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SHELTER PLUS CARE CONTRACT
3278
THIS SHELTER PLUS CARE CONTRACT (this "Contract ") is made and
entered into, in duplicate, as of August 16, 2012 for reference purposes only, pursuant to
a minute order adopted by the City Council of the City of Long Beach at its meeting on
August 9, 2011, by and between MENTAL HEALTH AMERICA OF LOS ANGELES, a
California nonprofit corporation ( "Organization "), with offices located at 100 W. Broadway,
Suite 5010, Long Beach, California 90802, and the CITY OF LONG BEACH, a municipal
corporation ( "City ").
WHEREAS, the City received Grant No. CA1132C9D061100 (the "Grant ")
from the U.S. Department of Housing and Urban Development ( "HUD ") Shelter Plus Care
Program (the "Grant Agreement "); and
WHEREAS, the City and Organization desire to complete the work required
by the Grant and enter into this Shelter Plus Care Contract for that purpose; and
WHEREAS, the City Council has authorized the City Manager to enter into
a contract with Organization that provides the grant funding within a maximum amount
and program accountability by the City; and
NOW, THEREFORE, in consideration of the terms and conditions
contained herein, the parties agree as follows:
Section 1. The above recitals are true and correct and the Grant is
incorporated herein by this reference. Organization shall comply fully with the terms of
II the Grant.
Section 2.
A. Organization shall perform or cause to be performed work in
accordance with the terms of the Grant Agreement, Attachment "A" entitled
"Scope of Work ", Attachment "B" entitled "Compliance with Federal Regulations ",
Attachment "C" entitled "Office of Management and Budget ( "OMB ") Circular A-
110", Attachment "D" entitled "OMB Circular A- 122 ", Attachment "E" entitled
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"OMB Circular A- 133 ", Attachment "F" entitled "Health Information in Compliance
with the Health Insurance Portability and Accountability Act of 1996 (HIPAA) and
the Health Information Technology
for Economic
and Clinical
Health Act
(HITECH Act) Business Associate
Agreement ",
Attachment
"G" entitled
"Certification Regarding Debarment, Attachment "H" entitled "Certification
Regarding Lobbying ", all of which are attached hereto and incorporated by this
reference, and the City of Long Beach Grants Monitoring Guidelines, which have
been separately provided to Organization and are incorporated by this reference.
B. Organization shall be responsible for adherence to all
policies, procedures, rules and regulations as noted in sources including but not
limited to the OMB Circulars, Code of Federal Regulations, United States Codes,
City of Long Beach Grants Monitoring Guidelines, this Contract, the Grant
Agreement, the Request for Proposal ( "RFP ") and Organization's proposal in
response to the RFP. In addition to and without in any way limiting the
foregoing, Organization shall comply with all laws and regulations set forth in 24
CFR Part 582.
Section 3. The term of this Contract shall commence at midnight on
August 15, 2012, and, unless sooner terminated as provided herein, shall terminate at
1111:59 p.m. on August 14, 2018.
Section 4.
A. Organization shall affirmatively and aggressively use its best
efforts to seek and obtain all possible outside funding and mainstream resources
available to continue the services identified in this Contract.
B. Total rental assistance and supportive services to be
provided under this Contract shall not exceed Four Hundred Eleven Thousand
One Hundred Thirty Dollars ($411,130) in Grant funds over the term of this
Contract. The City's obligation herein is contingent upon the City's receipt of
Grant funds from HUD.
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C. No later than thirty (30) days after the completion of each
twelve -month period ( "Operational Year ") during the term of this Contract,
Organization shall submit to the City an APR certified by one of Organization's
officers or by its Executive Director.
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Section 5.
A. Organization's records relating to the performance of this
Contract shall be kept in accordance with generally accepted accounting
principles and in the manner prescribed by the City. Organization's records shall
be current and complete. The City and HUD, and their respective
representatives, shall have the right to examine, copy, inspect, extract from, and
audit financial and other records related, directly or indirectly, to this Contract
during Organization's normal business hours to include announced and
unannounced site visits during the term of the Contract and thereafter. If
examination of these financial and other records by the City or HUD reveals that
Organization has not used these grant funds for the purposes and on the
conditions stated in this Contract, then Organization covenants, agrees to and
shall immediately repay all or that portion of the grant funds which were
improperly used. If Organization is unable to repay all or that portion of the grant
funds, then the City will terminate all activities of Organization under this
Contract and pursue appropriate legal action to collect the funds. Alternatively,
to the extent the City has been refusing payment of any invoices, the City may
continue to withhold such funds equal to the amount of improperly used grant
funds, regardless of whether the funds being withheld by the City were
improperly used.
B. In addition, Organization shall provide any information that
the City Auditor and other City representatives require in order to monitor and
evaluate Organization's performance hereunder. The City reserves the right to
review and request copies of all documentation related, directly or indirectly, to
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the program funded by this Contract, including by way of example but not limited
to, case files, program files, policies and procedures. Organization shall provide
all reports, documents or information requested by the City within three (3) days
after receipt of a written or oral request from a City representative, unless a
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longer period of time is otherwise expressly stated by the representative.
C. Organization shall comply with HUD's Homeless
Management Information System (HIMIS) requirements and ensure full
participation in the City's HMIS. Organizations that provide domestic violence
and legal services have been permitted by HUD to use a comparable database
to capture required data elements that comply with HMIS data and HUD
reporting requirements.
D. If Organization spends Five Hundred Thousand Dollars
($500,000) or more in Federal funds in an Operational Year, then Organization
shall submit an audit report to the City in accordance with OMB Circular A -133
no later than thirty (30) days after receipt of the audit report from Organization's
auditor or no later than nine (9) months after the end of the Operational Year,
whichever is earlier. If Organization spends less than Five Hundred Thousand
Dollars ($500,000) in Federal grant funds in an Operational Year, submission of
the audited financial statement is required.
Section 6.
A. In the performance of this Contract, Organization shall not
discriminate against any employee, applicant for employment or service, or
subcontractor because of race, color, religion, national origin, sex, sexual
orientation, gender identity, AIDS, HIV Status, condition, age, disability or
handicap. Organization shall take affirmative action to assure that applicants are
employed or served, and that employees and applicants are treated during
employment or services without regard to these categories. Such action shall
include but not be limited to the following: employment, upgrading, demotion or
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transfer; recruitment or recruitment advertising; layoff or termination; rates of pay
or other forms of compensation; and selection for training, including
apprenticeship.
B. Organization shall permit access by the City or any other
agency of the County, State or Federal governments to Organization's records of
employment, employment advertisements, application forms and other pertinent
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data and records for the purpose of investigation to ascertain compliance with
the fair employment practices provisions of this Contract.
Section 7.
A. In performing services hereunder, Organization is and shall
act as an independent contractor and not as an employee, representative, or
agent of the City. Organization's obligations to and authority from the City are
solely as prescribed in this Contract. Organization expressly warrants that it will
not, at any time, hold itself out or represent that Organization or any of its
agents, volunteers, subscribers, members, officers or employees are in any
manner officials, employees or agents of the City. Organization shall not have
any authority to bind the City for any purpose.
B. Organization acknowledges and agrees that (a) the City will
not withhold taxes of any kind from Organization's compensation, (b) the City will
not secure workers' compensation or pay unemployment insurance to, for or on
Organization's behalf, and (c) the City will not provide and Organization and
Organization's employees are not entitled to any of the usual and customary
rights, benefits or privileges of City employees.
Section 8. This Contract contemplates the personal services of
11 Organization and Organization's employees. Organization shall not delegate its duties or
11 assign its rights under this Contract, or any interest in it or any portion of it, without the
11 prior written consent of the City. Any attempted assignment or delegation shall be void,
11 and any assignee or delegate shall acquire no right or interest by reason of the attempted
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assignment or delegation.
Section 9. Organization shall indemnify and hold harmless the City, its
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Boards, Commissions, and their officials, employees and agents (collectively in this
Section "City ") against any and all liability, claims, demands, damage, causes of action,
proceedings, penalties, loss, costs, and expenses (including attorney's fees, court costs,
and expert and witness fees) (collectively "Claims" or individually "Claim ") arising, directly
or indirectly, out of any negligent act or omission of Organization, its officers, employees,
agents, subcontractors or anyone under Organization's control (collectively "Indemnitor "),
breach of this Contract by Organization, misrepresentation or willful misconduct by
Indemnitor, and Claims by any employee of Indemnitor relating in any way to workers'
compensation. Independent of the duty to indemnify and as a free - standing duty on the
part of Organization, Organization shall defend the City and shall continue such defense
until the Claim is resolved, whether by settlement, judgment or otherwise. Organization
shall notify the City of any Claim within ten (10) days. Likewise, the City shall notify
Organization of any Claim, shall tender the defense of the Claim to Organization, and
shall assist Organization, as may be reasonably requested, in such defense.
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Section 10.
A. Organization shall procure and maintain at Organization's
expense for the duration of this Contract the following insurance and bond
against claims for injuries to persons or damage to property that may arise from
or in connection with the performance of this Contract by Organization, its
agents, representatives, employees, volunteers or subcontractors.
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(1) Commercial general liability insurance (equivalent in
scope to ISO form CG 00 01 11 85 or CG 00 01 11 88) in an amount not
less than One Million Dollars ($1,000,000) per occurrence and Two Million
Dollars ($2,000,000) general aggregate. Such coverage shall include but
not be limited to broad form contractual liability, cross - liability, independent
contractors liability, and products and completed operations liability. The
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City, its Boards and Commission, and their officials, employees and agents
shall be named as additional insureds by endorsement (on the City's
endorsement form or on an endorsement equivalent in scope to ISO form
CG 20 10 11 85 or CG 20 26 11 85), and this insurance shall contain no
special limitations on the scope of protection given to the City, its Boards
and Commission, and their officials, employees and agents.
(2) Workers' Compensation insurance as required by the
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California Labor Code.
(3) Employer's liability insurance in an amount not less than
One Million Dollars ($1,000,000) per claim.
(4) Professional liability or errors and omissions insurance in
an amount not less than One Million Dollars ($1,000,000) per claim.
(5) Commercial automobile liability insurance (equivalent in
scope to ISO form CA 00 01 06 92), covering Auto Symbol 1 (Any Auto) in
an amount not less than Five Hundred Thousand Dollars ($500,000)
combined single limit per accident.
(6) Blanket Honesty Bond in an amount equal to at least fifty
percent (50 %) of the total amount to be disbursed to Organization
hereunder or Twenty -Five Thousand Dollars ($25,000), whichever is less, to
safeguard the proper handling of funds by employees, agents or
representatives of Organization who sign as the maker of checks or drafts
or in any manner authorize the disbursement or expenditure of said funds.
If
delivering
services
to minors, seniors, or
persons with disabilities,
Organization's
Commercial
General
Liability insurance shall
not exclude coverage for
11 abuse and molestation. If Organization is unable to provide abuse and molestation
11 coverage, it can request a waiver of this coverage from the City. The City's Risk Manager
will consider waiving the requirement if Organization can demonstrate to the satisfaction
of the City's Risk Manager that Organization has no exposure, that the coverage is
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unavailable, or that the coverage is unaffordable. If a request for a waiver is desired,
Organization must submit a signed document on Organization's letterhead to the Director
of the City's Department of Health and Human Services, who will forward it to the City's
Risk Manager, providing reasons why the insurance coverage should be waived.
Waivers will be considered on a case by case basis.
B. Any self- insurance program, self- insured retention, or
deductible must be separately approved in writing by the City's Risk Manager or
his /her designee and shall protect the City, its Boards and Commission, and their
officials, employees and agents in the same manner and to the same extent as
they would have been protected had the policy or policies not contained
retention or deductible provisions. Each insurance policy shall be endorsed to
state that coverage shall not be reduced, non - renewed, or canceled except after
thirty (30) days prior written notice to the City, and shall be primary and not
contributing to any other insurance or self- insurance maintained by the City.
Organization shall notify the City in writing within five (5) days after any
insurance required herein has been voided by the insurer or cancelled by the
insured.
C. Organization shall require that all contractors and
subcontractors that Organization uses in the performance of services under this
Contract maintain insurance in compliance with this Section unless otherwise
agreed in writing by the City's Risk Manager or his /her designee.
D. Prior to the start of performance or payment of first invoice,
Organization shall deliver to the City certificates of insurance and required
endorsements for approval as to sufficiency and form. The certificate and
endorsements for each insurance policy shall contain the original signature of a
person authorized
by that insurer to
bind
coverage on its behalf. In addition,
Organization shall,
within thirty (30)
days
prior to expiration of this insurance,
28 11 furnish to the City certificates of insurance and endorsements evidencing
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renewal of the insurance. The City reserves the right to require complete
certified copies of all policies of Organization and Organization's contractors and
subcontractors, at any time. Organization shall make available to the City's Risk
Manager or his /her designee during normal business hours all books, records
and other information relating to the insurance coverage required herein.
E. Any modification or waiver of these insurance requirements
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shall only be made with the approval of the City's Risk Manager or his /her
designee. Not more frequently than once a year, the City's Risk Manager or
his /her designee may require that Organization, Organization's contractors and
subcontractors change the amount, scope or types of coverages if, in his or her
sole opinion, the amount, scope, or types of coverages are not adequate.
F. The procuring or existence of insurance shall not be
construed or deemed as a limitation on liability relating to Organization's
performance or as full performance of or compliance with the indemnification
provisions of this Contract.
Section 11.
A. Organization shall provide reports as required by the City
and HUD and as required in this Contract and applicable laws and regulations.
B. In addition to, and not in substitution for, other terms of this
Contract regarding the provision of services or the payment of operating costs
for services pursuant to 24 CFR Part 582, and except as described in Section
11.C. below, Organization shall not:
1. Represent that it is, or may be deemed to be, a
religious or denominational institution or organization or an organization
operated for religious purposes that is supervised or controlled by or in
connection with a religious or denominational institution or organization.
2. In connection with costs of services hereunder, engage
in the following conduct:
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(a) discriminate against any employee or applicant
for employment on the basis of religion;
(b) discriminate against any person seeking housing
or related supportive services only on the basis of religion and will
not limit such services or give preference to persons on the basis of
religion;
(c) provide religious instruction or counseling,
conduct religious worship or services, engage in religious
proselytizing, or exert other religious influence in the provision of
services or the use of facilities and furnishings;
3. In the portion of the facility used for services assisted in
whole or in part under this Contract or in which services are provided that
are assisted under this Contract, contain sectarian religious symbols or
decorations.
C. Organizations that are religious or faith -based are eligible,
on the same basis as any other organization, to participate in the Shelter Plus
Care program. However, an organization that participates in a HUD funded
program shall comply with the following provisions if it is deemed to be a
religious or faith -based organization.
1. Organization may not engage in inherently religious
activities, such as worship, religious instruction, or proselytization, as part of
the programs or services funded under this Contract.
If Organization conducts such activities, the activities must be
offered separately, in time or location, from the programs or services funded
under this Contract, and participation must be voluntary for the beneficiaries
of the HUD funded programs or services.
2. A religious or faith -based organization will retain its
independence from Federal, State, and local governments, and may
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continue to carry out its mission, including the definition, practice, and
expression of its religious beliefs, provided that it does not use direct HUD
funds to support any inherently religious activities, such as worship,
religious instruction, or proselytization.
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A religious or faith -based organization may use space in their
facilities to provide HUD funded services, without removing religious art,
icons, scriptures, or other religious symbols.
A religious or faith -based organization retains its authority
over its internal governance, and it may retain religious terms in its
organization's name, select its board members on a religious basis, and
include religious references in its organization's mission statements and
other governing documents.
3. A religious or faith -based organization shall not, in
providing program assistance, discriminate against a program beneficiary or
prospective program beneficiary on the basis of religion or religious belief.
4. HUD funds may not be used for the acquisition,
construction or rehabilitation of structures to the extent that those structures
are used for inherently religious activities.
HUD funds may be used for the acquisition, construction, or
rehabilitation of structures only to the extent that those structures are used
for conducting eligible activities under this Section. Where a structure is
used for both eligible and inherently religious activities, HUD funds may not
exceed the cost of those portions of the acquisition, construction, or
rehabilitation that are attributable to eligible activities in accordance with the
cost accounting requirements applicable to HUD funds herein. Sanctuaries,
chapels, or other rooms that a HUD funded religious congregation uses as
its principal place of worship, however, are ineligible for HUD funded
improvements. Disposition of real property after the term of the grant, or
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any change in use of the property during the term of the grant, is subject to
government -wide regulations governing real property dispositions.
D. Organization certifies that it will comply with all documents,
policies, procedures, rules, regulations and codes identified in Sections 2 and 11
of this Contract and such other requirements as from time to time may be
promulgated by HUD.
E. Organization shall execute a Certification Regarding
Debarment in the form shown on Attachment "G ".
F. Organization shall execute a Certification Regarding
Lobbying in the form shown on Attachment "H ".
Section 12. Organization certifies that it has established a Drug -Free
Awareness Program in compliance with Government Code Section 8355, that it has
given a copy of said Program to each employee who performs services hereunder, that
compliance with the Program is a condition of employment, and that it has published a
statement notifying employees that unlawful manufacture, distribution, dispensation,
possession or use of a controlled substance is prohibited and action will be taken for
violation.
Section 13. The City shall facilitate the submission of all reports required
by HUD based on information submitted by Organization to the City. The City shall act
as the primary contact for Organization to HUD for services provided under this Contract.
The City shall facilitate directly to HUD the submission of any information related to all
11 financial and programmatic matters in this Contract, including but not limited to
11 reimbursements of grant funds, requests for changes to Organization's budget and
requests for changes to Organization's application for grant funds.
Section 14. All notices given under this Contract shall be in writing and
personally delivered or deposited in the U.S. Postal Service, certified mail, return receipt
requested, to the City at 2525 Grand Avenue, Long Beach, California 90815, Attn:
Homeless Services Officer, and to Organization at the address first stated above. Notice
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shall be deemed given on the date personal delivery is made or the date shown on the
return receipt, whichever is earlier. Notice of change of address shall be given in the
I same manner as stated for other notices.
Section 15. The City Manager or his /her designee is authorized to
administer this Contract and all related matters, and any decision of the City Manager or
his /her designee in connection with this Contract shall be final.
Section 16. Either party shall have the right to terminate this Contract at
any time for any reason by giving ninety (90) days prior notice of termination to the other
party. If either party terminates this Contract, all funds held by Organization under this
Contract which have not been spent on the date of termination shall be returned to the
City.
Section 17. This Contract, including all exhibits and attachments hereto,
constitutes the entire understanding of the parties and supersedes all other agreements,
oral or written, with respect to the subject matter herein.
Section 18. This Contract shall not be amended, nor any provision or
breach hereof waived, except in writing by the parties that expressly refers to this
Contract.
Section 19. The acceptance of any service or payment of any money by
the City shall not operate as a waiver of any provision of this Contract, or of any right to
11 damages or indemnity stated herein. The waiver of any breach of this Contract shall not
11 constitute a waiver of any other or subsequent breach of this Contract.
Section 20. This Contract shall be governed by and construed pursuant to
the laws of the State of California, without regard to conflicts of law principles.
Section 21. In the event of any conflict or ambiguity between this Contract
and one or more attachments, the provisions of this Contract shall govern.
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IN WITNESS WHEREOF, the parties have executed this document with all
formalities required by law as of the date first stated above.
2012
Type or Print Name
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ROBERT E. SHAN
M
City Attorney
Attachment "A"
City of Long Beach - Shelter Plus Care Program
2011 SPC
Scope of Work
Agency: Mental Health America of Los Angeles SPC11
HUD Grant: CA1132C9D061100 CLB Contract:
Program Objective: The Shelter Plus Care New Project as proposed for the Permanent
Housing Bonus will provide permanent housing to homeless individuals disabled by serious
mental illness. Tenant -based Rental Assistance provides an opportunity for self determination
along with structure and support to help individuals integrate into community housing. The
project will provide eight total units of studio /efficiency type apartments. Supportive Services,
provided by MHA's Homeless Assistance Program will consist of street outreach, case
management, life skills, mental health and health services, employment placement and
transportation. The project will benefit from a new Homeless Innovations Project that
integrates mental health, physical health and substance abuse recovery services.
Outcomes /Performance Measures
Universe #
Tar et #
Target %
Persons remaining in permanent housing as
1
of the end of the operating year or exiting to
8
6
75%
permanent housing (subsidized or
unsubsidized) during the operating year,
Persons age 18 and older who maintained or
3
increased their total income (from all
8
4
50%
sources) as of the end of the operating year
or program exit.
4
Program Participants have increase in
8
1
13%
educational /vocational skills at exit.
5
HMIS Data Quality: Reduce Null data values
80
4
5%
Note: Universe number reflects project participant chart PIT
HMIS - Universe number is established by multiplying the number of adult (in families and singles) and children as program
participants x 10 data elements for each client record.
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EXI4IBIT I
Codified Shelter Plus Care Program Regulation
24 CFR Ch, V (4 -1 -09 Edition)
S +C is subject to the changes made by
the Homeless Definition Rule that is at
the end of this Rule.
Subpart D- Program Requirements
582.300 General operation.
582,305 Housing quality standards; rent
reasonableness.
582.310 Resident rent,
582,315 Occupancy agreements.
582.320 Termination of assistance to
participants,
582.325 Outreach activities,
582.330 Nondiscrimination and equal
opportunity requirements,
582.335 Displacement, relocation, and real
property acquisition,
582.340 Other Federal requirements.
Subpart E- Administration
582.400 Grant agreement,
582,405 Program changes.
582,410 Obligation and deobligation of funds.
AUTHORITY; 42 U.S.C. 3535(d) and 11403 -
11407b.
SOURCE; 58 FR 13892, Mar, 15, 1993, unless
otherwise noted.
Subpart A- General
PART 582- SHELTER PLUS CARE
Subpart A- General
Sec.
582.1 Purpose and scope
582.5 Definitions.,
Subpart B- Assistance Provided
582. 1.00 Program component descriptions,
582.105 Rental assistance amounts and payments,
582,110 Matching requirements.
582.115 Limitations on assistance,
582.120 Consolidated plan.
Subpart C- Application and Grant Award
582,200 Application and grant award,
582.230 Environmental review
§ 582,1 Purpose and scope.
(a) General, The Shelter Plus Care program
(S +C) is authorized by title IV, subtitle F, of the
Stewart B. McKinney Homeless Assistance Act
(the McKinney Act) (42 U.S.C, 11403- 11407b).
S +C is designed to link rental assistance to
supportive services for hard -to -serve homeless
persons with disabilities (primarily those who
are seriously mentally ill; have chronic problems
with alcohol, drugs, or both; or have acquired
immunodeficiency syndrome (AIDS) and related
diseases) and their families, The program
provides grants to be used for rental assistance
for permanent housing for homeless persons
with disabilities. Rental assistance grants must
be matched in the aggregate by supportive
services that are equal in value to the amount
of rental assistance and appropriate to the
needs of the population to be served. Recipients
are chosen on a competitive basis nationwide,
(b) Components. Rental assistance is
provided through four components described in
§ 582.100. Applicants may apply for assistance
under any one of the four components, or a
combination.
r58 FR. 13692, Mar. 15, 1993, as amended at 61 FR 51J69, Sept. 30,
1996)
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§ 582.5 Definitions.
The terms Fair Market Rent (FMR), HUD,
Public Housing Agency (PHA), Indian Housing
Authority (IHA), and Secretary are defined in 24
CFR part 5.
As used in this part:
Acquired immunodeficiency syndrome
(AIDS) and related diseases has the meaning
given in section 853 of the AIDS Housing
Opporturnity Act (42 U.S.C. 12902).
Applicant has the meaning given in section
462 of the McKinney Act (42 U.S.C. 11403g).
Eligible person means a homeless person
with disabilities (primarily persons who are
seriously mentally ill; have chronic problems
with alcohol, drugs, or both; or have AIDS and
related diseases) and, if also homeless, the
family of such a person. To be eligible for
assistance, persons must be very low income,
except that low- income individuals may be
assisted under the SRO component in
accordance with 24 CFR 813.105(b),
Homeless or homeless individual has the
meaning given in section 103 of the McKinney
Act (42 U.S.C, 11302).
Indian tribe has the meaning given in
section 102 of the Housing and Community
Development Act of 1974 (42 U.S.C. 5302).
Low - income means an annual income not in
excess of 80 percent of the median income for
the area, as determined by HUD. HUD may
establish income limits higher or lower than 80
percent of the median income for the area on
the basis of its finding that such variations are
necessary because of the prevailing levels of
construction costs or unusually high or low
family incomes.
Nonprofit organization has the meaning
given in section 104 of the Cranston - Gonzalez
National Affordable Housing Act (42 U.S.C.
12704). The term nonprofit organization also
includes a community mental health center
established as a public nonprofit organization,
Participant means an eligible person who
has been selected to participate in S +C.
Person with disabilities means a household
composed of one or more persons at least one
of whom is an adult who has a disability,
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§ 582.5
(1) A person shall be considered to have a
disability if such person has a physical, mental,
or emotional impairment which is expected to
be of long- continued and indefinite duration;
substantially impedes his or her ability to live
independently; and is of such a nature that such
ability could be improved by more suitable
housing conditions,
(2) A person will also be considered to
have a disability if he or she has a
developmental disability, which is a severe,
chronic disability that-
(!) Is attributable to a mental or physical
impairment or combination of mental and
physical impairments;
(ii) Is manifested before the person attains
age 22;
(iii) Is likely to continue indefinitely;
(iv) Results in substantial functional
limitations in three or more of the following
areas of major life activity:
(A) Self -care;
(B) Receptive and expressive language;
(C) Learning;
(D) Mobility;
(E) Self- direction;
(F) Capacity for independent living; and
(G) Economic self - sufficiency; and
(v) Reflects the person's need for a
combination and sequence of special,
interdisciplinary, or generic care, treatment, or
other services which are of lifelong or extended
duration and are individually planned and
coordinated,
(3) Notwithstanding the preceding
provisions of this definition, the term person
with disabilities includes, except in the case of
the SRO component, two or more persons with
disabilities living together, one or more such
persons living with another person who is
determined to be important to their care or
well- being, and the surviving member or
members of any household described in the first
sentence of this definition who were living, in a
unit assisted under this part, with the deceased
member of the household at the time of his or
her death. (In any event, with respect to the
surviving member or members of a household,
the right to rental assistance under this part will
terminate at the end of the grant period
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§ 582.100
under which the deceased member was a
participant.)
Recipient means an applicant approved to
receive a S +C grant.
Seriously mentally ill has the meaning given
in section 462 of the McKinney Act (42 U.S.C.
114038),
Single room occupancy (SRO) housing
means a unit for occupancy by one person,
which need not but may contain food
preparation or sanitary facilities, or both.
Sponsor means a nonprofit organization
which owns or leases dwelling units and has
contracts with a recipient to make such units
available to eligible homeless persons and
receives rental assistance payments under the
SRA component,
State has the meaning given in section 462
of the McKinney Act (42 U.S.C. 11403g).
Supportive service provider, or service provider,
means a person or organization licensed or
otherwise qualified to provide supportive
services, either for profit or not for profit.
Supportive services means assistance that -
(1) Addresses the special needs of eligible
persons; and
(2) Provides appropriate services or assists
such persons in obtaining appropriate services,
including health care, mental health treatment,
alcohol and other substance abuse services,
child care services, case management services,
counseling, supervision, education, job training,
and other services essential for achieving and
maintaining independent living.
(Inpatient acute hospital care does not qualify
as a supportive service.).
Unit of general local government has the
meaning given in section 102 of the Housing
and Community Development Act of 1974 (42
U.S.C. 5302).
Very low- income means an annual income
not in excess of 50 percent of the median
income for the area, as determined by HUD,
with adjustments for smaller and larger families,
HUD may establish income limits higher or lower
than 50 percent of the median income for the
area on the basis of its finding that such
variations are
24 CFR Ch. V (4 -1 -09 Edition)
necessary because of unusually high or low
family incomes.
[61 FR 51169, Sept. 30, 1996; 62 FR 13539, Mar, 21, 1997]
Subpart B- Assistance Provided
§ 582.100 Program component descriptions.
(a) Tenant -based rental assistance (TRA).
Tenant -based rental assistance provides grants
for rental assistance which permit participants
to choose housing of an appropriate size in
which to reside. Participants retain the rental
assistance if they move, Where necessary to
facilitate the coordination of supportive services,
grant recipients may require participants to live
in a specific area for their entire period of
participation or in a specific structure for the
first year and in a specific area for the
remainder of their period of participation.
Recipients may not define the area in a way
that violates the Fair Housing Act or the
Rehabilitation Act of 1973. The term of the
grant between HUD and the grant recipient for
TRA is five years.
(b) Project -based rental assistance (PRA).
Project -based rental assistance provides grants
for rental assistance to the owner of an existing
structure, where the owner agrees to lease the
subsidized units to participants. Participants do
not retain rental assistance if they move. Rental
subsidies are provided to the owner for a period
of either five or ten years. To qualify for ten
years of rental subsidies, the owner must
complete at least $3,000 of eligible
rehabilitation for each unit (including the unit's
prorated share of wort; to be accomplished on
common areas or systems), to make the
structure decent, safe and sanitary. This
rehabilitation must be completed with in 12
months of the grant award.
(c) Sponsor -based rental assistance (SRA).
Sponsor -based rental assistance provides grants
for rental assistance through contracts between
the grant recipient and sponsor organizations. A
sponsor may be a private, nonprofit
organization or a community mental health
agency established as a public nonprofit
organization. Participants reside in housing
owned or leased by
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the sponsor. The term of the grant: between
HUD and the grant recipient for SRA is five
years,
(d) Moderate rehabilitation for single room
occupancy dwellings (SRO), (1) The SRO
component provides grants for rental assistance
in connection with the moderate rehabilitation
of single room occupancy housing units,
Resources to initially fund the cost of
rehabilitating the dwellings must be obtained
from other sources, However, the rental
assistance covers operating expenses of the
rehabilitated SRO units occupied by homeless
persons, including debt service to retire the cost
of the moderate rehabilitation over a ten -year
period.
(2) SRO housing must be in need of
moderate rehabilitation and must meet the
requirements of 24 CPR 882.803(a), Costs
associated with rehabilitation of common areas
may be included in the calculation of the cost
for assisted units based on the proportion of the
number of units to be assisted under this part to
the total number of units.
(3) SRO assistance may also be used for
efficiency units selected for rehabilitation under
this program, but the gross rent (contract rent
plus any utility allowance) for those units will be
no higher than for SRO units'(i.e., 75 percent of
the 0- bedroom Moderate Rehabilitation Fair
Market Rent).
(4) The requirements regarding
maintenance, operation, and inspections
described in 24 CFR 882.806(b)(4) and
882.808(n) must be met.
(5) Governing regulations. Except where
there is a conflict with any requirement under
this part or where specifically provided, the SRO
component will be governed by the regulations
set forth in 24 CFR part 882, subpart H,
§ 582.105 Rental assistance amounts and
payments.
(a) Eligible activity, S +C grants may be
used for providing rental assistance for housing
occupied by participants in the program and
administrative costs as provided for in
paragraph (e) of this section, except that the
housing may not be currently receiving Federal
funding for rental assistance or operating costs
under other HUD programs. Recipients may
design a housing
§ 582.105
program that includes a range of housing types
with differing levels of supportive services,
Rental assistance may include security deposits
on units in an amount up to one month's rent.
(b) Amount of the grant. The amount of
the grant is based on the number and size of
units proposed by the applicant to be assisted
over the grant period. The grant amount is
calculated by multiplying the number of units
proposed times the applicable Fair Market Rent
(FMR) of each unit times the term of the grant.
(c) Payment of grant. (1) The grant
amount will be reserved for rental assistance
over the grant period. An applicant's grant
request is an estimate of the amount needed for
rental assistance. Recipients will make draws
from the reserved amount to pay the actual
costs of rental assistance for program
participants, For TPA, on demonstration of
need, up to 25 percent of the total rental
assistance awarded may be spent in any one of
the five years, or a higher percentage if
approved by HUD, where the applicant provides
evidence satisfactory to HUD that it is financially
committed to providing the housing assistance
described in the application for the full five -year
period.
(2) A recipient must serve at least as many
participants as shown in its application, Where
the grant amount reserved for rental assistance
over the grant period exceeds the amount that
will be needed to pay the actual costs of rental
assistance, due to such factor as contract rents
being lower than FMRs and participants are
being able to pay a portion of the rent,
recipients may use the remaining funds for the
costs of administering the housing assistance,
as described in paragraph (e) of this section, for
damage to property, as described in paragraph
(f) of this section, for covering the costs of rent
increases, or for serving a great number of
participants.
(d) Vacancies. (1) If a unit assisted under
this part is vacated before the expiration of the
occupancy agreement described in § 582.315 of
this part, the assistance for the unit may
continue for a maximum of 30 days from the
end of the month in which the unit was vacated,
unless occupied by another eligible person. No
additional assistance
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§ 582.110
will be paid until the unit is occupied by another
eligible person.
(2) As used in this paragraph (d), the term
"vacate" does not include brief periods of
inpatient care, not to exceed 90 days for each
occurrence,
(e) Administrative costs, (1) Up to eight
percent of the grant amount may be used to
pay the costs of administering the housing
assistance, Recipients may contract with
another entity approved by HUD to administer
the housing assistance.
(2) Eligible administrative activities include
processing rental payments to landlords,
examining participant income and family
composition, providing housing information and
assistance, inspecting units for compliance with
housing quality standards, and receiving into
the program new participants, This
administrative allowance does not include the
cost of administering the supportive services or
the grant (e.g., costs of preparing the
application, reports or audits required by HUD),
which are not eligible activities under a S +C
grant.
(f) Property damage. Recipients may use
grant funds in an amount up to one month's
rent to pay for any damage to housing due to
the action of a participant.
[58 FR 13B92, Mar. 15, 1993, as amended at 61 FR 51170, Sept. 30,
1996)
§ 582.110 Matching requirements.
(a) Matching rental assistance with
supportive services. (1) To qualify for rental
assistance grants, an applicant must certify that
it will provide or ensure the provision of
supportive services, including funding the
services itself if the planned resources do not
become available for any reason, appropriate to
the needs of the population being served, and
at least equal in value to the aggregate amount
of rental assistance funded by HUD, The
supportive services may be newly created for
the program or already in operation, and may
be provided or funded by other Federal, State,
local, or private programs in accordance with 42
U.S.C, 11403b, This statute provides that a
recipient may use funds from any source,
including any other Federal source (but
excluding the specific statutory subtitle from
which S +C
24 CFR Ch. V (4 -1 -09 Edition)
funds are provided), as well as State, local, and
private sources, provided that funds from the
other source are not statutorily prohibited to be
used as a match,
(2) Only services that are provided after
the execution of the grant agreement may
count toward the match,
(3) It is the responsibility of the recipient to
ensure that any funds or services used to satisfy
the matching requirements of this section are
eligible under the laws governing the funds or
services to be used as matching funds or
services for a grant awarded under this
program.
(b) Availability to participants. Recipients
must give reasonable assurances that
supportive services will be available to
participants for the entire term of the rental
assistance. The value of the services provided to
a participant, however, does not have to equal
the amount of rental assistance provided that
participant, nor does the value have to be equal
to the amount of rental assistance on a
year -to -year basis,
(c) Calculating the value of supportive
services. In calculating the amount of the
matching supportive services, applicants may
count:
(1) Salaries paid to staff of the recipient to
provide supportive services to S +C participants;
(2) The value of supportive services
provided by other persons or organizations to
S +C participants;
(3) The value of time and services
contributed by volunteers at the rate of $10.00
an hour, except for donated professional
services which may be counted at the
customary charge for the service provided
(professional services are services ordinarily
performed by donors for payment, such as the
services of health professionals, that are
equivalent to the services they provide in their
occupations);
(4) The value of any lease on a building
used for the provision of supportive services,
provided the value included in the match is no
more than the prorated share used for the
program; and
(5) The cost of outreach activities, as
described in § 582.325(a) of this part.
i58 FP. 13892, Mar. 15, 1993, as amended at 73 FR 75325, Dec. 11,
2008)
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§ 582.115 Limitations on assistance.
(a) Current occupants, Current occupants
of the real property are not eligible for
assistance under this part. However, as
described in § 582.335, persons displaced as a
direct result of acquisition, rehabilitation, or
demolition for a project under the S +C program
are eligible for and must be provided relocation
assistance at Uniform Relocation Act levels.
(b) Amount of assistance provided within a
jurisdiction. HUD will limit the amount of
assistance provided within the jurisdiction of
any one unit of local government to no more
than 10 percent of the amount available,
(c) Faith -based activities. (1) Organizations
that are religious or faith -based are eligible, on
the same basis as any other organization, to
participate in the S +C program. Neither the
Federal government nor a State or local
government receiving funds under S +C
programs shall discriminate against an
organization on the basis of the organization's
religious character or affiliation.
(2) Organizations that are directly funded
under the S +C program may not engage in
inherently religious activities, such as worship,
religious instruction, or proselytization as part of
the programs or services funded under this part.
If an organization conducts such activities, the
activities must be offered separately, in time or
location, from the programs or services funded
under this part, and participation must be
voluntary for the beneficiaries of the
HUD- funded programs or services.
(3) A religious organization that
participates in the S +C program will retain its
independence from Federal, State, and local
governments, and may continue to carry out its
mission, including the definition, practice and
expression of its religious beliefs, provided that
it does not use direct S +C funds to support any
inherently religious activities, such as worship,
religious instruction, or prose lytization. Among
other things, faith -based organizations may use
space in their facilities to provide S +C- funded
services, without removing religious art, icons,
scriptures, or other religious symbols, In
addition, an S +C- funded religious organization
retains its authority over
§ 582.120
its internal governance, and it may retain
religious terms in its organization's name, select
its board members on a religious basis, and
include religious references in its organization's
mission statements and other governing
documents,
(9) An organization that participates in the
S +C program shall not, in providing program
assistance, discriminate against a program
beneficiary or prospective program beneficiary
on the basis of religion or religious belief.
(5) If a State or local government
voluntarily contributes Its own funds to
supplement federally funded activities, the State
or local government has the option to segregate
the Federal funds or commingle them. However,
if the funds are commingled, this section applies
to all of the commingled funds,
(d) Maintenance of effort. No assistance
received under this part (or any State or local
government funds used to supplement this
assistance) may be used to replace funds
provided under any State or local government
assistance programs previously used, or
designated for use, to assist persons with
disabilities, homeless persons, or homeless
persons with disabilities.
[58 FR 13892, Mar. 15, 1993, as amended at 68 FR 56907, Sept. 30,
2003]
§ 582.120 Consolidated plan.
(a) Applicants that are States or units of
general local government. The applicant must
have a HUD - approved complete or abbreviated
consolidated plan, in accordance with 24 CFR
part 91, and must submit a certification that the
application for funding is consistent with the
HUD - approved consolidated plan. Funded
applicants must certify in a grant agreement
that they are following the HUD - approved
consolidated plan. If the applicant is a State,
and the project will be located in a unit of
general local government that is required to
have, or has, a complete consolidated plan, or
that is applying for Shelter Plus Care assistance
under the same Notice of Fund Availability
(NOFA) and will have an abbreviated
consolidated plan with respect to that
application, the State also must submit a
certification by the unit of general local
government that the State's application is
consistent with the unit
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§ 582.200
of general local government's HUD - approved
consolidated plan,
(b) Applicants that are not States or units
of general local government, The applicant must
submit a certification by the jurisdiction in which
the proposed project will be located that the
jurisdiction is following its HUD - approved
consolidated plan and the applicant's application
for funding is consistent with the jurisdiction's
HUD - approved consolidated plan. The
certification must be made by the unit of
general local government or the State, in
accordance with the consistency certification
provisions of the consolidated plan regulations,
24 CFR part 91, subpart F.
(c) Indian tribes and the Insular Areas of
Guam, the U.S. Virgin Islands, American Samoa,
and the Northern Mariana Islands. These
entities are not required to have a consolidated
plan or to make consolidated plan certifications.
An application by an Indian tribe or other
applicant for a project that will be located on a
reservation of an Indian tribe will not require a
certification by the tribe or the State, However,
where an Indian tribe is the applicant for a
project that will not be located on a reservation,
the requirement for a certification under
paragraph (b) of this section will apply.
(d) Timing of consolidated plan certification
submissions. Unless otherwise set forth in the
NOFA, the required certification that the
application for funding is consistent with the
HUD - approved consolidated plan must be
submitted by the funding application submission
deadline announced in the NOFA.
[60 FR 16379, Mar. 30, 1995)
Subpart C- Application and Grant
Awa rd
§ 582.200 Application and grant award.
(a) Review. When funds are made
available for assistance, HUD will publish a
notice of fund availability in the FEDERAL
REGISTER in accordance with the requirements
of 24 CFR part 4. Applications will be reviewed
and screened in accordance with the guidelines,
rating criteria and procedures published in the
notice.
24 CFR Ch. V (4 -1 -09 Edition)
(b) Rating criteria. HUD will award funds
based on the criteria specified in section
455(a)(1) through (8) of the McKinney Act (42
U.S.C. 11403d(1)- 11403d(8)) and on the
following criteria authorized by section
455(a)(9) of the McKinney Act (42 U.S.C,
11403d(9));
(1) The extent to which the applicant has
demonstrated coordination with other Federal,
State, local, private and other entities serving
homeless persons in the planning and operation
of the project, to the extent practicable;
(2) Extent to which the project targets
homeless persons living in emergency shelters,
supportive housing for homeless persons, or in
places not designed for, or ordinarily used as, a
regular sleeping accommodation for human
beings;
(3) Quality of the project; and
(4) Extent to which the program will serve
homeless persons who are seriously mentally ill,
have chronic alcohol and /or drug abuse
problems, or have AIDS and related diseases.
(Approved by the Office of Management and Budget under control
number 2506 -0118)
[61 FP. 51170, Sept. 30, 1996]
§ 582.230 Environmental review.
(a) Activities under this part are subject to
HUD environmental regulations in part 58 of this
title, except that HUD will perform an
environmental review in accordance with part
50 of this title prior to its approval of any
conditionally selected applications from PHAs for
Fiscal Year 2000 and prior years for other than
the SRO component. For activities under a grant
to a PHA that generally would be subject to
review under part 58, HUD may make a finding
in accordance with § 58,11(d) and may itself
perform the environmental review under the
provisions of part 50 of this title if the recipient
PHA objects in writing to the responsible entity's
performing the review under part 58,
Irrespective of whether the responsible entity in
accord with part 58 (or HUD in accord with part
50) performs the environmental review, the
recipient shall supply all available, relevant
information necessary for the responsible entity
(or HUD, if applicable) to perform for each
property any environmental review required by
this part.
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Ofc. of Asst, .Sect'., Comm, Planning, Develop., HUD
The recipient also shall carry out mitigating
rrreasures required by the responsible entity (or
HUD, if applicable) or select alternate eligible
property, HUD may eliminate from consideration
any application that would require an
Environmental Impact Statement (EIS),
(b) The recipient, its project partners and
their contractors may not acquire, rehabilitate,
convert, lease, repair, dispose of, demolish, or
construct property for a project under this part,
or commit or expend HUD or local funds for
such eligible activities under this part, until the
responsible entity (as defined in § 58,2 of this
title) has completed the environmental review
procedures required by part 58 and the
environmental certification and RROF have been
approved or HUD has performed an
environmental review under part 50 and the
recipient has received HUD approval of the
property. HUD will not release grant funds if the
recipient or any other parry commits grant
funds (i.e,, incurs any costs or expenditures to
be paid or reimbursed with such funds) before
the recipient submits and HUD approves Its
RROF (where such submission is required),
(6(i FR 56130, Sept. 29, 2003)
Subpart D- Prograrn Requirements
§ 582.300 General operation,
(a) Participation of homeless individuals.
(1) Each recipient must provide for the
consultation and participation of not less than
one homeless individual or formerly homeless
individual on the board of directors or other
equivalent policy- making entity of the recipient,
to the extent that the entity considers and
makes policies and decisions regarding any
housing assisted under this part or services for
the participants. This requirement is waived if
the applicant is unable to meet the requirement
and presents a plan, which HUD approves, to
otherwise consult with homeless or formerly
homeless individuals in considering and making
such policies and decisions, Participation by
such an individual who also is a participant
under the program does not constitute a conflict
of interest under § 582.340(b) of this part.
§ 582,305
(2) To the maximum extent practicable,
each recipient must involve homeless individuals
and families, through employment, volunteer
services, or otherwise, in constructing or
rehabilitating housing assisted under this part
and in providing supportive services required
under § 582.215 of this part,
(b) Ongoing assessment of housing and
supportive services, Each recipient of assistance
must conduct an ongoing assessment of the
housing assistance and supportive services
required by the participants, and make
adjustments as appropriate,
(c) Adequate supportive services. Each
recipient must assure that adequate supportive
services are available to participants in the
program.
(d) Records and reports, (1) Each recipient
must keep any records and, within the
timeframe required, make any reports (including
those pertaining to race, ethnicity, gender, and
disability status data) that HUD may require.
(2) Each recipient must keep on file, and
make available to the public on request, a
description of the procedures used to select
sponsors under the SRA component and
buildings under the SRO, SRA, and PRA
components,
(3) Each recipient must develop, and make
available to the public upon request, its
procedures for managing the rental housing
assistance funds provided by HUD, At a
minimum, such procedures must describe how
units will be identified and selected; how the
responsibility for inspections will be handled;
the process for deciding which unit a participant
will occupy; how participants will be placed in,
or assisted in finding appropriate housing; how
rent calculations will be made and the amount
of rental assistance payments determined; and
what safeguards will be used to prevent the
misuse of funds.
(Approved by the Office of Management and budget wider control
number 1506 -0118)
X58 FR 13892, Mar. 15, 1993, as
1996] amended at 61 FR 51171, Sept 30,
§ 582305 Housing quality standards;
rent reasonableness,
(a) Housing quality standards. Housing
assisted under this part must meet the
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§ 582.310
applicable housing quality standards (HQS)
under § 982.401 of this title - except that §
982.4010) of this title does not apply and
instead part 35, subparts A, B, K and R of this
title apply -and, for SRO under § 882.803(b) of
this title. Before any assistance will be provided
on behalf of a participant, the recipient, or
another entity acting on behalf of the recipient
(other than the owner of the housing), must
physically inspect each unit to assure that the
unit meets the HQS. Assistance will not be
provided for units that fail to meet the HQS,
unless the owner corrects any deficiencies
within 30 days from the date of the lease
agreement and the recipient verifies that all
deficiencies have been corrected. Recipients
must also inspect all units at least annually
during the grant period to ensure that the units
continue to meet the HQS.
(b) Rent reasonableness. HUD will only
provide assistance for a unit for which the rent
is reasonable. For TRA, PRA, and SRA, it is the
responsibility of the recipient to determine
whether the rent charged for the unit receiving
rental assistance is reasonable in relation to
rents being charged for comparable unassisted
units, taking into account the location, size,
type, quality, amenities, facilities, and
management and maintenance of each unit, as
well as not in excess of rents currently being
charged by the same owner for comparable
unassisted units. For SRO, rents are calculated
in accordance with 24 CFR 882.805(g).
[58 FF. 13892, Mar, 15, 1993, as amended at 61 FR 51171, Sept. 30,
1996; 61 FR 50226, Sept. 15, 1999)
§ 582.310 Resident rent,
(a) Amount of rent, Each participant must
pay rent in accordance with section 3(a)(1) of
the U.S, Housing Act of 1937 (42 U.S.C.
1437a(a)(I)), except that in determining the .
rent of a person occupying an intermediate care
facility assisted under title XIX of the Social
Security Act, the gross income of this person is
the same as if the person were being assisted
under title XVI of the Social Security Act.
(b) Calculating income, (1) Income of
participants must be calculated in accordance
with 24 CFR 5.609 and 24 CFR 5.611(a),
24 CFR Ch. V (4 -1 -09 Edition)
(2) Recipients must examine a participant's
income initially, and at least annually thereafter,
to determine the amount of rent payable by the
participant. Adjustments to a participant's rental
payment must be made as necessary,
(3) As a condition of participation in the
program, each participant must agree to supply
the information or documentation necessary to
verify the participant's income. Participants must
provide the recipient information at any time
regarding changes in income or other
circumstances that may result in changes to a
participant's rental payment.
[66 FR 6225, )an. 19, 2001]
§ 582.315 Occupancy agreements.
(a) Initial occupancy agreement.
Participants must enter into an occupancy
agreement for a term of at least one month.
The occupancy agreement must be
automatically renewable upon expiration, except
on prior notice by either party.
(b) Terms of agreement. In addition to
standard lease provisions, the occupancy
agreement may also include a provision
requiring the participant to take part in the
supportive services provided through the
Program as a condition of continued occupancy.
§ 582.320 Termination of assistance to
participants.
