AGREEMENT FOR PUBLIC SERVICES FUNDED UNDER THE CLEARWATER COMMUNITY DEVELOPMENT BLOCK GRANT PROGRAM
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AGREH1ENT roR PUBLIC SERVICES RJNDED
UNDER TI-IE CLEARWATER CO~'f.1UNITY DEVELOPl'-lENT
BLOCK GR~"IT PROGRI\t\f
PART I
This Agreement is entered into this
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day Of<J~
subdivision of the
19 ~, by the CITY OF aEA.RWATER, FLORIDA, a political
State of Florida, hereinafter referred to as the "CITY", and
NEIGHBORLY SENIOR SERVICES, INC., hereinafter
referred to as the "PUBLIC SERVICE AGENCY (PSA}," a nonprofit corporation
organized and existing under the laws of Florida, having its principal office
at 440 Second Avenue North, St. Petersburg, Florida
, ~ld consists of
Pa rt I and Appendices
l\HEREAS, the City has agreed Hith the United States Department of
Housing and Urban Development to conduct a Comrmmity Development Program,
hereinafter referred to as the "PROGR6J.1, II with federal financial ass istance
under Title I of the Housing and Community Development Act of 1974, as
amended, herein~fter called the "ACr"; and
w1-IEREAS, the Community Development Department, hereinafter called
the "DEPARTI.[Ei'IT," ,."ill act in behalf of the City in conducting the program;
and
WHEREAS, the NEIGHBORLY SENIOR SERVICES, mc.,
proposes to operate an ener~v conservation
project for the elderly
hereinafter refeY'red to as the "PROJECT, II and desires federal financial
assistance through the City to effect ~~is proposal; and
\',HEREAS, the City finds that the PROJECT proposed by Neighborly
Senior Services. Inc.
is meritorious and
fulfills the purpose and policies of the ACT:
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THEREFORE, the parties Cl.grce Cl.S fo11oh's:
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1.
Services Perfonned: The PSA shall, in a satisfactory and
proper manner as detennined by the DEPARTI-IENT, conduct the PRQ.JECf
outlined in the attached Narrative and Budget as Appendix A and identified
as follows:
Energy Conservation Project
(Name of Project)
A-l throu~h A-6
(Page ~umbers - Narratlve)
$40,000
(Total Cost)
A-7
(Page Numbers - Budget)
2. Tenn and Clarification of Agreement: TIle PSA shall perfonn
the seTVlces outlined in the Narrative during the tenn of this AGREDIEl'ff,
commencing on
January 25, 1982
and tenninating on December 31. 1982,
unless this AGREE-ffN'f is otherwise earlier c~'celled as hereinafter provided,
or nnless extended by written addendum to this AGREB1ENT. The DEPAR'J1'.1ENf
may issue written or oral instructions to clarify any details or provisions
of this AGREEMENT. Such instructions must be wi thin the intent of the vmrk
set forth in this PGREEMENT and may not be of such nature to affect cost or
period of performance.
3.' Agreement Administration: The City representative with the
PSA as regards to the conduct of services under this contract is
Joseph R. McFate II, Community Development Director
or his designee. The
PSA's services shall be carried out tmder the supervision of
Fredric Buchholtz, Executive Director
4. Use of Funds:
(a) The PSA shall use the funds to support the PROJECf servlng
residents of the City, partiollarly in Neighborhood Target Areas
as defined in Appendix B.
(b) The PSA shall not exceed its budgeted amount and shall use the
funds in accordance with the Budget-Expenses to be paid by
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Community Development funds included in .~)pendix A of this
AGREH1FNf .
(c) The PSA shall only obligate PROJECf funds for costs incurr.ed for
the delivery of services specified in Appendix A and subject to the
provisions of Paragraph 18 of this AGREE'iF.;\1'.
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(d) The PSA shall not obligate PROJECT funds when the PROJECT has
been suspended or tenninated pursuant to Paragraph 17 of this
AGREEMENT. The P~ may resume PROJECT operation, including
obligation of ftmds, upon receipt of written pennission by the
DEPAR1MENT that it may proceed.
(e) The PSA shall reftmd to the City any payment or portions of
payments which the DEPARTMENT detennines were not properly due to
the PSA tmder the tenns of this AGREFMENT.
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5. Financial Management:
(a) The PSA shall comply with the provisions of OMB Circular A-I02,
which is attached as Appendix C and with the provisions of Cl>ffi
Circular A-122, attached as Appendix H. Unless otherwise required by
Federal law, the PSA shall allow the City to audit the PSA's financial
operation including compliance with certain provisions of Federal law
and regulation.
(b) The PSA shall provide in writing the name or names and title(s)
of all persons responsible for the receipt, custody, and disbursement
of pro gram ftmds.
(c) All PSA financial records relating to this PROJECT are subject to
review by the City.
6. Contracts: All subcontracts to this AGREEMENf nnlSt be approved
by the City.
7. Purchasing: The PSA shall purchase all consumables, capital
equipment, and services by purchase order or by written contract and in
confonnity with OMB Circular A-l02, Procurement Standards, as set forth in
Appendix C. Accmmtability of PSA for PROJECT property and equipment
costing $50.00 or more with a life expectancy of one year or more shall be
in accordance with the requirements of the City relating to nonexpendable
City property.
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8. Method of Payment:
(a) The City agrees to make payment on budgeted costs allowable as
stated in Appendix A tmder Budget- Expenses to be paid by
Conummity Development Funds tmder Federal/HUD, State, and City
guidelines on a reimbursement basis.
(b) The PSA shall make requests for payment as directed by the
DEPARTMENT as detailed in Appendix D.
(c) No advance payments shall be made to PSA for services rendered.
(d) Within 20 days after receipt of each invoice and other~-
supporting documentation, the City shall make payment thereon.
(e) 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 accotmting
documents pertaining in whole or in part to the AGREEMENT shall be
clearly identified and readily accessible.
(f) Within thirty (30) days after completion of all services to be
performed by it, PSA shall render a final and complete statement to
the City of all charges for eligible costs not previously invoiced.
The City shall not be responsible for payment of any charges, claims
or demands of PSA not received within said thirty (30) day period;
however, such time may be extended in the City's discretion not to
exceed a period of ninety (90) days, provided the delay in its
submission is not occasioned by any fault or negligence of PSA.
9. Property Management:
(a) The City shall retain custody upon tennination of this AGREEMENT
of any and all property purchased with Commtmity Development ftmds.
"Property" as used in this paragraph shall mean nonexpendable,
tangible property valued at $50.00 or more with a life expectancy of
one year or more.
(b) The PSA shall retain custody of property acquired with federal
ftmds so long as the property is used for the purposes described in
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Project Narrative, Appendix A of this AGREEMENT.
When the property no longer is used for the purposes so stated, the
Ci ty shall asStmle custody of the property upon written notice to
the PSA.
(c) Upon purchase and receipt of any property, the PSA ,shall submit
to the DEPARTMENT a Property Receiving Report.
(d) The PSA, shall submit a report to the DEPAltIMm-IT' if property is
returned to the vendor. The report shall list the i terns returned,
description, serial number, and quantity.
(e) The PSA shall report lost or stolen property immediately to
the DEPAR1MENT. Stolen property Im.lSt also be reported to the local
law enforcement agency and a police report shall be fOIWarded to
the DEPArn1ENf.
(f) Thirty (30) days prior to the end of the grant year, or
immediately upon tennination of this AGREEMENT by either party,
the PSA shall submit in a Property Report a physical inventory of
all property purchased with CoJTl1l1.D1ity Development funds. The
report shall also contain a verification of the existence and current
use of the property and, if applicable, the continued need for the
property.
(g) No real or personal property or custody thereof purchased
wi th COJlIIU.1I1i ty Development :ftmds shall be disposed of, transferred,
assigned, loaned by ?SA without prior written consent of the City.
10. F1.mding Confidential: Nothing in this AGREEMENT shall be
construed to permit invasion of the privacy of individuals who are served by
the PROJECf, nor shall this AGREEMENT be construed to require the PSA to
publish or release infonnation to third parties which would invade the privacy
of such individuals. Infonnation obtained by the DEPAR1MENT as required by
this AGREEMENT shall not be used or disclosed in such a way as to invade
individual privacy and client relationships, tmless Florida law pertaining to
public records requires disclosure of said information.
11. Subsequent Changes: The PSA shall obtain approval by written
addendum to this AGR.E91ENT prior to any of the following changes:
(a) Substantial changes in the PROJECT work plan
,
(b) Changes desired in any budget line item
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12. Evaluation:
(a) The PSA hereby agrees to participate fully with the guidance
and assistance of the DEPARTMENT in the implementation and
maintenance of an evaluation system whereby the PROJECT may be
continually monitored. Full participation in an evaluation system
shall include, but not be limited to, periodic submission of client
data reports which will be used by the DEPAR'lMENT for inclusion in
the Annual Grantee Perfonnance Report, annual monitoring visits by
the DEPAR1MENT for confonnance with this A~ incorporated
standards and requirements, and a detennination whether PSA has a
continuing capacity to carry out block grant assisted activities in
a timely JnaIU1er. The DEPAR1MENT agrees to share with PSA such data
and reports derived therefrom. The PSA agrees to comply with
evaluation and infonnation requirements issued by the DEPAR1MENT.
(b) The PSA shall submit a quarterly program activity report
outlining activities tmdertaken with grant ftmds and including
client data on individuals served within the designated service area
as stipulated in this A~ffiNT.
(c) The PSA shall submit a final report within thirty (30) days
after the end of the contract period. The final report requires a
Stnnmary discuss ion regarding PROJECT effectiveness and should
include but is not limited to service delivery problems encotmtered,
and reconmendations. This final report shall consolidate reporting
of all PROJECT participants.
13. Accotmting System: The PSA shall establish and maintain on an
accrual basis an accotmting system in accordance with Federal ~furnagement
Circular (FMC) A-l02 Standards of Grantee Financial ~furnagement Systems, as
set forth in Appendix C of this AGREFlv1ENT, and in accordance with generally
accepted accotmting principles and standards. Prior to disbursement of
fimds pursuant to this AGRmffiNT, PSA and City shall review PSA's internal
control, accotmting, and report systems. PSA agrees to modify or correct
said systems in accordance with the City's requirements subsequent to said
review to accomplish the purpose of this section.
14. Maintenance of Records:
(a) PSA shall maintain such records and accounts including property,
personnel and financial records as are deemed necessary by the City to
assure a proper accotmting for all PROJECT ftmds.
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These records will be made available for audit, inspection or
copying purposes at any time during nomal business hours and as
often as the City, HUD, and/or representatives of the Comptroller
General of the United States, or other federal agency, may deem
necessary. There shall be made available to the City, HUD,
representatives of the Comptroller General of the United States or
other federal agency, for examination, all of these records with
respect to all matters covered by this AGREEMENT; and PSA will permit
same to be examined and excerpts or transcriptions made or
duplicated from such records, and audits made of all contracts,
invoices, materials, records of personnel, and of employment and
other data relating to all matters covered by this AGREEMENT. The
City's right of inspection and audit shall pertain likewise with
reference to any audits made by any other agency, whether local,
state or federal. PSA likewise shali retain all records and
supporting documentation applicable to this AGREEMENI' for such period
as required by applicable laws and regulations and may thereafter be
destroyed only with the prior written approval of the City. All
records shall be available for inspection as aforesaid, for compliance
wi th applicable laws and regulations.
(b) The PSA agrees to retain all records pertaining to the PROJEcr
for such period as required by applicable laws and regulations and
may thereafter be destroyed only with the prior written approval of
the City, as related to this AGREEMENT or extension of the AGREE-IENI'.
Such records shall include financial records, audits, supporting
documents, statistical reports and client files.
(c) PSA agrees to comply with such additional requirements as to
maintenance of records as the City may request in writing. In the
event that 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
AGREEME.'rr .
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15. Hold Hannless: The PSA shall hold and save the City, its
officers, agents and employees hannless from liability of any nature or
.
kind, including costs and expenses, for or on account of any suits or
damages of any character whatsoever resulting from injuries or damages
sustained by any persons or property resulting in whole or in part from
the negligent perfonnance or omission of any employee, agent or
representative of the PSA.
16. Assignability: The PSA shall not assign any interest in this
AGREEMENT without the prior written consent of the City.
17. Suspension or Tennination: The City may suspend, withhold,
or tenninate payment of the PROJECT in whole or in part for cause. Cause
shall include the following:
(a) Ineffective or improper use of PROJECT ftmds.
(b) Failure to comply with either the tenns and conditions of
this AGREEMENT or the PROJECT set forth in Appendix A of this
AGREPMENT
(c) Refusal to accept conditions imposed by I-IDD
(d) Submi ttal to the DEPARTMENT of reports which are incorrect or
incomplete in any material respect
(e) If the carrying out of this AGREEMENT is rendered impossible or
infeasible for any reason including changes in federal law or the
unavailability of Cornmtmity Development Block Grant ftmds from HUD
\vhich are necessary for continuation of the prqgram.
If the City suspends payment, it shall advise the PSA and specify, in
writing, the actions that must be taken as a condition precedent to the
resumption of payments and specify a reasonable date for compliance.
18. Delivery of Services:
(a) The PSA and the City hereby agree to use their best efforts to
ensure that the services tmder this AGREEMENT are provided at such
times and in such places as will best meet the needs of City
residents with priority to those residents who reside in the target
area(s) set forth by Appendix B of this AGREEMENT.
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(b) The PSA shall make every effort to assure that a mini.rm..nn of
two-thirds of those persons receiving the public service under
this AGREEMENT are low- and moderate-income.
19. Discrimination Prohibition: No person with responsibilities
in the operation of the PROJECf will discriminate with respect to any
PROJECf participant because of race, color, national origin, or sex. Nor
shall any participant be excluded from participation in, be denied of, or
be subjected to discrimination under any program or activity funded in
whole or in part with Cornrmmi ty Development funds because of race, color,
national origin or sex, as set forth in Appendix G, Other Program
Requirements. (CPR 570.601).
20. Assurances:
(a) 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.
(b) Prior to requesting any continued PROJEcr funding beyond the
tenn covered by this AGREEMENT or for new public services not
covered by this AGREEMENT, the PSA shall provide evidence of having
applied or inquired in writing to other local, state and federal
agencies which conduct a program or programs most likely to meet the
needs for which COJIII1UIlity Development funds are being considered.
(c) The PSA will not as a result of receiving funding for the
PROJECf reduce its support for other similar services already being
provided by PSA in the identified target area or in other areas,
and will, in fact, affinnatively seek additional assistance and
support from other sources for increasing services where needs demand
such increase.
(d) The PSA shall not use Block Grant funds for' publici ty or
propaganda purposes designed to support or defeat legislation
pending before federal, state, or local governments.
21. Fmployrnent Opporttmi ties for Businesses and Lower Income Persons:
The PSA shall comply with the requirements of Section 3 of the Housing and
Urban Development Act of 1968 (12 use l70lu) in the provision of training,
employment and business opportunities, as amended, and the HUD regulations
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issued pursuant thereto at 24 CFR Part 135, attached hereto as f\ppendix E.
22. Equal Employment: The PSA will comply with Equal Employment
Opporttmities Exeuctive Order 11246, as amended, attached hereto as
Appendix F.
23. Compliance With. Other Federal Regulations: 'The PSA shall comply
wi th applicable federal lali and regulations, including but not limited to;
National Environmental Policy Act of 1969;
Flood Disaster Protection Act of 1973 CPL 93-234) ;
!IUD Lead-Based Paint Poisoning Prevention Act, 24 CFR Part 34;
Clean Air Act, as amended, 42 USC 1857, et seq.;
Historic Preservation Requirements of Public Law 89-656;
Archeological and 11istoric Preservation Act of 1974;
Executive Order 11593;
Architectural Barriers Act of 1968;
Hatch Act;
Federal Water Pollution Control Act, as amended, 33 USC 1251, et seq. ;
Federal Labor Standards Provision and the Davis-Bacon Act;
Tne Civil Rights Act of 1964;
National Flood Insurance Program.
24. Titles and Headings: Titles and headings are utilized for
convenience of reference only and shall not affect the provisions of the
AGREEHENT or interpretation thereof.
IN WIT~'JESS WHEREOF, the parties hereto have caused this AGREBvlE.'IT,
Part I and Appendices, to be exeucted on the day and year first above written.
NEIGHBORLY SENIOR SERVICES, INC.
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By:
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A:24 ()dJ. klym~
Attest:
Witnesses as to City:
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By:. '
I"'y '1..- er ' "~
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Attest V}u~~"~-:-:l~~
CIty
Countersigned:
Approved as
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Energy Conservation Proposal
Submi tted to:
The City of Clearwater
Community Development Department
10 South Missouri Avenue
Clearwater, Florida 33515
Submi t ted by:
Neighborly Senior Service s, Tnc.
440 Second Avenue, North
St. Petersburg, Florida 33701
821-1771
Fredric Buchholtz, Executive Director
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TABLE OF CONTEN1S
PAGE
1.
In troduction.
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II.
Program Oescr iption.......................................
A. Q)a 1. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
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B. Ob j ec t i ve. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2
I II.
Methodology.............
Budget Narrative....
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C.
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I. Introduction
Neighborly Senior Services, Inc. is requesting $40,000 in order to
implement an energy conservation program in conjunction and cooperation
with Flor ida Power Corporation' s Home Energy Fix-up progr am. This
project proposes a cooperative effort between a non profit, social ser-
vice agency and the private sector in order to provide home improvements
to a vulnerable population, the low income elderly residing in the City
of Clearwater. NSS will be able to extend its service dollars to twice
as many elderly clients wi th the proposed funding as it would if the
agency were to complete the project on its own. Florida Power will pay
for one half of each energy fix-up not to exceed a maximum of $50.00 per
household. NSS will pay for ,the remaining half of each energy fix-up
not to exceed a maximum of $50.00 per household. A cap of $100.00 will
be put on the energy modifications to be done on each participant's
residence. In addition to increasing the cost effectiveness of the pro-
gram, cooperation between NSS and Florida Power brings a wide variety of
expertise and technology to the project. Florida 80wer adds its
expertise in energy conservation techniques and energy auditing, and NSS
brings its expertise in the delivery of social services to the elderly
and ability to outreach the low income and homebound elderly that are
mos t in need of services. This program also allows for expertise in
workmanship as installation will be performed by professional con-
tr actor s.
The main objective of this service project is to administer a _ walk
through ene rgy audi t to approxima tely 582 elderly res idents 0 f
Clearwater and on the basis of this audit, implement a maximum of six
(6) energy conservation measures as needed in each individual
household. The following, energy conservation measures will be installed
as determined by the energy audit: a hot water heater insulation jacket
and insula- tion for pipes leading to waterheater, weatherstrippirig on
exterior doors, caulking of exterior windows and doors, adjustmen t of
water heater thermostat, water flow restr ictors, and electr ical outlet
and switchplate gaskets.
II. Program Description
A. Q)a 1
The goal of this energy conservation proposal is to administer a walk
through energy audit to approximately 582 elderly residents of
Clearwater, and on the basis of this audit, some or all of the
following low cost energy conservation items will be installed:
Caulking on windows and doors.
Weatherstripping of exterior doors.
Waterheater and hot water pipe insulation
lldjustment of water heater temperature.
Water flow restrictors.
Electrical outlet gaskets.
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The above energy saving measures have been selected by the U. S.
Department of Energy as offering the greatest return in energy
savings for the least amount of effort and expense; and have been
endorsed by Florida, Power Corpora tion as effect i ve energy conserva-
tion measures. The implementation of the above energy saving
measures will help to conserve energy and significantly reduce
monthly electric bills for the low income elderly who are most
drastically affected by the inflationary costs of energy. In
addi tion, the energy audit will include many no cost energy saving
suggestions that will help the elderly resident conserve energy and
lower energy bills.
B. Cl:ljective
1. To administer a walk through
income elderly res idents of
basis of this audit implement
energy conservation measures.
energy audit to at least 582 low
the Ci ty of Clearwater and on the
a maximum of the six above-mentioned
The following action steps will be implemented in order to achieve
the stated objective:
a. Hire and train an Ehergy Coordinator.
b. Publicize the energy conservation program through local news-
papers, radio spots, presentations to local civic organiza-
tions, social agencies and mobile home parks, and through
announcements at all NSS locations in Clearwater.
c. All NSS Site/Program Managers in Clearwater will dis tribute,
,collect and forward applications for the energy conservation
program to the NSS Energy Coordinator.
d. Application will be made available to the public (60 and over)
at key locations in Clearwater.
e. Energy, Coordinator will screen all applicants based on eligi-
bility criteria.
f. Energy Coordinator will contact the
Fix-up Representative and arrange
performed at each client's home.
Flor ida Power Home Energy
for energy audits to be
g. Florida Power
request sheet
of materials
savings items
auditors will submit a' cost estimate and work
to the Fix-up Representative detailing the_amount
needed and the estimated cost of the energy
and their installation for each client household.
h. Florida Power will retain a list of outside con tractors who
will provide and install energy conservation material according
to the agreed price specifications on the cost estimate and
work request sheet.
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i. Florida Power will draw up a contract bet.....een each NSS client
and the specified contractor before work is to begin on any
household.
j. Energy Coordinator will set up appointments for energy work to
be completed at each client's home.
k. Upon completion of each home fix'-up, the Energy Coordinator
will inspect the quality of installation of materials in each
client residence.
1. NSS will pay
tracted work
Coordinator.
household) .
its port ion of
is inspected
(Up to', but not
the contractor's
and approved
exceeding a cost
bill after con-
by the .Ehergy
of $50.00jclient
m. Energy Coordinator will survey client satisfaction and
effectiveness of program in 15% of the residences ~here energy
conservation materials have been installed.
n. 'The .Eh e rgy
plete and
Clearwater
Coordinator will keep all necessary files, and com-
forward all records and reports to the City of
Corr~unity Development Department as required.
C. !--1e thodology -
Upon notification of the gr ant award, Ne ighborly Senior Services,
Inc. will designate a Project Director within its staff who will in
turn, hire and train a Special Project Energy Coordinator who will be
responsible to oversee and coordinate the implementation of the pro-
posed project with the Florida Power Corporations' Home Energy Fix-up
Program. 'The. availability of this energy conservation service
program will be publicized in local newspapers, radio stations, and
through other appropriate means wi th a special effort to reach the
elderly with the greatest economic need. Where possible, NSS will
cooperate with Florida POwer Corporation in publicizing the program.
Applications for participation in this program will be available at
the following addresses within the city limits of Clearwater:
1. Jewish Community Center, 302 S. Jupiter Avenue, Clearwater,
Florid a 33516.
2. Mount Carmel Baptist Ch urch, 1014 Pennsylvania, Clearwater,
Florida 33515.
3. St. Paul's Lutheran Church, 407 South Saturn, Clearwater, Florida
33 517.
4. Channel Markers for the Blind, 1610 N. Myrtle Avenue, Clearwater,
Florida 33515.
5. Ci ty of Clearwater Communi ty Development De partrrient, Ci ty Hall
Annex Building, Clearwater, Florida 33518.
Al though all Clearwater residents 60 years of age or older will be
welcome to complete an application, the following criteria will be
used to determine the eligibility of each applicant:
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1. Residents of the City of Clearwater (and)
2. Sixty (60) years of age or older (and)
3. Household income at or below limits set by the City of Clearwater
Community Development Department (and)
4. Applicant directly responsible for paying monthly electric bills.
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The Energy Coordinator will screen all applications for eligibility
requirements, and will then arrange wi th the f ix-up representative
for ene{"gy audits to be performed by Florida Power auditors. Upon
completion of the audit, the Florida Power auditor will submit a cost
estimate and work request sheet to the Fix-up Representative
detailing the' amount of materials needed and the estimated cost of
each energy fix-up. The energy fix-up (materials and labor) will be
a minimum $20.00 and will not exceed a maximum of $100.00 per client
household. Florida Power will pay for one half of each energy fix-up
not to exceed a maximum of $50.00 per household. NSS will pay for
the remaining half of each energy fix-up not to exceed a maximum of
$50.00 per household. Florida Power will retain a list of preferable
outside con tractors who will provide and install energy conservation
materials according to the specifications on the cost estimate and
work request sheet. The Energy Coordinator will coordinate appoint-
ments for energy work to be cowpleted between each client and con-
tractor. A representative from Florida Power will train the Energy
Coordinator to perform on-si te inspections of installation of
materials after the contractor's ~ork is completed at each client
household. When the contractor completes the work required, he will
then submit a bill to Florida Power for half of the total amount (not
to exceed $50.00), and submit a second ~ill to NSS for the other half
of the total amount (not to exceed $50.00). NSS' bill will be paid
after the contracted work passes satisfactory inspection by the
Ehergy Coordinator:
It is estimated that each energy -fix-up will take a maximum of 2-3
hours per household. It is expected that all energy conservation
items will not have to be installed in each applicant's home.
Therefore, it is most probable tha t more than the estimated 582
elderly low income residents will actually benefit from this program.
The Energy Coordinator will be responsible for surveying client
satisfaction and cost effectiveness of the program in 15% of the
residences where energy conservation materials have been installed.
-4-
A-6
r
II
/'-
-v
Cl r'
€
"-
Energy Conservation Project
Budg.e t N3rrative
III. Budget Narrative
A. Personnel
l. Project Director .0271 x 14,560 $ 395
2. Energy Coordinator
4.27 HR x 6 hrslday x 184 days $ 4,714
Total salaries j 5,109
- -
3. Fringe Benefits
a. FICA - 6.65% x $5,109 $ 340
b. Wor k Comp. - 4% x 1st $ 5,200 204
.04 x $5,109
c. Unemp. Compo - .9% x 1st $6,000 46 590
.009 x $5,109
Total Personnel ~.!.~22
B. Travel
En e rg y Coordinator
20 mi./day x 184 days x .2 Dim i =Zl~
C. Cornmun ica tio n and Utili ties
l. Telephone
a. Installation $125
b. 9 mon ths @ 35 Imo. 315 440
2. Electr ic, Wa ter, Se wer, etc.
75 Imo . x 9 mon ths 675
Total Communications and Ut ili ties ~ ! ' ll~
D. Oth e r Costs
l. Contracted Services
a. Energy Conservation Installations
$50/house x 582 houses 29~!OQ
To tal Direct Cost ~3E!.~50
E. Ind irec t Cos t
9.14% x 36,650 $ 3,350
Total Budgeted Cost ~iQ.!.QQ.Q A-7
-5-
I
CLEARWATER. FLORIDA
s
..-:--" . -.-."..--- -:::: "
fi
(1) North Greenwood NTA
(2) South Greenwood NTA
(3) East Clearwater NTA
(4) Land Acquisition
; Appendix B
e
COMMUNITY DEVELOPMENT BLOCK GRANTS
~
OFFICE OF MANAGEMENT AND
BUDGET
(Circular No. A-I02 Revised)
UNIFORM ADMINISTRATIVE REQUIRE.
MENTS FOR GRANTS-IN-AID TO STATE
AND LOCAL GOVERN~ENTS
AUGUST 24. 1977.
1. Purpose. This Circular promu1ga.tes
standuds for establishing conslsten:y
and un1!onn1ty among Federal agencies
In the administration of grant6 to State.
local, and federally recognized Indian
tribal govenunents. Also included in the
C1rcular are standards to Insure the con-
sistent implementation 01 sections 202.
203. and 204 of the Integrovemental c0-
operation Act of 1968 (82 Stat. 1100.
2. Supersession.. The President by Ex-
ecutive Order 11717 transferred the func--
t10ns covered by OMB Circular No. A-I02
dated October 19, 1971, from the Otfice
of Management and BUdget to the Gen-
eral Services Administration. OMB Cir-
cular No. A-I02 wa.s revised and is:med a.s
, Federal Management. CIrcular 74--7 dated
September 13. 1974. On December 31.
1975. the President superseded this order
by Exe:utlve Order 11833 and transferred
the functions covered by this Circular
back to the Otfice of M2.na.gement. and
Bu.d6et. FMC 74-7 is revised and reissued
under its or1g1nal des1gna.tion 01 OMB
Circular No. A-I02.
3. Summary 01 s41nificant chan.ges.
The revised Circular contains changes
that bring It into general agreement with
the more recent Circula.r A-110 which
covers grants to universities, bospit:aJs.
and ncnprotlt organizations.
The more ~~1tli::ant changes include:
(a) An am'endment to the basic Cir-
cular to make it- clea.r tha.t the provisions
01 the a.ttachments shall be applied to
subgrantees except where they ue spe-
cifically excluded.
(b) A provision that Pederal age!lcies
ma.y accept the bonding poUcies and re-
quirements of the gra.ntee for construc-
tion contracts over $100,000 provided
tha.t the Government's interest Is ade-
quately protected.
(c) A revision to the criterion for the
valua.tion of donated real and ~onal
property to provide that the ....alue of
such property shall be based on fair
market value. The original Circu1.a.r pro-
vided that properly should be based on
the cost of the property less depre:la-
tion or fa.ir market ....alue. whJchever was
less.
(d) A prov1:sion that -grantee audits
should be made in accordB.nce with gen-
erally a.ccepted auditing standa.rds.
inclUding Standards for Audit. 01
Governmental Organiza.tlons, Programs.
Activities and F'lUict1ons. published b1
the General Accounting Otfice.
(e) A provision to require Federal
a.&encies to pa.y within 30 da~.s a.fter tl1e
receipt of !:l~i..'1g when the !"eimcurse-
:r.ent method Is used.
(f) A re'\~lon to the criterion for is-
suance of e. letter of cred.1t from $250,000
to $1:l0,000. .
(g) D:leUon of the r~u1rements for
o;n_:~ t-ees to Qot.-,,\n prior app:o\'als for
OMB CmCULAR A-102
budget. revisions to grants under $100.-
000. ,
(h) Provision that title to rea.l prop-
erty funded partly or wholly by the Fed-
eral Government shall vest in the recip-
ient..
m A revision to the criteria governing
when a grantee may keep nonexpendable
property without reimbursement to .the
Federal Government when it is no longer
needed for any Federal program.
4. Background. The standards in-
cluded in the attachments to this Cir-
cular replace the multitude of yar}.ing
and oftentimes conflicting requirements
in the same subject matter which have
been burdensome to the State and local
governments. Inherent in this stand-
ardization process is the concept of plac-
Ing greater reliance on state and local
governments. In addition, the Intergov-
ernmental Cooperation Act of 1968 wa.s
passed. in parl. for the purposes of: (a)
Achieving the fullest cooperation and
coordination of activities among levels of
government: (b) improving the admin-
istration of grants-In-aid to the states;
and (c) establishing coordinated inter-
governmental policy and administration
of Federal assistance program. This Act
provided certain basic policies pertaining
to administrative requirements to be im-
posed upon the States as a condition to
nceiv1ng Federal grants. The imple-
menting instructions of these policies
were initially Issued in C1rcular A-96.
These instructions are modified herein in
the interest. of achieving further con-
sfstenCY in implementing that Act.
5. Applicab~ p1'ovision.s 01 t1r.e Inter-
{1OI}eTn71U7I.tal CooperC1t~on Act 01 1968.
Federal a.gencies shall continue to fol-
101V the provisions 01 the Act, quoted
below:
I)zposn' or G&.uITS-IN-Am
Sec. 202. No grant-In-a1d to II. State shaU
be required by FedenrJ law or adIl".JD.1stra-
tin regulation to be depcelted In a separate
bank a.ccount apart from ot!:ler funds admJn-
t&tered by the State. All Federa.l gr&nt-,In-
a1d tunds made avaUable to the States sh&l1
be properly accounted for 80S FedenrJ funds
In the a.ccounta ot the State. In each ClLSe
the State a.genq ooncerned shalJ re.nder reg-
ular authenticated reporta to the appropr1-
a.te FederaJ agency covering the status and
the application ot the tund3, the l1aolll tIes
aDd obllgatlon.s on hand, and such other
tacta 80S may be required by said Federal
agency. The hes.c1 ot the FederaJ a.gency and
the ComptrolJer GenenrJ ot the Un1~ States
01' any of their duly author1zed represent-
athes &ha11 have s.c:cess tor the purpose of
audIt and exao1natlon to any books, docu-
menta, papen, and re.::ord3 that are perU-
~ent to the grant-In-&.Id received by the
St& us.
SalxDt7LD'fC or F2:ilElLAt. Ta.'Nsn:1lS TO THE
, SUTZS
Sec. 203. H~ ot Federal depa.rtmenta =d
a.ge::1cles responslb:e for admlnlste~ng 6-'=U1t-
in.ald programs s~a!1 5C~ed'-lle the transfer
ot grant-Ln.ald funds cons:stent. ...-tth pro-
pm pur~s and appllc3.ble Tre!l.Sury reg-
'.::s.:!ocs. ~ &oS to ~~:nl::e the ti:=1e e~3pS!:'lg
bee....een the t..~nsfer ot such funds from
t:;e U:1ltcd States Tre:>.",ury .."d the disburse-
ce::1t t~e~~f b7 a S:ate. ....=.ether such dls-
burser:nent occurs prIor to or subsequcct to
Sl:c!:l t:-a=..ster of runds. or su~equent to sue!:!
APPENDIX "c"
09: 1541
HDR RF -136
4-23-79
transfer ot fund3. (SiC) States shL: ::lot be
held accountable tor Interc:st ~-=-ed on
grant.ln-ald fund3. pending their, ~:sburse-
ment tor program purposes.
ELICIllLE STAn: ACI:NCT
Sec. 204. Notwithstanding &ny o~er Fed-
eral law which provides that a 6lr.i:e State
agency or multimember board or c:o=!sslon
must be established or designated \.(\ a.dClln-
Ister or supervise the admlnlstratlo~ of any
grant-In-aid program, the head ot s.:ly Fed-
eral depar:tment or agency adm!=.~terlng
such program may, upon request ot ::::'e Oov-
ernor or other appropriate executl.e or leg-
Islatlve authority of the State n~o::.slble
tor determlnlDg or revlsln!; the c;:f3.nlza-
tlonal structure ot State governme:.:. ....a!ve
the single State agency or mult:.=.ember
board or c:omD1.lsslon provision uj:-jlJ. ade-
quate showing that such provIsion ;:~vents
the esta.bllshment ot the most ell"ec::...e and
e!:lclent organizational ll.lTe.ngc:nen:.5 within
the State government Rnd apprc.e other
State administrative structure or ..~ange-
melJ.t.s: Provided, 'That the head ot ~e Fed-
eral department or agency determ!=.es that
the obJectl...es ot the Federal statu~ "'....thor-
Izlng the grant-In-aid program vrtl.I not be
endan~red by the use of such o~er State
structure or arrangements.
Some of the a.bove prov1.sior'.s :cqulre
implementing instructions and t.'1ey are
pro.ided in several of the atts.:2.'!1ents
to this Circular which deal with ~e spe-
cific subject matter.
6. Af'Plicability and scope. The stand-
ards promulgated bi this C1rcu!s.r apply
to a.U Federal agencies responsi":lle for
administering programs that involve
grants to' State and local gove::::nent.s
and federally recognized Indian tribal
government.s. However, ~encies U"e en-
couraged to apply the standa.rds to loan
and 10an gua.rantee programs to the ex-
tent practicable. II the enabling legisla-
tion for a. spec1tlc grant progr..:n pre-
scribes policies or requirements t.ill.t dif-
fer from the standards providee. herein.
the provisions of the enabling I~.slatlon
shall govern. Except where they ;;,;-e spe-
cifically excluded, the provislol"...!'o! the
atta.chments of this Circular shall be ap-
piled to su b:;ra.n tees perf o~ sub-
sta.:ltive work under gl"2.nts t.!:at are
passed through or a.warded by t:':.e pri-
mary grantee 1! such su~ante€S are
States, local governments or f~eral1y
recogn!zed. Indian tribal govern=. ::It.s as
defined in par~raph 7.
7. De]'lniti01l.3. For t.'1e purposes of this
Circular: ,
(a) The term "grant" or "g:-::.nt-in-
aid" means money, or property in !leu'
of money, paJd or .furnished by: ~e Fed-
eral Government to a State. !xa.l. or
federally recognized Indian trit-al gov-
ernment under prOgr3.rr.s t.iat ;:>:o\1de
ftnancial assistance through ~nt or
contra.ctual arrangement.s. The te:-:n does
not include technical assista~ce pro-
grams v,'Wch provide services i.r..;~C'ad ot
money or other assistance in t2:e form
of general re....~nu9 sh.2:"'..ng-. loa::.s. Ivan
gua r:>n tees, lnsur:u1ce, or C:>~t;-3::t.s
v,'hich are ente:-ed into a...,d ad.::;i..-..i.5tered
under p:ocure:nent !3.ws a.r1d, :~-e;-~a.-
tions.