(a) Termination of assistance. The recipient
may terminate assistance to a participant who
violates program requirements or conditions of
occupancy. Recipients must exercise judgment
and examine all extenuating circumstances in
determining when violations are serious enough
to warrant termination, so that a participant's
assistance is terminated only in the most severe
cases. Recipients are not prohibited from
resuming assistance to a participant whose
assistance has been terminated.
(b) Due process. In terminating assistance
to a participant, the recipient must provide a
formal process that recognizes the rights of
individuals receiving assistance to due process
of law. This process, at a minimum, must
consist of;
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(1) Written notice to the participant
containing a clear statement of the reasons for
termination;
(2) A review of the decision, in which the
participant is given the opportunity to present
written or oral objections before a person other
than the person (or a subordinate of that
person) who made or approved the termination
decision; and
(3) Prompt written notice of the final
decision to the participant.
§ 582.325 Outreach activities.
Recipients must use their best effort, to
ensure that eligible hard -to -reach persons are
served by S +C, Recipients are expected to make
sustained efforts to engage eligible persons so
that they may be brought into the program.
Outreach should be primarily directed toward
eligible persons who have a nighttime residence
that is an emergency shelter or a public or
private place not designed for, or ordinarily
used as, a regular sleeping accommodation for
human beings (e.g., persons living in cars,
streets, and parks). Outreach activities are
considered to be a supportive service, and the
value of such activities that occur after the
execution of the grant agreement may be
included in meeting the matching requirement.
552.330 Nondiscrimination and equal
OPPortunity requirements,
(a) General. Recipients may establish a
preference as part of their admissions
procedures for one or more of the statutorily
targeted populations (i.e., seriously mentally ill,
alcohol or substance abusers, or persons with
AIDS and related diseases). However, other
eligible disabled homeless persons must be
considered for housing designed for the target
population unless the recipient can demonstrate
that there is sufficient demand by the target
population for the units, and other eligible
disabled homeless persons would not benefit
from the primary supportive services provided.
(b) Compliance with requirements. (1) In
addition to the nondiscrimination and equal
opportunity requirements set forth in 24 CFR
part 5, recipients serving a designated
population of
§ 592.330
homeless persons must, within the designated
Population, comply with the prohibitions against
discrimination against handicapped individuals
under section 503 of the Rehabilitation Act of
1973 (29 U.S.C. 794) and implementing
regulations at 41 CFR chapter 60 -741,
(2) The nondiscrimination and equal
opportunity requirements set forth at part 5 of
this title are modified as follows;
(i) The Indian Civil Rights Act (25
U.S.C, 1301 et seq.) applies to tribes when they
exercise their powers of self - government, and
to IHAs when established by the exercise of
such powers. When an IHA is established under
State law, the applicability of the Indian Civil
Rights Act will be determined on a case -by -case
basis, Projects subject to the Indian Civil Right,
Act must be developed and operated in
compliance with its provisions and all
implementing HUD requirements, instead of title
VI and the Fair Housing Act and their
implementing regulations.
(ii) [Reserved]
(c) Affirmative outreach, (1) If the
procedures that the recipient intends to use to
make known the availability of the program are
unlikely to reach persons of any particular race,
color, religion, sex, age, national origin, familial
status, or handicap who may qualify for
assistance, the recipient must establish
additional procedures that will ensure that
interested persons can obtain information
concerning the assistance,
(2) The recipient must adopt procedures to
make available information on the existence and
locations of facilities and services that are
accessible to persons with a handicap and
maintain evidence of implementation of the
procedures.
(d) The accessibility requirements,
reasonable modification, and accommodation
requirements of the Fair Housing Act and of
section 504 of the Rehabilitation Act of 1973, as
amended.
r58 FR 1 1 3892, Mar, 15, 1993, as amended at 6: FR 5210, Feb. 9,
1996J
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§ 582.335
§ 582.335 Displacement, relocation, and
real property acquisition.
(a) Minimizing displacement. Consistent
with the other goals and objectives of this part,
recipients must assure that they have taken all
reasonable steps to minimize the displacement
of persons (families, individuals, businesses,
nonprofit organizations, and farms) as a result
of supportive housing assisted under this part.
(b) Relocation assistance for displaced
persons. A displaced person (defined in
paragraph (f) of this section) must be provided
relocation assistance at the levels described in,
and in accordance with, the requirements of the
Uniform Relocation Assistance and Real Property
Acquisition Policies Act of 1970 (URA) (42 U.S.C.
4601 -4655) and implementing regulations at 49
CFR part 24.
(c) Real property acquisition requirements,
The acquisition of real property for supportive
housing is subject to the URA and the
requirements described in 49 CFR part 24,
subpart B.
(d) Responsibility of recipient. (1) The
recipient must certify (Le,, provide assurance of.
compliance) that it will comply with the URA,
the regulations at 49 CFR part 24, and the
requirements of this section, and must ensure
such compliance notwithstanding any third
party's contractual obligation to the recipient to
comply with these provisions.
(2) The cost of required relocation
assistance is an eligible project cost in the same
manner and to the same extent as other project
costs. Such costs also may be paid for with local
public funds or funds available from other
sources.
(3) The recipient must maintain records in
sufficient detail to demonstrate compliance with
provisions of this section,
(e) Appeals. A person who disagrees with
the recipient's determination concerning
whether the person qualifies as a "displaced
person," or the amount of relocation assistance
for which the person is eligible, may file a
written appeal of that determination with the
recipient. A low- income person who is
dissatisfied with the recipient's determination on
his or her appeal may submit a written request
for review of that determination to the HUD
field office.
24 CFR Ch. V (4 -1 -09 Edition)
(f) Definition of displaced person, (1) For
purposes of this section, the term "displaced
person" means a person (family, individual,
business, nonprofit organization, or farm) that
moves from real property, or moves personal
property from real property permanently as a
direct result of acquisition, rehabilitation, or
demolition for supportive housing project
assisted under this part. The term "displaced
person" includes, but may not be limited to:
(1) A person that moves permanently from
the real property after the property owner (or
person in control of the site) issues a vacate
notice or refuses to renew an expiring lease, if
the move occurs on or after:
(A) The date that the recipient submits to
HUD an application for assistance that is later
approved and funded, if the recipient has
control of the project site; or
(B) The date that the recipient obtains
control of the project site, if such control is
obtained after the submission of the application
to HUD.
(ii) Any person, including a person who
moves before the date described in paragraph
(f)(1)(1) of this section, if the recipient or HUD
determines that the displacement resulted
directly from acquisition, rehabilitation, or
demolition for the assisted project.
(iii) A tenant - occupant of a dwelling unit
who moves permanently from the
building /complex on or after the date of the
"Initiation of negotiations" (see paragraph (g) of
this section) if the move occurs before the
tenant has been provided written notice offering
him or her the opportunity to lease and occupy
a suitable, decent, safe and sanitary dwelling in
the same building/ complex, under reasonable
terms and conditions, upon completion of the
project. Such reasonable terms and conditions
must include a monthly rent and estimated
average monthly utility costs that do not exceed
the greater of:
(A) The tenant's monthly rent before the
initiation of negotiations and estimated average
utility costs, or
(B) 30 percent of gross household income.
If the initial rent is at or near the maximum,
there must be a reasonable
basis for concluding at the time
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the project is initiated that future rent increases
will be modest,
(iv) A tenant of a dwelling who is required
to relocate temporarily, but does not return to
the building /complex,, if either:
(A) A tenant is not offered payment for all
reasonable out -of- pocket expenses incurred in
connection with the temporary relocation, or
(B) Other conditions of the temporary
relocation are not reasonable.
(v) A tenant of a dwelling who moves from
the building /complex permanently after he or
she has been required to move to another unit
in the same building /complex, if either:
(A) The tenant is not offered
reimbursement for all reasonable out -of- pocket
expenses incurred In connection with the move;
or
(B) Other conditions of the move are not
reasonable,
(2) Notwithstanding the provisions of
paragraph (f)(1) of this section, a person does
not qualify as a "displaced person" (and is not
eligible for relocation assistance under the URA
or this section), If:
(1) The person has been evicted for serious
or repeated violation of the terms and
conditions of the lease or occupancy agreement,
violation of applicable Federal, State, or local or
tribal law, or other good cause, and HUD
determines that the eviction was not undertaken
for the purpose of evading the obligation to
provide relocation assistance;
(ii) The person moved into the property
after the submission of the application and,
before signing a lease and commencing
occupancy, was provided written notice of the
project, its possible impact on the person (e.g.,
the person may be displaced, temporarily
relocated, or suffer a rent increase) and the fact
that the person would not qualify as a
"displaced person" (or for any assistance
provided under this section), if the project is
approved;
(iii) The person is ineligible under 49 CFR
24.2(g)(2); or
(iv) HUD determines that the person was
not displaced as a direct result of acquisition,
rehabilitation, or demolition for the project.
(3) The recipient may request, at any time,
HUD's determination of whether
9 582.340
a displacement is or would be covered under
this section,
(g) Definition of initiation of negotiations.
For purposes of determining the formula for
computing the replacement housing assistance
to be provided to a residential tenant displaced
as a direct result of privately undertaken
rehabilitation, demolition, or acquisition of the
real property, the term "initiation of
negotiations" means the execution of the
agreement between the recipient and HUD, or
selection of the project site, if later.
§ 582.340 Other Federal requirements.
In addition to the Federal requirements set forth
in 24 CFR part 5, the following requirements
apply to this program:
(a) OMB Circulars,l (1) The policies,
guidelines, and requirements of OMB Circular
No, A -87 (Cost Principles Applicable to Grants,
Contracts and Other Agreements with State and
Local Governments) and 24 CFR part 85 apply
to the acceptance and use of assistance under
the program by governmental entities, and OMB
Circular Nos. A -110 (Grants and Cooperative
Agreements with Institutions of Higher
Education, Hospitals, and Other Nonprofit
Organizations) and 24 CFR part 84 and A -122
(Cost Principles Applicable to Grants, Contracts
and Other Agreements with Nonprofit
Institutions) apply to the acceptance and use of
assistance by private nonprofit organizations,
except where inconsistent with provisions of the
McKinney Act, other Federal statutes, or this
part.
(2) The financial management systems
used by recipients under this program must
provide for audits in accordance with the
provisions of 24 CFR part 44. Private nonprofit
organizations who are subrecipients are subject
to the audit requirements of 24 CFR part 45.
HUD may perform or require additional audits as
it finds necessary or appropriate.
(b) Conflict of interest, (1) In addition to
the conflict of interest requirements
1 Copies of OMB Circulars may be obtained From E.O.P. Publications,
room 2200, New Executive office Building, Washington, DC '20503,
telephone (202) 395 -7332, (This is not a toll -free number.) There is
a limit of two free copies.
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§ 582.400
in 24 CFR part 85, no person who is an
employee, agent, consultant, officer, or elected
or appointed official of the recipient and who
exercises or has exercised any functions or
responsibilities with respect to assisted
activities, or who is in a position to participate in
a decisionmaking process or gain inside
information with regard to such activities, may
obtain a personal or financial interest or benefit
from the activity, or have an interest in any
contract, subcontract, or agreement with
respect thereto, or the proceeds thereunder,
either for himself or herself or for those with
whom he or she has family or business ties,
during his or her tenure or for one year
thereafter, Participation by homeless individuals
who also are participants under the program in
policy or decisionmaking under § 582.300 of this
part does not constitute a conflict of interest.
(2) Upon the written request of the
recipient, HUD may grant an exception to the
provisions of paragraph (b)(1) of this section on
a case -by -case basis when it determine that the
exception will serve to further the purposes of
the program and the effective and efficient
administration of the recipient's project. An
exception may be considered only after the
recipient has provided the following;
(1) For States, units of general local
governments, PHAs and IRAs, a disclosure of
the nature of the conflict, accompanied by an
assurance that there has been public disclosure
of the conflict and a description of how the
public disclosure was made; and
(ii) For all recipients, an opinion of the
recipient's attorney that the interest for which
the exception is sought would not violate State
or local law.
(3) In determining whether to grant a
requested exception after the recipient has
satisfactorily met the requirement of paragraph
(b)(2) of this section, HUD will consider the
cumulative effect of the following factors, where
applicable:
(i) Whether the exception would provide a
significant cost benefit or an essential degree of
expertise to the project which would otherwise
not be available;
(ii) Whether the person affected is a
member of a group or class of eligible persons
and the exception will permit
24 CFR Ch. V (4 -1 -09 Edition)
such person to receive generally the same
interests or benefits as are being made available
or provided to the group or class;
(iii) Whether the affected person has
withdrawn from his or her functions or
responsibilities, or the decisionmaking process
with respect to the specific assisted activity in
question;
(iv) Whether the interest or benefit was
present before the affected person was in a
position as described in paragraph (b)(1) of this
section;
(v) Whether undue hardship will result
either to the recipient or the person affected
when weighed against the public interest served
by avoiding the prohibited conflict; and
(vi) Any other relevant considerations.
[58 FR 13892, Mar, 15, 1993, as amended at 61 FR 5210, Feb. 9,
1996; 61 FR 51171, Sept. 30,1996; 62 FR 13539, Mar. 21, 1997]
Subpart E- Administration
§ 582.400 Grant agreement.
(a) General, The grant agreement will be
between HUD and the recipient. HUD will hold
the recipient responsible for the overall
administration of the program, including
overseeing any subrecipients or contractors.
Under the grant agreement, the recipient must
agree to operate the program in accordance
with the provisions of this part and other
applicable HUD regulations.
(b) Enforcement, HUD will enforce the
obligations in the grant agreement through such
action as may be necessary, including
recapturing assistance awarded under the
program.
§ 582.405 Program changes.
(a) Changes. HUD must approve, in writing, any
significant changes to an approved program.
Significant changes that require approval
include, but are not limited to, a change in
sponsor , a change in the project site for SRO or
PRA with rehabilitation projects, and a change
in the type of persons with disabilities to be
served. Depending on the nature of the change,
HUD may require a new certification of
consistency with the CHAS (see § 582.120).
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(b) Approval, Approval for such changes is
contingent upon the application ranking
remaining high enough to have been
competitively selected for funding in the year
the application was selected,
§ 582.410 Obligation and deobligation
of funds.
(a) Obligation of funds. When HUD and the
applicant execute a grant agreement, HUD will
obligate funds to cover the amount of the
approved grant. The recipient will be expected
to carry out the activities as proposed in the
application. After the initial obligation of funds,
I - IUD is under no obligation to make any upward
revisions to the grant amount for any approved
assistance,
(b) Deobligatlon. (1) HUD may deobligate
all or a portion of the approved grant amount if
such amount is not expended in a timely
manner, or the proposed housing for which
funding was approved or the supportive services
proposed in the application are not provided in
accordance with the approved application, the
requirements of this part, and other applicable
HUD regulations, The grant agreement may set
forth other circumstances under which funds
may be deobligated, and other sanctions may
be imposed.
(2) HUD may readvertise, in a notice of
fund availability, the availability of funds that
have been deobligated, or may reconsider
applications that were submitted in response to
the most recently published notice of fund
availability and select applications for funding
with the deobligated funds. Such selections
would be made in accordance with the selection
process described in § 582.220 of this part. Any
selections made using deobligated funds will be
subject to applicable appropriation act
requirements governing the use of deobligated
funding authority.
(Approved by the Office of Management and Budget under control
number 2506.0118)
583.1
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The 2011 Amendments to the
Shelter Plus Care Codified Regulation
Billing Code 4210 -67
PART 582 - SHELTER PLUS CARE
PROGRAM
3. The authority citation for 24 CFR part
582 continues to read as follows:
Authority: 92 U.S.C. 3535(d), and
11403- 11407b.
4. In § 582.5, the definition of Homeless or
homeless individual" is removed, the definitions
of "Developmental disability" and "Homeless"
are added, and the definition of "Person with
disabilities" is revised to read as follows:
&582.5 Definitions.
Developmental disability means, as defined
in section 102 of the Developmental Disabilities
Assistance and Bill of Rights Act of 2000 (42
U.S.C. 15002):
(1) A severe, chronic disability of an individual
that -
(i) Is attributable to a mental or physical
impairment or combination of mental and
physical impairments;
(ii) Is manifested before the individual
attains age 22;
(iii) Is likely to continue indefinitely;
(iv) Results in substantial functional
limitations in three or more of the following
areas of major life activity:
(A) Self -care;
(B) Receptive and expressive language;
(C) Learning;
(D) Mobility;
(E) Self- direction;
(F) Capacity for independent living;
(G) Economic self- sufficiency; and
(v) Reflects the individual's need for a
combination and sequence of special,
interdisciplinary, or generic services,
individualized supports, or other forms of
assistance that are of lifelong or extended
duration and are individually planned and
coordinated.
(2) An individual from birth to age 9, inclusive,
who has a substantial developmental delay or
specific congenital or acquired condition, may
be considered to have a developmental
disability without meeting three or more of the
criteria described in paragraphs (1)(i) through
(v) of the definition of "developmental disability"
in this section if the individual, without services
and supports, has a high probability of meeting
those criteria later in life.
W W W *
Homeless means:
(1) An individual or family who lacks a fixed,
regular, and adequate nighttime residence,
meaning:
(1) An individual or family with a primary
nighttime residence that is a public or private
place not designed for or ordinarily used as a
regular sleeping accommodation for human
beings, including a car, park, abandoned
building, bus or train station, airport, or
camping ground;
(ii) An individual or family living in a
supervised publicly or privately operated shelter
designated to provide temporary living
arrangements (including congregate shelters,
transitional housing, and hotels and motels paid
for by charitable organizations or by federal,
state, or local government programs for
low- income individuals); or
(iii) An individual who is exiting an institution
where lie or she resided for 90 days or less and
who resided in an emergency shelter or place
not meant for human habitation immediately
before
entering that institution;
(2) An individual or family who will imminently
lose their primary nighttime residence, provided
that:
(i) The primary nighttime residence will be
lost within 14 days of the date of application for
homeless assistance;
(ii) No subsequent residence has been
identified; and
(iii) The individual or family lacks the
resources or support networks, e.g., family,
friends, faith -based or other social networks,
needed to obtain other permanent housing;
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(3) Unaccompanied youth under 25 years of
age, or families with children and youth, who do
not otherwise qualify as homeless under this
definition, but who;
(i) Are defined as homeless under section
387 of the Runaway and Homeless Youth Act
(42 U,S.C, 5732a), section 637 of the Head
Start Act (42 U.S.C. 9832), section 41403 of the
Violence Against Women Act of 1994 (42 U.S.C,
14043e -2), section 330(h) of the Public Health
Service Act (42 U.S.C, 254b(h)), section 3 of the
Food and Nutrition Act of 2008 (7 U.S,C. 2012),
section 17(b) of the Child Nutrition Act of 1.966
(42 U.S.C. 1786(b)), or section 725 of the
McKinney -Vento Homeless Assistance Act (42
U.S.C. 11434a);
(ii) Have not had a lease, ownership
interest, or occupancy agreement in permanent
housing at any time during the 60 days
immediately preceding the date of application
for homeless assistance;
(iii) Have experienced persistent instability
as measured by two moves or more during the
60 -day period immediately preceding the date
of applying for homeless assistance; and
(iv) Can be expected to continue in such
status for an extended period of time because
of chronic disabilities; chronic physical health or
mental health conditions; substance addiction;
histories of domestic violence or childhood
abuse (including neglect); the presence of a
child or youth with a disability; or two or more
barriers to employment, which include the lack
of a high school degree or General Education
Development (GED), illiteracy, low English
proficiency, a history of incarceration or
detention for criminal activity, and a history of
unstable employment; or
(4) Any individual or family who;
(i) Is fleeing, or is attempting to flee,
domestic violence, dating violence, sexual
assault, stalking, or other dangerous or
life- threatening conditions that relate to
violence against the individual or a family
member, including a child, that has either taken
place within the individual's or family's primary
nighttime residence or has made the individual
or family afraid to return to their primary
nighttime residence;
(ii) Has no other residence; and
(iii) Lacks the resources or support
networks, e.g., family, friends, and faith -based
or other social networks, to obtain other
permanent housing.
Person with disabilities means a household
composed of one or more persons at least one
of whom is an adult who has a disability.
(1) A person shall be considered to have a
disability if he or she has a disability that;
(i) Is expected to be long- continuing or of
indefinite duration;
(ii) Substantially impedes the individual's
ability to live independently;
(iii) Could be improved by the provision of
more suitable housing conditions; arid
(iv) Is a physical, mental, or emotional
impairment, including an impairment caused by
alcohol or drug abuse, post - traumatic stress
disorder, or brain injury.
(2) A person will also be considered to have a
disability if he or she has a developmental
disability, as defined in this section.
(3) A person will also be considered to have a
disability if he or she has acquired
immunodeficiency syndrome (AIDS) or any
conditions arising from the etiologic agent for
acquired immunodeficiency syndrome, including
infection with the human immunodeficiency
virus (HIV),
(4) Notwithstanding the preceding provisions
of this definition, the term person with
disabilities includes, except in the case of the
SRO component, two or more persons with
disabilities living together, one or more such
persons living with another person who is
determined to be important to their care or
well- being, and the surviving member or
members of any household described in the first
sentence of this definition who were living, in a
unit assisted under this part, with the deceased
member of the household at the time of his or
her death. (In any event, with respect to the
surviving member or members of a household,
the right to rental assistance under this part will
terminate at the end of the grant period under
which the deceased member was a participant.)
5. A new § 582.301 is added to read as
follows;
§ 582.30I Recorclkeeping_
(a) [Reserved,]
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(b) Homeless status. The recipient
must maintain and follow written intake
procedures to ensure compliance with the
homeless definition in § 582.5. The procedures
must require documentation at intake of the
evidence relied upon to establish and verify
homeless status, The procedures must establish
the order of priority for obtaining evidence as
third -party documentation first, intake worker
observations second, and certification from the
person seeking assistance third. However, lack
of third -party documentation must not prevent
an individual or family from being immediately
admitted to emergency shelter, receiving street
outreach services, or being immediately
admitted to shelter or receiving services
provided by a victim service provider, as defined
in section 401(32) of the McKinney -Vento
Homeless Assistance Act, as amended by the
HEARTH Act. Records contained in an HMIS or
comparable database used by victim service or
legal service providers are acceptable evidence
of third -party documentation and intake worker
observations if the HMIS retains an auditable
history of all entries, including the person who
entered the data, the date of entry, and the
change made; and if the
HMIS prevents overrides or changes of the
dates entries are made.
(1) If the individual or family qualifies as
homeless under paragraph (1)(i) or (ii) of the
homeless definition in § 582.5, acceptable
evidence includes a written observation by an
outreach worker of the conditions where the
individual or family was living, a written referral
by another housing or service provider, or a
certification by the individual or head of
household seeking assistance,
(2) If the individual qualifies as homeless
under paragraph (1)(iii) of the homeless
definition in § 582.5, because he or she resided
in an emergency shelter or place not meant for
human habitation and is exiting an institution
where he or she resided for 90 days or less,
acceptable evidence includes the evidence
described in paragraph (b)(1) of this section
and one of the following:
(i) Discharge paperwork or a written or oral
referral from a social worker, case manager, or
other appropriate official of the institution,
stating the beginning and end dates of the time
residing in the institution. All oral statements
must be recorded by the intake worker; or
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(ii) Where the evidence in paragraph
(b)(2)(1) of this section is not obtainable, a
written record of the intake worker's due
diligence in attempting to obtain the evidence
described in paragraph (b)(2)(i) and a
certification by the individual seeking assistance
that states he or she is exiting or has just exited
an institution where he or she resided for 90
days or less,
(3) If the individual or family qualifies as
homeless under paragraph (2) of the homeless
definition in § 582.5, because the individual or
family will imminently lose their housing, the
evidence must include:
(i)(A) A court order resulting from an
eviction action that requires the individual or
family to leave their residence within 14 days
after the date of their application for homeless
assistance, or the equivalent notice under
applicable state law, a Notice to Quit, or a
Notice to Terminate issued under state law;
(B) For individuals and families whose
primary nighttime residence is a hotel or motel
room not paid for by charitable organizations or
federal, state, or local government programs for
low- income individuals, evidence that the
individual or family lacks the resources
necessary to reside there for more than 14 days
after the date of application for homeless
assistance; or
(C) An oral statement by the individual or
head of household that the owner or renter of
the housing in which they currently reside will
not allow them to stay for more than 14 days
after the date of application for homeless
assistance, The intake worker must record the
statement and certify that it was found credible,
To be found credible, the oral statement must
either: (I) be verified by the owner or renter of
the housing in which the individual or family
resides at the time of application for homeless
assistance and be documented by a written
certification by the owner or renter or by the
intake worker's recording of the owner or
renter's oral statement; or (II) if the intake
worker is unable to contact the owner or renter,
be documented by a written certification by the
intake worker of his or her due diligence in
attempting to obtain the owner or renter's
verification and the written certification by the
individual or head of household seeking
assistance that his or her statement was true
and complete;
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(ii) Certification by the individual or head of
household that no subsequent residence has
been identified; and
(iii) Certification or other written
documentation that the individual or family
lacks the resources and support networks
needed to obtain other permanent housing,
(4) If the individual or family qualifies as
homeless under paragraph (3) of the homeless
definition in § 582.5, because the individual or
family does not otherwise qualify as homeless
under the homeless definition but is an
unaccompanied youth under 25 years of age, or
homeless family with one or more children or
youth, and is defined as homeless under
another Federal statute or section 725(2) of the
McKinneyVento Homeless Assistance Act (12
U.S.C. 11434a(2)), the evidence must include:
(1) For paragraph (3)(i) of the
homeless definition in § 582,5, certification
of homeless status by the local private nonprofit
organization or state or local governmental
entity responsible for administering assistance
under the Runaway and Homeless Youth Act
(42 U.S.C. 5701 et seq,), the Head Start Act (42
U.S.C. 9831 et seq,), subtitle N of the Violence
Against Women Act of 1994 (42 U.S.C. 14043e
et seq.), section 330 of the Public Health
Service Act (42 U.S.C. 254b), the Food and
Nutrition Act of 2008 (7 U.S.C. 2011 et seq,),
section 17 of the Child Nutrition Act of 1966 (42
U.S.C. 1786), or subtitle B of title VII of the
McKinney -Vento Homeless Assistance Act (42
U.S.C. 11431 et seq.), as applicable;
(ii) For paragraph (3)(ii) of the homeless
definition in § 582,5, referral by a housing or
service provider, written observation by an
outreach worker, or certification by the
homeless individual or head of household
seeking assistance;
(iii) For paragraph (3)(iii) of the homeless
definition in § 582.5, certification by the
individual or head of household and any
available supporting documentation that the
individual or family moved two or more times
during the 60 -day period immediately preceding
the date of application for homeless assistance,
including: recorded statements or records
obtained from each owner or renter of housing,
provider of shelter or housing, or social worker,
case worker, or other appropriate official of a
hospital or institution in which the
individual or family resided; or, where these
statements or records are unobtainable, a
written record of the intake worker's due
diligence in attempting to obtain these
statements or records, Where a move was due
to the individual or family fleeing domestic
violence, dating violence, sexual assault, or
stalking, then the intake worker may
alternatively obtain a written certification from
the individual or head of household seeking
assistance that they were fleeing that situation
and that they resided at that address; and
(iv) For paragraph (3)(iv) of the homeless
definition in § 582.5, written diagnosis from a
professional who is licensed by the state to
diagnose and treat that condition (or intake
staff - recorded observation of disability that
within 45 days of the date of application for
assistance is confirmed by a professional who is
licensed by the state to diagnose and treat that
condition); employment records; department of
corrections records; literacy, English proficiency
tests; or other reasonable documentation of the
conditions required under paragraph (3)(iv) of
the homeless definition,
(5) If the individual or family qualifes under
paragraph (4) of the homeless definition in §
582.5, because the individual or family is fleeing
domestic violence, dating violence, sexual
assault, stalking, or other dangerous or
life-threatening conditions related to violence,
then acceptable evidence includes an oral
statement by the individual or head of
household seeking assistance that they are
fleeing that situation, that no subsequent
residence has been identified, and that they
lack the resources or support networks, e.g.,
family, friends, faith -based or other social
networks, needed to obtain other housing. If
the individual or family is receiving shelter or
services provided by a victim service provider,
as defined in section 401(32) of the
McKinney- Vento -Home less Assistance Act, as
amended by the HEARTH Act, the oral
statement must be documented by either a
certification by the individual or head of
household, or a certification by the intake
worker, Otherwise, the oral statement that the
individual or head of household seeking
assistance has not identified a subsequent
residence and lacks the resources or support
networks, e.g., family, friends, faith -based or
other social networks, needed to obtain housing
must be documented by a certification by the
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individual or head of household that the oral
statement is true and complete, and, where the
safety of the individual or family would not be
jeopardized, the domestic violence, dating
violence, sexual assault, stalking or other
dangerous or life- threatening condition must be
verified by a written observation by the intake
worker or a written referral by a housing or
service provider, social worker, health -care
provider, law enforcement agency, legal
assistance provider, pastoral counselor, or any
other organization from whom the individual or
head of household has sought assistance for
domestic violence, dating violence, sexual
assault, or stalking, The written referral or
observation need only include the minimum
amount of information necessary to document
that the individual or family is fleeing, or
attempting to flee domestic violence, dating
violence, sexual assault, and stalking.
(c) Disability. -Each recipient of
assistance under this part must maintain and
follow written intake procedures to ensure that
the assistance benefits persons with disabilities,
as defined in § 582.5, In addition to the
documentation required under paragraph (b),
the procedures must require documentation at
intake of the evidence relied upon to establish
and verify the disability of the person applying
for homeless assistance. The recipient must
keep these records for 5 years after the end of
the grant term. Acceptable evidence of the
disability includes:
(1) Written verification of the disability from
a professional licensed by the state to diagnose
and treat the disability and his or her
certification that the disability is expected to be
long- continuing or of indefinite duration and
substantially impedes the individual's ability to
live independently; Written verification from the
Social Security Administration;
(2) The receipt of a disability check (e.g,,
Social Security Disability Insurance check or
Veteran Disability Compensation);
(3) Intake staff- recorded observation of
disability that, no later than 45 days of the
application for assistance, is confirmed and
accompanied by evidence in paragraph (c)(1),
(2), (3), or (4) of this section; or
(4) Other documentation approved by HUD.
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Attachment 99CII
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Office of the Secretary, HUD
respect to data, information or re-
ports) required under subpart E of this
part (but that are not required by sec-
tions 309(,u) 01' (n) of the Famiie Adae
Charter Act or by sections 307(e) or (f)
of the Freddie IV1ac Act), the Secretary
may pursue any civil or administrative
remedies or penalties against the GSE
that may be available to the Secretary.
The Secretary shall pursue such rem-
edies under applicable law,
(3) Procedures. The ,Secretary shall
comply with the procedures set forth in
subpart G of this part in connection
with any enforcement action that Ile Or
she ma.y initiate against a GSE under
paragraph (e) of this section.
(69 FR 63642, Nov. 2, 20043
PART 84- UNIFORM ADMINISTRA-
TIVE REQUIREMENTS FOR GRANTS
AND AGREEMENTS WITH INSTITU-
TIONS OF HIGHER EDUCATION,
HOSPITALS, AND OTHER NON.
PROFIT ORGANIZATIONS
Subpart A- General
.Sec.
84.1 Purpose.
84.2 Definitions.
84.3 Effect on other issuances.
84.4 Deviations.
84.5 Subawards.
Subpart B- Pre -Award Requirements
84.10 Purpose.
04.11 Pre -award policies.
84.12 Forms for aPPlying for Federal assist-
ance.
04.13 Debarment and suspension; Drug -Free
Workplace.
84.11 Special award conditions.
84.15 lvletric system of measurement.
84.16 Resource Conservation and Recovery
Act.
84.17 Certifications and representations.
Subpart C -Post -Award Requirements
FMANCIAL AND PROGRAM h4ANAO1;n7EnT
04.20 Purpose of financial and program man-
agement.
04.21 Standards for financial management
sysLems.
04.22 Payment.
84.23 Cost sharing or matching.
04.24 Program income.
84.25 Revision of budget and program plans.
04.26 Non - Federal auclits.
84.27 Allowable costs.
84.211 Period of availability of lands.
PROPERTY STANDARDS
84.30 Purpose of property standards
PI. 84
84.31 lnsurance coverage,
84.32 Real property.
84,33 Federally -owned and exempt property.
84.31 Equipment.
84.35 Supplies and other expendable prop-
erty.
84.36 lntangible property.
84.37 Property trust relationship.
PRocuRrwrNIT STANDARDS
84.40 Purpose of procurement. standards.
84.41 Recipient responsibilities.
84.42 Codes of conduct.
84.43 Competition.
84.41 Procurement procedures.
64.45 Cost and price analysis.
84.46 Procurement records.
84.47 Contract administration.
84.48 Contract provisions.
REPORTS AND RECORDS
84.50 Purpose of reports and records.
84.51 1+4onitoring and reporting program
performance.
84.52 Financial reporting.
84.53 Retention and access requirements for
records.
TERMINATION AND ENFORCEIADVT
84.60 Purpose of termination and enforce-
ment.
84.61 Termination.
84.62 Enforcement.
Subpart D- After - the -Award Requirements
04.70 Purpose.
84.71 Closeout procedures.
81.72 Subsequent adjustments and cou-
tinuing responsibilities.
84.73 Collection of amounts clue.
Subpart E -Use of Lump Sum Grants
04.80 Conditions for Ilse of Lump Sum (fixed
price or fixed amount) grants.
84.81 Definition.
W1,82 Provisions applicable 01)13' to lumP
sum grants.
04.83 Property standards.
84.84 Procurement standards.
81.85 Reports and records.
84.86 Termination aaul enforcement.
84.87 Closeout procedures, subsequent ad-
iustments and continuing responsibil-
ities.
APPEh`DD; A TO PART 04- CONTRACT PRO' *q-
S]ONS
AUTHORITY: 42 U.S.C. 3535(4).
SOURCE: 59 FR 47011, Sept. 13, 1994, unless
otherwise noted.
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I ATTACHMENT ......C:........
984.1
Subpart A— General
84.1 Purpose,
Tbi"� part esta.Yilishes uniform admin-
wtratiwi recl Ill rements for Federal
;;'ranks and agreements awarded to in-
stitutions of higher education, I)OR
pitals, and other non - profit organiza-
tions, Additional or inconsistent re-
quirements shall not be imposed, ex-
cept as provided In § §8 n,nd 84.14 or
unless specifically required by Federal
statute or executive order. Non - profit
organizations that, imploment Federal
programs for the Sta.tos are also sub -
Ject to Skate requirements,
§84.2 Definitions,
Aecru,ed eXpen.ditures means the
chaages incurred by the recipient dur-
ing a, given period requiring the provi-
sion of funds for;
(1) Goods and other tangible property
received;
(2) Services performed by employees,
contractors, subrecipients, and other
payees; and
(3) Other amounts becoming owed
under programs for whicb no current
services or performance: is required.
Accrued income means the sum of:
(1) Earnings during a given period
from:
(i) Services performed by the recipi-
ent: and
(ii) Goods and other tangible prop-
erty delivered to purchasers; and
(2) Amounts becoming owed to the
recipient for which no current services
or performance is required by the re-
cipient.
Acquisition cost of equipment means
the net invoice price of the equipment,
including the cost of modifications, at-
tachments, accessories, or auxiliary
apparatus necessary to make the prop-
erty usable for the purpose for which it
was acquired. Other charges, such as
the cost of installation, transportation,
taxes, duty or protective in- transit in-
surance, shall be included or excluded
from the unit acquisition cost in ac-
cordance with the recipient's regular
accounting practices.
Advance means a payment made by
Treasury check or other appropriate
payment mechanism to a recipient
upon its request either before outlays
are made by the recipient or through
24 CFR Subtitle A (4 - 1 - 11 Edition)
the use of predetermined pa.,vmcnt.
scbedules.
Award means financial assistance,
that provides support, or stimulation to
accomplish a. public purpose. Awards
include grants and other agreerrumts in
the form of money or property in lieu
of money, by HUD to an eligible recipi-
ent, The term does not include; tech-
nical assistance, whiob provides serv-
ices instead of money; other assistance
in the form o1' loans, loan guarantees,
capital advances under the Sections 202
and fill programs, interest; subsidies, or
insurance; direct payments of any kind
to individuals; and, contracts whicb
are required to be entered into and ad-
ministered under procurement laws
and regulations.
Cash contributions means the recipi-
ent's cash outlay, including the outlay
of money contributed to the recipient,
by third parties.
Closeout means the process by which
HUD determines that all applicable ad-
ministrative actions and all required
work of the award have been completed
by the recipient and HUD.
Contract means a, procurement con-
tract, under an award or subaward, and
a. procurement subcontract under a re-
cipient's or subrecipient's contract.
Cost, ;h.a.rinr/ or ntatch.ing means that
portion of project or program costs not;
borne by HUD.
Date of completio ?t means the date on
which all work under an award is com-
pleted or the date on the award docu-
ment, or any supplement or amend-
ment thereto, on which HUD sponsor-
ship ends.
Disallowed costs means those charges
to an award that HUD determines to be
unallowable, in accordance with the
applicable Federal cost principles or
other terms and conditions contained
in the award,
Equipment means tangible nonexpend-
able personal property including ex-
empt property charged directly to the
award having a useful life of more than
one year and an acquisition cost of
$5000 or more per unit. However, con-
sistent with recipient policy, lower
limits may be established.
Excess property means property under
the control of HUD that, as determined
by the Secretary, is no longer required
d 0'1
7 NT CHME P-,._. OF ....7.... PAGES
Office of the Secretary, HUD
for its needs or the discharge of its re-
sponsibilities.
Exempt property means tangible per-
sona] property acquired in whole or in
part with Federal funds, where HUD
has statutory authority to vest title in
the recipient without further obliga-
tion to the Federal Government. An ex-
ample of exempt property authority is
contained in the Federal Grant and Co-
operative Agreement Act (31 U.S.C.
6306), for property acquired under an
award to conduct basic or applied re-
search by a non- profit institution of
higher education or non- profit organi-
zation whose principal purpose is con-
ducting scientific research.
Federal awarding ageai.cY means the
Federal agency that provides an award
to the recipient.
Federal funds authorized means the
total amount of Federal funds obli-
gated by HUD for use by the recipient,
This amount may include any author-
ized carryover of unobligated funds
from prior funding periods when per-
mitted by HUD regulations or imple-
menting instructions.
Federal share of real property, equip-
ment, or supplies means that percent-
age of the property's acquisition costs
and any improvement expenditures
paid with Federal funds.
Funding period means the period of
time when Federal funding is available
for obligation by the recipient.
Intangible property and debt instru-
ments means, but is not limited to,
trademarks, copyrights, patents and
patent applications and such property
as loans, notes and other debt instru-
ments, lease agreements, stock and
other instruments of property owner-
ship, whether considered tangible or in-
tangible.
Obligatiolus means the amounts of or-
ders placed, contracts and grants
awarded, services received and similar
transactions during a given period that
require payment by the recipient dur-
ing the same or a future period.
Oittla•ys or ea:pendit.ures means charges
made to the project or prograin. They
may be reported on a cash or accrual
basis. For reports prepared on a cash
basis, outlays are the sum of cash dis-
bursements for direct charges for goods
acid services, the amount of indirect ex-
pense charged, the value of third party
§ 84.2
in -hind contributions applied and the
amounj of cash advances and payments
made to subrecipients. For reports pre-
pared on an accrual basis, outlays are
the sum of cash disbursements for di-
rect charges for goods and services, the
amount of indirect expense incurred,
the value of in -kind contributions ap-
plied, and the net increase (or de-
crease) in the amounts oared by the re-
cipient for goods and other property re-
ceived, for services performed by em-
ployees, contractors, subrecipients and
other payees and other amounts be-
coming' owed under programs for which
no current services or performance are
required,
Personal propeftp means property of
any kind except real property. It may
be tangible, having physical existence,
or intangible, having no physical exist-
ence, such as copyrights, patents, or
securities.
Prior approval means written ap-
proval by an authorized official evi-
dencing prior consent,
Program irticome means gross income
earned by the recipient that is directly
generated by a supported activity or
earned as a result of the award (see ex-
clusions in §§ 84.24 (e) and (h)). Program
income includes, but is not limited to,
income from fees for services per-
formed, the use or rental of real or per-
sonal property acquired under feder-
ally- funded projects, the sale of com-
modities of items fabricated under an
award, license fees and royalties on
patents and copyrights, and interest on
loans made with award funds. Interest
earned on advances of Federal funds is
not program income. Except as other-
wise provided in HUD regulations or
the terms and conditions of the award,
program income does not include the
receipt of principal on loans, rebates,
credits, discounts, etc., or interest
earned on any of them,
P1'oieet costs means all allowable
costs, as set forth in the applicable
Federal cost principles, incurred by a
recipient and the value of the contribu-
tions made by third parties in accom-
plishing the objectives of the award
during the project period.
Proiect period means the period estab-
lished in the award document during
which HUD sponsorship begins and
ends,
455
F ATTACHMENT ......C...------
84.2
/h'upertr/ nlea.ns, unless othorwise
ata.teci, real property, e(Jcripnlent, in-
ta.ngib)o property and debt Instru-
nlonts.
Real propert ?l means land, including
land Improvements, structures and ap-
purtonances thereto, but excludes mov-
a,Ne: machinery and equipment,
Recipient means an organization re-
eeiving financial assistance directly
from TTUD to carry out a. project or
program. The torm includes public and
private institutions of highor edu-
(antion, public and private; hospitals,
and other quasi - public and private non-
))rofit organizations such as, but not
limited to, community action agencies,
resoareb institutes, educational asso-
ciations, and health centers. The term
includes commercial organizations,
international organizations when oper-
ating domestically (such as agencies of
the United Nations) which are recipi-
ents, subrecipients, or contractors or
subcontractors of recipients or sub -
recipients. The term does not include
government owned contractor- operated
facilities or researcb centers providing
continued support for mission- oriented,
large -scale programs that are govern-
ment- owned or controlled, or are des-
ignated as federally - funded research
and development centers. The term
does not include mortgagors that re-
ceive mortgages insured or held by
HUD or mortgagors or project owners
that receive capital advances from
HUD under the Section 202 and 811 pro-
grams.
Research. and development means all
research activities, both basic and ap-
plied, and all development activities
that are supported at universities, col-
leges, and other non - profit institu-
tions. "Research" is defined as a sys-
tematic study directed toward fuller
scientific knowledge or understanding
of the subject studied. "Development"
is the systematic use of knowledge and
understanding gained from research di-
rected toward the production of useful
materials, devices, systems, or meth-
ods, including design and development
of prototypes and processes. The term
research also includes activities in-
volving the training of individuals in
research techniques where such activi-
ties utilize the same facilities as other
research and development activities
24 CFR Subtitle A (4-1-11 Edition)
and where such activities are not in-
cluded In the instruction function.
,Small awards means a grant or coop-
erative, agreement not ex ce edi llt;'
$100,000 or the small purchase threshold
fixed at 11 U.S.C. 403(1.1), whichever is
greater.
Suba.wa.rd means:
(1) An award of financial assistance
Ili the form of money, or property in
lieu of money, made under an award by
a recipient to an eligible subreripieni,
or by a. suhrecipient to a. lowor tier snh-
recipient. The term includes fina.ncia.)
assistance when provided by any legal
agreement, even if the agreement, is
called a contract, but does not include
procurement of goods and services nor
does it include any form of assistance
which is excluded from the definition
of "award ".
(2) For Community Development
Block Grants, the term "subawarcl"
does not include the arrangement
whereby the prime recipient transfers
funds to another entity and that entity
is the project. A distinction is made be-
tween such a transfer for the further-
ance of the prime recipient's goals and
the transfer of funds to a subrecipient
who carries out activities and is ac-
cotultable to the prime recipient, For
example, in a. CDBG award where a.
prime recipient has as its program goal
the revitalization of a downtown area,
the funds transferred to a business in
the downtown area, to remodel its store
would not be, considered a subawarcl
subject to this part 84.
Subrecipient means the legal entity to
which a subaward is made and whicb is
accountable to the recipient for the use
of the funds provided. The term in-
cludes commercial organizations and
international organizations operating
domestically (such as agencies of the
United Nations).
Supplies means all personal property
excluding equipment, intangible prop-
erty, and debt instruments as defined
in this section, and inventions of a con-
tractor conceived or first actually re-
duced to practice in the performance of
work under a funding agreement
( "subject inventions "), as defined in 37
CFR, part 401, "Rights to Inventions
Made by Nonprofit Organizations and
456
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Office of the Secretary, HUD
Small Business Firms Under Govern
ment. Grants. Contracts, and Coopera-
tive Agreements."
Suspensiov means an action by HUD
that temporarily withdraws HUD spon-
sorship under an award, pending cor-
rective action by the recipient or pend-
ing a decision; to terminate the award
by I -IUD. Suspension of an award is a
separate action from suspensions under
HUD regulations implementing E.O.
12549 and E.O. 12689, "Debarment and
Suspension," at 2 CFR part 2424.
Ter?ninatioai means the cancellation
of HUD sponsorship, in whole or in
part, under an agreement at any time
prior to the date of completion.
Thirdd party iii -kind contributions
means the value of non -cash contribu-
tions provided by non - Federal third
parties. Third party in -kind contribu-
tions may be in the form of real Prop-
erty, equipment, supplies and other ex-
pendable property, and the value of
goods and services directly benefiting
and specifically identifiable to the
project or program.
Unliquidated obligations, for financial
reports prepared on a. cash basis, means
the amount of obligations incurred by
the recipient that have not been paid.
For reports prepared on an accrued ex-
penditure basis, they represent the
amount of obligations incurred by the
recipient for which an outlay has not
been recorded.
Unobligated balance means the por-
tion of the funds authorized by HUD
that has not been obligated by the re-
cipient and is determined by deducting
the cumulative obligations from the
cumulative funds authorized.
Unrecovered indirect cost means the
difference between the amount awarded
and the amount which could have been
awarded under the recipient's aPProvecl
negotiated indirect cost rate.
11'orkiai.p capital advance means a pro-
cedure whereby fluids are advanced to
the recipient to cover its estinnated
disbursement needs for a given initial
period.
[59 FE 97011, SepL. 13, 1994, as amended at 72
FE 73492, De(;. 27, 2007)
k84.3 Effect on other issuances,
For awards subject to this part, all
achninistrative requirements of codi-
fied progrann regulations, program
§ 84.10
manuals, handbooks and other nbn-
regu]ator } materials which are incon-
sistent 1vith the requirements of this
part shall be superseded, except to the
extent they are required by statute, or
authorized in accordance with the devi-
ations provision in S 84.4.
§84A Deviations.
The Office of 1 \1anagement and Budg-
et (0I\413) nnay grant exceptions for
classes of grants or recipients subject
to the requirements of this rule when
exceptions are not prohibited by stat-
ute. However, in the interest of max
imum ulniformity, exceptions from the
requirements of this rule shall be per-
mitted only in unusual circumstances.
HUD may apply more restrictive re-
quirements to a class of recipients
when approved by OB4B. HUD may
apply less restrictive requirements
when awarding small awards and when
approved by OMB, except for those re-
quirements which are statutory. Ex-
ceptions on a case -by -case basis may
also be made by HUD.
fi 84.5 Subawards•
Unless sections of this part specifi-
cally exclude subrecipients from cov-
erage, the provisions of this part shall
be applied to subrecipients performing
work tinder awards if such subrecipi-
ents are institutions of higher edu-
cation, hospitals, conunercial organiza-
tions and international organizations
operating domestically, or other non-
profit organizations. State, local and
Federally recognized Indian tribal gov-
ernnnelnt subrecipients are subject to
the provisions of regulations imple-
menting the grants managennent conn-
nnoln rule, "Administrative I;.equire-
ments for Grants and Cooperative
Agreements to State, Local and Feder-
ally Recognized Indian Tribal Govern-
ments," (24 CFR part. 85).
Subpart B— Pre -Award
Requirements
§84.10 Purpose,
Sections 84.11 thu•ough 84,17 Prescribe
forms and instructions and other pre -
award matters to be used in applying
for HUD awards,
457
§64,11
tH4.11 1're- awilI'd policies.
NO IJv! of 0)vnts and Cooperative
d(peenwn.ts, and C(n.tracts. In cael') in-
stn.nce. I-IUD shall docile on the appro-
priate award instrument (i.e., grant,
eooporative a(,rreemont, or contract).
The Federal Grant and Cooperative
A roc;ment Act (31 iJ.S,C. G80I -68) gov-
erns the use of grants, cooperative
agreements and contracts. A grant or
nooperative, agreement shall be used
only when the principal purpose of a.
fsansa.ction is to accomplish a, public
)urpose. of support; or stimulation au-
thorized by Federal statute. The statu-
tory criterion for choosing between
rants and cooperative agreements is
that for the latter, "substantial in-
volvement is expected between the ex-
ecutive agency and the State, local
government, or other recipient when
carrying out the activity contemplated
in the agreement." Contracts shall be
used when the principal purpose is ac-
quisition of property or services for the
direct benefit or use of the Federal
Government.
(b) Public Notice and Priority Setting.
HUD shall notify the public of its in-
tended funding priorities for discre-
tionary grant programs, unless funding
priorities are established by Federal
sra,r,o.te.
84.12 Forms for applying for Federal
assistance.
(a.) MUD shall comply with the appli-
cable report clearance requirements of
5 CFR, part 1320, "Controlling Paper-
work Burdens on the Public," with re-
gard to all forms used by HUD in place
of or as a, supplement to the Standard
Form 424 (SF -424) series.
(b) Applicants shall use the SF -424 se-
ries or those forms and instructions
prescribed by HUD,
(c) For Federal programs covered by
E.O. 12272, "Intergovernmental Review
of Federal Programs," the applicant
shall complete the appropriate sections
of the SF -424 (Application for Federal
Assistance) indicating whether the ap-
plication was subject to review by the
State Single Point of Contact (SPOC).
The name and address of the SPOC for
a, particular State can be obtained from
the Catalog of Federal Domestic Assist-
ance. The SPOC shall advise the appli-
cant whether the progra.rn for which
24 CFP. Subtitle A (4-1-11 Edition)
appllca.tion is made has heen selected
b,y 1,11a1, State for review.
184.13 Debarment and suspension;
Drug-Free Workplace.
(a) Recipients and suhreclpients sliadl
comply with the government non -
procurement debarment and suspension
requirements in 2 CFR hart 2424. These
governmontwide requirements restrict
subawards and contracts with cortain
parties that are debarred, suspended, or
otherwise excluded from or lnoligible,
for participation in federal a.ssistarwfe
programs or activities,
(b) Recipients and aubrocipionts shall
comply with the requirements of the
Drug -Free Workplace Act- of 1988 (42
U.S.C. 701), as set forth at 24 CFR part,
21.
[72 FR 73491, Dec. 27, 20071
484.14 Special award conditions.
If an applicant or recipient;
(a) Has a history of poor perform-
ance;
(b) Is not financially stable;
(c) Has a. management; system that,
does not, meet, the standards prescribed
in this part;
(d) Has not conformed to the terms
and conditions of a, previous award; or
(e) Is not otherwise responsible, HUD
may impose additional requirements as
needed, provided that such applicant or
recipient is notified in writing as to;
the nature of the additional require-
ments, the reason why the additional
requirements are being imposed, the
nature of the corrective action needed,
the time allowed for completing the
corrective actions, and the method for
requesting reconsideration of the addi-
tional requirements imposed. Any spe-
cial conditions shall be promptly re-
moved once the conditions that
prompted them have been corrected.
84.15 Metric system of measurement.
The Metric Conversion Act, as
amended by the Omnibus Trade and
Competitiveness Act (15 U.S.C. 205) de-
clares that the metric system is the
preferred measurement system for U.S.
trade and commerce, The Act requires
each Federal agency to establish a date
or dates in consultation with the Sec-
retary of Commerce, when the metric
system of measurement will be used in
458
ATTACHMENT .......
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office of the Secretary, HUD
the agency's procurements, grants, and
other business- related activities. Met-
ric implementation matt' take longer
where the use of the system is initially
impractical or likely to cause signifi-
cant inefficiencies in the accomplish-
ment of federally- funded activities.
HUD shall follow the provisions of E,O.
12770, "Metric Usage in Federal GOV-
ernment Programs."
§84.16 Resource Conservation and Re-
covei-y Act.
Under the Resource Conservation and
Recovery Act (RCRA) (Pub. L. 99 -580,
42 U.S.C, 6962), any State agency or
agency of a political subdivision of a
State which is using appropriated Fed-
eral funds must comply with Section
6002. Section 6002 requires that pref-
erence be given in procurement pro-
grams to the purchase of specific prod-
ucts containing recycled materials
identified in guidelines developed by
the Environmental Protection Agency
(EPA) (40 CFR parts 247 through 254).
Accordingly, State and local institu-
tions of higher education, hospitals,
connlercial organizations and inter-
national organizations when operating
domestically, and non- profit organiza-
tions that receive direct Federal
awards or other Federal funds shall
give preference in their procurement
programs funded with Federal funds to
the purchase of recycled products pur-
suant to the EPA guidelines.
§84.17 Certifications and representa-
tions.
Unless prohibited by statute or codi-
fied regulation, HUD is authorized and
encouraged to allow recipients to sub-
mit certifications and representations
required by statute, executive order, or
regulation on an annual basis, if the re-
cipients have ongoing and continuing
relationships with the agency. Annual
certifications and representations shall
be signed by responsible officials with
the authority to ensure recipients'
compliance iti the pertinent require-
ments.
§ 84.21
Subparf C— Post -Award
Requirements
FINIOgCIAL AND PROGRAM MANAGEMENT
§84.20 Purpose of financial and pro -
gram management.
Sections 84.21 through 84.28 prescribe
standards for financial management
systems, methods for making pay-
ments and rules for: satisfying cost
sharing and matching requirements,
accounting for program income, budget
revision approvals, making audits. de-
termining allowability of cost, and es-
tablishing fund availability,
§84.21 Standards for financial man.
agement systems.
(a) HUD shall require recipients to
relate financial data to performance
data and develop unit cost information
whenever practical,
(b) Recipients' financial management
systems shall provide for the following:
(1) Accurate, current and complete
disclosure of the financial results of
each federally- sponsored project or
program in accordance with the report-
ing requirements set forth in §84.52. If
a recipient maintains its records oil
other than an accrual basis, the recipi-
ent shall not be required to establish
an accrual accounting system. These
recipients may develop such accrual
data for their reports on the basis of an
analysis of the documentation on hand,
(2) Records that identify adequately
the source and application of funds for
federally - sponsored activities. These
records shall contain information per-
taining to Federal awards, authoriza-
tions, obligations, unobligated bal-
ances, assets, outlays, income and in-
terest.
(3) Effective control over and ac-
countability for all funds, property and
other assets. Recipients shall ade-
quately safeguard all such assets and
assure they are used solely for author-
ized purposes.
(1) Comparison of outlays with budg-
et amounts for each award. \Ahenever
appropriate, financial information
should be related to performance and
unit cost data.
(5) Written procedures to minimize
the time elapsing between tile, transfer
of fluids to the recipient Stun the U.S.
459
ATTACHMENT ....... .........
§ 64.22
'rroasnry and the issuance of redellip-
1Jon of checks, wa.rra.nts or pa,Srmonts
by other rrioans for program purposes
by tho recipient. To I.he extent that the
provisions of the Casb marlapenuont. )m-
provoment Act ((:'MIA) (Pub. L. 1(11 -153)
;;'Quern, pa.ymont methods of State
aft'encies, instrumentalities, and fiscal
regents shall be. consistent with CMIA
`1'roasury- State Agreements or the
CMIA default procedures codifiod at 31
CFR part 205, "withdrawal of Cash
from the Treasury for Advances undor
P'odera) Grant and Other Programs,"
t(l) written procedures for doter -
mining the reasonabl oil ess, al)oca.bility
and allowabillty of costs in accordance
with tho provisions of the applicable
Federal cost, principles and the terms
and conditions of the award.
(7) Accounting records including cost
accounting records that are supported
by source documentation.
(c) Where the Federal Gover nment
guarantees or insures the repayment of
money borrowed by the recipient, HUD,
,at its discretion, may require adequate
hooding and insurance if the bonding
and insurance requirements of the re-
cipient are not deemed adequate to
protect the interest of the Federal Gov-
ernment.
(d) HUD may require adequate f:idel-
ity bond coverage where the recipient
lacks sufficient coverage to protect the
Federal Government's interest.
(e) Where bonds are required in the
situations described above, the bonds
shall he obtained from companies hold-
ing certificates of authority as accept-
able sureties, as prescribed in 31 CFR
part 223, "Surety Companies Doing
Business with the United States."
§84.22 Payment.
(a) Payment methods shall minimize
the time elapsing between the transfer
of funds from the United States Treas-
ury and the issuance or redemption of
checks, warrants, or payment by other
means by the recipients. Payment
methods of State agencies or instru-
mentalities shall be consistent with
Treasury -State CMIA agreements or
default procedures codified at 31 CFR
part 205.
(b) Recipients are to be paid in ad-
vance, provided they maintain or dem-
onstrate the willingness to maintain:
24 CFR. Subtitle A (4 -1 -11 Edition)
(l) Writ;ten procedures that minimize
t,he: time elapsing between the transfer
of fusels and disbursement by the ro
c;ipient: and
(2) Fina.noial management synt�rnr.
hat meet, the standards for fund mn-
trol a.nd accountability as esta.hlishc -;d
in §84.21. Cash advalces to a. renipic;nt
organization shall be limited to the
minimum amounts noodod and he
tlnuad to be in accordance with the MO..
tual, immediate cash requiromontss of
the rocipient, organization in ca.rmline:
out the purpose of the approved pro-
gram or project, The timing aimd
amount, of cash advances shall hct ns
close as is administratively feasible to
the actual disbursements by the recipi-
ent organization for direct program or
project costs and the proportionate
share of any allowable indirect costs.
(c) Whenever possible, advances shall
be consolidated to cover anticipated
cash needs for all awards made by HUT)
to the recipient.
(1) Advance payment mechanisms in-
clude, but are not limited to, Treasury
chock and electronic funds transfer.
(2) Advance payment mechanisms are
subject to 31 CFR part 205,
(3) Recipients shall be authorized to
submit requests for gAva,noes and reiyn-
bursements at least monthly when
electronic fund transfers are not used.
(d) Requests for Treasury check ad-
vance payments shall be submitted
through electronic means Clete rmined
by the authorizing HUD program, or on
forms as may be authorized by OAVTB.
This form is not to be used when Treas-
ury check advance payments are made
to the recipient automatically through
the use of a predetermined payment
schedule or if precluded by special HUD
instructions for electronic funds trans-
fer.
(e) Reimbursement is the preferred
method when the requirements in para-
graph (b) of this section cannot be met.
IUD may also use this method on any
construction agreement, or if the
major portion of the construction
project is accomplished through pri-
vate market financing or Federal
loans, and the Federal assistance con-
stitutes a minor portion of the project.
1.60
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Office of the Secretary, HUD
(1) «ghen the reimbursement method
is used, HUD shall make payment with-
in 30 days after receipt of the billing,
unless the billing is improper.
(2) Recipients shall be authorized to
submit request for reimbursement at
least monthly when electronic funds
transfers are not used.
(f) If a recipient cannot meet the cri-
teria for advance payments and HUD
has determined that reimbursement is
not feasible because the recipient lacks
sufficient working' capital, HUD may
provide cash on a working capital ad-
vance basis. Under this procedure, HUD
shall advance cash to the recipient to
cover its estimated disbursement needs
for an initial period generally geared
to the awardee's disbursing cycle.
Thereafter, HUD shall reinnburse the
recipient for its actual cash disburse-
ments. The working capital advance
method of payment shall not be used
for recipients unwilling or unable to
provide timely advances to their sub -
recipient to meet the subrecipient's ac-
tual cash disbursements.
(g) To the extent available, recipi-
ents shall disburse funds available from
repayments to and interest earned on a
revolving fund, program income, re-
bates, refunds contract settlements,
audit recoveries and interest earned on
such funds before requesting additional
cash payments.
(h) Unless otherwise required by stat-
ute, HUD shall not withhold payments
for proper charges made by recipients
at any tine during the project period
unless paragraphs (h)(1) or (11)(2) of this
section apply.
(1) A recipient has failed to comply
with the project objectives, the terms
and conditions of the award, or Federal
reporting requirements.
(2) The recipient or subrecipient is
delinquent in a debt to the United
States as defined in OMB Circular A-
129, " Blanaging Federal Credit Pro-
grams." Under such conditions.. HUD
may, upon reasonable notice, inform
the recipient that payments shall not
be made for obligations incurred after
a specified date until the conditions
are corrected or the indebtedness to
the Federal Government is liquidated.
(i) Standards governing the use of
banks and other institutions as deposi-
§ 84.22
tories of iundt advanced under awards
are as follows.
(1) Except for situations described in
paragraph (i)(2) 01' this section. HUD
shall not require separate depository
accounts for funds provided to a recipi-
ent or establish any eligibility I quire -
nnents for depositories for funds pro-
vided to a recipient. However, recipi-
ents must be able to account for the re-
ceipt, obligation and expenditure of
funds.
(2) Advances of Federal funds shall be
deposited and maintained in insured
accounts whenever possible.
(j) Consistent with the national goal
of expanding the opportunities for
women -owned and minority -owned
business enterprises, recipients shall he
encouraged to use women- owned and
minority -owned banks (a hank which is
owned at least 50 percent by women or
minority group members).
(k) Recipients shall maintain ad-
vances of Federal funds in interest
bearing accounts, unless paragraphs
(k)(1), (k)(2) or (k)(3) of this section
apply.
(1) The recipient receives less than
$120,000 in Federal awards per year.
(2) The best reasonably available in-
terest bearing account would not be ex-
pected to earn interest in excess of $250
per year on Federal cash balances.
(3) The depository would require an
average or minimum balance so high
that it would not be feasible within the
expected Federal and non - Federal cash
resources.
(1) For those entities where CDIIA
and its implementing regulations do
not apply, interest earned on Federal
advances deposited in interest bearing
accounts shall be remitted annually to
Department of Health and Hunan
Services, Pa) *went Managennent Sys-
tem, P.O. Box 6021, Rockville, BID
20852. In keeping with Electronic Funds
Transfer rules (31 CFR part 206), inter-
est should be remitted to the 1115 Pay -
ment. Management System through a.n
electronic medium such as the
FEDWIRE Deposit system. Recipients
which do not have this capability
should use a check. Interest amotunts
up to $250 per year may be retained by
the recipient for administrative ex-
pense. State universities and hospitals
shall comply with CB4IA, as it. pertains
461
§ 84.23
1,0 1111,er("gt . If a,11 t,;1 "11,1I,y stUhy!(e i, I,o
MOM uses 11,5 own I'an(s to pay pre -
nw,trd oasts for discretionary awards
without. ))riot written a.pprova,l from
Ow >'edera) a.wa.rrlink', agency, it waives
It.; right to rocov'or the interest, under
C1I lA.
159 rIL 97011., ,9op1„ 13, 1994, as anuaudad at, 75
PT 410119. '11 fly 15, 20101
§84,23 Cori, rlutring or matching,
(a) 2\11 contributions, Including cash
and third party in- kind, shall he ac-
,;o,ptwl as part of the recipient's cost,
sharing or matching when such con -
eriPnttions meet, all of the following cri-
teria.
(1) Are verifiable from the recipient's
records.
(2) Are riot included as contributions
for any other federally- assisted project
or program.
(3) Are necessary and reasonable for
proper and efficient accomplishment of
project, or program objectives.
(9) Are allowable under the applica-
ble cost principles.
(5) Are not paid by the Federal Gov-
ernment under another award, except
where authorized by Federal statute to
be used for cost sharing or matching.
(6) Are provided for in the approved
budget when required by HUD.
(7) Conform to other provisions of
this part, as applicable.
(b) Unrecovered indirect costs may be
Included as part of cost sharing or
matching only with the, prior approval
of HUD.
(c) Values for recipient, contributions
of services and property shall be, estab-
lished in accordance with the applica-
ble cost principles. If HUD authorizes
recipients to donate buildings or land
for construction/facilities acquisition
projects or long -term use, the value of
the donated property for cost sharing
or matching shall be the lesser of para-
graphs (e)(1) or (c)(2) of this section.
(1) The certified value of the remain-
ing life of the property recorded in the
recipient's accounting records at the
time of donation,
(2) The current. fair market value. How-
ever, when there is sufficient justifica-
tion, HUD may approve the use of the
current fair market value of the do-
nated property, even if it exceeds the
24 CER Subtitle A (4-1-11 Edition)
.csrtifiocd wdvw at Lhe time of donation
„o tfie project.
(d) Volunteer services furnished h,y
professional and technical personnel,
oons nts, a.nd other drilled and nn-
Skilled lo'bor may lie counted as coy {t,
sharing or matching if the, service is an
integral and necessary part, of an ap-
proved project or program. Rates for
volunteer services shall be consistent,
with those, paid for similar worlt in the
recipient's organization. In those in-
stances in which the required shills are
not found in the recipient ori;anizatiort,
rates shall be consistent with those
paid for similar work in the labor mar
ket in which the recipient competes lot
the kindd of services involved. In either
case, paid fringe benefits that are rea-
sonable, allowable, and allocable may
be included in the valuation.
(e) When an employer other than the.
recipient furnishes the services of an
employee, these services shall be val-
ued at the employee's regular rate of
pay (plus an amount of fringe benefits
that are reasonable, allowable, and al-
locable, but exclusive of overhead
oasts), provided these services a.1•e in
the same skill For tt the employee
is normally paid.
(f) Donated supplies may include
such items as expendable equipment
office supplies, laboratory supplies or
workshop and classroom supplies.
Value assessed to donated supplies in-
cluded in the Cost sharing or matching
share shall be reasonable and shall not
exceed the fair market value of the
property at the time of the donation.
(g) The method used for determining
cost, sharing or matching for donated
equipment, buildings and land for
which title passes to the recipient may
differ according to the purpose of the
award, if paragraphs (g)(1) or (g)(2) of
this section apply.
(1) If the purpose of the award is to
assist the recipient in the acquisition
of equipment, buildings or land, the
total value of the donated property
may be claimed as cost sharing or
matching.
(2) If the purpose of the award is to
support activities that require the use
of equipment, buildings or land, nor-
mally only depreciation or use charges
for equipment and buildings may be
462
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Office of the Secreiary, HUD
made. However, the full value of equip-
ment or other capita] assets and fair
rental charges for land ma)' be allowed,
provided that HUD has approved the
charges.
(h) The value of donated property
shall be determined in accordance with
the usual accounting policies of the re
cipient, with the following qualifica-
tions.
(1) The value of donated land and
buildings shall not exceed its fair mar-
ket value at the time of donation to
the recipient as established by an inde-
pendent appraiser (.e.g„ certified real
property appraiser or General Services
Administration representative) and
certified by a responsible official of the
recipient.
(2) The value of donated equipment
shall not exceed the fair market value
of equipment of the same age and con-
dition at the time of donation.
(3) The value of donated space shall
not exceed the fair rental value of com-
parable space as established by an inde-
pendent appraisal of comparable space
and facilities in a privately -owned
building in the same locality.
(4) The value of loaned equipment
shall not exceed its fair rental value.
(5) The following requirements per-
tain to the recipient's supporting
records for in -kind contributions from
third parties,
(i) V ohmteer services shall be docu-
mented and, to the extent feasible, sup-
ported by the same methods used by
the recipient for its own employees.
(ii) The basis for determining the
valuation for personal service, mate-
rial, equipment, buildings and land
shall be documented.
§84.24 Program income,
(a) IIUD shall apply the standards set
forth in this section in requiring recipi-
ent organizations to accouit for pro-
gram income related to projects fi-
nanced in whole or in part with Federal
funds.
(b) Except as provided in paragraph
(h) of this section, program income
earned during the project period shall
Ile retained 1)y the recipient and, in ac-
cordance with HUD regulations or the
terms and conditions of the award,
shall be used in one or more of the
ways listed in the following.
§ 84.24
(1) Added to funds eonnnitted to the
project. by HUD and recipient and used
to further eligible project, or prograan
objectives.
(2) Used to finance the non - Federal
share of the project or program.
(3) Deducted from the total project or
program allowable cost in determining
the net allowable costs on which the
Federal share of costs is based.
(c) When HUD authorizes the disposi-
tion of program iucoine as described in
paragraphs (b)(1) or ()))(2) of this sec-
tion, program income in excess of any
limits stipulated shall be used in ac-
cordance with paragraph (b)(3) of this
section.
(d) In the event that HUD does not
specify in its regulations or the terms
and conditions of the award how pro -
grain income is to be used, paragraph
(1))(3) of this section shall apply auto-
matically to all projects or programs
except research. For awards that sup-
port research, paragraph (b)(1) of this
section shall apply automatically un-
less HUD indicates in the terms and
conditions another alternative on the
award or the recipient is subject to spe-
cial award conditions, as indicated in
§ 84.14.
(e) Unless HUD regulations or the
terms and conditions of the award pro-
vide otherwise, recipients shall have no
obligation to the Federal Government
regarding program income earned after
the end of the project period.
(f) If authorized by HUD regulations
or the terms and conditions of the
award, costs incident to the generation
of program income may be deducted
from gross income to determine pro-
gram income provided these costs have
not been charged to the award.
(g) Proceeds from the sale of property
shall be handled in accordance With the
requirements of the Property Stand-
ards (See § §84.3() through 84.37).
(h) Unless HUD regulations or the
terms and condition of the award pro-
vide otherwise, recipients '311,.11 have no
obligation to the Federal Government.
- kyith respect to program income earned
from license fees and royalties for
copyrighted material, patents, patent
applications, trademarks, and inven-
tions produced uncles an award. How-
ever, Patent and Trademark Amend-
ments (35 U.S.C. 18) apply to inventions
463
ATTACHMENT ........ ........
c 84.25
Ilmd e undo( a,u r::;perinlr;utsrl. III' , clot)
Il'Ielll,M Or reHear(Sh aw ard.
M.25 Revision of budvei and pro -
granl phxus,
Isl.) The budget, plan is the financial
c>cpression of the project or program as
a.pprmved during the award process. It
nta. Include eithor the Federal and
non- Fodoral share, or only the Federal
Oar(", deponding upon HUD require-
ments. It shall be, rolatod to perform-
ance for program evaluation purposes
whenever appropriate.
(b) Recipients are required to report,
deviations from budget and program
plans, and request prior approvals for
hudgot, and program plan revisions. in
accordance with this section.
(c) For nonconstruction awards, re-
cipients shall request prior approvals
from HUD for one or more of the fol-
lowing program or budget related rea-
sons.
(1) Change in the scope or the objec-
tive of the project or program (even if
there is no associated budget revision
requiring prior written approval).
(2) Change in a key person specified
in the application or award document.
(3) The absence for more than three
months, or a, 25 percent reduction in
time devoted to the project, by the ap-
proved project director or principal in-
vestigator.
(4) The need for additional Federal
funding.
(5) The transfer of amounts budgeted
for indirect costs to absorb increases in
direct costs, or vice versa, if approval
is required by HUD.
(0) The inclusion, unless waived by
IIUD, of costs that require prior ap-
proval in accordance with OMB Cir-
cular A -21, "Cost Principles for Insti-
tutions of Higher Education," OMB
Circular A -122, "Cost Principles for
Non - Profit Organizations," or 45 CFR
part 74 Appendix R, "Principles for De-
termining Costs Applicable to Research
and Development under Grants and
Contracts with Hospitals," or 48 CFR
part 31, "Contract Cost Principles and
Procedures," as applicable.
(7) The transfer of funds allotted for
training allowances (direct payment to
trainees) to. other categories of ex-
pense.
24 CFIR Subtitle A (4 -1 -11 Edition)
(8) Unless descrillod in the a.pplic,-
tion and funded in the approved
,.wards, the subaward, transfer or con -
M"I'oting out, of any work under a.n
award This provision does not apply to
tlu: purchase of supplies, nla.Ucrial.
equipment or general support services.
(d) No other prior approval require .
menu for specific items may he im
posed unless a. deviation has been ap-
proved by OMB.
(e) Except for requiremonts liatod in
pa.rag•raplis (o)(1) a,nd (c)(4) of thiN seo-
tion, IIUD is authorized, i,t; )ts option,
to waive cost- related and administra-
tive prior written a,pprovlds required
by Circular A -110 and OMB Circulars
A -21 and A -122. Such waivers ma.y in-
clude authorizing recipients to do any
one or more of the following.
(1) Incur pro -award costs 90 calendar
days prior to award or more than 90
calendar days with the prior approval
of HUD. All pre -award costs are in-
curred at the recipient's risk (i.e., HUD
is under no obligation to reimburse
such costs if for any reason the recipt-
cut does not receive an av✓ard or if the
award is less than anticipated and in-
adequate to cover such costs).
(2) Initiate a. one -time extension of
the expiration date of the award of up
to 12 months unless one or more of the
following conditions apply. For one:
time extensions, the recipient must no-
tify HUD in writing with the sup-
porting reasons and revised expiration
date at least 10 days before the expira-
tion date specified in the award. This
one -time extension may not be. exer-
cised merely for the purpose of using
unobligated balances,
(i) The terms and conditions of award
prohibit the extension.
(ii) The extension requires additional
Federal funds.
(iii) The extension involves any
change in the approved objectives or
scope of the project.
(3) Carry forward unobligated bal-
ances to subsequent funding periods.
(4) For awards that support research,
unless HUD provides otherwise in
HUD's regulations, the prior approval
requirements described in paragraph
(e) of this section are automatically
waived (i.e,, recipients need not obtain
such prior approvals) unless one of the
119
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Office of the Secretary, HUD
conditions included in paragraph (e)(2)
of this section applies.
(f) HUD may, at its option: restrict
the transfer of funds among direct cost
categories or programs, fiunctions and
activities for awards in which the Fed-
eral share of tine project exceeds
$100,000 and the cunnulative amount of
such transfers exceeds or is expected to
exceed 10 percent of the total budget as
last approved by HUD. HUD shall not
permit a transfer that would cause any
Federal appropriation or part thereof
to be used for purposes other than
those consistent with the original in-
tent of the appropriation
(g) All other changes to nonconstruc-
tion budgets, except for the changes de
scribed in paragraph (j) of this section,
do not require prior approval.
(h) For construction awards, recipi-
ents shall request prior written ap-
proval promptly from HUD for budget
revisions whenever paragraphs (h)(1),
(h)(2) or (h)(3) of this section apply.
(1) The revision results from changes
in the scope or the objective of the
project or program.
(2) The need arises for additional
Federal funds to complete the project.
(3) A revision is desired which in-
volves specific costs for which prior
written approval requirements may be
imposed consistent with applicable
OMB cost principles listed in §84,27.
(i) No other prior approval require-
ments for specific items may be im-
posed unless a deviation has been ap-
proved by OMB,
(j) JIThen HUD makes an award that
provides support for both construction
and nonconstruction work, HUD may
require the recipient to request prior
approval from HUD before making an)'
fund or budget transfers between the
two types of work supported.
(k) For both construction and non -
construction awards, HUD shall require
recipients to notify HUD in writing
promptly whenever the amomit of Fed-
eral authorized funds is expected to ex-
ceed the needs of the recipient for the
Pr oject period by more than 515000 0'
five percent of the Federal award,
whichever is greater. This notification
shall not be required if an application
for additional funding is submitted for
a continuation award.
§ 84.26
(1) When requesting approval for
budget revisions, recipients shall use
the budget forms that were used in the
application unless HUD indicates a let
ter of request suffices.
(m) `Within 30 calendar days from the
date of receipt of tine request, for budg-
et revisions, HUD shall review the re-
quest and notify the recipient whether
the budget revisions have been ap-
proved. If the revision is still under
consideration at the end of 30 calendar
days, HUD shall inform the recipient in
writing of the date when the recipient
ilia) expect the decision.
§84,26 Non - Federal audits,
(a) Recipients and subrecipients that
are institutions of higher education or
other non - profit organization (includ-
ing hospitals) shall be subject to the
audit requirements contained in the
Single Audit Act Amendments of 1996
(31 U.S.C. 7501 -7507) and revised OMB
Circular A -133, "Audits of States,
Local Governments, and Non- Profit Or-
ganizations. "
(1) Non- profit organizations subject
to regulations in the part 200 and part
800 series of this title which receive
awards subject to part 84 shall conply
with the audit requirements of revised
oMB Circular A -133, "Audits of States,
Local Governments, and Non - Profit Or-
ganizations." For HUD programs, a
non - profit organization is the Mort
gagor or owner (as these terms are de-
fined in the regulations in the part 200
and part 800 series) and not a related or
affiliated organization or entity.
(2) [Reservod]
(b) State and local governments shall
be subject to the audit requirements
contained in the Single Audit Act
Amendments of 1996 (31 U.S.C. 7501-
7507) and revised OMB Circular A -133,
"Audits of States, Local Governments,
and Non- Profit Organizations."
(c) For - profit hospitals 'not covered
by tine audit provisions of revised 0MB
Circular A -133 shall be subject to the
audit requirements of the Federal
awarding agencies.
(d) Connmercial organizations shall
be subject to the audit requirements of
HUD or the prime recipient as incor-
porated into the award document.
[59 FR 97011, Sept. 13, 1991, as amended a -t 62
FP, 61615, Nov. 16, 19971
465
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§ 84.27
;84.27 Allowable coNl.s.
For ori,ch ].rind of recipient., Chore is a
sni. of Federal principles for dal'on-
nririlne; ,dlowable. coats. Atlowahllity of
uosts shall he determined in accord -
ancc with the cost principles a,pplica,hle
to the entity incurring the costs. Thus,
allowability of costs incurred by State,
local or federally- recognizcul Indian
tribal governments is determined in
accordance with the provisions of OMB
Circular A47, "Cost Principles for
State and Local Governmonl,H." The al-
lowability of costs incurred by non-
profit organizations is dotermined in
a.ncordanee with the provisions of OMB
Circular A -122, "Cost Principles for
Non- Profit Organizations." The allow -
ability of costs incurred by institutions
of higher education is determined in
accordance with the provisions of OMB
Circular A -21, "Cost Principles for
Educational Institutions." The allow -
ability of costs incurred by hospitals is
determined in accordance with the pro-
visions of Appendix. E of 45 CFR part 74,
"Principles for Determining Costs Ap-
plicable to Research and Development
Under Grants and Contracts with Hos-
pitals," The allowability of costs in-
curred by commercial organizations
and those non - profit organizations list-
ed in Attachment C to Circular A -122 is
determined in accordance with the pro-
visions of the Federal Acquisition Reg-
ulation (FAR) at 48 CFR. part 31.
§ 84.28 Period of availability of funds,
Where a funding period is specified, a
recipient lnay charge to the grant only
allowable costs resulting from obliga-
tions incurred during the funding pe-
riod and any pre -award costs author-
ized by HUD.
PROPERTY STANDARDS
k84.30 Purpose of property standards,
Sections 84.31 through 84.37 set forth
uniform standards governing manage-
ment and disposition of property fur-
nished by the Federal Government
whose cost was charged to a. project
supported by a Federal award. HUD
shall require recipients to observe
these standards under awards and shall
not impose additional requirements,
unless specifically required by Federal
statute, The recipient may use its own
24 CFR Subtitle A (4 -1 -11 Edition)
pr(gw] ty nia,na);em ell t si',a.ruiards and
procedures provided it observes thr.
pmvisionF, of g M.31 through 84.37.
Insurance coverage,
Recipients shall, at a. neinirruun. pro -
vicic the equivalent insurance coveni.ffc
for real property and equipment, ac-
quired with Federal funds as provided
to property owned by the recipient.
Pod erall y -Own ed property need not ho
insurod unless required by the terms
a,nd conditions of the ,iNNvard.
u 44,82 Real property
FTUD prescribes the following re(Juire+
neents for recipients concerning the use
and disposition of real property ac-
quired in whole or in part under
awards:
fa) Title to real property shall vest in
the recipient subject to the condition
that the recipient shall use the real
property for the authorized purpose, of
the project as long as it is needed an(]
shall not encumber the property with-
out; approval of HUD.
(b) The recipient shall obtain written
approval by HUD for the use of real
property in other federally - sponsored
projects when the recipient, determines
that the property is no longer needed
for the purpose of the original project.
Use in other projects shall be limited
to those under federally- sponsored
projects (i.e., awards) or programs that
have purposes consistent with those
authorized for support by HUD.
(c) When the real property is no
longer needed as provided in para-
graphs (a) and (b) of this section, the
recipient shall request disposition in-
structions from HUD or its successor
Federal awarding agency. HUD shall
observe one or more of the following
disposition instructions.
(1) The recipient may be permitted to
retain title without further obligation
to the Federal Government after it
compensates the Federal Government,
for that percentage of the current fair
market value of the property attrib-
utable to the Federal participation in
the project.
(2) The recipient may be directed to
sell the property under guidelines pro-
vided by HUD and pay the Federal Gov-
ernment for that percentage of the cur-
rent fair market value of the property
UGC
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Office of the Secretary, HUD
attributable to the Federal participa-
tion in the project (after deducting ac-
tual and reasonable selling and fix-111)
expenses, if any, from the sales pro-
ceeds). When the recipient is author-
ized or required to sell the property,
proper sales procedures shall be. estab-
lished that provide for competition to
the extent practicable and result in the
highest possible return.
(3) The recipient may be directed to
transfer title to the property to the
Federal Government or to an eligible
third party provided that, in such
cases, the recipient shall be entitled to
compensation for its attributable per-
centage of the current fair market
value of the property.
§84,33 Federally - owned and exempt
property.
(a) Federally -owned property. (1) Title
to federally-owned property remains
vested in the Federal Government. Re-
cipients shall submit annually an m-
ventory listing of federally -owned
property in their custody to HUD.
Upon completion of the award or when
the property is no longer needed, the
recipient shall report the property* to
HUD for further HUD utilization.
(2) If HUD has no further need for the
property, it shall be declared excess
and reported to the General Services
Administration, unless HUD has statu-
tory authority to dispose of the prop -
erty by alternative methods (e.g., the
authority provided by the Federal
Teclulology Transfer Act (15 U.S.C. 3710
(I)) to donate research equipment to
educational and non- profit organiza-
tions in accordance with E.O. 12321,
"Improving I�Jathematics and Science
Education in Support of the rational
Education Goals.") Appropriate in-
structions shall be issued to the recipi-
ent by IIUD.
(b) Fxempi property, When statutory
authority exists, HUD has the option
to vest title to property acquired with
Federal funds in the recipient without
further obligation to the Federal Gov-
ernment and under conditions HUD
considers appropriate. Such property is
"exempt property." Should HUD not
establish conditions, title to exempt
property upon acquisition shall vest in
the recipient without further obliga-
tion to the Federal Government.
§84.34 Equipment,
§ 84.34
(a) Title to equipment acquired by a
recipient. with Federal funds shall vest
in the recipient, subject to conditions
of this section.
())) The recipient shall not use equip-
ment acquired with Federal funds to
provide services to non - Federal outside
organizations for a fee that is less than
private companies charge for equiva-
lent services, unless specifically au-
thorized by Federal statute, for as long-
as the Federal Government retains an
interest in the equipment.
(c) The recipient shall use the equip-
ment in the project or program for
which it was acquired as long as need-
ed, whether or not the project or pro-
gram continues to be supported by Fed-
eral funds and shall not encumber the
equipment without approval of HUD.
When the equipment is no longer need-
ed for the original project or program,
the recipient shall use the equipment
in connection with its other federally -
sponsored activities, in the following
order of priority:
(1) Activities sponsored by HUD
which funded the original project; then
(2) Activities sponsored by other Fed-
eral awarding agencies.
(d) During the time that equipment
is used on the project or program for
which it was acquired, the recipient
shall make it available for use on other
projects or programs if such other use
will not interfere with the work on the
project or program for which the equip-
ment was originally acquired. First
preference for such other use shall be
given to other projects or programs
sponsored by IIUD that financed the
equipment; second preference shall be
given to projects or programs spon-
sored by other Federal awarding agen-
cies. If the equipment is owned by the
Federal Government, use on other ac-
tivities not sponsored by the Federal
Government shall be permissible if au-
thorized by HUD. User charges shall be
treated as program income.
(e) When acquiring replacement
equipment, the recipient may use the
equipment to be replaced as trade -in or
sell the equipment and use the pro-
ceeds to offset the costs of the replace-
ment equipment subject to the ap
proval of HUD,
467
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§ 84,34
(1') propertti rna.nage-
))ow, for equipment acquired
with Federal funds a,nd federally -awned
(ulnip III ent shall include all of the fol-
inwink.
(I) Pquipinont records shall be main -
ta.inod a.oeura,tolq and shall include the
following Information.
(1) A description of the equipment.
(ii) Manufacturer's serial number,
inodel number, Federal stool( number,
national stock number, or other identi-
flca.tion number.
(iii) Source of the equipment, inolud.
inf; the award number.
(iv) whether title vrests in the rocipi-
ent or the Federal Government.
(v) Acquisition date (or date re-
ceived, if the equipment was furnished
by the Federal Government) and cost.
(vi) Information from which one can
calculate the percentage of Federal
participation in the cost of the equip-
ment (not applicable to equipment fur-
nished by the Federal Government),
(vii) Location and condition of the
equipment and the date the informa-
tion was reported.
(viii) Unit acquisition cost.
(ix) Ultimate disposition data, in-
cluding date of disposal and sales price
or the method used to determine cur-
rent, fair market; value where a, recipi-
ent compensates HUD for its share.
(2) Equipment owned by the Federal
Government shall be identified to indi-
cate Federal ownership.
(3) A physical inventory of equipment
shall he, taken and the results rec-
onciled with the equipment records at
least once every two years. Any dif-
ferences between quantities deter-
mined by the physical inspection and
those shown in the accounting records
shall be investigated to determine the
causes of the difference. The recipient
shall, in connection with the inven-
tory, verify the existence, current uti-
lization, and continued need for the
equipment.
(4) A control system shall be in effect
to insure adequate safeguards to pre-
vent loss, damage, or theft of the
equipment. Arty loss, damage, or theft
of equipment shall he investigated and
fully documented; if the equipment was
owned by the Federal Government, the
recipient shall promptly notify HUD.
24 CFR Subtitle A (4 - 1 - 11 Edilion)
(5) Adequate maintenance procedures
shall be implemented to keep the.
equipment in good condition.
(6) Where the recipient: iR a,uthorizod
or required to sell the equipment„ p'ol'y
er sales procedure- shall he estahlishe:d
wliich provide for competition to thf�
extent practioable. and result in the
highest ):possible return,
(g) whoa the recipient no longer
neods the equipment, the equipment,
tna5� he used for other activities in ac-
cordance with the following standards.
For equipment with a, current per unit,
fair market; value of ,%5000 or n(ore, MIn
recipient may retain the equipment for
other uses provided that componsa.tion
Is made to HUD or its successor. The
amount, of compensation shall be corm
puted by applying the percentage of
Federal participation in the cost of the
original project or program to the cu_t•-
rent fair market value of the equip-
ment. If the recipient has no need for
the equipment, the recipient shall re-
quest disposition instructions from
HUD. HUD shall determine whether the
equipment can be. used to meet, HUD's
requirements. If no requirement e xists
within HUD, the availability of the
equipment shall be reported to the
General Services Administration by
HUD to determine whether a, require-
ment for the equipment exists in other
Federal a.g•encies. HUD shall Issue in-
structions to the recipient no later
than 120 calendar days after the rocipi-
east's request and the following proce-
dures shall govern.
(1) If so instructed or if disposition
instructions are. not issued within 120
calendar loss after the recipient's 1'e-
quest, the recipient shall sell the
equipment and reimburse HUD an
amount computed by applying to the
sales proceeds the percentage of Fed-
eral participation in the cost of the
original project or program. However,
the recipient shall be permitted to de-
duct and retain from the Federal share
$500 or ten percent of the proceeds,
whichever is less, for the recipient's
selling and handling expenses.
(2) If the recipient is instructed to
ship the equipment elsewhere, the re-
cipient shall he reimbursed by the Fed-
eral Government by an amount which
is computed by applying the percent-
age of the recipient's participation in
nrg
^I I ACHMFNT .._....(�.__....
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Office of the Secretary, HUD
the cost. of Lbe original project or pro -
gran to the current fair market, value
of the equipment: plus any reasonable
shipping or interim storage costs in-
curred.
(3) If the recipient is instructed to
otherwise dispose of the equipment, the
recipient shall be reimbursed by HUD
for such costs incurred in its disposi-
tion.
(4) HUD ma) reserve the right to
transfer the title to the Federal Gov-
ernment. or to a third party named by
the Federal Government when such
third party is otherwise eligible under
existing' statutes, Such transfer shall
be subject to the following standards.
(i) The equipment shall be appro-
priately identified in the award or oth-
erwise made known to the recipient in
writing.
(ii) HUD shall issue disposition in-
structions within 120 calendar days
after receipt of a final inventory. The
final inventory shall list all equipment
acquired with grant funds and feder-
ally -owned equipment. If HUD fails to
issue disposition instructions within
the 120 calendar day period, the recipi-
ent shall apply the standards of this
section, as appropriate.
(iii) When HUD exercises its right to
take title, the equipment shall be sub-
ject to the provisions for federally -
owned equipment.
fi 84.35 Supplies and other expendable
property.
(a) Title to supplies and other ex-
pendable property shall vest in the re-
cipient upon acquisition. If there is a
residual inventory of unused supplies
exceeding $5000 in total aggregate
value upon termination or completion
of the protect or program and the sup-
plies are not needed for any other fed-
erally- sponsored project or program,
the recipient shall retain the supplies
for use on non- Federal sponsored ac-
tivities or sell them, but shall, in ei-
ther case, compensate the Federal Gov-
ernment for its share. The amoturt of
compensation shall be computed in the
same manner as for equipment.
(b) The recipient shall not use sup-
plies acquired with Federal fluids to
provide services to non- Federal outside
organizations for a fee that is less than
private companies charge for equiva-
§ 84.36
]euf, services, unless specifically air
thorized by Federal statute, as long as
the Federal Government retains an In-
terest, in the supplies.
fi 84.36 Intangible property.
(a) The recipient may copyright any
work that is subject to copyright and
was developed, or for which ownership
was purchased, under an award. HUD
reserves a. royalty free, nonexclusive
and irrevocable right to reproduce,
publish, or otherwise use the wort, for
Federal purposes, and to authorize oth-
ers to do so.
(b) Recipients are subject to applica-
ble regulations governing patents and
inventions, including government -wide
regulations issued by the Department
of Commerce at 37 CFR part 401,
"Rights to Inventions Made by Non-
profit Organizations and Small Busi-
ness Firms Under Government Grants,
Contracts and Cooperative Agree-
ments."
(c) HUD has the right to:
(1) Obtain, reproduce, publish or oth-
erwise use the data first •produced
under an award: and
(2) Authorize others to receive, repro-
duce, publish, or otherwise use such
data for HUD purposes.
(d)(1) In addition, in response to a
Freedom of Information Act (FOIA) re-
quest for research data relating to pub-
lished research findings produced under
an award that were used by HUD in de-
veloping an agency action that has the
force and effect of law, HUD sbal] re-
quest, and the recipient shall provide,
within a reasonable time, the research
data so that they can be made avail-
able to the .public through the proce-
dures established under the FOIA. If
HUD obtains the research data solely
in response to a FOIA request, HUD
may charge the requester a reasonable
fee equaling the full increment%] cost
of obtaining the research data. This fee
should reflect costs incurred Vy HUD,
the recipient, and applicable subr'ecipi-
ents. This fee is in addition to any fees
IIUD may assess under the FOIA (5
U•S.C. 552(a)(4)(A)).
(2) The fol]ojOng definitions apply
for purposes of this paragraph (d):
(i) Research dcai.o is defined as the re-
corded factual material commonly ac-
cepted in the scientific comnnuiity as
969
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§ 84.37
4sa.r) to va.lidad,(' rrr4r- ;arch I'iudlnt;'s,
nit not,
any of the followint, prolinli
nary analyses, dr °lfts of scientifi(. pa
)rla.n; for Paten research. peer rr-
VJOVd4. 01' c0111111u.ni0a.ti0ns vdlth col -
r,u.r;uos. This "recorded" material w:-
cludes )rhysioal objects;ej la.bora.tory
;a.m):rlew. 2esearclt data also do not in
cline.
A) Tra,cle 4eorots, commorcia.l hIfbr-
ma.tion, materials necessary to be hold
confidential by a researcher until they
are published, or similar information
Which is protected antler I[IM: and
1 Personnel and medical lnfornla-
1,1011 and similar Information the dis-
closure of which would constitute a.
clearly unwarranted invasion of per-
sona,] privacy, such as information that
could be used to identify A. particular
person in a research study.
(ii) Published is defined as either
when:
(A) Research findings are published
in a peer- reviewed scientific or tech-
nical journal: or
(B) HUD publicly and officially cites
the research findings in support of an
agency action that has the force and
effer.t of law.
(iii) Used by HUD in developing an
orlen.cy action that ha. the force and ef-
iecl of lau) is defined as when HUD pub-
licly and officially cites the research
findings in support of an agency action
that has the force and effect of law.
(e) Title to intangible property and
debt, instruments acquired under an
award or suba.ward vests upon acquisi-
tion in the recipient, The recipient
., , 11 use that property for the origi-
na.11y- authori7ed purpose, and the re-
cipient shall not encumber the prop -
orty without approval of HUD. When no
longer needed for the originally au-
thorized purpose, disposition of the in-
tangible property shall occur in accord-
ance with the provisions of § 84,34(g).
[59 FR 97011, Sept. 13, 1994, as amended at 66
FR. 30499, May 11, 2000)
§94.37 Property trust relationship.
Real property, equipment, intangible
property and debt instruments that are
acquired or improved with Federal
funds shall be held in trust by the re-
cipient as trustee for the beneficiaries
of the project or program under which
the property was acquired or improved.
24 CFP Subtitle A (4 -1 -11 Edition)
)IM) 111a1,y require recipionts W record
lion:; or other appropriate. notice4 of
rocord to indicate that personal or real
property ha.s been acquired or mlprovno
with Federal funds and that usw w)(I
disposition conditions tIpply to !Aw
property.
fart.( CURRnarraT STANDARD','
§94,40 Purpose of procurement stand-
ards,
Rocf,iorrs MAI through MAI 4ei, forth
standards for use 1)) recipients in os
to,blishing procedures for the procure
mont, of supplies and other e;5:pondadde
proporty, equipment, coal property aml
other services with Federal funds.
These standards are furnished to en-
sure that, such materials and services
are obtained in an effective manner
and in compliance with the provisions
of applicable Federal statutes and ex-
ecutive orders. No additional procure-
ment standards or requirements shall
be, imposed by I-lUD upon recipients,
unless specifically require(] b Federal
statute or executive order or approved
by OMB.
§84.41 Recipient responsibilities,
The standards contained in this sec-
tion do not relieve the recipient of the
contractual responsibilities arising
under its contract(s). The recipient is
the responsible authority, without re-
course to HUD, regarding the settle-
ment acid satisfaction of all cont,rao-
tual and administrative issues arisirw
out of procurements entered into in
support of an award or other agree-
ment. This includes disputes, claims.
protests of award, source evaluation or
other matters of a. contractual nature.
Matters concerning violation of statute
are to be referred to such Federal,
State or local authority as may hwve
proper jurisdiction.
§84.42 Codes of conduct,
The recipient shall maintain written
standards of conduct governing the
performance of its employees engaged
in the award and administration of
contracts. No employee, officer, or
agent shall participate in the selection,
award, or administration of a contract
supported by Federal funds if a real or
apparent conflict of interest would he
J 7n
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involved. Such a conflict would arise
when the employee, officer, or agent,
ant member of his or her immediate
family, leis or her partner, or an orga-
nization which employs or is about to
employ any of the parties indicated
herein, has a financial or other interest
in the firm selected for an award. The
officers, employees, and agents of the
recipient shall neither solicit nor ac-
cept gratuities, favors, or anything of
monetary value from contractors: or
parties to subagreements. However, re-
cipients may set standards for situa-
tions in which the financial interest is
not substantial or the gift is an unso-
licited item of nominal value. The
standards of conduct shall provide for
disciplinary actions to be applied for
violations of such standards by offi-
cers, employees, or agents of the re-
cipient,
§ 84.43 Competition.
All procurement transactions shall
be conducted in a manner to provide,
to the maximum extent practical, open
and free competition. The recipient
shall be alert to organizational con-
flicts of interest as well as noncompeti-
tive practices among contractors that
may restrict or eliminate competition
or otherwise restrain trade. In order to
ensure objective contractor perform-
ance and eliminate unfair competitive
advantage, contractors that develop or
draft specifications, requirements,
statements of work, invitations for
bids and/or requests for proposals shall
be excluded from competing for such
procurements. Awards shall be made to
the bidder or offeror whose bid or offer
is responsive to the solicitation and is
lost advantageous to the recipient,
price, quality and other factors consid-
ered. The other factors shall include
the bidder's or offeror's compliance
with ,Section 3 of the Housing and
Urban Development Act of 1008 (12
U,S.C. 1701u), hereafter referred to as
"Section 3." Section 3 provides that, to
the greatest extent feasible, and con-
sistent with existing Federal, State,
and local laws, and regulations, eco
nomic opportunities generated by cer-
tain HUD financial assistance shall be
directed to low- and very low- income
persons. Solicitations shall clearly set
forth all requirements that the bidder
§ 84.44
or offeror shall fulfil] in order for the
bid or offer to lie ev iluated bS• the re-
cipient. Ally and el] bids or offers ma�'
be rejected when it is in the recipient's
interest to do so.