(b) The ter:n "State" mea.!'-S :.:1Y of
the seve;-al St::.t{'s of the l7,jtee States.
the District of Columbia, t.l)e C:':::.."!:on-
wealth of Pue:to Rico, a.ny te::-::0r)' or
?~btis~ed ~y THE Bt'REAU OF: "ATJO:"AL AFFAIRS. I:"C., W....SHl"GTO:". D.C. "0037
23
09: 1542
'J)05.."-e:sSlon ot the. United States, or any
&&,e=.cy or instrumentalIty ot a state ex-
clw!';e ot state institutions ot higher
education and hosplt~.
Cc) The term "local government"
,mea::..s a local unIt oC government In-
clu~'1g specifiCally a county, municipal-
Ity, city, town. township, local pubUc au-
tho~ty, school district, special district.
Intrastate district, councU oC govern-
men:.s, sponsor group representative or-
gan.!zatlon (as defined In 7 CFR 620.2,
40 n 12472, March 19. 1975) and other
reg:;'!::ll or Interstate go,vernment entity,
or any agency or instrumentality ot a
loca.:. governmept exclusive ot institu-
tloI:.3 othlgher education and hospitals.
Cd) The term "!ederally recognized
IndUn tribal government" means the
go,,'eming body or a governmental agen-
cy 0: any Indian tribe, band.. nation, or
othe: organized gl'oup er community (in-
clUding any Native village as defined in
Section 3 ot the Alaska Native Claims
Sett!e.:nent Act, 85 Stat. 688) certl1ied by
the Secretary ot the Interior as eligible
tor the special programs and services
pro".~cied by him through the Bureau ot
Indlz:l ..s.!!alrs. .
8. Attachments. The standards pro-
mule;.;.ted by this Circular lU'e set torth
In t:.e attachments, which are:
Attac~ent A-ca.sh depositories.
Atta.~eat B--Bondlng lLlld; Insurance.
Atta.::~ent C-R.etentlon and cwtod1al re-
q~!.:ll~nt.s tor re<:ord.s.
Atta.:~ent. D-Walver or "smgle" State
a.g~::.:y requl:ements.
Atta..:" ::lent. E-Program Income.
Att~::==ent F'-~tchlng share.
Attac~ent Q-.Standard.s tor grantee dnan-
cl.&l ::::.ana.gement systems.
Atta.c~ent B-F1na.nclal reporting require-
me::.:.s.
Att,3.l:~ent I-Monitoring lLlld report.lng
pre~m performance.
Atta.::~ent J~rant. payment require-
me::.:.s.
Atta.::~ent K-Budget. revision procedures.
Atta.:~.::lent ~rant closeout procedures.
Atta.::~:::ent ~!-3tandard torIn5 tor apply-
In;;; :~r F~er&l assIstance.
Att&c::.:::ent. N-Proporty manasement
s~d.s.
Att&c~:::en~ o-P::'ocurement standards.
9. .~equestj for exceptions. The Otnce
Man.;.i~ment and BUdget may grant ex-
cept~:-c.s trom the reqUirements ot th13
Clrc~.3r when pennlsslble under existing
laws. ::::o-:;ever, in the interest ot keepi..lg
unltc:=1ty to the maximum extent. devi-
atlo::.s :rom t.'1e requirements ot this CIr-
cula: ;;ill be permitted only In excep-
t10~2.! Cl!.Se3. .
10. :: .=cept:on.s for certain recipient.:.
Not;;-;:''':.standirlg the prOvisions of para.-
grap~ 9 l! an applicant/recipient ha.s a.
h!sto" ot poor pertormance, 13 not fiDan-
cl&lly staBle, or Its management system
does ::~t meet the standards prescIibed
In the Circular, Federal agencies may
lmpc~ add1tional reqUirements as
needee' provided that such applicant/
reclp::::t Is notl.fted In writing as to:
(a) ";Vhy t..'le addItional standards are
beln6 :=.posed:
(bl ~at corrective action Is neeaed.
Co;::~ ot such notifications shall be
sent ~ the O~ce o( Mana~ement and
Bud;:: J..."1d other agencies (unding that,
e
~
HOUSING & DEVELOPMENT REPORTER
recipient at the same time the recipient
Is notUied. .
11. Respon3ibilities. AgencIes respon-
sible (or administering programs that in-
volve grants to State and local govern-
ments shall Issue the appropriate
regulations necessary to implement the
prOvisions ot this Circular. All portions
ot such regulations that Involve reco,d-
keeping and/or reportmg requirements
subject to the provisions ot the Federal
Reports Act and OMB Circular A-40
must be submitted to OMS tor clearance
betore being used. Upon request all reg-
ulations and Instructions implementing
this Circular shall be furnished to the
Otnce ot Management and Budget.Agen-
cies shall also designate an official to
serve as the agency representative on
mattets relating to the implementation
ot this Circular. It the name and t1Ue
were previously transmitted. notification
to the Office of Management and BUdget
Is reqUired only when there Is a change
in the designated rep'resentative.
12. Inquiries. Further information
concerning this CIrcular may be obtained
by contacting the Financial Management
.Branch. Budget Review Division. Office
ot Management and Budget. Washing-
ton. D.C. 20503. telephone 395-4773.
BERT LANCE.
Director.
ATTACHMENT A~IRCtTLAR No. A-102
CASH: DEPOSITORIES
1. This attachme'n~ sets forth stand-
ards governing the use of banks and
other institutions as depositories oC funds
adV8.1"l.Ced under grants.
2. Except tor situations descIibed in
paragraphs 3, 4. and S. no gra.n.tor agency
shall :
(a) Require phys1ea.l segregatIon of
C2.'lh depositories for tunds which are
provided to a grantee.
(b) EStabllsh' any eligibility require-
ments for cash depositories for funds
w!ilch a.re provided to a. gran tee.
3. A sepa.rz.te bank account shall be
required when applicable letter-oC:'credit
a.greements provide that drawdowns will
be made when the grantee's checks are
pr~nted to the bank for payment.
.. Any moneys advanced to a grantee
which are subject to the control 01'" regu-
lation oC the United States or any ot Its
o.tncers. agents or employees (public
moneys as det1ned In Treasury ClrcuIar
No. 176. as amended) must be deposited
In a bank with Federal Deposit Insur-
ance Corporation <PoIC) Insurance cov-
e~e and the balance exceeding the
FDIC coverage must be collat~rally se-
cured. ,
5. Consistent. with the national goal
oCexpandlng the OPPOrtunities tOI'" mi-
nority business enterprises. grantees and
subgrantees shall be encouraged to use
mlnorit.y b8..i"l..ks Ca bank which is owned
at least 50 percent by minority group
members). A list of minority owned
banks can be obtained from the Office o(
ML."l.ority Business Enterprise. Depart-
ment oC Commer'Ce, Washington. D,C.
20230.
ATTACH14ENT B-CIRCt1l.AR No. A-102
BONDING AND INSURANCE
1. This a.tta.chment sets forth bonding
and Insurance requirements for grants.
No other bonding and insul'"ance require-
ments sh3ll be imposed other than those
normally required by the grantee.
2. Except as otherwise required by'law,
a grant that requires the contracting (01'"
subcontracting) tor construction or fa-
cility improvements shall prOVide tor the
grantee to tallow its own requirements
relating to bid guarantees, performance
bonds, and payment' bonds unless the
construction contract or subcontract ex-
ceeds $100,000. For those contracts or
subcontracts exceeding $100,000. the Fed-
eral agency may a.ccept the bonding
policy and requirements of the grantee
provided the Federal agency has made
a detennination that the Government's
interest is adequately PI'"O~ted. U such
a determination has not been made, the
minimum requirements shall be as fol-
lows:
(a) A bid guarantee from each bidder
eQuiL'alent to five percent of the bid price.
The "bid guarantee" shall consist of a
firm commitment such as a. bid bond,
certified check, or other negotiable in-
strument accompanying a bid a.s a.ssur-
ancethat, the bidder will, upon accept-
a.nce oC his bid. execute such contractual
documents as may be reqUired within
the time specified.
(b) A performance bond on the part
afthe contractor for 100 percent of the
contract price. A "performance bond" is
one executed in connection with a con-
tract to secure fulfillment oC all the con-
tractor's obligations under such contract.
(c) A pallment b07ld on the part of
the contractor for 100 percent of the
contract price. A "payment bond" Is one
executed in connection with a contract
to assure payment as required by law of
all persons supplYing labor and mate-
rial in the ex~ution o! the work pr~
v1ded (or in the contract.
3. Where the Federal ~vernment
guarantees or insures the repayment of
money borrowed by the grantee. the Fed-
eral agency, as its dise<etion. may re-
Quire adequate bonding and insur::u1ce it
the bonding and Insurance reqUirements
of the grantee are not deemed adequate
to protect the interest o( the Federal
Government.
.. Where bonds are required in the
situations described above. the bonds
shall be obtained from companieS-hold-
ing certUicates ot authority as a.ccept-
able suretIes (31 crn 223).
ATTACHMENT C-CIRCULAR No. A-lO:!
UTEl'lnON AND CUSTODIA!. REQtnRE~l'l"TS
FOR RECORDS
1. TIlls attachment sets (orth record
retention require:nents (or grants. Fed-
eral grantor agencies shall not Impose
a."l}' record retentioQ requirements upon
gran tees other than those described
below.
2. FInancial records. supporting docu-
ments, statistical records, :md aU other
records pertinent to a grant s."lall be re-
Publi>h~d by THE BuREAU OF ~ATIO~.-\L .-\FFAIRS. I:\C. WASill\"GTO\', D.C. :20037
2-4
It ~
COMMUNITY DEVELOPMENT BLOCK GRANTS
tained for a. periOO of three years.' with
the following Qualifications:
a. If any litigation. claim or audit Is
started before the expiration of the 3-
year period. the reccrds shall be retained
until all litigations. claims. or a.udit
findings Involving the records ha.ve been
resolved.
b, Records for nonexpenda.ble prop-
erty acquired with Federal funds shall
be retained for 3 years after its final
disposition. '
c. \Vhen records are transferred to or
maintained by the Federal sponsoring
agency, the 3-year retention requirement
is not applicable to the grantee.
3. The retention perioo start..S.from the
date of the submission of the final ex-
penditure report or. for grants that are
renewed annually. from the date of the
submission of the annual financial status
report.
4. Grantees should be authorized by
the Federal grantor agency. if they so
desire. to substitute microfilm copies in
lieu of original records.
5. The Federal grantor agen~y shall
request transfer of certain records to its
custodY from grantees when it deter-
mines that the records posses long-term
retention ....alue. However. in order to
a....oid duplicate recordkeeping. a Federal
grantor agency may make arrangements
with grantees to retain any records that
are continuously needed for joint use.
6. The head of the Federal grantor
agency and the Comptroller ~neral of
the United States. or any I)f their duly
authorized representatives. shall have
access to any pertinent books. docu-
ments. papers. and records of grantees
and subgrantees to make audits. exami-
nations, excerpts and transcripts.
7. Unless otherwise reqUired by law. no
Federal grantor age:ICY shall place re-
strictions on grantees that wil11imit pub-
lic access to the records of grantees that
are pertinent to a grant except when
the agency can demonstrate that such
records must be kept confidential and
would have been excepted from disclo-
sure pursuant to the Freedom of Infor-
mation Act (5 U.S.C. 552) II the records
had belonged to the grantor agency.
ATnCH~.tENT D-CIRCULAR No. A-I02
WAIVER OF "SINGLE" STATE .'GENCY
REQUlREMnn'S
1. Requests to Federal grantor agencies
from the Go....ernors. or other duly con-
stituted State authorities. for waiver of
the "single" State agency requirements
in accordance ,;\'ith section 204 of the
Intergovernmental Cooperation Act of
1968 should be given expeditious han-
dling and. "\\'hene\'er possible. an a.ffirma-
tive response should be made to such re-
quests.
2. When it is necessary to refuse a re-
quest for v.-a.i\.er of the "single" State
agency requirements under section 204.
the Federal gran tor agency handling
such request will so advise the Or.lce of
:--.tanagcme:lt :l!ld Bucget prior to in~
forming the St.1.te that the request can-
:1ot be gr:lnted. Such ad\'ice should indi-
cate the rca~ons for the denial of the
rr-quest.
09: 1543
HDR RF-161
4-7-80
3. Futurelegisl:1tive proposals embrac-
ing grant-in-aid programs should avoid
Inclusion of proposals for "single" state
agencies in the absence of compelling
reasons to do otherwise. In addition,
existing "single" Slate agency require-
ments in present grant-in-aid programs
should be reviewed and legislative pro-
posals should be developed for the re-
moval of these restrictive provisions.
ArrAcHMENT E-CIRCULAR No. A-I02
cash and In-kind contributions maCe ,by
grantees, sUbgrantees or third parties In
satisfying cost sharing and matchmg re-
quirements of Federal grantor age.:lcles.
2. 'the following defirutlons apply for
the purpose of this Attachment:
(a) J'rc;er:t costs. PToject coots are all
allowable costs ~ set forth in Federal
Management Circular No. 74-4 Incurred
by a. grantee and the value o! the in-
- kind contribution made by the grs.ntee
or third parties In accomplishing the
PROGR.'U4 INCOltR objectives of the grant during the prej-
1. Federal grantor agencies shaH apply ect or program period.
the standards set forth in this Attach- (b) Cost sh.aring and matc~ing. In
ment in requiring grantees to account . general. cost sharL'1g and n;atchmg rep-
for program income related to projects resents that portion ot project cost.s not
financed in whole or in part with Federal borne by. the Federal GQvernment. Us-
grant funds.. Program income means ally, a m~1rnum percentage for match-
gross income earned by the grantee from !ng share 15 prescTlb~d by prog:ran: leg-
grant-supported activities. Such earn- Islation. a~d match.mg share reC;:Jire-
ings exclude interest earned on advances ments are Included Ul the grant e;-:ee-
and may include. but will not be limited ment.s. ..
to. income from service fees. sale ot com- (~) Cash. contnbutuJnS. C~h cc::tr1-
modUies. usage or renial fees. and rO:ial- butt~ns re~resent the grantee s cash out-
ties on patents and copyrights. la~. mcludmg the outlay of money c()~-
2.. Interest earned on advances of Fed- tnbuted to the grantee by other p:.tbl1c
eral funds shall be remitted to the Fed- agencies and 'institutions. and private
era! agency except for interest earned orga?izations and individua~, Wh~ au-
on advances to States or instrumentali- thorlzed by Federal legIslatIon, Fe~eral
ties of a St:1.te as provided by the Inter- funds received from other grants ma~' be
governmental Cooperation Act of 1968 c?nsidered as grantees' cash cont:lbu-
(Pub. L. 90-577) and advances made to tlOns. .
tribal organizations pursuant to sectlon (d) Tn-kind contributions. In-klnd
102 103 or 10"l of the Indian Self Deter- contributions represent the value of
mi~tio~ Act (Pub. L. 93-638). noncash contributions provided by the
3. Proceeds trom the sale of real and grantee. and non-Federal parties. Only
personal property. either provided by when authorized bi" Federal legisht\on
the Federal Govermnent or purchased in may property. purchased w1th F~era1
.....hole or in part with Federal funds, f~ds be co~sld.ered as the grantee S. in-
shall be handled in accordance with At- kind contnbutIons. In-kmd cont:lbu-
tachment N to this Circular pertaining tions may be in thetorm ot charges for
to Property Management. real property and nonexpendable per-
4.. Unless the grant agrement provides sonal property ~nd the value of !;oods
otherwise grantees shall have no obliga- and servICes directly benefiting and
tion to t,he Federal Government with specificaIly identifiable to the project or
respect to royalties received as a result ot program.
copyrights or patents produced under the 3. ~neral guidelines for comp~~ing
grant or other agreement. (See para- cost sharing or matching are as follows:
graph 7. Attachment N.) (a.) Cost sharing or matching share
5. All o~her program income earned may consist of:
during the grant peri?d shall be reta~ed (1) Charges incurred by the gr~,tee
by the grantee. and. m accordance WIth as project costs. (Not all charges require
the grant agreement. shall be: cash outlays during t.'1e grant peric-j by
(~ Added to funds commItted to the the grantee: examples are dcprecis.tion
project by' the grantor and grantee and and use charges for buildings and e~uip-
be used to further eligible program ob- ment..) ,"
jectives. . (2) Project costs financed with cash
(b) Used to fiz:ance the non-Federal contributed or donated to the grantee by
share of the proJec~ when approved by other non-Federal public agencies and
the Federal Sponsonng agency; or .. ti d' t l1"
(c) Deducted from the total project mstl~u ~~. an pnva. e organ za,1Ons
costs for the purpose of determining the and mdlVl~uals.
net costs on which the Federal share of (3) Project costs represented by serv-
costs will be based. ices and real or personal property, 0: use
6. Federal grantor agencies shall re- ther~f. don~ted by other public age~c:es
quire the grantees to record the receipt a.nd lDst1t.utlOns. and pri\'ate orga.:.lZa-
and expenditure ot revenues (such as hons and mdIvlduals.
taxes. special assessments. levies, fines, . (b! All contnbut:ons, boUl cash and
etc.) as a part ot grant project transac- tn-kind. shall be accepted as part of the
tions when such rc','enues are specifically gr~ntce's rr.atchl:-:.g sr,are whe:1 su,c~ co~-
.earmarked for a grant proiect in accord- tnbutions meet all of the folloVi"mg crl-
ance with grant agreements. t.eria:
ATTACH~ST F---C:lIcL"UJ!. No. A-I02 (1) .J.~e verifiable from the gra:-. :ee's
recor...,;
(2) Are not included as contrjb'~:;ons
Cor any other fede::llly-a..ssisted pro-
gram;
~'TCP.!..'i"G SHAIU!:
L This Attachment sets forth c:iteria
and procedures Cor the allo....'abilitj. of
,Pu~lish~d r-y T!!E Bl'RL,H' OF \ATIO\AL AHAIRS. I~C.. \\ASHI\GTOr-;. 0,("' ~0037
9
09:1544
(3) Are necessary and reasonable for
P"lpe:" and e.fr1cient a.ccompllshment ot
project obJectlves:
(4) Are types at chlU"ge5 that would
be al!owable under FMC 74-4.
(5) Are not pa.1d by the F-ederal Gov-
ernment under another a.ss1stance agree-
ment ~e:ss authorized under the other
a.gree::::mt and the laws and regulat!ona
It Is subject fO.
(lH Are provided for In the approved
budget when required by the Federal
ageDC7: ,and
(7) CoDform to other prov1sioi:1.s of
t.h.1s Attachment.
4.. Values for grantee tn-kind contn-
butlOM-s will be established at the gran-
tee's z.ctuBl C06t In aceorda.nce wiUlFMC
7+-4.
5. Specl1lc pro<:edures for the grs,ntee:s
'In esta.hH"hlng the value of In-k!nd.con-
trlbutiona from. noo-Federal ~..
tles a..-e set forth below:.
(a>' Valua:tUm of' OOZanteeT 1eT1li.cU.
Volunteer services may be furuJ.shed by
profes.;iooal and tech.nJcal pe~el,
cocsult.ants, aDd other sk:1lled and un-
skilled lsbor. Volunteered service mA1 be
countai sa cost shariDi or ~tcll1Dg 1!
the se::-rtce Ia an tntegral and. neces0&r7
perl o! an approved 'progl"am.
-(1) &te3 far 'OOlunteer ie7"'Dice.l. Rates
for wunteer:s should be consistent with
those ;::aid far sJmila.r work In other ac-
tivities of the state Oi" local lfOTenlmW t..
In ~ Instances In wb1ch the. required
ak1!1.s a.z.e not found In the gI-antee org:.-
nl~";"'I. ra~ahould be cons1steDt.w1th
thqse ~for s1m.Uai work'bi the labor
~ tnWbieh the grantee competes
tel" ~ kmd of services 1lIvolved.
(2) VoZunturJ em~ by otJ\er
~~. . When an empioyei- other
ibsn U:.e gr:antee turnJshes the servi.ces of
an eI:!lplDyee, these services shan be
..,alcci at the employee's regular rata of
pay (aclus1ve of. fringe bendl.ta and.
ovate:s.d cost) prO'91ded these serv1ces
are In the same 5ki1l for which the em-
ployee ~ norms.D.y psJ~ '
(b) Valu.atWn 01 do1I4ted e-~le-
~3Ol\Gl ~. Donat.fil ~le
penocs1 property tnc1udes such. items aa
~le equ.tpment.. omce &upplles,
,~:.ory supplles. or workshOp aDd
cl~m suppUes. Values &MeSSed to ex-
~da:!e persooaJ property "Included In
the ccs~ or mat.ch1ng share should ,be
res..sc..=.sble and lIhould not exceed the
f&1r II:.Sl'ket value of the proyerty at the
t1me or the donation.
(c} Va.l:u:tf.cm 01 d.on.ated ~-
able ';)-!Tlona.l property, bu.fldf~ and
land M' u.se thereof.
(l) The method used for c.bBrg1Dg
matcll.!I:g share for donated nooexpeDd-
able personal property, buJld1I1gs, and
I&nd ::::.31 diller depencl.1Dg upon the pur-
pose o! the grs.nt as follows:
(a) If the purp068 or the grant 1.s to
~ equipment. bulld1ng3. or land to
the ~....::ltee or otherwise provided s. hell-
It:r. tt.~ total value of Ule donat.ed prop-
erty ~y be c1aJmed as a mat.ch.iD.g share.
(b) If the purpo.;e ot th& grant. is to
suppo~ acUvities tha~ requIre t.~e use ot
equ!~=-=t, buildings. Of' land on a te.m-
pol"lWj or part- time ba:S1s, de:l recIA tion
I
e
I
.~
HOUSING & DEVELOPMENT REPORTER
or use charies tor equipment and build-
Ings m.iLy be made. The tull value of
equ1pmentor other capital assets and
r&1r rental ch&l1tes for land tIlSy ~ msde
provided that the grantor agency hs.s
approved the charges. .
(2) The value ot donated property will
be determIned In accordance with the
Usual account!ng pol1cies at the grantee
with the following qua11tl.cat1ona:
(a) lAM- and buildfndJ. The' V'&lue of
donated land and builcl.1Dgs may not ex-
:eed'lts fair market value; at the time,of
doIiaUon to. the.grantee &.\I esta.bUsed by
an Independent appraJ.&er (e,g., cert.1tl.ed
real property appral.5er or G5A repre-
sentaUves) and certified by a responsl-
ble official of the grantee.
(b) Ncnerpe7Ufable peTSon4l prOPeTtv.
The value or donated nonexpendab.Ie
personal prOperty 'shall nof eueed the
f8Jr market value or equipment and
property ot the same age and cond1tlon
at the time or dons.t1on.
(c) Ule of !1)lICe. The value o! don.li.ted
space shall not exceed. the t&1r rental
value of comparable space as establlshed
by an' Independent appraisal or compar-
able space and fac1llties In & privately
awned bulld1ng In the same locality.
(d> Loo~ equipment. The value of
loaned equ]pment' shall not exceed its
fair rental value.
4. The fOllWtDg requirements pertaJn
to, the II'SJ1tee'.s support1ng recordS for
tn-kind contnbUt1::lIlS from non-Federal
thJrd part.1es.
(aJ Volunteer services mu.n be docu-
mented and, to the extent fea.s1ble. .sup.-
ported by the same methods- used by t.b.e
grantee for its employees.
(b) 'lbe be.sJs tor cfetum.1.DJDg the
Yalus.t1on for penoc.sJ' .services, mat.erlal,
equipment, buDdJngS, and lam1 mwt be
documented.
ATT.ACXJoCJ:Nio lI-CmC'tl'LU No. A-IO:1
liT.unlUDS l'O. G~ J'I1'f.AJlcx.u. lUlUC%-
.~ STSTDlS
1. This Att&c:hmentpI'1!:SCr1bes stand-
ards for'~!a1 IIlJl,DJl.gemeD t sys t:e.ma
at grant-supported '&eUvtt1es of State,lo-
cal, and federaJly recogn1zed IDd1lm tn-
bal governments. Federal gn.ntor ~en-
c1es sh&I1 not impo.se add.1t!ozial staDd-
ards on grantees unless st)eCific.al13' pro-
vided for In other Att&e~P.Ilts to th!3
Circular; HO';l;eveT, gra.ntor agencies ~
eocour&.ged to make sugge.st~ns ~d e.s-
!!.s" lbe gran tees In es t::.bl.l.sh.ln g or im-
provi!1g tinanclal management syste~
when such a.s.slstance Ia needed or re-
quested.
2. Grs..otee tlnanclal man~ement Sj"s-
t.e.ms sball prov1d~ for:
(a) Accurate, current. and complete
d1sc10&Ure of the fiDancial results of each
nan" program In accocdance with re-
port1Ilg requ1rement:& set forth In At-
ta.chmeot H to t.b.1s C1rcula.r. When !\.
Pedenl gr.l.lltar ~ency requ!re:s report.-
1Ilg on lLD accrual b63l.s. the gran tee sh a.ll
not be required to establlsh ao accrual
a.ceounUng system but 3h.3.D develop suc.~
a.ecrual da.ta. on L~ repor..s on the be.sl.s
or an a..i:Il1.lysls ot the docume:ltaUoo o.n
hAnd.
(b) Record" lbat Ident1fy adeqUAtely
the sour"ce and application of funds for
grant-supported activities. These record.3
sPall coota.1n ir1!ormation pertalolIlg to
Federal awards and a.uthor1zatioIlS. obll-
gations, unobligated beJances, a.ssets, 11-
abilities. outlays, and IDcome.
(e) Effective control. over and ac-
countablllty for all tund", property, and
other assets. Grantee3 shall adequately
safeguard all such assets and shall assure
that they, are,u.sed solely for authori:red
pUrposes.
, (d~ Comp&r1son of actual ouUayS with
budgeted amounts for e1lcl1 gra.nt. Also,
relation of- ftnanclal lr.tormation with
performance' or productivity "data. in:'
cludlng the producUon of unit cost 10-
'formation whenever appropriate a.od re-
quired by the grantor agency.
(e) Procedures to miolm.lze the time
els.pslDg between the tra.ns!er ot fund"
from the U.s. Treasury and the d13-
bursement by the gran~. whenever,
fUnds are advanced by the Federal QQv-
ernment. When 'advances are made by
lL letter-of-credIt method. the grantee
shall make, drawdoWD3 from the U.S.
Treasury as close as posSible U> the time
of making the disbursements. Advances
made by pr1m.ary recipient organ1zation8
(those which receive payments'd1recUy
from the Federal Governmen t) to sec-
ondary recipients shall conform sub-
st&nt1a1ly to the same standards of , tim-
tog and amount a.s !tPPly to advances by
Federal agencIes to pr1m.ary recipient
org-anlza t1oIlS.
(n Procedures far determmlng res.-
s.onablenes3. allowa.bUlty and allocab1l1-
'ty of costs In accordance w1th t..~e pro-
visions ot F'ederal Ma&ogement Circular
74--4:.
(g) Account1Dg records that are sup-
ported by. source documentation.
(h) [Deleted)
CD A systematic method to assW\...
t1mely and appropriate resolution of
aud1t fIDd1ng:s and re.;ommendat1ons.
3. P'r1ma.rY grantees shall require rub-
gra.ntee.s U> adopt the standards In pera-
grsph 2. above. except for the require-
ment in subparagraph 2(a). regarding
reporting forms and fiequenclespre-
scrlb:ld 10 Atta.clunent H to this Circul'\r.
ATTACHll!Xl'fT H-CL'I~ No. A-102
~ A."fClAL REPO R'rUiG IlEQtrntr.oal':TS
1. This Att......chment prescribes uniform
reporting procedures for grantees to:
sum.mar1.z.e eXPenditures made and Fed-
er-a1 fW1ds unexpended for ea..ch award.
report the statWi or Federal cash ad-
vanced. request advances aDd relmbun;t:-
ment when the lett..e.r-<l~-credlt method
is not usaf; and promulgates. standard
forms incident theretc.>. Grantees when
obtaln1ng financIAl Ih!ormation required
by Pedenl agencies from subgrantces
are not. required ~ use UJe forms con-
tained 10 this A::tachme.:lt.
2. The follow1ng de!\n1tloos apply for
purposes of this Attachment:
(a) A.ccrued e....--pendiluTe3. A<<:Grued
expendltures are the chsr&es incurred by
the grantee duririg a given period re-
Quiring the =,rav1slon or funds for: (1)
goods a.Dd otheT tangible property re-
ceived; (2), .serv1ces performed by em-
Pu~h,hd b)' T!lE llLRl.\L' 01 S..\TI(}~,\L .-\I'TAmS. 'Sc.. W.-\SlIlSGTO~. D,(". ~003i
10
I
e ('
COMMUNITY DEVELOPMENT BLOCK GRANTS 09:1545
IIDR RF-161
4-7-80
l>loyees. contractors, subgrantees. and
other payees; and (3) other amounts be-,
camlng owed un<!er programs for whJch
no current services or performance Is re-
quired such &s annuitieS", l.n.,"'Ul"8nce
c1s.ims, and otherbeneflt paymcnts.
(b) Accrued inccnn.e. Accrued IncaIDe
Is the sum of (1) es.rnJngs during a .
given period from 11) &erv1ces performed
by thc gnmtee; and (ll) goods and ':lther
tangible property del1vcred 'to purchas-
ers; and (2) amounts becoming owed to
the grantee for whfch no current serv-
Ices or performance Is required by the
grantee.
(c) Federal/u1'.d.., authorized. ?ede.ral
funds authorized are the total am.ount of
Federal funds obllgsted by the Federal
Government for use by the grantee. Tb1s
amount may Include any autl:1orized
carryover of unobligBt.ed !uuds trom
prior ~ years when permitted by law
or agency regulation.
(d) In-kind. contributio1u. In-ldnd
contributions are defined in Att3-chrT'lpnt
p to this Circular. .
(e) Obligatio1u. ObUgst1ons are the
amounts of orders placed, cantracts and
grants awarded, serv1ces received. and
s1m1lar transactions during a given pe-
riod that will require payment by the
grantee dilrlng the same or a future
period.
(n Outlays. Outlays or expenditures
represent charges made to the project or
program. They may be reported on's.
cash or accrual basis. For reports pre-
pared on a cash bas15. outlay:s are the
sum of actual cash disburse:nents for
direct charges for goods and services, the
amount ot indirect expense charged. the
value ot In-kind contr1butions applled.
and the amount of cSsh ad~ces BDd
paymentS made to subgrantees. Por re-
pon., prepared -on an ~rus.l basis, out-
ls.ys are the sum 0: a.c.tua.l CllSh disburse-
ments tor dJrect charges tor goods and
services, the amount of Indirect expense
Incurred. the value of 1n-k1nd contr1bu-
t10ns appUed. and the net i.!l.cres.se (or
decrease) In the amounts oo;:;ed by the
g=i:1tee for goods and other property re-
ceived, for serv1ces performed by em-
ploYee5. contractors, sutgrantees and
other payees and o~her amoullts becom;..
Ing owed under prognuI13 tor which no
CUITent services or pedorms.nce are re-
quired such aa annuities, Insurance
claimS. and oth~ benefit payments.
(g) Program fnccnn.e. Program Incame
Is defined In Attachment E of t~ Cir-
cular. It .may be reported "D a CMh or
accrual ba.s1s, whichever Is used for re-
porting outlays.
(h) Unobligated balance. The unobU-
ga~ bals.nce 15 the portIon of the funds
authorized by the Peelersl agency that
has not been obllgllted by t1le grantee anc'
is deterinlned by deduct1ng. the cumula-
Uve obligations from the cumulative
funds $uthor1zed.
m Unliqui.d4ted obligati0n3. For. re-
ports prepared on a cash basts. unliqui-
dated obllgllt1on:i represent the amount
ot obllgllt1ocs Incurred by the grantee
that h&s not beeI1 paId. Fur repor..s pre-
pared on an accrued expenditure bas15,
they represent the amount at obllgat1ons
Incurred by the grantee for which an
outlay has not been recorded.,
3. Only the follOwing forms w1Il be
authorized for obts.ln1ng tinaocl.a.l in-
formation from grantees..
(a) Fi7U1n.cial Stc.tu..s Report (Exhibit
1>' (1) Each Federal agency shall re":
quire grantees to use the standardized
Financial Status Report ~ report the
statu$ ot funds fer all nooconstructlon
projects or progra~. The Federal agen-
cles may, however, have the option of
not requiring the Fl.l:ancial StJltu.s Re-
port when the Request for Advance or
Reimburseme:nt(paragraph 4 (a)) or
Report ot Federal CBSb Transac tiOD.S
ipan,graph J(b)) is detamined to pro-
vide adequate in!or:pat1on to meet their
needs, except t11at a final FinancIal
Status Report shall be required at the
cOl!lpIet1o~ ot the project when the Re-
quest for Advance or Reimbursement
form is used only for adva.nces..
(2) The Federal agency shall pre-
scn"be wbether-the report shall be on a
cash or ~rual bas15. If the ~eraJ
agency requires accrualln!onnatloa and
the grantee's acc.ounting records are not
oorma.lIy kept 00 the accrual basis. the
grantee &ha.ll not be required to conv.ert
Its a.ccountlng system, but &hall develop
such a.ccruallnlormatlon through an
an~ysls ot the documentatIon OD hand.
(3) The Federal agency shall deter-
mine the frequency ot the Financl.a.l
status Report for each project or pro-
gram considering the size and complex-
ity of the particular project or progr:un.
Howev4;l". the re~rt shall not lie reql!lred
more frequently than quarterly or less
frequently than annually except as pro-
v1ded In subparagraph 3(a) .(1) above. A
ft.oal report shalJ b.e required at the com-
pletion ot the grant.
(4) Federal agencles shall require
gran~ to S".lbmlt the Financial StatUs
Report (original and no more than two
copies) no later than 30 days after the
end of each specified report.ing penod
for Quarterly and senU-a.nnuaI reports,
and 9Q days for annual and final reports.
Exten.'i[ons to reporting due dates may
be granted upon request ot the recipi-
ent.
(b) Report 01 Federal Cash Tran.sa.c-
tion3 (E.zhib1t Z), (1) When funds are
advanced to grantees through letterS of
credit or w1th direct Treasury checks.
the Federal agencies shall requIre each
o;rantee to submit a Report ot Federal
Cash Transactions. ,The Federal agencles
shall use th15 report to assist them In
moDltor1ng a.dvances to grantees and to
ol:!t.a.1n disbursement In!ormation for
each agTeemen~ from the grantee.
Grantees under the R~ona.1 Disburs-
Ing Omce (RDO) system shall not be
requ.U:ed to submit a. Report of F'ederal
Cash Trs.nsactlocs. For these grantees
Federal agencies shall Use lnlormaUon
cant&1ned In the Request for Payment to
moDltor grd.ntee cash baJances and to
get disbursement 1n!ormatlon.
(2) Federal agencies may ~ulre
foreca.sts of PeelernJ cash requirements
in the "Remarks" section of the report.
(3) When p:-e.ctlcal and d~ed nec-
essary.the Federal agencies may requ.tre
grantees to report In the ''Remarks'' sec-
tion the amount of exce..'"-3 cash ac',,3.Ilces
Pu!:-li-h.:J by THE BLRf;L. or '.\TIO'AL ,;n:"IRS. I'C.. \\ASIfI'GTOS, DC :U037
11
09: 1546
In the hands at subgrantees and to pro-
v:lde short narrative explanations at ac-
tions taken by the grantees to reduce
the excess balacces.
(4) Grantees shall be required to sub-
mit. not more than the original" and two
copies of the Report at Federal Cash.
Trac.sa.ct1oos15 worldng days following
the end of each quarter. The Federal
ageocles may require a' monthly report
from those gra.ctecs recelvlDg advances
tot.a.llD.g- $1 milllon or more per yea~.
(5) Federal agencies ms.y waive the
requirement for subm.lssion ot the Report
at PedenLl Cash Transadions when
monthly advacces 00 not exceed $10,000
per grantee, provided that such advanceS
are monitored through other torms COD.-
tained In this Attacliment, or If. in the
Federal agency's optn1on., the gra.ctee's
aecount.1.ng controls are adequate to mJD-
1m.ize exc~ive Fedffil advances.
4. Except as noted below. only the fol-
low1Dg torms will be authorized for
grantees in requesting advances and re:-
imbursements.
(s.) Request Jur AdNnce 01' Reim-
bursement (E:zluOit 3). (1) Each Federal
agency shall adopt the Request tor Ad-
vance or Reimbwoement 1!.S a standard-
ized form far all nODcoostructlon pro....
grs.ms when letters-ot-credit or Prede-
t.erInJ.ned advance methods are not used.
Federal agencies. however, have the op-
tion of using this form for COI13truct1on
progr&mS in lieu ot the Outlay Report
a.nd Request tor &1mbursement for Con-
--
I
~
HOUSING & DEVELOPMENT REPORTER
struct10n Progra.rns (subpare.oraph 4
(b)). '
(2) Gr.1ntee.s shall be authorized to
submit requests ror advances and re1m-
bursementa at least monthly when let-
ters-at-credit are not used. FederliJ agen-
cies shall not req!l1rf' the submission ot
more than the or1g1nal and two copies
ot the Request. far Advance or Reim-
bursement.
(b) Outlall report a.nd request Jor re-
fmeursement 101' ccm..!truct!o1l. progra.ms
(Exhibit 4>' (1) Each Federal agency
shall adopt the 'OuUay Report, and Re-
quest- for Reimbursement .for Construc-
tion Programs as the standardized for-
mat to be lL$ed for requesting relmbu~e-
ment for construction progra,ms. The
Federal agencies may; however. have the
option of sub6Ututing the Request tor
Advance or Reimbursement Form (sub-
p&T1l.graph 4(a)) when t,he Federal agen-
cIes determine Ulat It proVides adequate
1n!ormat1on to meet the!!' needs.
(2) Grantees :>hall be author1red to
subm1t requests for re1mbW3ement at
least. monthly when lette~-ot'-c~ed1t are
not. used Feden1l agencies shall not re-
quire more than the ortg'.nal and two
copies ot the Outlay Report and Request
tor Reimbursement. for Construction
Programs.
5. When tne Federal agencies need ad-
d1tlonalintormat1on in using these fomu
or more trequent reports; the following
shlW be observed:
(a) When additional 1r.1orme.tlon is
needed to comply with legislative re-
quirements, Federal agencies sh:1ll issue
1nstrucUons to require grantees to sub-
mit such 1n!.ormatlon, lmder the "Re-
marks" ~tlon of the reports.
<b) When a Federal agency has de-
termlned that a grantee's 'accounting
system does not. meet the standards tor
t1nanclal managemen.t contained in At-
tachment G to this C1rcula.r,.addltiona.l
pertinent intorma.t1on to turther monitor
grants and otlier agreements may be
obtalned upon written notice to the
grantee until such time as the system-is
brought up to standard.
(c) The Federil.1 agency, in obtaining
lnIormailon as in paragraphs a and b
above, must comply with reports clear-
a.nce,requ.lrements 0' the Omce of Man-
agement lUld BUdget Circular No. A--40,
as revised.
6. Federa.le~encies ha.ve the option ot
shading out any line Item on any report
that is unnecessary tor declsion-ma.king
purposes.
7. Federal agencies should accept the
id.ent1cal1ntorma.tlon trom the grantees
in machine usable format or computer
pr1ntouts in lieu ot prescribed formats,
8. Federal a.ge::J.cies may provide com-
puter outputs to grantees when it will
expedite or contribute to the accuracy
of reporting.
9. The standard r"rms ca.n be obtalped
from the ~nera.l Services AdminJstra.-
tion.
PU~'lh::~J h~ TilL Ill'RI,\l' OF ,";..HIU'I:-\L ,-\FI'.\IRS. I\C. W,.\SIII~c;TO~. D,C ~0037
12
.. C
COMMUNITY DEVELOPMENT BLOCK GRANTS
A'I'TAC1UdENT I~I1lCt11.AIl No. A-102
WONITOIlDlC AND RZPORTINC or PIlOCIlAX
PClFOll1lL\NCS
1. This AtUs.chment set.5 forth the pro- .
cedures for monltorinr. e.nd repo~1ng
progr!l.lU performance 'under FederlLl
grants. These procedures are' designed
to place greater rellanlf.e on grantees to
ma.nage the day-to-day operations ot the
grant-supported activities:
2. Grantees !hall constantly monl,tor
the performance tinder grant-supported
activities to assure that tlme"schedules
are being met, projected work units by
time periods are being accomplished,
and other performance goals are being
achieved. ThiS'revlew shall be made for
ellch program, funcUon. or activity of
each grant as set forth in the approved
grant appIlcation or award document.
3. Grantees shall submit a. perform-
ance report far each grant whIch br1etly
presents the !ollowing for each program,
functIon, or' activity.. involVed a.s pre-
scribed by the Federal agency:
(a) A compar1son ot actual accom-
plishments to the goals estabIlshed for
the per1od. Where the output ot grant
programs can be readIly quantified. such
quantitative data should be related to
cost data for computation of unit coots.
(b) Reasons why estabUshed goals
were not met.
(c) Other pertinent informatIon In-
cludIng. when appropr1ate, analysis an4
e~planl'.t1on of coot overrunS or high unit
c osts~
4. Except as provided 1n a and b below.
and in subparagraph- 3a(1). of Attach-
ment H, gra.ntc~' shall submit the per-
formance or technIcal reports to Federal
agencies and the Financial Status Re-
pqrts covering the same pertod In the
frequency established by Attachment H
of this CIrcular and. where ap'propr1a.te.
a. Mal technical or performance report
a.tter completIon ot the project on a
date spec1tl.ed by the Federsl agency. The
Federa1 agency shalLpresaibe. the fre-
quency with which the performance,re-
ports will be submitted with the request
for advance \>r reimbursement when
that form Is used in lieu ot the Financial
Sta.tusReport. Except as provided for
in paragraph 5 be!ow,performance re-
ports shall not be required more fre-
Quently than quarterly or less frequently
than annually, Fe<1eral agencies may
waive the reqUirement for grantees to
subm1t performance reports with the
financial reports under 'the following
clrt'Umstances:
(a) When the grantee Is required to
submit a performance report with a con-
tinuatIon or renewal a.pplicatlon.
(b> When the Federal agency deter-
mines that on-site technical inspections
and cert1tl.ed completIon data will be
su1!1clent to evalua.te constructIon proJ-
ects.
(c) When the Federal agency requests
annual financial reports on a ffscal year
casls but It Is necessary to get annual
pr067ess reports on a ca:!end3l',year basis.
5. Bet-:.een t..'le requ1..-ed pe~ormanC1!
reportL.'l6 da.:.es. event.s may occur which
ha.ve s1gtilll.c:mt !mpact u;>on the proj-
ect or program. In suc!) cases, the
grantee sha.llln!orm the grantor agency
as soon as the following types-ot concU-
Uons become known:'
CiO Proble~. del.ays, or 1ic1ve.r~cOn-
d1tions'whlch will materla.lly. at!ect the
r.!)l'1ty to attain program obJectives; pre-'
vent the 'meetlnt of time schedules and
goals, or preclude the, a.ttainm~nt of
projec1l work, unIts ,by est.s:bllshed time
perIods. This d1.sclosure sha.ll beaccom-
tlanled by a statement of,t.~e action tak-
en. or contemplated. nnd any FederaI
a.ss{stance needed to resolve the s1tua.-
Uon.
,{b) Fa,yorable dei'elopment.s or events
wIth enable meeting t1ri:J.e schedules
and goals sooner than -antIcipated or
producing more wQrk units than or1g-
1nally projected.
6. If any performa.nce revIew. conduct-
ed by the grantee dlscloses the need for
change In the budget estimates In ac-
cordance with the cnter1a established in
Attachment K to. this-Circular. the
grantee shall submit a. request for bUdget
re~on. '
'1. The gra~tor agency shall make sIte
..1s1ts e." frequently as pract1ca.ble to:
!a) RevIew program accompllshment.s
and management control systems.
(b) Provide such technical assistance
a& ma.y be required.
8. Federal agencies shall submit pro-
posed technical and performance repo'rts
to the Office ot Ma.ria.gement and Budget
tor approval in accordance with the re-
port clearance requirements of OMB Cir-
cular No. A-40 as re\'lseC.
AXXACHMElfT J-'--cIRCU1.AIl No. A-I02
CRANX PAYJa:~" ilEQtnIl.EMEN'rS
1. This Attachment establishes required
methods ot maldng payment.5 to grantees.
These methods w11I mlnimlze the time
elapsing between the disbursement by a.
grantee and the trar.ster of funds from
the United States Treasury 'to the
gnmtee. whether such disbursement oc-
curs pr10r to or subsequent to the tra.nsfer
ot funds.
2. Qra.nt payments are made to
granteeS through a. letter of credit. an
advance by Treasury check. or a re1m..-
bursement by Treasury check. The fol-
lowing defin1tlons apply for the purpose
ot this Attachment:
(a.) Letter of credit. A letter of credIt
Is an Instrument certii'l.ed by an author-
Ized of!lclal of a. grantor agency which'
authorizes B. gran tee to dra. w funds
needed tor immediate disbursement in
accordance with the provisIons of Treas-
wy Circular No. 1075.
Cb) Adrance by TreasuTl/ check. An
adV'l1nce by Treasury check Is a paj'II'lent
mad~ by a. Tre&sury check to a. grantee
upon' Its request betore cash outla.yS are
made by the recIpient or through the use
ot predeterm1ned payment schedules
be!or~ payment.5 are made by the grantee.
Ccl Reimb-.l.T$ement 1:nI TreasuTlI check.
A re~bursement by Tre:3.SUIy check Is a.
pa.yment :nade to a. 6!?-ntee ,;,..lth a
Treasury check upon request for rcim-
bU:'Se!1lent trom t.~e grantee.
09: 15.f7
HDR RF-136
4-23-79
3. Except for construction gr-.-..=~ for
which optional payment m~thods !.:"e au-
thorized, the letter-of-credit !:..;ndlng
method shall be used by grantor 21<en-
cies where a.ll ot the following cot:~t1ons
exist:
(a) V/hen there Is 01' will be a. con-
t!nulng relationship between a. ..-a.n~
and a Federal grantor agency tor at least
a. 12-month per10d and the toW e.::lount
ot advances to be receIved wi~ tha.t
pez:tc>d from the grantor agency'1s ;120.-
000 01' more.
(b) When the grantee has est.a..!:lUshed
01' demonstrated to the ~ntor ~e w1l1-
In&ness and ablllty to establish ;>roce-
dures that w11I mliUmlze the tlrpe :!aps-
Ing between the tra.nsfer of fun~ and
their disbursement by the grantee.
(c) When the grantee's finanCial:n.aD-
agement system meets the stancU...:ds for
fund control and accountab1l1ty p(e-
scr1bed In Attachment G to th1s C:rcb-
Iar. - "Standards for Grantee F'ir..o..nc1al
Managem~nt Systems."
4. The method of advancing [u=ds by
Treasury cl!-eck shaJ1be used, In E.::~rd-
ance with the prOvisions ot Tr-e::?.sury
Circular No. 1075.. when the f;:""""o:.Iltee
meets a.ll of the requirements sP'!'Cified
in paragraph 3 a.bove except th~e :"'1 3.a.
5. The reimburscment by Tre2.SUry
check method shall be 'the pre:eITed
method when the grantee does no~ meet
the requirements specifted In eltber or
both ot pa,ragraphs 3.b. and 3.c. This
method may also be used when the mA-
jor portIon ot the 'progrim Is a.:com-
pIished through private market financing
or Federal loans, and when the F-ederal
grant assistance constitutes a. m1no: por-
tion ot the program. \'/ben the !"elm-
bursement method IS used the F~eral
a.gencles shall make payment -;;1th1n
thirty da.ys after receipt ot the !:-illing
unless the ~i1llng is improper.
6. "Nhen the letter-of -cre<1lt ;:oce-
dure Is ;;sed, the grantee shAll be issued
one consolid&ted letter-of-credit -;;-hen-
ever possible to CQver a.ntlclpated cash
needs for all grants awarded by tlJe Fed-
ers.l agency. I:.lkel\ise. to the extent pos_
sible. when the advance by Tre:;.sury
check method Is used. advances ~ould
be consolidated (pooled) for a.ll s.-a.nts
mAde by the Federal agency to the
gran tee.
7. Unless othel:'V.1.se requlre<1 br law,
grantor agencies shall not w1thholc! pay_
ments for proper cha..-ges made by State
and local government.5 at any time dur-
ing the gran"!; per10d unless Ca)" a grantee
has faUed to com.ply v.ith the prc:-..-ram
objectives, grant awa.rd conditions.. or
Federal reporting requirements, or Cbl
the ~tee Is Indebted to the United
States, and collection of the In.d~ted-
n ess v.111 not lmJ:l a ir s.c c 0 DlPlishm.e n t ot
the objectives ot any gra..c.t ~
SpOnsored by the United States. Cnder
such condJUons, the grantor may. u:;>on
reasonable notice, Worm the ......:..o"ltee
tha.t paj'1!lents W1Jl :'lot be :r.B.defor ooll-
g-atlons Incurred s.!ter a spec~ed ~te
u."lUl tile concUtlons are corrected 0: t..'le'
Inde:,tectness to t.~e F'e<:!eral gover::;::ent
Is llq wc.a ted.
P:;~!i<h~d by TilE Bl'RE.;L~ OF \ATIOSAL AFFAIRS. ISC.. W.-\SHI\GTO~, DC. ~0037
29
3. All Federal grantor agencies &hall
establish grant clooeout prOcedures wh1ch
Include the following requirements:
(a) Upon request, the Federal grantor
agency &hall make proq:1pt payments to
a grantee for allowable reimbursable
costs under the grant being closed out
. (b) The gran tee &hall immediately re-:
fund to the ~antDr agency any balance
ot unobllga.ted '(unencumbered) cash
advanced to the grantee that is not au-
thorized tD be retained by the grantee for
use on other grants. .,
. (c) The grantor 'ageDCY shall obta.1.o
from the grantee within 90 days after
the date ot cam.pletlon ot the, grant all
.financIa.I, per!orman~, and other reports
required a.s a condItion of the grant.
The agency may graDt extensIons when
requ.ested by the grantee. '
(d) When authorized by the grant the
grantor agency ~ha.ll m.a.ke a settlement
for any' upward ()r downward adjust-
ments for any upward or downward
adJusb:nents to the Federal sh.a..re of costs
atter Ulese reports are receIved.
(e) 'The grantee shall a::count for any
property acquired witJ:l grant funds, or
received from the Government in ac-
cordance with the prOvisions of Attach-
.ment N to thls C1rcula.c.
, (n In the event a. final audit has not
been performed prior to the closeout of
the grant, the grantor agency shall 1"e-
tain the right to recover an/ appropriate
&mount a.!.ter fully conslderL'lg the -re-
commendations on dlsalIowed casts re-
sulting from the final audit.
4. Ali Federal grantor agencieS shall
provide p~dures to' be followed when
,a grantee has faUed to comply w1tll the
grant award stlpula.tlons, standards, or
conditions. When that occurs, the grant-
or agency may, on rec.sonable notice to
the grantee, sUspend-the grant, and with':'
GlLUfT C1.0SE0UT J'ROCZtlt1llES hold further payments, or prohibIt the
1. Th.1s Attachment pres:rlbes un1Iorm grantee froni incurring addltIonal obll-
closeout procedures for gra.ntees. gations of grant funds, pending cOrrec-
2., The fOllowtiigdetihltlons shall apply t1ve action by the. grantee or a decision
for the purpose ot th.l:sAtt:a.chment: to terminate In accordance 'with pa.ra-
~a} Gra7!i closeout. The closeout of a graph 5.a. The gmntor a.gency shall allow
grant is the proc~ by which a Federal all necessary and proper casts which the
grantor agency determines that all ap- grantee could not reasonably avoid dur-
plicable administrative actions and all Ing the period of suspension p'rovided
requiredwork Qfthe grant ha.ve been t..~at they meet the pro\1sions of Federal
completed by 'the grantee tuld the M-alUf"ement CIrcular No. 74-4.
grantor. - 5. Subject to the provIsions of para-
(b) Dcte 01 completion. The date when graph 5 of the ba.slc Circular, of wh1ch
all work under a grant is completed or t.h.1s Attachment ls a part, all Federal
the date In the gJ'8.Ot award docwnent, granter agencies s.'uIl prov1de tor the
or any supplement !)r a.mendinent tbere- systematIc sett1ement of terminated
to. on whIch Fedeml assLstance ends. grants Including the fOllowing:
(c)' Termination: The teTmJn1!.t..'oo ot (a) Termin.a.tion lor ccu.se. The grant-
a grant means the cancell.e.t1on of FeQ- or agency may termL."late any grant In
era.I asslstance, in whole or In part, under whole, or In Part, at any t1m.e before the
a grant at any time pr10r to the date of date of complet:1on, whenever It is de-
completion
Cd) S~. The suspensIon at a termlned tJ1,at the grantee h.a.s falled to
irant lis an a.ct.l.onby"a -Federal gr&ntor comply with the conditIons of the grant,
~ency which ~mponu11y suspends Fed- The g:rantor ~ency shs.1l promptly noWy
e:ral1!.SSlstance UDaet the grant pending the p-antee In WTiting' of the deteiniln&-
corrective actJon by the g:-antee or pend- tion and the,_reasons for the te.~tIon,
1ng a'decision to'termJ.na.te the grant together w1t.'1 the e,t=ec~lve date. Pay-
by the grantor agency.
, (e) Di.sa.ll01Ded cods. D1sallowed costs ments made to grantees or reoover1es b1
M'e .those cl:mrges to a uant whrch the tbe grantor aie.ncle:s under grants term1-
~tor agency or Its. %2pr-es.enta.t1ve de- nated for cause shs.ll be In a~ord w1t.h
t.ermines to be unallowable. (~ Federal the legal rl&hts 9.."\d llabUiues of the
M&::a.germent ,Clrcul&r No_ 7+-4.) parties..
Published by TI1E BUREAU OF NATIONAL AFFAIRS, I:-;C.. WASlll:-;GTO~. D.C. ~0037
09: 1548
8. Attachment H oC thls Circular. "FI-
ne.nclal Reporting," provIdes Cor the pro-
cedUres and formS-Cor requesting ad-
vances or reimbursements.
AT'1'AcHXJ:HT K---cnCt1LAR ~o. A-102
.UDCET IU:VISION J'ROCXIlUllES
1. This At.tachment sets forth cri~na
'and procedur~ to be followed by Federal
grantor agencies in requiririg grantees to
report deviations from grant budgets and
to request approvals for bUdget revisions.
2. The grant budget as used In this
Attachment means the approved finan-
cial plan 'for bOth the Federal arid non-
Federal shares to carry out the purpose
of the grant. This plAn ls the financial
expression Qf the project or program as
approved during, Ule gran t application
and a,;>ud, process. It should be related
to perCormance for program evaIuatioO
purposes whenever appropriate and reo
quired byUle grantor agency.
3'. For nonconstructlon grants, grant-
ees sha~ request. prior approvals
promptlY from~tor 'agencies when
therE:. is reason, to beIleve that a. revision
will be ne<:essary for the following rea.-
sons:
(a) {:hanges in the scope or the.ob-
Jective of the grant-supported project or
program.
Cb) The need for additional Federal
funding.
(c) The revisions involve the transfer
of amounts budgeted for indirect C06ts
to abso rb increases In dire:: t costs if ap-
proval is required by the Federal agency.
(d) The revisions pertain to the addI-
tion of Items, requiring approval 1zi ac-
cordance with the provisions ot Federal
~anagement Circula.r '14-4.
(e) Recipients plan totra.nsfer funds
allotted for training allowances (direct
payments to trainees) to other catoe-
gories.of~xpense. '
-i. FOr nonconstructlon. grants, the Fed-
eral age:lcy may also. at Its option, re-
strict transfers of funds among direct
cost ca.t.eiones for awards In which the
Federal share exceeds $100,000 when the
cumulative amount o! such transfers ex-
ceeds or is expected to exceed flve ~rcent
of the total bud;et. The same criteria.
shall app!:r to the cumul3.tlve amount of
transfe:-s among prOgT3.lT1S, functions.
and actj'.ities when budgeted separately
for an a..-ard, except that the Federal
agency shall permit no transfer that
would ca~e any Federal apprOPriation,
or part thereof. to be used for purpa;es
other than those Intended.
5. All other changes to ,nonconstruc-
t.lon grant budgets, except for the
changes desc'ribed In paragraph 7. do not
requitea.Ppreva1. These changes include
(a) Ule use~ grantee funds in turther-'
ance'oC program. objecUves oter' and
above tl::.e grantee minimum share in-
, cluded in the appro\'ed grant bUdget; and
(b) Ule transfer oC &mounts Dudgeted
for c11rect costs to absorb lWthor1ud in-
c Teases in Ind lrec t cos t.s.
S. For construct.lon grants, grantees
shall request pr10r approvals promptly
from gra.=.t.or agendes for bUdget rev1-
.s.IoIU ...~e...'le<fer:
I
e
C
HOUSING & DEVELOPMENT REPORTER
(a) The rev1s1on resultS from changes
10 the scope 'or the objective ot the proJ-
ect or program. .
(b) The, revision 1l:1crea..ses the budg-
eted amounts of Federal . funds needed
to compkt.e the project. .
T. When a,-grantor a,gency awards a
grant which provides support t~ both
construction' and DOncODstiuctlon work,
the grll.ntor agency may require the
,grantee to request prior approval trom
the grantOr agency t1e!ore making any
fund or budget fraris.ters between the two
'types of work supported. .
8. For both cons't.ruct1on and ,rion~
constructIon gTants. grantor agencleis
shall require State and local gOVe.rIl-
ments to notify the grantor' ag,ency
i)romptly whenever the '&mount otPed-
eral authorized fimds is expected to "ex-
.ceed U1e needs of the grantee by more
than $5.000 or 5 percent ot the Federal
grant, whIchever 13 greater. nus not11l-
cation will not be required when appllca-
t10ns for additional !undIng are submlt-
t.ed' for continuing grants...
9. When requestmg approval for bud-
Iet revisions, gran~ shall use the
.:>udget forms which were used In the
grant applIcation. However. grantees
may request by letter tn.e approval re-
quired by the provisIons of Federal
~ement CIrcular 74-4.
10. WIth!Il 30 days from the date ci!
receIpt of the request for budget rev1-
s.IoDS, , grantor agenc1es shall review the
request 'and notify the grantee whether
or IlO:tthe budget revisions have been ap-
.proved. It the revision 15 still under con-
sideration at the end of 30 days. the
grantor shan inform the grantee In writ-
Ing as to when the grantee may expect
Ule d~lon.
AT'1'ACH!Il':NT L---CI:RCt7L\R No. A-I02
30
f) ('
COMMUNITY DEVELOPMENT BLOCK GRANTS 09:1549
HDR RF-136
4-23-79
b. Termination lor convenience. The
grantor agency or grantee may ~rmJnate
gra.n~ in whole, or in part., wben both
parties agree that the cont1nuatlon ot the'
project :would not produce bene1lcia.i- re-
sul~ commensurate with the turther ex-
peodJtureof.!unds. The two parties sha.ll
agree upon the termination C1:>ndJtiona,
including the efrec"tlve date and, in the
case ot partllil terminations, the portion
-to be ,termlnated. The grantee sha.ll not
incur new obUgat1ons tor the terminated
portion a.tter the efrective date, and sba.1l
C'8.l1cel as m.a.ny 0 u t.s;tculdJng ob Ii ga tions
a.s possible. The Federal agency sha.1l al-
low tull cred1tto the grantee tor the
Federal share 01 the noncancelableobU-
gatlons, properly incurred by the grantee
prior to tenniDati~n.
ATTACIOa:NT M-CIRcUI.Aa No. A-I02
STANDA.II..D rouel ro& A.PPL TING 7'O1l
rEDEW ASSISTAlICB
1. This Attachment promulgs.te:s
standard torms to be used by State, local,
and, tedersJly recognized Ind1s.n tribal
governments in applying for s.ll Federal
gra,nt1 except those Federal tormula
grant programs wh1cl1 do not require
grantees to apply tor Federal tunds on a
project basis. When &pplyfngtor Join~
tunded .Projects see OMB C1rc~ No.
A-Ill. The use ot the sts.ndard torms by
grantees in obta1n.1ng necessary 1n!orma-
tion trom subgra.ntees is opt1on.a.l.
2. The standa.rd. tormS and their pur-
poses Sole brlefiy described in the tollow-
IIlg paragraphs:
,,(a) Preapplication lor Federal Assi.tt-
ance (Ezl1.ibit 1). Pret.ppUcat1on. tor
Federal Assistance' is used to: ( 1) Es-
t&bll3h commurucet1on between the Fed-
e:ra.l grantor' agency a.rid t.1ie applicant:
(2) determine the a\tpllcant'& ellg1bWt:Y:
(3) determine how well the project can
compete W1Ul similar applJca,tioc" trom
oUlers: and (4) ellminate any proposals
w,b.1ch have Uttle or no chance tor Fed-
eral funding before appUca.nts incur sJ.g_
n1.ficant, expend1tures tor prepa.r1ng an
appUcation. PreappUcation tOnD3 shBJl
be required tor a.1l construction, lan.d ac-
quislt10nn .and land development proj-
ects or PI'OlP'8.mS tor wbJch the need for
Federal tund.1ng exceeds $100,000. The
Federal grantor agency ma.y requ1re the
use ot .the preapplJcation torm tor other
types of grant programs or tC1I" those tor
which the Federal tUl1d request 1.s for
$100,000 or less. In addit1on, Federal
agencieS shall estabI1sh procedures al-
10wUlg sta.te and local go~ent s.p-
plJcants to submit; It Uley so desire, the
preapp!Jcat1on torm when mandatory re-
Qu1remen~ for preappl1cation do not
exist.
(b) Notice of Review Action (Ezhibit
Z). The purpose ot t.~e Notice ot Revtew
Action'is to Intorm the s.ppUcant ot the
resul~ of the review ot the preappI1ca.-
tlon torms whJch were submitted to Fed.-
enl gra.:l to I" agencies. The Federal
grantor agency shall send a notIce to t.~e
applJcant within 45 da}"S of the r-e<:elpt
ot the prca?pllcatlon torm. When the re-
view cannot be made w-itr.in 45 days, the
app!Jcant sheJI be informed by letter a.s
to 'i'o'hen the re.,1ew -:;tl.l be completed.
(c) Federl!l Assistance AppUcr;!lon lor
Noncon.structl.on l'TograTTL3 (Ezl1.ib1t J),
The' Federal Assistance Application tor
Nonconstruction Programs torm is de-
signed to accommodate sevetal programs
and sha.ll be used by the apjiUcant tor a.ll
actions covered by thLs Attachment ex-
cept where the major purpose o!the
gre.nt 1nvolves construction, land ac-
quisition, or development or single-pur-
pose and one-time gTa.!1t applications tor
less t.'1an $10000 which do not require
cIeartnghouse approval, an envtronme.n-
tallmpact statement, or the reloCation of
persons, businesses, o. farms.
. (d) Federal Assistance Application lor
Con.stru.ction l'TograTTL3 (Ezhibit"4). The
Federal Assistance Applicat10n tor Con-
struction Progrs.m.s torm sha.ll be used
tor a.1l grs.nt3 wbere the maJor purpose
ot the program involves construction.
land aCquisition, and laDd development,
except when the Applicatlon tor Federal
Assistance-Short Form (p~ph 2e)
is used.
(e) AppUcation lor Federal Assi.tt-
a7U:e--sll.ort Form CEzhibit SJ. The Ap-
pUca.tlon tor Peden.! Assistance-Short
Form sha.ll be used tor lill gran~ for
sIngle-purpose and one-time gr'llJJt a.p-
pUcations tor less than $10,000 not re-
Qu1r1ng cleo-rlngbouse approval, an en-
?1ronmentalimpact statement, or the re-
location of persons, businesses, or tarms..
Federal grantor agencies may, at their
discretion, s.utbor1ze the usa ot this torm
tor applications torls.l"ler amounts. ,
3. For all tOnD3 described herein a.1l
reques~ by grantees for changes, con-
t1nu.s.tlons. and supplementa.ls to ap-'
proved grants sheJI be submltted on the
&&me torm as the orig1na.1 ap:pUcs.t1on.
For these p~, only Ule require<1
pages of the torms should b~ submjtted.
.. .F'ederaJ. agencies ma.y spec1!y and
describe the progra,m,s, functions, or'ac-
t1vmes which will be used to plan, budg-
et, and evaluate the wprlc under the
grant progra,ma. '
5. When additional 1nforInl!.tJon 1.s
n~ed to comply wIth leg-'.s1ative re-
quirements or to meet specific progra.,m
needs Federal agencIes must comply with .
the reports clearance requirements ot
omce and Ma.na.gement BUdget C1reular
No. A-40 as revised.
6. Addlt10nal assurances shall not be
added to the standard assurances con-
talned In the Circular unless specifically
requIred by law.
7. Federal &geocles hs.ve the opUon ot
shading out any llne Item on any form
that is unnecessary for dec!slonmaldng -
purposes or tor meetlng the requ1remen~
ot other circulars or laws except for the
Standard Form 424. Tb1s form should
not be altered. It an Item is not appUca-
ble. write or o-.erpr1nt "NA" l:n the spa.ce
prOVided tor each item.
8. Grantees shall submjt the original
and two copies of t.~e ap;ll!catlon.
9. Federal grantor ~ncjes are aut.~or-
..ized to reproduce t.~ese ~or.n.s. The fonr.s
for reproduction pu..-;lc.ses can be ob-
tained from the Of:ke ot ~fanagement
and Budiiet. The St.andard Fonn ~24 can
be obtained from the ~neral .se......Ices
Admlnis t.ra tlon.
, Published by TIlE Bl'RE.-\lJ OF NATIO~.-\L AFFAIRS. J:'\c.. WASIlI"GTO~, D.C. ~0037
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HOUSING & DEVELOPMENT REPORTER
Arr.\CH!aNT N-'-CrRc"l7L.\lt No. A-102
PItOPEATY MANAGUn:.'lT STA.N1lAROS
1. Thl.> Attachment prescribes un1!orm
standards governing the utUizatlon and
d1sposltlon o( property furnished by the
Fedenl Government or acquired In
whole or In 'part with Federal funds or
whose cost. WR.S charged to a proJect sup-
ported by, a Federal grant. Federal
grantor agencies shall require grantees
to obse:ve these standards under gr&..'1ts
tram the Federal Govemment and shall
not Impose additional requirements un~
lesS speclftcally required by Federal la';li.
The grantees snall be authorized to use
their 017;11 property management stand-
ards and procedures as long as the pro-
visions of this Attachment are Included.
2. The following definitions apply for
the purpose oC this Attachment:
Ca.) Real property. Real property
means land, includlng land improve-
ments, structures and appurtenances
thereto, excluding movable machinery
and equipment.
Cb) Personal proper tV. Personal prop-
erty of any kind ~xcept real property. It
may be tangible-having physical exlst-
ance. or intang:ible-having no physIcal
ex.1stence, such, as patents. Inventions.
and cop;;rights.
(c) None:rpendable personcl pTopertv.
Nonexpendable personal property means
tangible personal property having a use-
ful l1!e. of more Ulan one year and an
acqUisition cost of $300 or more per unit.
A grantee may use Its own definition ot
nonexpendable personal property pro-
vided tha.t suC'h definition would a.t least
Include all tangIble personal property ~
defined above.
Cd) E:pendable personalprO'Pertv. Ex-
pendable personal property refers to all
tangible personal property other than
nonexpecdable property.
(e) Ezcess propenv. Excess property
means property under the control of any
Federal agency which, as determlned by
the head thereoC, is no longer required
for Its nms or dLscha..-ge ot its responsi-
bilities.
(!l Ac:<uisition cost ofpurchG.3ed non-
e::p,mcic;le personal propmll. Acqui-
sition cc.;t of an Item o( purchased nca-
expend2.'Jle personal property means the
net invo:.ce unIt. price of the property in-
clUding :.'le cost of modlftcatlons. attach-
ments, accessories. or 'au:<1llary appara-
tus necessary to make the property usa-
ble for the purpose for' which It wa.s
acquired. Other charges such as the cost
.ot 1D.sW!.a.tlon, transportation, taxes.
duty. or- protective in-transit insurance.
, shall be included or excluded from the
unit acquisition cost In accordance 'i\1th
the gra::.~ee's regular accounting prac-
t1ces.
(g) E:empt propertll.Exempt property
means tangible personal property ac-
quired in ;:rhole or In part -;v1th Federal
funds. a::.d title to which is vested In the
~Iplent. ";I;"jthout further obllgs.tlon to
the Feee:-1I Government except as pro-
v1ded lD subpa.ra.graph 6a. below. Such
Wlcond~~:onal vesting o( title will be pur-
5Ua.ot to ~ Federalleg<.sls.tlon that pro-
vldes the Federal sponsoring agency with
adequate authority. , '
3. RealproperfJ/. Each Federal grant-
or agency shan prescribe rf;Quirements
for gmntees concerning the use and dis-
posItion at real property tunded parUy
or wholly by the Federal Government.
Unless otherwise provided by statute,
such requirements. as a minimum, shall
contain the Collo\1;ing: .
(a) T1Ue to real property shall vest in
the recipient SUbject to the condition
that the grantee shall use the real prop-
erty for tlie authorized purpo5e..of the
origInal grant a.s long as needed.
(b) The grantee shall obtain approval
by the gra.ntor agency for the use of the
real property In other projects when
the grantee determines that the property
Is no longer need!d tor the original grant
purposes, Use In other projects shall be
limited to those under other Federal
grant programs. or programs that have
purposes cons1stent with those author..;
!zed tor support by the grantor.
(c) When the real property Is no long-
er needed as provided in a and b abo\"e.
the grantee shall request dlspoolt10n in-
structions from the Federal agency or its
successor. Federal' agency. The Federal
agency shall observe the following rules
in the d1sposltfon instructions:
Cl)The grantee may be permitted l:9
retain title after it compensates the Fed-
eral Government in an amcwnt computed
by applying the Federal percentage of
particIpation In the cost at tne orig:inal
project to the fair market value ot the
property.
. (2) The grantee may be directed to
sell the property under guidellnes pro-
vIded by the Federal agency and pay the
Federal Go\'ernment. an amount com-
puted by applying the- Federal percent-
age or particIpation In the cost of the
original project td the proceeds from S{1le
Ca.!ter deducting actual and reasonable
selllng and ftx-up expenses. 1! any. from
the sales proceeds). When the gran~ Is
authorized or required to sell the pro!>-
ert:r. pr-oper sales procedures shall be es-
tablished that provide tor competition to
the extent practicable and result in the
highest pOssible return.
(3) The grantee may be directed to
transfer title to the property to the Fed-
eral Government. provided that In such
cases the grantee shall be entItled to
Compensation computed' b)' s.pply!ng the
grantee's percentage of partIclpatlon In
the cost at the program or proJect to the
current tair market value ot the pro!>-'
erty.
4. Fed.erallv oumed 110nezpendaCle
per$onal f11'opert7. T1tle to federally
,owned property remains vested in the
Federal Government. Recipients shall
submit annually an Inventory listIng ot
federally owned property in their custody
to the Federal 'agency. uPon completIon
oC the agreement. or when the property
Is no longer needed; the grantee shall
report the property to the F-ederal ageDCY
.for turt.'ler agency utillz.a.tion.
U the Federal agency has no turther
need for the property. it shall be declared
excess and reported to t.'le General Serv-
Ices AdminLstratloD. Appropriate dispo-
sition 1D.structIoxls will be Issued to the
recipient a.!ter completion of the Federal
agency review. .
5. E:rempt proper tv, When statutory
author-ity exIst., title to nonexpenda.ble
personal property acquired wIth pr-oJect
funds sha.U be ve::ted in the recIpient
upon IlcQuisH.lon unless It Is determined
that to dv so Is not In the furtherance
o( the objectives of the Federal sponsor-
Ing agency. When tIUe is vested Ul the
recipient the recipIent .shall have no
other obllga.tlon or accountability to the
Federal Government for its use or dis-
position except. a.s provided 1n 6a below.