§84.44 procurement procedures,
(a) Al] recipients shall establish writ-
ten procurement procedures. These
procedures shall provide for, at a min-
imum, that paragraphs (a.)(1), (a)(2) and
(a)(3) of this section apply.
(1) Recipients avoid purchasing M)
necessary items.
(2) Where appropriate, an analysis is
made of lease and purchase alter-
natives to determine which would be
the most economical and practical pro -
cru•ement for the Federal Government.
(3) Solicitations for goods and serv-
ices provide for all of the following.
(i) A clear and accurate description
of the technical requirements for the
material, product or service to be pro-
cured. In competitive procurements,
such a description shall not contain
features which unduly restrict com-
petition.
(ii) Requirements which the bidder/
offeror must fulfill and all other fac-
tors to be used in evaluating bids or
proposals.
(iii) A description, whenever prac-
ticable, of technical requirements in
terms of functions to be performed or
performance required, including the
range of acceptable characteristics or
minimum acceptable standards.
Ov) The specific features of "brand
name or equal" descriptions that. bid-
ders are required to meet when such
items are included in the solicitation.
(v) The acceptance, to the extent
practicable and economically feasible,
of products and services dimensioned in
the metric system of measurement.
(vi) Preference, to the extent prac-
ticable and economically feasible, for
products and services that conserve
natural resources and protect the envi-
ronment and are enermv efficient.
(b) Positive efforts shall be made by
recipients to utilize small businesses,
minority - owned firms, and women's
business enterprises, whenever pos-
sible. Recipients of Federal awards
shal] take all of the following steps to
further this goal.
471
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PL.rC fG '2,-,
§ 84.45
(1) 1?nsur( [,11,11 [;mall husincsser;. n1i
nority -owned firms. and wnrnen's husi.
slow; enterprises arc used to [;her fullest
o)(tenl, practioa,ble.
Make information on forthcoming
opportunities av;c.ilahle and a.rra.ng?.
brae frames for purchases and con-
tracts to encourage and facilitate par -
ticilla,tion by sn1all husinesses, minor -
lty - ownod firms. and women'); husiness
entorprfsos.
(3) Corlsidor in the contract, process
whether firms competing for larger
contaa.cis intend W suhcontract with
small husinesses, minority -owned
firms, and women's business emer-
prises.
(9) I contracting" with con-
sortiums of small businesses, minority -
owned firms and women's business en-
terprises when a contract is too large
for one of these firms to handle individ-
ually,
(5) Use the services and assistance, as
appropriate, of such organizations as
the Small Business Administration and
the Department of Commerce's Minor-
ity Business Development Agency in
Ole solicitation and utilization of
small husinesses, minority - owned firms
and women's business enterprises.
(c) The type of procuring instruments
used le.g., fixed price contracts, cost
reirnbursable contracts, purchase or-
der"s, and incentive contracts) shall be
determined by the recipient but shall
he appropriate for the particular pro-
curement and for promoting the best
interest of the program or project in-
volved. The "cost- plus -a- percentage -of-
cost" or "percentage of construction
cost" methods of contracting sha.il not
be, used.
(d) Contracts shall be made only with
responsible contractors who possess
the potential ability to perform suc-
cessfully under the terms and condi-
tions of the proposed procurement.
Consideration shall be given to such
matters as contractor integrity; com-
pliance with public policy, including,
where applicable, Section 3 of the
Housing and Urban Development Act of
1966 (12 U.S.C. 1701u); record of past
performance; and financial and tech-
nical resources or accessibility to other
necessary resources, In certain cir-
cumstances, contracts with certain
parties are restricted by implementa-
24 CER Subtitle A (4 Edition)
tlon of )!,xeeutive Orders 12599 and
1209, "Deha.r119ent and Suspension," at
2 CFR. part 2424.
i(- R,ecipients shall, on request, ma.kc
availabje for the Federal a,Nwixdinq
agency, pre'- a.wa,rd review and proclll'( .
lnent documents, such as requests fol
proposals or invitations for hids inde-
pell( lent, cost estimates, ete., when H.11y
of 'the following conditions apply.
(1) A recipient's procurement proce-
dures or operation fails to comply with
the proctu•ernent standards ill AUII's
ilnplerrlontation of Circular A -110.
(2) The proctu•enleni, is expeetod r ,(,
exceed X100,000 or the small purchase
threshold fixed at, 41 U.S.C. 403 M).
whichever is greater, and is to he
awarded without competition or only
one bid or offer is received in response
to a. solicitation.
(3) The procurement, which is ex-
pected to exceed the small purchase
threshold, specifies a. "brand name"
product,
(4) The proposed award over the
sinall purchase threshold is to he
awarded to other than the apparent
low bidder under a. soaled bid procure-
ment.
(5) A proposed contract modification
changes the scope of a contract or in-
creases the contract, amount by more
than the amount of the small purchase
threshold.
[59 PR 17011, Sept. 13, 1994, as amended a.t 72
FR 73492, Dec. 27, 2007'1
84.45 Cost, and price analysis.
some form of cost or price analysis
s12a11 be made and documented in the
procurement files in connection with
every procurement action. Price anal-
ysis may be accomplished in various
ways, including the comparison of
price quotations submitted, market
prices and similar indicia, together
with discounts. Cost analysis is the re-
view and evaluation of each element of
cost to determine reasonableness,
allocability and allowability.
84.46 Procurement. records,
Procurement records and files for
purchases in excess of the small pur-
chase threshold shall include the fol-
lowing at a minimum:
(a) Basis for contractor selection;
472
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(b) Justification for lacl; of competi-
tion when competitive bids or offers
are not obtained; and
(c) Basis for award cost or price.
§84,47 Contract administration.
A systen) for contract administration
shall be maintained to ensure con-
tractor conformance with the terms,
conditions and specifications of the
contract and to ensure adequate and
timely follow up of all purchases. Re-
cipients shall evaluate contractor per-
formance and document, as appro-
priate, lvhether contractors have met
the terms, conditions and specifica-
tions of the contract.
§84,48 Contract provisions.
The recipient shall include, in addi-
tion to provisions to define a sound and
complete agreement, the following pro-
visions in all contracts. The following
provisions shall also be applied to sub-
contracts.
(a) Contracts in excess of the small
purchase threshold shall contain con-
tractual provisions or conditions that
allow for administrative, contractual,
or legal remedies in instances in which
a contractor violates or breaches the
contract terms, and provide for such
remedial actions as may be appro-
priate.
(b) All contracts in excess of the
small purchase threshold shall contain
suitable provisions for termination by
the recipient, including the manner by
Which termination shall be effected
and the basis for settlement. In addi-
tion, such contracts shall describe con-
ditions under which the contract may
be terminated for default as well as
conditions where the contract may be
terminated because of circumstances
beyond the control of the contractor.
(c) Except as otherwise required by
statute, an award that requires the
contracting (or subcm)tra.cting) for
construction or facility improvements
Shall provide for the recipient to follow
its own requirements relating to bid
guarantees, performance bonds, and
payment bonds unless the construction
contract or subcontract exceeds
5100,000. For those contracts or sul)-
contracts exceeding 5100,000, I3UD may
accept the bonding policy and require-
ments of the recipient, provided HUD
§ 84.48
has made a determination that the
Federal Government's. interest is a.de-
quately protected. If such a determina-
tion has not been made, the minimum
requirements shall be as follows:
(1) A bid guarantee from each bidder
equivalent to five percent of the bid
price. The "bid guarantee" shal] con-
sist of a firm commitment such as a
bid bond, certified check, or other ne-
gotiable instrument accompanying a
bid as assurance that the bidder shall,
upon acceptance of his bid, execute
such contractual documents as may be
required within the time specified.
(2) A performance bond on the part of
the contractor for 100 percent of the
contract price. A "performance bond"
is one executed in connection with a
contract to secure fulfillment of all the
contractor's obligations under such
contract.
(3) A payment bond on the part of the
contractor for 100 percent of the con-
tract price. A ''payment bond" is one
executed in connection with a contract
to assure payment as required by stat-
ute of all persons supplying labor and
material in the execution of the work
provided for in the contract.
(4) Where bonds are required in the
situations described herein, the bonds
Shall be obtained from companies hold-
ing certificates of authority as accept-
able sureties pursuant to 31 CFR part
223. "Surety Companies Doing Business
With the United States."
(d) All negotiated contracts (except
those for less than the small purchase
threshold) awarded by recipients shall
include a provision to the effect that
the recipient, HUD, the Cmnptroller
General of the United States. or any of
their duly authorized representatives,
shall have access to any books, docu-
ments, papers and records of the con-
tractor which are directly pertinent to
a specific program for the purpose of
making audits, examinations, excerpts
and transcriptions.
(e) All contracts, including small
purchases, awarded by recipients and
their contractors shall contain tile, pro -
curement provisions of Appendix A to
this rule, as applicable.
473
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§ 84.50
1fS�.YUIi.'I'.ti ANU I;,P;('r>)tlaH
)0 Porpoet of reporta and ree.orde
hcr.tions 84.51 through 119.53 set, forth
1,11r procedures for n•aonil'oring and re-
1wi%ing on the recipient`s financial and
prog•ra,m performance and the nec-
ssa.ry
standard reporting forms. They
also set, forth record rel,cttion require -
nue n ts.
84.51 Monitoring and reporting pro-
gram performance,
Cal Recipients are responsible for
carat ing and monitoring oath pro'loct,
program, subaward, function or a,cthr-
Ity supported by the award. Recipients
shall monitor suhawards to ensure sub -
recipients have met; the audit require-
ments as delineated in §84.26.
(h) IIUD shall prescribe the frequency
with which the performance reports
shall be submitted. Except as provided
in §84.51(f), performance reports shall
not, be required more frequently than
quarterly or less frequently than annu-
ally. Annual reports shall he due 90 cal -
end days after the grant year; quar-
terly or semi - annual reports shall be
due 30 days after the reporting period.
HUD may require annual reports before
the anniversary dates of multiple year
awards in lieu of these requirements.
The final performance reports are due
90 calendar days after the expiration or
termination of the award.
(c) If inappropriate, a. final technical
or performance report shall not be re-
quired after completion of the project,
(d) When required, performance re-
ports shall generally contain, for each
award, brief information on each of the
following:
(1) A comparison of actual accom-
plishments with the goals and objec-
tives established for the period, the
findings of the investigator, or both.
Whenever appropriate and the output
of programs or projects can be readily
quantified, such quantitative data
should be related to cost data for com-
putation of unit costs.
(2) Reasons why established goals
were not met, if appropriate.
(3) Otber pertinent information in-
cluding, when appropriate, analysis
and explanation of cost overruns or
high unit costs.
24 CFR Subtitle A (4 -1 -11 Edition)
aea lt.ecipients; shall not bc required to
suhmit, more than the original and two
oopies of performance reports.
(f) R.ec;ipients shall ]mmediat(ly no-
tify HUD of developments tha.i, have a
significant impact on the awti ixd -sup
ported activities. Also, notification
shall he given in the case of problems,
delays, or adverse conditions which
materia,))y impair the ability to mewl
the objectives of the award. This notifi-
cation sha11 include a statement o1' the.
action Calton or contemplated, and any
a.ssistanoe needed to resolve I;he situ"
Lion.
(g') HUD ma..y make site visits, ;a.s
needed.
(h) IIUD shall comply with clearance
requirements of 5 CPR part, 1320 whc -;n
requesting performance data. from re
cipients.
§ 84.52 Financial reporting,
(a) The Federal financial report
(FFR), or such other form as may be
approved by OMB, is authorized for ob-
taining financial information from re-
cipients, The applicahility of the FFI:,
form shall be determined by the appro-
priate HUD program, and the grantee
will be notified of any program require-
ments in reference to the FFR upon re-
ceipt of the award, A HUD program
may, where appropriate, waive the use
of the FFR for its grantees and require
an alternative reporting system.
(b) IUD shall prescribe whether the
FFR shall be on a, cash or accrual
basis. Ii' IUD requires accrual informa-
tion and the recipient's accounting
records are not normally kept on the
accrual basis, the recipient shall riot, be
required to convert its accounting sys-
tem, but shall develop such accrual in-
formation through best estimates
based on an analysis of the documenta-
tion on hand.
(c) HUD shall determine the fre-
quency of the FFR for each project or
program, considering the size and com-
plexity of the particular project or pro-
gram. However, the report shall not be.
required more frequently than quar-
terly or less frequently than annually.
The reporting period end dates shall be
March 31, June 30, September 30 or De-
cember 31. A final FFR shall be re-
quired at the completion of the award
agreement and shall use the end date of
474
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tile project or grant period as the re-
porting end date.
(d) HUD requires recipients to submit
the FFR no later than 30 days after the
end of each specified reporting period
fm• quarterly and semi - annual reports,
and 90 calendar days for annual re-
ports. Final reports shall be submitted
no later than 90 days after the project
or grant. period end date. Extensions of
reporting due dates may be approved
by HUD upon request of the recipient.
HUD may require awardees to submit
the FFR electronically. Electronic sub-
mission may be waived for cause in ac-
cordance with HUD's waiver policy in
§5.110 of this title.
(e)(1) J�Ilien funds are advanced to re-
cipients HUD shall use the FFR to
monitor cash advanced to recipients
and to obtain disbursement infornna
tion for each agreement with the re-
cipients. HUD may require forecasts of
Federal cash requirements in the "Re-
marks" section of the FFR and may re-
quire recipients to report in the "Re-
marks" section the amount of cash ad-
vances received and retained in excess
of three days and any interest earned
on such cash advances. Recipients shall
provide short narrative explanations of
actions taken to reduce early
drawdowns and excess balances.
(2) Recipients shall be required to
submit not more than the original and
two copies of the FFR or submit the re-
port electronically. HUD may require a
quarterly report from recipients re-
ceiving advances totaling $1 million or
more per year.
(f) JAThen HUD needs additional infor-
mation or more frequent reports, the
follotiving shall be observed.
(1) 1Wben additional information is
needed to comply with legislative re-
quirements or governmentwide re-
quirements, HUD shall issue instruc-
tions to require recipients to submit
such information under the "Remarks"
section of the reports or other means.
(2) Ayhen HUD determines that, a re-
cipient's accounting system does not
meet the standards in §84.21, additional
pertinent information to further mon-
itor awards may be obtained bJ' written
notice to the recipient until such time
as
the system is brought up to stand-
ard. HUD, in obtaining this informa-
§ 84.53
time, shall comply win report clear-
ance requirements of 5 CFR part 1320.
(3) HUD may elect to accept the Wen -
tical information from the recipients
through a system to system data inter-
face as determined by HUD,
(75 FP. 41000, Jule 15, 2010)
§84.53 Retention and access require-
ments for records.
(a) This section sets forth require-
ments for record retention and access
to records for awards to recipients.
HUD shall not impose any other record
retention or access requirements upon
recipients.
(b) Financial records, supporting doc-
uments, statistical records, and all
other records pertinent to an aAvard
shall be retained for a period of three
years from the date of submission of
the final expenditure report or, for
awards that are renewed quarterly or
amlually, from the date of the submis-
sion of the quarterly or annual finan-
cial report, as authorized by HUD. The
only exceptions are the following.
(1) If any litigation, claim, or audit is
started before the expiration of the 3-
year period, the records shall be re-
tained until all litigation, claims or
audit findings involving the records
have been resolved and final action
taken.
(2) Records for real property and
equipment acquired with Federal funds
shall be retained for 3 years after final
disposition.
(3) When records are transferred to or
maintained by HUD, the 3 -year reten-
tion requirement is not applicable to
the recipient.
(4) Indirect cost rate proposals. cost
allocation plans etc, as specified in
§ 84.53(g).
(c) Copies Of original records may be
substituted for the original records if
authorized by HUD.
(d) HUD shall request transfer of cer-
tain records to its custody from recipi-
ents lyhen it determines that the
records possess long term retention
value. However, in order to avoid dupli-
cate recordheeping, HUD may ma) - ar-
rangements for recipients to retain any
records that are continuously needed
for joint, use.
(e) I-IUD, the Inspector General,
Comptroller General of the United
475
F AT1 ....... .......
§ 84.60
tn.tes, or any of 1,11 (111 (luly a.utlio:
ropresent;a.tives, ha.vc the righl of tin7e-
Iy "'m of un rostri( tell awf o(; to
hooks, documents, pfi.pers, or other
records of recipients; 6119..1, are perti)ent,
to the a.wa,rds, in order to make a.urlits,
(:SN,Illlll a,til011F, (9xcerpts, transcrlp*; and
copies of such documents. This right
also inciudes tin7ely and reasonable ac-
cess to a recipient's personnel for the
purpose of Interview and discussion re-
lated to such docun7eilts. The rights of
si.c("ese in this paragraph (e) a.ro not
limited to the requhlocl retention pe-
riod, but shall last a.s )ong as records;
are retainod,
(f) Unless required by st2,tnte, HUD
shall not place restrictions on reclpi-
onis ghat: limit public; access to the
reeords of recipients that are pertinent
to an award, except when HUD can
demonstrate that such records shall be
kept confidential and would have been
exempted from disclosure pursuant to
the Freedom of Information Act (5
I1.S.C. 552) if the records had belonged
to HUD.
tg) Indirect cost rate proposals, cost. al-
location plans, etc. Paragraphs (g)(1) and
(p�)(2) of this section apply to the fol-
lowing types of documents, and their
supporting records — indirect cost rate
computations or proposals, cost alloca-
tion plans, and any similar accounting
computations of the rate at which a.
particular group of costs is chargeable
:such as computer usage charg
rates or composite fringe benefit
rates).
(1) If submitted for negotiation, If the
recipient submits to HUD or the sub -
recipient submits to the recipient the
proposal, plan, or other computation to
form the basis for negotiation of the
rate, then the 3 -,year retention period
for its supporting records starts on the
date of such submission.
(2) If not submitted for negotiation. If
the recipient is not required to submit
to HUD or the subrecipient is not re-
quired to submit to the recipient the
proposal, plan, or other computation
for negotiation purposes, then the 3-
year retention period for the proposal,
plan, or other computation and its sup-
porting records starts at the end of the
fiscal year (or other accounting period)
covered by the proposal, plan, or other
computation.
24 CEP Subtitle A (4 - 1 - 11 Edition)
'1'1;rnITNATION AND RNIPO P.CE"NI NT
§ 8,1.0'0 Purpose of termination aml en-
forcement.
`ioctions fW.fi7 a,nd 84.(i2 Iol, forth Ilm
form suspension, termination a.nd oll
f01'01:1ne171: procedure's.
§ 84.01 Termination,
(a) Awards may he terinirl9.te(I in
whole or in part; only if pa,ra,gra.pl7s
(9.00 ), (a)(2) or (a)(3) of this section
a.ppl }'.
(1) Ely HUD, If' a recipient niiterially
fails to comply with the terms and con
ditions of an award.
(2) B,y -HUD with the consent of the
recipient, in which case the two parti(s
shall agree upon the termination con
ditions, including the effective date,
and, in the case of partial termination.
the portion to be terminated.
(3) By the recipient upon sending to
HUD written notification setting forth
the reasons for such termination, the
effective date, and, in the ease of par -
tial termination, the portion to he ter-
minated. However, if HUD determines
in the case of partial termination that
the reduced or modified portion of the
grant will not accomplish the purposes
for which the grant was made, it may
terminate the grant in its entirety
ander either paragraphs (a)(1) or (a)(2)
of this section.
(b) If costs are allowed under ),n
award, the responsibilities of the re.
cipient referred to in §84.71(9.), includ-
ing those for property management wi
applicable, shall Ile considered in the
termination of the award, and provi-
sion shall be made for continuing re-
sponsibilities of the recipient after ter-
mination, as appropriate.
§ 84.62 Enforcement,
(a) Remedies for noncompliance, If a re-
cipient materially fails to comply with
the, terms and conditions of an award,
whether stated in a Federal statute,
regulation, assurance, application, or
notice of award, HUD may, in addition
to imposing any of the special condi-
tions outlined in §84.14, take one or
more of the following actions, as appro-
priate in the circumstances,
nor,
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(1) Temporarily withhold cash pay
ments pending correction of the defi-
ciency by the recipient or more severe
enforcement action by HUD.
(2) Disallow (that is, deny both use of
funds and any applicable matching
credit for) all or part of the cost of the
activity or action not, in compliance.
(3) \d'holly or partly suspend or ter-
minate the current award.
(4) vTithhold further awards for the
project or program.
(5) Take other remedies that may be
legally available.
(b) Hearings and appeals. In taking an
enforcement action, HUD shall provide
the recipient an opportunity for hear-
ing, appeal, or other administrative
proceeding to which the recipient is en-
titled wider any statute or regulation
applicable to the action involved.
(c) Effects of sies7oension and ternni-
7tation, Costs of a recipient resulting
from obligations incurred by the re-
cipient during a suspension or after
termination of an award are not allow-
able waless HUD expressly authorizes
them in the notice of suspension or ter-
mination or subsequently. Other recipi-
ent costs during suspension or after
termination which are necessary and
not reasonably avoidable are allowable
if paragraphs (c)(1) and (c)(2) of this
section apply.
(1) The costs result from obligations
which were properly incurred by the re-
cipient before the effective date of sus-
pension or terinina.tion, are not in an-
ticipation of it, and in the case of a ter-
mination, are noncancellable.
(2) The costs would be allowable if
the award were not suspended or ex-
pired normall3' at, the end of the fund-
ing period in which tine termination
takes effect.
(d) Relationship to debarment (1.77.11 SUS -
p)ensi.on. The enforcement remedies
identified in this section, including
suspension and termination, do not
preclude a recipient from being subject
to debarment and suspension under
HUD's regulations at 2 CFR hart. 2429
(see §84.13).
[09 FR 97011, Sept. 13, 1994, as amended at. 72
FR 73492, Dec. 27, 2007]
§ 84.72
Subpart D— After- the -Award
Requirements
§84.70 Purpose.
Sections 84.71 through 69.73 contain
closeout procedures and other proce-
dw for subsequent disallowances and
adjustments.
§84.71 Closeout procedures.
(a) Recipients shall submit. within 90
calendar days after the date of comple-
tion of the award, all financial, per-
formance, and other reports as required
by the terms and conditions of the
award, HUD may approve extensions
when requested by the recipient.
(b) Unless HUD authorizes an exten-
sion, a recipient shall liquidate all ob-
ligations incurred under the award not
later than 90 calendar days after the
funding period or the date of comple-
tion as specified in the terms and con-
ditions of the award or in HUD instruc-
tions,
(c) HUD shall make prompt payments
to a recipient for allowable reinnburs-
able costs under the award being closed
out.
(d) The recipient shall promptly re-
fold any balances of unobligated cash
that HUD has advanced or paid and
that is not authorized to be retained by
the recipient for use inn other projects.
OMB Circular A -129 governs uireturned
amounts that become delinquent debts.
(e) When authorized by the terms and
conditions of the award, HUD shall
make a settlement for any upward or
downward adjustments to the Federal
share of costs after closeout reports are
received.
(f) The recipient shall account for
any real and persona] property ac
quired with Federal funds or received
from the Federal Government in ac
cordance with § §84.31 through 84,37,
(g) In the event a final audit has not
been performed prior to the closeout of
an awai HUD shall retain the right to
recover an appropriate amount after
full) considering the recomm Oil clations
Oil disallowed costs resulting from the
final audit.
k84,72 Subsequent adjustments and
continuing responsibilities
(a) The closeout of an av'ard does not
affect any of the following.
477
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384,73
(1; , PI)a right, of II(II) to (I1;,aliow !netts
;Ind recover funds on I,)) o I)I..ts of n
jal,or alldil, or other review.
(21 The oh]i of tho r(;ci))ient, to
ri a,n,y funds (Ill(' a.r ,l result, of
Aeer refunds, norrectiorls, or other
Ia ;larsa.cti ons.
(3) Audit requironiont<, fn §B
( Property roquire-
niontli In §iit14.31 throurli 81.37.
(fi) R000rds retention as required in
(b) After closeout, of an award, a. relax
tionshlp area.ised ultcler a.n aw j,j ma.5
1w modified or ended In whole. or in
part with the consent of HUD and the
recipient, provided the responsibilities
of the recipient, referred to in §84.73(x),
including those for property manage-
ment as applicable, are considered and
provisions made for continuing respon-
siliilities of the recipient, as appro-
priate,
§84.73 Collection of amounts due,
(a) Any funds paid to a.. recipient in
excess of the amount to which the re-
cipient is finally determined to be enti-
tled under the terms and conditions of
the award constitute a. debt to the Fed-
eral Government. If' not paid within a,
reasonable period after the demand for
payment, HUD may reduce the debt by
paragraphs (a)(1), (a)(2) or (a)(3) of this
section.
(1) RRaking an administrative offset
against other requests for reimburse-
ments.
(2) Withholding advance payments
otherwise due to the recipient.
(3) Taking other action permitted by
statute.
(h) Except as otherwise provided by
haw, HUD shall charge interest on an
overdue debt in accordance with 4 CFR
Chapter 11, "Federal Claims Collection
Standards."
Subpart E —Use of Lump Sum
Grants
§84.80 Conditions for use of Lump
Sum (fixed price or fixed amount)
grants,
(a) Heads of awarding activities
(HAAS) shall determine and publish the
funding arrangement for award pro-
grams having a published program reg-
ulation or Notice of Funding Avail-
24 CrR Subtiile A (4 - 1 - 11 Edifion)
ai lit5'. Itor other awards, discretion
ma.y
he provided to Grant offlcers to
d(.termfne the funding arra.ngenien f, on
a tra.nsa.ctfon Itas{s. In suoli cases.
Cra.nt of'noers shall document i,he basis
i'or saloction of the funding arras
iitwnt in the negotiation record. Aplrro
pria.te consideration to fisted a.niount
(lump sum) awards shall be, made if onet
or more of the following condition arc
present:
(1) Tho I-TUD funding amount. is (InVi
nitely less than the total actual cost of
thr, project.
(2) Tl , HUD funding amount does unt
exceed 5;100,000 or the small purchaso
threshold fixed at 41 U.S.C. 102 (11).
whichever is greater.
(3) The project; scope is very specific
and adequate cost, historical, or unit.
pricing data. is available to establish it
fixed amount award with assurance
that the recipient will realize no incro-
ment above actual cost.
(b) [Reserved]
§84.81 Definition.
(a.) A lump sum award is an award fot
a. predetermined amount, as set forth
fri the grant agreement, which amount,
does not vary with the amount of the
recipient's actual incurred costs. Undor
this type of award, HUD does not pay
the recipient for its incurred costs but
rather for completing certain defined
events in the work or achievement of
some other well - defined milestone.
Some of the ways in which the grant,
amount may be paid are, but are not
]ilnited to:
(1) In several partial payments, the
amount of each agreed upon in ad-
vance, an(] the "milestone" or event
triggering the payment also agreed
upon in advance, and set forth in the
grant;
(2) On a unit price basis, for a defined
unit or units (such as a housing coun-
seling unit), at a defined price or
prices, agreed to in advance of perform-
ance of the grant and set forth in the
grant; or,
(3) In one payment at grant eomple-
ti on.
(b) The key distinction between a
lump sum and a cost reimbursement
grant is the lack of a. direct relation-
ship between the costs incurred by the
4711
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Office of the Secretary, HUD
recipient an(1 the amount paid by HUD
in the lump sum arrangement.
84.82 Provisions applicable only to
lump sum grants.
In addition to the provisions of this
subpart E, subparts A and B of this
part apply to lump sum grants.
(a) Fi7lancial 0.71.(1 pn•ogrca?n 7?ianoge-
(11e)1.t. Paragraphs (b) through (e) of this
section prescribe standards for finan-
cial management systenns, methods for
making payments, budget revision ap-
provals, and making audits,
(b) Standaa for financial management
sgste>ns. (1) Records that identify ade-
quately the source and application of
ftnnds for federally- sponsored activities
are required. These records shall con-
tain information pertaining to Federal
awards, authorizations, obligations,
unobligated balances, assets, outlays,
income and interest.
(2) Effective control over and ac-
countability for all funds, property and
other assets are required. Recipients
shall adequately safeguard all such as-
sets and assure they are used solely for
authorized purposes.
(3) Comparison of outlays with budg-
et amolults for each award is required.
ti)Thenever appropriate, financial infor-
mation should be related to perform-
ance and unit cost data,
(4) Where HUD guarantees or insures
the repayment of money borrowed by
the recipient, HUD, at its discretion,
may require adequate bonding and in-
surance if the bonding and insurance
requirements of the recipient are not
deemed adequate to protect the inter-
est of the Federal Government.
(5) HUD may require adequate fidel-
ity bond coverage where the recipient
Jacks sufficient coverage to protect the
Federal Government's interest.
(6) AArllere bonds are required in the
situations described above, the bonds
shall be obtained from companies hold -
ing certificates of authority az accept-
able sureties, as prescribed in 31 CFR
part 223, "Surety Companies Doing
Business with the United States."
(c) Payment. (1) The standard gov-
erning the use of banks and other insti-
tutions as depositories of funds ad-
vancecl under akv, s is, HUD shall not
require separate depository accounts
for funds provided to a recipient or es-
§ 84.82
tablish an y eligibility requirements for
depositoriess for funds provided to a re-
cipient. However, recipients must be
able to accoulrt for the receipt, obliga-
tion and expenditure of funds.
(2) Consistent with the national goal
of e?.panding the opportunities for
women - owned and minority -owned
business enterprises, recipients shall be
encouraged to use women -owned and
minority -owned banks (a banL which is
owned at least 50 percent by women Or
nninority group members).
(d) Revisioli of budget (old prograni
plans. (1) The budget plan is the finan-
cial expression of the project or pro -
grain as approved during the award
process. It may include either the Fed-
eral and non - Federal share, or only the
Federal share, depending upon HUD re-
quirements. It shall be related to per -
formance for program evaluation pur-
poses whenever appropriate.
(2) Recipients are required to report
deviations from program plans, and re-
quest prior approvals for budget and
program plan revisions, in accordance
with this section.
(3) For nonconstruction awards, re-
cipients shall request prior approvals
from HUD for one or more of the fol-
loiving program or budget related rea-
sons.
(i) Change in the scope or the objec-
tive of the project or program (even if
there is no associated budget revision
requiring prior written approval).
(ii) The need for additional Federal
funding.
(iii) Unless described in the applica-
tion and funded in the approved
awards, the subaward, transfer or con-
tracting out of any work under an
award. This provision does not apply to
the purchase of supplies, material,
equipment or general support services.
(4) No other prior approval require-
ments for specific items may be. im-
posed unless a deviation has been ap-
proved by OMB.
(5) Except for requirements listed in
paragraphs (d)(3)(i) and (d)(Mii) of this
section, HUD is authorized, at its op-
tion, to waive cost - related and a(hnin-
istrative prior %written approvals re-
quired by Circular A -110 and OhZB Cir-
culars A -21 and A -122. Such waivers
may include authorizing recipients to
(lo any one or more of the following.
479
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q 84.33
fi) lttlti;I,te a one- t,in'w oxtonsion of
P,bh expiro.tfon date of the award of up
Iso 12 months unless one or more of the
following conditions apply. Por one -
ClnlF oxtensions, the recipient nnnst no-
11'y 1TUD in writing with the sup -
porting reasons aald revised expiration
date 31 least 10 days before the expira-
tion date specified in the award. This
action play he taken unless:
(A) The terms and conditions of
uimard prohibit, the extension.
(B) The extension requires additional
federal funds.
(C) The ox ten sion hrvohres any
change in the approved objectives or
scope of the project.
(f,) For construction awards, recipi-
ents shall request prior written ap-
proval prompt)y from HUD for budget
revisions whenever paragraphs (d)(6)(i)
or (d)(6)(it) of this section apply.
(i) The revision results from changes
in the scope or the objective of the
project, or program.
(ii) The need arises for additional
Pederal funds to complete the project.
(7) No other prior approval require -
nlonts for specific items may 1)e im-
posed unless a deviation has been ap-
proved by OMB.
(8) VTbell HUD makes an award that
provides support for both construction
and nonconstruction work, HUD may
require the recipient to request prior
approval from HUD before making any
fund or budget transfers between the
two types of work supported.
e) Noii -- Federal audits, (1) Recipients
and subrecipients that are institutions
of higher education or other non- profit
organizations (including hospitals)
shall be subject to the audit require-
ments contained in the Single Audit
Act Amendments of 1996 (31 U.S.C. 7501-
7507) and revised OMB Circular A -133,
"Audits of States, Local Governments,
and Non - Profit Organizations,"
(i) Non - profit organizations subject
to regulations in the part 200 and part
800 series of this title which receive
awards subject to part 84 shall comply
with the audit requirements of revised
OMB Circular A -133, "Audits of States,
Local Governments, and Non- Profit Or-
ganizations." For HUD programs, a
non - profit organization is the mort-
gagor or owner (as these terms are de-
fined in the regulations in the part 200
24 CFR Subtitle A (4 Edition)
a.nd part. R00 series I and not a. rclo,ted or
ia.t,ed or "��olliza.tiOil or entity.
(ii ) (Reservedl
(2) State and local governments shall
he suhject to Ishe audit roquirenlents
contained fn the Single Audit Act
Amendments of 1996 Cal U.S.C. 7501-
7507) a,nd revised OMB Clrcula.r A -133,
"Audits of States, Local Governments,
and 1001- Profit Organi7wati oil s
(3) P'or- profit hospitals not covered
by the audit; provisions of revised OhM
Circular A -133 shall he suhject to the
audit requirements of the Fodor"d
a.wa.rding a,goncies.
(4) Commercial orga.nizatiom whal) 1W
subject to the audit requirements of
I -IUD or the prime recipient a.s incor-
porated into the award document,
[GA FR. 47011, Sept, 13, AM, as amended at 62
YR, 61x17, Nov. 18, 1997; 7r, PR 41090, July 1
20101
§ 84,83 Property standards.
(a) Pill-pose of property standards.
Paragraphs (b) through (g) of this sec-
tion set forth uniform standards gov-
erning management and disposition of
property furnished by the l +ede d Gov-
ernment whose cost was charged to a
project supported by a. Federal award.
HUD shall require recipients to observe
these standards under awards and shall
not impose additional requirements,
unless specifically required by Federal
statute. The recipient may use its own
property management standards an(]
procedures provided it observes the
provisions o1' paragraphs (b) through (g)
of this section.
(b) Insurance coverage, Recipients
shall, at a. minimum, provide the equiv-
alent insurance coverage for real prop-
erty and equipment acquired with Fed-
eral funds as provided to property
owned by the recipient. Federally -
owned property need not be insured un-
less required by the terms and condi-
tions of the award.
(c) Real property, HUD prescribes the
following requirements for recipients
concerning the use and disposition of
real property acquired in whole or in
part under awards:
(1) Title to real property shall vest in
the recipient subject to the condition
that the recipient shall use the real
property for the authorized purpose of
the project as long as it is needed and
.19111
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shall not encumber the property with-
out approval of HUD.
(2) The recipient shall obtain written
approval by HUD for the use of real
property in other federally- sponsored
projects when the recipient determines
that the ))property is no longer needed
for the pwrpose of the original project.
Use in other projects shall be limited
to those under federally- sponsored
projects (i.e., awards) or programs that
have purposes consistent with those
authorized for support by HUD.
(d) Federally -owned and exempt prop -
erty —(1) Federally -owned p7 -0)
Title to federally -owned property remains
vested iv the Federal Gover71771ent. Recipi-
ents shall submit annually an inven-
tory listing of federally -owned prop-
erty in their custody to HUD. Upon
completion of the award or when the
property is no longer needed, the re-
cipient shall report the. property to
HUD for further HUD utilization.
(ii) If HUD has no further need for
tine property: it shall be declared excess
and reported to the General Services
Administration, unless HUD has statu-
tory authority to dispose of the prop-
erty by alternative methods (e.g., the
authority provided by the Federal
Technology Transfer Act (15 U.S.C. 3710
(I)) to donate research equipment to
educational and non - profit organiza-
tions in accordance with E.O. 12821,
"Improving Mathematics and Science
Education in Support of the National
Education Goals. ") Appropriate in-
structions shall be issued to the recipi-
ent by HUD.
(2) Exempt properPt. When statutory
authority exists, HUD has the option
to vest title to property acquired with
Federal funds in the recipient without
further obligation to the Federal Gov-
ernment and under conditions IIUD
considers appropriate. Such property is
" exempL property." Should IIUD not
establish conditions. title to exempt
property upon acquisition shall vest in
the recipient without further obliga-
tion to the Federal Government.
(e) Eg2c.ipme�tt., (1) Title to equipment
acquired by a recipient with Federal
funds shall vest in the recipient, sub-
ject to conditions of this section.
(2) The recipient shall use the equip -
nnent in the project or program fo'
which it was acquired as long m need-
§ 84.83
ed, whether or not the project or pro -
grELm continues to be suppori,od by Fed-
eral funds and shall not encumber the
equipment without approval of HUD.
When the equipment is no longer need-
ed for the original project or program,
the recipient shall use the equipment
in connection with its other federally-
sponsored activities. in the following
order of priority:
(i) Activities sponsored by HUD
which funded the original project; then
(ii) Activities sponsored by other
Federal awarding agencies.
(3) During the time that equipment is
used on tine project or program for
which it was acquired, the recipient
shall make it available for use on other
projects or programs if such other use
will not interfere with the work on the
project or program for which the equip-
ment was originally acquired, First
preference for such other use shall be
given to other projects or programs
sponsored by HUD that financed the
equipment; second preference shall be
given to projects or programs spon
sored by other Federal awarding agen-
cies. If the equipment is owned by the
Federal Government, use on other ac-
tivities not sponsored by the Federal
Government shall be permissible if atn-
thorized by HUD.
(4) The recipient's property manage-
ment standards for equipment acquired
with Federal funds and federally-owned
equipment shall include all of the fol-
lowing.
(i) Equipment records shall be main-
tained accurately and shall include the
following information.
(A) A description of the equipment.
(B) Manufacturer's serial number,
model number, Federal steel, number,
national stock number or other identi-
fication number.
(C) Source of the equipment, includ-
ing the wwo' l number.
(D) Whether title vests in the recipi-
ent or the Federal Government.
(E) Acquisition elate (or date re-
ceived, if the equipment was furnished
by the Federal Government) and cost.
(F) Location and condition of the
equipment and the date the ianfbrma-
tion was reported.
(ii) Equipment owned by the Federal
Government shall be identified to indi-
cate Federal ownership.
481
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G 44.84
(Jill A )Ahvsic;d iln,ntor,p 111 W111ip-
nwnt sbadl he L(a.lt'en ;111(1 LI)v rosults
rneoncilod wlt,h the ocpipmerll, recrnrds
a.1, leac;t, once every two year,,,,. Any dif..
foresees het w"ll quantities dotor-
milud by the physical inspection and
thoso shown in the accounting records
shall be investigated to determine the
oa.uaes of the difference. The recipient
shall, in connection with the inven-
tory, verify the existence, current uti-
lization, and continuod need for i',he
equipnlont.
nv) A control systom shall be in of-
focL to insure adequate safeguards to
prevent loss, damage, or theft of the
equipment. Any loss, damage, or theft
of equipment shall be investigated and
fully documented; if the equipment; was
owned by the Federal Government, the
recipient shall promptly notify HUD.
(v) Adequate maintenance procedures
shall be. implemented to keep the
equipment in good condition.
(5) HUD may reserve the right to
transfer the title to the Federal Gov -
crnment or to a third party named by
the Federal Government when such
third party is otherwise eligible under
existing statutes. Such transfer shall
he subject to the following standards.
(f ) The equipment, shall be appro-
priately identified in the award or oth-
erwise made known to the recipient in
writing.
(if) HUD shall issue disposition in-
structions within 120 calendar days
after receipt of a final inventory. The
final inventory shall list all equipment
acquired with grant funds and feder-
ally -owned equipment. If HUD fails to
issue disposition instructions within
the 120 calendar day period, the recipi-
ent shall apply the standards of this
section, as appropriate.
(iii) When IIUD exercises its right to
take title, the equipment shall be sub-
ject to the provisions for federally -
owned equipment.
(f) Intangible property. (1) The recipi-
ent may copyright any work that is
subject to copyright and was devel-
oped, or for which ownership was pur-
chased, under an award. HUD reserves
a, royalty -free, nonexclusive and irrev-
ocable right to reproduce, publish, or
otherwise use the work for Federal pur-
poses, and to authorize others to do so.
24 CFR Subtitle A (4 - -1 1 Edition)
(2) R.ociploill; a.rc anlijoct, to applica-
h10 reevla.tlons povorning patents o,ncl
inventions. including govornnlenY wide
regulations iss;Uod by tile, Depa,rtanan1,
of Commoree, at 3" CPR. 1"mxt 401.
"Rights to Inventions Made I)y Noll.
profit Organizations and 8ma.11 Busi
nags Firms Under Government, Gr;lnts.
Contracts and Cooperative Avree-
ments'.
(3) Unless waived by HUD, the Fed-
eral Government, I1as the ritflll to para-
gra.phs (f)(3)(i) a'n(1 (f)(3)(ii) of 11111E se(;-
tion,
(i) Obtain, reproduce, publish or otb
orwise use the data. first produ(:od
under a.n award.
(fi) Authorize others to receive, re-
produce, publish, or otherwise use such
data for Federal purposes.
(4) Title to intangible property and
debt instruments acquired under an
award or subaward vests upon acquisi-
tion in the recipient. The recipient
shall use that property for the origi-
nally- authorized purpose.
(g) Property/ trust. relation.sMp. Real
property, equipment, Intangible prop-
erty and debt instruments that arc ac-
quired or improved with Federal funds
shall be, held in trust by the. recipient
as trustee for the. beneficiaries of the
project or program under which the
property was acquired or improved.
IIUD may require recipients to record
liens or other appropriate notices of
record to indicate that personal or roal
property has been acquired or improved
with Federal funds 111d that use and
disposition conditions apply to the
property.
§ 84.84 Procurement standards,
(a) Purpose of procurement standards.
Paragraphs (b) through N) of this sec-
tion set forth standards for use by re-
cipients in establishing procedures for
the procurement of supplies and other
expendable property, equipment, real
property and other services with Fed-
eral funds. These standards are fur-
nished to ensure that such materials
and services are obtained in an effec-
tive manlier and in compliance with
the provisions of applicable Federal
statutes and executive orders. No addi-
tional procurement standards or re-
quirements shall be. imposed by HUD
482
PAGE __ - -__ -- OF ... .� PAGES
Office of the Secretary, HUD
upon recipients, unless specifically re-
quired by Federal statute or executive
order or approved by OI+ZB.
(b) Redapien.t. respo7isibilities. The
standards contained in this section do
not relieve the recipient of the con-
tractual responsibilities arising under
its contract(s). The recipient is the re-
sponsible authority, without recourse
to HUD, regarding the settlement and
satisfaction of all contractual and ad-
ministrative issues arising out of pro-
curements entered into in support of
an award or other agreement, This in-
cludes disputes, claims, protests of
award, source evaluation or other mat-
ters of a contractual nature. h4atters
concerning violation of statute are to
be referred to such Federal, State or
local authority as may have proper ju-
risdiction,
(c) Codes of conduct. The recipient
shall maintain written standards of
conduct governing the performance of
its employees engaged in the award and
administration of contracts. No em-
ployee, officer, or agent shall partici-
pate in the selection, award, or admin-
istration of a contract supported by
Federal funds if a real or apparent con-
flict of interest would be involved.
Such a conflict would arise when the
employee, officer, or agent, any mem-
ber of his or her immediate family, his
or her partner, or an organization
which employs or is about to employ
any of the parties indicated herein, has
a financial or other interest in the firm
selected for an award, The officers, em-
ployees, and agents of the recipient
shall neither solicit nor accept gratu-
ities, favors, or anything of monetary
value from contractors, or parties to
subagreements. However, recipients
may set standards for situations in
which tie financial interest is not sub-
stantial or the gift is an unsolicited
item of nominal value. The standards
of conduct shall provide for discipli-
nary actions to be, applied for viola-
tions of such standards by officers, em-
ployees, or agents of the recipient.
(d) Competition, All procurement
transactions shall be conducted in a
manner to provide, to the maximum
extent practical, open and free com-
petition. The recipient shall be alert to
organizational conflicts of interest as
well as noncompetitive practices
§ 84.84
among contractors that may restrict
or eliminate competition m' otherwise
restrain trade. In order to ensure objec-
tive contractor performance and elimi-
nate unfair competitive advantage,
contractors that develop or draft speci-
i'ications, requirements, statements of
work, invitations for bids and/or re-
quests for proposals shall be excluded
from competing for such proctn'en)ents.
Awards shall be made to the bidder or
ofieror whose bid or offer is responsive
to the solicitation and is most advan-
tageous to the recipient, price, quality
and other factors considered. The other
factors shall include the bidder's or
offeror's compliance with Section 3 of
the Housing and Urban Development
Act of 1968 (12 U.S.C. 1701u), hereafter
referred to as "Section 3,' Section 3
provides that, to the greatest extent
feasible, and consistent with existing
Federal, State, and local laws, and reg-
ulations, economic opportunities gen-
erated by certain HUD financial assist-
ance shall be directed to low- and very
low- income persons. Solicitations shall
clearly set forth all requirements that
the bidder or offeror shall fulfill in
order for the bid or offer to be evalu-
ated 1)y the recipient. Any and all bids
or offers may be rejected when it is in
the recipient's interest to do so.
(e) Procurement. procedures. (1) All re-
cipients shall establish written pro-
curement procedures. These procedures
shall provide for, at a minimum, that
paragraphs (e)(1)(i), (e)(1)(ii) and
(e)(1)(iii) of this section apply.
(i) Recipients avoid purchasing un-
necessary items.
(ii) Where appropriate, an analysis is
made of lease and purchase alter-
natives to determine which would be
tile most economical and practical pro-
curement for the recipient.
(iii) Solicitations for goods and serv-
ices provide for all of the following.
(A) A clear and accurate description
of the technical requirements for the
material, product or service to be pro -
cured. In competitive procurements,
such a description shall not contain
feaWres which unduly restrict com-
petition.
(B) Ii.equirements which the bidderj
offeror must, fulfill and all other fac-
tors to be used in evaluating bids o>
proposals.
483
ATTACHMENT
PAGE � � nG ; I n A ern
§ 84.84
fC!� A deRCriptlon, Whcncvor prat:
Cin;dde, of recfuiremonf in
i.erms of function, to ho performed or
pe:rformarwe requtred, includinf;' tb0
ro'llp:s oi' accept,a.h)e. obaracteristics or
rninimuwn i.ccepto,b)(4 etanda.rds.
(C)) The specific f'e'atures of "brand
mane o' equal" descriptions that, bid-
ders are required to meet when such
itoms are includwl In the solicitation.
(F) The acceptance, to the extent
practicable and economically feasible,
of products and services dimensioned In
the metric system of measurement.
(F) Preference, to the e3:tcmt, prat
doable and economically feasible, for
products and services that conserve
natural resources and protect the envi-
ronment and are energy efficient.
(2) Positive efforts shall be made by
recipients to utilize small businesses,
minority - owned firms, and women's
business enterprises, whenever pos-
sible. Recipients of Federal awards
shall take all of the following steps to
further this goal.
(i) Ensure that small businesses, mi-
nority -owned firms, and women's busi-
ness enterprises are used to the fullest
extent, practicable.
(id) Make information on forth-
coming opportunities available and ar-
range time frames for purchases and
contracts to encourage and facilitate
participation by small businesses, mi-
nority- owned firms, and women's busi-
ness enterprises.
(iii) Consider in the contract process
whetho' firms compot,ing• for larger
r.,ontracts intend to subcontract with
small businesses, minority - owned
firms, and women's business enter-
prises.
(iv) Encourage contracting with con-
sortiums of small businesses, minority -
owned firms and women's business en-
terprises when a contract is too large
for one of these firms to handle individ-
ually.
(v) Use the services and assistance, as
appropriate, of such organizations as
the Small Business Administration and
the Department of Commerce's Mdnor-
ity Business Development Agency in
the solicitation and utilization of
small businesses, minority -owned firms
and women's business enterprises.
(3) The type of procuring instruments
used (e.g., fixed price contracts, cost
24 CFR Subtitle A (4 -1 -11 Edition)
rni ill h1Jrsal))e (;ontra(1ts, purchase or-
ders, and incentive contracts) shall he
det,errnined i)y the recipient Hut slia.11
ho appropriate for the l")artioular pro
curoment; and for promoting the hc" ;I,
interest of the program or projecl, in
volved. The " cost - plus- a- percent,n,p; <
cost" or "percentage of construction
cost" methods of oontractiDf; sl'uc,ll rio1 .
he used.
(4) Contracts shall be made only with
responsible contractors who possess
t;he potential ability to perform s;iw
cessihlly under the terms and windi-
tions of the proposed procurcnwnt.
Consideration shall be given to 5uch
matters as contractor integrity; cnm
plianoe with public policy, includinK.
where applicable, Section 3 of thO
IIousing aril Urban Development Act of
14168 (12 U.S.C. 1701u); record of past
performance; and financial and tech-
nical resources or accessibility to other
necessary resources. In certain cir-
cumstances, contracts with certain
parties are restricted, as set forth al, 2
CFR part, 2424.