6. Other none:rpendable propertv.
When oth~r noc,expendable tang:ible
property Ls acquired by a grantee with
project tunds title shall not. be ta.k.en
by the Federal Government but shall
vest in the grantee subJect. to the follow-
ing conditions: ,
(a.) Right to transfer title. For Items
or nonexpendable personal property
having a unit acquisition cost ot $1,000
or more. the Federal.ae;ency may reserve
the right to transfer the tithe' to the
Federal Government or to a. trJrd party
named by' the Federal Government when
suc,h third party Is otherwise eligible
under ex1stin~ statutes. Such reserva.-
tion shall be subject to the fOllowing
standards: '
(1) The property shall be appropri-
ately Identlfted in the grant or other-
wise made kno'ilrn to the grantee In
writing.
(2) The Federal agency shall Issue
disposition instructions wIt.'l.in 120 cal-
endar days after the end of the Federal
support. or the project for which it was
acquired. U the Federal agency Calls to
Issue dIsposItion Instructions within the
120 calendar-day period, the grantee
shall apply the' standards ot subpara-
graph 6(b) and S(c) as appropriate.
(3) When the Federal agency exer-
cises Its right to take title, the personal
property shall be subject to the provi-
sions for tederall7-owned nonexpenda..ble
property discussed In paragraph 4.
above.
(4) When tltle is tra.n.sferred either
to the Federal Go\'ern.ment or to a. third
party, the provisIons oC subparagraph
6(c) (2) (b) should' be followed.
(b) Use of other tangible' 1107le~lG-
able propertv far which the grantee hc.s
title. '
(1) The gran tee Shall use the proper-
ty In the proJect or program tor which
It was acqUired as long ~ neMed,
whether or not the project or progran:.
continues to be supported by Federal
fund3. When no J.onger needed for the
original project or program, the gran~
shall use the property In connection wltb
Its other federally sponsored activities,
In the follOwing order of, priority:
(a.) Activities spons'Jred by t.'le same
Federal agency.
(b) Activities sponsored by other Fed-
eral agencies.
(2) Shared use. During the tL-ne t.'lat
tlone:tpendable personal property. 15 held
for use on tlle project Or program for
which It was acquired, the gTan~ shall
Publi,h.:d by T1iE BL'REAl: OF :\ATIO:'-:AL ..HTAIRS.I:-':C., W,-\S!l(:-;GTO:-<, D,C. =0037
32
.'
"
I
COr..HvlUNITY DEVrOPMENT FLOCK GHANTS
make It avaJlable for Ul;e on othl!l' proJ-
ects or progra..ms i1 such oth er use 'will
not interfere with the work on the proj-
ect or p!"t>gT'8.[D for wbJch the property
W&6 or1g1nAlIy acquired. First pre1.erence
Yoi such other use &ball be given to other
proJecu or programs sponsored by the
Federal agency that financed the~prop-
erty- second preference shall be given
to projects or programs spono.sred by
other Federal p.gcncles. U the property
1&' owned by the FedenLl Government.,
use on oWer"a.ctlviUes Dot sponsored by
the Federal Government shall be ~r-
m1sslble \! buthorlzed by the Fc.-oeral
agency. . User charges should .be con-
sldered'\! appropriate.
fC) . IJ.{sposition 01 other ncnezpen4-
able f1TopeTtll. Mlen the grantee no
100ger needs the property as provided
In Bb, above; the property ma.y be used
for other activities In accordance with
the follOwing standards:
. nfNonexpenda.i11e property with a
unit I\.CQu.1.sitlon cost ot leSs tban $1,000.
'rile - gr-iirit.ee - may use the property for
other actlv1Ues without reimbursement
to the Pederal Government or sell the
property and reuIn the proceeds.
(2) Nonexpendable personal .property
with a unit' acquisition cost of $1,000 or
more. The grantee may retal.n the prop-
erty for other uses provided that com-
pensation I.s l111I.de to the orl.g1nal Federal
a ge.!1cy, or Jt.S successor. The amount ot
compensation sblill be computed by ap-
plYing' the percentage ot Federal par-
tlclpatfon In the east ot the original
project or pro.gnun to .llie current fair
market vsJue 01 the property. If the
grantee has no need for the property and
the property has further use value. the
grantee shall request disposition instruc-
tions from the or1g1nal gnlntor agency.
The Federal a.gency shall determine
whether the property can be used to
meetuie agency's requirement.!. U no
requirement ex1sts ~'ithin that 'agency,
the availabillty of the property shall
be reported. in acc.orcllu1ce' with the
guidelines ot the Federal Property
Management Regulatlons (FPMR,), to
the ~neral 3en1ce.s Ad:n1oistratlon by
the F'ederal aitency to determlne'whether
a -requirement (or the property exists In
other Federal agencies. The Federal
a,ency shall Issue Instruc!jons to the
grl.ntee no Is.ter than 120 days after
,the grantee request and the following
procedures Shall govern:
(a) U so Instructed. or. 1! disposItion
'lnstruc:"t,jC'!lS are not ls.roed within 120
calendar days after the grantee's re-
QUest, the.grantee shall sell the prop-
erty and retmb~ the Federal agcncy
an amount computed by applying to the
Sales proceeds the percentage 01 Federal
participation in ~e co.st of the original
project or program. ~o;:;-ever. .the
grantee shall be permitted to deduct
and retain from the Federal share $100
or ten percent of the prcceed.s. ;:;hlch-
eyer Is greater, for the gr:'\.ntee.s sell-
in&, and hs.ndlL"'1g expenses.
(b) II the grsntee Is InstrJcted to
.s...~lp t.'le pro~rty e!.se;:;here the ~ntee
shsll be rct!T1bu.'"sed by tl1e be.'1C~eng
F'Cderal e.geney w1th an l'.mount ;:;h1eh
c
18 c~putcd by nppiylng the' pen::enlage
of die grl1ntee pnrtlclpatlon In the eost
ot the originsJ grant projector program
to the current fair market value of the
property, plus any reasonable shipping
or I.oter1m storage costs l,nctlI'T'ed.
'(c)' It t:neg1'-aritee IS Instructed' to
otherwise dispose of, the property, t..'le
grantee shan be .reimburSed by the Fed-
eral, a;;cncy Cor such costs incurred in
Its cUspositlon.
(d) Property mana.ce-:nent standard!
lor nonerpcndaole prOPeTtll. The Ir.ant-
~'s property management standards Cor
noneipend able personal property shall
Include the f(.'Jowing procedural require-
ments:
-, (ii-Properly records shall be mltl.n-
tat.,ed accurately a.nd shall Include:
(a.) A description of the property.
.(b) Manufacturer's serial number,
model number. Federal stock number.
national stock nwnber, or other 1dentii1-
cation number.
(c) Sou.ce of the property Ineludlng
grant or other agreement number.
(d) Whether title vests In the grantee
or the Federal GOvernment.
,(e) ACQuisitjon, date (or date received.
1! the property ~'as furnished by the
Federal Government) and cost.
e!) Percentage (at the end 01 the
budget year) of Federal partlclpat!on In
the cost af the project or program for
..wbich the property was acquired. (Not
appliC2.ble to 'property furnished by the
Federal Government.)
(g) Location. use, andcondl~on of
the property and the date the In!orma-
tlon was reported.
(b) Unit acQu!sit1on coist.
(1) Ult1ma.t.e disposition data, !Delud-
Ing date ot disposal and sa.'les pri~ or
tbe method used to determine current
fair market ve.lue where a grantee com-
pensat.es the Federal agency. for Its share.
(2) Property owned._ by the Federal
Government must be marked to indi-
cate Fede~l ownership.
(3) A physical Inventory of pro~rty
shall be taken-and the results reconciled
with the property records at least once
every two years. Any dllrereoce.s between
Quantit1es determined b)- tl1e physl;;l\l
inspection and t.ho~e sho..-n in the B.C-
counUng reco$ sball!>e investiS'ated to
determine tIle .causes of the difference.
The gran~ shall, in connection with the
Inventory. \.er1!y the ex:lstence. current
uWlzation. and continued need for the
property. ,
(4) A ~ontrol system shall be'ln etl'ect
to Insure a.deqU:l.te safeguards to prevent
loss, damage, or lliett ot tl1e property.
AJJ7 loss, damage. or theft ot nonex-
pendable property shall be investigated
a.nd fully docUI:1ented; 1! the property
was owned by the Federal Government.
the grantee shall promptly notify the
Fed~:'lI1 a.g~ncy.
(5) "_~equate maintcna.nce procl'~ures
shall be Imp!emcnted to kc-ep the prop-
erty in good cond1tlon. '
(B) Where the grantee 15 authorized
or reqUired to sell L'1e property. pro;Jer
sales prt'Ceeurcs shall be esi:!.bl1sh~
~;hlch ..auld pro\"1de for eom~tltion to
,
09:1551
IJDR RF-161
4-;-80
the extent pI'l'lcl.lcnblc lUld resuH In the
h1c;hest possible return. '
, 7. E:tpendable personal f1TOpcr!:I. TItle
to expendr.ble p(lrsonal pr~sbal!
vest I.n the.grs.ntee upon ltCQul:s.1thl1. U
there is a re:;ldusl Inventory of such
-property cxcoo:llng $1,000 In toW s.t:gre-
gate fair' market value, upon te..'7ll1na-
tlon or completion olthe grant c.n.d 1!
the property is not n~ed for any ot11er
fed ernlly ,spOnsored proJ eet or ,p~co-am.
the grant.ce shall retain the piop.efty for'
use on nonfcderally.sponsored a.c:tjvltles.
or sell It, bllt must In either ca...~, com~
pensat.a the Ft:-dera1 G~Yernmcnt for lu
share. The !UJ1ount of compensation Ehall
be computed in the same mar:..T"ler 64
nonexpenda.ble pers<>OPJ property.
8. Intangible -proper-tll.
(a) Inventions and patent.!,. U any
program produces plltent.able Items,
patent rigbts, processes, or L:lycnllons.
in the cour.;e of work sponsored by the
Federal Go.ernment: such !.s.ct ~:.a.ll be
promptly' nee! tully reported to ~e Fed-
eral agency. Unlc::.s there is a prior s.gree-
ment between the grantee and the F€'d-
e.'"8.1 agency on dispositIon of such Items,
the Federal a.gency shall det-ermine
whetl1er protet:tio~ on t.'le 1nve.r:ltion or
dlscovery shall be sO}l.gbt. The C"1:.'dersJ
agency will a.lso Jet.e.rrn,ine how t.'1 e r1..h ts
in the invention or d.!scovery, including
ri~hts under any patent issued L'H:reon,
shall be a.UOCri.t..ed lUld o.dm1nist.rsted In
order to pro!..ect the pi..ibllc inten>st con-
sistent with "Government Patent Policy"
(President's Memorandum for He--o...ds Of
Sxecutive Departments and Abencies"
August 23. 1971, and statement af Gov-
'ernment Patent Policy as printed In 36
FR 16389>-
(b) Copyrights. Except as ot..l:erwlse
pro\1ded in the terms l!.nd eondl:ions of
t..;e ~ement the author or the !;T".J1tee
or&,lUl1z.a.t1on is f~ to COPYright ?.ny
books. publicaUons, or other ('OP?r!bht-
e.ble materials developed In the course ot
or under a Federal a.~rnent. but tl1e
Federal ageocyshlill resen-e a. roS?-1t;y-
fr~ nonexclusive and J.n-eyoce.b!e right
to reproduce, pubIish. or otheri-tse \lse.
and to authorize others to use. the ',vor1c
for Goyernment purposes.
9. E:u:ess personal prop'!rtll. When
title to excess property 15 vested In ir.T?.nt-
ees such property shall be ~counted for
'Uld d15p05ed of in e..c<.:aroance wH..; para-
graphs GCe) 'and B(d) oC this at~':ment.
.,' d' -'~E -U'R""' U 0- ';A-l IC'';AL AFFAIRS. INC., .........SHI';GTO:-l. D.C. 20037
p::bushe oy ,.. 0 ,_^ r. ,
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4i874
Federal Register I Vol. 44. No. 159 I Wednesday, August 15. 1979 I Notices
OFFICE OF MANAGEMENT AND
BUDGET
[Circular No. A-102. Rev:sed; Transmittal
Memorandum No. 1J
Standards Governing State and Local
Grantee Procurement, Attachment 0
of OMB Circular A-102
Aug"sll, 1979.
To heads of Executive Departments
dnd Establishments
1. Purpose: This Memorandum
transmits an amendment (revised
Attachment 0) to Office of Management
and Budget (OMB) Circular A-I02.
2. Background: This notice, pursuant
to the authority of Pub. L. 93-400. the
Office of Federal Procurement Policy
Act and the Intergovernmental
Cooperation Act. amends Attachment 0
to O~tB Circular A-I02 issued
September 12, 1977, Federal Register,
Vol. 42. No. 176, page 45828. The
proposed revision was circulated to
State and local interest groups in
accordance with Circular A-85
procedures and Executive Order 12044
and to affected Federal agencies and
cont:actor organizations. The proposed
re\'ision was published in the Federal
Register December 6,1978. Vol. 43, NO.
235, page 57201, and a public hearing
was held January 16. 1979. No regulatory
analj'sis is required in accordance with
Executive Order 12044. The amendment
(1) reaffir{T1s the maximum reliance on
State and local government grantees
mar.o,~ement of their own procurement:
(21 dirp.r.t,~ qrantor agencip" to rescind
nnn....nntnr-ml'ul ,.r,Ut11U"nq nr c"""pnl
i1!:!er.cv sube>rrli na te regulit..v..... one
lIml'. .n.. ..",,;on,... r,f additional
rp'lll'remt'r,IS; loS) creales a grd...~e
certificalIvn pro~ram to rp.duce the
grar::,"e :I3ellCll~S Ullrl.l~nSOme pre.
aWard review of indi\'iJual
procurements; (4) adds provisions to
ret.!u.::e the possibility of fraud a:1d
was:.::: and (5) expnnds coverage
~durt:~s:ng small. minority. wop.!en and
labor surplus contracting. The
a:n.?r:c:ment. it is anticipated. wi:! reduce
admir:ist:ati\'e cost. paperwork and
other ;uch factors wh1ch contributed to
inefficiency, waste and delay in
im;:e:nenting assista<1ce programs.
3. Action.' Remove the old Attachment
o fre;m the Circular and insert the new
Altilchment. Grantor ascncies shall
begin immediately to amend
non:o::forming subordinate regulations.
4, Summary of Chuq;es: Section 1.
Prob:~ts grantor agencies from 1ldding
additional requirements or subordinate
regulations. This attachment strikes a
balance betwp.pn agencies' stewardship
rOle anu lilt: pOlky ui plO\..Ulg lllC
maximum reliance on grantees to
conduct their own affairs, To avoid
confusion. areas not covered by this
prohibition are enumerated~
Section 2. Spells out the
responsibilities that properly belong to
the grantor or the grantee. To avoid
burdensome detailed reviews of
grantees' discretionary actions the
substitution of grantors' judgment is
prohibited. unless it is primarily a
Federal question.
Section 3. Grantor agencies are
encouraged to provide technical
assistance to grantees rather than
require submission for review,
Section 4, Proposes that grantor
agencies conduct grantee procurement
system rev'iews and that when a grantee
procurement system meets the
standards of this attachment it may be
certified by the grantor agencies, thus
reducing individual pre-award contract
reviews by that agency or other
agencies making grants. Both grantees
and grantors expressed their concern
about keeping the quality of the
certification reviews constant. A
paragraph was added to make reviews
adhere to OFPP standards.
Section '5. Limits grantor agencies'
authority to review protests. This is
properly the responsibility of the
grantee.
Section 6. Umits grantor pre-award
review of grantee procurements to non-
comp~titive and brand name
procurements. and procurements by
grantees who do not me~t Attachment 0
standards.
Section 7. Expands the code of
conduct from merely prohibiting the
acceptance of gifts and gratuities to
prohibiting the participation in the
award of c~r.tracts to firms in which the
employee has some financial interest.
Section 9, Expands the section
requiring affirmative steps to ensure
minority and small busi;'\ess
participa tio:! in contr:lcling under
Federal grant programs, and encourages
the placement of contracts in labor
surplus areas and wilh women business
enterprises.
Section 11. Explains when it is
appropriate to use one of the following
four methodsii' of procurcm~nt. small
purchase, competitive sealed bids.
competitive nego:Jations. and
noncompetitive negotia tions. and
recognizes price competition need not
be used for AlE contracts..
Section 12. Prohibits the use of a
percentage of construction cost method
of contracting. requires either a cost or
price analysis of all procurement. and
states costs will be allowed if consistent
with Federal cost principles.
Section HG. Expands contract
provisiun on inventions tu cover
copyrights and rights in data.
Section 14J. Adds provision requiring
compliance with State Energy
Conservation Plans.
5. Effective Date: This revision is
effective October 1. 1979, Grantees may
comply with this amendment
immediately .....here they do not conflict
with grantor agency regulatiof}S. Grantor
agencies may implement this
amendment immediately or allow
grantee agencies to implement.
6, For Further Information Con/act:
Mr. Jack Nadol, Assistant for
Intergovernmental Affairs, Office of
Federal Procurement Policy, Telephone
201-395-.Q166.
James T. Mcintyre, Jr..
Director.
Procurement Standards
1, Applicability.
a. This Attachment establishes
standards and guidelines for the
procurement of supplies, equipment.
construction. and services for Federal
assistance programs. These standards
are furnished to ensure that such
materials and services are obtained
efficiently and economically and in
compliance with the pro~'isions of
applicable Federal law and Executive
orders. ' ,
b. No additional procurement
requirements or subordinate regulations
shall be imposed upon grantees by
Executive agencies unless specifically
required by Fecerallaw or Executive
orders or authorized by the
Administrator for Federal Procurement
Policy. This prohibition is not 3pp!ic'able
to payment conditions issued in
acconJai1ce with Tre:lsury Circ.;u!.lf 10:-5,
indi...idt;:Il g;'anti!e requirements
pursuant to section 10 of the basic
circular or the provisions of this or other
OMD circulars.
c. Provisions of current subord:nJte
require::1ents not codorming to this
attac~ment shall be rescinded by
grantor agencies un lass appro\'ed by the
Office of Federal Procurement Poll-t:y
(OFPP).
2. Gra.1tee/C.-antor Respo.1sibility
a. Tht!se standard.~ r1n n". ...!l...... 'he
grantee of ;on\' rnntrar.lllal
resor....c...,......" lor,rl..r lis cc::.~~~.q. the
gran!,.... III -~4",,".,;hle. in accordance
with good aamInlstrative practice dnd
sound busi;'\ess judgment. for the
settlement of all contractual and
administrative issues ar:s;f1g out of
procurements entered into in support of
a grant. Theseinciude but are not '
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limit<:d to; source evaluation. protests,
displJtes, and claims. Executivc u~cncies
shall not substitute their jucgmcnt for
that of the grantee unless the mailer is
primarily a Federal concern. Violations
of !c.w are to be refcrred to the local.
State, or Fcderal authority having proper
jurisdiction.
b. Graulees shall use their own
procurement procedures .....hich reflect
applicable State and local laws and
regulations, provided that procurements
for Fedcral Assistance Programs
conform to the standards set forth in this
allachment and applicable Federal law.
3. Grantee Procurement Impro~'err:ent.
Executive agencies awarding Fedcral
grants or other assistance which require
or allow for procurement by the
recipients are encouraged to assist
recipients in improving their
procurement capabilities by providing
them with technical assistance. training,
publications. and other aid.
4. Procuremen't System Re~'iews.
a. Executive agencies are encouraged
to perform reviews of their grantees'
procurement systems if a continuing
relationship with the grantee is
anticipated or a substantial amount oC
the Federal assislance is to be used for
procurement and review of individual
contracts is anticipated. The purpose of
the review shall be to determine: (1)
whether a grantee's procurement system
meets the standards prescribed by this
Attachment or other criteria acceptable
to the OFPP. such as provisions of the
model procurement code for State and
local government and (2) whcther the
grantee's procurement system should be
certified oy the reviewing agency. Such
a review will also give an agency an
opportunity to give technical assistance
to a grantee to rcmedy its procurement
system if it does not fully comply. In
addition, such a review may provide a
basis for deciding whe~hcr the grantee's
contracts and related procurement
documents should be subject to the
grantor's prior approval. as pro\'ided by
Si!ction 6.
b, In concuctir:g procurement system
reviews, grantor agencies will evaluate
a grantee's procurement system in terms
of whether it corr:plies with the
standards prescribed by this
Attachment and represents a fair.
efficient and effective procurement
system, To the maximum ex lent
feasible, re\'ie\'Io'ers will rely upon Slate
or local evaluaticns and anal\'ses
performed by agencie~ or o:g~nizations
indcpende:1~ oft~e 3rantce contracting
activi,ty.
c. Whcn a Federal gianlor agency
ccmplelcs a ?rocurerr.ent re\"iew, it shall
furnish a report to thc grantee, wilh a
copy to OFPP,
d, All agencies should normally rdy
upon the resultant findings or
certification for a period of 24 months
before another review is performed.
e. Reviews shall be c~nducted in
accordance with standards and
guidelines approved or issued by OFPP.
f. The reviews authorizcd by Section G
arc waived if a grantee's procurement
system is certified.
S. Protest ProcediJres.
Grantor agencies may develop an
,administrative procedure 10 handle
complaints or protests r('garding grantee
conlractor selection actions. The
procedure shall be limited as follows:
a. No protest shall be accepted by the
grantor agency until all administrative
remedies at the grantee le\'el have been
exhausted.
b. Review is Iimitcd to:
(i) Violations of Federal law or
regula tions. Violations of Slale or local
law shall be under the jurisdiction of
State or local authorities.
(ii) Violations of grantee's protest
procedures or failure to review a
complaint or protest.
6. Grantor Ren'ew of Prcposed
Contmets.
Federal grantor pre-award review and
approval of lhe grantee's proposed
contracts and related procurement
documents, such as requests for
proposals and invitations fM hids, is
pt:llIlIrtea OnlY unuer L'1e follOWing
circumstances;
a. The procurement is expected to
exceed C:1I" fVVl and is to be awarded
with.,Il' ,.n...~..tltion or only one bid or
oner IS received 1Il response to
solicita Hon.
b. The procuremcnt expectcd to
exceedC:10 11()() ~n..cifies a "brand ;lamc"
product: or
c. The grantee's procurement
procedures or opera :ion fails to comply
with one or more significant aspects of
this Attachment. The grantor agency
shall notify the grantee i;'l w:it:ng, wilh a
copy of slIch notification to the OFF?,
7. Code of Conduct.
Grantees'shall rr.aintain a written
code or standards of conduct which
shall govern the performance of their
officers. err:ployees or agents enga~ed in
the award and administration of
contracts supported by Federal funds.
No employee. officer or agent of the
grantee shall participale in selection. or
in the award or administration of a .
contract suppor~ed by Federal funds if a
cont1ict of :nti'rcst. rea! or apparent.
would be in\'ol\"ed. S~ch a conflict
would arise when:
a, The e~ployee. officer or agent;
47375
b. Any member of his immedia te
family:
c, His or hcr partner: or'
d. An organization wl:ich employs, or
is about 10 employ, any of the above,
has a financial or other interest in the
firm selected for award.
The grantee's officers, emp!Jyees or
agents shall neither solicit nur accept
gratuities, favors or anything oC
monetary \'alue from contractors.
potential contractors, or parties' to
subagreements.
Grantees may set minimum rules
where the financial interest is not
substantial or the gift is an unsolicited
item of nominal intrinsic value.
To the extend permilled by Sta te or
localla w or regula lions. such standards
of conduct shall provide ior peniilties,
sanctions, or other disciplinary actions
for violations of such sland:uds by the
grantee's officers, empluyees. or agents.
or by contractors or their agents.
8. Procurement Procedures,
The grantee shall establish
procurement procedures which pro\'ide
that proposed procurement actions shall
bc reviewed by grantee cfficials 10
avoid the purchase of unnecessary or
duplicative items. CQ,nsideration should
be given to consolida tion or brea king
out to obtain a more economical
purchase. \Vhere appropriate, an
analysis shall be made of lease versus
purchase allernatives. and ;Jny other
appropriate analysis to dcterl"71i::e which
approach wculd be lhe most
economical. To fostcr g:ea ter economy
and efficiencv grantees are encOt.::;J"ed
to cnter into State and !ucal "
intergovernmental agreements for
procurement or use of corr:mon goucs
and services.
9. Contracting With Small and
A1inority Firms, ~t'ol:1e!l's !].::.-;;('('55
Enterprise and La!.;or Surplus .'1.rL'O
Fi,-ms.
a. It is national pelicy to <lward <J f:lir
share of contracts to sOT!a!l and ~i::orit\'
bus:~e$s fi:OT!s. Accvrding!y. a:r;r~ativ~
stE.'pS ;;.ust be taken to a~S:lre th;ll ~'~l:l!l
and :ni;lOrity busin!:$ses arc i.:liI;zcd
\';hen possiblc as sources cf sl,lpplitls.
eqi.:ipnent, c(;nstru_cticn and service3.
Affirmative steps shall incbde lhe
following:
(1) Including qualified small and
m:nority businesses on solir:i la t:cn !is~s.
(2) Assuring that small and r.linority
businE.'sses are solicited \\"~enevt:r t1;C":j'
are polc::t:al sources.
(J) When econor;;ica:ly feasible,
c;\"id;:1g lotal rr.qL:ircr;;ents into smaller
[3sb or qCla:1tities so as to permit
ffiaxi;;"1um small 21.d minority business
par:icipalion.
'.
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Federal Register / Vol. 44. No. 159 / Wednesday. August 15, 1979 / Notices
(4) Where the requirement permits.
establishing delivery schedules which
will encourage participation by small
and minority business.
(5) Using the services and assistance
of the Small Business Administration.
the Office of Minority Business
Enterprise of the Department of
Commerce and the Community Services
Administration as required.
(6) If any subcontracts are to be let.
requiring the prime contractor to take
the affirmative steps in 1 through 5
abo\'e. '
b. Grantees shall take similar
appropriate affirmative action in support
of women's business enterprises.
c. Grantees are encouraged to procure
goods and services from labor surplus
areas.
d. Grantor agencies may impose
additional regulations and requirements
in the foregoing areas only to the extent
specifically mandated by statute or
presidential direction..
10. Selection Procedures.
a. All procurement transactions,
regardless of whether by sealed bids or
by negotiation and without regard to
dollar value, shall be conducted in a
manner that provides maximum open
and free competition consistent with this
attachment. Procurement procedures
shall not restrict or eliminate
competition. Examples of what is
considered fo be restrictive of
competition include. but are not limited
to: (1) placing unreasonable
requirements on firms in order for them
to qualify to do business. (2)
noncompetitive practices between firms
(3) organizational conflicts of interest.
and (4) unnecessary experience and
bondbg requirements.
b. The grantee shall have written
selection procedures which shal.l
pro\'id~, as a minimum, the following
procecura I requ ire men ts:
(1) Solicitations of offers. whether by
comp2~itive sealed bids or competitive
negotiation. shall:
(a) incorporate a clear and accurate
descr:;;!ion of the technical
requirements for the material. produd.
or service to be procured, Such
description shall not, in competitive
procurements, contain features which
unduly restrict competition. The
description may include a statement of
the qualitative nature of the material.
product or service to be procured. and
when necessary, shall set forth those
minimt.:m essential characteristics and
standards to which it must conform if it
is to sat:sfy its intended use. Detailed
prodt.:ct specifications should be
avo iced if at all possible. When it is
imprac!:cal or uneconomical to make a
clear and accurate description of the
technical requirements, a "brand name
or equal" description may be used as a
means to define the performance or
other salient requirements of a
procurement. The specific features of the
named brand which must be met by
offerors shall be clearly stated.
(b) clearly set Corth all requirements
which offerors must fulfill and all other
factors to be used in evaluating bids or
proposals.
(2) Awards shall be made only to
responsible contractors that possess the
potential ability to perform successfully
under the terms and conditions of a
proposed procurement. Consideration
shall be given to such matters as
contractor integrity, compliance with
public policy, record of past
performance. and financial and
technical resources.
11. Method of Procurement.
Procurement under grants shall be
made by one of the following methods.
as described herein:. a) small purchase
procedures; b} competitive sealed bids
(formal advertising); c) competitive
negotiation; d) noncompetitive
nego tia tion.
a. Small purchase procedures are
those relatively simple and informal
procurement methods tha t are sound
and appropriate for a procurement of
services, supplies or other property,
costing in the aggregate not more than
510,000. Grantees shall comply with
State or local small purchase dollar
limits under 510.000. If small purchase
procedures are used for a procurement
under 'a grant. price or rate quotations
shall be obtained from an adequate
number of qualified sources.
b. In competitive sealed bids (formal
advertising], sealed bids are publicly
solicited and a firm-fixed-price contract
(lump sum or unit price) is awarded to
the responsible bidder whose bid.
conforming with all the material terms
and conditions of the invita tion for bids,
is lowest in price.
(1) In order for {ormal advertising to
be feasible. appropriate conditions must
be present, including. as a,minimum. the
following:
(a) A complete. adequate and realistic
specification or purchase description is
available.
(b) Two or more responsible suppliers
are willing and able to compete
effectively for the grantee's business.
(c) The procurement lends itself to a
firm.fixed-price contract. and selection
of the successful bidder can
appropriately be made principally on
the basis of price.
(2) If formal advertising is used for a
procurement under a grant, the following
requirements shall apply:
. (a) A sufficient time prior to the date
set for opening of bids. bids shall be
solicited from an adequate number of
known suppliers. In addition, the
invitation shall be publicly advertised,
(b) The invitation for bids. including
specifications and pertinent
attachments, shall clearly define the
items or services needed in order for the
bidders to properly respond to the
invitation.
(c) All bids shall be opened publicly
at the time and place stated in the
invitation for bids.
(d) A firm.fixed-price contract award
shall be made by written notice to that
responsible bidder whose bid.
conforming to the invita tion for bids. is
lowest. Where specified in the bidding
documents, factors such as discounts.
transportation costs and life cycle costs
shall be considered in determining
which bid is lowest. Payment discounts
may only be used to determine low bid
when prior experience of the Grantee
indicates that such discounts are
generally taken.
(e) Any or all bids may be rejected
when there are sound documented
business reasons in the best interest of
the program.
c. In competitive negotiation,
proposals are reques:ed from a number
of sources and the Request for Proposal
is publicized. negotia tions are normally
conducted with more than one of the
sources submitting offers, and either a
fixed.price or cost-reimbursable type
contract is awarded. as appropriate,
Competitive negotiation may be used if
conditions are not appropriate for the
use of formal advertising. II competitive
negotia tion is used for a procurement
under a grant. the following
requirements shall apply:
(1) Proposals shall be solicited from
an adequate number of qualified sources
to permit reasonable competition
consistent with the nature and
requirements of the procurement. The
Request for Poposals shall be publicized
and reasonable requests by other
sources to compete shall be honored to
the maximum extent practicable.
(2) The request for proposal shall
identify all significant evaluation
factors. including price or cost where
required and their relative importance.
(3) The grantee shall provide
mechanisms for technical evalua tion of
the proposals .ecei ved. uctermina tions
of responsible offerors for the pUr;lose of
written or oral discussion8. and
selection for con tract a wllrd..
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Federal Register I Vol. 44. No. 159 I Wednesday. August 15. 1979 I Notices
(4) Award may be made to the
responsible offeror whose proposal will
be most adavantageous to the procuring,
party. price and other factors
considered. Unsuccessful offerors
should be notified promptly. .
(5) Grantees may utilize competitive
negotiation procedures for procurement
of Architectural/Engineering
professional services. whereby
competitors' qualifications are
evaluated 3nd the most qualified
competitor is selected, subject to
negotiation of fair and reasonable
compensa tion.
d. Noncompetitive negotiation is
procurement through soliciation of a
proposal from only one source. or after
solicitation of a number of sources.
competition is determined inadequate.
Noncompetitive negotiation may be
used when the award of a contract is
infeasible under small purchase.
competitive bidding (formal advertising)
or competitive negotia tion procedures.
Circumstances under which a contract
may be awarded by noncompetitive
negotiation are limited to the following:
(1) The item is available only from a
single source:
(2) Public exigency or emergency
when the urgency for the requirement
will not permit a delay incident to
competitive soliciation:
(3) The Federal grantor agency
authorizes noncompetitive negotation;
or
(4) After solicitation of a,number of
sources. competition is determined
inadequate.
e. Additional innovative procurement
methods may be used by Grantees with
the approval of the Grantor Agency. A
copy of such appro\'al shall be sent to
OFPP.
12, Contract Pricing.
The cost plus a percentage of cost and
percentage of construction cost method
of contracting shall not be used.
Grantees shall perform some form of
cost or price analysis in connection with
every procurement action including
contract modifications. Costs or prices
based on estimated costs for contracts
under grants shall be allowed only to
the extent that costs incurred or cost
estimates included in negotiated prices
are consister.t with Federal cnst
principles.
13. Grantee Procurement Records.
Grantees shall maintain records
sufficient to detail the significant history
of a procurement. These records shall
include. but are not necessarily limited
to. information pertinent to the
following: rationale for the method of
procarement. sP'!t!ction of contract type.
contractor selection or rejection, and the
basis for the cost or price.
14. Contract Provisions.
In addition to provisions defining a
sound and complete procurement
contract, any recipient of Federal grant
funds shall include the following
contract provisions or conditions in all
procurement contracts and subcontracts
as required by the provision, Federal
Law or the Grantor Agency.
a. Contracts other than small
purchases shall co!1'tain provisions or
conditions which will allow for
administrative. contractual. or legal
remedies in instances where contractors
violate or breach contract terms, and
provide for such sanctions and penalties
as may be appropriate.
b, All contracts in excess of $10.000
shall contain suitable provisions for
termination by the grantee including the
manner by which it will be effected and
the basis for settlement. In addition.
such contracts shall describe conditions
under which the contract may be
terminated for default as well as
conditions where t}:le contract may be
terminated because of circumstances
beyond the control of the con-tractor.
c. All contracts awarded in excess of
510,000 by grantees and their
contractors or subgrantees shall contain
a pro\'ision requiring compliance with
Executive Order 11246. entitled "Equal
Employment Opportunity," as amended
by E;'(ecutive Order 11375, and as
supplemented in Department of Labor
regulations (41 CFR Part 60).
d. All contracts and subgrants foc-
construction or repair shall include a
provision for compliance with the
Copeland "Anti-Kickback" Act (18 use
874) as supplemented in Department of
Labor regulations (29 CFR, Part 3). This
Act provides that each contractor or
suhgrantee shall be prohibited from
inducing, by any means, any person
employed in the construction,
completion, or repair of public work. to
give up any part of the com pens a tion to
which he is other"wise entitled. The
grantee shall report all suspected or
reported viIJlations to the grantor
agency.
e. When required by the Federal grant
program legislation. all construction
contracts in excess of 52.000 awarded
by grantees and subgrantees shall
include a pro'.-isicn for compliance with
the Davis-Bacon Act (40 USC 276a to a-
7) as supplemented by Department of
lahor regulations (29 CFR Part 5). Under
this :\c~ ccnt:actors shall be recu;red to
pay wages to laborers and rnech:!:;ics at
3 rate :lot less than the ::-:::1im'Jm wages
specified in a wage determina tion made
by the Secretary of Labor. In addition.
~j877
contractors shall be required to pay
wages not less often than once a week.
The grantee shall place a copy of L,e
current prevailing wage determina tion
issued by the Department of Labor in
each solicitation and the award of a
contract shall be conditioned upon the
acceptanGe of the wage determination.
The grantee shall report all suspec:ed or
reported violations to the grantor
agency.
r. \Vhere applicable, all contracts
awarded by grantees and subgrant:?es in
excess of 52,000 for construction
contracts and in excess of $2,500 for
other contracts which involve the
employment of mechanics or laborers
shall include a provision for compbnce
with sections 103 and 107 of the
Contract Work Hours and Safety
Standards Act (40 USC 327-330) as
supplemented by Department of Labor
regulations (29 CFR, Part 5). Under
section 103 of the Act. each contractor
shall be required to compute the wages
of every mechanic and laborer on L1e
basis of a standard work day of 8 }:ours
and a standard work week of 40 hours.
Work in excess of the standard wo~kday
or workweek is permissible provided
that the worker is compensated at a rate
of not less than 1 V2 times the basic rate
of pay for all hours worked in excess of
8 hours in any calendar day or 40 hours
in the work week. Section 107 of the Act
is applicable to construction work and
provides that no laborer or mechanic
shall be required to work in
surroundings or under working
conditions which are unsanitary,
hazardous, or dangerous to his health
and safety as determined under
construction, safety and health
standards promulg~ted by the Secretary
of Labor. These requirements do aot
apply to the purchases of suppiles or
materials or articles ordinarily available
on the open market. or contracts for
transportation or transmission of
in te lligence.
g. The contract shall include notice of
grantor agency requirements and
regulations pertaining to reporti:ig and
patent rights under any contract
involving research. ,developmental.
experimental or demonstration work
with respect to any discovery or
invention which arises or is de\"eloped
in the course of or under such contract.
and of grantor agency requirements and
regulations pertaining to copyr:g~ts and
rights in data.
h. All negotiated contracts [except
those awarded by small purchases
procec'Jres) awarded by g~a:1tces s::all
i:-tc!ude a provision :0 the effect that the
g~antee, the Federal grantor agency. the
COr:l;l:roller Genera! of the L'r.ile::l
COMMUNITY DEILOPMENT BLOCK GRANTS ('
Stales. or any of their duly authorized
representatives. shall have access to
any books. documents, papers. and
records ofthe cor.tractor which are
directly pertinent to that specific
contrac,t. for the purpose of making
audit. examination. excerpts. and
transcriptions.
Grantees shaH require contractors to
maintain all required records for three
years after grantees make final
paj"ments and all other pending matters
are dosed.
i. Contracts. subcontracts. and
subgrants of amounts in excess of
$100.000 shall contain a provision which
requires compliance with all applicable
standards. orders. or requirements
issued under Section 306 of the Clean
Air Act (42 V.S.C. 1857(hll. Section 508
of the Clean Water Act (33 V.S.C. 1368).
Executive Order 11738, and
Environmental Protection agency
regulations (40 CFR Part 15). which
prohibit the use under non.exempt
Federal contracts, grants or loans of
facilities included on the EPA List or
Violating Facilities. The provision shali
require reporting of violations to the
grantor age:1cy and to the U.S.E.P.A.
Assistant Administrator for
Enforcement (EN-329J.
j, Contrac!s shall recognize mandatory
standards and policies relating to energy
efficiency which are contained in the '
State energy conserva tion plan issued in
compliance with the Energy Policy and
Conservation Act (p.L 94-163).
Grantor Agencies are permitted to
require changes. remedies, changed
conditions, Bccess and record retention
and suspension of work clauses
approved by the Office of Federal
Procurement Policy.
15. Contract Administration.
Grantees shall maintain a contract
administration system insuring that
. contractors perform in accordance with
the lerms, conditions, and specifica !ions
of their contracts or purchase orders.
IF'll 0,><- :9-:,s::OJ FiI.d 5-1.....:9: 5,'5 oml
BILLl..e CODE J 110-01-101
Attachment P-Audit Requirements
!"Replaces Paragraph 2h, Att;J<.:hment G)
1. This Allachment eslablishes audit
requirements ror Stale and local
governments. and Indian lIibsl
governments that receive Federal
assistance. It provides for independent
audits or financial operations. including
compliance with certain provisions of
Federal law and regulation. The
re~uirements are established 10 insue
that audits aremade on an organizalion-
wide basis. rather than on a grant-by-
grant basis. Such audils are to
determine whether (a) financial
operations are conducted properly, (b)
the financial statements are presented
fairly. (c) the organization has complied
with laws and regulations afiecting the
expenditure of Federal funds. (d)
internal procedures have been
established to meet the objectives of
federally assisted programs. and (e)
financial reports to the Federal
Government contain accurate and
reliable information. Except where
specifically required by law. no
additional requirements for audit will be
imposed unless approved by the Office
or Management and Budget.
2.. Defioitions: "Cognizant agency"
means the Federal agency that is
assigned audit responsibility for a
parlicular recipient organization by the
Office of Management and Budget.
"Recipient organization" means a
State department. a local government.
an Indian Iribal government. or a
subdivision or such entities. that
receives Federal assistance. It does not
include State and local institutions of
higher education or hospitals. which are
covered by Circular A-11o.
3. Slate and local governments and
Indian tribal governments shall use their
own procedures to arrange for
indepen,deot ;3upHs. and to prescribe Jb_~
scope of audits. provided that the audits
comply with the requirements set forth
below. Where contracts are awarded for
audit services. the conlIacts shall
include a reference to this Allach;;;ent.
4. The provisions of this At:ac~l71ent
do r.otlimit the authority ~f Federal
agencies to make audits of recipient
or;aniz~~ions. However. if independent
audits arranged for by redpiE:1ts meet
the requlrements prescribed below, all
I
09: 1555
llDR RF-161
4-7-80
Federal agencies shall rely on lhem. and
any additional audit work shall build
upon the work already done.. . ".. .
S. Audits shall be made In accotdance
with the Ceneral Accountin'g Office
Standards far Audit of Governmental
Organizations. Programs. Activities S-
Functions, the Guidelines for Pinoncial
and Compliance Audits of Federally
,Assisted Programs. any compliance
supplements approved by OMB~ and
generally accepl~ auditing standards
established by the American Institute of
Certified Public Accountants.
6. Audits will include. at a minimum.
an examination of the systems of
Internal control. systems established to
ensure compliance with laws and
regulations affecting the expendilllia or
Federal funds. financiallIansactions
and accounts, and financial stalements
and reports of recipient organiza lions.
These examina tions are to determine
whether:
a. There is effective conlrol over and
proper accounting for revenues,
expenditures. assets, and liabilities.
b. The financial statements are
presented fairly in accordance with
generally accepted accounting
principles.
c. The Federal financial reports
(including Financial Status Reports.
Cash Reports. and claims for advances
and reimbursements) contain acc\iiate
and reliable financial data; and are
presented in accordance with the terms
of applicable agreements. and in
accordance with Attachment H of this
Circular.
d. Federal funds are being expended
in accordance with the terms of
applicable agreements and those
provisions of Federal law or regulations
that could have a ma terial effect on the
financial statements or on the~nvards
tested.
7. In order to accomplish the purposes
set forth above. a representative number
of charges 10 Federal awards shall be
tested. The test shall be representative
of (1) the universe of Federal awards .
received. and (2) all cost categories that
materially affect the award. The test is
to determine whether Ihe charges:
a. Are neces'sary and reasonable for
the proper administra tion of the
pro..8E.a~~ '
b. Conform to any Iimi!ations or
exclusions in the award.
c. \Vere given consistent accounting
lIeatment and applied uniformly to both
federally assisted and olher ac:ivities of
the recipient.
d. Were net of a;:,;:!;cable credits.
e. Did not include costs properly
charseable to c:her federally assisted
programs.
P\;-:'li~~ed by T:-lE S\.-'REAU OF :-:ATIO:'\AL AFFAIRS, l:;C.. W.....SHI:'\GTO:O-:. D.C. 20037
17
09: 1556
f. Were properly recorded (i.e.. correct
amount, date) and supported by source
documentation.
g. Were approved in adv_ance. if
.ubjectto prior approval1n accordance
with Circular 74-4.
b. Were incurred in accordance with
competitive purchasing procedures. if '
covered by Attachment 0 of tbis
Circular.
I. Were allocated equitably to
benefiting activities, irtcludfng non.
Federal acllvilies.
a. Audits usually will be made
aIU1ually, but not less frequently than
every two years.
9. II the auditor becomes aware of
Irregularities tn the recipient
organization. the auditor shall promptly
notify the cognizant agency and
recipient management officials above
the level ,of involyemenl. Irregularities
include such matters as conflicts of
interest. falsification of records or
reports, and misappropriation of funds
or other assets.
10. The audit report shall include:
a. Financial statements. including
footnotes. of the recipient organization.
b. The auditors' comments on the
finar:cial statements which should:
(1) Identify the statements examined.
and the period covered.
(2J Identify the various pregrams
uncar which the organization received
Federal funds, and the amount of the
awards received.
(3) State tbat the audit was done in
accordance with the standards in
paragraph 5.
(4) Express an opinion as to whether
the financial statements are fairly
presented in accordance with generally
acce;lted accounting principles. II an
unc:;:.;alified opinion1:annot be
exp:assed, state the nature of the
qualifica tion.
Co The auditors' comments on
cor::;:liance and internal control which
shc'.:!d:
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HOUSING & DEVELOPMENT REPORTER
(1) Include comments on weaknesses
in and noncompliance with the :;ystems
of internal control. separately
identifying materjal weaknesses.
(2) Identify the nature and impact of
any noted instances of noncompliance
with the terms of agreements and those
provisions of Federal law or regulations
that could,have a material effect on the
rmancial statements andreports.
(3) Contain an expression of pQsitive
assurance with respect to compliance
with requirements for tested items. and
negative assuranc~ for untested items.
do' Comments on the accuracy and
completeness of financial reports and
claims tor advances or reimbursement
to Fed~ral age~c;ies.
e. Commen.tJ on corrective action
taken or planned by the recipient
11. Work papers and reports ahall be
retained for a minimum of three YearI
from the date of the aOOit report unless
the auditor is notified in writing by the
cognizant agency of the need to extend
the retention period. The audit
workpaperslhaU be made available
upon request to the cognizant agency or
its designees and the General
Accounting Office or its designees.
12: The Office of Management and
Budget will work with Federal agencies
and State and local governments to
assure that recipient audits are made in
accordance with the standards set forth
in paragraph 5-
13. The Office of Manag~ent and
Budget will designate cognizant
agencies for major recipient
organizations. ,
14. The cognizant agency shall have
the following responsibilities:
a. Obtain or make quality assessment
reviews of the work of non-f.e.der.al
audit organizations. and provide the
results to other interested audit
_age~~es.JJLa nO!l:F.:eq~I:9t ~udit
organIzation is responsible for audits of
recipients that hav-e different cognizant
audit agencies. a single quality
assessment re\iew should be arranged.)
b. Assure that all audit reports of
rec:pients that affect federally assisted
programs are received. reviewed. and
distributed to appropriate Federal audit
officials. These officials will be
responsible for distributing audit reports
to their program officials.
c. Whenever significant inadequacies
in an audit are disclosed. the recipient
organization will be advised and the
auditor will be called upon to take
corrective action. If corrective action is
nbt taken. the cognizant agency shall
notify the recipient organization and
Federal awarding agencies of the facts
and its recommendation. Major
inadequacies or repetitive substandard
performance of independent auditors
shall be referred to appropriate
professional bodies.
d. Assure that satisfactory audit
coverage is provided in a timely manner
and in accordance with the provisions of
this attachment.
e. Provide technical advice-and act as
a liaison between Federal agencies;-
independent auditors. and recipient
organiza tions.
f. Maintain a foIlowup system on audit
findings and investiga tive ma !ters to
assure that audit findings are resolved.
g. Inform other affected audit agencies
of irregularities uncovered. The audit
agencies, in turn, shall inform all
appropriate officials in their agencies.
State or local government taw
enfo-rcement and prosecuting authorities
shall also be informed of irregularities
within their jurisdiction. .
15. Recipients sh.aJ1 require
lubrecipients that are State and local
governments or Indian tribal
governments to adopt the requirements
in paragraph 1. through 11. above. The
recipient shall ensure that the
lubrecipient audit reports are received
as required. and shall submit the reports
to the cognizant agency. The cognizant
agency will have the responsibility for
these reports described in paragraph 14.
Publisl-:d by THE Bl:REAU OF :-;ATIO:\AL AFFAIRS, P.'iC.. WASHI:--;GTO:-;, D.C. 20037
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APPENDIX D
METHOD OF PAYMENT
~T. PETERSBURG ECONOMIC DEVELOPMENT CORPORATION
All payments shall be on a reimbursement basis only.
All requests for reimbursement shall be supported by proper invoices,
payrolls, checks, receipts and other documentation as requested.
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.
Payments will be made to St. Petersburg Economic Development Corporation.
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APPENDIX "E"
SECTION 3 CL~uSE
A. The work to be perfo~.ed under this contract i$ on a proj~ct assisted un~e~
a program providing direct Federal financial assistance from the Departwent
of Housing and Urban Development and is s~j~ct to the requirements of Sec-
tion 3 of the Housing and Urban Develop~ent Act of 1968, as a~ended, 12 U.S.C.
170u. Section 3 requires that to the greatest extent feasible opportunities
for t~aining and employment be given lower income residents of the project
area and contracts for work in connectior. with the project be awarded to
business concerns which are located in or o'..med in substantial part by persons
residi~g in the area of the project.
B. The parties to this contract will comply with the provisions of said Section 3
and the regulations issued pursuant thereto by the Secre~ary of Housing and Urb~
Develop:nent set forth in 24 CFR, and all applicable rules and orders of the
Departwent issued thereunder prior to the execution of chis contract. The
parties to this contract certify and agree that they are under no contractual
or other disability which would prevent them from complying with these re-
quirements.
C. The contractor will send to each labor organization or representative of workers
with which he has a coll~ctive bargaining agreernen~ or other contract or under-
standing, if any, a notice advising the said labor organization of workers'
representative of his commitments under this Section 3 Clause and shall post
copies of the notice in conspicuous places available to employees and appli-
c~~ts for employment or training.
D. The contractor will include this Sectior. 3 Clause in every subcontract for
work in connection with the project and will, at the direction of the applicar.t
for or recipient of Federal financial assistance, take appropriate action pur-
suant to the subcontract upon a finding that the subcontractor is in violation
of regulations issued by the Secretary of Housing and Urban Development, 24
CFR. The contractor Will not subcontract with any subcontractor where it'has
notice or kno',o/ledge that the latter has been found in violation of regulations
under 24 CFR, and will not let any subcontract unless the subcontrftctor has
first provided it with a preliminary statement of ability to comply with the
require~ents of these regulations.
E. Compliance with the provisions of Section 3, the regulations set forth in
24 CFR, and all applicable rules and orders of the Depart~ent issued thereunder
prior to the execution of the contract, shall be a condition of the Federal
financial assistance provided to the project, binding u::;on the applicant or
recipient for such assistance, its successors, ~nd assigns. Failure to fulEill
these req'.lirements shall subject the applicant or recipient, its contractors
and subcon~ractors, its succeS5ors, and assigns to those san~tions specified by
the gran~ or loan agreement or contract through Hhich Federal a: sistanca is
provided, and to suc~ sanctions as are specified by 24 CFR 135.
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,t'PENDIX F
NOTICE OF REQUIREME~T fOR .;Y=I~~TIVE ACTION
TO ENSURE EQUAL E!1.PLOY:-1.E~iT OPPORTUNITY
(EXECUTIVE ORDER 11246)
1. ~e Offeror's or Bidder's attention is called to the "Equal Opportunity
Clause" and the "Sta:ldard Federal Equal Employment Opportunity t.:onstruc-
tion Contract' specifications" set fort.\ herein.
2. The goals and timetables for minority and female participation, expressed
in percentage terms for t."e Contractor I s aggregate workforce in each
trade on all construction.work in the covered area, are as follows:
A. Goals for Fe~A1e Utilization, All ?races:
AREA COVC::RED
Goals for Women apply nationwide.
GOALS AND T!~~TABLES
Timetable
Goals
(perce:1t)
From Apr. 1, 1978 until Mar. 31, 1979.... 3.1
From Apr. 1, 1979 ll.."1. ti 1 Mar. 31, 1980. .. . 5.1
F:::-om Apr. 1, 1980 until Mar. 31, 1981. . . . 6.9
B. Goals for Minoritv Utilization:
TAMPA-ST. PETERSBURG, F!.A., AREA
Area covered: Hillsborough, Pasco, and Pinellas
counties, Fla.
Goals and Ti~e~ablesl
Trade
Goal
(percen t)
17.9
A.ll. . . . . . . . . . . . . . . . . . . . . . . . . .
lFor t.~e life of the project.
These goals are applicable to all b~e Contractor's cons~uction work
(whet."er or not it is =ecer~l or federally assisted) performed in the
covered area.
The Cont=actor's cocpliance ~i~~ the ~x~cutivc Order and the regulation5.
in 41 C:R Part 60-4 shall,be based on its i~plernentation of the Equal
Opport~,ity Clause, specific affi~ative action obligations reGui=e~ by
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the specifications set forth in 41 CFR 60-4.3(a), and its efforts to meet
the goals established for the geographical area ~here the contract
resulting from this solicitation is ~o be performed. The hours of minority
and female ~nployment and training must be substantially uniform throughout
the leng~~ of the contract, and in each trade, and the contractor shall
make a good faith effort to employ min~rities and women evenly on each of
its projects. The tr~.sfer of minori ty or female employees or trainees
from Contractor to Contractor or from project to project for the sole
purpose of meeting the Contractor's goals shall be a violation of the
contract, ~~e Executive Order and the regulations in 41 CFR Part 60-4.
Compliance with the goals will be measured against the total work hours
performed.
3. The Contractor shall. provide written notification to ~~e Director of the
Office of Federal Contract Compliance Programs within 10 working days of
award of any construction subcontract in excess of $10,000 at any tier
for construction work under ,the cont=act resultir.g from ~~is solicitation.
The notification shall list the n~~e, address and telephone numbe~ of the
subcontractor; employer identification n~~er; estimated dollar amount of
the subcontract; estimated starting and completion dates of ~~e subcontract;
and ~~e geographical area in which the contract is to be performed.
4. As used in this Notice, and in the contract resulting from this solicitation,
the "covered area" is pinellas Count!, Florida.
60-4.3 .(a)
EQUAL OPPORTU~ITY CLAUSE
curing the performance 'of this contract, the contractor agrees as follows:
1. The contractor will not discriminate against any employee or applicant
for employment because of race, color, religion, sex, or national ori~in.
The contractor will take affirmative action to ensure that applicants are
employed, and that employees are treated during employment wi~~out regard
to their race, color, religion, sex, or national origin. Such action shall
include, but not be limited to the following: ~ployment, upgrading,
demotion, or transfer. recruitment or recruitment advertising; layoff or
termination, rates of payor other for.ns of compensation; and selection
for training, including apprenticeship- The contractor agrees to post
in conspicuous places, available to e~ployees and applicantS for employ-
ment, notices to be provided setting forth the provisions of this non-
.discrimination clause.
2. The contractor will, in all solicitations or advertisements for employees
placed by or on behalf of the contractor, state that all qualified
applicants will receive consideration for emplo~.ent without regard to
raca, color, religion, sex, or national origin.
3. The contractor will send to each labor union or represen~ative of workers
with which he has a collective bargaining agreeme~t or other contract or
understanding, a notice to be provided advisin~ the said labor union or
workers' representatives of the contractor's co~~iG~ents under ~~is
section, and shall post copies of -=.he notice in conspicuous places C'.vail-
able to employees and applicants for ~ployment.
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APPENDIX F
4. The contractor will comply with all provisior.s of Executive Oreer 11246
of September 24, 1965, and of the rules, regulations, and relevant orders
of the Secretary of Labor.
5. The contractor will furnish all information and reports required by
Executive Order 11246 of Septe~ber 24, 1965, and by rules, regulations,
and orders of the Secretary of Labor, or pursuant thereto, and will permit
access to his books, records, and account~ by the udministering agency
and ~~e Secretary of Labor for purposes of investigation to ascertain
compliance w~th such rules, regulations, and orders.
6. In ~~e event of the contractor's non-co~p1iance wi~ the nondiscr~nation
clauses of ~~is contract or with any of ~~e said rules, regulations, or
orders, this contract Qay be canceled, terminated, or sus,pended in whole
or in part and ~~e contractor may be declared ineligible for further
Goverr~ent con~acts or federally assisted construction contracts in
accordance with procedures au~~orized in ~xecutive Order 11246 of
September 24, 1965, or by rule, regulation, or order of the Secretary
of Labor, or as o~~erwise provided by law.
7. The contractor will include the portion of the sentence immediately
prec,~dil\q p.u:;J.qraph (1) .\Ild thp. pr()vi~i(Jn:; of p.lrLl(]t"".:l.ph~ (1) through (7)
in ~v.~l.'y ::;ubcontrcJ.ct or purch.l~e orch:!.' I.:nll!:;:'; (!;<I.~Jn{ltL:d by ru1n!], rcqulo.1-.
tions, or orders of the Secretary of L~(Jr issued purZudnt to section
204 of f.xecut.ivA Order 11246 of Sept:ernber 24, 1965, so that such provisions
will be binding upon cadi ~lllL~UIlLt.:1I.:II" 1.'1 Vnlll'll'. Thn ,'!"ll\triu-:l:or will
take such action with respect to any s~cont=act or purchase order as
~~e administering agency may direct as a. me~ns of enforcing such provisions,
including sanctions for non-compliance: p~ovidad, however, That in the
event a contractor becomes involved in, or is threatened with, litigation
with a subcontractor or vendor as a result of such ei=ection by the
administering agency, the contractor may request ~~e United States to enter
into such litigation to protect the interests of ~~e United StateS.
STANDARD ~EDERAL EQUAL EMPLOYHENT O?PORTU"NITY CONSTRUCTION CONTRACT
SPECI~ICATIONS (EXECUTIVE ORDER 11246)
1. As used in ~~ese specifications:
a. "covered area" means ~"'e geographi~~l area descri~ed in the solici ta-
tion from which ~~is contract resulted.
b. "Director" means Director, Office of Federal Contract Compliance
Programs, United States Depar~ent of Labor, or any person to whom
~"'e Director delegates authority.
c. "::''t\ployer identification number" r.,e:lns the Federal Social Security
nunber used on ~~e zr..ployer's Qua~terly Federal Tax Return, U. S.
Treasury Oepar~~ent Form 941.
d. "r-tir.ority" includes:
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APPENDIX F
(1) Black (all persons having origins in any of the Black
African racial groups not of Hispanic origin) ;
(2) Hispanic (all persons of Mexican, Puerto Rican, Cuban,
Central or South American or other Spanish'Culture or
origin, regardless of race);
(3) Asian and Pacific Islander (all persons having origins
in any of the original peoples of the Far East, Southeast
Asia, the Indian Subcontinent, or the Pacific Islands); and
(4) American Indian or Alaskan Native (all persons having
origins in any of the original peoples of Nor~ America and
maintaining identifiable tribal affiliations through m~er-
ship and participation or COI:'.r.lunity icentification) .
2. Whenever the Contractor, or any Subcontractor at any tier, subc~ntracts
a portion of the work involving any construction ~ade, it shall
physically include in each subcontract in excess of $10,000 the provi-
sions of these specifications and the Notice which contains the ap-
plicable goals for minority and female participation and which is set
forth in the solicitations from which ~~is contract resulted.
3. If the Contractor is participating (pursuant to 41 C~~ 60-4.5) in a
Hometown Plan approved by the U. S. Depar~~ent of Labor in the covered
area either individually or through an association, its affi~tiye action
obligations on all work in the Plan area (including goals and timetables)
shall be in accordance with that "Plan for those trades which have unions
participating in the Plan. Contractors must be able to demonstrate their
participation in and conpliance with ~~e provisions of any such Hometown
Plan. Each Contractor or Subcontractor participating in an approved Plan
is individually required to comply with its obligations under the EEO
clause, and to make a good faith effort to achieve each goal ~,der the
Plan in each trade in which it has employees. The overall good faith
performance by other Contractors 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 to achieve the Plan goals and time-
table.
4. The Contractor shall implement the speci=ic affi~ative action standards
provided in paragraphs 7a through p of ~~ese specifications. The goals
set form in ,the solicitation from which this con~act resulted are
expressed as percentages of the total hou=s of er.p1vyrnent and training
of minority and female utilization the Contractor should reasonably be
able to 'achieve in each construction trade in which it has employees in
the covered area. The Contractor is ex?ec':ed to make substantia:lly
unifo~ progress toward its goals in each craft duri~g ~~e period
specified.
5. Nei~~er the prov~s~ons of any collective bargaining agreement, roor the
failure by a union with whom the Contractor has a collactive bargai~ir.g
agree~ent, to refer either minorities or women s~all exc~se the Contrac-
tor's obligations under ~'e5e specifications, Exe~utive Crder 11246, or
~~e regulations prc~ulgated pursu~~t theret~.
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6.
) ) APPENDIX F
In order for the nonworking training hours de apprentices and trainees
to be counted in meeting the goals, such apprentices and trainees must
be employed by the Contractor during the training period, and the
Contractor must have made a commitment to employ the apprentices and
trai~ees at the completion of their training, subject to the availabil-
ity of employment opportunities. Trainees mU3t be trained pursuant to
training programs approved by the U. S. Department of Labor.
7.
The Contractor shall take specific affirmative actions to ensure equal
employment opportunity. The evaluation of the Contractor's cOr.lpliance
with ~~ese specifications shall be based upon its effort to achieve
maximum results from its actions. The Contractor shall document these
efforts fully, and shall implement affi~ative action steps at least as
extensive as ~~e following:
a. Ensure and maintain a working environment free of harrass~ent,
intimidation, and coercion at all sites, and in all facilities at
which the Contractor's employees are assigned to work. The
Contractor, where possible, will assign eNO or more wo~en to each
construction project. The Contractor shall specifically ensure ~~at
all foremen, superintendents, and other on-site supervisory personnel
are aware of and carry out t~e Contractor's obligation to maintain
such a workinq environment, with specific attention to minority or
female individuals working at such sites or in such facilities.
b. Establish and maintain a current list of minority and female
recruitment sources, provide written notification to wino~ity and
female recruitment sources and to co~munity organizations when the
Contractor or its ~.ions have emplo~ent oP9ortunities available,
and m~intain a record of the organizations' responses.
c. Maintain a current file of the names, addresses and telephone
numbers of each minori~y and fema~e off-~~e-street applicant and
minority or female referral from a union, a recruitment source or
community organization and of what action was taken wi~~ .respect
to each such individual. If such individual was sent to the union
hiring hall for referral and was not refe~=ed back to the Contractor
by the union or, if referred, not employ~d by the Contrac~or, this
shall be documented in ~~e file with the reason therefor, along with
whatever additional actions the Contractor ~ay have taken.
d. Provide immediate written notification to ~~e Direc~or when the
union or unions wi~~ which the Cont=actor has a collective
bargaining ag=ee~ent has not referred to the Contractor a minority
person or woman sent by' the Contractor, or when th~ Contractor has
other information that the union referral process has irr.geded the
Contractor's efforts to meet its obligations.
e. Develop on-t~e-job training opportunities and/or participate in
training programs for the area which expressly include mi"-orities
and women, including upgrading prog=~LS and apprenticeship and
trainee progra~ relevant to the Contractor's e~910yrnent needs,
especially those progr~ fundec or approved by the Depar~~ent of
Labor. The Contractor shall provide notice of these ?rogr~ to
the sources compiled under 7b above.
f. Disseminate ~~e Contractor's EEO policy by providing notice of ~~e
poli~i to unions and training ~=ogr~~s and reqeesting ~~eir coopera-
tion in assis~ing the Contractor in ~e~ting its EEO obligations; by
inclUding it in any policy manual and collective bargaining agreement; by
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APPENDIX F
publicizing it in the company newspape~, annual report, etc.; by
specific review. of the policy with all management personnel and
with all minority and female employees at least once a year; and
by posting the company EEO policy on bulletin boarcs accessible
to all employees at each location where const~uction work is
performed.
g. Review," at least anr.ually, the company's EEO policy anc affirmative
action obligations under these specifications with all employees
having any responsibility for hiring, assigr~ent, layoff, termina-
tion or other employment cecisions including specific review of
these items with onsite superviso~ pe~sonnel such as Superintencents,
General Foremen, etc., prior to the initiation of construction work
at any job site. A written reco=d shall be made and rnaintainec
identifying ~'e time and place of these meetings, persons attending,
subject matter discussed, and disposition of the subject matter.
h. Disseminate the Cont=actor's EEO policy externally by including
it in any advertising in the news media, specifically including
minority and female news media, and providing written notification
to and discussing the contractor's EEO' policy wi~, o~~er Contrac-
tors and Subcont:actors wi~~ whom the Cont~actor does or anti=i-
pates doing business.
i. Direct its recruitment efforts, both oral and written, to minority,
female and community organizations, to schools wi~, mino~ity and
female students and to mino~ity and female recrui~ent and training
organizations serving the Contractor's recrui~ent area and ~ploy-
ment needs. Not later than one month prior to the date for ~'e
acceptance of applications for apprenticeship or other training
by any recruitment source, the Contractor shall send written
notification to organizations such as the above describing the
openings, screening procedures, and tests to be used in the selection
process.
j. Encourage present minority and female employees to recruit other
minority persons and women and, where reasonable, provide after
school, summer and vacation employment to minority and female youth
both on the site and in other areas of a Contractor's workforce.
k. Validate all tests and other selection requirements ~here there
is an obligation to do so unde~ ~l C:~ Part 60-3.
1. Conduct, at least anr.ually, an invento~ and evaluation at least of
of all minority and fe~le personnel for pro~otional opportunities
and encourage these employees to seek or to prepare for, ~~rough
appropriate training, etc., such opportunities
m. Ensure that seniority practices, jo~ classifications, work assign-
ments and other personnel practices, co not hav~ a disc:-i:c..inatory
effect ~y continually monitoring all ?ersonnel and em?lc~,ent
related activities to ensure ~~at the ~E~ policy a~d the Contructor's
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APPENDIX r'
obligations under these specifications are being carried out.
n. Ensure that all facilities and company activities are non-
segrated except that separate or single-user toilet and
necessary changing facilities shall be provided to assure
privacy between ~~e sexes.
o. Document and maintain a record of all solici~ations of offers
for subcontracts froQ minority and female construction
contractors and suppliers, including circulation of solicitations
to r.Unori ty and female contractor associations and other business
associations.
p. Conduct a review, at least annually, of all supe~visors' adherence
to and performance under the Contractor's EEO policies and
affirmative action obligations.
8. Contractors are encouraged to participate in volunta~ associations
which assist in fulfilling one or more of their affircative action
obligations (7a through p). The efforts of a contractor association,
joint contractor-union, contractor-community, or o~'er similar group
of which the contractor is a member and participant, may be asserted
as fulfilling anyone or more of its obligations under 7a through p
of these Specifications provided that ~~e contractor actively partic-
ipates in the group, makes every effort to assure ~~at the group has
a positive impact on the employment of ~norities and women in the
industry, ensures ~'at ~~e concrete benefits of the progr~~ are
reflected in the'contractor's minority and female workforce partic-
ipation, makes a good faith effort to wcet its individual goals and
timetables, and can provi~e access to docurr.entation which derr~nstrates
the effectiveness of actions taken on behalf of the Contractor. The
obligation to comply, however, is the Contractor's and failure of such
a group to fulfill an obligation shall not be a defense for the
Contractor's noncompliance.
9. A single goal for minorities and a separate single goal for women have
been established. The Contractor, however, is required to provide
equal employment opportunity and to take affi~ative action for all
minority groups, both male and female, and all .....omen, both minority
and non-minority. Consequently, the Contractor may be in violation
of the Executive Order if a particular group is employed in a substan-
tially disparate manner (for example, even tho~gh the Contractor has
achieved its goals for women gene~al1y, w~e Contractor may be in
violation of ~'e Executive Order if a specific minority group of wo~en
is underutilized).
10_ The Contractor shall not use the goals anc t~~etables or affi~ative
action standards to ciscriminate agai~st a~y person because of race,
color, religion, sex, or national origin.
11. The Contractor shall not enter into any Subcontract wi th any pe~son
or firm debarred from Government contract3 p~rs~ant to F.xecutive
Order 11246.
F-7
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Al:'l:'1:;NDIX F
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)
12. The Contractor shall carry out such sanctions and penalties for
violation of these specifications and of the Equal Opportunity Clause,
including suspension, termination and cancellation of. existing sub-
contracts as may be imposed or ordered pursuant to Executive Order
ll246, as amended, and its implementing regulations, by ~~e Office
of Federal Contract Compliance Programs. Any Contractor who fails
to carry out such sanctions and penalties shall be in violation of
these specifications and Executive Order ll246, as amended.
l3. The Contractor, in fulfilling its obligations under ~~ese 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 maximum results from its efforts to ensure
equal e~ployment opportunity. If the Contractor fails to comply with
the requirements of the Executive Order, the implementing regulations,
or these specifications, the Director shall proceed in accordance with
4l CPR 60-4.8.
14. The Contractor shall designate a responsible official to monitor all
employment related activity to ensure that the company EEO policy is
being carried out, to submit repo~ts relating to the provisions hereof
as may be required by the Government and to keep records. Records
shall at l~ast include for each employee the name, address, telephone
numbers, construction trade, union affiliation if any, employee
identification nucbe~ when assigned, social security number, race,
sex, st~tus (e.g., mechanic, apprentice, trainee, helper, or laborer),
dates of changes in status, hours worked per week in the indicated
trade, rate of pay, and locations at which ~~e work was perfo~ed.
Records shall be maintained in an easily understandable and retrievable
. form; however, to the degree ~~at existing records satisfy tbis
requir~~ent, contractors shall not be required to maintain separate
records.
lS. No~~ing herein provided shall be const~ed as a limitation upon the
application of other laws which establish different standards of
compliance or upon t:he application of requirements for the hiring of
local or other area residents (e.g., those under ~'e Public Works
Employment Act of 1977 and the Community Development Block Gran~
Program) .
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EXHIBIT "G"
fi .570~601 Nondiscrimination.
(3) A recIpient. in determinIng the
sIte or location or bousing or facilitIes
provided In whole or in part witb funds
under tills part, may not. mllke selee-
tions of such site or 10c.:ltion owhJch have
the effect or excludIng indIviduals from.
denying" lhem the bcnetlL.s or, or sub_o
-Jectlng tliem to discrimInatIon on {.be
. ground or race, color, natIonal" origIn. or
sex; or which h::l.Ve the ;nu-pose or ecrred
or ddeatIng or 6ubst.3ntJ:illy 1mpsUn'lg,
the.accomplIshmenl or the objectives or
the Act and at th1s section.
" .(~) en In admL'l!~rIng a progrnm or
acttvlty funded in whole or In p:u-t with
C<lmmunlty ceveloplIlent 0 block ~ant.
funds recardlng which lhe reclj)lent has'
previously dlscrlrninat.cd B.!::Unst persons
000 the" ground or rn.ce, color, natIonal
oricin lor !-eX. lhe reclpicnt must t.!1.ke
affirmatIvc netloD lo overco:ne the effrets
oJ zlor dhcrlmlosilcin..
: Cln 1'.:"cn In UIU Ilr..sl;nre of such prior
'dlscrlmln::ltlon. a rcCfpknt ill o.am!ili.s-
1erlng a pro~rnm or ndl\1lj' fundc;d.ln
...hol~ or. In pnrt ;,..lth ool!::m-c::n.lty de-
velopment block bl.lnl t'unds should tnke
~U';OAC.fjo=l. ~- ~1.:~"'Comc ille ca'e"ct;.
1:It condItIons ....hlcb ..auld otherwise re-
8ult In 11mJtlng p:lrtlclpatlon by pe:-sons
at a particular race. color. nR-tlonnl orlgln
or ~X_ W'h.~re pre\10us discrlmlnatoO"
p~tlce"or \L"3.ge tends. on the ground
or ra.c.e, color, n/l.tlonal orlgin or &ex. to
exclude individuals from partlclt):l.Uon
In, to d~ny them the beneflls "r. or to
'subject LlJom:1o discrlminntion under"
any program or acthity to which lh.Is
pa~ Ilpplles, tlie redplcnt h:l.S an obliga-
tiE!l to ~ke rC:l:<onable action lo remove.
or overcome the consequences oC the
.prior dLscrimlna!.ocy pr::lctlce or usage.
and lo accoplpllsh the purpose ot the
AS~'
em) A recipient shall not be prohibIted
by thi!i part from taking any actIon eligi-
ble under Subpart C 10 ameliorale an im:
balance In services or facUitles provIded
to any gpo!;:Taphlc area or specific. group
ot persons within 1ls jurisdictIon, where
the purpose of sucb action Is lo overcome
p~orciiscrib1inatory practice or usa.ge. .
(5) NolwithsL:.nding anything lo the'
contrary in. this osection. nothing con":
t~Ined herein shall be constr:ued lo pro-
hibIt any recipient from maintaining or
constructing se;>ar:lte living facilitIes or
rest room.facilities,for the different seXeS.