(5) Recipients shall, on request, make
available for the Federal a.wardine
agency, pre - award review and procure-
ment documents, such as requests for
proposals or invitations for bids, inde-
pendent cost estimates, etc., when any
of the following conditions apply.
(1) A recipient's procurement proce-
dures or operation fails to comply with
the procurement standards in HUD` -:
implementation of Circular A -110.
(ii) The procurement is expected to
exceed $100,000 or the small purchase
threshold fixed at 41 U.S.C. 403 (11).
whichever is greater, and is to he
awarded without competition or only
one hid or offer is received in response
to a. solicitation.
(iii) The procurement, which is ex-
pected to exceed the small purchase
threshold, specifies a "brand name"
product.
(iv) The proposed award over the
small purchase threshold is to be
awarded to other than the apparent
low bidder under a, sealed bid procure-
ment.
(v) A proposed contract modification
changes the scope of a contract or in-
creases the contract amount by more
than the amount of the small purchase
threshold.
484
r ATTACHMENT
PAGE .. �... OF., ...I.... PAGES
Office of the Secretary, HUD
(f) Cost and P?*ice analysis, Some form
of cost or price analysis shall be made
and documented in the procurement
files in connection with every procure-
ment action. Price analysis may be ac-
complished in various ways, including
the comparison of price quotations sub-
mitted, market prices and similar indi-
cia, together with discounts. Cost anal -
ysis is the review and evaluation of
emb element of cost to determine rea-
sonableness, allocability and allow -
ability.
(g) Procurement records. Procurement
records and files for purchases in ex-
cess of the small purchase threshold
shall include the following at a min-
imum:
(1) Basis for contractor selection;
(2) Justification for lack of connpeti-
tion when competitive bids or offers
are not obtained; and
(3) Basis for award cost or price.
(h) Contract administration. A system
for contract administration shall be
maintained to ensure contractor call -
formance with the terms, conditions
and specifications of the contract and
to ensure adequate and timely follow
up of all purchases. Recipients shall
evaluate contractor performance and
document, as appropriate, whether con-
tractors have met the terms, condi-
tions and specifications of the con-
tract.
(i) Contract p ? ovisions, The recipient
shall include, in addition to Provisions
to define a sound and complete agree-
ment, the following provisions in all
contracts. The following provisions
shall also be applied to subcontracts.
(1) Contracts in excess of the small
purchase threshold shall contain con-
tractual provisions or conditions that
allow for administrative, contractual,
or legal remedies in instances in Which
a contractor violates or breaches the
contract terms, and provide -for such
remedial actions as may be apPro-
priate.
(2) All contracts in excess of the
small purchase threshold shall contain
suitable provisions for termination by
the recipient, including the manner by
which termination shall be effected
and the basis for settlement. In addi-
tion, such contracts shall describe con-
ditions under which the contract may
be terminated for default as well as
§ 84.84
conditions where the contract may be
terminated beoause of circumstances
beyond the control of the contractor.
(3) Except as otherwise required by
statute, an award that requires the
contr acting (or subcontractin.-I for
construction or facility improvements
shall provide for the recipient to folJONN'
its own requirements relating to bid
guarantees, performance bonds, and
payment bonds unless the construction
contract or subcontract exceeds
5100,000. For those contracts or sub-
contracts exceeding 8100,000, HUD may
accept the bonding policy and require-
ments of the recipient, provided HUD
has made a determination that the
Federal Government's interest is ade-
quately protected. If such a determina-
tion has not peen made, the minimum
requirements shall be as follows:
W A bid guarantee from each bidder
equivalent to five percent of the bid
price. The "bid guarantee" shall con-
sist of a firm commitment such as a
bid bond, certified check, or other ne-
gotiable instrument accompanying a
bid as assurance that the bidder shall,
upon acceptance of his bid, execute
such contractual documents as may be
required within the time specified.
(ii) A performance bond on the part
of the contractor for 100 percent of the
contract price. A "performance bond"
is one executed in connection with a
contract to secure fulfillment of all the
contractor's obligations under such
contract,
(iii) A payment bond on the part of
the contractor for 100 percent of the
contract price. A "payment bond" is
one executed in corm ection with a con-
tract to assure payment as required by
statute of all persons supplying' labor
and material in the execution of the
work provided for in the contract.
(iv) Where bonds are required in the
situations described herein, the bonds
shall be obtained from companies hold-
ing certificates of authority as accept-
able sureties pursuant to 31 CFP part
223, "Surety Companies Doing Business
with the United States."
(4) All negotiated contracts (except
those for less than the small purchase
threshold) awarded by recipients shall
include a provision to the effect, that,
the recipient, IIUD, the Comptroller
General of tine United States, or any of
485
F A TT CHN,ENT .......C-.......
S 84.85
tbnir ;lull anther ,cd rr;prosrutl,n.Cives.
_tb;cll have aucesa Cc ;ills' books, docil-
nionl,s; papers a,nd rc +cords of I,he con
la;ector a.ro directly pertir!ont to
;1 :!pectfic prograal1 far thc�. purpose of
mnJ(it;g audits, exatrtlna.Clons, excerpts
and transcriptions.
ui All contracts, includin[4 small pur-
r_hases, a.va by recipients a.nd their
contractors shall contain the proew'e-
nu;nt provisions of appendix. A to this
rule, as a,pplicahle.
159 lit. 47071, ,opt, 13, lf)!)1. ar, mnnndnd a.t 72
P'li 'I:14U, Doc, 27, 20071
§94,85 Raports uucl records,
(a,) Purpose of reports and records.
Paragraphs (b) and (c) of this section
set forth the proce(lures for monitoring
a,nd reporting on the recipient's finan-
cial and program performance and the
necessary standard reporting forms.
They also set, forth record retention re-
quirements.
(b) Monitoring anal reporting program
performance. (1) Recipients are respon-
sihle for managing and monitoring
each project, progrann, subaward, func-
tion or activity supported by the
awarcl. Recipients shall monitor sub -
awe,r<ls to ensure subrecipients have
met, the audit requirements as delin-
eated in §84.82(e).
(2) The Federal awarding agency
shall prescribe the frequency with
v, the performance reports shall he
submitted. Except as provided in para-
graph (h)(6) of this section, perform-
ance reports shall not be required more
frequently than quarterly or less fre-
quently than annually, Annual reports
shall be due 90 calendar days after the
grant year: quarterly or semi - annual
reports shall be due 30 days after the
reporting period. The Federal awarding
agency may require annual reports be-
fore the anniversary dates of multiple
year awards in lieu of these require-
ments. The final performance reports
are due 90 calendar days after the expi-
ration or termination of the award.
(3) If inappropriate, a final technical
or performance report shall not be re-
quired after completion of the project.
(4) When required, performance re-
ports shall generally contain, for each
award, brief information on each of the
following:
24 CFP Subtitle P. (4 - 1 - 11 Edition)
( i) A connlxl.rison of actual acoom-
plishnia;nts with Cho. )goals a.nd ol),jec-
tives esto,hligl'ied for the period, 1,1)c;
findings of the- investigator, or hol.h.
Vlboncver appropriate and the output
of programs or projects can he rca.(]Hy
quantified, swell qua,ntita.tive data
should be relclod to cost data, for cone
pute.tion of unit costs.
(it) Ro"),sons why established goals
were not met, 11' appropriate.
(ti) P,ecipients shall non, be required to
submit more. than the original nand lmo
copies of performaau;e; reports.
(6) Recipients shall hnmediately no-
tif5? HUD of developments that have n
significant, impact on the award -sup
ported activities. Also, notification
shall be, given in tine case of problems,
delays, or adverse conditions which
materially impair the ability to meet
the objectives of the award. This notifi-
cation shall include a statement of the
action taken or contemplated, and any
assistance needod to resolve the situa-
tion,
(7) HUD may matte site visits, as
needed.
(8) HUD shall comply with clearance
requirements of 5 CFP part 1,320 when
requesting performance data fronn re
cipients.
(c) Retention and access requiremen.t,v
for records. (1') This paragraph ( c) sets
forth requirements for record retention
and access to records for awards to re-
cipients. Federal awarding agencies
shall not impose, any other record re
tendon or access requirements upon
recipients.
(2) Financial r•eaords, supporting doc-
uments, sta.tisticaI records, and all
other records pertinent to an award
shall be, retained for a period of three
years from the date of submission of
the final expenditure report or, for
awards that are renewed quarterly or
annually, from the date of the submis-
sion of the quarterly or annual finan-
cial report, as authorized by HUD. The
only exceptions are the following.
(i) If any litigation, claim, or audit is
started before the expiration of the 3-
,year period, the records shall be re-
tained until all litigation, claims or
audit findings involving the records
have been resolved and final action
taken.
486
t I ACH /0 ENT ..._...C.... -..
PAGE __.�_.._. OE ...?' -�_... PAGES
Office of the Secretary, HUD
(if) Itiecords for real property and
equipment acquired with Federal funds
shall be retained for 3 years after final
disposi ti on.
(iii ) ZWhen records are transferred to
or maintained by the Federal awarding
agency, the 3 -year retention require-
ment is not applicable to the recipient
(3) Copies of original records may be
substituted for the original records if
authorized by HUD.
(4) HUD shall request transfer of cer-
tain records to its custody from recipi-
ents when it determines that the
records possess long term retention
value. However, in order to avoid dupli-
cate recordkeeping, HUD may make ar-
rangements for recipients to retain any
records that are continuously needed
for joint use.
(5) HUD, the Inspector General,
Comptroller General of the United
States, or any of their duly authorized
representatives, have the right of time-
ly and unrestricted access to any
books, documents, papers, or other
records of recipients that are pertinent
to the awards, in order to make audits,
exanninatioils, excerpts, transcripts and
copies of such documents. This right,
also includes timely and reasonable ac-
cess to a recipient's personnel for the
purpose of interview and discussion re-
lated to such documents. The rights of
access in this paragraph (c)(5) are not
limited to the required retention pe-
riod, but shall last as long as records
are retained.
(6) Unless required by statute, HUD
shall not place restrictions on recipi-
ents that limit public access to the
records of recipients that are pertinent
to an award, except when HUD can
demonstrate that such records shall be
kept confidential and would have been
exempted from disclosure pursuant to
the Freedom of Information Act (5
U.S,C, 552) if the records had belonged
to IIUD.
§84,86 Termination and enforcement,
(a) Teniihi.at.ion.. (1) Awards may be
ternnina.ted in whole or in part only if
paragraphs (a)(1)(i), (a)(1)(ii), or
(a)(1)(iii) of this section apply•
(i) By HUD, if a recipient materially
fails to comply with the terms and con-
ditions of an award.
§ 84.86
(ii) By HUD Nvith the consent, of the
recipiont, in which case the two parties
shall agree upon the termination con-
ditions, including the effective date
and, in the case of partial termination,
the portion to be terminated.
(iii) By the recipient upon sending to
HUD written notification setting forth
the reasons for such termination, the
effective date. and, in the case of par-
tial termination, the portion to be ter-
minated. However, if HUD determines
in the case of partial termination that
the reduced or modified portion of the
grant will not accomplish the purposes
for which the grant was made. it may
terminate the grant in its entirety
under either paragraphs (a)(1)(i) or
(a)(1)(h) of this section.
(2) If costs are allowed under an
award, the responsibilities of the re-
cipient referred to in §8d.87(a)(1), in-
cluding those for property management
as applicable, shall be considered in the
termination of the award, and provi-
sion shall be made for continuing re-
sponsibilities of the recipient after ter-
mination, as appropriate.
(3) If costs are allowed, the cost prin-
ciples in §84.27 apply, even though the
award was made on a lump -sum basis.
Alternatively, a termination settle -
n7ent may be reached by prorating the
grant amount against the percentage
of completion or by some other method
as determined by the Grant Officer, as
long as the method used results in an
equitable settlement to both parties.
(b) En.forcemen.t. —(1) Remedies for non -
cmiplican.ce, If a recipient materially
fails to comply with the terms and con-
ditions of an award, whether stated in
a Federal statute, regulation, assur-
ance, application, or notice of award,
HUD may, in addition to imposing any
of tine special conditions outlined in
§89.14, take one or more of the fol-
lowing actions, as appropriate in the
circumstances.
(i) Temporarily Ivithhold cash pay-
ments pending correction of the defi-
ciency by the recipient or more severe
enforcement action by HUD,
(ii) Wholly or partly suspend or ter-
minate the current award.
(iii) Withhold further awards for the
project or program.
(iv) Take other remedies that nnay be
legally available.
487
ATTACHMENT ........ .......
§ 84.87
(`) blearmq/ a:nd opp(!a.is. In I,a.icinp: MI)
m lforcemcntl, actlou, HUD shall provide
thw recipient, aal opportunity for hear-
ing', a,ppea,l, or other a(Iministrotive
p rocending to which the recipient Is ern
tll,lc -(i under aliv statute or rc; ;ula.tion
;t.pplica,l,le to the action invo)vod.
;) Effects of ,suspension a.n.d. terrtli-
na.tion Costs of a recipient resulting
from obligations incurred by i:he re-
cipient during a suspension or after
tsermina.tion of an award are not allow -
ahle unless HUD expressly authorizes
them In the notice of suspension or ter-
mination or subsequently. Other recipi-
ent costs during suspension or after
termination which are nocessary a.nd
not reasonably avoidable are allowable
if' paragraphs 0h)(3)(1) and (b)l3)liiy of
this section apply.
(i) The costs result from obligations
which were properly incurred by the re-
cipient before the effective date of sus-
pension or termination, are not in an-
ticipation of it, and in the case of a, ter-
mination, are noncancellable.
(ii) The costs would be. allowaiile if
the a.wal were not suspended or ex-
pired normally at the and of the fund-
ing period in which the termination
takes effect.
A) Relationship to debarment and sus-
pension.. The enforcement remedies
identified in this section, including
suspension and termination, do not
preclude a recipient from being subject
to debarment and suspension under
HUD's regulations at 2 CFR part 2424
(see §84.13).
f59 FR. 97011, Sept. 13, 1904, as amended at, 72
PR. THU, Dec. 27, 2007)
84.87 Closeout procedures, subse-
quent adjustments and continuing
responsibilities,
(a) Closeout procedures. (1) Recipients
shall submit, within 90 calendar days
after the date of completion of the
award, all financial, performance, and
other reports as required by the terms
and conditions of the award. HUD may
approve extensions when requested by
the recipient.
(2) The recipient shall account for
any real and personal property ac-
quired with Federal funds or received
from the Federal Government in ac-
cordance with %84.83(b) through (g).
24 CEP Subtitle A (4 - 1 - 11 Edition)
0h! Subcequrw a.ddusi- mmit.,e o.nd con..
t.inionq r(,spon0bili.Nc8. (1) The closcoul,
of x1.11 award (toes not affect any of i,he
fol)owing•:
iii Audit, re(luircntorit,; in
(ii) l'roperty manafR011')cnt re(lun(n
nxmts in §§B WW througl', m).
( iii) R.ocords rotcntion as required in
84.53.
(2) After closeout of an lt,Wal'd, a cola
tionshi]_) created under an award ma.y
be modified or ended in whole or in
part, vt the consent of IIUD and the
recipient, provided the responsibilities
of the recipient, are eonsiderod and pro-
visions made for oorttinuinp; I1 ;p tn-
sdbilities of the reolpient, a.s appro-
priate.
API'LNDLx A TO PART 84— CONTRACT
PROVISIONS
All contracts, awarded by a recipient, in-
cluding small purchases, shall contain the
following provisions as applicable:
1, Cqual Employ vien( 0)xp0rtIM1t)( —All eon -
tracts sho.11 contain a. provision requiring
compliance with D.O. 11246, "Equal Pmploy-
mont Opportunity," as amended by D.(I,
11375, "Amending DY.OcUtive Order 11246 Re-
lating ho Equal Employment Opportuuity,'
and as supplemented by ref;nlations a.t. 4)
CPR part, 60, "office of Federal Contir;wl.
Compliance Programs, 1Pqua,l Dmployrn(ml.
Opportunity, Department of Labor."
2. Copela.n.d. "Anti- Mckbacic" drl (111
874 and 40 U.S,C 2760 —All contracts and sub -
gra,nts to excess of 52000 for construction or
repair ama,rded by recipients and suhrecipi-
ents shall include a. provision for compliance
with the Copeland "Anti - ILickback Hot, Mt
t
U.S.C. 874), as supplemented by Department
of Labor regulations (29 CFR part. 3. "Con -
tmators and Suboontractor on Public Euild-
iug or Public: Work Pina.need in Whole or in
Part by Loans or Grants from the Unii,ed
States "). The Act, provides that each enn-
tractor or subrecipient shall he prohibitec!
from inducing, by any means, any person
employed in the construction, completion, or
repair of public work, to give up any part of
the compensation to which he is otherwise
entitled, The recipient shall report all sus-
pected or reported violations to HUD.
3. Davis -Bacon Acct, as amended (40 U.S.C.
276x to a -7) —When required by Federal pro-
gram legislation, all construction contracts
awarded by the recipients and subrecipients
of more than 52000 shall include a , provision
for compliance with the Davis -Bacon Act t40
U.B.C. 2769 to a -7) and as supplemented by
Department of Labor regulations (29 CFR.
part 5, "Labor Standards Provisions Applica-
ble to Contracts Governing Federally Fi-
nanced and Assisted Construction "). Under
MOM
f\ I TACHMF,NT ....... L-
PAGE ..�.�.... OF ..1 �.... PAGES
Office of the Secreiary, HUD
this Act, contractors shall be required to pa)'
wages to laborers and mechanics at a rate
not less than the Ininimuni wages specified
in a wage determination made by the Sec -
retary of Labor. In addition, contractors
shall be required to pay wages not less than
once a weeh. The recipient shall plac0 a cop)'
of the current prevailing wage determination
issued by the Department of Labor in each
solicitation and the award of a Contract shall
be conditioned upon the acceptance of the
wage determination. The recipient shall re-
port all suspected or reported violations to
HUD.
4. Contract Work Hours and Saletcl St.andm'ds
Act (40 U.S.C. 327 t)II 333)— NVhBPe appli-
cable, all contracts awarded by recipients in
excess of 52000 for construction contracts and
in excess of S2500 for other contracts that in-
volve tine employment of mechanics o' labor-
ers shall include a provision for compliance
with Sections 102 and 107 of the Contract
Work Hours and Safety Standards Act (40
U.S,C. 327 -333), as supplemented by Depart-
ment of Labor regulations (29 CPR part 5).
Under Section 102 of the Act, each con-
tractor shall be required to compute the
wages of every mechanic and laborer on the
basis of a standard workweek of 40 hours.
Work in excess of the standard workweek is
permissible provided that the worker is com-
pensated at a rate of not less than 1' /s times
the basic rate of pay f all hours worked in
excess of 40 hours in the workweek. Section
107 of the Act is applicable to construction
work and provicles that no laborer or me-
chanic shall be required to work in sur-
roundings or under working conditions
which are unsanitary, hazardous or dan-
gerous. These requirements do not apply' to
the purchases of supplies o• materials or ar-
ticles ordinarily available on the open mar -
het, o' contracts for transporta-tion or trans-
mission of intelligence.
5. ltfplets to havelitiots Made Ululer c Coil
t.rncl or A,oreernen.l— Contracts or agreements
for the performance of experimental, devel-
opmental, or research 'Work shall provide for
the rights of the Federal Governnnennt and
the recipient in any resulting invention in
acco rdance with 37 CPR part 401, "Rights to
Inventions Made by Nonprofit. Organizations
and Small Business Firms Under Govern
ment Grants, Contracts and Cooperative
Agreements," and an,)' implementing regula-
tions issued b HUD.
6. Clean Air Act (42 U.S.C. 7401 el seq.) and
tltr Federal Water Pollutie Conh'o1 Act (33
U.S.C. 1251 of MI.), aS MPc"(1ed— Contracts
and subgrants of amounts in excess of
5100,000 shall contain a provision that re-
quires the recipient to agree to connply with
al] applicable standards, orders o' regula
tions issued pursuant to the Clean Air Act
(42 U.S.C. 7401 el seq.) and the Federal Water
Pollution Control Act as amended (33 U.S.C.
1251 et Sect.). Violations shall be reported to
Pt. 85
I-]UD and the Regional Office of the Environ-
vienba] protection Agenoy (EPA).
7. Byyd Anti- Lobbybip Anen(IMP111 (31 U.S.0,
1352) —C oil true to•s' who apply' or bicl fo an
award of SOWN() or more shall file the re-
cqufrod certification. Each tier certifies to
the tier above tbat it will not and has not.
used Federal appropriated fande Lo pay ant'
person o' organization for influencing or at-
tempting to influence an officer o' employee
of any agency, a member of Congress, officer
o• employee of Congress, or an ennp)oyee of a
member of Congress in connection with ob-
taining' any Feces] contract, grant. or an)'
other award covered by 31 U.S.C. 1352. Each
tier shall also disclose any lobbying with
non - Federal funds that takes place in con
vection with obtaining any Fades] award.
Such disclosures are forwarded from tier to
tier up to the recipient.
[59 FR 47011, Sept. 13, 1994, as amended at 72
FP,. 73493, Dec. 27, 2007]
PART 85— ADMINISTRATIVE RE-
QUIREMENTS FOR GRANTS AND
COOPERATIVE AGREEMENTS TO
STATE, LOCAL AND FEDERALLY
RECOGNIZED INDIAN TRIBAL
GOVERNMENTS
Subpart A— General
Sec.
85.1 Purpose and scope of this part.
85.2 Scope of subpart.
85.3 Definitions.
85.4 Applicability.
85.5 Effect on other issuances.
85.0 Additions and exceptions.
Subparl B— Pre -Award Requirements
85.10 Forms for applying for grants.
85.11 State plans.
85.12 Special grant or subgrant conditions
for "high-risk" grantees.
Subpart C— Post -Award Requirements
FmANciAL ADIMNISTRATION
85.20 SLandards for financial management
systems.
85.21 Payment.
85,22 Allowable costs.
05.23 Period of availability' of funds.
05.24 Nia.tchfng or cost sharing.
85.25 Pregn'am income.
85.26 IQon- Federal audit.
CHA1\ PROPCRTY, AND SUIIAWARDS
85.30 Changes.
85.31 Ilea] property.
85,32 Equipment.
85.33 Supplies.
489
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pA? � ;-� np 31 PAr -r--q
Attachment
This page intentionally left blank.
Pi. 230
3. Indirect cost allocations not usinn rates.
In certain situations, a governmental unit,
because of the nature of ite awards, may be
required to develop a cost. allocation plan
that distributes indirect (and, in scone cases,
direct) costs to the specific funding soul'ces.
hI these cases, a narrative cost allocation
methodolo, >y should be developed, docu-
mented, maintained for audit, or submitted,
as appropriate, to the cognizant agency for
review, negotiatioll, and approval.
4. Appeals. If a dispute arises in a negotia-
tion of an indirect cost rate (or other rate)
between the cognizant agency and the gm-
ernmental unit, the dispute shall be resolved
in accordance with the appeals procedures of
the cognizant agency.
5. Collection of unallowable costs and erro-
neous payments. Costs specifically identified
as unallowable and charged to Federal
awards eitlier directly or indirectly will be
refunded (including interest chargeable in
accordance with applicable Federal agency
regulations).
6. OMB assistance. To the extent that prob-
lems are encountered among the Federal
agencies and/or governmental units in COD -
nection with the negotiation and approval
process, OMB will lend assistance, as re-
quired, to resolve such problems in a timely
manner.
PARTS 226 -229 [RESERVED]
PART 230 —COST PRINCIPLES FOR
NON - PROFIT ORGANIZATIONS
(OMB CIRCULAR A -122)
Sec.
230.5
Purpose.
230.10
Scope.
230.15
Police.
230.20
Applicability.
230.25
Definitions
230.30
OMB responsibilities.
230.35
Federal agency responsibilities.
230.40
Effective date of changes.
230.45
Ii.elationsllip to previous issuance
230.50
111f'ormation Contact.
APPENDD; A TO PART 230— GENBRKL PRIN
CIPLES
APPBNDD: B TO PART' 230 —SBLBCTBD ITEMS OF
COST
APPBI \DD: C To PART' 230— NOK PROF39' ORGA-
141ZAT10N51Q0'1' BUBJBO9' 7'O THIS PART
AUTHO111TY: 31 U.S.C. 503; 31 L'.S.L'. 1111; 41
U.S.C. 905; Reorganization Plan ho. 2 of 1970;
E.O. 11541, 35 FR 10737, 3 CPR, 1966 -1970, p. 939
SOURCE: 70 Fri 51927, Aug. 31, 2005, Unless
otherwise noted.
2 CFR Ch. II (1 -1-09 Edition)
§230.5 Purpose,
This part establishes principles for
determ ining costs of grants, contracts
and other agreements with non- profit
organizations.
i; 230.10 Scope.
(a) This part does not apply to col-
leges and universities which are cov-
ered by 2 CFR part 220 Cost Principles
for Educational Institutions (ORIB Cir-
cular A -21); State, local, and federa113
recognized Indian tribal governments
which are covered by 2 CFR part 225
Cost Principles for State, Local, and
Indian Tribal Governments (OIdIB Cir-
cular A -87); or hospitals.
(b) The principles deal with the sub-
ject of cost determination, and make
no attempt to identify the cir-
cumstances or dictate the extent of
agency and non - profit organization
participation in the financing of a par-
ticular project. Provision for profit or
other increment above cost is outside
the scope of this part.
§230,15 Policy.
The principles are designed to pro-
vide that the Federal Government bear
its fair share of costs except where re-
stricted or prohibited bS law. The prin-
ciples do not attempt to prescribe the
extent of cost sharing or matching On
grants, contracts, or other agreements.
However, such cost sharing or match-
ing shall not be accomplished tb_rough
arbitrary limitations on individual
cost, elements by Federal agencies.
§230,20 Applicability,
(a) These principles shall be used by
all Federal agencies in determining the
costs of work performed by non- profit
organizatioils under grants, coopera
tive agreements, cost reimbursement
contracts, and other contracts in which
costs are used in pricing, administra-
tion, or settlement. All of these instru-
ments are hereafter referred to as
awards. The principles do not apply to
awards under which an organization is
not required to account to the Federal
Government for actual costs incurred,
(b) All cost reimbursement sub -
awards (subgrants, subcontracts, etc.)
146
ATTACHMENT ......P .........
PA( �..... OF ......... PAGES
OMB Circulars and Guidance
arc subject, to those Podond cost. prin-
ciples a.pplic:able to Lbe partioular or
1;anizaI;Ion coIIce I'll od, T11 11S, if a.
sulwm,.Lrd is to a non - profit organiza-
Limi, this part shall apply; If a.
sulni.v, IS to a commercial organiza:
Lion, the cost principles Jpplical') e, to
conunerr;ial uonc;erns sl',a,ll apply; If a.
audWaward is to a college or university,
2 CFR, part 220 shall apply; if a
suha.ward is to a. State, local, or feder-
a115�- recognized Indian tribal govern-
ment, 2 CFR, pars, 225 shall apply.
(c) Exclusion of some non - profit, or
t;aniza.tions. Some non - profit organiza-
tions, hecauso of their size and nature
of operations, can be. considered to be,
similar to commercial concerns for
purpose of applicability of cost prin-
ciples. Such non - profit organizations
shall operate under Federal cost prin-
ciples applicable to commercial con-
cerns. A listing of these organizations
is contained in Appendix C to this part.
Other organizations may be. added from
til to time,
§ 230.25 Definitions,
(a) Non- profit organization means
any corporation. trust, association, co-
operative, or other organization which:
(l.) Is operated primarily for sci-
entific, educational, service, chari-
table, or similar purposes in the public
interest;
(2) Is not organized primarily for
profit; and
(3) Uses its net proceeds to maintain,
improve, and /or expand its operations.
For this purpose, the term "non- profit
organization" excludes colleges and
universities; hospitals; State, local,
and federally- recognized Indian tribal
governments; and those non - profit or-
s1anizations which are excluded from
coverage of this part in accordance
with § 230.20(c).
(b) Prior approval means securing the
awarding agency's permission in ad-
vance to incur cost for those items
that are designated as requiring prior
approval by the part and its Appen-
dices. Generally this permission will be
in writing. Where an item of cost re-
quiring prior approval is specified in
the budget of an award, approval of the
budget constitutes approval of that
cost.
?; 2311,3(1 (AM responsibilities,
§ 230,50
OMP maS' Rra,nt, exceptions to Lh( ro .
quirements of this part when perrnis-
siNe under existing law. Ilowevnr, in
the interest of achieving ma.xlmum
uniformity exceptions will he per
mlt only in highly unusual cir-
Cll Inst,a,ll -oes.
§230.35 Federal agency responsibil-
ities.
The head of oach Federal agency that.
awards and administers grants a.nd
a,greemonts subject to this part; is re
sponsiNo. for roquesting approval from
and /or consulting with OMB MS appli
cable) for deviations from the guidance
in the appendices to this part and per-
forming the applicable functions speci-
fied in the appendices to this part.
§230,40 Effective elate of changes,
The provisions of this part are effec-
tive August 31, 2005. Implementation
shall be phased in by incorporating the
provisions into new awards made after
the start of the organization's next, fis
cal year, For existing awards, the new
principles ,clay he applied if an organi-
zation and the cognizant Federal agen-
cy agree. Earlier implementation, or a
delay in implementation of individual
provisions, is also permitted by mutus,.l
agreement between an organization
and the cognizant Federal agency.
§230.45 Relationship to previous
issuance.
(a,) The muidance in this part prc�-
viously was issued as OMB Circular A-
122. Appendix A to this part contains
the guidance that was in Attachment A
(general principles) to the OMB cin
cular; Appendix B contains the guid-
ance that was in Attachment B (se-
lected items of cost) to the OMB cir-
cular; and Appendix C contains the in-
formation that was in Attachment C
(non - profit organizations not subject to
the Circular) to the OMB circular.
(b) Historically, OMB Circular A--122
superseded cost principles issued by in-
dividual agencies for non - profit organi-
zations.
§230.50 Information contact.
Further information concerning this
part may be obtained by contacting the
147
ATTACHMENT ....... 0......... ` I
L PAGE
Pf. 230, App. A
Office of Federal Financial 14a1ag'e-
ment, OMB, Washingtoll, DC 205031
telephone (202) 395 -3993.
APPENDa' A TO PART 230 — GENERAL
PRINCIPLES
GENDRAL PRINCIPLES
TABLE of CONTENTS
A. Basic Considerations
1. Composition of total costs
2. Factors affecting allowability of costs
3. Reasonable costs
4. Allocable costs
5. Applicable credits
6. Advance understandings
7. Conditional exemptions
B. Direct Costs
C. Indirect Costs
D. Allocation of Indirect Costs and Deter-
mination of Indirect Cost Rates
1. General
2. Simplified allocation method
3. Multiple allocation base method
4. Direct allocation method
5. Special indirect cost rates
E, Negotiation and Approval of Indirect Cost
Rates
1. Definitions
2. Negotiation and approval of rates
GENERAL PRINCIPLES
A. Basic Considerations
1. Composition of total costs, The total
cost of an award is the sum of the allowable
direct and allocable indirect costs less any
applicable credits.
2. Factors affecting allowability of costs.
To be allowable under an award, costs must
meet the following general criteria:
a. Be reasonable fertile performance of the
award and be allocable thereto under these
principles.
b. Conform to any limitations or exclu-
sions set forth in these principles or in the
award as to types or amount. of cost items.
e, Be consistent with policies and proce-
dures that apply uniformly to both federally -
ffnanced and other activities of the orgal)iza-
ti on.
d. Be accorded consistent treatment.
e. Be determined in accordance with gen-
crally accepted accounting principles
(GAAP).
f. Not, be included as a cost, or used to meet
cost sharing or matching requirements of
any other federally - financed program in ei-
the] the current, or a prior period,
g. Be adequately documented.
3. Reasonable costs. A cost. is reasonable if,
in its nattu*e er amotutt, it does not exceed
that which would be incurred by a prudent
person tinder the circumstances prevailing at
the time the decision was made to incur the
2 CFR Ch. II (1 -1-09 Edition)
costs. The question of the reasonableness of
specific costs must be scrutinized with par
ticular care in connectim) with organizatim)s
or separate divisions thereof which reoeiti'e
the preponderance of their support from
atvaads made by Federal agencies. I11 deter-
mining the reasonableness of It given cost,
consideration shall be given to:
a. Whether the cost is of a type generally
recognized as ordinary and necessary for the
operation of the organisation or the perform-
ance of the award.
b. The restraints or requirements imposed
by such factors as generally accepted sound
business practices, arms length bargaining.
Federal and State laws and regulations, and
terms and conditions of the award.
c. 4v])ether the individuals concerned acted
with prudence in the circumstances, consid-
ering their responsibilities to the Organiza-
tion, its members, employees, and clients,
the public at large, and the Federal Govern-
ment.
d. Significant deviations from the estab-
lished practices of the organization which
may unjustifiably increase the award costs.
4. Allocable costs. a. A cost is allocable to
a particular cost objective. such as a grant,
contract. project, service, or other activity,
in accordance with the relative benefits re-
ceived. A cost is allocable to a Federal award
if it is treated consistently with other costs
incurred for the same purpose in like cir-
cumstances and if it:
(1) Is incurred specifically for the award.
(2) Benefits both the ativard and other work
and can be distributed in reasonable Propor-
tion to the benefits received, or
(3) Is necessary to the overall operation of
the organization, although a direct relation-
ship to any particular cost objective cannot
be shown.
b. Any cost allocable to a particular award
m• other cost objective under these principles
may not he shifted to other Federal awards
to overcome fundfug deficiencies, m' to avoid
restrictions imposed by late or by the terms
of the award.
5. Applicable credits. a. The term applica-
ble credits refers to those receipts, or reduc-
tion of expenditures which operate to offset
or reduce expense items that are allocable to
awards as direct or indirect costs. Typical
examples of such transactions are: Purchase
discounts; rebates or allowances, recoveries
or indemnities on losses, insurance refunds,
and adjustments of overpayments m' erro-
neous charges. To the extent that such cred-
its accruing or received by the organization
relate to allowable cost, they shall be cred-
ited to the Federal Government tither as a
cost reduction Or cash refund, as appro-
priate.
b. In some instances, the amounts received
from the Federal Government to finance of
ganizational activities or service operations
148
ATTACHIMENT .......��.........
PAGE ....3..... OF ... .... PAGES
OI\iB Circulars and Guidance
rlllould be trca.terl as appltoa.bia. nroditr„ 81)
c lfkclllly, the eolloopt. of uotting such credit,
iten'u: ng9.lnsl, rels,tod oxpondituros should ho
a.ppllod by the orga,11t7,a.tioll ill dot,ernlininf;
t,hr rates or n.mounts to be ohargnd to Fod-
oral a.ws,rds for services rendered whonever
kiw Du. llities or other resources used in pro -
vldtup; such sorvioes hanVe been financed (If-
, wAdl ,, in whole or in part, by Foderld funds.
c For rules novoring progra.tn hlootne (Lo.,
q'ro9s Income, earned from federally -aup-
port,od rr,ctivitfos) see 8215.24 of 2 CFR part
215 Uniform Administrative Roqutements
I'or Grn,nts and Agrennlents with Institutions
of Higher 1]duea.tion, Hospitals, and Other
Non-Profit OrgamizationH (OMB Circular A•-
110),
G. Advance understandings. Under any
g award. the r ea9011ahI Oil 098 and
s.iloon.billty of certain Items of costs may he
difficult to determine. This is particularly
Lrur, in connection with organizations that
receive a. preponderance of their support,
from Federal agencies. III order to avoid sub-
sequent disallowance or dispute based on
unreasonableness or noualloca.hility, it is
often desirable to seek a. written agreement,
with the cognizant or awarding agency in ad-
vance of the incurrence of special or unusual
casts. The absence of an advance agreement
071 any element of cost will not, in itself, af-
fect the reasonableness or allocability of
that olemont.
7. Conditional exemptions, a. OMB author-
izes (miditiona.l exemption from OMP adnnln-
lstra.tive requirements and cost principles
For certain Federal programs with staatu-
torily- a.uthorizetd consolidated planning and
consolidated administrative funding, that
am identified by a Federal agency and ap-
proved by the head of the Executive depart-
ment or establishment. A Federal agency
shall consult with OMB during its consider-
ation of whether to grant such an exemption.
h. To promote efficiency in State and local
program administration, when Federal non -
ontitlement programs with common pur-
poses have specific statutorily- authorized
consolidated planning and consolidated ad-
ministrative funding and where most of the
State agency's resources come from non -
Federal sources, Federal agencies may ex-
crept these covered State - administered, non -
entitlement grant programs from certain
OMB grants management requirements. The
exemptions would be from all but the
allocability of costs provisions of Appendix
A, subsection C.e, of 2 CFR part 225 (OMB
Circular A -87); Appendix A, Section CA. of 2
CFR part 220 (OMB Circular A -21): Section
A.4. of this appendix; and from all of the ad-
ministrative requirements provisions of 2
CFR. part 215 (OMB Circular A -110) and the
agencies' grants management common rule.
e. When a Federal agency provides this
flexibility, as a. prerequisite to a. State's ex-
ercising this option, a. State must adopt its
Pi. 230, App. A
rnvn wrfttnu I'isoad and ednl(nistraidve 1•e-
gllwonlents for a;xpendius and a.ceounl,inf: for
all funds, which arc consistent, with the Pro-
visions of 2 CPIs print 225 (Ohllf Circular A-
87), and cxtmld such policies to all suhreeipi-
ents. These f'isoal and acdnlfuistrativr r, .
quironionts musi, he sufficiently specific to
ensure that I - Ounds a.re usod fn r•,ompiunlcr•
vith a.11 applicable Federal sta.tuf,or^ eud
ro.gulatory provisions, costs a.rr, roasnnnnl,
and necassary for npora.ting these program:;,
and funds a.rp. not. to he used for fTnllorn.l r, -
ponses required to oarrl' out other renpon
sihllities of it Moto or Its subrnclpimlts
R Direct, MoHts
1. Mrent. costs rr.rn thosn that, call be Monti
find sprrifica.11,v With s particular final nest,
objective, t.e., a partioular award, projewt.,
service, or other diroct activity of all orga.ni-
ZRIMO11. ITowever, a. cost may hot, be assif;•necl
to an a.wa.rd as a. direct, cost if any other r,ost
incurred for thee same purpose, in 111u ch-
oumstalnce, has been alloca.tod to an sward
as an indirect cost. Costs identified specifi-
cally with awards are direct costs of the
awa, ds and are to be, assigned directly there-
to. Costs identified specifically with other
final cost objectives of the organization are,
direct costs of those cost objectives and are
not, to bc assigned to other awards dirnr,tly
or indirootly.
2. Any direct cost of s minor amount, ma
be trea.tad as a,n indirect. cost, for rca.sons of
practicality where the accounting trca.tmr,nt.
for such cost I.'; consistently ;),Pplied to a.11
final cost objectives.
3. The cost of certain activities are not al
towable as charges to Federal awards (see,
for example, fundraising costs in paragraph
1" of Appendix: P to this part). However, even
though those costs are unallowable to pur-
poses of computing charges to Federal
awards, they nonetheless must, be treated as
direct costs for purposes of determining indi-
rect cost rates and be. allocated their share
of the organization's indirect costs if they
represent activities which include tho sala-
ries of personnel, occupy space, and benefit .
from the organization's indirect costs.
4. The costs of activities performed pri-
marily as a. service to members, clients, or
the general public when significant and nec-
essary to the organization's mission must be
treated as direct costs whether or not allow-
able and be. allocated an equitable share of
indirect costs. Some examples of these types
of activities include:
a. Maintenance of membership rolls, snb-
scriptions, publications, and related func-
tions.
b. Providing services and information to
members, legislative or administrative bod-
ies, or the public.
c. Promotion, lobbying, and other forms of
public relations.
149
ATi ACI- IMEN — T - -����
PAGE _... -__.. OF .._c?a� _. PAGES
P1. 230, App. A
d. moetings and conferences except Lhosc
held to conduct the general administration
of the orgautimLiot.
L. 30ainLenauce, protection, and invest-
ment of special iunds not used in operatioi
of the organization.
f. Administration of grOUp benefits on be-
half of membars o' clients, including life and
hospital insurance, annuity o• retirement
plans, financial aid, etc.
C. Indirect Costs
1. Indirect costs are those that have been
incurred for conrrnon or joint objectives and
cannot be readily identified with a par-
ticular final cost objective. Direct cost of
minor amounts may be treated as indirect
costs under the conditions described in suU-
paragraph B.2 of this appendix. After direct
costs have been determined and assigned di-
rectly to awards or other work as appro-
priate, indirect costs are those remaining to
be allocated to benefiting cost objectives. A
cost may not be allocated to an award as an
indirect cost if any other cost incurred for
the same purpose, in like circumstances, has
been assigned to an award as a direct cost.
2. Because of the diverse characteristics
and accounting practices of non- profit orga-
nizations, it is not possible to specify the
types of cost which may be classified as indi-
rect cost in all situations. However, typical
examples of indirect cost for mauy non -prof-
it organizations may include depreciation or
use allowances on buildings and equipment,
the costs of operating and maintaining fa-
cilities, and general administration and gen-
eral oxpenses, such as the salaries and ex-
penses of executive officers, personnel ad-
ministration, and accounting.
3. Indirect costs shall be classified within
two broad categories: "Facilities" and "Ad-
ministratiou." "Facilities" is defined as de-
preciation and use allowances on buildings,
equipment and capital improvement, inter-
est on debt associated with certain buildings,
equipment and capital improvements, and
operations and maintenance expenses. "Acl-
milristration" is defined as general adminis-
tration and general expenses such us the di-
recto's office, accounting, personnel. library
expenses and all other types of expenditures
1101 listed specifically under one of the sub-
categories of "Facilities" (including cross al-
locations from other pools. where applica-
ble). See indirect cost rate reporting require-
ments in subparagraphs D.2.e and D.3.g of
this appendix.
D. Allocation of Indirect Costs and
Determination of Indirect. Cost hates
1. General. R. where a non- profit o•ga.niza-
Lion has only one major function, o• where
all its major functions benefit from its indi-
rect costs to approximately the same degree,
the allocation of indirect. costs and the con-
2 CFR Ch, II (1 -1 -09 Edition)
putatiou of an indirect cost rat(. may he ac-
complished through simplified allocation
procedures. as described in suUparagrapli D.2
of this appendix:
U. Where all organization has several major
functions which benefit from its indirect
costs in varying degrees, allocatiot of indi-
rect costs may require the acc till) ulatiOn of
such costs into separate cost groupings
which then are allocated individually to ben-
efiting functions by means of a base tivhich
best nteasares the relative degree of benefit.
The indirect. costs alloca.Led to each function
are then distributed to individual awards and
other activities included in that function by
means of an indirect cost rate(s).
c. The determination of what constitutes
an organization's major functions will de-
pend on its purpose in being; the types of
services it renders to the public, its clients,
and its members; and the amount of effort it
devotes to such activities as fundraising,
public information and membership activi-
ties.
d. Specific methods for allocating indirect
costs and computing indirect cost rates
along with the conditions under which each
method should be used are described in sub-
paragraphs D,2 through 5 of this appendix.
e. The base period for the allocation of in-
direct costs is the period in which such costs
are incurred and accumulated for allocation
to work performed in that period. The base
period normally shoulcl coincide with the or-
ganization'S fiscal year but, in any event,
shall be so selected as to avoid inequities in
the allocation of the costs.
2. Simplified allocation method. a. Where
an organization's major functions benefit
from its indirect costs to apprm:imately the
same degree, the allocation of indirect costs
may be accomplished by separating the orga-
nization's total costs for the base period as
either direct or indirect, and dividing the
total allowable indirect costs (net of apPlica-
ble o by an 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 costs
bears to the base selected. This method
Should also be used where an organization
has only one major function encompassing a
number of individual projects or activities,
hard may be used vrhere the level of Federal
awards to an organization is re I'll .tiveh'
small.
b. Both the direct costs and the indirect
costs shall exclude capital expenditures and
unallowable costs. Ilowover, unallowable
cost= which represent activities must be in-
cluded in the direct costs under the condi-
tions described in subparagraph B.B. of this
appendix.
c. The distribution base may be total di-
rect, costs (exc)uding capital expenditures
150
ATTACHMENT..... I
PAGE .... r te....... OF ...;; A.. PAGES
OMB Circulars and Guidance
Mill 01,1101' d it; LOrtinIt Items. sun ;h nf. realer
vu hr,onld'n.0tr'. c1' eu bgra.n LeL dlrnct sidlL i0:'.
aml tvu.gos, or ol,her I nsc which results Ili all
ivinitn.bin. distribution. The dintrinutton base
nha.l! Ifnucrally exelucle pn.rLiripant support
,rrstr a.s defined In parn.gra.ph 32 of Appendix
It
d Axnmpi, whore n special ra.te(s) is ro-
iluirod in aoeordn.nne with subparagraph 1 of
1,hw 0.ppoilcdix, the Indirect cost rate (love) -
op(Id under the above principles Is a.pplion,ble
Co a.l) awards at, the organization. If a. special
rmtr,(s) 1s required, appropriate modifications
shall be made itt order to develop the special
rnLots).
n ror all nrganfzation 110.1, m(loives more
1.hn.n ,SIO million in Federal ftntding of direct
r.osts In s risoal veal, it breakout of the Indi-
rect cost; oomponent into two broad oat,
egories, Paoflitlos and Administration as de-
finocd in subparagraph C.3 of this appendix, is
rnquh'sd. The rate iu each case shall be stat-
ed as t ;he percentage. which the amount, of
the particular indirect cost oategory (i.e.,
Facilities or Administration) is of the dis-
tribution base identified with that category.
9. Multiple allocation base method.
a. General. Where an organization's indi-
reot costs benefit its major functions in
varying degrees, indirect costs shall be accu-
mulated into separate cost groupings, as de-
scribed in subparagraph D,3.1, of this appen-
dix. Mo,ch grouping shall then be, allocated
individually to benefiting functions by
means of s base which best measures the rel-
ative benefits. The default allocation bases
by cost pool are described in subparagraph
li 3,c of this o,pnendix.
b, Identification of indirect costs. Cost,
groupings shall be established so as to per-
mit the allocation of each grouping on the
basis of benefits provided to the majo' func-
tions. Itach grouping shall oonstitute a pool
of expenses that, are of like character in
terms of functions they benefit, and in terms
of the allocation base which best measures
the relative benefits provided to each func-
tion. The groupings are classified within the
two broad categories: "Facilities" and "Ad-
ministration," as described in subparagraph
0.3 of this appendix. The indirect cost pools
are defined as follows;
(1) Depreciation and use allowances, The
expenses under this heading are the portion
of the costs of the organization's buildings,
capital improvements to land and buildings,
and equipment which are computed in ac-
cordance with paragraph 11 of Appendix B to
this part ( "Depreciation and use allow-
ances").
(2) Interest. Interest on debt associated
with certain buildings, equipment and cap-
ital improvements are computed in accord-
ance with paragraph 23 of Appendix B to this
part ("Interest").
(3) Operation and maintenance expenses.
The expenses under this heading are those
PI. 230, App. A
1,lml linvr Been incurred for the. adntinistrti
(.toll, cpa'atlnln. itl a,l It tr,tl a.pee, prf7snrvat'i ell.
and prntectdou of thn orvil.niza.tion's physical
plant. They includo c>gwiisoc normally fn
purred for such Items as: Janitorial and lmil-
itv services: repairs and ordinary or norni:'.l
a.ltore,bioils of buildings, furniture and nquip
moat: osxo of grounds, malntenluim. a,nd op-
e.ra.tiot of buildings and other plant in.elli
ties: security; earthquake and disaster pro -
)arodness; environmental safety; ha%z Ix dolls
Waste disposal: property, liability and obiinr
insurance rola.ting to property; sparew mild
capital lensing; facility planning a.nd 11111,11
agemnnt; and, control receiving. Tho opnr
atlon and mf0l)(Autalloc expenses 1 all nry
shall n.)so tuclude Its alloen.blo sha,rr 1',l
fringe benefit mats, doproctnt,i ml nild um' al
lowanoes, and interest casts.
(4) Gono'a.l administration an(] gnmoral rx-
penses. (a) The expenses under this hoa.dinp
are these that have been incurred for the,
overall general executive and a.dmlnistrs.tivo
offices of the organization and other ex-
pannes of a general nature which do not, re-
late solely to any major function of the orga-
nization, This category shall also include its
allocable share of fringe benefit costs, oper-
ation and maintenance expense, depreciation
and use allowances, and interest costs. Dx-
amplos of this category include control of-
fices, such as the director's office, the officer
of finance, business services, budget a.nd
planning, personnel, safety and risk manage-
111011 general counncl, managEnnont infor-
ma.tlon systems, and library costs.