Furthermore, seleetivity on the basis of
sex.is I;Ot prohibited when 1n.st1tutiDnaf _
or cusloctial seiv1ces can properly be per-
formed only by a member or the same
sex as the rec1pienls or lr.e. services.
(&) iiiscrimination prohibited., Sec-
tion 109 of otlie Housing. and Conununitt
Development Act of 1974 requires thal;no
person 10 the United states shall on the
ground of. race, color, national origin or
sex, be" excludP.d from partlclpation in.
be denied the benefits of, or be subjected
to d1scrlmlnatiop under, any program or
act1v1ty funded ~ whole or 10 part with
caInJEup.lly deve!2P.m~~t. Iun~"" !D~e.
avallable pursuant to this Part. For pur-
poses of this section "Program or a.ctiv-
1ty" is defined as any function conduct-
ed by. an Identifiable admln1strative UI11t
of the. recipient, or by a.ny unit ot gov-
ernment or private contractor -recelvfnc
community development funds or loans
from the recipIent. "Funded tfi wbole or
Oln part with communlty development;
funds" mes.:os that .commun1ty develop..-
ment fund.s1i1any amount 10 the. form.
of grants or proceeds from HOD. guar-
e.nteed loans have been transferred by
the rec1pIent lo an IdenWi.a.ble admin-
istrative unit and disbursed IIi a program
9Lactly1%. -
(b) Specific discriminatoT1l actio7U
"rohibited and corrective actiom. (1) A
rectplent may not, Under any program or
activity lo whJch the regulations ot this
p!!-rt IJ;123 a.pply, directly or,thrauga eon-
. t.ra.ctuJU or other arrangements, on ~e
iround or rice, color; nR-t:on91 origIn, or
(lex:
(I) Deny any !aclIlties. servkcs. finan-
cfal a.ld or olher bcneflls provIded under
tlie pro"gram or activity. . .
(ll) Provide any fn.cilitlC's. serv ic ell. fl-
nailclal a.ld or other benefits whlcfi a.re
dIfferent, or Are provided in s. ditTerent
form from that provided to others under
the program or acllvlty.
__ (Ill) Subject lo segregated or separate
treatment 10 any f:l.Clllty in. or in all)'
matter or process relaLed to re1:eipt of
any service or benef~t "under ~e pro-
gram or actIvlt.y.
'(Iv) Restrict in a.n:r v>s.y access to, or
10 the enjoyment or any advantage or
privilege enjoyed by others ~ connec-o
tion wIth ofa.c1litIes, servlcf'S, tlnandal aid
&r Qther benefils under the program oor
ictlvity.
(v) Treat an indivIdual differently
from others 10 determln1ng whetber tlie
indJvldual satisfies any admission. enroll-
ment, eIlgibility, membership., or other
'requirement or conditIon which ind1vid-
\lab must mcet In .order to be provided-
a.n.1 facilities, services or other benefit
provided under the .progr.lm or actIvity.
. (Vi) Deny an opportunity to partici-
pate In a program or activity '8.5. an em-
ployee.. .
- (2) A recipient may not utilize cri-
teria or methods ot admlcistr:ation
whIch have the ectre-ct of subjecting In-
dhJduals lo dIscrLrnin:ltion on the basis
or race, color, 'national orlgin, OT sex. or
have the effect of de!e:lting or sub..rt2.n-
ti;illy Impairing necomplishmcnt of the
objectives of the, progr:un or ACtivity
with respect to inCJvlduals or a particular
race.. color, n2.tlor.~ origIn, or sex.
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APPENDIX "H"
-
Federal Register I'Vol. 45, No. 132 I Tuesday, July 8, 1980 I Notices
~~--
46022
OffiCE OF MANAGEMENT AND
BUDGET
arouIar A-122, "Cost Principles for
~ofit Org.anlzations"
AGENCY: Office of Management and
Budget _
ACTION: Final Policy. .--
SUMMARY: This notice advises of a new
OMB Circular dealing with principles for
determining costs of grants. contracts,
and other agreements with nO!lprofit
organizations. . ,_
The Circular is the product of an
interagency review conducted over a
two-year period. Its purpose is to
provide a set of cost principles to
replace existing principles issued by
individual agencies. These have often
- contained varying and conflicting
requirements. and created confusion
among agency administrators. auditors.
and nonprofit ofZ:cials. The new Circular
will provide a unifonn approach to the
problem of determining costs. and
promote efficiency and better
understanding between recipients and
the Federal Government
EFFECTlVE DATE: The Circular becomes
effective on issuance.
FOR FURTHER INl"CnMATION CONTACT:
Palmer A. Marcantonio. Financial
Management Branch. Office of
Management and Budget. Washington.
D.C. 20503. (202) 395-4773.
SUPPLfMENTAi'lY INFORMATION: Before
the Circular became final there was "
extensive coordination with the affected
" nonprofit organizations. professional
associations. Federal agencies and
others. All interested persons. were
given an opportunity to comment on the
proposed CIrcular through informal
consuHations and a notice in the Federal
Register. In response to our requests for
comment. we received about 100 letters.
from Federal agencies, nonprofit
organizations. associations. and other
interested members of the public. These
commen!s were considered in the fU1al
version of the Circular. There follows a
sUI:'~'"Tlary of Lie major comments and the
action taken on each. -
In addition - to the changes described.
other changes have been made to
u::prove the clarity c:nd readability of
the Circular. To the extent possible, we
have tried to make the language of this
Circ~ar consistent with that oC cost
principles for educational institutions
(Circular A-Z1). and State and locaL
govemme:'lts (Circular 74-4).
Sur.;mar./ of Sig::lficant Changes:
Set forth are changes that have been
made in the final Circular as a result of
public comments. The more significant
changes to the basic Circular and
Attachment A include:
1. Paragraph 2. "Superscssion~ w~.
added to the basic Circular 10 make it"
clear that this Circular supersedes cost
principles issued by indh;dual agencies.
2. Paragraph 4 'of the basic Circular
has been amended to make it clear that
the absence of an advance agreement on
any element of cost will not in itself
affect the reasonableness of allocability
oC that element. Also, this paragraph
was amended to make it clear that
where an iiem of cost requiring prior
approval is specified in the budget.
_approval of the budget constitutes
approval oC the cost
3. Paragraph 5 of the basic Circular
has been changed to remove any doubt
as to which nonprofit organizations
would not be covered by t.l::e Circular.
Now. Appendix C to the c-lrcu!ar lists all
exclusions.
4. Pa:agraph 8 was added to the basic
Circular to permit Federal agencies to
request exceptions from the.
requirements of the Circular.
5. Paragraph E.2. was added to
Attachment A to cover the negotiation
and approval of indirect cost rates. and
to provide for cognizance arrangemenl3.
The more significant changes to
Attachment B to the Circular L'lc!ude:
_ _.1. Paragraph 5, Compensation for
Personal Services. was modified to:
a. Permit Federal agencies to accept a
substitute system for documenting
personnel costs through means other
than personnel activity reports.
" b. Clarify provisions covering the
allowability of costs for ll."1employment
compensation or workmen's
compensation. and costs of insuranca
policies on the lives of trustees. officers,
or other employees.
. c. Malee unallowable any increased
costs of pension plans caused by
delayed funding.
d. Delete a paragraph dealing with
review and approval oC cOIr'!pensation of
individual employees.
2. Paragraph 6. Continger.cies. was
changed to make it clear that the term
"contingency reserves" excludes self.
_ insurance reserves or pension funds.
3. Paragraph 10 was modified to-
provide that the value of donated
services used in the performance of a
direct cost activity shall be allocated a
share oC iIodirect cost only wheI: (a) the
aggregate value of t.'te service is .
material. (b) the services are sup;Jorted
by a significar.! amount of L~e indirect
cost incurred by the organization. and
(c) the cirect cost activity is not pursued
primarily for th benefit of the Feceral
Gover~:nent. P.o\'isicns were also
added to !his paragraph for the
cognizant agency and the recipient to
negotiate when there is no basis for
determining the fair market value of the
services rendered. and to permit indirect
costs allocated to donated services to be
charged to an agreement or used to meet
cost sharing or ma!ching requiremen-ts.
- 4. Paragraph 31. Equipment and Ot.?er
Capital Expenditures, was changed.
Capital equipment is now defined as
ha..;ng an acquisition cost of $500 and a
useful life of more than two years.
5. Paragraph 26. Meetings,
. Conferences. The prior approval
. requirement for charging meetings and
conferences as a direct cost was
deleted. A sentence was added to make
it clear such costs were allowable
provided they meet the criterion for the
aIlowability oC cost shewn in
Attachment A.
6. Paragraph 27, Organization Costs,
was amended to provide that
organization costs may be allowable
when approved in "friti~ by the
awarding agency. .
7. Paragraph 30. Page Charges in
. Professional Joumals. was revised to
provide that page charges may be
alIowable.
8. Paragraph 37, Public Information
Service Costs. was modifled to make
public information costs allowable as
direct costs with awarding agency
approval.
9. Paragraph 43. Rental Costs. was
rewritten to: - _ .
a. Make it clear that ren!al costs
under leases which create a material
equity on the leased property are
a1!owable only to the amount that the
organization would have been allowed
had they purchased the property; e.g.,
depreciation or use allowances.
- maintenance. taxes. insurance. ete.
b. Clarify the criteria for material
equity leases.
10. Paragraph 51. Tra~'el Costs. was
amended to delete the prior approval
requirement for domestic travel. In
adation to the above. a number oC
editorial changes WEre made to the'
original document.
Suggested Changes Not Considered
Necessary.
Comment. Several respOrlderrts
question~d the pro..ision that. for "less
than arm's ler:gth" 1l'2ses. rental costs
are allowable only up to the ar.lOunt that
would be allowed hc:d tHle to the
property been vested in t~e gr;;nte-e
organization. In their cpbion tbs rule
will res;:]t in ur.neces~aiJ' cost to the
Federal G~';e:r..;:~ent. s;;;ce it would
encou:age an c:;;:?~;Z3!!C:l to lease
space on :!-.e ccmmGciaI :::arket at
higher rate.
e
Response. The cost principles are
designed to co....er most situations;
howe....er. there are always exceptions
that must be considered on a case-by.
case basis. The Circular contains a
provi!1ion for Federal agencies to request
exceptions." . .- '.
Comment. Several respondents
questioned wh}' interest is not an "
allowable cost, since it is an ordinary
and necessary cost of doing business.
Response. It bas been a longstanding
policy not 10 recognize. ir.terest as a cost
However. this policy has recently been
revised for Stale and local governments
in Circular i4-4. with respect to the cost
of office space. The revision provides
that "rental" rates for publicly owned
buildings may be based on actual costs.
including depreciation. interest, . .
operation and maintenace costS'. and
other allowable costs. This revision was
under consideration for some time. It
was studied extensively by o~m. the
General Accounting Office and others.
and considerable analysis went into Its
formulation. Suggestions for extending it
to nonprofit o:-ganizations would bave to
be examined with equal care~ This has'
not yet been done. and we were
reluctant to further delay issuance of .
this Circular. "
Comment. Several respondents
questioned why public information costs
were not allowable as an indirect cost..
Response. Public information.costs
are often direct services to an
organization's other programs. They are
allowable. however. as a direct charge
when they are within' the scope of wQrK
of a particular agreement
Comment. One respondent suggested
that smaller grantees be excluded from.
compl}'ing with the Circular.
Response. Similar rules for .the 50 .
selected items of cost would be needed-
regardless of the size of the grantee. To
the extent possible. the Circular
provides simplified methods for smaller
grantees.
Comment. One respondent said the
requirements of the Cost Accounting
Standards Soard should be applied to
cover contracts with nonprofit
organizations. .
Response. It is unlikely that the type
of grantees co\'ered by this Circular
would bave contr:'!cts large enough to be
covered by the CASS. In the event that
they do. bowever. the regulations of the
CASS would apply.
Com,r.ent.' One respondent said the
allocation of indirect cost to donated
services would pose a tremendous
difficult)' to tne organization. The
oq;ani:ation relies on a corps of
appro)(::nate1r 8.C'OO cCffimillee members
to carry out obligatior.s in response 10
Co\'ernment requests. There is no
~
employer relationship in the
arrangements for this assistance. nor are
there committee members normally .
reimbursed for such services. Fur~er. it
was pointed out the committee members
spend many thousands of hourS' outside
the organlzalion's premises conducting
research.': . ~..
Response. It wo'uld appear that this
l}'Pe of committee arrangement would
not be considered in the "determination.
of the organization's indirect cost rate
provided that Federal agreements do not
bear an unreasonable share of indirect
. cosl However. the cognizant agency
will be responsible for evaluating the
allocation of indirect cost where there
are committee-type arrangements on a
case-by-case basis.
Comment. One respondent s'J3gested
that wherever possible the language in
t!:e Federal Procurement Regulations be
used for nonprofit organizations.
Response. The lar.guage in the Federal
Procurement RegulatioIls was
designated primarily for commercial"
firms. and is not necessarily well s;ilted
to nonprofit organizations. At the
suggestion of th.e General Accounting
Office. thenonprofit cost principles
were writfen to conform as closely as
possible to those of educational '
institutions (Circular A-21). and Stite
and local governments (Circular 74-4)".
John J. LordaD.' ,
aiel. Financial Management Branch.
(CUculac So. A-l221
June p. 1980
To The Heads of Executive
Departments and Esta~lishments
Subject: Cost principles for nonprofit
organizations. .
1. Purpose. This Circular establishes
principles for determining costs of
grants, contracts and other agreements
-with nonprofit organizations. It does not.
apply to colleges and universities which
are covered by Circular A-21; State.
local. "and federally recogrJzed Indian
tribal govermnents which are covered
. by Circular 74-4; or hospitals. The
principles are designed to provide that
the Federal Government bear its fair
share of costs except where restricted or
prohibited by law. 111e principles do not
attempt to prescribe the extent of cost
sharing or matching on grants. contracts.
or other agreements. Howe\'er. sucb cost
sharing or matching shall not be
accomplished through arbitrary
limitations on individual cost elements
by Federal agencies. Provision for profit
or other increment above cost is outside
the scope of this circuiar.
2. St.:persession. This Circular
supersedes cost principles issued by
~602:
Individual agencies for nonprofit
organization. ..
3. Applicability. a. These principles
shall be usedby all Federal agencies in
determining the. costs of work performec
by nonprofit organizations under grants.
cooperative agreements. cost
reimbursement contracts. and other
contracts In which costs are used in
pricing. administration. or settlement
All of these instruments an hereafter
referred to as awards. The principles do
not apply to awards under which an
or.;aniza tion Is nol:required to acco:mt
to the Government for actual costs
incurred.
b. All cost reimbursement subawards
(subgrants. subcontracts. etc.) are
subject to those Federal cost principles
applicable to the particular 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
a college or university. Circular A-21
shall apply; ii a subaward is to a State.
local. or federally recognized Indian
tribal government. Circular 74-4 shall
apply.
4. Definitions. a. "Nonprofit
organization" means any corporation.
trust..association. cooperative. or other
organization wbich (1) is operated
primarily for scientific. educational.
sen;ce. charitable. or similar purposes
in the public interest: (2) is not
organized primarily for profit; and (3)
uses its net proceeds to maintain.
improve. andlor expa.nd its opera tions.
For tbis purpose. the term "nonprofit
organization"excludes (i) colleges and
. universities; (ii) hospitals: (iii) State,
local. and federally recognized Indian
tribal governments; and (iv) those
nonprofit organizations which are
excluded from coverage of this Circular
in accordance with paragraph 5 below.
b. "Prior approval" means securing -
the awarding agency's permission in
advance to incur cost for those items
that are designated as requiring prior
approval by the Circular. Generallj' this
perrrJssion will be in writing.. Where an
item of cost requiring prior approval is
specified in the budget of an awaro.
approval of the budget constitutes
approval of that cost. .
5. Exclusion of some nO!lprofit
organizations. Some nonprofit
organizations. because of their size and
nature of operations. can be considered
to be similar to commercial concerns for
purpose of appIicabiHty of cost
principles. Such nonprofit organizations
shall Gpera Ie t:nder Federal cost
prbcip!es applicatle to cornrnercial
concerns. A listing of these
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Federal Register I Vol 45, No. 132 I Tuesday, July 8, 1980 I Notices
-
oCbanizalions Is conlained in _ .
Attachment C. Other orsanizations may
be added from lime 10 time.- .
6. Responsibijitie;. Agencie. .
responsible for administering progrsnu
thai involve awards 10 nonprofit.
organiza tions shall implement the .
provisions of this Circular. Upon. .
request implementing inslJ:'uctifln shall
be furnished to the Office of .
Management and BudgeL Agcncies shall
designate a liaison official 10 serve as
the agency representative on matters
relating to the implementation of this
Circular. The name and title of such'
rcprcsenlalive shall be furnished to the
Office of Management and Budget"
within 30 days of the date of thi.
Circular.. _
7. Attachments. The prin-ciplcs and
rela ted policy guides are set forth in the
follo\o';ng Attachments: .
Attachment A-General Principles _
Attachment B-Selccled Ilems of Cost
Attachment ~N'onprofit
Organiza tions Not Subject to This"
Circular
8. RequesLs for exceptions. The Office
of Manazemenl snd Bueget may grant
exceptions to the requirements oClhis
Circ'U!ar w~en permissible under
existing law. However, in the interest of
achieving maximum unifcnnity.
exceptions will be permitted only in
highly unusual circumstances. .
9. Effecti..-e Date. The provisions of
this Circular are effective immediately.
Implementation shall be phased in by
incorporating Lie provisions into new
a wards made after the start oC'the
organization's next fiscal year. For" .
existing awards the new principles may
be applied if an organization and the
cognizant Federal agency agree, Earlier
implementation. or a delay in "
implemen:ation of individual pro....isions
is also permitted by mutual agTeement .
between an oq;anizalion and the.
cognizant Feaeral agency. _
10.Inquiries. Further informati.on
concerning this Circular may be .
obtained by contacting the Financial
~fanagement Branch, Dudget Re\;ew
Di.....ision. Office of Management and
Budget. Washington, D.C. 20503, ..
ielcphone (lOl] 3S}-4773.
James T. McIntyn, Jr..
Director. -
(Circular No. A:"lZ2J
AlIacbme:lt A
, .
General Principles
Tcble of C:;.-:tenu
A. E:lsic Cc::sice~ations
1. cC;-:;;'t'!:~:C-:l or :o:al cost.
Z_ Factors a!:cc!:ng ar.o",\'a~;!itj' oC cosLs
3. R,aso::.bJe cos~
4. A!locc:'e costs
5. Applicable credit. .
6. Advance understandings
B. Dired Costa :
-
C. lncf'u-ect Cas..
D. An~tion 'of Indirect Costs and
DetenninalloD oCIndi~ect Cost Rates
1. Ceneral '. . "'-
2. Simplified alloca lion me lhod. '. .
3. Multiple allocation base method. '..
4. Direct anocation method
5. Special indirect cost ratea
E.. -Negofiation and Approval ofTndIl'ect Cost
Rates .
1. Definitions
2. Negotiations and approval or rates
(C'ucular No. A-1.22}
Attachmc:lt ^ "
General Principle.
A. Basic Considerations. .
1. Co~pasition of total costs. The 'iolal cost
oC an award is the sum of lhe allowable
direct and allocable indirect cosls less any
applicable credits. .
2. Factors affecting allo\A."apJ1ity of casu.
To be aDowable under an award, costs muat
meet the Coil owing general criteria:
a. Be reasonable Cor lhe performance of lhe
award and be allocable thereto under L1)ese
principles. .
b. ConCorm to any limitations or exclusions
set Corth in lhese principles or in the award
as 10 types or amount of cost items.
c. Be co!!sislent with p91icies and
procedures lhat apply uniformly to bolh
federany fin_anced and other activities. of lhe
organization. '. .'
'. d. Be accorded consislent treatment. .
e. Be delermined in accordance with -
generaDy accepted accounting principles.
C. Not be included as a cost or used to meet
cost sharing or matching requirements oC any'
olher federally financed program in eilher the
current or a prior period.
g_ Be adequately documented. .
3. Reascnable costs. A cost is reasonable
If. in its nature or amount, it does not exceed
that which would be" incurred by a prudent
person under the circumstances p:evailing at
lhe time the decisioD was made to incur the
costs. The question oC the reasooa~leness at
specific costs must be scrutinized with
particular care in connection with
Qrganizations or serarate c!ivisions L'1ereol
which receive, the preponderance or their
support from awards made by Federal ..
agendes. In detennining the reasonableness'
of a given cost, consideration ahaD be given
to:
a. \VDether lhe cost is oC a type se::eraUy
recognized as ordinary and necessary for ilie
operaticn of lhe organization or the
performance oC the award. . .
b. Tbe restraints or requirements Imposed
. by such Cactors as generally accepled sound
business practices. arms length bar~afning. _
Fecc:al and Slate laws and reg-..:lalions. and
t<!rms a:'ld conditions of the award.
c. \\'hether :''1e inci,-id:.:a!s concc7.ed aCled
with pn;dence in the circ\:;;lalances.
con~;:'!eri:-:g their rcspon~:~:lities 10 the
orga::izat:on. its members. employees. and
I
clients. the public allarge. and lhe
GovernmenL .
d. Sisnlfic<lnt devialions Crom the
established practlces oC the oq;anizatioa
which may unjustifiably Increase rne award
COSIL "
. 4. Allocable cosLL . "
.- 8. A cost I. allocable to it particular co.t .
objective. such as a grant. project, service. or
other activity. In accordance witb the relativa
benefits received. A cost is allocable 10.
Covernmenl'award if it r. treated .
consistently with olher cosls Incurred for the
same purpose In Iikedrcuinstances and ifit
(1) Is Incurred specifically for the awarii.
(2) Benefits both the award and other wprk
and can be distributed in reasonable .
proportion 10 the benents received. - -
(3) Is necessary to the overall operation of.
the organization. allhough Ii dired
relationship to any particular cost objective
cannot be shown.
b. Any cost anocable to a parlicular award
or-other cosl objective under these principle.
may not be shifted to other Federal awards to
overcome funding deficiencies. or fo avoid
restrictions imposed by law or by the terms
of the awani
5. Applicable credits. . .
a. The term applicable credits .e{ersto _.
those receipts, or reduction of expenditures.
which operate to offset or reduce expanses
items lhatare anocable '0 awards as dirlict
or indirect costs. Typical examples of such
tran~actions ani: purchase discounts. rebates
or allowances. recoveries or-indemnilies oa
losses. insurance refunds. and adjustments ot
overpayments pr erroneous charges. To lhe
extentlhal such credits accruing or received
by the organization relare (0 allowable cost
they shall be credited to the Government
either as a cost reduction or cash refund as
appropriate.'
b. In some instances, lhe amounts received
{orm the Federal Covemment to finance
organizational activities or service operations
should be treated as appliCable credits.
Specifically, lhe concept of netting soch
credit i.lems against related expenditures
should be applied by lhe organizalon in-
determing the rates or amounts to be "
organization in determining the rales or
amaounts to be charged to Fede.al award.
for sen;ces rpndered whenever the (acilities
or other resources used in providing such
services have been financed directly, in
whole or in part, by Federal funds.
a(c) For rules covering program income.
(i.e.. gross income earned Crorn federally
supporled activities) see Altach.':lent D of
OMB Circular A-llo.
6_ Ado'once and unaerstG.'ldi.'lgs. Under any.
given award the reasonableness and.
allocabililyol certain items of costs' may b.
difficullto determine. This pa:ticuJar!r true In
connection ",;lh orsL::s tions L'la t recei\-e a
preponderance- of their SU?port from Feceral
agendes. In order to avc;d subsequent
disallowance or dispute based on. .
unreasonableness or nona!\ocability. it i.
of:en desirable to seck a w.it:en agrcc:7:enl
\,.:th the cognizant or av;arding age;:c)" in
advance of t!'ie inc\;"ence of sFecial or
Ul:;'':5aI ccsts_ The a bsc;;ce of an acvance
asreeClent on any eJe:7.Cnl of cost wi!! not. !.a
i:sclf. a::~ct the reason~l::lcness or .
al1ocab:lity of L'1at e!cmenL
"
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Federal Register I Vol. 45. No. 132 I Tuesday. July 8. 1980 I Notices
B. Direct Cosu
. '
t. Direct costs are L'Jose that can be
Identified specifically with a particular final
cost objective: I.e.. a particular award.
project. service. or other direct acth;ty of aD
organization. However. a'cost may not"be
assigned to an award as a direct cost if any
other cost Incurred for the same purpose. ill
like circumstance. has been allocated to aD
award sa an indirect cost. Cost identified
specifically with awards are direct cost of the
awards and are to be assigned directly.
thereto. Cost identified specifically with other
final cost objectives of the organization are.
direct costs of those cost objectives and are
not to be assigned to other awards directly or
indirectly.
~. Any direct cost of a minor amount may
be treated as an indirect cost of or reasens of
practicality where the account treatment for
such cost is cor.sislenlly applied to all final
cost objective..
3. The ceit of certain activities are not
allowable as charges to Federal awards (see.
ror example. fund raising costs in paragraph
Z1 of Attacbnent B). However. even though
these costs are unallowable for purposes of
computing c.;arges to Federal awards. they
nonetheless must be treated as direct cost for
purposes of determining bdirect cost rates
and be allocated.their share of the
organization's indirect costs if they represent
acth-ilies which (1) include the salaries of
personneL (Z) occupy space. and (3) benefit
from the o16~niza tion' s indirect cos ts.
4. The costs or activitiesper!ormed
primarily as a sen;ce to members. clients. or
the general public when significant and
necessary to the organization.s mission ml13t
be treated as direct costs when or not
allowable and be allocated an equitable
share or indirect costs. Some examples of
these types of activities include:
a. Mainte::a:J.ce of membership rolls.
subscriptions. plOblicatipns. and related
functions. .
b. Providir.g services and information to
members. legislative or administrative
bodies. or the publie. .
c. Promotion. lobbying. and other rorms of
public relatiollS.
d. ~feetings and conferences e:'(cept those
held to conduct t.;e general administration of
the organiza tion. .
3. ~,!ainte:1ac:1e, protection. and investment
or s;lecial f::nds not used in operation of the
organization.
f. Administ;atlon or group benefits on
behelf of r.:e:nbers or clients including life
and hos;lital insurance. annuity or retire:rient
plaru. financial aid. ete.
e Indirect Cost.'
1. Indirect costs are those that bave beeD
inc:::red fo: common or joint objectlves and"
cannot be readily. identified ",;th a particular
final cost c!ljective, Direct cost of minor
amounts may be" treated as i.~direct costs
under the concitions described in paragraph
B.%. above, Mer direct costs have been
dete~m:ned and assigned directly to awards
or o:l:.er worle as appropriate. indirect costs
are those .c:!":a:::;ing to be a\!oealed to
bent::l:llg co~t objectives, A cost may not be
ailocated to an a.....ard as an indirect cost if
eny o:..ier cost inc1.O:TCd for the same pu.-pose.
ID like cir1:urrultanees, has been assigned to
aD award as a direct cost. _
Z. Because of the diverse characteristica
and accounting practices of nonprofit
OIianiza tions. it Is not possible to specify tlte
types of cost which may be classified as
iDdirect cosqn all aituation. However. typical
eXamples of indirect cost for many nonprofit
organizations may include depredation or
use allowances on buildings and equipment..
the costs of operating and maintainin8
facilities. and genenl adminlstrstion and
general expenses. such as the salaries and
expenses of executive officers. personnel
administration. and accounting.
D. Allocalion o/Indirect Cost and
Determination of Indirect Cost Rates.
t. CeneraL
L Where a nonprofit organization hu only
one major function. or where all its major
functions benefit from its indirect costs to
approximately the same degree. the .
anocation of indirect costs and the
computation of an indirect cost rate may be
accomplished through simplified allocation
procedures as described in paragraph Z
below.
b. Where an organization has several major
functions which benefit from its indirect costs
in varying degrees. allocation or indirect
costs may require the accumulation of such
costs into separate cost groupings which then
are allocated individually to benefiting
functions by means of a base which best
measures the relative degree of benefiL The
indirect costs allocated to each function are
then distributed to individual awards and
other activities included in that dunction by
means of an indirect cost rate{s). _
e. The determination of what constitutes an
organization's major functions will depend on
Its purpose in being; the types of services it
renders to the public. its clients. and its,
members; and the amount of effort it devotes
to such activities 88 fund raising. public
information and membership activities.
d. Specific methods fo~ allocating indirect
costs and computing indirect cost rate. along
.ith the conditioru under which each method
should be used are described in paragraphs 2
through 5 below.
e. The base period for ~e alloca tion oC
iDdirect costs is the period in which such
costs are incurred and accumulated for
anocation wo work performed in that period.
The base period normally should coincide
,.,ith the ol'banization's fiscal }'ear. but in any
emt, .shall be so selected as to avoid
inequities in the allocation of the coats. -
Z. Simplified allocatian method. .
L Where an organization's major functiola
benem from its indirect costs to
approximately t~e same degre. the allocation
of indirect costs may be accomplBhed by (i)
separating the organization's total costs for
the base period as either direct or indirect, .
and (ii) dividing the total allowable indirect
costs (net of a;:tplicable credits) by aD
equitable distribution base. The result of this
process is an indirect cost rate which is used
to distribute indirect costs to individual .
-awards. The rate should be expressed as the
percentage which the total amount of
allowable indirect ces!s bea~ to the base
selected. This meLltod should alos be used
46025
where an ol'b3nlzation has only one majal'
runction encompassing a number of
Individual projects or activities. and may be
used where the level of Federal awards to aD
organization Is relatively smalL
b. both the direct costs and the indirect
costs shall exclude capital expenditures aDd
unallowable costs. However. unallowable
costa which represent activities must be
included in the dl.ectcosts under the
conditions desaibed in paragraph B.3. above,
c. The distribution base may be total c:rect
costs (excluding capital expenditures and
other distorting items, such 81 major
subcontracts or subgrants). direct salaries.
and wages. or other base which results in aD
equitable distribution. The distribution base
shall generally exclude participant suport
costs as defined in paragraph Z9 of
Attachment B.
d. Except where a special rate{s) ill
required In accordance with paragraph D.s
below, the indirect cost rate developed UDder
the above principles is applicable to all,
awards at the organization. If a spedal
raters) is req\lired. appropriate modifications
shall be made in order to develop the s;lecial
rate(s).
3. ,\fultiple allocation base me!..iod.
a. \Vhere an organization's indirect costs
benefit its major rta,ctions in val'}"ing degrees.
such costs shall be accumulated ir.to sepa:ate
cost groupings. Each grouping shall then be
allocated indi\;d1.Oany to benefiting functions
by means of a base which bellt measures :.he
relative benefits.
b. The groupings shall be established so u
to permit the allocation of each grou;ling on
Lie basis of benefits provided to t.he major
functions. Each grou;l:..g should constitute a
pool of expenses t.hat are of like character in
terms oC the functions they benefit and in
terma of the allocatioll base which best
measUlS tha relati\"e benefits pro\;dd to each
function. The number of separate groupin6s
should be held within practica/limits. laking
into consideration the materiality of the
amounts involved and the degree of precisioD
desired. I
c. Actual conditions must be taken into _
aCCOllJlt in selecting the base to be used in
allocating the expenses in each g;ouping to
benefiting functions. When an allocation can
be made by assignment of a cost grolOpill3
directly to the function benefited. the
allocation shall be made in that manner.
'When the expenses in a grou;ling are more -
general in nature. the allocation should be
made through the use of'a selected base
which produces results that are equitable to
both the Covemrneni and the organization. In
generaL any cost element or cost related
factor associated with.'the organization'. "
work is potentially adaptable for use as an
allocation base provided (i) it can readuy be
expressed in terms of dollars or otber .
quantitative measures (lotal direct costs.
direct salaries and wages. staff hours ap;;!ied.
square feet used. hours of usage. number of
documents processed. poplllatioQ served. and
the like) and (H) it is corr~"Tlon ~o the.
benefiting functions during t.':e base period.
d. Exce;:!t where a special incirect cost
rate(s):s rcq1.O;r"d ;n accordance .....ith
paragraph 0.5. below. the sepa'" ~c sroup:"-..gs
of :ndirect costs allocated to eac.'1 r.1ajOl .
/
I
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Federal Rc:,:islcr I Vol. 45, No. 132 I TucsJay. Jly 8. 1980 I Notices
function ,hall be agregaled and treated u a
common pool for lhat function. The co,t, in
the common pool shall then be dislri~\!led to
Indivi,ual awars included in that function by
use of a single indirect co,t rate.
e. The distribution base u,ed in compuling
the indirect cost rale for each function may
be total direct cost, (excluding capital .
expenditures and other dislorting items such
as major subcontracts and subgranls). direct
salaries and wages. or other sse which
results ill an equitable distribution. The .
distribution base shall generally exclude
participanl support cosls as denned ill
paragraph 29. Allachment B. An indirect cost
rate should be developed lir each separale -.
Indirecl cosl pool developed. The rate in each
case should be slated as the percentage .
which the amounl oC the particular indirect
cosl pool is oC the distribution base identiIied
with thaI pool. .
4. Direct allocatian method. .
a. Some nonprofit organiza tions. !real aU
cosls as direct costs expect general
administration and general expenses. These
organizations generally separate their costs
into thre basic calegories: (i) General
administration and general expenses. (ii)
fund raising. and (iii) other direct functions
(including projects perCormed under Federal
aw.ards). Ioint costs. such as depreciation.
rental costs. operation and maintenance of
facilities. telephone expenses. and the like
are prorated indivisually as direct cost to
each category and 10 each award. or other
activilyusing.a base most appropriate to the
particular cost being prorated.
b. This method is acceptable provided each
joint cosl is proraled using a base which
accurately measures the benefils provided 10
each award or other activily. The bases must.
~ established in accordance with resonable
criteria, and be supported by current data.
This method is compatible with tha
Standards oC Accounting and Financial
Reporting for Voluntary Health and Welfare'
Organizations issued jointly by the National.
Health CounciL lnc.. the National Assembly
of Voluntary Health and Social \'telfare
O~anhations, and the United Way oC.
A::lerica. .
Co Under this method. indirect costs consist
eclusively of seneral administration and
general expenses. In all other respects, the
organization's indirect cost ratess shal be.
co;;Jputed in the same manner as that
described in p'aragraph D.2 above.
5. Special indirect cast rates. In s.ome
Inslances. a single indirect cost rate for all
acti',ities of an orga!'.ization or for eac:i !:!!ajor
function of the organization ay not be - .
ap~ropriale..since it would not lake Into
account those different factors which may
substantially affect the indirect costs
appl!cable to a particular segment of work.
For :his purpose, a particular segment of
worX. For this purpcse, a partlcular sesment
/ or work may be thaI performed under a single
awa:d or it may consist oC work under a
group of awards performed In a common
en,ironmenL the Cactors may include the
phys::allocation of the work. the level oC
ad..,.'-'<trative support required. the nature of
the fa:::lities or order resources employed. the
sd".:::'::c c!i~cipli::es or l~chnical skills
In\C~',.d. L~e o'iianizational arran:;emen.ts
&
used. or any combination thereof. When a
particular segment of work Is performed in an
environment which appears to generate a
significantly differentle...el of indirect costs,
pro;,;sions should be made for. a separate
Indirect cost. pool applicable to such work.
The separale indirect cost pool should be
developed during the course oC the regular
allocation process. and the separate indirect
cost rale resulting therefrom should be used
provided it Is. determined that (i) the rate
difCers si:;nilicantly Crom that which would
bave been obtained under paragraph D.%, 3.
and 4 above. and (ii) the volume of work to
which the rate would apply i. materiaL
..' . .
E. Negoliatlan and Approval of Indirect Cost
. Rates. . .
1. Definitions. As used in this section. the
following terms bave themeanin:;s sel forth
below: .
a. "Cosnizant agency" means the Federal
. _ agency responsible for negotiating and
approving indirect cost rates Cor a nonprofit
o~ganization on behalf of all Federal
~encie~ . . ~
b. "Predetermined rale" means an indirect
cost rate. applicable to a spC!CiIied curren I or
future peri.od. usually the organization's fiscal
year. The rate is based on an estimate oC the
costs to be incurred during the period. A
predetermined rate is not subject to
adjustment . .
c. "FIxed rate" means all indirect cost rale
wbicb bas the same characteristics as a
predetermined rate. except th3t the difference
between the estimated costs an.d the actual
'costs oC the period covered by the rale is
carried Corward as an adjustment to the ra te
computation oC a subsequent period.
d. "Final rate" means an indirect cost rate
applicable to a specified past period which is
based on the actual cosls of the period. A
final rate is not subject to adjustmenL
e. "Pro,;sional rate" or billing rale mea:!s a
temporary bdirect cost rate applicable to a
specified period which is used for funding.
Interim reimbursement. and reporting indirect
costs on a wards pending the. establishment oC
a ra fe Cor the period.
C. "Indirect cost proposal"" means the
documenlation prepared by an organization
to substantiate its claim for the
reimburseme:!t of indirect costs. This
proposal provides the basis for the review
and negotiation leading to the es:ab!:shment
of an organization's indirect cost rate. .
g. MCost objective" mean! a function.
organizalional subdivision; contract. grant. or
other work unil ror which cost data are
desired and for which provision is made to
accumulate and measure the cost oC
processes. projects. jobs and capitalized
projects.
2. NegotiQrron and appro,-aJ of rates.
a. Unless different arrangements are
agreed to by the agi!nciesconcemed. the
Fedi!ral aaency with the la~~t dollar value
of award! with an organization will be
designaled as the cognizant ag':!lIcy for the
neg:ltiation and approval of indirect cost
rates and. where necessary. other rates such
as fringe benefit and computer charge,out
rates. Once an agency is assigned cognizance
for a particular nonprllCit or:;:ar:i:Jtion, the .
assignment will not be changed unlcs. there
.'
Is a major long-terrn shift in the dollsr volume
oC the Federal awarus to the organization. All
concerned Federal agencies shall be given the
opportunity to participate in the negotiation
process, but after a ra te has been a:;~ced
upon it will be accepted by at! Federal
agencies. When a Federal agency has reason
to believe that special operating factors
afCecting Its awards necessita te special
Indirect cost rates In accordance. with
paragraph 0.5 above. it will: prior to the time
the rates are negotiated. notify the cognizanl
agency. . ....
b. A nonprofit organization which has not
previously established an indirect cost rate
with a Federal agency shall after the
organization is advised thaI an award will be .
made and. in no event. later than three
months after the effective date oC the award.
c. Organizations that have previously
established indirect cost rates must submit a .
ne\y indirect cosl proposal to the cognizanl
agency within six. months after the close oC
each fiscal year. .
d. A predetermined rate may be negotiated
Cor use on awards where t.'lere is reasonable
assurance. based on pasf experience and
reliable projection of the organiZ.'ilion's costs.
that the rate is not likely to exceed a rate
based on the organization's actual costs,
e. FIxed rates may be negotiated where
predetermined rates are not considered.
appropriate. A fixed rate, however. shall not
be negotiated if (i) aU or a substantial portion
oC the organization's awards are expected to
expire before the'carry,forward adjustment
can be made; (ii) the mix oC Government and
, llon'government work at the organization is
too erratic to permit an equ.itable carry-.. .
forward adjustment; or (Hi) the organization's
operations fluctuate significan~y from year to
year. . .
f. Provisional and final rates shall be
negotiated where neither predetermL'led nor
fixed rates are appropriate.' .
g. The results of each negotiation shall be
Cormalized in a written agree:nent between
the cognizant ag~cy and!.;e nonprofit .
organization. The cognizant agency shall
distribute copies of the agreement to all
concerned Federal agencies. ..
h. If a dispute arises in a ne:;ctiation oC an
indirect cost rate bel.....een the cognizanl
agency and the nonprofit organization. the
dispute shall be rt:solved in accordance with
the appeals procedures oC the cognizant
agency.
. i. To the extent that problems are
encountered among the Federal agencies In
connection with the nqotiationand a;:proval
process. the Office of ~lar.ager.:ent and
Budget will lead assistance as required to
resolve such pr<;lblems i? a timely manner.
[Circular ~o. A-l2.2]
Attachment B
. .
Selected Items of Cost
. Table of Contents '.
1. Advertising costs
2. Bad debts
3. Bid and proposal costs (reserved)
.. Bonding costs
5. Communication cn~ts
6. Compensation for ll.:r90nal ser....l(.(...
7: Olnlin!;en.::y prll\'i~iuns
'.
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Federal Register I Vol. 45. No. 132 I Tuesday. July 8. 1980 I Notices
a. Contributions
9. D'!preciatfon ar:d ase ~lIowances
10. DonaUoni
lL Err:ployee morale. health and welf3re
costs and credits
1:!. Entertainmentcos!s
13. Equipment ~d other capital expendlt:Jres
H. FInes and penalties
15. Fringe benefits' .....
16. Idle Cacilities and idl~ capacity
V. Independant research and development
(reserved) ';' ,. . .' . .
la lnsura~::e and indemnification
19. Interest, fund raising. aad w-estment
management costs - .
20. Labor relations costs
Z1. Losses on other awards
22. Maintenence and repair costs
Z3. Materials and supplies
Z4. Meetings. conferences . ..
23. ~[emb~rships. subscriptions. and '
professional acth'i!}' cos:'
26. OrgJrJzstion costs .
7:1. Overtime. e:c:tnt,psy sh~.. and multishil'l
premiulr'u .
26. Page charges I~ proCessionallournals
29. Participant s:.:pport costs
30. Patent costs -
31. Pension plans .
3Z. Plant security costs .'.
33. Preaward costs
34. Professional sen;ce costs
3S. Profits and losses on disposition of
depreciable property or other capital
assets
36. Public information sen-lce costs
:ri. Publicativ:l and printing costs
38. Re3CTange~ent and alteration costs
39. Reconver:;ion costs
40. Recr.litin~ cost.
4L Relocation cosll
4Z. Rental costs
43. Royalties and other costs for use of
patents and copyrights -
4-l. Severance pay _
4S. Specialized service facilities
40. Taxes
47. TeCI:lination costs
48. Traini~ and education costs
49. Transportation costs
so. Travel costs
(Ci.-cular No. A-W)
Attacluneot B
- --.
Se!ected Items of Cost
Paragraphs 1 through 50 provide principles
to be applied in establishing the allowabiUty
of certain items or cost These principles
ap;ily whether a cost is treated as direct or
indir!!ct. Pailure to mention a pan;cular item
oC C04t Is not intended to Imply that it is "
unallowable; rather determination as to
allowability in each case should be based OD
the ~atment or p:inciples provided for-
sio.ilar or related items of cost
L Ad~'ertising costs. . ".
L Ad\'ertising costa mean the costs of
me~!a sel"o;cea and associated costs. Media'
adverti3ing includes magazines. newspapers.
radio and television programs. direct mail
e'\hibi13. and the like,
b. The only advertising costs allowable are
thoS<! which are solely Cor (i) the recruitment
of p~rscr:r.el when considered in conjunc.tioo
witl: all ot."er recruitment costs. u set Corth
,
In paregr!lpll 40: (ii) the procurement of goc<!s
and sen;ces; (Hi) the disposal oC 1ur;Jlus
ma terlals acquired In the performance of the
award except when o~anizatlor.s are
reimbursed for disposals at a predetermined
amount In accordance with Allach;llent N of
OMS Circwar A-llO; or (Iv) specific
". requirements of the award.
. z. Bad debls. Bad debts. Inclu~ losses -
.. (w~ether actual or estimated) arising from
uncollectible accounts and other claims.
related coOection costs. and related legal
costs. are unallowable. . .
. 3. Bid and proposal costs. (reserved)
4. Bonding costs. -
a. Bonding Cos~arise when the
Covernment requires assurance against
financial loss to Itself or others by reaSOD of'
the act or default of the organization. They
arise also in Instancea where the org~zatioQ
requires similar assurance. Inc!uded are such
bonds as bid, performance. payment
advance payment. infringement. and fidelity
bonds. ..
b. Costs of bonding required pursuant to
the terms of the award are anowable.
c. Costs of bonding required by the
organization in the general. COIlCilCt oC III
operations are allowable to the extent that
. such bondIng Is iIi accordance with 50und
business practice and the rates and premiums
are reasonable under the circum.>tances.
S. Communication costs. Costs lncurred for
telephone services. local and long distance
telephone caDs. telegram.s. radio!;l'llIl1S.
postage and the Uke. are allowabLe. '
6. Compensation for personal serriceg.
a. Definition. Compens!ltioa for personal
serviCe3 in.cludes all comper.sation paid
ClUTently oc accrue1 by the orgU1iL1!ion foc
services of employees rendered duri!:lg the
period of the award (e;x;cepl as otherwise
provided in paragraph g. below). It includes.
but i. not limited to. salaries. wages.
director's and executive committee member'.
fees. incentiye awards. fringe benefits.
pension plan costs. allowances Coc olf.site
pay. incenti'le pay. location allowances.
hardship pay. and cost oflivi.ag differentials.
b. Allowability. Eltcept as otherwise
specificaUy provided in this paragnpb the
costs of such compensation are allowable to
the e.'dent that: .
(1) Total compensation to individual
employees is reasonable Cor the services
rendered and conforms to the es:ablished
policy oC the organization consisten~y
applied to both Government and noa-
Government acth;ties;'3J1d
(2) Charges to awards wl:e!hll.C treated as
direct or indirect costs are determined and
supported as required in this paragraph.
c. Reasonableness.
(1) Wben the orgal1iza!lo:1 is predominantly
engaged in activities other than those
sponsored by the Government. com~nsation
ror employees on Government-sponsored
work will be considered reasonable to the
extent that It is consistent with that paid fOf'
.imilar work in the organization.. other
activities. . .
(2) When the org:mization is predomiaantly
engaged in Go\'emm~nt~po..sored activities
and in' cases where the kind oC employees
required foc the Govemr.lent activities are
not found in the organization-'s otler'
4€027
acllvilies. compensation Cor employ~s on
Government,spunsored work will be
considered reaJonable to the extent that it Is
comparable to thot paid Cor similar work in .
the labor mark'!ts in which the organization
competes for the kind DC emp!o~'ees involved.
d. Special considerations in determining
a/lowability. Certain conditions require
special consideratloo a:ld possible limitations
In determining cost3 unde.r Federal awards
where amounts or types DC compen!ation
appear unreason:Jble. Among such conditions
are the followill8= "
(1) Compensation to members oC nonprofit
organizations, trustees. directors. associates.
officers. or the Immediate families thereor.
Determination sbould be made that such
compensation Is reasonable Cor the actual
personal services rendered rather than II
distribution of earnings in excess or costs.
(2) Any change in an organization'.
compensation policy resulting in a
substantial increase b the organization',
level of compensation. particularly when it
was concurrent with ao Increa,e In the ralio
of Government awards to other activities oC
the organization or any ch2nge in the
treatment oC allowability oC spedfic types of
compensation due to changes in Government
policy.
e. Unallowable co:;ls. Costs 1Vhkh .re
unallowabl~ under other par~graph, of thi,
Attachment shall not be allowable under this
paragraph solely on t."e basis that they
constitute personal cocr<pensacon.
f. Fringe bimefits.
(1) Frir.ge benefits in ~e COl'I:l of reg'!!?.!'
compar.satioD paid to enplcl,'ees during
periods oC authorized ahsences from the job.
such as vacatioD leave, si.:k leave, !!!i!!tary
leave. and the like. are allowable pC'O\;ded
such costs are absorbed by aU o:gJn:zation
activities in proportion to the relative amount
, of time or effort actually de\"oted to each.
(2) Fringe benefit, in the form of emplorer
contributions or expecses for social security,
employee insurance. worlane!1's
compensation insurance. pension plan COits
(see paragr:Jph g. below). and tha Uke. are
allowable pro\;ded such benefits are granted
in accordance"with established written
org3nizaUon polic:es, Such henefits whether
treated as indirect coels or IS di:ect costs.
shall be distributed to partic:.llar awards and
other activitias i., a maMer cor.sistent with
the pattern of benefits accruil"-8 to the
individuals or group or emplo}'ees whose
salaries and w3ge3 are c!!3rgeable to such
awards and other acti\;lies.
(3)(a) Provisions for a reser..e un::!;r a selC,
insurance program Cor unemployment
compensation or workmen's compe:'..S~tion
are allowable to the extent that the
provisions represent reasonable estima tes oC
the liabilities for such coa:pensa lion. and the
types oC coverage. exlent of coverage. and .
rates and premiums would ha...a been
allowable had insurance bee!1 purchased to
cover the risk.s. However. provisions for self,
insured liabilities which do Co;lt become.
payable for. more than ODe year ailer the
provision is made sl:all oot exceed the
present value oC the liability. .
(h) Where an o'banization foUows a
. consistent potcy of expensing actual
payments to. oc 0" behaU of. er.:pioyeee or
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Fe;}1 Register I Vol. 45, No. 132 I TuesdC July 8. 1900 I Notices
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former employees for unemployment
cor::pensalion or workmen', compansatioD.
,uch payments are allowa ble In the year of
pa)'ment with the prior approval or the .
awarding agency pro~;ded they are allocated
10 aU activities of the organization.
(4) Costs of Insurance on the live, of '
truslie.. officers. or other employees holding
. positions ot similar responsibility are . '
allowable only 10 the extent that the
Insurance represents additional
compensation. The costs of such insurance
when the organization [s named 81
beneficiary are unalIowable.
g. Pension pIon cosu. _
(1) Costs of the organization's pension plan
which are incurred in accordance with the
es!ablisl1ed policies of the organi::alion are
allowable, provided:, - __ .
(a) Such policies meetllle test of
reasonableness; . -
(b) The methods of cost allocation are not
discrimina loty.., _ '"
(c) The cost assigned~o ea~h fiscal year I.
determined in accordance with generally
accepted accounling principles as prescribed
In Accounting Principles Board Opinion No.8
issued by ,the American InstihJle of Certified
Public Accountants; and .
(d) The cosls assigned 10 a given fiscal Year
are t:mded for alI plan participants within six
!:lonths aner the end of that year. However,
increases to normal and past service pension
costs caused by a delay in tunding the
actuarial liability beyoDd 30 days aller each
quarler of the year to which such costs are
as~jgnable ate WlaUowable.
(2) Pension plan lermination insuranCl!
premiums paid pursuant lo-the Employee
Ret:rement Income Security Act of 1974 (Pub.
I- 93-406) are allowable, Lale payment
charges on s:Jch premiums are unallowable.
(3) Excise laxes on accumulated funding
deficiencies and other penalties Lrnposed
under the Employee Retirement Income
SecuritY Act are unallowable. .
h.lncentive compensation. Incentive _
compensation 10 employees based on coat
reduction. or efficient performance,
sugzestion awards, safety awards. etc~ are
allowable to the extent that the overall
compensation is determined to be reasonable
aod such costs are paid or accrued pursuant
to an agreement entered into in good taith
between the organization and the employees
before the sen;ces were rendered. or -
pursuant to an eS'tabllshed plan followed by
the orsanization so consiste;;tly as 10 imply,
- in effect. an agreement to make such '
payment.
i. O\'erti:;re. extra pay shift, and multishift
premiums, See paragraph z:J. '
J. Se\'erance pay. See para67'aph 44-
k. T~ining and education costs. See _
parag:-aph 43. " -
I. Support of salaries and wages.
(1) Charges to awards for salaries and
wages. whether treated as direct cost, or.
, indirect costs. will be based on documented
payrolls approved by a responsible official(s)
of the organization. The distribution of
salaries and wages to awards must be .
suppor1ed by personnel aclh;ty reports as
prescribed in subparagraph (2) below. except
....hen a s::bslilule system has heen approved
in wriE~g by L'le the cognizant agcnc)'. :See
paragraph E.2 of Attad::7Ient A}
(2) Reports renecting the distribution ot
acth;ty or each emplo)'l:e must be .
mainlained for all slarr membetl
(professionals and nonprofessionals) whose
compensation I, charged. In whole or in part"
directly to awards. In addition. In order to
support the allocation ot Indirect costs. such
reports must also be mainlained for other .
employees whose work Involves two or more .
_ roncHons or activities it a distribution of their
compensation between such tunction. or_
activities Is needed In the determination or
the or;anizalion's indirect cosl rale(s) re.g~
an employee engaged part,time in Indirect
cost activities and parI. time in a direct
f\lJ1ction). Reports maintained by nonprofit
organizations 10 salisfy these requirements
must meet the tollowing standard..:
(a) The reports must renect an o/ter.the-
fact determination of the actual activily of
each employee. Budget estimales (i.e.. .
estimales determined before the services are
performed) do not qualify as support for-
charges 10 awardL ' .
(b) Each report must account for the total
activity for which employees are , _
compensated and w!:.ich is required in
fulfillment ot their ohliga tions to the
organization. . '
(c) The reports must be signed by the
individual employee. or by a res?<,nsible
lupervil!ory official having first hand
h1owledge'ot the activities performed by the
employee. that the distributioD ot activity
represents a reasonable estimale of the
actual work performed by the employee
during the periods covered by the reports.
(d) The"teports must be prepared at least
monthly and must coincide with ODe or more
pay period.. . ,
(3) Charges for the salaries and wages of
nonprofessional employees. in addition to the
supporting dOC".lIIlenlation described in
subparagraphs (1) and (2) above. must also
be supported by records indicating the total
number of hours worked each day.. ' .
maio'llained in conformance with Department
of Labor regulations implementing the Fair_
Lab'or Standards Act (29 CFR Part 516). For
this purpose. the lenu wnonprore~sional'
employee" shall have the same meaning 81
"nonexempt err.ployee. ft under the Fair Labor
Standards Act.,' -
(4) Salaries and wages of emploj'ees used
in meeting cost sharing or matching -
requirements on awards must be supported in
the same man.,er as salaries and wages
claimed for reimbursement from awarding
ageocies.
7. r;ontingency provisions. Contributions to
a contingency reserve or any similar
provision made for events the occurrence ot
which cannot be foretold ....;1..'1 certainty as to
time. intensity. or ....;th an assurance ol their
happening. are unallowable. The term .
.contingency reserveft excludes self-
. insurance reserves (see paragraph 6.l.(3) and
18.a.(2)(d)}; pension funds (see paragraph
8.(g)): and reserVes for normal severance pay
(see paragraph 44.(b)(l). ,
8. Contributions. Contn"butions and'
donations by t.'1e organization 10 others are
unal!owable. .
9. Depreci::t;":;.i and use allawallce,.
a. Compe;rs3 :ion for the use of buildings,
ot!':er capital improvct:'1e:lts. a::d eq:Ji;:;:ent
on hand may be made through use
allowances or depreciation. Howcver. ex
as provided In paragraph r. below I .
comblnntion of the two methods may not
used In connection with a single clas, of
fixed IIssets (e.g., bulldings, office cquipm
computer equipment, elc.). .
b. Thecompulalfon of use allo.....ances c
depreciation shaU be based on'the
acquisition cost of the assets Involved. Th
acquisition cost ot an asset donated 10 thl
organization by a third parly shall be Its f
market value al the lime ot the donation.
c. The computation of use allowances 0,
depreciation will exclude.:
(1) The cosl of land;
(2) Any portion of the cost ot buildings,
equipment borne by or donated by the
Federal Government Irrespective of where
title was originaUy vested or where It
presently resides; and
- (3) Any portion of L'Ie cost of buiJdinss a
equipment contributed by or for the .-
orgar.izationin satisfaction of a stalutory
malching retirement
d. Where the use Jllowa.,ce method i.
followed. the use allowGJJce for buildings,
impro\'ement (ineluding land impro\'emenl
such as paved parking areas. fences. and
sidewalks) \viU be computed at an annual
rate not excecdi~g two percent of acquisiti
cost. The use allow,mce for equipment will
be computed at an annual rate not exceedi
.six and two,thirds percent of acquisition c(
V:hen the use altowance method is used fo
buildings. the entire building-t:'1usl belreall
as a single 8ssel; the building's component!
(e.g. plumbing system. heating and air
conditioning. elc.) cannot be segrega led fro
the building's shell. The two percent
limitation. however, need not oe applied 10
equipment which is merely al1ached or
lastened to t.'le building but r.ot pe:rmanenll
fixed 10 it and which is used as furnishings
decorations or for speciali::ed put;loses (e.g
dentist chairs and denIal trealment units,
counters. laboratory benches bolted to the
floor. dishwashers. carpeting. etc.). Such .
eguipment will be considered as not being
per.:nanently FoXed to the building if it can hi
removed withoul the need for costly or'
extensive alteratior.s or repairs to the
building or the equipment. Equipment that
meets these criteria will be subjeclto the si:
and "vo,thirds percent equipment use
allowance limitation.
e. Where depreciation melbod is rollowed
the period of useful service (useful lire)
established in each case for usable capilal
assets must take into consideration such
tactors as type of construction. narure of the
equipment used. technological developweD(,
in the particular program area, and the
renewal and repl~_ce:nent policies followed
lor the the individual items or classes &f
8ssets involved. The method ol depreciation
used to essign the cost of an asset (or group'
of assets) 10 accounting periods shaU reflect
t.'1e pattern ol const=;:tioQ of the asset
during its useful life. In the absence of clear
e~;dence indicating that L'le expecled _
conswr.p:ion of tl:e a!~el will be sigr.ific~nIJ
greater or lesser in the early porUons of its
usef:llli[e than L'1 :1:e la ter po~tions. LlJe
straig::t,line :7Iet!':cd s~a!ll::e presumed to be
the appropriate rr.~:!':od. Dcprec~ation
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Federal ~cgister I Vol. 45. No. 132 I_Tuesday, July 8, 1980 I Notices
46029
methods once used shall not be changed
unless appro\'ed in advance by the.cogniunt
Federal agency. \"/hen the depreciation .
method is introduced for application to asselll
previously subject to a use allowance. the
combination of use allowances and
depreciation applicable to such assets must
not exceed the total acquisition cost of the
assets. When the depreciation method is used
for buildings. e building's shell may be
segregated from each building component
(e.g.. plumbing systeli heating. and ait
conditioning system. etc.) and each item
deprecia_ted over its estimated useful life; or
the entire building (i.e., the shell and all -,
- components) may be treated as a single asset
and depreciated over a single useful life.
r. \"/hen the depreciation method is used
for a particular class of assets, no -
deprecia.tion may be allowed on any such
assets that. under paragraphe. above: would
be viewed as fully dejlreciated. However. a
reasonable use allowance may be negotiated
for such'assets if warranted afU!r taking into
consideration the amount of depreciation
previously charged to the Government. the
estimated useful life remaining at time of
negotia tion. the effect of any increased
maintenance charges or decreased efficiency
due to age. and any other factors pertinent to
the utilization of the asset for the purpose
contemp.lated. _
g. Charges' for use allowances or .
depreciation must be supported by adequate
property records and physical inventories
must be taken at least once every two years
(a statistical sampling basis is acceptable) to
ensure that assets exist and are usable and
needed. ""aen the depreciation method is
followed. adequate depreciation records
indicating the a:nount of depreciation taken
each period must also be maintained.
10. Donations
a. Services received
(1) Donated or volunteer senrices may be
furnished to an organization by professional
and technical personnel. consultants, and
other skilled and unskilled labor. The value
of these services is not reimbursable either as
a direct or indirect cost.
(Z) The value of donated services utilized
in the performance of a direct cost activity
. shall be considered in the determination of
the organization's indirect cost rate(s) and.
accordingly, shall be alloca ted a
proportionate share of applicable indirect
costs when the following circumstances exist
(a) The aggregate value of the ser.ices is
material;
(b) The services ~ supported by a
significant amount of the indirect coslll
incurred by the organization:
(c) The direct cost activity is not pursued
primarily for the benefit of the Federal
Government. _
(3) In those instances where there is no .
basis for determining the fair market \.alue of
the services rendered. the recipient and the
cognizant agency shall negotiate an
appropriate allocation of indirect cost to the
services.
(4) .....here donated services directly beneRt
a project supported by an' award. the indirect
costs allocat~d to the services will be
considered R' a part oC the total costs of the
project. Such indirect costs may be
reimhursed under the award or used to meet
cost :.haring or matching requirements.
(5) The value of the donated services may
be used to meet cost sharing or matching .
requirements under conditions described in
Attachment E.OMB Cil"CUlar No. A-no.
Where donated services are treated as
indirect costs, indi:ect cost rates will
separate the value of the donations so that"
reimbursement will not be made.
(6) Fair market value oC donated services
shall be computed as follows: .
(a) Rates for volunteer services. Rates for
volunteers shall be consistent with those
regular ra tes paid for similar work in other
acth;ties of the organizatiolL In cases .....here
the kinds oC skiUs involved are not found in
the other acth;ties of the organization. the '
rates used shall be consistent with those paid
Cor similar work in the labor market ill which
the organization competes for such skills.
(b) Serdces donated by other
olgQJIizations. "\aen an employer donates
the services of an employee. these services
shall be valued at the employee's regular rate
of pay (exclusi\'e of fringe benefits and
infuect costs) pro\;ded the services are in
the same skill Cor which the employee is
normally paid. If the services are not in the
same skill Cor which the employee is nonnally
paid. Cair market value shall be computed in
_ accordance with subparagraph (a) above.
b. Coods and space.
(1) Donated goods: i.e.. expendable
personal property/supplies, aDd donated usa
of space may be furnished to an organizatiolL
The value of the goods and space is not
reimbursable either as a direct or indirect
GOst.
(Z) The value of the donations may be ~sed
to meet cost sharing or matching share
requirements under tl1e conditions described
in Attachment E. OMB Circular No. A-no.
The value oC the donations shall be -_
determined ill accordance with Attachment
E. Where donations are treated as indirect
costs. indirect cost rates win separate the
value of the donatioIl3 so that reimbursement
......ill not be made.
11. Employee morole. healtlr. and welfare.
cost!1 and c.-edits. The costs of house
publications. health or first.aid clinics. and/
or infinnaries. recreational activities. -
employe::s' counseling services. and other
expenses incurred ill accordance with the
organization's e.tablished practice or custom
for the improvement of working conditions.
employer.emplo}-ee relatior.5. employee
morale. and emjlloyee performance are
allowable. Such costs \\ill be equitably
apportioned to all activities of the
organizatiolL income generated from any of
these acti\;ties will be credi:ed to the cost
thereof unless such income has been
Irrevocably set over to employee welfare
organizations.
. 12. Entertainment costs. Costs of
amusement. diversion. social activities.
ceremonials. and costs relalina thereto, such
as meals. lodging. rentals. transportation. and
gratuities are ur.allowable (but see
paragraphs 11 and 25). _
13. Equipment ond o:.~er capital
e.'(penditures. "
a. As used in t.l:is paragrajlh. the following
tenns have the meanings set forth below:
(1) ';Equipment" means an article of
nonexpendable tangible personal property
ha\ing a useful life of more than two years
and an acquisition cost of &;00 or more per
unit. An organization may use its own
defmition provided that it at least includes all
non expendable tangible p.ersonal property as
defined herein. .
(Z) "Acquisition cost" means the net .
invoice unit price oC an item of equipment.
Including the cost oC any modifications.
attachments. accessories. or auxiliary
apparatus necessary to make it usable Cor th-e
purpose for which it is acquired. Ancillary
charges. such as taxes. duty. protective iD-
transit insurance. freight. and installation
shall be included in or excluded from
acquisition cost in a"ccordance with the
organization's regular written accounting
practices. - " . -
(3) "Special purpose equipment" means
equipment which is usable only for research.
medicaL scientific. or technic:!l activitieL
-. Examples of special purpose equipment
include microscopes. x.ray mac..iines. surgical
instruments. and spectrometers.
(4) "General purpose equipment" means
equipment which is usable for other than
research. medical, scientific. or technical .
acti\ities. whether' or not special -
modifications are needed 10 make them
suitable for a particular purpose. E:<amples oC
general purpose equipment include office
equipment and furnishings. air conditioning
equipment, reproduction and printing .
equipment, motor vehicles, 'and automatic
data processing equipm,ent.
b. (1) Capital expenditures for general
purpose equipment are unallowable as a
direct cost except with the prior approval of
the awarding agency.
(Z) Capitlil expenditures for special purpose
equipment are allowable as direct costs
provided that items with a unit cost of SllXXJ
or more have the prior approval of the
awarding agency. .
c. Capital expenditures for land or
buildings are unallowable as a direct cost
except with the prior approval of the
awarding asenq.
d. Capital expenditures for improvements
to land. buildings. or equipment which
materially increase their value or useful life
are unallowable as a direct cost except ....ith
the prior approval of the awarding agency.
e. Equipment and other capital
expenditures are unallowable as indirect
. costs. However. see paragraph 9 for
alIowability of use allowances or
depreciation on buildings. capital
improvements, and equipment. Also. see
paragraph 42 for allowability of rental costs
Cor land. buildings. and equipment.
14. Fines and penalties. Costs of fines and
penalties resulting from violations of. or
failure of the organization to comply with
Federal. State. and local laws and reg-..:Iations
are unallowable except when incurred as a
result of compliance with specific prO\isioo.s
of an award or instructions in writing from
the awarding agency.
15. Fringe benefits. See paragraph 6. r.
16. Idle facilities and idle capocity.
a. As used in this paragraph the following
terms have the meani!':ss set forth below:
(1) "FaciliUes~ means land and buildin"s or
any portion thereof. equipment individually
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Federal Register
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or collcctively. or any othcr langible capllal -
I9Scl. wherever located. and whether o....'Tled -
or IC:lscd by the org~niz:atioa.
(2) "Idle faCl1ilies" mcans completely
unuscd facilities thaI are excess 10 the
organization's current needs.
(3) "Idle capacity" means the anused
.capacity of partially used facilities. It is.the .
difference bctween thaI which a facUity
could achieve under 100 per5e?t operatilli
time on a one. shift basis less ope..-alini .'
interruptions resulting from liI:Ie lost for .
. repairs. setups. unsatisfactory materials. and
other non:nal delays, and the extent to which
the facility was actually used 10 meet
dcman~s during L!je accounting ~e..iod. ^ -
multishiCt basis may be usedi! it canbe
shown that this ar::ounl of US2re could .
normally be expecled for L"'e r}7e of facility
involved.
(4) "Cosls of idle facilities or idle capacity'"
mea!'.s costs such as maintenance. repair.
housing. rent. and other related costs; e.g..
property taxes, insurance. and depreciation
or use allowance... .
b. The costs of ic!Ie facmtie~ are
unallowable except to the exte.'llthal:
(1) They !lIe unnecessary 10 /Ileet
fluctuations in workload; or
(2) Allhough not neces~ary to meet
fluctuations in workload. they were.
nece$sary wbe;:l acquired aJld are now idle.
because of changes in pro;;am requirements.
efforts to ac."'ieve more economical ..
operations. reorganiution. termi.,alion. or
orhar causes which could r.ot bave been
rea~onab!y fcreseeD. Un~er the exception
slaled in this subpar<:6I'aph. COSU oC idle
facilities are allowable for a reasonable
period 'of u..T.e, or~:r:~ri]y not to exceed one
year.aepc:ndbg upon the initialj....e taken to
use, lease. or dis;><lse of s~cl1 facilities (bul
see l=are~aphs 47.b. and d.}. .
Co The costs of idle capacity are normal
cests of doing business and are ..factor in the
. normal nuctualions of usage or i.:J&ect cost
rales c..om period to peried. Sucb cos~ are
alio'NabTe, prc\'ided tZe capacity is
reasonably anticipate~ to be nece'ssary or
v:as orit.l1aJ1y reasc~ab~e aJld is sl;bject to
reduction or e"-ni..a:.ion by roblelti.ng.
renting. or sale. in a=rdance w:i!.h sound
business. economics. OT sec-.lrity practices.
Wides?:eag idle caracity ~ol:ShOl<t aJl
enti:e facrtity or affio::g a group of aS3ets
ha...ing sl:bstaJltially t.':e s:.;ne hmction may
be idle fac:i!ities.
17: 1"depe;lde:-:t r.!search a.;:d ce\'e,'opment
(Reser-'"dJ. . .
. 18.1.1sz;.-once and ince;;:.-ufical1cm..
a. Insurance i.:Jcluces insurance which the
organization is required to carry, or which is
appro\:ed. under the tern:s of l.'oe a.....ard and
any oilier insurance w~ich the orga..'1izatian
mzintaios in c~ection with the general
conduct of i!s operati~ns. This parasrapb
does not apply to insurance which represents
frinse benefi~s for er.;plv/ces (see pa:-agrapb .
8.f. and 6.g.(2l}'
ll) Cosls o! i.-.Sli:ance reqlired'or
aPilroved. ;;:l~ r::aintaiued. PU:SU3:lt to :be
award are a!lo.....ab]e. -~
l:!) Cos~s of o'_':u ins:;,;a:lce rr.ai::~3~nf.'d by
L".e lJrK~r:iz2tiv:! ~ cCi;nec!i-Jn ~;li: the
,ec~ral c~n~~ct of ;Is oFera:.ior.s are
a:l';','i~]e s;object to l.'le follo"ir:g E:::ilations.
I Vol. 45. No. 132 I Tuesday. J~J 8.
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(a)Types and ex1c:nt of coverage shall be
in'accordance with sound business practice'
and the rales and premiu'lr.s sban be
reasonable under the cil'C'.Jmstanc~.
(b) eosts anowed for business inlerruption
or otber similar insurance shaD be limited to .
exclude coverage of management fees. : '
(c) Costs of insurance or or any 'p~ovision.'
for a reserve cOvering the risk.of loss or
damage to Goverr.ment property are
allowable only 10 the e:deat that the
organization is liable Cor such loss or damage.
(d) Provisions for a reserve u.~der a sel1-
insurance p~gram are anowable to the -
extent that types of coverase. exlent of .
coverage. rates, and prernilUDS would have
been anowed had msurance been purchased
to cover the rislr.s. Hcwe\'er. pro\-ision far '.
"known or re~son;!bly esti!Ilaled se]f.insured
liabilities. which do nol become p;]yable for
more than one yeer aner the pI'1l\-l~ion is
made shall not exceed the prescnt "'illue or
the liability........ .
(e) Costs at insurance on ilie fives or "
trustecs. officers, or other employees holding
positions of sinu'!ar respor:sibililias are
allowable only to the extent thaI the .
Insurance represents additiOilal' . .
compensation (see par'3gr3;:h 6). The cost or
such insurance when '.he o!,&anization is -
identi1ied as the benefio3IJ' ~ u..'13llow:ible.
(3) Actual losses which could have been
covered by permissible insurance (through
the purchase of insurance oi- a se!!.insurailce
program) are una!':o....ab]e unless expressly
provided for in the award. e,'l:cept:
. (a) Cos.1s incur.ed beca~e oflosses not
.... covered under nomi::al deduct:ble insurance
coverage provided in keep~ with sound
busine~s practice are aITowable:: . .
(bJ Minor losses nol co.,e~ by in~urance,
such as spoil3ge. breaka!;e. and .' .
disappearance of su;;p!ies. ....hich occur in the
ordinary course oC operations. are allowable.
b. Indemnification i.,c1;;l!es securing the
orsanization against !iabililfes to t.'lird
persons and any other loss OT damage. not _
compensated by insurance or otherwise. The-
Government is obligated to indel!lnity the
organization oo1y to the extent expre~sly
pro\;ded in the award. .
19. Interest, fund ,oisi-ng. and invfs(;nenl
l11anagement C~B..,..' - .
a. Cosls inCUlT1!d for infe.-::sl on borrowed
capital ar temporary use of endowment
funds.r.owever repr:!sen!ed. are unallowable.
. b. Costs of or,;a!'Jzed fund r.iisi~,' -.
including financial c8lr.paig!ls, endowment
drives. solicitation of gifts and be"uests. and
similar expense. inCUlT1!d so]ely 10 raise .
capilal or ob!ain .cont::1'budons are....:. .
unallo....able. . . . ,.
c. Cos:s of iriver..-nent eoun;el and Slaff' -
aod sUnilar expenses inC"'..rred solely to .
enhance income from inve5tI::lentsa~'
unallowable. .
d. Fund raisir.~ and' in.les~enLacth;ties
shall be alloca:ed an arr,:l"Gpriale share or
indirect cos~s u.,der the CDncitions cescn'bed
In paragraph B of Attacbent A-
'ZO. Labor relation$ cC'Sts. Costs incur.ed in .