(b) In developing this cost pool, special
care should be exercised to ensure that costs
incurred fm' the same purpose in like cir-
cumstanees are treated consistently as ei-
ther direct or indirect costs. For example,
salaries of technical staff, project supplies,
project publication, telephone toll charges,
computer costs, travel costs, and specialized
services costs shall be treated as direct, costs
wherever identifiable to a. partioular pro-
gram. The, salaries and wages of administra-
tive and pooled clerical staff should nor-
mally be treated as indirect costs. Direct
charging of these costs may be. appropriate
where o, major project or activity explicitly
requires and budgets rot administrative or
clerical services and other individuals in-
volved can be identified with the program or
activity. Items such as office supplies, post-
age, local telephone casts, periodicals and
memberships should normally be treated as
indirect costs.
c. Allocation bases. Actual conditions shall
be, taken into account in selecting the hase
to be used in allocating the expenses in each
grouping to benefiting functions. The esson-
tial consideration in selecting a method or a.
base is that it is the one best suited for as-
signing the pool of costs to cost objectives in
accordance with benefits derived; a, traceable
cause and effect relationship; or logic and
151
677, " - �CHiviGi�lT p `
PAGE ..•....... OE PAGES
PI. 230, App. A
reason, Where neither the cause no the Of
feot of the relationship is determinable.
11'bon an allocation can be made by assign
ment of a oost. grouping. directly Lo the June -
tion benefited, the allocation shall hr made
in that manner. When the expenses in a cost
grouping are more general in nature, the M-
]ocation shall be made through the use of a
selectocl base which produces results that are
equitable to both the Federal Government
and the organization. The distribution shall
be made in accordance with the bases de-
scribed herein unless it can be demonstrated
that the use of a different base would result
in a more equitable allocation of the costs,
or th a more readily available base would
not increase the costs charged to sponsored
awards. The results of special cost studies
(such as an engineering utility study) shall
not be used to determine and allocate the In-
direct costs to sponsored awards.
(1) Depreciation and use allowances. Depre-
ciation and use allowances expenses shall be
allocated in the following manner:
(a) Depreciation or use allowances on
buildings used exclusively in the conduct of
a single function, and on capital improve-
ments and equipment used in such buildings,
shall be assigned to that function.
(b) Depreciation or use allowances on
buildings used for more than one function,
and on capital improvements and equipment
used in such buildings, shall be allocated to
the individual functions performed in each
building on the basis of usable square feet of
space, excluding common areas, such as hall-
ways, stairwells, and restrooms.
(c) Depreciation or use allowances on
buildings, capital improvements and equip-
ment related space (e.g., individual rooms,
and laboratories) used jointly by more than
one function (as determined by the users of
the space) shall be treated as follows. The
cost of each jointly used unit of space shall
be, allocated to the benefiting functions on
the basis of either the employees and other
users on a full -time equivalent (PTE) basis
or salaries and wages of those individual
functions benefiting from the use of that
space; o organization -wide. employee FT1s
o' salaries and wages applicable to the bene-
fiting functions of the organization.
(d) Depreciation o• use allowances on cer-
to, capital improvements to land, such as
paved parking areas, fences, sidewalks, and
the like, not, included in the cost of build-
ings, shall be allocabecl to user categories on
a FT); basis and distributed to majo func-
tions. in proportion to the salaries and wages
of all employees applicable to Lhe functions.
(2) Interest. lnterest costs shall be allo-
cated in the saane manner as the deprecia-
tion or use allowances on the buildings.
equipment and capital equipments to which
the interest relates.
(3) Operation and main tell once e >:penses.
Operation lint) maintenance expenses shall be
2 CFR Ch. II (1 -1-09 Edition)
ulloeaLed in the same manner as the d6)) re_
ciabion and use allowances.
(9) General adnninistratio and general ex-
penses. General adulinistra.Lion and g'oneral
e >;penses shall be all ocated Lo benefiting
functions based on modified total direct.
costs (MTDC), as described in subparagraph
D.3.1 of this appendix. The expenses includecl
in this category could be grouped first ac-
cording to nnajo functions of the organiza-
tion to which they render services or provide
benefits. The aggregate expenses of each
group shall then be allocated to benefiting
functions based on MTDC.
d. Order of distribution. (1) Indirect cost
categories consisting of depreciation and use
allo,ances, interest, operation and mainte-
nance, and genera) administration and gen-
eral expenses shall be allocated in that order
to the remaining indirect cost categories as
Well as to the major functions of the orge.ni-
mtion. Other cost categories could be aho-
cated in the order determined to be most ap-
propriate by the organization. V`hen cross al-
location of costs is made as provided in sub-
paragraph D.3.d.(2) of this appendix, this
order of allocation does not apply.
(2) Normally, an indirect cost category will
be considered closed once it has been allo-
cated to other cost objectives, and costs
shall not be subsequently allocated to it.
However, a cross allocation of costs between
two or more indirect costs categories could
be used if such allocation Will result in a
more equitable allocation of costs. If a cross
allocation is used, an appropriate modifica-
tion to the composition of the indirect cost
categories is required.
e. Application of indirect cost rate or
rates. Bxoept Where a special indirect cost
rates) is required in accordance with sub-
paragraph D,5 of this appendix. the separate
groupings of indirect. costs allocated to each
majoy function shall be aggregated and
treated as a connnol pool for that fuuctiou.
The costs in the common pool shall then be
distributed to individual awards included in
that funetiol by use of a single indirect cost
rate.
f. Distribution basis. Indirect costs shall be
distributed to applicable sponsored awards
and other benefiting activities within. each
major ItllnetiOrl on the basis of h4TDC. MTDC
consists of all salaries and wages, fringe ben-
efits. materials and supplies. services, travel,
and subgrants and subcontracts up to the
first 525.000 of each subgrant or subcontract
(regardless of the period covered by the
subgrant or subcontract,). Equipment, capital
expenditures, charges, for patient care, rental
costs and the portion in e>.cess of 525,000
shall be excluded from h4TDC. Participant
support oost,s shall generally be excluded
from h4TDC. Other items may only be ex-
cluded when the Federal cost cognizant
152
.0 PAGES
OF
OMB Circulars and Guidance
alC(I)wv dntcrmines that. a,n oxr.lusiou is nee
owwry to avoid a seriF)m,• inequity It, tlln (If s-
tri )II rdoil of indirect (eats
I; Individual kite Components. An indi-
r";nl anal, ra.tc shall be determined for oa.oh
ar.pa.rat( indiroot oast, pool developed. The
ra't'o in oath case shall be stated as the per -
(tontn,ge which the amount, of the particular
ndirc +r, t, oosl, pool Is of thla distribution base
iflontli'lod with that pool, Each Indirect cost
ra.to nag•otia.tioll or doterminrc.tion agreement
shall Include development of the rate for
oar)) indirect, cost, pool as well as the overall
Indirnct (lost, rate. The indirect coat pools
shall be classified wit)lf l two broad ca.t,
ogorios' "Fi,,cilittes" and "Administra't'ion,''
e,v (Inscribed In nubpn.ragrn,ph C of this ap-
poudix.
, 1. Direct allocation nlathod a. Sonic non -
profit organizations treat s.l) nests as direct
oasts oxcept, general administration and gon-
cra) expenses. These organizations generally
sopa,ra.te their costs into three basic cat.
oKories: General administration and general
expenses, fundraising, and other direct func-
tions (including projects performed under
Federal awards). Joint costs, such as depre-
ciation, rental costs, operation and mainte-
nn,noe of facilities, telephone expenses, and
the like are prorated individually as direct
costs to each category and to each award or
other activity using a, base most a'ppropria'te
to the particular cost being prorated.
b. This method is acceptable, provided each
joint cost. is prorated using i base which ac-
curately measures the benefits provided to
each award or other activity. The bases must
he establisher) in accordance with reasonable
criteria, and be supported by current data,.
This method is compatible with the Stand-
ards of Accounting and Financial Reporting
for Voluntary Health and Welfare Organiza-
tions issued ,jointly by the National Health
Council, Inc., the National Assembly of Vol -
nutoxy Heo,lth and Social Welfare Organiza:
bons, and the United Wa.y of America..
G. Under this method, indirect costs con-
sist exclusively of general administration
a.ncl general expenses, Ih all other respects,
the orga'nization's indirect cost, rates shall
be computed in the same manner as that de-
scribed in subparagraph D.2 of this appendix.
5. Special indirect cost rates. In some in-
stances, a. single indirect cost rate for all ac-
tivities of an organization or for each major
function of the organization may not be ap-
propriate, since it would not take into ac-
count those different factors which may sub-
stantially affect the indirect costs applicable
to a particular segment of work. For this
purpose, a, particular segment of work may
be that performed under a single award or it
may consist of work under a group of awards
performed in a, common environment. These
factors may include the physical location of
the work, the level of administrative support
required, the nature of the facilities or other
Pt. 230, App. A
rr.snurr,as: onrploved. 1,1w somill,ifir. diacipluurs
or tochnival skills involvod, rho orga.uiza-
(tiona.l arratgoments used, or any nomhinti-
tior, ('hereof. "Ibou a }articular srgrt,eni of
worlt lo-• performed in an envirotunon( whlab
appoa.r:• to generate a significantly dil'liure.nt .
level of Indirect costs, provisions should Its
marls for a sepa'ra'te indhloct (lost, pool a)pli
oa.ble w such work. The soparate indirccl
cost pool should be. developed during the
coarse, of the regular allocation prooess, ;i.nd
the separate indirect cost rate resulting
therefrom should be used, provided it w dc-
tertnlnod that the rate differs sivilifioantly
from that, which would have boon obt,idnrd
under subparagraphs D.2, 3, and 1 of Chi;; ap
pondix, and the volume of worl: to v;hir;li 1,hr
rata would apply is material.
]t:. Nogotia.tion and Approval of lndirnat (;ost
Rates
1. Definitions. As used in this section. the
following terms have the meanings set, forth
below:
a. Cognizant agency means the Federal
agency responsible for negotiating and ap-
proving indirect cost rates for a. non- profit
organization on behalf of Ql Federal agen-
cies.
b. Predetermined rata means an indirectr
cost rate, applicable to a specified current or
future period, usually the, organiza'tion's Ba-
ca] ,year. The rate is based on an estimate of
the costs to be incurred during the period- A
predetermined rate is not, subject to al.iust-
ment.
c. Fixed rate means an indirect cost. ra.t(-
which has tho same characteristics as a pre
determined rate, except that the difference
betw"n the estimated costs and the actual
costs of the period covered by the rate is oar-
He(] forward as an adjustment to the rate
computation of a• subsequent period.
d. Final rate means an indirect nnst rats
applicable to a, specified past, period which Is
basest on the actual costs of the period. A
filial rate is not subject to adjustment.
e. Provisional rate or billing rate means a
temporary indirect cost rate applicable to a
specified period which is used for funding, in-
terim reimbursement, and reporting indirect,
costs on awards pending the establishment of
a, final rate for the period.
f. Indirect cost proposal means the docu-
mentation prepared fly an organization to
substantiate its claim for the reimbursement
of indirect costs. This proposal provides the
basis for the review and negotiation leading
to the establishment of an omanization's in-
direct cost rate.
g. Cost objective means a. function, omani.
zational subdivision, contract, grant, or
other work unit for which cost data are de-
sired and for which provision is made to ac-
cumulate and measure the cost, of processes,
projects, jobs and capitalized projects.
153
c
ATTACHMENT ....... �)........
PAGE ..._ �� ..... dF ...c _. P
Pi. 230, App, B
Negotiation and approval 01 rf Les. it. Un-
less different arrangemeuLS are agreed Lo by
Ube agencies concerned, the Federal agency
with the largest dollar value of awards with
an organization will be designated as the
cognizant agency for the negotiation and ap
proval of the indirect cost rates and. Where
necessary, other rates such as fringe benefit
and computer charge -out rates. Once an
agency is assigned cognizance for it par-
ticular non - profit organization, the assign-
ment toil] not he changed unless there is a
major long -term shift. in Gibe (101111" volume of
Lite Federal awards to the organization. All
concerned Federal agencies Sim)) be given
the opportunity to paTbicipabe in the nego-
tiation process but, after a rate has been
agreed upon, it Will be accepted by all Fed-
eral agencies. When a Federal agency has
reason to believe that special operating fac-
tors affecting its awards necessitate special
indirect cost rates in accordance with sub-
paragraph D.5 of this appendix, it will, prior
to the time the rates are negotiated, notify
the cognizant agency.
b. A non - profit organization which has not
previously established an indirect cost rate
with a Federal agency shall submit its ini-
tial indirect cost proposal immediately after
the organization is advised that an award
will be made and, in no event, later than
three months after the effective date of the
award.
c. Organizations that have previously es-
tablished indirect cost rates must submit a
new indirect cost proposal to the cognizant
agency within six mouths after the close of
each fiscal year,
d. A predetermined rate nnay be negotiated
for use on awards where there is reasonable
assurance, based on past experience and reli-
able projection of the organization's costs,
that the rate is not likely to exceed a rate
based on the organization's actual costs.
e. Fixed rates nnay be negotiated where
predetermined rates are not considered ap-
p•opriate. A fixed rate, however, shall not be
negotiated if all or a substantial portion of
the organization's awards are expected to ex-
pire before the carry - forward adjustment can
be made; the nnix of Federal and non - Federal
work at the organization is too erratic: be
permit an equitable carry - forward adjust
meat: or the organization's operations. fhic
Luate significantly from year Lo year,
f. Provisional and final rates shall be nego-
tia.Led where neither predetermined n0Y fixed
rates are appropriate.
g. The results of each negotiation shall be
Formalized in It written agreement- between
the cognizant fcgency and Lhe noel - profit. or-
ganization. The cognizant agency shall dis-
t•ibnte copes of the agreement to all con-
cerned Federal agencies.
h. If a dispute al'ises in a negotiation of an
indirect cost, rate between the cognizant
agency and the non - profit organization, the
2 CFR Ch. II (1 -1 -09 Edition)
dispute shall be resolved in accordance• wiLh
Lb, appeals procedures of the cognizant
a g L'11Cy.
i. To the exLenl that problem:: are encoun-
tered anlcnlg Lbe Federal agencies in connec-
tion with Lhe negotiation and approval proc-
ess, 0]+4B Will lend assistance as required Lo
resolve such problems in a timely manner.
APPENDIX B TO PART 230- SELBCTSD
ITLA4S OF COST
BELECTEL ITEMS OF COST
TABLE OF CONTENTS
1. Advertising and public relations costs
2. Advisory councils
S. Alcoholic beverages
4. Audit costs and related services
5. Bad debts
6. Bonding costs
7. Comhll Llllicati011 Costs
S Compensation for persona) services
9, Contingency provisions
10, Defense and prosecution of criminal and
civil proceedings, claims, appeals alld
patent infringement
11. Depreciation and use allowances
12. Donations and contributions
13. Employee morale, health, and welfare
costs
14. Entertainment costs
15, Equipment and other capital eh:pendi-
Lures
16. Pines and penalties
17. Fund raising and investment manage-
ment costs
16. Gains and losses on depreciable assets
19. Goods or services for personal use
20. Housing and personal living expenses
21. Idle facilities and idle capacity
22. Insurance and indemnification
23. Interest
24. Labe relations costs
25. Lobbying
26. Losses on other sponsored agreements
or contracts
27. A4aintenance and repair costs
26.B4aterials and supplies costs
29. Meetings and conferences
30, Memberships, subscriptions, and profes-
sional activity costs
31. Organization costs
32. Page charges in professional journals
33. Participant support costs
34. Patent costs
35. Pla114 and honlolalld security costs
36. Pre aLmleenlent costs
37, Professional services costs
38. Publication and printing costs
30. 1j. 0, and alteration costs
40. Reconversion costs
41. Recruiting costs
42. Relocation costs
43. Rental costs of buildings and equipment
44. Royalties and oLbor costs NY use of pat.
eats and copyrights
154
ATTACHMENT .. ..W..
C\ y
PAGE ......I..... O ...?.... P AGES
OIAB Circulars and Guidance
qG .Snllittl! ; nlarl(o.tlnq
46 . sorvino lowilll,ln;;
I,, 'i';Lxnn
W Torminn -ti(rn cost,." u. ppilr,, ldo In span
Hol'Od agl'nem0nl',a
to Tranli1)P cost,."
i0 Trnnsperl,n.tioil (,oats
i,I Tra.vn) costa:
YG 'I`ruHtnos
A I'19NI)1X 11 TO OF
COH'I'
arn.l;rnphs 1 Liiroufth 52 of this aplm.ndix
Iwo"idn principles Lo bo applind u1 osl,n.h-
Ilshing the a.11nwabilitfi of col%a.iin ILen)s of
"osl. 'Phone principle." apply wbet,bor o nisi. is;
Ixontnd a.r; dirooi, or Indirect. Failure to nlon-
Lien I, 1116)'ttnplal' {Lein of cost, is not. inl,on(do(i
Lo Imply that it, is oindlowable: ra.ther, de-
erlrinatiorn Il,.c L0 aliowe.biliby in each case
xhnuld 11v based on the ta'on.tmont or prin-
ciples provided for similar or related items
of cost.
1 A(dvertitung and public; rolations posts. 1-
The term advertising costs means the costs
of aalvertising media and corollary adminis-
trative costs. Advertising media, include
magazines, newspo.pers, radio and television,
direct mail, exhibits, electronic or computer
transmittals, and the like.
b. The term public relations includes core-
I inlity relation. and means those activities
dedicated to maintaining the image of the
non - profit organization or ma.mtaining or
promnting understanding and fa.vora.ble rolai
time with the community or public at, large
or any segment of the public.
c. '1'1)0 only allowable advertising costs are
those which are solely for
(li The recruitment, of personnel reg air od
for the performance by the non -profit organi-
zation of obligations arising under a Federal
s.wax(l (See also paragraph 41. Recruiting
costs and pa.ragra.ph 42, Relocation Costs, of
(,ills a.ppendix):
f2) The procurement, of goods and services
for tdm performance of a. Federal award:
(3, The disposal of serail or surplus mate-
rials acquired in the performance of It Fed-
era,) a.waxo except whon 11011- profit organiza.
Lions a.re reimbursed for disposal costs at a.
predetermined amount: or
(4) Other specific purposes necessary to
meet the requirements of the Federal award.
d. The only allowable public relations costs
are:
(1) Costs specifically required by the Fed-
eral award:
(2) Costs of communicating with the public
and press pertaining to specific activities or
accomplishments which result from perform-
ance of Federal awards (these costs are con-
sidered necessary as part of the outreach ef-
fort for the Federal award); or
(3) Costs of conducting general liaison with
notes media- and government public relations
officers, to the extent, that, such activities
PI. 230, App. B
a.rc IInlMod to , •.nnul (III ic11,tinln 111)(1 lk"Isoll
lwcossnvy Imo)) I,hv puhlic informnd on nla.(.-
Le,rs of ))tlltlic 001100111, such aH notions of
Federal contraol'o;rInit aavards. fincuncio.)
ul a.Il Le rs, etc.
n. Costs identified in subpa.ragla.phs (. and If
if incurred for more than one Federal atva,rd
or for both sponsored tvorlt ano olshor work of
the nou- profit ore�an(za.tion, a.rn a.Ilowallin Le
6hr r.xtornt that the principles in Appendix A
6o t,h{s part, parakrr'a.phs B. ( "Direct Costs ",
acrd C ( "Indirect Costs") are observed.
I. UnlLI)ewah)e advertising and puhlk; rnla
Lions oosts Include the followbig:
(1) All advertising and public, re,la.tions
costs other than as specified in subpar;i
„ra,phs c, d, at)d o:
(2) Costs of ineetingh, convelltion.t con
voc)l.tions, 01 other eveuts volo.ted to other
activities of the non- profit organiva.tinn, it)
eluding:
(a,) Costs of displays, demonstrations, a.nd
exhibi
(b) Costs of meeting rooms, hospitality
suites, and other special facilities used in
conjunction with shows and other special
events: and
(c) Salaries and wages of employees en-
gaged in setting up and displaying exhibits,
making demonstrations. and providing brief
i11gS;
(3) Costs of promotional iLrnns a.nd mnnlo.
rabilia, Including models. gifts, and son
venirs;
(4) Costs of advertising and public rela.tionr•
designed solely to promote the non - profit. or
ganiza.tion.
2. Advisory Councils, Costs invoirred by ad-
visory r.,ouncils or committees are a)lowal le.
as a direct cost where authorized by the Fed-
eral awarding agency or as 0,1) indirect cost .
whore allocable to Federal awards.
3. Alcoholic. beverages. Costs of o.looholic
beverages are unallowable.
4. Audit costs and related services. a. The
costs of audits required by, a,nd performer) III
accordance. with, the Single Audit: Act,, e.v
implemented by Circular A -133, " Audit<, of
States, Local Governments, and Non - Profit
Organizations" are allowable. Also see 31
U,S.C. 7505(b) and section 230 ( "Audit Costs ")
of Circular A -133.
b. Other audit costs are allowable if in-
cluded in an indirect cost rate proposal, or if
specifically approved by the awarding agen-
cy as a, direct cost to all award.
c, The cost of agreed -upon procodures en-
gagements to monitor subrecipients who are
exempted from A -133 under section 200(0) are
allowable, subject to the conditions listed in
A -133, section 230 (b)(2).
5. Bad debts. Sad debts, including losses
(\uhether actual or estimated) arising from
uncollecta,ble accounts and other claims. Ire -
la.ted collection costs, and related legal
costs. are unallowable.
7.55
PAGE .... f L. OF .. , ... PAGES
PI. 230, App. B
G. Bonding costs. a. Bonding 00SLE arise
when t;he Federal Governs - lent requires as-
Suranoe against financial loss to itself or
others b reason of the act or default, of the
nml- profit organization. The`' arise also in
instances where the non- profit organization
requires similal' assurance. Includ are site)]
bonds as bid, performance. payment. advance
payment, it) fringem ell t, and fidelity bonds.
b. Costs of bonding required pursuant to
the terms of the award are allowable.
G Costs of bonding required by the non-
profit organization in the general conduct of
its operations are allowable to the extent
that such bonding is in accordance with
sound business practice and the rates and
premiums are reasonable under the cir-
cumstances.
7. Communication costs. Costs incurred for
telephone services, local and long distance
telephone calls, telegrams, postage, ]mes-
senger, electl'ouic or computer transmittal
services and the like are allowable.
8. Compensation for personal services. a.
Definition. Compensation for personal serv-
ices includes all compensation paid cur-
rently or accrued by the organization for
services of employees rendered during the
period of the award (except as otherwise pro-
vided in subparagraph 8.11 of this appendix).
It includes, but is not limited to, salaries,
wages, director's and executive committee
member's fees, incentive awards, fringe belle
fits, pension plan costs, allowances Ior off -
site pfly, incentive pay, location allowances,
hardship Pay, and cost of living differentials.
b. Allowability, Except as otherwise spe-
cifically provided in this paragraph, the
costs of such compensation are allowable to
the extent that:
(1) Total compensation to individual em-
ployees is reasonable for the services ren-
dered and conforms to the established policy
of the organization consistently applied to
both Federal a nd non- Federa) activities; and
(2) Charges to awards whether treated as
direct or indirect costs are deLerminecl and
supporte(1 as required in this paragraPll.
c. Reasonableness. (1) Pdllen the organiza-
tion is predominantly engaged in activities
other than those sponsore(1 by the Federal
Government, compensation for employees on
federally-sponsored wort: will be considered
reasonable to the extent that it is consistent
Wit]) that paid for similar work in the orga-
nization's other activities.
('L) 1�'hen the organization is predominantly
ongaged in federally- spoesore( activities and
in cases where the Lincl of employees re-
quired Ior the Federatl activities are ]lot
found in the organization's other activities,
compensation for employees on federa]]y-
sponsored wort: will be considerod reasonable
Lo the extent that it is comparable to that
paid for similar wort in the labor markets in
Which the organization competes for the
1 :ind of employees involved.
2 CFR Ch. II (1 -1-09 Edition)
d. Special cmlSiderati011s ill determining
allowabilfty. Oel'Laill condition: require spe-
cial consideration and possible limitations in
determinin@ costs under Federal awar(ls
where amounLS or types of compensation sip
pear unreasonable. Amon'; such conditions
are the lollowing:
(1) Compensation to mombers of non- profit
organiza.tions.trusLees, directors. associates,
officers, or the immediate families thereof.
Determination should be made that such
compensation is reaswlable lot- the actual
personal services rendered rather than a dis-
tributioll of earnings in excess of costs.
(2) Any change in an organization's com-
pensation policy resulting in a substantial
increase in the organization's level of com-
pensation, particularly when it was concur-
rent with an increase in the ratio of Federal
awards to other activities of the organiza-
tion or any change in the treatment of a.]-
lowability of specific types of compensation
due to changes in Federal policy.
e. Unallowable costs. Costs which are unal-
]oleable under other paragraphs of this ap-
pendix shall not be allowable under this
Paragraph solely oil the basis that tale) con-
stitute personal compensation.
f. overtime. extra -pay shift, and multi -
shift premiums. Premiums for overtime,
extra -pay shifts, and multi -shift wort: are a)-
lowab]e only with the prior approval of the
awarding agency except:
(1) wllerl necessary to cope With emer-
gencies, such as those resulting from a•cci-
clents, natural disasters, breakdowns of
equipment, or occasional operational bottle -
necks of a sporadic nature.
(2) \T'hen employees are performing indi-
rect functions, such as administration, main-
tenance, or accounting.
(3) In the performance of tests, laboratory
procedures, or other similar operations
tvhicll are continuous in nature and cannot.
reasonably be interrupted or otherwise com-
pleted.
(4) 1d'hen lower overall cost• to the Federal
Government will result.
g, Fringe benefits. (1) Fringe benefits in
the lm•m of regular compensation paid to
employees during periods of authorized ab-
sences from the job, such as vacation leave,
sict lease, military leave. and the like. aa'e
allowable, provided such costs are absorbed
by all organization activities in proportion
to the relative amount of time or effort actu-
ally' devoted Lo each.
(2) Fringe benefits in the fOTnl of employer
eontribntions or expenses for social security,
employee insurance, workmen's compensa-
tion insurance, pension plan costs (see sub -
parag'raph 8.), of this appendix), and the like,
arc allowable, providod such benefits are
granted in accm•dame with established writ-
ten organization policies. Such benefits
whether trea.Led a. indirect costs or as direct
costs, shall be distributed to particular
156
AT FACHMENT .......} .......
PAGE OF PAGES
01013 Circulars and Guidance
awards; and nthor a,ctivll.iot, ni ;i enamor r.mr
sistonl wlLI) the pa.t,ni'll of hnnr,l'ICk anrruing'
Ln I,hn Individuais or f,rnup of omployeos
whnso sa.larios e.11(1 wagot-•, a.ro. olwxk,'oa.ble t,o
such a,avu•ds Mid Other actIV11;ios.
(3)uu 1'POPI810Ra for a. Peael've under a solf-
u;suranee program for unemployment, com-
pinlso.tion or woricors• onmpnusoi.Liou a.re al-
Inwa,b)e to tho extonl, that tho provisions
r wosent, reasonable ostimatof; of the. Habit -
Itios for such componsa.tlon, a,nd the typos of
covorattc, oxtonl, of covorage, anti ratos anti
prumlulns would have bean a.11nwable had in-
suranoo boon puroha,sod to coven• the risks,
flownvor, provisions for self - insured Hahil-
ties whim; do not beeO1110 payeLblo for morn
Ulan one yoar a.l'Lor Lhn provision is nla.ue
s))Idl lint w:cood the prosont, value of LI)e If-
a,hillty,
(b) Whore an ort anizatfou follows a con -
sistcmt poll(, of expensing actual payments
Lo, or all bolialf of, omployeos or former em-
ployees for unomployment, compensation or
workers eompensa.tion, such payments are
a,IlowaJ7le ill the year of paymient with the
print approval of the awarding agency, pro-
vided they are allocated to all activities of
the organization.
(4) Costs of Insurance on the lives of trust-
ees, officers, or other employees holding po-
sitions of similar responsibility are allow-
able only to the extent that, tho insura.noe
represents additional compensation. The
e,osts of such insurance when the organiza-
tion is named as beneficiary are unallowable.
h. Organization - furnished automobiles.
That partial] of the oast, of organizatiolt-fur-
nished an torn obi I ws that rela.tos to personal
rise by employees (including transportation
to a.nd from work) is unallowable as fringe
henefit or indirect costs regardless of wheth-
er the cost is reported as taxable income to
the employees. These costs are. allowable as
direct costs to sponsored award when nec-
nssary for the performance of the sponsored
award and approved by awarding agencies.
I. Pension plan costs. (1) Costs of the. orga-
nization's pension plan which are incurred in
accordance with the established policies of
the organization are allowable. provided:
(a) Such policies meet, the test, of reason-
ableness;
(b) The methods of cost allocation are not
discriminatory
(c) The cost assigned to each fiscal year is
determined in accordance with generally ac-
cepted accounting principles (GAAP), as pre-
scribed in Accounting Principles Board Opin
ion No. (i issued by the American Institute of
Certified Public Accountants; and
(d) The costs assigned to a. given fiscal year
are funded for all plan participants within
six months after the end of that year. How-
ever, increases to normal and past service
pension costs caused by a. delay in funding
the actuarial liability beyond 30 days after
Pi. 230, App. 6
r.estli quarter of Lhe y(!lu to which such e.os6�
nr, ;c.ssignahla are. nnn.11owo.hle..
(2) Pcision plan Lermina.Lion insura,n(c
premiums paid pu suaaf, to Lhe TPmpinyno.
Nolirinnant.Income Security Act 11:R.ISAi of
1974 (flub, L. 99-406) are allowa.bin. 1La.to pa
mom, charp'es on such premiumt; LIT 1111M) v,.
sill(,
(3) IOxcise taxes all accumulated Funding
dofieiencies arul other pcma,ltios Impo!wd
under II;1t,1SA are unallowable.
J. Ilroentive, compensation, Incentive cone
ponsa.tlon to emplgyees based on eosL roduc -
Lion, ar officiont performanoo, suggostion
a,waxos, safety awards, ate., are allowable. Lo
LIW oxtlnit Chat Lhe overall conipcuna.Lion i:,
determined to be reasonable and such test LF.
a.rn paid or aocruad pm'nuaall; to an
niont, ontered Into In snod faith botwoen I,hv
organization and the employees boforn. Lho
services were rendered, or putsua,nt to an cs-
tablisl)ed plan followed by the arf:aniWll,ion
so consistently as to imply, in effect,, nn
agreement to make such payment.
k, Severance pay. (1) Severance pay, also
commonly referred to as dismissal wagon, is
it payment in addition to regular salaries and
wages, by organizations to workers whose
employment is being terminated. Costs of
severance. pay are allowable only to the
tent that in each case, IL is required by:
(a ) La.w
(b) Pmp)oyor- employeo agreement
(e) P'sta.bliahed policy that oonstituLes, to ef-
fect, all implied agreement o7) the Oma.ni-
ze.tion's part, or
(d) Circumstances of the particular omp)oy-
manL.
(2) Costs of severance payments are divided
into two categories as follows:
(a.) Actual normal turnover severance pay-
ments shn,l) be allocated to 'I'll activities, or-
v, the organization provides for a resew«
for normal severa,noes, such method will be
acceptable if the charwe to current, oper-
ations is reasonable in light of payments ac-
tually matte for normal severances over a
representative past period, and if amounts
charged are allocated to all a.etivities of the
organization.
(b) Abnormal or mass severance pay is of
such a conjectural nature that measurement
of costs by means of an accrual will not
achieve equity to both parties. Thus, accru-
als for this purpose are not allowable. How-
ever, the Federal Government recognizes its
obligation to participate, to the extent of its
fair share, in any specific; payment. Thus, at-
lowability will be considered on a. case -by-
case basis in the event or occurrence.
(c) Costs incurred in certain severance pay
packages (commonly known as "a, golden
parachute" payment) which are in an
amount in excess of the normal severance
pay paid by the organization to an employee
upon termination of employment and are
157
�;1,�1,� t _� I
L-
AP,�., __-_ �- -.- OF ... -_ P AGES
Pt, 230, App. B
paid to the employee contingent upon it
change in management control over, m• ovn-
oship of, the org((nlizaLion's assets are unal-
Io wable.
((U Severance payments to foreign nation-
als onployed by the o•gmuzation outside. the
United SLaLes, to the extent that. the amount
exceeds the customary m' prevailing prac-
tices for the organization in the United
States are unallowable, unless then me nec-
essary lo• the performance of Poderal pro-
grams and approved by awarding agencies.
(e) Severance payments to foreign nat]on-
als employed by the organization outside the
United States clue to the termination of the
foreign national as a result of the closing of.
o• curtailuent of activities by, the organiza-
tion in that country, are unallowable, unless
they are necessary for the performance of
Federal programs and approved by awarding
agencies.
1. Training costs. See paragraph 49 of this
appendix.
M. Support of salaries and wages.
(1) Charges to ativards for salaries and
wages, whether treated as direct costs o' in-
direct costs, will be based on documented
pa}n•olls approved by a responsible Official
of the organization. The distribution of sala-
ries and wages to awards must be supported
by personnel activity reports, as prescribed
in subparagraph 8.m.(2) of this appendix, ex-
cept when a substitute system has been ap-
proved iv writing by the cognizant agency.
(See subparagraph E.2 of Appendix: A to this
Part.)
(2) Reports reflecting the distribution of
activity of each employee must be main-
tained for all staff members (professionals
and nonprofessionals) whose compensation is
charged, in whole or in part, directly to
awards. In addition, in order to support tine
allocation of indirect costs, such repots
must also be maintained for other employees
whose wort: involves two or more functions
or activities if a distribution of their coin-
pensation between such functious or activi-
ties is needed in the determination of the o'
ganization's indirect cost, rates) (c.g., an ern
plo, e engaged part -time in indirect cost. ac-
tivities and part -time in a direct function).
Deports maintained by non- Profit organiza-
tions to satisfy these requirements must
meet the following standards:
(a) The reports must reflect. an after -the-
fact determination of the actual a.ctivft"' of
each employee. Budget estimates (i.e.. esti-
mates determined before tine services are
performed) do not qualify as suppo for
charges to awards.
(b) Bach )report must account for the total
activity for which employees cure conn-
pensated and which is required in fulfillment
of their obligations to the o'ga.nization.
(c) The repo'Ls nnust be signed by the indi-
vidual employee, or by a responsible super-
visory official having first hand knowledge
2 CFR Ch. II (1 -1 -09 Edition)
of the activities performed by the employee,
that the distribution of activity represents a
reasonable ostima.te of the actual uvorl: per-
formed by the employee during the periods
covered by the reports.
(d) The reports must be propared at least,
monthly and must coincide with one m•nnore
pay periods.
(3) Charges for the salaries and wages of
nonprofessional employees, in addition to
the supporting (locumentation clescribed in
subparagraphs (1) and (2), must also be suP-
ported by records indicating the total num-
ber of hours worked each daz' maintained in
conformance with Department of Labor reg-
ulations implementing the Fair Labor
Standards Act (PLSA) (29 CPR part 516). FBI'
this purpose, the term "nonprofessional em-
ployee" shall have the same meaning as
"nonexempt. employee, ".under FLSA.
(4) Salaries and wages of employees used in
meeting' cost sharing or matching require-
ments on awards must be supported ill the
same manner as salaries and wages claimed
for reimbursement from awarding agencies.
9. Contingency provisions. Contributions
to a contingency reserve or any similar pro-
vision made for events the occurrence of
which cannot be foretold with certainty as
to time, intensity, or with an assurance of
their happening, are unallowable. The term
"contingency reserve" excludes self- insur-
ance reserves (see Appendix E to this part,
paragraphs 8.g.(3) and 22.a(2)(dj); pension
funds (see paragraph 8,i): and reserves for
normal severance pay (see paragraph 8.h.)
10. Defense and prosecution of criminal and
civil proceedings, claims, appeals and patent
infringement.
a. Definitions. (1) Conviction, as used here-
in, means a judgment or a conviction of a
criminal offense by any oourt of competent
Jurisdiction, whether entered upon as a ver-
dict o• a plea, including a conviction due to
a plea of role coutendere.
(2) Costs include, but are not lfmftecl to,
administrative and clerical expenses: the
cost, of legal services, whether Performed by
in -house Or private counsel; and the costs of
the services of accountants, consultants, o•
others retained by the organization to assist
it: costs of employees, officers and trustees,
and any similar costs incurred before, dur-
ing, and after connnnencennent of 'a judicial o•
administrative proceeding that bears a di-
met relationship to the proceedings.
(3) Fraud. as used herein, means acts of
(rand corruption or attempts to del and the
Fe(leral Government o' to corrupt its agents,
acts that constitute a cause for debarment.
o• suspension (as specified in agency regula-
tions). and acts which viola6e the False
Claims Act. 31 U.S.C., sections 3729 -3431, o'
the Ant;- Iiickbach Act, 11 U.S.C„ sections 51
anti 59.
(9) Penalty does not include restitution, I -
imbursement, or coil) pensatory damages.
158
ATTACHMENT ......0........
PAGE ....� ?.... OF ... <... PAGES
0I0B Circulars and Guidance
1 " I't•oCoodhut ino•ludrt; It'll btvr.:;ttgn.l, inn
b (I; foxnopt as ol,horwisn doscrihod hornnn.
,••nstx tnrurred h( oonnontion wfish auy ovi ni.
nn.), civil or a.(hniuistra,tive. pr000edintl 011-
(lu(litw Ciling of it false Corti fioo.ti oil l Com-
mnIwod by I,hc Podo.ra,1 Govornmeltt, or it
local or foreign gov(n'nnnent, are not•
n.Ilmva,blo if the proceeding: itelates to a vio.
Intiou of, or failurr 1,0 comply with, a FCd-
nral, (31tnCc, local nr forr,lgn statute or rogu.
hdtion 1)) the orfoulizn.tioil (including its
+igonts and enployees), and results 1)n any of
Chr. following (lispnsittons:
fn l In it rrinninal proceedinn, it Conviction,
fit; In a Civil or afhnintstrative proceeding
nlvolving a.n alloga.tlon of fraud or similar
nusoonduct, it determination of orfrantrn-
tinnn,l 1 ta•billl;y.
(e) 111 the case of any Cavil or administra-
tivo proceeding', the imposttion of it mono -
tary Penalty.
(0) A final dociaion by an appropriate Fed-
ora.) official to lobar or suspend the organi-
zation, to rescind or void an award, or to ter-
minate an award for default by reason of a
violation or failure to comply with it law or
regulation.
(Pi A disposition by consent or com-
promise, if the action could have resulted in
any of the dispositions described in subpara-
graphs lab.0)(a.), (1)), (o( or (d( of this a.ppen-
dix.
(2) If more than onw proceeding involves
the same allegod misconduct the costs of 1•11
suc), proceedings shall be unallowable if any
onr, of them results in one of the dispositions
shown in subparagraph 10.1).(1 ) of this appen-
d Ix.
c. If a proceeding referred to in subpara-
grn.ph 10.h of this a.ppendb: is commenced by
the Foders,l Government and is resolved by
consent or compromise pursuant to an agree -
loot ento'ed into by the orgaanizn•tion and
the. Fede'a.l Government, then the costs in-
curred by the organization in Connection
with such proceedings that are otherwiso not
allowable tinder subparagraph 10.b of this ap-
pendix may be allowed to the extent specifi-
colly provided in such agreement.
(1. If a proceeding referred to in subpara-
graph 10,b of this appendix is commenced by
a State, local or foreign government, the au-
thorized Federal official may allow the costs
incurred by the organization for such pro-
ceedings, if such authorized official deter-
mines that the costs were incurred as a re-
sult of a, specific term or condition of a, fed-
erally- sponsored award, or specific written
direction of an authorized official of the
sponsoring agency.
e. Costs incurred in connection with pro-
ceedings described in subparagraph 10.h of
this appendix, but which are not made unal-
lowable by that subparagraph, may be al-
lowed by the Federal Government, but on])
to the extent that:
P1. 230, App. B
I Thr. Cost)'; av(.. ro.asuuahlo iu rolrt.tion to
I•hr. a.ctivitua roquirnd Lo deal with Mw pro -
eeoding a.ud isle undm9ying cause of acl'•lon.
(8) Yaynx:nt of the Costs incurred, n.s a.11oxv .
alilo, and allocahle costs, is not prohibited hy
a.ny other provisio of tho sponsored
award;
Cli The costs fire unt otherwtso rnonvo,r(
from t•he Fode'al Government or n (•lm'd
party, either dirontly as a vosull: of 1hlw pro
coeding or otherwise; and,
At Tho percentage of costs allowed does
trot cxcood the peroentage doto'minod by an
authorized Podoral official to be a.pproprin.tc,
collohloring the connploxity of the litipalJon,
genorally aooeptod principles govorninl: 1',10
award of legal fans ]n civil n.ctdons invnlvirtf.
the United Statos n.s it party, aiid snob nChnr
fn.ctors as may be appropriate. Such percent.
-
ago, shall not, excoe(1 00 pm'oent. Ilowovor. If
, agreement r0acho(1 Undo)' subpsu'n,grn.ph
Me of this appendix has explicitly consid-
ered this 00 percent, limltation and permiti,ed
a higher percentage, then the full amount of
costs resulting from that a,greomont shall be
allowable.
f. Costs incurred by the organization in
ronneotion with the defense, of suits broutl
by its employees or ox- employees uncle' se(l-
tion 2 of the Major Fraud Act. of 19138 Muh, I_,.
100 -700), including the cost of all relief nee:
essary to make such employee whole, where
thf . orga.uiza.tiorn was found liable or settled,
arr, unallowable.
K. Costs of legal, accounting, aaui oousnit,
ant services, an(i related Costs, ineurrod ill
connection with defense against Federal
Government claims or appeals, antitrust,
suits, o' tho prosecution of claims or a.ppea.lh
against the Federal Government, are unal-
lowable.
h. Costs of legal, a.cceunting, and Consult.
e.ut, services, an(] related Costs. incurred in
connection with patent infringement litiga-
tion, are unallowable unless otherwise pro-
vided for in the sponsored awards.
i. Costs which may he unallowable uncle
this paragraph, including directly associatod
costs, shall be segregate(1 and accounted for
by the organization separately. During the
pendency of any proceeding covered by sub-
paragraphs 10.1) and f of this appendix, the
Federal Government shall generally with-
hold payment of such costs. However, if in
the best interests of the Federal Govern-
ment, the Federal Government may provide
for conditional payment upon provision of
adequate security, or other adequate assur-
ance, and agreements by the organization to
repay all wnallowable costs, plus interest, if
the costs are subsequently determined to he
unallowable.
11. Depreciation and use allowances. a.
Compensation for the use of buildings, other
capital improvements, and equipment on
hand may be made through use allowance. or
depreciation. However, except as provided in
159
I PAGE .... .... OF ...�.�� .. PAGES
PI. 230, App. B
paragraph 11.1 of this appendix., a oombina-
Lion of the.two methods may not be used in
connection with a single class of fixed assets
buildings, office equipment, connputo•
equipment, etc.).
b. The colmpUtation of use allowanoes o'
depreciation shall be basod On the acquisi-
tion cost of tine assets involved. The ac(luis)-
tion cost of an asset donated to the non -prof-
it Organization by a third party shall lie its
fair market value at the time of the do"
ti on.
c. The computation of use allowances or
depreciation will exclude:
(1) The cost of land;
(2) Ant' Portion of the cost of buildings and
equipment borne by or donated by tine red -
era) Government irrespective of where title
was originally vested or where it presently
resides; and
(3) Any portion of the cost of buildings and
equipment contributed by or for the non-
profit organization in satisfaction of a statu-
tory matching requirement.
d. General criteria where depreciation
method is followed:
(1) The period of useful service (useful life)
established iii each case for usable capital
assets must take into consideration such fac-
tors as type of construction, nature of the
equipment used, technological developments
in the particular program area, a nd the re-
newal and replacement. policies followed for
tine individued items ar classes of assets in-
volved. The method of depreciation used to
assign the cost of an asset (o• group of as-
sets) to accounting periods shall reflect tine
pattern of consumption of the asset during
its useful life.
(2) In the absence of clear evidence indi-
cating that the e>:pected consumption of the
asset will be significantly greater o• lesser in
the early portions of its useful life than in
the later portions, the straight -line method
shall be presumed to be the appropriate
method.
(3) Depreciation methods once used shall
not be changed unless approved in advance
by the cognizant Federal agency. When the
(lepreciation method is introduced for appli-
cation to assets previously subject to a use
allowance, the combination of use allow-
ances and depreciation applicable to such as-
sets must not exceed the LOW acquisition
cosh of the assets.
e. 11'hol the depreciation method is used
for buildings, a building's shell nlay be seg-
regated from each building. component (e.g„
plumbing system, heating, and air condi-
tioning system, etc.) and each item (lepre-
ciaLed over its estimated useful life: or the
entire building (i.e.. the shell and all compo-
nents) may be treated as a single asset and
depreciated Over a single useful life.
f. 11'bein the depreciation method is usCid for
a particular class of assets. no depreciation
may be allowed on any such assets that,
2 CER Ch. II (1 -1 -09 Edition)
under subparagnapin 13 d of tnfs appendix'.
u on](1 be viewed as full\' depreoiaLocl. How-
ever, a reasonable use allowance Una } - Lo ne-
goLiated for such assets if warr111te(1 after
Laking into eousi(lo•ation the amount of de-
preciation provicusly charged to the Federal
Government, the estimated useful life re-
maining at time of negotiation, the effect of
auy in ceased maintenance charges or de-
o•eased efficiency clue to age. and any other
factors pertinent to the Utilization of the
asset for the purpose contemplated.
g. Criteria where the use allowance method
is followed:
(1) The use.a.11ovance for buildings and inn -
provennent. (including land improvennents,
sucl; as paved parking areas, fences, and
sidewalks) twill he computed at an annual
rate not exceeding two percent of acquisition
cost.
(2) The use allowance for equipment will be
computed at an annual rate not exceeding
sip: and two - thirds percent of acquisition
cost. 11 the use allowance method is used
for buildings, the entire building must be
treated as a single asset; the building's com-
ponents (e.g., plumbing system, heating and
air conditioning, etc.) cannot be segregated
from the building's shell.
(3) The two percent limitation, however,
nee6 not be applied to equipment which is
merely attached or fastened to the building
but not permanently fixed to it and which is
used as furnishings or decorations or for spe-
cialized purposes (e.g., dentist chairs and
dental treatment units, counters, laboratory
benches bolted to the floor, dishwashers,
modular furniture, carpeting, etc.). Such
equipment will he considered as not being
permanently fixed to the building if it can he
removed without the Heed for costly or ex-
tensive alterations o• repairs to the building
o• the equipment. Egnipment that meets
these criteria will be subject to the G per-
cent equipment use allowance limitation.
h. Charges for use allowances or doprecia-
tion must be supported by adequate property
records and physical inventories must be
taken at least once every two years (a statis-
tica) sampling basis is acceptable) to ensure
that assets e;:ist and are usable and anooded.
\'When the d method is followed,
adequate depreciation records indicating the.
amount of depreciation taken each period
must. also be nnainLained.
12. Donations and contributions.
R. Contributions o' (lonations rondoe(1.
Contributions or donations, including cash,
property, and services, made by the Ogani-
zation, regardless of the recipient, are unal-
low•able.
b. Donated services received:
(D Donated o• volunteer services may be
furnished to an organization by professional
and Lechnical personnel, consultants. and
other skilled and mnsh labor. The value
of these services is not refmbm•sable either
160
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/\hENT
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PA.GEF
OMB Circulars and Guidance
;I . n rlircot or indirect (•.nail liovwnvnr, t.hr
valor of dona.too snrvir,es• nla "y he usod Ln
Illmd (lost sharing or unl.tahing ro(lim": ntntts
li n,nwwclanue with tho Common Palle.
„ Tlw value of donated 4(lrvinos utilized in
ter pallorma,neo of a direct coat activity
slwdl, when ma8,criai in rtlnount, be consid-
"rnrl ni the (Iotormina.tion of the nmt profit,
nrlrn,nizn.l; inn's indirect costs or ratws) and,
nro•.nrrlhtfTly, shall be a,llocate(I a propor-
tinns,tu share of apphoa,ble indirect costs
1 )vm tiff I'ollov'inf:' exiat:
rn.i 'PiM aggr0g[Lt,0 value of Lho aorvioes is
Illl,kirial'•
Ih) 'I'lle sorvires are suppol'Lod by a signifl-
••.altl ninoulli, of the Indirnel, (,calla Incurred
oe the non- profit orxanizn.tior)'. and
u•.) The diroot. cost activity is not, pursued
Prllu .rlly I'or the battofl , of the ) ?ndnra.l Clov-
nrnment
(3) In those instauoea Where Micro is no
bmais I'm determining the fall maxicct value
of the services rondered, the recipient and
the cognizant agency shall negotiate an a) >
propriate allocation of indirect, cost to the
sorvices.