;na[ntai;:i~g satisfactory .e!ations be!we.m .
the organization and ils e:::p]oyees. including
cosls of labor r:lanaseL,e:1l commi\lp~.
emplc;yee p'~b!ic~!io~s. z:;d other re:at~
2ctiv;ties are allowable.
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21. Lasses on other oward$. Any el<cr., of' -
costs over income on any award I.
unallowable IS a cost of any other award.
This Includes. but is not limited la, the
organizalion.s contributed portion by re~SOQ
of co'st sharing agrecmcnts or alIJ .
underrecoveries throllgh nt~o::3tion of lump
sums for. or cenings on. iD~irect casu: j
Z2. Maintenance and repair cos.ts. Cost.
incurred for necessary maintenance. repair.
or upkeep ofbuildir:gs and equipment- "
(Including Government propertyunJes. .
othcr-vise provided for) which neither add 10
the per;r.anent value of the property nor
appreciably prolong its intended Hfe. but .
keep it in an efficient opera.ting condition. a",
allowab]e. Costs inCUITed for improvem~nl.
which add to l!le pe,:nanen('value oC the
buildings and equipment or appreciably
prolong their iiltenced life shall be trl!<llcd as
c:Jpilal expendilures (see paragraph 13).
23. Ma:eria/s and !:Jpplie$. The costs of
materials and supplies nece~~ary to carry out
an award are allowable. S.:ch costs !hou:d be
charged all.'1eir actual p:ices ar.er d~d....c:ing
all cash discounts, trade discounts. rebales.
and allowances received by t~e organization.
Withdrawals from general stores or
stockrooms should be cha;'6"d at cost under
any recognized ffieL'lcd of pricing
consistently applied. Ineo::ling tr;!ns;>ort<l!ion
charges may be a proper paq. of material
cost. Materials and supplies chargi!d a9 II
direct cost should include only the ma ten a],
and supplies actuany osed for the .
performance oC the contract or grant. and cue
credit should be given ror any.excess
maleria!s or supplies retained. or returned 10'
- vendors. .' .- .
24. "feetings. confuence!l..
a. Costs associated with Ibe conduct oC
. . meetings. and conferences. and include the
eosl of renting facilities. meals. speoke~'
fees.. and the like. Bul see paragraph 12,
Entertairur.ent costs. and paragraph Z9. _
Participant support ccs!s.
. b. To th~ extent that l.I,ese costs are
identjfia~!e with a particular cost ob;ecli-re.
they should be charged to tSat objective. [See
paragraph B. oC Attachment A.) These cost,
are allow2ble pro\;ded I.\:at they meet the
general te!!s of allowable. sno'sT1 in .
Attachment A 10 Ibis Circular.
c. Costs of meetinss and COO'lferences held
lo'.conduct the seneral administration of l.'le
org3nization are allowac]e. ...-
25. J.rembe:'SM;s. sds::j:p(ions. ana
professional oc:hity cOS($. '. .
a. Costs of the or;;:anizal:on's membership
in dvic. business. technical. and professional
organizations are allowab]e.,
b. Costs of the organization's sub~cription.s
to civic, business, professional. and lechnical'
periodicals are aqowable. .
c. Costs of at!end:!nce at ::-:ee:ings a:!d
conferences. sponsorcd by ol....ers ",he:! the
prir.:ary p;;f?ose is l.'1e cisse~;'!:!1:on of
technical infort!:3!ion. are allowable. nus
includes costs of roea]s. tra~~p~rtation. and
Olher items incidental to such at1cnCilnce.
::6. Organization ccsts. Exper.~~'.1Jes. suc.'t
as incor,;cra:ic;n fees, brokers. fe~5. lees to
promo:ers. c~6.~::i~ers or I:1AnagCi::ent
consultants. at!cr;:cys. accountan',s. or
i.-:.\~s~::,:~~t c..,'.!r:se1o~. \,,'hc~~er or ~ot
tmpl,,}'~es of the crgani:ali:::n. ;n co::::~clion
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Federal Register I Vol. 45, No. 132 I Tuesday. July 8. 1980 / Notices
40031
with astablishment or reorg:lnization of an
organ.i:ation. are unallowable except with
priur a;:pro\'al oftl:e awarding ag~ncy.
27. o-..ert:'me. extrrJ.pay shift. and
multish/lt premiums. Premiums for overtime.
extra.pay shins. and multishift work are
allowable only with the prior appro\'al of the
awarding aeency except: .
a. Whe.n nece~sa;y to cope with, _
emergencies. s;.tch as those resulting from
accidents. natural disasters. breakdowns of
equipment. or occasional operational
bott!e::ech of a sporamc pature. .
b. When employees are perfonnil18 in~lrect
func~ons such as adminiiltraUon. . ,
maintenance; or accounting. . ':
c; In the performance of tests, laboratory "-
procedures. or other similar operations which
are continuo:Js in nsture and cannot
re;15onably be inter.-.:pted or otherwise'
cODlp!eted.
d. When lower overall cost to the .
Government .....ill result.
28. Page charges in prof~ssional journals.
Page charges for professional journal
publications are allowable as a necessary
part of research costs. where:
a. The research 'papers report work
supported by the Govem.TIlen!: and
b. The charges are le\;ed impartially on all
research papers published by the journal.
whether or aot by Government.sponsored
authors.
29. Participant support costs. Particlpant
support costs are direct costs for items such
as stipends or subsistence allowances. travel
allowances. and-registration fees paid to or
on behalf of participsnts or trainees (but not ..
emplo~'eesJ in cor.nection with meetings.
conferences, s~'I::posia. or trainir.g projects.
These costs are ailuwable with the prior
approval or the awarmng agency.
30. Petellt co:;ts.
a. Costs of (iJ preparing disclosures.
reports. and ether documents required by Ule
award and of searc!ling the art to the extend
necessary to make such disclosures. (ii)
preparing documents and any other patent
costs in connection with the filL..,g and
prosecution of a United states patent
applic3 tiO!! where tiUe orroyaltj'.!ree license
is required by the G.:l\'crnment to be
conveyed to th~ Go...ernment. and (iji) general
counseling services relating to patent and .
copyright matters. such as advice on patent
and cOPi-=ightlaws. reg'llations. clauses. and
employce 8g:-eerr.e!lts are allowable (but see
par2~aph ~).
b. Cost o~ prepllring disclosures. re;lOrts.
and oLlter docume::ts and of searchin~ the art
to the extent necessary to make disclosures.
if Dot required by the awerd. are
unallowable. Cos15 in connection with (i)
filing and prosecuting any forei~ patent
application. or (ii) a:ty United States patent
application. where ilie award does not.
require com'eying title or a royalty-free
Ucense to the Go\'ernmenl, are u:lallowable
(also see paragraph 43). .
31. Pension pla::s. See paragr:lph 6. g.
32. Plant security costs. :-':ecessary
expenses inC".1rl'ed to comply with
Goverl".ment security requirements or ror
racilities protection. incl"ci!l3 \Va;;es.
uniforms. and eq:Ji;::llenl of personnel arc
a1!o.....able. .
33, Precward cests. Preawrtrd costs ere
those incurred prior to the e!:ecth'e da te of
the award direc:ly p,!Jrsua~t to the
negotiation and in anticipation of the award
where such costs is necessary to.comply wHh
the propost!J delivery schedule or period of
performance. Such costs are allowable only
to the extent that t.ltey would have been
allowable if incurred after lIie da te of the .
award and only \\;i.h th~ written appro...al of
the awa.-dbg asenc)'.
34. Professional service costs.
a. Costs of professional and consultant
services rendered by persoria who are
members of a particula; profession or possess
. a special skill and who are not officers or
employees of the organization. are allowable,
subject to b. c. and d. of this paragraph when
reason:!ble in relaticn to the se/"\ices
rendered and when not contingent upon
recovery of the costs from the Government
b. In determing the allowability of costs in
a particular case. no single factor or any
special combina tion of factors is :1ecessJJily
determinative. However, the following
factors are relevant:
(lJ The nature and scope of the service
rendered in relation to the service required.
. (2) The necessity of cor:tracting for.,C;e
service. considerir.g the or,ganization's
capability in the particular area.
(3J The past pattern of such costs.
particularly in the yestS prior to Go\'el':".ment
a wards.
(4) The impact of Government awards on
the organization's business (Le.. ,.,.hat new
proble:ns have arisenJ.
(5) 't.'hether the proportion of Govem.'llent
work to the organization's total business is
such as to influence the org::llza tion in favor
of incurring the cost. particularly where the
services rendered are not of a continuing
nature and have little re!ationsrJp to work
under Government grants and cona-acts.
(6J Whether the service can be perfonned
more economically by direct emploi'me::!t
rather thaa contracting,
(7) The qualifications of the indh;dual or
concern rencering the service and the
customary fees charged. especially on non-
Govema:ent awards.
(8) Adequ~cy of the cO!ltractual agreement
for the sendce (e.g.. description of the sen'ice.
estimate of tirne required. i'a~e of
compensation. and temination pro\'isions).
c. In addition to the factors in paragr.:!ph b
above. retainer fees to the allowable must be
supported by evidence of bona fidJ! services
nailable or rcnde~ed.
d. Cost of legal. accounting, ar.::! consulting
services. and related costs incurred in
coanection with def'!nse of antitrust suits.
and the prosecution of c1ai.:ns a6a[nst t.lte
Government. are unallowable. Costs of legal.
accounting and consulting se:-.ices. and
related cests. incurred in connection \\oith
patent iniringl?mentlitigation, organization
and reorganization. are unallowable u.1.Iess
otherwise provided for in the award (but see
paragraph 47e).
35. Profits and losse!l on dispositio:: of
depreciable propert;- or o/ber capital csse!s.
a. (1) Gains and losses on sale, retirement.
or other dispesit:cn of dc~re.::able pro~'?rty
shall be included in the year in which they
oc...-ur as credits or charocs to cost If-'oupir.;(.)
in which the depreciation applicable to such
property was included. The amount of the
gain or loss to I:e included as a credit or
charge to the appropriate cost grouping(s)
shaU be the differe:':!ce bel ween the amount
realized on the property and the .
undepreciated ba:;is of the property.
(2) Gains and losses on the disposition of
depreciable property shall not be recognized
as a separate credit or charge under the ..-
following conditions.
(aJ The gain orloss is processed through a
depreciation reserve account and is reflected
In the depreciation allowable under
paragraph 9. .
(b) The propertj' is gi...en in exchange as
part of the purchase price of a sirililar item _
and the gain or loss is taken into account in
detenninins the depreciation cost basis of the
new item. .
(c) A loss results from the f..i1ure 10
maintain permissible insurance. except as
otherwise pro\'ided Lo1 paragraph 18.a.(3).
(d) COr:1pensation for the use of the
,. propert;- was provided t.hrough use
allowances in lieu of depreciation in
accordance with paragraph 9. .
(e) Gains and losses arising from'mass or
exa-aormnary sales. retirements, or other
dJspositions shall be considered on a case-
by-case basis.. "
b. Gains or losses of any nature arising
from the sale or excnange of propertj' other
than the property co...ered in parag;-aph a.
above shall be excluded in computing award
costs. .
36. Public information service costs.
a. Public ir.formation service costs include
the cost associated withpamph!ets. news
releases. and other forms of information
sen'ices. Such cosls are normally incurred to:
(1) WOn:::! or instruct individuals. groups. or
the general public.
(2) Interest indi\;duals or groups in
participating in a service program of the
organization.
(3) Disseminate the results of sponsored
and nonaponsored activities. .
b. Public information sen;ce cost.s are .
allowable as- direct costs with the prior
appro\'al o~:.he awarding agency. Such costs
are unallowable as indirect costs. .
~. Publication aild prbting C05tS.
a, Publication costs include the costs of
printing (inc!uding the processes of .
composition. plate-making. press work.
bindi..::g. and the end products procuced by
auch processes). distribution. prorr::otion.
majjing, and ge:':!eral ha!ldlir:;:.
b. IT these costs are not identifiable ,\'ith a
particular cost objective. they she'lld be
allocated as indirect costs to all benefiting
activities of the organiza tion.
c. Publication and printingcosts are
unallowable as direct costs except with the
prior approval of the awarding agency.
d. The cost of page charges in journals is
add:essed paragraph Z8.
38.. Rearrangement and alteration costs.
Cos!s incurred for ordinary or normal
rearrangement and alteration of facilities are
allowable. Special arrar:ger::::ent and
alteration costs incurred si'eci!ically for the
project are allowable wit.J.: t.lte prior appro\.al
of the a v.:ar.:ii::g age~cy.
39. Reconversio.'1 costs. Cosls incurred in
:.he restoration or rehabilitation of the
~
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Federal Register I Vot 45. No. 132 I Tuesday. ;U'y 8. 1980 I Notices
46032 '
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organ:z.ation'. facllltie, 10 approxlmately the
same condItion exl,lIns bnmediately prior to
commencement of Covernment aword" Cait
wear and tear excepltd. are aBowablL
40. Recruiting casu. The followin8 .
recruiting cosls are allowable: <:ost of "help
wanled" advertising. operating cosh of aD
employment office. cosL1 of operating aD
educational testing program. travel experule.
including food Il1ld lodging of employeea.
whOe ensosed in recruiting personnel. travel
costs of applicanls for interviews far .
prospective employment, Rnd relocation costJ
incurred incident to recruitment of new .
employees (see paragraph 41c). Where the.
organizatIon uses employmenl agendes.
costs not in excess of standard commercial .
rates for such services are allowable.. . .
41. Relocation costs. .
a. Relocation costs are costs incident to the
perma::ent cange of duty assignment [for aD
indefinite period or for a slaled period of not
less than 12 months) of an existing employee
or upon recruitment oC a new employee.
Relocation costs are aDowable, subject to the
Iimilation descn'bed in paragraphs b, Co and d,
below. pro"ided that: ,
(1) The move is for the benefit or the
employer.. ~
(2) Reimbursement 10 the employee is in
acco.dance v.ith an est;;blished written .
policy consislentl}' followed by tlie emplbyer.
(3) The reimbursement docs not exceed the
emplo}'ee's actual (or reasonably 7s!imatea)
expenses. . ~
b. Allowable relocation costs for current
employees are limited to the fonowing: . , '
(1) The costs of transportation of the
emplo)'ee: members .ofhis immediate family.
and his household. and personal eITecls 10 the
r.ew localion. . _. . , .. .
(2) The costs of finding a new home. such. .
a.s ad\'ance trips by employees and spouses
to loc:!te living quarte;s and lemporaxy
lodgiolg during the transition period. up 10 a -
maxii%:um period of 30 da}'s, including
advance trip tims; - _ -,'
(3) C10sing c.osts, suo as brokerage. legal.
and appraisal fees. incident to the disposilioll
of the employee's former home. These costs.,
together with those desc..'bed in (4) below, .
are limited to 8 per C::l:t of the sales price oC
the emplcyee's fermer home. .
(4) The continuing costs oC ownership of .
the vacant former home aner the settlement .
or lease date of the employee's new
perm;!nent heme. such as caintenance of
buildLigs and gro~ds (e;t,c!usive of nx.ir.g up
expenses), utill~es. taxes, alld property
insurance.", _ .
(5) Other necessary alld reas.onable .
expen'ses normally illcident to relocation..
such as L~e cests or cancell~ l!:1 unexpired-
lease, disconnecting and reinstalling
household appliances, and purc."asing
. ir:surance 2gabstloss of or damages to
pc~sonal property, The cost of callcellli1g all
unexpi.-ed lease is limited to three times the
monthly rental.
c. Allowable rElocation costs for new
er:lployees liIe limited 10 those described in
(1) and (1) .of pa;ogra"h b. a1::o\'e. "..'hen _.
re!oc.Jlion ~osts i:ll:...lJTed illcident to the
recruitment cf r....w e~"lo}.ees na,.e t,cen
a!lo-,.;ed either as a ~;,,-ect or ind;;ect cost and
L'le ...:o:p!o)'ee res!~s for reasons ",;thin hi,
,/
"
control withIn 12 months anCT hire. the
organization shall refund or credit the
Goverr.ment for \Is share of the coat.
However. the costs or tnvelto an oversell
location shall be considered travel costs in
accordance with paragraph 50 and not - ..-_
relocallon costJ for the purpose oC thlJ
paragraph Lf dependents are not perm\lled a~
the location Cor any reason and the costs do
not tnc:tude costs or ~anspo~g househol~
. goodL " .. . '.. , " .
d. 11Ie rollowlng costs rehlted 10 relocation. -
are imallowable: ! .. , " - .
(1) Fees and other costs associated with
acquiring a new bome. .
(2) A 1031 on the sale of a former home.
(3} Cct:linu.Utg mortgage principal and
interest pa~'!!len(s on a home being sold.
. (4) Income taxes paid b}' an employee
- related to reimbursed relocation costL .
_ 42. Bento! cosu. '
a. Subject to the nmilatiolU described iIJ ~
pa.agrzphs b.. through d. of this porabTap!1o
rental cost.s are allowable to the extenl that
the rates.are reasonoble In light oC such, I
factors as: renlal costs oC comparable
property. Lf any: market conditions in the
area; alternatives a\'a:Jable; and the type.li!e
. expectancy. ct:ndition. and value of the ' :
propert}'leased.
b. Rer.~l costs under sale and leaseback
ar.angements are ellowable only up to the
amOll:1t that would be allowed had the
organizatlon co:::linued to own the'proper:t}'. :
c. Rental costs under less.than.length -~ .
leases are allowable orily up to the amount
that would be allov.ed bad title to the -'
. property vesled ill Lie organization. For thia
purpose, a less.tban.arms-Iength lease is one
under which one party to the lea.se' agreement
is able to con\:'Ol or substantially Influenca
the adior:s of the other. Such leases include.
but' ~ notlimi:ed to those between (ij,
divisicms of all organization.: (ill OrganizatioIU
under common control through co=on. ,
ofiiC2rS, <iinctorl. or members; and (iii) an
organization and a director. L-uslee. officer. .:
or Kq employee of the O'ia:1i:za tion or his
immediate family either directly or th.--ough ,
corporations, \rusts. or similar ~emenLt
in wbich they hold a controlling interest.... . .
d. Rental costs under lejlses which create L
material equity ill the leased pr:lperty a.-e
allowable oaly up 10 the amount that would
be aDowed had the organization purc:."ased
the property on the cate the lease agreement,.
was executed: e_g~ depre.dation or use .-
,allowa:'lt:es. maintenance, I=es, insurance
but excludir.g illterest expense and other
unaDowable cests. For this purpose, II.
material equity ill the property exists if the
lease in noncancelable or is cancelable only
upon !be occurrence of some remote', .,
contir:gency and has one or more of the ~
fonowing characterislica:, ' -: I'.' .
(1) The organization has the right io.' .' ..
purchase the property for a price which ai the
beginning of the lease appears to be
lubstantially less LlJan the probable fair - .
mar1l.et value at the time it is permitted to
purchase the property (commorily called a
lease with a bargain purchase option):
(2) Tille to t.!:e property passe.,!.o tbe -:
Olbanization at some :i~e curing or aCler the
lease pe;;od; ..' '
(3) 11;e ter.:: of ~,he lease (;;'!itiallerc plua
periods cO\'2red by bargain rer.ewal options.
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Ir any) Is equal to 75 per cent or more or Cle
economic life of the lessed property: I.e~ ~
period the property Is expected (0 be -
eeonomically usable by one or more: USCTL
43. Roralties and other costs for U,'~ of
patents and copj'righu.
a. Royallles on a palent or copyright or
amortiz.alion of the cost of acquIring by
purchase a copyright, patent, or right. .,
thereto, ne~ssary for the proper performance
of the award are allowable unless:
(1) The Government has B license or the
right 10 free use of the patent or copyright.
(2) The patent or copyright has beeD
adjudicated to be invalid, or has beeD ,
administratively determined to be Invalid.
(3) The pa tent or 'copyright Is considered 10
be unenforceable. .
(4) The patent or copyright. Is expired.
b, Special care should be exercised in
determining reasonableness. where the .
royalties may have been arrived at 8S a result
o[less then arm's length bargaining: e.g.:
(1) Royalties paid 10 persons, including
corporations. eUiliaYcd with the erganizatioil:'
(2) Royalties paid to lL"lamnatcd parties.,
including corporations, uncer an agreement
entered i."lto in conlerr.plation that a '
GovernJ'nenl award would be made.
(3) Royalties paid under an agreemelIl
enle:-ed into after an award is made to an
organiza lion.
c. In any case invol\'Ing a palent or
copyf-sbt formerly owned by the
. organization, the amount or royalty allowed
should not exceed the cost which would have
. been anowed bad the organization retained
title thereto. -
~. Severance pay.
a. Severance I=ay, also commorily"referred
to as dismissal wages. is a payment iII-. ,
addition 10 regular salaries and wages, by
organizac:ms to workers whose err.ploJ.ment
. is being terminated. Costs of severance pay
are allowable cnly to the extent that in each
,case. it is requiied by (i) law, (ii) employer- .
eIilplo~'ee agreement. (iii) esla bEshed policy
that ccnstitutes, in effect, an implied
_ . agreement on the orga.r:ization's part, or (iv)
cirC'.unstances of the particular employment.
b, ~osts or severance payments are di,,;ded
into two categories as [ollowa: '
(1) Actual normal trunover severance
par=lents shan be anocated to all activities;
or. where the organization provides for B
reserve fer r.ormal severances such method
;,;11 be acceplable if the charge to Cllirent '_
oparations is reasonable i., light of paymenLt
actually cade for normal seve:ances o\'er. a
representative past period. and if amounL1
cha:.ed are allocated to all activities of the
org a l".iza tion. ,.
(2) Abnormat or !!lass severance pay is at
such a cor.jectural nature that measurement...
of costs by means or an accrual ....ill not -
achieve equity to both parties. Thus. accruals -
for this pu.-pose are not allowable, However,
the Government recognizes its obligation 10
_ participate to the extent of its fair share, 1a
any specific payment. Thus. allowabJity ",ill
be considered on a case-by.case basis in L\e-
e\'ent o[ occ~ence. .
45_ S;;ecic!;'::ed ser..ice /ccili:ies. .
a. The costs of se:"o'ices pro\.idcd by hi::;:Jy
. complex or s;:ec:al:zed f;;cililies o;:~~~:ed by
L"e c~.;an:Z2 t:on. suc..\ as elect:onic
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Federal Register / Vol. 45. No. 132 / Tuesday, July 8, 1980 / Notices
compufers and wind tunnels, are allowable
provided the charges for the services meet
the conditions of either b. or c. of this
paragraph and, in addition. take into account
any items of income or Federal financIng that
qualify as applicable credits under paragraph
A.S. of Attaclunent A.
b. The costa of such services, when
material, must be charged directly to .
applicable awards based on actual usage of
the services on the basis ol a schedule ol,
rates or established methodology that [n does
not. discriminate against federally supported
activities of the organization, Including usage
by the organization for internal purposes. and
(ii) is designed to recover only the aggregate
costs of the services. The costs of each
service shall consist normally of both its
direct cos:s and its allocable share of all
indirect costs. Advance agreements pursuant
10 paragraph A.6. of Attachment J{ are,
particularly important in this situation,
c. VJhere the costs incurred for a service
are not malerial, they may be allocated as
indirect costJ.
46. Taxes.
a. In general. taxes which the organization
is required to pay and which are paid or
accrued in accordance with generally
accepted accounting principles, and
payments made to lecat governments in lieu
of taxes which are COmmensurate with the
local government services received are
allowable, except for (i) taxes from which
exemptions are available to the organization
directly or which are available to the
organization based on an exemption aHo:'ded
the Government and in the latter case when
the awarding agency makes available the
necessary e:<emption certi1icates, (ii) special
assessments on land which represent capital
improvements. and (Iii) Federal income taxes.
b, Any refund of taxes, atld any payment to
the organizalfon of interest thereon. which
were allowed as award costs, will be
credited either as a cost reduction or cash
refund, as appropriate. to the Government. _
47. Terminat.ion costs. Termination of
awards generally give rise to the incurrence
of costs. or the need for special treatment of
costs. whIch would not have arisen had the
award not been terminated. Cest principles
covering !bese items are set rorth below.
They are 10 be used in conjunction with the
other provisiolU of this Circular in
termination situations.
a. Common items. The cost of items
reasonably usable on the organization's other
work shall not be allowable unless the
organization submits evidence L'Iat it would
not retain such items at cost without
sustainin$ a Joss. In deciding whether such
items are reasonably usable on other work of
the organization. the awarding agency should
consider the organization's plans and orders
for CUtrent and scheduled acthity.
Contemporaneous purchases of common
items by the organization shall be regarded
as evidence that such i1emsare reasonably
usable on the organization's other work. Any
acceptance of common items as allocable to
the terminated portion of lhe award shall be
limited to the ex:ent !bat !be quantilies of
such items on hand. in transit. and on order
are in e:>;cess of the reasonable quantitative
l"Pquiremenls of other work.
b. Cos13 continuing alter t~rmination. II In
e particular case, despite all reasonable
efforts by the organization. certain cosll :
cannot be discontinued L'lUTlediately afler the
effective date 01 termination. such costa are
generally allowable within the limltativns set
forth in th1s CLl:'.l1ar. except that any such '
costs continuing aner tenninalion due to the
negligent or willful railure of the ol'8anization
to discontinue such cosls sball be
unallowable.
Co Loss 01 use/ul value. Loss or useful value
or special toblL"lg. machinery and equipmenl .
which was nol charged 10 the award as a
capital expenditure is generally allowable If:
(1) Such special tooling, machinery. or
equipment is not reasonably capable or use In
the other work of t.'Ie organization.
(2} The Interest of t.ie Go\'ernment is
protected by transfer of title or by other
means deemed appropriate by the a.....arding
agency;
. d. Rental costs. Rental cosls under
unexpired leases are generally allowable_
. where clearly shown to have been
reasonably necessary for the perfonnance of
the term:nated a.....ard less the residual value
of such leases, if (i) the amount of such rental
claimed does not exceed the reasonable use
value of the property leased for the period oC
the' sward and such further period as may be
reasonable. and (ii) the organization makes
aU reasonable efferts to terminate, assign,
settle, or otherwise reduce the cost of such
lease. There also r:::ay be included !be cost oC
alterations ol such leased properly. pro\ided
such alte:-ations \';ere necessa..y for the
perfonnance of the award, and of reasonable
restoration required by the provisions of the
lease.
e. Settlement e;'rj)eMes. Settlement.
expenses including the following are
generally allowable: .
(1) Accounting, legal, clerical, and similar
costs reasonably necessary for: .
(a) The preparation and presentation to
awarding agency of settlement claims and
supporting data with respect 10 the
terminated portion of the award, unless the
. tenn:.,alion is ror default. (See paragraph 4.a.
of Attachment L OMB Circular No. A-no:
and
(b) The tennination and settlement of
subawarda,
(2) Reasonable costs for the storage.
transportation. pro:eclion, a.Jd diSPOsition of
property prOvided by the Government or
acquired or produced for the award; except
wh8lJ graniees are :-e:mbu."'Sed for disposala
at a predetermined amou.,t in accordance
with Attachment N of OMB Circular A-llO,
(3) Indirect costs related to salaries and
wages inc:urred as settlement expenses in
subparagraphs (1) a.nd (2J of this parag:-aph.
Normally, such indirect costs shall be limited
to fringe benefits, occupancy cost, and
L'l1media Ie supenision.
t. Claims under subowards. Claims under
subawards, including the allocable pertion of
claims which are common to !be award, and.
to other work of the erganization are
. generally allowable. An appropriate s!':a:e of
the o'tanization's i."ldirect expe!lse may be
aUocaled to t.'Ie amount of settlements .....ith
subcontractor I subgra:ltees: provided thai the
amount allocated is oLien..ise consislent
46033
with Ihe besic,guidelbes contained in
Attachment A. The indirect expense 80
allocaled shall exe/ude the same and s:miJar
costs claimed directly or indirectly as
seltlement expenses.
4a. Tro/:-:irg GIld educotion costs.
a. Costa of preparation arid mainlecaIlce at
a program of instruction including but Dot
limiled to on-the.job, classroom. and
apprenticeship training, designed to inc.-ease
. the vocational effectiveness of employees,
including training materials, textbooks,
salaries or wages of trainees (excluding
overtime compensation, which might arise
therefrom), and (I) sala..-ies of the directDr ot
training and staff when the training program
is conducted by Lie orsanization; or (ii)
tuition and fees when L'Ie trair:ing is in an
msti:ution not operated by the organization,
are a./lowable.
b. Cesls of part.time t:duca Uon, at an .
undergraduate or pestgraduate college level.
including.:nat pravid.:d at the organization's
own racilities. are allowable only when tbe
course or degree pursued is rela tive to :.be
field in which the employee is DOW working
or may reasonably be expected 10 work, ..ad
are limited to:
(1) Training materials.
(2) Textbooks.
(3) Fees charges by the educational
in sti tu Ii on.
(4J Tuition c.harged by the educational
institution, or in lieu of tuition. instruCIOl'$'
salaries and the related share of indired
costs of the educational institution 10 the
extent that the sum thereor is not in excess 01
the tuition which wonld have ben paid to !be
Participating educational institution.
(5) Salaries and related costs ot instroctors
who are employees of the organization.
(6) Straight.time compensation of each
employee ror lime spent attending classes
du.-L"lg working hours not in excess of 154
hours per year and only to the extent iliat
circums:ances do nol permit the operation at
classes or a!lendallce at classes after regular
working hours: othen\-,se such compensatioQ
is unallowable. '
c. Costs of tuition, fees. training IDa leriaI.s,
and textbooks (but nol subsistence, salary, or
any other emolumentsJ in connection with
full.time educ'::'ion, including tl::al provided at
the organization', own facilities. at a
POsl8t.ad",!le (t,ut not unde:g.-aduate) co!lege
level are allowable only when t."te Course or
degree pursued is related to the f;eld in whIch
the employee is now workill8 or may
~ reasonably be expected to work, and only
where the costs recei\'e !be prior approval ol
the awarding agency. Such costs are limited
10 the cost$ attributable 10 e total period not
to exceed one s<:bool )'ear for each employee
so trained. In unusual cases the period may
be extended. .
d. Cosl, of attendance of up 1016 weeka
per ecployee per Jiear al specialized
program.! specifica!!y designed to enhance
the effectiveness of executives or managelll
or 10 prepare employees for such pO$itions
are allowable. Such costs bclude enro!!rt:e.o.t
fees. t:-aining t::aterials. textbooks and
related c!:arges, emp!o}ees' salaries,
subsistence. and t:aveL Cesls allo.....able
under t.1:!s i'dri:g:-a;Jh do not inc.J\;ce l';ose f<Jr
courses that are part of a degr-ee~rienled
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curriculum. which are allowable ody to l.'Je
extenl set forth in b. and c. above.
e, Maintenance expense. and normal
depreciation or [air renlal on [acilitie.
owned or leased by the organization for
training purpose, are allowable to the extent
set forth in paragraphs 9. 22, and 42-
C. Contributioni or donations to
educa tional or training institution,. including
the dona tion o[ [acilitie, or other properties,
and scholarships .or fellowships, are .
unallowable. . _
g. Training and educatioa:.costs in excess of
those other-vise allowable under p~agraph.
b. and c. of this paragraph may be allowed
with prior approval of the awarding agency.
To be cO!1sidered [or approval, the
orgllnization must demonstrate that such
costs are consistently incurred pursuant to an
established training and education program,
and that the course or degree pursued ia
relative to the field in which the employee is
now working or may reasonably be expected
to work. "
49. Transportation casts. Transportation
costs include freight. express. carlage. and
postage charges relating either to goods
purchased. in process. or delivered. These
cosls are allowable. Wben ,uch cost, can
readily be Idenlified with the item, involved, .
they may be directly charged as
transportation costs or added 10 the cost of
such items (see paragraph Z3). \Vhere'
Identification with the material, received
Cllnnot readily be made. transportation co,ts
may be charged to the appropriate indirect
cost accounts if the organization follow, a
consistent equitable procedure in thi,
re~ pect.
50, Travel costs.
a. Travel costs are the expenses for
Irilns;ortation. lodging. subsistence. and
related items incurred by employees who are
in travElI status on official business of the
orgar.ization. Travel costs are allowable
subject to paragraphs b. through e. below,
when thilY are directly attributable to specific
work under an award or are incurred in the
nonnal course of administration oC the
organization. _
_b. Such costs may be charged on an actual
basis. on a per diem or mileage basis in lieu
of actual costs incurred. or OD a combination
of the two. provided the method used results
in charges consistent with those normally
allowed by the organization in its regular
opera1ions.. ,
c. The diITerence in cost beh\"een nrst.dass
air accommodations and less than first-class
air accommodations is unallowable except
when less than nrst-class air
accoaunoda tions are not reaS<lnably
available to tneet necessary c::.issioD
requirements. suclt as where less than rlrSt.
class accommodations would (i) require
circuitous routing. (il) require travel during
unreasonable hours. (iii) greatl)' increase'the
duration of the flight. (iv) t:l!sult in additional
costs whicb would offset the transportatioo
savings. or (v) offer accommodations which
are nol reasonably adequate for the I:QedicaJ
needs of the Ira veler.
d, Nece!Sary and reasonable costs of
!ami!r movements and personnel moveme::ts
o[ a special or mass nature ate allowable.
pursuanlto paragraphs 40 and 41. subject to
allocation on the basis of work or time period
benefited when appropriate. Advance
abreements arc particularly important. ,
e. Direct charges for foreign travel costs are
allowable only when the travel has received
prior.approval of the awarding agency. Each
separate.foreign trip must be approved. For
purposes of this provision. foreign tra vel is
defined as any travel outside ol.Canada and
the United States and its territories and
possessions. However. for an organization
located in foreign countries. the terin "foreign
tra\'eI" mC3ns travel outside that counlly.
{Circular No. A-l22J _
Attachmeut C
Nonp~ofit Organizations not Subjectta thia
CIrcular
Aerospace Corporation. EI Segundo.
California
Argonne Universities Association. Chicago,
lI1inois
Associilted Universities. Incorporated,
Washington. D.C.
As~ociated Universities for Research and
AstronODlY. Tucson. Arizona
Atomic Casualty Commission. Washington.
D.C.
Battelle Memorial Institute. Headquartered in
Columbus. Ohio ' . .
Brookhaven National Laboratory. Upton.
New Yom
Centerfor Ene~ and Environmental
Research (CEER). (University of Puerto
Rico)
Commonwealth oC Puerto Rico. ChadilS Stark
Draper Laboratory. Incorpo~ated
Cambridge. Massachusetts. Comparative
Animal ~esearch Laboratory (CARL]
(Unh'ersity of Tennessee]. Oakridge.
Tennessee
Environmental Institute of ~chigan. Ana
Arbor, Michigan . .
Hanford En\irorunental Health Foundation.
Richland. Washington
lIT. Research Institute. Chicago. minois
Institute for Defense'Analysis. Arlington.
Virginia
. Insti!ute of Cas Technology, Chicago. illinois
Midwest Resilarch Insli:lJte. Headquartered
in Kansas City. Missouri
Milre Corporation. Bedford, Massachusetts
Montilna Energy Research and Development
Ir.stitute, Ine.. (MEROI). Bulle. Montana
National Radiological Astronomy
Observatory. Creen Ban.~ West VIrginia
Oakridge Associated Universities. Oakrid8e.
Tennessee
Project Management Corporation. Oakrid8e.
Tennessee _ _
Rand Corporation. Santa MoniCa. California
Research Tr'.angle Institute. ResellJ'Ch
Triangle Park, North Carolina
Riverside Research Institute. New York, New
York
Sandia Corporation. Albuquerque. New
Mexico,
Southern Research Institute. Birmingham,
Alabama _ , _
Southwest Research Institute. San A.,tonio,
Texa.
SRI In!ernat:cr:al ~ferJo Park. Ca!i:CT':Iia
S)racuse Research Corporatio!1, Sj":'acuse.
~ew York
Universities Research Associaiion.
In COrpora led ~ational Acceleration Lab).
Argonne. !IIinoi. '
Universities Corporation for Atmospheric
Research. Boulder. Colorado
Nonprofit Insurance Companies such as Blue
Cross and Blue Shield Or,ganizations
Other nonprofit organizations as negotiated
with awarding agenciel.
[FR Doc. ~:O270 FiI.d 7-7-<!C, 8;4S IIDI
a/WHO CODE 311~1-M