(4) Whero donated services directly benefit
a. project, supported by an award, the indirect
costs allocated to the services will be consid-
errd as a part of the total costs of the
project. Such indirect, costs may be reim-
bursed under the award or used to meet, coat.
altaring or matching requirements.
(5) The value of the donated services may
lw used to meet cost sharing or matching re-
gnirements under conditions described in
Rootion 215.23 of 2 CPR part 215 (OMB Cit
(lular A -lip). Where donated services are
treated as indirect costs, indirect cost ra,tos
will soparate the value of the donations so
that reimbursement will not be made.
c. Donated goods or space. (1) Donated
Roods: i.e., expendable personal propertvisup-
plios, and (lonated use of space may hn fur-
nishod to a non- profit orgaauiza.tion. The
vn.lue of the goods and spa.ee Is not reimburs-
ahle either as a, direct or indirect cost.
(2( The value of the donations may be used
to meet, cost sharing or matching sharee re-
cuiretnents under the conditions Oascribed in
2 CPT, part 215 (OMB Circular A -110). Where
(lona.tions are treated as indirect costs, indi-
rect cost rates will separate the value of the
donations so that reimbursement will not be
made.
13. Employeee morale, health, and welfare
costs.
a. The costs of employee information pub-
li(lations, health or first-aid clinics and /or
infirmaries, recroational activities, em-
ployee counseling services, and any other ex-
penses inourrod in accordance with the non-
profit, organization's established practice or
custom for the improvement of working con-
ditions, employer - employee relations, em-
ployee morale, and employee performance
are allowable.
Pt. 230, App. B
��. ,yuck will W• willlud))v a.pporl,ionnd
gn a.l) ,ictivftirs of thr non- profit orgar)iza-
i,ion. Incontn fonerate(i from any of theso ac-
tivities will Ile credited to the rnsl. I,herenf
unless suet) income has been irrovooa.bly s(rt
over to enlplovne welfare orga,niza.tinns"
14. En6ertainnuont costs. Costs of )nitol
la.inulont, including aarnlsrnu;nt, diveraiou
and social activities a,ud any oosts diroctly
a.ssoci;ltcd with such costs (such as Lfckot::
to shows or sports events, moils, lodgfnf;.
rentals. I;ra.nsporta.ti on, and grn.tull,ies) a.re
unallnwa,blc.
15. Mquipinow a,nd mbar an.pltal r.xpr.nth
t,ll1'na.
a. For purpoww of this suhpnd a '1 a.ph. tin
Rlllnwtnp, deftnttlmts a.InAv
(1) "Capltdtl P:xpou(liturea" nutaus exp(n(li
Lures for thn ncquisition coat of ca.plts.) n.s-
sets ( equipment, bulldings, inn(1), or expendi-
tures to make improvemonts to en.pital as-
acts that materially ineroase, theft value or
useful life. Acquisition cost, meatus the (lost,
of the asset including the cost to put, it. Ill
place. Acquisition cost for equipment, for ex-
ample, means the net invoice price of the
equipment, including the cost, of any modi-
fications, attachments, accessories, or n.uxil-
iary apparatus necessary t,o mal(e it usable
for the purpose for which it, is acquire(] Ali-
ciliary charges, such as taxes, duty, prole(•,"
five in transit, insurance, freig)t, and instal
lation may be included in, or oxoludod from
the acquisition cost, in accordance n'ith the
non - profit organization's regular aremintinf
practices.
(2) "Equipment" moans an article of non-
expendable, tangible personal property hav-
ing a useful Ilfe of more. thou one year and
an acquisition ('lost which ("quids or exceeds
I'll(" lesser of the oapitalizatiOil level eeta,la-
lishod by the non - profit organization for fi-
nanoia.l ata.tement purposos, ov .1:50(1(1.
(3) "Special purpose equipment's meant-
equipment, which is nsed only I'm research,
medical, scientific, or other technical aativi-
ties. Examples of special purpose equipment.
include microscopes, x -ray machines, snr-
gical instruments, and spectrometers.
(4) "Coneral purpose equipment" meaals
equipment, ve'hich is not limited to research,
medical, scientific or other technical activi-
ties. Examples include office equipment and
furnishings, modular offices, telephone net-
works, information technology equipment
and systems, air conditioning equipment, re-
production and printing equipment, and
motor vehicles.
h. The following rules of allowa.bility slin,il
apply to equipment and other capital ex-
penditures:
(1) Capital expenditures for goneral pur-
pose equipment, buildings, and land are unal-
lowable as direct charges, except, where ap-
proved in advance by the amarding agency.
IG7"
f \I I! \�.1- 11Y1CIV 1 -..- ..dam/ ----------
PAGE ... l�___. OF . -.23 -- PAGES
pi, 230, App. B
(2) Capital expenditures for special purpose
equipment are allowable as direct costs, pro -
vided that items with a unit cost of s'GO(JO or
more have the prior approval of the awcu•clinp
agency.
(3) Capital expenditures for in) Provenl ell ts
to land, buildings, or equipment. which nhate-
rialh inmvease their value or useful life are
unallowable as a direct cost except with the
prior approval of the awarding agency.
(4) When approved as a direct charge pursu-
ant to paragraph 15.1).(1), (2), and (3) above,
capital expenditures will be charged in the
period in which the expenditure is incurred,
or as otherwise determined appropriate by
and negotiated with the awardimg agency.
(5) Equipment and other capital expendi-
tures are unallowable as indirect costs. How-
ever, see paragraph 11., Depreciation and use
allowance, of this appendix for rules on the
allowability of use allowances or deprecia-
tion oil buildings, capital improvements, and
equipment. Also, see paragraph 43., Rental
costs of buildings and equipment, of this ap-
pendix for rules on the allowability of rental
costs for land, buildings, and equipment.
(6) The unamortized portion of any equip-
ment written off as a result of a change in
capitalization levels may be recovered by
continuini= to claim the otherwise allowable
use allowances or depreciation on the equip-
ment, or by amortizing the amount to be
written off over a period of ,years negotiated
with the cognizant agency.
16. 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 regula-
tions are unallowable except when incurred
as a result of compliance with specific provi-
sions of all award or instructions ill writing
from the awarding agency.
17. Fund raising and investment lnanage-
ment costs. a. Costs of organized fund rais-
ing, including financial campaigns, endow-
ment drives, solicitation of gifts and be-
quests, a nd similar expenses incurred solely
to raise capital ol• obtain contributions are
unallowable.
b. Costs of investment counsel and staff
and similar expenses incurred solely to en-
llallee income from investments are unallow
able.
c. Fund raising and investment activities
shall be. allooated an appropriaLc share of in-
dire.e6 costs under the conditions described
in subparagraph B.3 of Appendii: A to this
part.
1(l. Gains alh(l losses on depreciable assets.
a, (1) Gains and losses on sale, retirement, o'
other disposition of depreciable property
shall ))c. included in the year in which they
occur as credits or charges Lo cost grouP
in,-(s) in which the clepreciaLion applicable to
such property was included. The amount of
the gain or loss to be included1 as a credit or
charge to the appropriate cost grouping(s)
2 CFR Ch. I) (1 -1-09 Edition)
shall be the difference bvmveon the sunount .
realized on the property anti the
undeprociat,ed basis 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 Jol-
lowiug conditions:
(a) The gain or loss is processed through It
depreciation account and is reflected in the
depreciation allowable under paragraph 11 of
this appendix.
(b) The property is given in exchange as
Part of the purchase price of a similar item
and the gain or loss is taken into account in
determining the depreciation cost basis of
the new item.
(o A loss results from the failure to lnain-
tain permissible insurance, except as other-
wise provided in paragraph 22 of this apPen-
dix.
(d) Compensation for the use of the prop-
erty was provided through use allowances in
lieu of depreciation in accordance with para-
graph 9 of this appendix.
(e) Gains and losses arising from mass or
extraordinary sales, retirements, or other
dispositions shall be considered on a case -by-
case basis.
b. Gains or losses of any nature arising
from the sale or exchange of property other
than the property covereclin subparagraph a
shall be excluded in computing award costs.
19. Goods or services for personal use.
Costs of goods or services for personal use of
the organization's employees are unallow-
able regardless of whether the cost is re-
ported as taxable income to the employees.
20. Housing and personal living expenses. a.
Costs of housing (e.g., depreciation, mainte-
nance, utilities, furnishings, rent, etc.),
housing allowances and personal living ex-
penses f'orlof the organization's officers are
Unallowable as fringe benefit (n' indirect
costs regardless of whether the cost is re-
ported as taxable income to the employees.
These costs are allowable as direct costs to
sponsored award when necessary for the pel•-
formance of the sponsored award and ap-
proved by awarding agencies.
b. The Lerm "officers inclucles current and
past officers and employees.
21. Idle facilities and idle capacity. a. As
used in this section the following terms have
the meanings set forth bendy:
(1) "Facilities" means land and buildings
or any portion thereof. equipment individ-
ually or collectively, o• any other tangible
capiLa.l asset, wherever IOCa.Led, and whether
owned Or leased by the non - profit organim-
ti on,
(2) "idle faciliLies" means conpleLely un-
used facilities that. are excos to the non-
profit organization's current nee(ls.
(3) "Idle capacity" means the unused ca-
pacity of partially used facilities. It is the
difference between: That which a facility
could achieve under 100 percent operating
1G2
ATTACHMENT ...... ........
PAGE ... j 2 .... OF ...� :� _.. PAGES
OMB Circulars and Guidance
tlrll' on a Oil( Shift lftgb. Irsr n)rr.r,,Llult
nitnrruptian:; rll n it l la llI Iron I. utn 101:1. I'oi rr
lu, Il•5. setllips, II I I Ill It, t, i s f I Ito l•,y Illn. Wwials. %611(I
nl.ho.r norma) cinln.VF: mild 1,111! rxtottL I,o cahici
I.hr fli.r.11it,t war, a.ctuall,y used I,o moot: do-
nuoudg during thr. tiroountinf period. A
nnllLi - slti('t bnsie. Should ho. nse(i if IC ran Ito,
nlr*,wit that. Ch IS moonlit. of usag( would not•
m911y b0 oxpncte( I I'or I,bo ty1)" of RLr,tli111 In-
IIvo I
( "OosL of tdIc faciIIt;Icg 0r fell). aa.pac;ity'
nnm.n; (iosts moll as mnf)II,ouaneo, ropn.ir,
houstng, rant, and other reln.ted costs, e.rl•,
Intnu•,ulco, Intoresl„ pt•opOrty t,axo" Raul d0-
pY(WbLtlnn or use allowances,
b Tho (lost;" of idle fa.ellltfos arc unoLllnu
abic exeapt, to thr. rx LOnl. I,hat.
�l I Thoy are n000ssary Lm mnnt rdnctuations
Ili N or
(2) Although not, ne0onsa.ry to moot fluu-
tua.tions In workload, they wer(l neoessary
whet a.cqulrod and are now idle because of
changes in program requirements, efforts to
aohleve me�0 econonnioa,l operations, re0 gam
nization, termination, or other causes which
could not have beau reasonably foreseen.
Under the exception stated in this subpara-
graph, costs of idle facilities are allowable
lot a. reasonable period of time, ordinarily
not to oxeeed one. year, depending on the. Ini-
tiative taken to use, lease, or dispose of such
fa.ei li t,i es,
r.. The costs of idle rapacity are normal
(torts of doing business and are a fa.etm in
she normal fluctuations of usage or indirect
cast, rates from period to period. Such (costs
an0 allowable, provided tho.t the capacity is
reasonably anticipated to be, necessary or
was originally reasonable. and is not subject
1,c reduction or elimination by use oil other
Federal awards, subletting, renting, or sale,
in a.ecordance with sound business, eco-
nomic, or security practices, Widespread idle
capacity throughout an entire facility or
among It group of assets having substantially
tie same; function may be considered idle fa-
cilities,
22. Insurance a.nd indemnification. a., Insur-
Iince includes insurance which the. organiza-
tion is required to carry, or which is ap-
proved, under the terms of the award and
any other insurance which the organization
maintains in connection with the general
conduct of its operations. This paragraph
does not apply to insurance which represents
fringe benefits for employees (see subpara-
graphs B.g and 8.i(2) of this appendix).
(1) Costs of insurance required m• approved,
and maintained, pursuant to the award are
allowable.
(2) Costs of other insurance mainta.f110d by
the organization in connection with the gen-
eral conduct of its operntions are a.11owa,ble,
subject to the following limitations:
(a.) Types and extent of coverage shall be, in
a.ceordanee with sound business practice and
k 230, App, B
I'll ;•a.l, n,ud Iwn11)iunr+ x I I I, H Ur roa.son III de
Il lIoor Lh(I (Si t• e❑ nl R 1, Ill I(;es.
(b) Cost), ad)owed for businoss Ill Lerruptioil
or othor simflar insurance shs.il be lh»lLnd to
nxclodo envorage of nladlagemenl. Rtes.
w) Coate: of insurn.nee or of any provisions
for a roliorve covering the risk of loss om
dan'nl,ge to Fooerld property err I,.Ilowahlo
only to the extent. that, the rn't;a,nfzaLfou IS
liable lot such loss or dama.Frr..
(d) Provisions for a resorve under a sell' -Irr
surilil(w Iarolrra.m are a,llowahle to the nxl'oni
Lhat, typos of c;ovorage, extent, of (Iovorngn.
raLOS, a.nd protnfums wouid hn.vo boom Ili -
lowed had Insurance born Purchased Lo 00\10)
I'll(! risks. Flowover, provision for I nnvn or
roll.sona.hly estimated self- hmserod Imbilltf(ts.
which do not, I)eeotne paVabJ0 for more t11a.n
0110 year after the provision is made, shall
2101, ex0eed the present value of the liahility
((;) Costs of insuranc oil the lives of tru
em, officers, or other employees holding po-
sitions of similar responsibilities are allow -
,able, only to the extent that the insurance
represents additional compensation (see sub-
paragraph 6.g(4) of this appendix). The cost,
of such insurance when the organiza.tien is
Identified as the beneficiary is unallowable.
(f) Insurance against defects. Costs of in-
surance with respect to any costs incurred to
correct defects in the organiziltimt's mnte-
ria.ls nr workmanship a,t•a. unallowlthle.
(g) Medical liability (malfiractice) Insur-
ance. Modieal liability insurance is an adlow-
able cost of Federal research programs only
I;o tho extent tllat the Federal resca.roll pro-
grams. involve human subjects or training of
pfixtiofplints hl research techniques. Medical
liability insurance: costs shall be treated as a
direct, cost and shall be assigned to indi-
vidual projects based on the manner in which
the insurer allocates the risk to the pope.
le.tion covered by the insi ranoe.
(3) Actual losses which could have peen
covered by pern'lissible. insurance (through
the purchase of insurance or a. self - insurance
program) are unallowable unless Lxpressly
provided for in the axillxd, exoept:
(a) Costs incurred because of losses not
covered under nominal deductible; insuraltoe.
coverage provided in keeping with sound
business practice are allowable.
(b) Minor losses riot covered by insurance,
such as spoilage, breakage, and disappear-
ance of supplies, which occur in the ordinary
course of operations, are allowable.
b. Indemnification includes securing the
organization against liabilities to third per -
sons and an) other loss or damage, not ccom-
penstited by insurance or otherwise. The Fed-
eral Government is obligated to indemnify
the organization only to the extent expressly
provided in the award.
23. Interest. a. Costs incurred for interest
on borrowed capital, temporary use of en-
dowment funds, or the use of the nil- profit
163
ATTACHMENT ....... I......._.
P AGE .... I.�.... 0 F ... �'�g _. PAG
Pf. 230, App. B
or , an t zaLiors own funds, however rep-
resented, are unallowable. However. interest
on debt incurrod after September 29, 1996 to
acquire or replace capita] assets (including
renovations, alterations, equipment, land,
and capital assets acquired through capital
]eases), acquired after Septonilier 29, 1995 and
used in support of Federal awards is allow-
able, provided that:
(1) For facilities acquisitions (excluding
renovations and alterations) costing over S10
million where the Federal Government's re-
innbursement is expected Le equal or exceed
40 percent of an asset's cost, the non - Profit
organization prepares, prior to the acquisi-
tion or replacement of the capital asset(s), a
justification that demonstrates the need for
the facility in the conduct of federally -spon-
sored activities. Upon request, the needs jus-
tification must be provided to the Federal
agency with cost cognizance authority as a
prerequisite to the continued allowability of
interest on debt and depreciation related to
the facility. The needs justification for the
acquisition of a facility should include, at a
minimum, the following:
(a.) A statement of purpose and justifica-
tion for facility acquisition or replacement.
(b) A statement as to why current facili-
ties are not adequate.
(c) A statement of planned future use of
the facility.
(d) A description of the financing agree-
ment to he arranged for the facility.
(e) A summary of the building contract
with estimated cost information and state-
ment of source and use of funds.
(f) A schedule of planned occupancy dates.
(2) For facilities costing over 5500,000, tine
non- profit organization prepares. prior to the
acquisition or replacement of the facility, a
lease /purchase analysis in accordance with
the provisions of § §215.30 through 215.37 of 2
CFR 215 (oI+4B Circular A -110), which shows
that a financed purchase or capital lease is
less costly to the organization than other
leasing alternatives, on a net present value
basis. Discount rates used should be equal be
the non - profit organization's anticipated in-
terest rates and should be no higher than the
fair market rate available to the non - profit'
organization from an unrelated ('arm's
length ") third- party. The lease /purchase
analysis shall include a comparison of the
net present value of the projected total cost
comparisons of both alternatives over the pe-
riod the asset is expected to be used by the
non - profit. ogarlization. The cost compari-
sons associated with purchasing the facility
shall include the estimated Purchase price,
anticipated operating and nncuntenanoe costs
(including property taxes, if applicable) not
included in the debt. financing, JOSE an`' esti-
nnated asset salvage value at the end of the
period defined above. The cost comparison
for a capital lease shall include the esti-
mated total lease payments, any estimated
2 CFR Ch. II (1 -1-09 Edition)
bargain purchase option, operating and
maintenance oosu. and taxes not included in
Lhe capital leasing arrangement. less iLmy es-
tima.ted credits clue under the lease at the
an d of the period defined above. Projected
operating. lease costs shall be based on the
anticipated cost of leasing comparable facili-
ties at fair nlarhoL rates raider rental agree-
ments that wou]d be renewed oy reesbab-
]ished over the period defined above, and ally
expected maintenance costs and allowable
property taxes to be. borne by the non- profit
organization directly or as part of the lease
arrangement.
(3) The actual interest cost claimed is
predicated upon interest rates that are no
higher than the fair market rate available to
the non- profit organization front an nnre-
lated ( "arm's length ") third PRI'ty.
(4) Investment earnings, including interest
income, on bond or loan principal, pending
payment of the construction or acquisition
costs, are used to offset allowable interest
cost. Arbitrage earnings reportable to the In-
ternal Revenue Service are not required to
be offset against allowable interest costs.
(5) Reimbursements are limited to the
]east costly alternative basest on the total
cost analysis required iwcler subparagraph
23.b. of this appendix. For example, if an op-
crating lease is determined to be less costly
than purchasing through debt financing,
then reimbursement is limited to the
amount determined if leasing had been used.
In all cases where a lease /purchase analysis
is performed, Federal reimbursement shall
be based upon the least expensive alter-
native.
(6) Non- profit organizations are also sub-
ject• to the following conditions:
(a) Interest on debt incurred to finance or
refinauce assets acquired before or reac-
quired after September 29, 1995, is not allow-
able.
(b) Interest. attributable to fully depre-
ciated assets is unallowable.
(c) For debt arrangements over S) million,
unless the non- profit organization makes all
initial equit1 contribution to the asset Pur-
chase of 25 percent or more, non - profit orge-
niaa.tions shall reduce claims for interest ex-
pense by an amount equal to innpuLed into' -
cot earnings on excess cash now. which is to
be calculated as follows. AunuaDY, non -prof
it organizations shall prepare n cumulative
(from the inception of the project) repot of
nnolbh]y cash flows that includos inflows and
outflows, regardless of the itwding source.
lnflovs consist of depreciation c;:pense, am-
ortization of capitalized construction inter
esL, and annual interest expense. For cash
floe calculations. the animal inflow figures
shall be divided by the number of months in
the year (usually 12) that the building is in
service for monthly amounts. f)utlle \PS con-
sist . of initial equity contributions, debt
pr]ncipal payments (less the pro rata share
164
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OIAB Circulars and Guidance
a.IIxi h lm hl r. I the. una.l low a.b le no "1 (1l
IMid Mild intornst pa)'m01ILS W))0IT (ill 11111
1111,1%11 Inflows oxcood autintlotive outflows,
ulternsl shall he calc:ute.ted on tho exoess
rnl'lom; for that period and be troa.ted as a re-
rluntlmi to allowa.blo Intorell ex)ten'4 The
11010 of int(.irest to be used to compute earn-
ing'" oil exoess cash flows shall he the throe
111011th Traaallry Bill alosing rate a,s of the
Iasi, husinens day of that month.
(d) Substn.ntial relocation of fodorally-
u)o11aored a.otivittos from if facility filia.ueod
p), mdobtednoss. Chu cost of which was fund -
(i d in whole or part, through Fedoral reim-
wrsomonts, to aarother facility prior to tho
oxpiratlon of a. period of 20 pears requiros no-
Wec to thn podorld cognizant agency. The ox-
Lont. of the relocation, the a,ntounl, oil the
Fa(leral partictpat6on in the fina,netng, and
the duproofation and fnterost charged to elate
may roquiro negotiation and /or dOWnWArd
a.d)ustmonts of repla.eemont space charged to
Fadora) programs in the future.
(e) The allowable, costs to aoquire facilities
and equipment are limited to a. fair market,
value available to the 11011-profit organiza-
tion Irom an unrelate(1 ( "arm's length ")
third party.
h. For non - profit organizations sub,j00t, to
"full coverage" under the Cost Accounting
Standards (CAS) as defined at 48 C I R
9903.201, the interest aliowability provisions
of suhparagraph a do not apply. Instead,
those, organizations' sponsors() agreements
aro silbjact to CAS 414 (40 CVR. 9903.414), cost
of money as an element of the cost of facili-
ties capital, and CAS 417 (48 CFR. 9903.417),
onst of money as an clement of the cost of
capital assets under construction.
c, The following definitions am to be used
for purposes of this paragraph:
(1 Re- acquirod assets means assets held by
the ion- profit organization prior to Sep -
tomber 29, 1995 that have again come to be
helcl by the organization, whether through
repurchase or refinancing. It does not in-
clude ascots acquired to replace older assets.
(2) Initial equity contribution means the
amount or value of contributions made by
non- profit organizations for the acquisition
of the asset or prior to occttpaalcy of facili-
ties.
(3) Asset costs means the capitalizable
costs of an asset, including construction
costs, acquisition costs, and other such costs
capitalized in accordance with GAAP.
24, Labor relations costs. Costs incurred in
maintaining satisfactory relations between
the organization and its employees, includ-
ing costs of labor managelnent committees,
employee publications, and other related ac-
tivities are allowable.
25. Lobbying. a. Notwithstanding other
provisions of this appendix, costs associated
with the following activities are unallow-
able:
Pi. 230, App. B
IL Attnnlpts Lc, Inllunnce l,h(! outcomes of
ny Fodfw;d, Stn.t,c. of Inca.) oleetinn, ref -
orillount, initiative, or similar procedure,
through in kind or cash contrihutions, m1-
dorsonu;nts, publicity, or similar activity;
(2) L'si,a.hltshing, administering, eontrih
uttng to. or paying the exponscs of a polil
ical party, ca,m)'ta.ign, political action e,urn
mit Coe, or other organization estAblisha(I for
thn purpose. of influencing tllc outnomer, nil
ohietions;
(3) Any attempt to influenow The introdw
tlon of Federal or State legislation: or thu
euaetmont or modification of Will pending
Fodoral or Ste,to logislation through namnnr
ni0,ation with any niomber or employee of
the Congress or Stato legislature. (Includhlr
efforts to innuonco State or local officials. to
engage in similar mbbybrg activity), of with
any Governmont official or employoe Ill anu
section with it decision to sign or voto oil
r011all logislation;
(4) Any attempt, to influence: The introduc-
tion of Federal or State legislation: or the
enactment or modification of any pending
Federal or State legislation by preparing',
distributing or using publicity m• propa-
ganda, or bh urging members of the general
public or 11,01' segment thereof to contribute
to or participate in any mass demonstration,
march, rally, fundraising drive, Inbbying
campaign or letter writing or telephone cam
paign; or
f5) Legislative liaison activities, including
atten(lanoe at, legislative sessions or corn
mlttee hearings, gathering information re-
garding legislation, and analyzing hho effect
of legislation, when such activities are ear -
ried on in support of or in knowing prepara-
tion for an effort, to engage in unallowable
lobbying.
e. The following activities are excepted
from the coverage of subparagraph 25.1 of
this appendix:
(1) Providing a technical and factual pres-
entation of information on a topic directly
related to the performance of a grant, con-
tract or other agreement through hoaring
testimony, statements or letters to the Con-
gress or a State legislature, or subdivision.
metnbor, or cognizant staff member thereof,
in response to a. documented request (includ-
ing a Congressional Record notice requesting
testimony or statements for the record a.t a
regularly scheduled hearing) made by the re-
cipient member, legislative body or subdivi-
sion, or a cognizant staff member thereof,
provided such information is readily Obtain-
able and can be readily put in deliverable
form; and further provided that costs under
this section for travel, lodging or meals am
unallowable unless incurred to offer testi-
mony at a regularly scheduled Congressional
heaving pursuant to a. written request for
such presentation made by the Chairman or
Ranking Minority Member of the Committee
or Subcommittee conducting such hearing.
165
�P E '2
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_�_l
Pt. 230, App. B
(2) Anti' lobbying made un,illowable by sub-
paragraph 25.a.(3) of this. appendix to infJn-
ence State legislation in order to direct]y re-
duce the cost, or to avof(1 nui.Lerial innpair
ment of the organization's authority to per-
form the gran L. contract, om other agree-
111011L.
(3) Any activity specifical)y authorized by
statute to be undertaken with funds fronn
the grant, contract, o• other agreement.
C. (1) 1','hen an organization seeks reim-
bursement for indirect costs, total )obbying
costs shall be separately identified in the in-
direct cost rate proposal, and thereafter
treated as other u nallowab)e activity costs
in accordance wit)) the procedures of sub-
paragraph B.3 of Appendix A to this part.
(2) Organizations shall submit, as part of
the annual indirect cost rate proposal, a cer-
tification that the requirements and stand-
ards of this paragraph have been copplied
with.
(3) Organizations shall maintain adequate
records to demonstrate that the determina-
tion of costs as being allowable or unallow-
able pursuant to paragraph 25 complies with
the requirements of this Appendix.
(4) Time logs, calendars, or sinnilar records
shall not be required to be created for pur-
poses of complying ivitli this paragraph (lur-
ing any particular calendar nlontll when: the
elnnployee engages in lobbying (as defined in
subparagraphs 25.a. and b. of this appendix)
25 percent or less of the employee's com-
pensated hours of employment during that
calendar month, and within tine preceding
five -year period, the organization has not
materially misstated allowable or unallow-
able costs of any nature, including legisla-
tive lobbying costs. '.'hen the conditions de-
scribed in this subparagraph are met. organi-
zations are not requirecl to establish records
to support the allovrability of claimed costs
in addition to records already required o•
maintained. Also, when tine conditions de-
scribed in this subparagraph are met. the ab-
sence of time logs, calendars, or similar
records will not, serve as n basis for dis-
allowing costs by contesting estimates of
lobbying time spent by employees (luring a
calendar nnonth.
(5) Agencies shall establish procedures for
resolving in advance. in consultation with
OMB, any significant questions 01' disagree-
ments concerning the interpl•etation o' ap-
plication of paragraph 25. Am' such advance
resolution steal] be binding in any subsequent
settlements, audits o' investigations with
resPOOL to that gran( o• cout)•act for pur
poses of ill LerpretatiOil of this Appendix: pro-
vided, however, that this shall not be con -
strned w prevent a contra.cto o• grantee
iron contesting the lawfu)ness. of such it de-
termillation.
d. hxecutive lobbying costs. Costs incurred
in attempting to in)pronerly influence either
directly or indirectly, nil ennployee o• officer
2 CFR Ch. II (1 -1-04 Edition)
of the Uxecut)ve Branch of tilt Federal Gov -
el'nnnenl Lo give consi(lernt)on or Lo act re-
garding a sponsored agreement or a regu-
lator• matter are unn]lowable. Improper in-
i'luence nlecule any influence that induces o
teu(ls to induce a Federal ennployee or officer
to give consideration o' Lo net regarding a
fe(lerally- sponsored agreement or regulatory platter on any basis other than tine merits of
the matter.
2G. Losses on other sponsored agreements
o contracts. Any excess of costs over in-
tone on any award is unallowable ns a cost
of any other aivard. This includes, but is not
)invited to, the organization's contributed
portion by reason of cost sharing agreements
or any under- recoveries through negotiation
of lump sums for, o• ceilings on, indirect
costs.
27. haintenance and repair costs. Costs in-
curred for necessary maintenance, repair, or
upkeep of buildings and equipment (includ-
ing Federal property unless otherwise pro-
vided for) which neitber add to the pernva-
nent value of the property nor appreciably
prolong its intended life, but keep it in an ef-
ficient operating condition, are allowable.
Costs incurred for improvements which add
to the permanent value of tine buildings and
equipment or appreciably Prolong their in-
tended life shall be treated as capital ex-
penditures (see paragraph 15 of this appen-
dix).
28. Materials and supplies costs, a. Costs
incurred for materials, supplies, and fab-
ricated parts necessary to carry out a Fed -
era] award are allowable.
b, Purchased materials and supplies shall
be charged at their actual prices, net of ap-
plicable credits. Witridrawals fron general
stores o• stockrooms should be charged at
their actual net cost, under any recognized
method of pricing inventory with(lrawals,
consistently applied. Incoming transpor-
tation charges are a proper Part of materials
and supplies costs.
C. Only materials and supplies actually
use(1 for the performance of a Federal award
Ilia~' be clvargocl as direct costs.
d. lynere filderally- donated m' furnished
nla.terials are used in performing the Federal
award, such materials will be used without
charge.
L0. Meetings and conferences. Costs of
meetings and conferences, the primary pun•
pose of which is the dissennina.tion of. Lee]) -
llica) information, are allowable. Tllis in-
cludes costs of meals, transpo'Lation, rent,
of facilities. speakers' fees, and other items
inc)clenLal to such meetings o' conferences.
But see paragraphs 14., TDnLerLailnnent costs.
and 33., Participant support costs of this ap
pendix.
30. Memberships, subscriptions, and profes-
sional activity costs. a. Costs of the non-
166
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0100 Circulars and Guidance
Iwo1 *11. orlt'a11 iza,tJnn's nl oil lwrship in InISI-
ncru ta<au1ioa,l, anri profnasiona,l nrga.nivn-
I,iene are allnwa.ble.
L Goats of thn note- profit orlt7l,liza.Mon's
�;ubnr,ripl,inns to business, professional, luld
�;hnian.l poriodica,ls arc o.l)owlLble,
CONS of momborship In any civic o
-mnnlunity orgatllzn.tion are a.11owaA)le with
prior a.nproval by Podoral no{fnizanl, agency.
d Costs of monlbership in a.uy eou,ntry club
or sooial or dining (11111 or Organ izalAoil are
nun.Ilown,Ille.
31. Crganizatiol costs Expen(hturos, such
a.a iuoorporatioil loos, brokorq hxls, feet; to
hronlol'orn. orgallizot's or Ill 10111,g(nllen t con -
sultn.nts. n.ttorneyp,. n.(e(1111nCall l;fl, nr invest:
nlnnl. counselors, whothor or not employees
nl I',ho o•ganim,tion, in oonnoction whit es-
ta.hllshmenL or roo'ganization nl' an organt-
zal,lon, are nnall(lwable except, with prior ap-
proval of the n.wardinl: agoncy.
32. Page charges In professional Journals.
F'a.g(t charges for prorossional journal publi-
ca -dons are allowable. as a neoessa,ry part of
research costs, where:
a. The. research papers report, work sup -
ported by the Federal Government; and
b, The charges are levied impartially on all
research papers published by the ,journal,
whether or not by federally - sponsored au-
thors.
33. Participant support oosts. Participant
snpport oosts are (tirect, costs lo• items such
a.s stipends or subsistence allowaalces, travel
a.11nwa.noes, and registration fees paid io o•
on behalf of participants o• tra,inaes ('but not,
employees) in connection with meetings,
:;onl'erences, symposia, o• training projects.
These costs are allowable with the prior ap-
proval of the awarding agency
M. Patent costs. a- The following costs re-
la,ting to patent and cop`n'ight nla,tters are
adlown.hle: cost of preparing disclosures, re-
ports. ,ofd other documents required by the
Federal award and of searching tile art, to
the extent, necessary to make such disclo-
sures; cost of preparing documents and any
other patent costs in connection with the ffl-
Ing raid prosecution of a. United States pa,t-
ent, a.pplieftiol where title or royalty -free lf-
cense is required by the Federal Government
to be conveyed to the Federal Government;
and general counseling services relating to
patent and copyright matters, such as advice
on patent and copyright lays, regulations,
clauses, and employee agreements (but, see
paragraphs 37., Professional services costs,
and 44., Royalties and other costs for use of
patents and copyrights, of this appendix).
b. The following costs related to patent
and copyright matter are unallowable:
(1) Cost of preparing disclosures, reports,
and other documents and of searching the
art to the extent necessary to make disclo-
sures not required by the award.
(2) Costs in connection with filing and
prosecuting any foreign patent application,
Pt. 230, App. B
o) ;�n ILlitod States pa.ton( a.pplical,lon .
whore ehn lacdnrld awlu sloes not, requ)ro
oonvoyinf; Little or It rmyldh -free Hoouso t,o
the Fo(lora.) Governmont (but see para.gra.ph
, 15_ Royalties a,ud other costs for In"o of pa.t
ents and copyrights, of this appen(li>:) .
35 Plant and homeland soouril,y cosh;
lvocessor• sand reasonable exponsee•, 11worreli
for routine and holnoland security to prntnal
facilities. personnel, and work produnts art
nllovrn.blo. Such costs include, but are 1101.
litnite(1 to, wages and uniforms of pomonnol
engaged in security a,ctivitios; equipment�
harriers; oonla•actua) security services: non -
sultants; etc, Capital expenditart•os for finny.
Iand nand pin.nt soeurity purposes oar, suhl,w1
W par•agrnph M., Rgaipmont a,nd othor c;Ip
Hal r,>;poulltures, of this a,ppondix.
36. Pro- agrootnent Cleats. Pre- n.ward costs
acre those lnourre(1 prior to the effeotive dote
of the n.ward directly pm'suanh to the nego-
tlation aild In anticipation of the award
where such costs are necessary Lo ocnnply
with the proposed delivery schedule or period
of performance. Such costs are allowable.
only to the extent, that they would have been
allowable if incurred after the date of the
award and only with the written approval of
the awarding agency.
37. Professional services costs. a. Costs of
professional and consultant services ron-
dered by po;sons who are members of a pax -
tioulax profession or possess a spacial skill_
anO who are not officers or ornployees of thv
non - profit orga.uization, are allowable, sub-
ject, to subparagraphs 1) and c when roason-
able ill rela.tion to the services ronderod and
wilon not, contingent upon recovery of the
costs from the Federal Government. In liAdi-
tion, legal and related services are limited
under paragraph 10 of this appendix.
)). In determining the allowa,bility of costp .
in a, particular case, no single factor or a,nv
special oonbination of faetors is neeessn.rily
determinative. However, the following fn,c-
tors are relevant:
(1) The nature and scope of the service ren-
dered in relation to the service required.
(2) The necessity of contracting for thw
service, considering the nor;- profit o•;raniza-
tion's capability in the particular area..
(3) The past pattern of such costs, particu-
larly in the years prior to Federal awards.
(4) The impact of Federal awards on the
non- profit organization's business (i.e., wha.t
nev✓ problems have arisen).
(b) Whether the proportion of Federal work
to the non - profit organization's total busi-
ness is such as to influence the non - profit or-
ganization in favor of incurring the cost,
particularly where the services rendere(1 are
not of a continuing nature and have little re-
lationship to work under Federal grants a,nd
contracts.
(6) whether the service can be performed
more eoonomica,lly by direct employment,
rather than contracting.
7-017
1 . `
A ACHMENT ...... ! )........
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PI. 230, App. B
(7) Tile qualifications of the individual or
concern renderinpp the service and the cus-
Lomary fees charged, especially on non -fed-
eral awards.
(3) Adequacy of the contractual agreement .
for the service (e.q., description of the serv-
ice, estimate of tine required, rate of com-
pensations. and termination provisions).
C. In addition to the factors in subpara-
grapli 37.1) of this appendix, retainer fees be
be, allowable must he supported by evidence
of bona fide services available or rendered
33. Publication and printing costs. R. Publi-
cation costs include the costs of printing (in-
cluding the processes of colnposition, plate -
making, press worL binding, and tile end
products produced by such processes), dis-
tribution, promotion. mailing, and general
handling. Publication costs also include page
charges in professional publications.
h. If these costs are not identifiable with a
particular cost objective, thee' should be al-
located as indirect costs to all benefiting ac-
tivities of the non- profit organization.
c. Page charges for professional journal
publications are allowable as a necessary
part of research costs where:
(1) The research papers report work sup-
ported by the Federal Government: and
(2) The charges are levied impartially on
all research papers published by the journal,
whether o• not by federally- sponsored au-
thors.
39. Rearrangement and alteration costs.
Costs incurred for ordinary or normal rear -
rangennent• and alteration of facilities are al-
lowable. Special arrangement and alteration
costs incurred specifically for tine project are
allowable with tine prior approval of the
awarding agency.
40. Reconversion costs. Costs incurred in
the restoration or rehabilitation of the non-
profit organization's facilities to appro:i-
nlatel;w the same condition existing imme-
diately prim' to commencement of Federal
awards, less costs related to normal wear
and tear, are allowable.
41. Recruiting costs. a. Subject. to subpara-
graphs 41.1), c, and d of this appendiX, and
provided that tine size of the staff reo•ti td
aI d maintained is in keeping +'nth workload
requiron ell ts, costs of "help wanted" adve
tising, operating costs of an employnent of-
fice necessary to secure and maintain an
adequate: staff. costs of operating an aptitude
and educational testing Program, travel
costs of employees while engaged in rec
ing personnel, travel costs of applicants for
inLervie+ws for prospective employment, and
relocation costs incurred incident to recruit.
ment of men' employees, are allowablee to tine
m:Lent that such costs are incur A pursuant
t.o a well- managed recruitment. program.
\There the oganizationn uses emploYanenL
agencies, costs that are not in excess of
standard commercial rates fo' snch services
are allocable.
2 CFP, Ch. II (1 -1-09 Edition)
b. In pnblica.LionE, costs of help wanl.ed ad-
ve•Lising that inolude: color, includes. adver-
tising material for other Lhan recruitment
Purposes. c is excessive in size (taking into
consideration ree•uitnnent purposes for
which intended and normal organizational
practices in this respect,). are unallowable.
c. Costs of 1nelp wanted a(hlertising. special
emoltunents, fringe benefits, and salary al-
lowances incurred to attract, professional
Personnel free athe' eganizations that do
not meet the test of reasonableness or do not
conform with the established practices of the
organization, are unallowable.
d. Where relocation costs incurred incident .
to recruitment of a new employee have been
allowed either as an allocable direct or indi-
rect cost, and the newly hired employee re-
signs for reasons within his control within
twelve months after being hired, the organi-
zation will be required to refund or credit
such relocation costs to the Federal Govern-
ment.
42. Relocation costs. a. Relocation costs
are costs incident to the permanent change
of duty assignee t (for an indefiaite period
or for a stated period of not less than 12
months) of an existing employee or upon re-
cruitment of a new employee. Relocation
costs are allowable, subject to the limitation
described in subparagraphs 42.b, c, and d of
this appendix, provided that:
(1) The move is for the benefit of the em-
ployer.
(2 Reimbursement to the emPloyee fs in
accordance with an established written Pol-
icy consistently followed by the employer.
(3) The reimbursement does not exceed the
enployee's actual (o' reasonably estimated)
expenses.
b. Allowable relocation costs for current
employees are linnited to the following:
(1) The costs of transportation of the em-
ployee, members of leis immediate family
and his hOUSe110)(L and pen,n
soa] effects to
the new location.
(2) The costs of finding a new home, such
as advance trips by employees and spouses to
JOeaLe liven q an
uarters d ten .) npo•ar lodging
during the transition period, up to maximum
Period of 30 days, including advance trip
time.
(3) Closing costs, such as brokerage, legal,
and appraisal fees, incident to the disposi-
tion of the enpJoyee's fornne' ]none. These
costs, together with those described in Bill)-
paragraph 423b.(4) of this appendix.. are lim-
ited to f percent of the sales price of Lhe em-
ployee's forme) home.
(4) The continuing costs of ownership of
the vacant forme' home a.fte' the settlement
or lease (late of the ennployee's new perma-
nent hone. snch as maintenance of buildings
and grounds (exclusive of fixing up expenses),
ntilities, taxes, and property insun2nce.
(G) Other necessary and reasonable ex-
pellses normally incident Lo relocation. such
168
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0I06 Circulars and Guidance
tu; the costs of a;i.neoiinp, an unexpired
(bsnunueclJill; aaul reinstalling household a11,-
plia.11,,os, and purchasing insurn,ucc against
loss; of or damages to personal property, The
nest, of woine,ling an unexpired lose. is hm-
11.00 Le, Idu•o" tinnos the monthly rental.
c. Allowa.bin relocation costs for new em-
pinl'ofw 11111itod to those doscribod ill suh-
po.ragraph '1 ?,.h(1) and (2) of this a.plintdix.
Whoa rolncatiol oosts incurred incident to
I,lo rocrultmonl, of now omployms lave, heen
allowod oithor as a diroct or imUrocl, cools
a.nd t,ho omployoe rosigns for ren.sons within
Ills control within 12 months after hb'o, the
orl;narimtlon shall rofund or m•odit the Fod-
cral 00vorlllnellt, for Its share of tho most'.
Hownvor, tho costs of travel to all Overseas
Inrntlon shall be connidarorl travol ,,oats In
a.c:no'danoo tvlhh parnp"rsph f10 n.tnd 1101, rolocn-
tlloll costs for the purpose of thls paragraph
If dopendents arc not pormittod at Cho loon-
tlon for any roason and the costs do not, It)-
elude costs of transporting household goods.
d. Tho following costs relatod to relool.tiou
arc. unallowa,blc..
(1) Fees and other costs associated with ac-
quiring a, new home.
(2) A loss on the sale, of n former home.
B) Continuing mortgage principal and in-
t,erost, payments oil a, home being sold.
H) Income taxes paid by an employee re-
lated to reimbursed relocation costs.
43. Rental costs of buildings and equip-
ment. a.. Subiont, to the limitations described
in subpoxagi a.phs 13,1). through d. of thir� ap-
pendix, rental costs are allowable to the ex-
tent that the rates are reasonable is light of
such factors as'. Rental costs of compa.ra.ble
property, if any; maritet conditions in the
area.; alternatives available; and, the type,
life expectancy, condition, and value of tile,
Property leased, Rental arraugoments should
of reviewed poriodically to determine if oir-
cnmstances lave changed and other options
n,re available.
b. Rental costs under'•sale and )oase back"
arrangements are allowable only up no the
amount that, would be allowed had the non-
profit organization continued to own the
property. This amount would include. ex-
penses such as depreciation or use allowance,
maintenance. taxes, and insurance.
c. Rental costs under "less- than -arms-
length" leases are allowable only up to the
amount (as explained in subparagraph 43.b.
of this appendix) that would be. allowed had
title to the property vested in the non - profit
organization. For this purpose, a less -than-
,% ms- length lease is one under which one
party to the lease agreement is able to con-
trol or substantially influence the actions of
the other. Such leases include, but are not
limited to those between divisions of a non-
profit organization; non - profit organizations
tinder common control through common offi-
cers, directors, or members; and a non- profit
organization and a director, trustee, officer,
Pt. 230, App. 6
W L'nv nmr))oyn, of tAly note- profit. orgn.nlza-
x)o ur his inuncdin.te hlulily, eil,her direcl')v
or tltrouli'h eorporn.tion,% trust. or sirnila,r
arrnngrmrmts in which they hold a control
ling intr.reat.. Pbr example, ,i non - profit
niv.n.Pdotl ms.y establish r' separn.te corpora'
tion for Lhc sole purpose of owning propar6p
a.nd leasing; It baste to the non - profit orgnnl
7,a ti o1).
(1. Routs.] costs under leases which n.rc re-
quired tc be treated a,s capital lassos under
QAAF n.re allowable only up to the anllnrnl.
(as explained in subparagraph h) Lha.l. would
be allowed had the non - profit org;allMatiol
purchased the property on the dato the leas,
agroonnent was executod. The provisions of
Financial Accounting Standards; 1`10o.1'd
Stn.toment, 13, Accounting 1'01' ).tenses shall
be used I,o determice whether a lease is. ;l
oapital )ease. Interest cost's relatod to cap-
ital leases arc allowable to the extent Idrey
meet the eritcrfa. in paragraph 23 of this s,p-
peudix, Unallowable costs include amounts
paid for profit, management fees, and Lazes
thad, would not, have been incurred had tho
non- profit organization purchased the fn(Al-
Ity.
44. Roya.lties and other costs for use of pa.t,-
ents and copyrights. a. Royalties on n patent,
or copyright or amortization of the test, of
acquiring by purchase a. copyright, patent, or
rights thereto, necessary for the proper per-
formanco of the award are a110wablo ml)oss:
(L The )i'edera,l Government, has a lionnse
or the right to free use of I,he patent. or copy
right,.
(2) The patent or copyright has boon wllu-
dicated to he invalid, or has been a.dministra.-
tively determined to be invalid.
(3) The pe.tent or copyright is considered in
be unenforceable,
(4) The patent or copyright, is expirod.
I,. Apeoin.l care should he exercised in ds-
Lermhling rea,sonablerless where the rw < "' )-
ties may have arrived at as a result, of lc"s-
than- arm's - length bargaining,
(1) Royalties paid to persons, including,
corporations, affiliated with the non- profit
nrganizatinn.
(2) Royalties paid to unaffiliated partios,
Including corporations, under an agreement
entered into in contemplation that a Federal
award would be made.
(3) Royalties paid under an agreement en-
tered into after an award is made to a non-
profit organization.
C. In any case involving a, patent or enpy-
right formerly owned by the non - profit orga-
nization, the amount of royalty allowed
should not exceed the cost which would have
been allowed had the non - profit orga,nim.tion
retained title thereto.
45. Selling and marketing. Costs of selling
and marketing any products or services of
the non - profit organization are unallowable
(unless allowed under paragraph 1. of this ap-
pendix as allowable public relations cost.
169
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Pt. 230, App. B
However, Lhese. costs tine allowable as direct
costs, with prior approval by awarding agen-
cies, when they are necessary' lm• the per -
forntance of Federal programs.
dG. Specialized service facilities. a. The
costs of services provided by highly complex
or specialized facilities operated by the nor
profit organization, such as computers, wind
tunnels, and reactors are allowable, provided
the charges for the services meet the condi-
tions of either paragraph 46 b, or C. of this
appendix: and, in addition, take into account
any items of intone o• Federal financing
that quality as applicable credits under sub-
paragraph AA of Appendix A to this part.
b. The costs of such services, when nla.te-
rial, must be charged directly to applicable
awards based on actual usage of the services
on the basis of a schedule of rates o' estab-
lished methodology that does not discrimi-
nate against federally > - supported activities of
the non- profit organization, including usage
by the non- profit organization for internal
purposes, and is designed to recover only the
aggregate costs of the services. The costs of
each service shall consist normally of both
its direct costs and its allocable share of all
indirect costs. Rates shall be adjusted at
least biennially, and shall take into consid-
eration over /under applied costs of the pre-
vious period(s).
c. Where the costs incurred for a service
are not material, they may be allocated as
indirect costs.
d. Under some extraordinary eir-
cumstances, where it is in the best interest
of the Federal Government and the institu-
tion to establish alternative costing arrange-
ments, such arrangements nlay be worked
out with the cognizant Federal agency.
47. Taxes. a. In general, taxes which the or-
ganization is required to pay and which are
paid or accrued in accordance with GAAP,
and payments made to local governments in
lieu of taxes which are commensurate with
the local •goverllnnent services received are
allowable, except for taxes from which ex-
emptions are available to the organization
directly or which are available to the organi-
Za.tion based on an e>:emptiol afforded the
Federal Government and in the latter case
when the awarding agency nnakes available
the necessary exemption certificates, special
assessments on land which represent capital
improvements, and Federal income taxes.
b. Any refund of taxes, and any Payment. to
the organization of interest, thereon, which
were allowed as award costs, will be credited
either as a cost reduction or cash refund, as
appropriate, to the Federal Government,
43. Termination costs applicable U, spon-
sored agreements. Terulina.tiol of awards
generally gives rise to the incurrence of
costs, or the need for special treatment of
costs, which would not have arisen had the
Federal award not been terminated. Cost
principles covering these items are set forth
2 CFR Ch. II (1 -1 -09 Edition)
below. They are to be used in conjunction
with the other provisiolta of this (Lppen(liX in
termination situations.
(t. The cost of items reasonably usable on
the non - profit organizatiors other work
shall not be allowable unless the non - profit .
organization submits evidence that it n'ould
not retain such items at cost without sus-
taining a loss. In dociding whether such
iLenns are reasonably usable on otlier work of
the non- profit organization, the awarding
agency should consider the von - profit. orga-
nization's plans and orders for current and
scheduled activity. Contemporaneous pur-
chases of common items by the not- profit
organization shall be regarded as evidence
that such items are reasonably usable on the
non- profit organization's other work. Any
acceptance of common items as allocable to
the terminated portion of the Federal award
shall be limited to the extent that the quan-
tities of such items on hand, in transit, and
on order are in excess of the reasonable
quantitative requirements of other work.
b. If in a particular case, despite all rea-
sonable efforts by the non- profit organiza-
tion, certain costs cannot be discontinued
immediately after the effective date of ter-
mination, such costs are generally allowable
within the limitations set forth in this ap-
pendix, except that any such costs con-
tinuing after termination due to the lleg-
ligent or willful failure of the non - profit or-
ganization to discontinue such costs shall be
unallowable.
c. Loss of useful value of special tooling,
machinery, and is generally* allowable if:
(1) Such special tooling, special machinery,
or equipment is not reasonably capable of
use in the other work of the non - profit orga-
nizati oll,
(2) The interest of the Federal Government
is protected by transfer of title or by other
means deemed appropriate by the awarding
agency. and
(31 The loss of useful value for any one ter-
minated Federal award is hnlibed to that
portion of the acquisition cost which bears
the same ratio to the total aequisition cost.
as the terminated po•bion of the Federal
award bears to the entire terminatedl Federal
award and other Federal awards tom' which
the special tooling, special machinery, or
equipment ryas acquired.
d. Rental costs under unexpired leasos are
generally allowable where clearly shown to
have been reasonably necessary for the per -
fornnance of the terminated Federal award
less the residual value of such ]eases, if:
(1) The amount of such rental claimed does
not exceed the reasonable use value of the
property ]easecl for the period of the Federal
award and such further period as may' be rea-
sonable, and
(21 The non- profit organization makes all
reasonable efforts to terminate, assign, set-
tle, or otherwise reduce the cost of such
170
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0Iv1B Circulars and Guidance
kmsc Thorn a.IHo no,,, he ineludod thr rW;l of
altorotfom of sueh loaned properly. provido(l
;uc)l ;.ILOra.tfons wort. neeongar } for the per -
formrnnee of the Pbderld att"t)a'd. and of ron-
smlw.hlo r0stora.1;ion requirod b)' tlin provi-
s)ons of the )oftse.
r, Rottl(mu+nt expenses including 1.1w fol-
Inwlnl( )u-o genorld)y n.11own.h1w
(I ) Accounting, legal, olericar, and similar
<:ostx reasonably necessary for'
(a.) The proparn.tion and presentation to
tin n.warding agency of sottlonnent claims
a.n(I supporting data with rospecl, to thin ter -
mina.tod portion of l;ho Padoral award, unlaHs
I,he tormbnn.tion Is for default, (Hoc �').lfi.fil of
2 CPit part 215 (OWI Cirrula,r A- 11011'. Mud
(h) Th0 t0rn11na.tfon Ind s0t01enlont, of nub -
awnrds.
(21 Rsa.Honn.blo ooHts for the atora.gc, trans -
porta tion, protection, and disposition of
property provider) by the Fodera.l Govern-
ment or a.equtrod or produced for the Poderal
award, except, when grantoes or oontractors
are reimbursed for disposals at, a predeter-
mined aanottnt In a.ccordanoe with §215.32
through 21507 of 2 CFR. part, 215 (01vIB Cir-
cular
(3) Indirect costs related to salaries and
wages incurred as settlement expenses fn
suhpn.ra.gra,phs 40,0.(1) and (2) of this appen-
dix. Normally, such indirect costs shall he
limil,ed to fringe benefits, 00011pancy cost,
n.n(1 innnediate, supervision.
f. Claims under soh awards, including tho
a.11ooable portion of claims which are conn-
ilnon to the. Pedera) award, and to other work
of the non -profit organization are goneratly
allowable.
An appropriate share of the non - profit or-
gaanizatfon's indirect expense may be allo-
cated to the amount of settlements with suh-
contra.etors and /or subgrantees, provided
that. the amount allocated is otherwise con-
sistent with the basin, guidelines contained
In Appendix A. The Indirect oxp0nse so allo-
caxod shall exclude the same and similar
costs claimed directly or Indirectly as settle-
ment expenses,
49. Training costs. a. Costs of preparation
an(1 maintenance of a program of instruction
including but not limited to on- the -job,
classroom, and apprenticeship training, de-
signed to increase the vocational effective-
ness of employees, including training mate-
rials, textbooks, salaries or wages of trainees
(excluding overtime compensation which
might arise therefrom), and (f) salaries of the
director of training and staff when the train-
ing program is conducted by the organiza-
tion; or (if) tuition and fees when the train-
ing is in an Institution not operated by the
organization, are allowable.
b. Costs of part -time education, at an un-
dergraduate or post, graduate college level,
including that provided ax the organization's
own facilities,, are allowable only when the
course or degree pursued is relative to the
P1. 230, App. B
field in which I,he nn)p1w is now worlcinh
(w m)iy romsona.hly be ex1mol'od to work. aa)d
al'o limited 1.0:
(1 I Training mnteria)s.
2) To :bhooics.
(3) Pees: (ha.rgas by the, e(hlcatfana.) innt)tu
Mon.
14) Tuftion charged by the o(luontional in
Stltutfon or, in 11011 of tuition, instructors'
salaries and the rob.ted share of lnd(rocl
costs of the educational institution to I,he
cxl,ont, that, the sum thereof Is not, in o>tw!ss
of the tuition which would have 130en po,id to
Cho pa.rticipating educational institution.
051 SaIILPIes and rela.t0d costs of ItHtn•nCt,01 "-
who arc. 0nnployons of tho organization.
((i) Straight -time. oomponsa.tion of cash
employon for time spent ttttanding olnssas
during working hours not to excess fit ' 15(I
hours per year and only to the extent. thal .
ciroumstancos do not pormit the opera.tfon of
classes or at, tell danoe. at classes after regular
working hours; otherwise, such compensa-
tion is unallowable.
c. Costs of tuition, fees, training materia1ai
and textbooks (but not subsistonce, salary.
or any other emoluments) in connection
with full -time education, including that, pro-
vided at the organization's own f'ncllities, al,
a, post - graduate (but not undergraduate) col -
)ege level, are allowable only when the
Course ar dogree pursued is related to the
field in which the employee fs now working
of may reasonably be e).Pmted to work, a.nd
only where the costs receive the prior a.p
proval of the awarding agency. Such costs
are limited to the costs a.ttrfbuta.blo is a
total period not, to exceed one sohool year l'or
each employee so trained. In unusual r:a.s0s.
the period may be. extended.
d. Costs of attendance of up to 16 weeks per
employee per year at, specialized programs
specifically designed to enhance the effec-
tiveness of executives m• Inamagers or to pme-
pa.re. employees for such positions am allow-
able. Such costs include enrollment fees,
training materials, textbooks and related
charges, employees' salaries, subsistence.
and travel. Costs allowable under this parr
graph do not include those for courses that,
are part of a. degree - oriented curriculum,
which are allowable only to the extent set
forth in subparagraphs 1) and c.
e. Maintenance expense, and normal depre-
ciation or fair rental, on facilities owned or
leased by the organization for training pur-
poses are allowable to the extent set forth in
paragraphs 11, 27, and 50 of this appendix.
f. Contributions or donations to edu-
cational or training institutions, including
the donation of facilities or other properties,
and scholarships or fellowships, are unallow-
able.
g. Training and education costs in excess
of those otherwise allowable under subpara-
graphs 49.b and. c of this appendix may be, al-
lowed with prior approval of the awarding
1.71
ATTACHMENT ..... D .........
��
PAGE ..� . OF -.. g P
Pi. 230, App. C
agency. To be (1onside)'ed 1 approval the
organization must demonstrate that such
cost's are consistently incurred pursuant to
an established training and education pro -
gram, and that the course or degree ptusned
is relative to the field in which the employee
is Wort' tvokin@ or may reasonable be ex-
pected to rvarl :.
50. Transportation costs. Transpm•tation
costs include freight, express, cartage. and
postage charges relating either to goods pur-
chased, in process, or delivered. These costs
are allowable. When such costs can readily
be identified with the items involved, they
may be directly charged as transpotation
costs m• added to the cost of such items (see
paragraph 2 of this appendix). 11 identi-
fication with the materials received cannot
readily be matte, transportation costs may be
charged to the appropriate indirect cost ac-
counts if the organization follows a con-
sistent, equitable procedure in this respect,
51. Travel costs.
a. General. Travel costs are the expenses
for transportation, lodging, subsistence, and
related items incurred by employees who are
in travel status on official business of the
von - profit organization. Such costs may be
charged on an actual cost basis, on a per
diem or mileage basis in lieu of actual costs
incurred, or on a combination of the two,
provided tine method used is applied to an en-
tire trip and not to selected days of the trip,
and results in charges consistent with those
normally allowed in like circumstances in
the non - profit organization's men- fetlerally-
sponsored activities.
b. Lodging and subsistence. Costs incurred
by employees and officers for travel, inclu(1-
ing costs of lodging, other subsistence, and
incidental expenses, shall be considered rea-
sonab)e anti allowable only to the extent.
such costs do not exceed charges normally
allowed by the noD- profit organization in its
regular operations as the result of the non-
profit orgauiza.ti oil '. written travel policy.
In the absence of an acceptable, written non-
profit organization policy regarding travel
costs, the rates and amounts established
antler subchapter I 'of Chapter 57. Title 5,
United States Code ( "Travel and Subsistence.
Expenses: Mileage Allot'ances "), o• by the
AchninistraLO of General Services, o' be the
President (o• his m• her designee) pursuant
to any provisions of such subohapte• shall
apply to travel under Federal awards (48 CPIs
31.205- 46(a)).
c. Commercial air travel. (1) Airfare costs
in excess of the custonare standard comm'e'-
cial airfare (coach o• equivalent). Federal
GovelliDellt, contract airfare (where all WWI`
ized and available), oy the lowest commercial
discount, airfare are unallowable except e'hen
such accomm�otla.tions would: require cit'cui-
Lou, routing: require travel during unr'ea5on
able hours: excessively prolong travel: result
in additional costs that would offset the
2 CFR Ch. Il (1 -1 -09 Edition)
transportation savings; or ofler acoonlmocla-
Lions not reasonable acloqua.te lo' the trav-
eler's medical needs. The non- profit organi-
zation Dust Justify sand clocument these con-
ditiom on a case -by -case basis ill order for
the use of first -class airfare to be allowslble
in such cases.
(2) Unless a pattern of avoidance is (le-
Wooed, the Fecleral Gcve•nmelt Will gen-
eralle not question a non - profit organiza-
tion's determinations that custonnary stand-
ard airfare o ether discount airfare is un-
available for specific trips if the non- profit
organization can demonstrate either of the
following: that such airfare was not avail-
able in the specific case; o' that it is the
non- profit organization's overall practice to
make routine use of such airfare.
d. Air travel by other than commercial
carrier. Costs of travel by non- profit organi-
zation- owned, - leased, or - chartered aircraft
include the cost of lease, charter, operation
(including personnel costs), maintenance. de-
preciation, insurance, and other related
costs. The portion of such costs that exceeds
tine cost of allowable commercial air travel,
as provided for in subparagraph) c., is urnal-
lowable.
e. Foreign travel. Direct charges for for-
eign travel costs are allowable only when the
travel has received prior approval of the
awarding agency. Each separate foreign trip
must receive such approval. For purposes of
this provisiol, "foreign travel" includes any
travel outside Canada, Mexico, the United
States, and any United States territories and
possessions. However, the term "foreign
travel" for a non- profit organization located
in a foreign country means travel outside
that country.
52. Trustees. Travel and subsistence costs
of trustees (o• directo•s) are allowable. The
costs are subject to restrictions regarding
lodging, subsistence and air travel costs pro-
vided in paragraph 57 of this appendix.
APPliNDD? G TO PART 230— NOF- PBOFIT
ORGANIZATIONS I90T SUBJECT TO
THIS PART
1. Advance Technology I11stittnte (ATI),
Charleston. South Carolina
1. Aerospace CO)TOratiorn, El Segun(lo, Cali-
fornia
American lnsti(utes of Research (AIR),
11'ashingbox) DC
4. Argonne National Labora.Lo•y, Chicago, Il-
linois
5. Atomic Casualty Commission, 1Vash-
ington, DC
0. Battelle Memorial institute,
Headquartered in Columbus, Ohio
7. Brookhaven NaticllaI Labm'a.Lo•e, Upton.
N et' '1' ork
B. Charles Stark Draper Labe•atory, lnco•-
porated, Cannbridge, MassachusetLS
172
ATTACHMENT ....... �D.......
P AGE OF . -• - -- PAGEES
OIJIG Circulars and Guidance
1 1 (!NA MwporA,tbnl (CNAC),
101118
III fbrnironnu;nl,nl Lust ot'n of Michif;an.
Ann Arlmr. Mmllffoul
I: O(toy'Ila Insr,l t,il to of Teeht101op'y /(.e(11'hie.
'I'��nh Appliorl R.osen,rah Cot'pol•a.ltinn/(,eor-
�ia '1`crli R.opwavoh hlstdtute, Atl!tntlt,
�1�•nl'r'in
I;i ILi.ufnrd b,nvironnutnta,l hlenitll T'ounda-
I:um. Rirhla.nrl. Washington
i:i fT'f' R.oaonre)) Instltut'.o, Clticnao, Illinois
H. ]na1,11'Autc of CJas Toolulolop•}', Chioaf;o, Il-
11noig
IG Inw,MutO for i>ofaiviv Amdysls, Aloxmj-
ria, Virkinln
Ir l,Ml, Me1,0n.n, VIrO'1nN!
Mltv(� Corporation, Bedford, A 11w1c ho
4n f.Ps
Mitrotok R,yatomal, Inn., pn.11s C11111'oh.
Virt;'inta
!I No,tJom l ftwholof;'ioni AstB•ollomy Obsorw
story, Gv(iou Bank, Wont Vlr{ iuia.
U. National ftolwmablo Dnergy La,hora.tory.
Oold0u, Colorado
31 OfLk R,idg(e Associated t)nivOrsities,
R.idve TOnnossoe.
Pt. 230, App. C
..., ft.a,ntl Col'lml')i.l. inn. tianitn Ntonirn„ L'ali-
I(unia
::3. Rd;sonduh TPiaalg')e Institute, IZesea.ruh
Tria.nt(lo. Park, Not'th 0fLI'010IR
V. 1 Jtrsoa.roh 1,11 t,(!, Now York.
N(lw York
South CaxoIina. I(.0s0a.reh Authority
(SCbA). Ch nt•leston, 9011th CM'01111P
'L(i Southern i osoaroh I11sMtute. 11h-
minf;ham, Aln.hn,ma
27. Southwest i wmmroh Iw',f;R ,u Han A111,0-
111o, T xim"
28 , ,SRd InWmmtimml, MEn110 Plir)t, Cnlifornm,
21). Syrn.cuso Rsn0nrol! Cm•porn,tion. 9yrfl-
mme, Now York
3Q. IJtilvo,rsLCiO llowmxch A440aintion. Inr,or-
porn.ted (Nationsd AccoltwroMf n ).nh), Ar
tonne, Illinois
37. Ilrbnrl Institute, Washinktan DC
32, Nan- proflt Insnrancr. rnmpnnie!;, su0h as
Milo Ernst; Mid Blue S10016 Urkn.IliZn.td O11R
3$. O1',her non - profit, 01'KaniznA7iolls a,s )MVO-
tiat,ed with a,wardink ao-enoies
PARTS 231 -299 [RESERVED]
173
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Attachment t
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Circular No. A -133
Revised to show changes published in the Federal Registers
of June 27, 2003 and June 26, 2007
Audits of States, Local Governments, and Non - Profit Organizations
TO THE HEADS OF EXECUTIVE DEPARTMENTS AIVD ESTABLISHID/ENTS
SUBJECT: Audits of States, Local Governments, and Non- Profit Organizations
1. Purpose This Circular is issued pursuant to the Single Audit Act of
1984, P.L. 98 -502, and the Single Audit Act Amendments of 1996, Y.L. 104 -156,
It sets forth standards for obtaining consistency and uniformity among Federal
agencies for the audit of States, local governments, and non- profit
organizations expending Federal awards.
2. Authority Circular A -133 is issued under the authority of sections
503, 1111, and 7501 et seq. of title 31, United States Code, and Executive
Orders 8248 and 11541.
3. Rescission and Supersession This Circular rescinds Circular A -128,
"Audits of State and Local Governments," issued April 12, 1985, and supersedes
the prior Circular A -133, "Audits of Institutions of Higher Education and
Other Ikon- Profit Institutions," issued April 22, 1996. For effective dates,
see paragraph 10.
4. Policy Except as provided herein, the standards set forth in this
Circular shall be applied by all Federal agencies. If any statute
specifically prescribes policies or specific requirements that differ from the
standards provided herein, the provisions of the subsequent statute shall
govern.
Federal agencies shall apply the provisions of the sections of this
Circular to non - Federal entities, whether they are recipients expending
Federal awards received directly from Federal awarding agencies, or are
subrecipients expending Federal awards received from a pass - through entity (a
recipient or another subrecipient) .
This Circular does not apply to non -U.S. based entities expending
Federal awards received either directly as a recipient or indirectly as a
subrecipient.
5. Definitions The definitions of key terms used in this Circular are
contained in §._.105 in the Attachment to this Circular.
6. Required Action The specific requirements and responsibilities of
Federal agencies and non - Federal entities are set forth in the Attachment to
this Circular. Federal agencies
malting awards to non- Federal entities, either directly or indirectly, shall
adopt the language in the Circular in codified regulations as provided in
Section 10 (below), unless different provisions are required by Federal
statute or are approved by the Office of Management and Budget (ON3).
7. OMB Responsibilities 01+j will review Federal agency regulations and
implementation of this Circular, and will provide interpretations of policy
requirements and assistance to ensure uniform, effective and efficient
implementation
8, Information Contact Further information concerning Circular A -133 may
be obtained by contacting the Financial Standards and Reporting Branch, Office
of Federal Financial Management, Office of Management and Budget, Washington,
DC 20503, telephone (202) 395 -3993.
1
ATTACHMENT ...... .........
PAGE .....�...... 0 F ... aL� 7 ... PAGES
-)o I u a Y W! A haws a po.) J -y I 1 - . I1 1 or s , 1 111
i ye - ,.)o (-2 , .Landayds set f o r L I i 1 . o rwhllvn'
1---!u, , ar, which appl d,' rect to Federal agenci es shall be effect. v6-
9 and app.1 to aud:i -s of ng a "Le" 'Jum(-
except aF, '):-hervnse, specified in
set 'Jortch jr) this rArMar that Federal aqnwies KAI
nor) eritjt -,es shah in adopted by Fe on] Hqmwips; in
not Lhar) 00 days after publication of e-h-s final revis.
in - !Je Pecfisex, so that 'I hey will apply to audits of fiscal years
)-cw after one 30, 1996, with the exception that .5 of the
to audits of fiscal years beginning after June 30, 199r;.
r,31though the McWar is rescinded, air]
q, of Ormaar A-113 ;-ewin in effect for au-]Jts of
ri Pader'jl ReglsLej a- "e
jwF� fi-�,r:aj ending afl.er December and
Lmp7emenLauon is not. permMed CC the exception of KW definition of
Hudir whir:h is effe-!t.ive July 3R, "M"'.
Auqus,tlne T. "'rflyt
A- r i nq 1 r-- I a
, v i ; ; j )ns publ i n i A ) e P �de i a I Pegi ;U I) P ,26 , OU , a re
-t v- ( f iscaJ, years ending on ar afLer December 25, 2006 .
Rob Ponman
Director
hAnd-nmen
2
E
---------- LP, AGE ---- OF -- ---- PAGES
PART_ -- AtJDITS OF STATES, LOCAL GOVERI\T1 J1VD 1VON- PROFIT
ORGAIVI ZATIONS
Subpart A--General
Sec.
_ .100 Purpose.
.105 Definitions.
Subpart B-- Audits
_ .200 Audit requirements.
_ .205 Basis for determining Federal awards expended.
_ .210 Sul- and vendor determinations.
_ .215 Relation to other audit requirements.
_ .220 Frequency of audits.
.225 Sanctions.
.230 Audit costs.
.235 Program- specific audits.
Subpart
C-- Auditees
Auditee responsibilities.
_.300
Auditor selection.
_.305
Financial statements.
_.310
.315
Audit findings follow -up.
_
.320
Report submission.
Subpart D-- Federal Agencies and Pass - Through Entities
_.400 Responsibilities.
405 management decision.
Subpart E -- Auditors
_. Soo Scope of audit.
_.505 Audit reporting.
_.510 Audit findings.
_ .515 Audit working papers.
_ .520 major program determination.
_ .525 Criteria for Federal program risk.
.530 Criteria for a low -risk auditee.
Appendix A to Part — - Data Collection Form (Form SF -SAC) .
Appendix B to Part — - Circular A -133 Compliance Supplement.
3
ATTACHMENT ...... b........
PAGE .... ? 3...... 0F...33_. PAGES
Subpart A--General
§_IOD Purpose.
nq ��ijr and
rin I ong I-:, es _>c,�en Ch ng FudercIj
;T) W.-I J El .
105 nefinitionE",
AucL t;:)y III ;j)i ,i)cl t J.s a pul accountant or a Fedrz-rr, I ,
)i qanr , ,Ejtj on, wl meets 1 ,1 - ie genera]
y�3 go—E!r audj ting l.a r -
1
"' aud,j_ t,ar c; ; 1
91 S 10 (a) I, i jerli j T�,' ))di I j and (P) j nned
fj I . a Federal. program
r:
Tie t)�pes of c up. ters of program, j I
tnd s fJ nanc tal c lld (7,FA) , and otliel
CA asters. "Other c_juwer 5" al as defined by the office of 1\ arld
Budget (OMB) in the comp.1 i.ance supplement or as designated by a State for
Federal awards . provides to i ts 7,ub enLs that meet the
oI f a C]US 'er . r ) f p cf , -ams . When designating an "other cluster, " a
* at e h a j. I d en ~ i f y t he Federa �. awards included in the cluster and ad-vise t1he
subrecip:leiIts of compliance requirements applicable to the cluster, cDnsi_
WJ I 400 (d) (1) and 5 .400(d)(2), respectively. k cluster of programs
shall 1.)c- ccnFl as one program for determining major programs, as
_n c . 520 a w t!Ti '-he of R&D as described in
.200(c), wt_) e 1 1 4. 1 _ C) ,gr - spec.; r - )e el ected.
i c au ma A I-
_LL_nLaf__Le for aur-11' I means, the Federal agency des
ou t he respons e.s de _ n
-
omp-
p�2
iance su..ement refers s no the circula- A-A-1.$' 2ompliance
�uj ement , lnc.. , luded as Appendix B to Circular A-I or such docudocuments
�r) repiace) j.
,)ME or designee may s sue : S d C) _ ava:� -a,':)-. �m
fne ', ': , -_ P 1: n :.."] e , "'u --- -2 Jent �� L) o 7 t ttl D
171 Dn
r 1 e C W e I " 'DIJCeY,
(2) P ecommended impro of
(3) Demonstrates that audit find are either invalid or do not
warrant auditee act'-on.
Federal agency has tine same meaning as the term agenc in Sect.i Jr, X51 (1j
of title 5, United Code.
Federal award nPFins7; T F LrIancial assistance and redera] 1:11".
reimbursement contracts that non - Federal entities rece ve directly fr')m
Federal awarding agencies or indirectly f rom pass-through entities.
I1
ATT,&,Cuk'
, (MEN I T ......
PAG5 ...... ... OF ... p
not include procurement contracts, under' grants or contracts, used to bud
goods or services from vendors . Any audits is of such vendors shall be covered
by the terms and conditions of tire- contract, Contracts to operate Federal
Government owned, contractor operated facilities (GOCos) are excluded from thowned,
requirements of this part.
Federal awarding acfency means the Federal agency that provides an award
directly to the recipient.
Federal financial assistance means assistance that non- Federal entities
receive or administer in the form of grants, loans, loan guarantees, property
(including donated surplus property), cooperative agreements, interest
subsidies, insurance, food commodities, direct appropriations, and other
assistance, but does not include amounts received as reimbursement for
services rendered to individuals as described in §_.205(h) and §_.205(i)
Federal program means:
(1) All Federal awards to a non - Federal entity assigned a single
number in the CFDA,
(2) When no CFDA number is assigned, all Federal awards from the same
agency made for the same purpose should be combined and considered one
program.
(3) Notwithstanding paragraphs (1) and (2) of this definition, a
cluster of programs. The types of clusters of programs are:
(i) Research and development (R &D);
(ii) Student financial aid (SFA); and
(iii) "Other clusters," as described in the definition of cluster
of programs in this section.
GAGAS means generally accepted government auditing standards issued by
the Comptroller General of the United States, which are applicable to
financial audits.
Gen erally accented accounting pr inciples has the meaning specified in
generally accepted auditing standards issued by the American Institute of
Certified Public Accountants (AICPA),
Indian tribe means any Indian tribe, band, nation, or other organized
group or community, including any Alaskan Native village or regional or
village corporation (as defined in, or established under, the Alaskan Native
Claims Settlement Act) that is recognized by the United States as eligible for
the special programs and services provided by the United States to Indians
because of their status as Indians.
Internal control means a process, effected by an entity's. management and
other personnel, designed to provide reasonable assurance regarding the
achievement of objectives in the following categories:
(1) Effectiveness and efficiency of operations;
(2) Reliability of financial reporting; and
(3) Compliance with applicable laws and regulations.
Internal control pertaining to the
compliance requirements for Federal
programs (Internal control over Federal programs) means a process -- effected by
5
=GC NT .......0
OF ...... ...... PAGES
) 1 ' . I - / ' '� ri I I , 'J °] I
I c I ) I d -." ! pe"F; L)n)jr_.J -
d;-_�s : qn-d
i d e
1 dl c)1
1 -- .t11 1.1 1 1 C,
I e c) ;� elflC 11
c) 1 1 ( 4
V ' F
f
! , ) I I F; ai pj)pe ) , corded
and
U
L y l e py e p a ri on -) f
) e
.inanc a.]. s tatements
and
j J '.
and
j J D em on F, a te c-)mplJ,ance. wi a 1 at'i ons, and t I
r1 q U I I I e') s;
x c I I i eJ i1.1 r I np r) k/ 1
a V 1'-i rrj) � t- r I s � I- (1 ti 1- y) I r)rjs ( r , r )j - ) i
h r) t -U)rj ilia ri I er'". on o
)d 1
J1 11'u rl I I F; I ; :m I I I I'
Pi in rjs , r npr-, I- t- a ri ri r a s; Fi o I I � 1 ) �rj , ,r .3 ,) 1 1 1! 1 j r�
,,r rj d (--.- ;d 1 n
C- 1) a Y
e r. r e c e e d c)r Ltdm: .
en tity.
go vernment 'within a. Sta e,
±J_1_) 1_a, qove. means, any unit of local go
-ount 'VP ov'n'l
boraugn, municipality, city, to , , t ship, parish, 0 11.
L school district, intrastate "hi-s--r-c-,
Of governments, and any other instrumentality of local
Major program means a Federal program determined by the audit:,-), to be a
n'. <, ;ol. program in accoi-dancr- v,7-"2 S 520 or a program i 'dei j
- jt'f_ied as a ma r
P. ?ederal agency -)-, pas��-=_ qh ent:�
am U_ 1 -n a:, _ ,..d w n
r
—.215(c),
Management decision means the evaluation oy the Federal a-wa)-d.'.ng agency
—ndings arid cor.eci�ive ac,�i . -or) plan arid
pas s- througla entity of Lihe audit 1 4
wr�_tl_en dec.,slon as to vjhat correcti action is necessa_r,
Non- Federal entity means a Sta - 1.(:,cF)l gr)•,rernment, or non-prOfiL
Non-profit on means
lj an y corporation, trust, association, cooperative, or C)
(1) is operated primarily for scientific, educational, service,
�"Ilaritable, or similar purposes in the public interest;
(ii) Is not organized primarily for profit; and
(iii) uses its net proceeds to maintain, improve, or expand
operations; and
(2) The term nor)--profit orcfanization includes non- profit institutions
of higher education and hospitals.
I
ATTACHMENT
PAGE ._.._U_.. OF .... 2
- -:Z-L PAGES
OMB means the E::ecut-_ve Office of the President, Office of l ✓anagerient
and Budget.
Over °iglu agency for audit means the Federal awarding agency that
provides the prectomiriant amount of direct funding to a recipient not Fassraled
a cognizant agency for audit, In }fen there is no direct funding, the
agency with the predominant indirect funding shall assume the oversight
responsibilities. The duties of the oversight agency for audit are described
in �_ .400(b).
Effective July 2E, 2003, the following is added to this definition:
A Federal agency with oversight for an audiLee may reassign oversight to
another Federal agency which provides substantial funding and agrees to
be the oversight agency for audit. Vdithin 30 days after any
reassignment, both the old and the new oversight agency for audit shall
notify the auditee, and, if known, the auditor of the reassignment."
Pas through entity means a non- Federal entity that provides a Federal
award to a subrecipient to carry out a Federal program.
Prooram - SIDeC fig audit means an audit of one Federal program as provided
for in §_ ,200(c) and §_ .235.
Questioned cost means a cost that is questioned by the auditor because
of an audit finding:
(1) Which resulted from a violation or possible violation of a
provision of a law, regulation, contract, grant, cooperative agreement, or
other agreement or document governing the use of Federal funds, including
funds used to match Federal funds;
(2) Where the costs, at the time of the audit, are not supported by
adequate documentation; or
(3) Where the costs incurred appear unreasonable and do not reflect
the actions a prudent person would take in the circumstances.
Recipient means a non- Federal entity that expends Federal awards
received directly from a Federal awarding agency to carry out a Federal
program.
Research and development (R &D) means all research activities, both basic
an applied, and all development activities that are performed by a non -
d.
Federal entity. Research is defined as a systematic study directed toward
fuller scientific knowledge or understanding of the subject studied. The term
research also includes activities involving the training of individuals in
research techniques where such activities utilize the same facilities as other
research and development activities and where such activities are not included
in the instruction function. Development is the systematic use of knowledge
and understanding gained from research directed toward the production of
useful materials, devices, systems, or methods, including design and
development of prototypes and processes.
Single audit means an audit which includes both the entity's financial
statements and the Federal awards as described in §_ .500.
State means any State of the United States, the District of COlUITlbia,
the Commonwealth of Puerto Rico, the virgin Islands, Guam, hmerican Samoa, the
Commonwealth of the ldorthern Mariana Islands, and the Trust Territory of the
7
ATTACHMENT .......G.......
PAGE ...... .... OF ... .... PAGES
1: V 1,.. 7I I I II� 1
_j
Jt.u< ait. T I1 lnCi0J J'.id i:, "F 'i( c' I IIRS 1 e1) eral stu
tarl:e, a1 1.I10.1;' jwl_h•,!j;'7!d by T.it:.:e V gal Tie Highu -�r Educat:ion Nci
'+,) , as amended, (l0 �1.�,,.r_:, IO or scu, whirl admin.i.stered by the
<�pr,r'nte'rj '_ c,. T,duc:,Ii on and an'Is provJid.ed by ()flier ed(:r,l:
1 ":)IJI THIS Wh )v,d<: T .Lmi rl;
11 T. „ ,nil, -�.� �v <� „���_ ,r for ;I„_..:_i!. - - .;!_u' I-:
_ ul , r�`c.'rr'i�rl,t me r,^ r, nor] -V�(i r�,l <- ni`_.i!j� that experlc)^ S'lel"aJ
,ijrfh en ±ity t') _.ar y 'lit. a Pede:'rll r)roq 'iIn, I,I
mw f,�' ,i �,rl � c�1 1 '_ h"„ �.•, �)G �i l =I lri 1 �1� �l i "�` '1 ;' !' "'fir
IW ,i i an r . , 1 'l.,. ��1.v :1 1) 1
.210.
c , IW E']IIE' .!fir r }c, r!
it 1 ,m1 an n'. I uCI( -
rl
Ili i'i 'I' Ji' .. " � '1:. ., . •!, � ,. ..,:11 �,: ): .: 'j, ii1C ,
d d(er.J I fit . ,Aldnt ui:he_ se., e.. prowl I
t!"lat a, :e required '-c);: �ll conduct of a Fedesal
`1, ��1 S °�41CeS maj/ -i2 for a.7 '_ >] ":�an zatiOn's own use or 4 oY
s of she Federal p °ogram. d. ( ona_1 guidance on d. stlna) -1 ,,. 1a
u)Drecip- and a veridor _S provided in .210.
Subpart B-- Audits
.200 Audit requirements.
awa.:; �.i�,_., ha <a n' ,gram ;,e.,,, a d,._ _ond d ..
_�, ,a'_ _. �7'1 i_Cl an C I
d w p . j• d y� '20,5.
i ! i< L1C i`lor: .) (1D r
_.., -3 ..;C��. , u.. e ✓E., d/'i.'i= �, .. �, i; �j C,1 rfi<,;_ _i, a ji i�d1
.y vi6 JS cl ij. fiaVe b St(IC7:° all�l, J 11"1 d "U. �.1) 1','.l. i:h C .500
dII .;E.y <_.ie t 'L a4e a Ur aU a.nl'"S e C rjud, - t r duc'_ed .iri 21 CCor r) 11: <-` 4.'I -.:
_,arag� p}I (c) of ':Mils section,
- - ,uram- spec_`ic -audit - T <?hen an juditee expends Fed'-.
awards under only one Federal program �ezciuding R� and. the Federal
program's laws, .regulations, or grant agreements do not require a financial
statement audit of the auditee, the aud.itee may elect to have a program -
specific audit conducted in accordance with § .235. A program- specific
audit may not be elected for R&D unless all of the Federal awards expended
were received. from the same Federal agency, or the same Federal agency and he
same pass- through entity, and that Federal agency, or pass- through entity in
the case of a subrecipient, approves in advance a pron.,ram- specific audit..
,d) Exemption when Federal awards expended are less than $300,000
( for {fiscal vears ending after December 31, 2003) . Ikon- Federal
1 ,
ATTACHMFWT ...... ".........
PAGE
000 (,'`O(;, OOC _` " t' c 1 eor encinn
t1,at e,'
el, ties pe]id less. tl,ar, ° "CC _ .,
Deoember 37, �'(IC��;) a yea 3' _r, Federal alva2CdE: are eY.eTllpt _xOITi Federal
2 , but 2:ecords
audit ?"equirements fox that year, e>:cept as 1 1:) in cj 15 a ai � ) Eccles)
ITIUSt be aha il able `_OT reN'1.ew or audit )7y appx ate Of- iCia_.� c,f the
C
and General Accounting f
agency, pass- througl, elitlt) -
e_F and Uevelonment Cen`e� s FF>'.LIC1 .
(e) Feder�ll�� Funded F :_. <:_a,-c1
1 of an aud-'tee that or operates a FFFt6c may elect to treat Lhc
FFRDC as a separate entity for Purposes of t1_1IS part.
S 205 Basis for determining Federal awards expended.
(a) D eterm i n;no Federal awards e x p ended, The determination of when an
award is expended should be based on when the activity related to the award
occurs. Generally, the activity pertains to events that require the non -
Federal entity to comply with laws, regulations, and the provisions of
contracts or grant agreements, such as: expenditure /expense transactions
associated with grants, cost- reimbursement contracts, cooperative agreements,
and direct appropriations; the disbursement of funds passed through to
subrecipients; the use of loan proceeds under loan and loan guarantee
programs; the receipt of property; the receipt of surplus property; the
receipt or use of program income; the distribution or consumption of food
commodities; the disbursement of amounts entitling the non - Federal entity to
an interest subsidy; and, the period when insurance is in force.
(b) Loan and loan guarantees (lo ans). Since the Federal Government is
at risk for loans until the debt is repaid, the following guidelines shall be
used to calculate the value of Federal awards expended under loan programs,
except as noted in paragraphs (e) and (d) of thi section:
(1) Value of new loans made or received during the fiscal year;
plus
(2) Balance of loans from previous years for which the Federal
Government imposes continuing compliance requirements; plus
(3) Any interest subsidy, cash, or administrative cost allowance
received,
(c) Loan and loan guarantee- (loans) at ins titutions of higher
education When loans are made to students of an institution of higher
education but the institution does not make the loans, then only the value of
loans made during the year shall be considered Federal awards expended in that
year. The balance of loans for previous years is not included as Federal
awards expended because the lender accounts for the prior balances.
(d) pr- loan and loan guarantees (loans) . Loans, the proceeds of
which were received and expended in prior- years, are not considered Federal
awards expended under this part when the laws, regulations, and the provisions
of contracts or grant agreements pertaining to such loans impose no continuing
compliance requirements other than to repay the loans,
(e) Endowment funds The cumulative balance of Federal awards for
endowment funds which are federally restricted are considered awards expended
in each year in which the funds are still restricted.
(f) Free rent Free rent received by itself is not considered a
Federal award expended under this part. However, free rent received as part
0'
ATTACHMENT .................
PAGE ._.. L�L.... OF ...... PAGES
d 1 )('(1 UIilril' "Jj I_ I I A 1 d Y i d
I ll'J . 1:1� V 'j uo d 1 1- 1 Ille I e - 'ej oy I
v rl 1.) q '_2 cl j
C; r
I I I di 1) rj a r) (1 1,
M l d I • rl
rl \1 r3 jj a I f3 �j y C I I r, ;I
I Mi! c 'j J (I j J I
H W i I x IA Ud I I T) Cj I t 11 1 A s rj _ t c' P T' �' M.1 1 1 1 ! III-.
I , L c A J_ ri d?; :f I, i - o A1 i e d b I.i N a t J, o I I a I C e c! J, t _U I I I or,
lii; I f . l L I j. or; T l: >1)1 f is1 1 .9 o e) I) s m
I rl r, 1d ;1114 -I :r- r) 1 __ I' d I U 3 d y Fri C I J
'q ,:)1 1 i I i, I III lII I I I 'I i III i''II'I 1 1 (' rio I I I ... I I I
21 Subrecipient and vendor determinations.
rj e rl e r a I. An a , t e e Iria y b a r c-_� c - I.p1 e n t , a s 1,, e r I and Ej
J! ,r. F - (3,E! )- a 1 '3 w a f d s e x pe T) d ''• d" a s a :. e c i p]. e n t o 1 a s 1) 1-). e r' p.; 'I- P, I w 'u I d
e -� I: L O a u d j
unde- th part The payments recelved for goods or
_ie l sil-1 a vendor - wr) , 61d not oe con& Federal awards The ju j dance In
j_ ;.I p I : s (b) and (c) .D-' th is section should. be considered in de ermirllrlr.'
hr'l- J:'rj ' `ute a Fede award or a Payment foi Jr,C)ds and
V
j
d
S
J I
J�l. C 'I TW3 J C
IIIIIia -1
H r n s Y a amL)i
erfle an
a nte
17-
Uses the 7 ederai funds to carry out a p_ of - -he
organization as compared to providing goods or services for a program of the
pass- through entity.
(C) Payment for goods and. services. Characteristics indicative of a
payment for goods and -; received by a vendor are when the
( I ) Prov.'Ld(•s the goods arid services within normal busjnese;
operations;
A A U k A C: K rr
PAGE ..... OF .... ... PAGES
( ) rrGVicee lar cioode. Cyr sc _cee tc• rr,any d_riErer,t-
pu''c);asc:rs;
(�i) Operates i.r, a COnjpe'� =:.1Ve 617ViSUIIIIierii;
(G) frovicies gOGQS 01: services that a? " e al,c1.11 �, to L)
operation, of the Federal and
(5) Is not subject to compliance requirements of the Federal
program,
(d) use of iudornent in maki.no determination. There may be unusual
circumstances or exceptions to the listed characteristics. In ma)ing the
determination of klhether a subrecipient or vendor relationship exists, the
substance of the relationship is more important ti the form of the
agreement. It is not expected that all of the characteristics will be .,resent
and judgment should be used in determining whether an entity is a subrecipient
or vendor.
e)
For - profit subrecipient. since this part does not apply to for-
profit subrecipients, the pass- through entity is responsible for establishing
requirements, as necessary, to ensure compliance by for - profit sulicableents.
The contract with the for- profit subrecipient should describe app
compliance requirements and the for- profit suhrecipient's compliance to for -
responsibility. Methods to ensure compliance for
profit subrecipients may include pre -award audits, monitoring during the
contract, and post -award audits.
(f)
compliance resnonsibilltV for vendors. In most cases, the
auditee's compliance responsibility for vendors is only to ensure that the
procurement, receipt, and payment for goods and services comply with laws,
regulations, and the provisions of contracts or grant agreements. program
vendors. However, the
compliance requirements normally do not pass through to
auditee is responsible for ensuring compliance for vendor transactions which
are structured such that the vendor is responsible for program compliance or
the vendor's records must be reviewed to determine program compliance. Also,
when these vendor transactions relate to a major program, the scope of the
audit shall include determining whether these transactions are nacoeementce
w ith laws, regulations, and the provisions of contracts or grant
§_ .215 Relation to other audit requirements.
(a) Audit under this part in lieu of other audits. An audit made in
accordance with this part shall be in lieu of any financial audit required.
under individual Federal awards. To the extent this audit meets a Federal
agency's needs, it shall rely upon and use such audits. The prov Of
this part neither limit the authority of Federal agencies, including
Inspectors General, or GAO to conduct or arrange for additional audits (e.g.,
financial audits, performance audits, evaluations, inspections, or reviews)
nor authorize any auditee to constrain Federal agencies from carrying out
additional audits. P'ny additional audits shall be planned and performed in
such a way as to build upon work performed by other auditors.
(b) Federal aoencv to Day for additional audits. A Federal agency
that conducts or contracts for additional audits shall, consistent with other
applicable laws and regulations, arrange for funding the full cost of such
additional audits,
11
AT7ACI-IMCNT .......�
...........
PAGE ...
OF_ PACES
220 Frequency of audits.
,,... � II^ � �., .i., ')1 ;,; - ....., r. ,, 11CL; I:�. '�V •']e �'I • Il r, .'f; -,I,:. (a)
I! :Il, �i� � �,,I, �, 1 - , , �-: 1, 1' ai �, I)d,� .'�h � ,�, ..�1. Ir��. .. •, /� -..1 .� v.�ll!,1II IIa� ,�, �fllll -1.
.I /,, , ;1, 1! It r)) ,:,t. I1 `! ( , V (' Y (Ir 11 1:- {u, , ed I-) y ;o .0 t: ,,,I l
.,' tI r', fe.cl. ')1 1n11ary I , I r)FI' /, ! III - I'le {G i clllc �`.,., i " ,
l.i e� L r''nu Il =`
I,ar, 1y, .is permitted to undergo _its audits pursuant 'L tIIYa part
, nr, I;y. ':'I s requi must _,LL'iJ be in effect for the I,_ierinia., pe:l��rl
Any r,cr,- L;roii rgar.iza ion :at ;lad biennial aud.i s for ay,
,nniaJ periods ending between ,July 1., -992, and January 1, ,9 °,5, -s
wTmi'_.ten K undergo its aunts pur cant to tl Dart P)lennjai.i.y.
S 225 Sanctions.
Adu ')._rji _ may he _ Wrget . _de:. a]- awards ex", audits e r n-,
_, par have not Keen made Dr have keen made but no`. ,.n O•CCO dance
�- -. 1n cows of "rl i. ;.nu°d, .AaMI� - -y )r D. w:i. I _.i. ngne`,, Aj ) an and
nlicte'd in acniYA w, !Ks . dit, Feder agencies a.nd
.n7 .n7l 13 as _,i1a. 3 _aml al.) pr'),.)-j.a: -e actJ'or, us-ng
') -,) WItI, II r,1d.LIlC7 ('Y S1J.>aliowJ -r)q er'Plead I_,SJ
cpendi.*ia Federal awa._ci.s unti l the audit j s __ amucted ,
d) Terminating the Federal award.
§ .230 Audit costs.
(a) A].Iowable costs Unless prohibited. by law, the cost of audits
made in accordance with the provisions of this part are allowable charges to
Federal awards. The charges may be considered a direct cost or an allocated
indirect cost, as determined in accordance with the provisions of applicable
OMB cost principles circulars, the Federal Acquisition Regulation (FAR) (98
CFR parts 30 and 3l), or other applicable cost principles or l egulations.
12
ATTACI-IMENT ...... E.- I
PAGE �.Z _.. OF ... 1 -- PiL,GES
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t - hrelj tale - ,udi.t.ee shall Piave
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220 Frequency of audits.
,,... � II^ � �., .i., ')1 ;,; - ....., r. ,, 11CL; I:�. '�V •']e �'I • Il r, .'f; -,I,:. (a)
I! :Il, �i� � �,,I, �, 1 - , , �-: 1, 1' ai �, I)d,� .'�h � ,�, ..�1. Ir��. .. •, /� -..1 .� v.�ll!,1II IIa� ,�, �fllll -1.
.I /,, , ;1, 1! It r)) ,:,t. I1 `! ( , V (' Y (Ir 11 1:- {u, , ed I-) y ;o .0 t: ,,,I l
.,' tI r', fe.cl. ')1 1n11ary I , I r)FI' /, ! III - I'le {G i clllc �`.,., i " ,
l.i e� L r''nu Il =`
I,ar, 1y, .is permitted to undergo _its audits pursuant 'L tIIYa part
, nr, I;y. ':'I s requi must _,LL'iJ be in effect for the I,_ierinia., pe:l��rl
Any r,cr,- L;roii rgar.iza ion :at ;lad biennial aud.i s for ay,
,nniaJ periods ending between ,July 1., -992, and January 1, ,9 °,5, -s
wTmi'_.ten K undergo its aunts pur cant to tl Dart P)lennjai.i.y.
S 225 Sanctions.
Adu ')._rji _ may he _ Wrget . _de:. a]- awards ex", audits e r n-,
_, par have not Keen made Dr have keen made but no`. ,.n O•CCO dance
�- -. 1n cows of "rl i. ;.nu°d, .AaMI� - -y )r D. w:i. I _.i. ngne`,, Aj ) an and
nlicte'd in acniYA w, !Ks . dit, Feder agencies a.nd
.n7 .n7l 13 as _,i1a. 3 _aml al.) pr'),.)-j.a: -e actJ'or, us-ng
') -,) WItI, II r,1d.LIlC7 ('Y S1J.>aliowJ -r)q er'Plead I_,SJ
cpendi.*ia Federal awa._ci.s unti l the audit j s __ amucted ,
d) Terminating the Federal award.
§ .230 Audit costs.
(a) A].Iowable costs Unless prohibited. by law, the cost of audits
made in accordance with the provisions of this part are allowable charges to
Federal awards. The charges may be considered a direct cost or an allocated
indirect cost, as determined in accordance with the provisions of applicable
OMB cost principles circulars, the Federal Acquisition Regulation (FAR) (98
CFR parts 30 and 3l), or other applicable cost principles or l egulations.
12
ATTACI-IMENT ...... E.- I
PAGE �.Z _.. OF ... 1 -- PiL,GES
(j_) Or,a_?oa;a�_e �'oe, A non- F'cce'a1 ent_�y s1,aL not clla_'cle t)ie
ollo.'irlg td a reo ra_ at -:ard:
Tide cost of any audit uiidex the Sir,gie 7:udi.t Act bniel "ldnlentS
Gf 1�'�V (J1 U. ° ,�', 7�Ci1 rt SeG .) Ilot conducted _]'l acco'_'Qance w]th this pa_
_ 1' eIa_� ent1T_ v21'l].cl'l has Fede' "al
( ?� ^1le cost of aud�t?ng G ndll _ea �
awards expended of less than S 00, 000 (" -00, 000 ror r "fiscal years eliding ai ter
December 31, 2003) pe_r year and i.s thexeby exempted under 0_ .200(d) from
1 an audit conducted under this part. However, this does not prohibit a
pass - through entity from charging Federal awards for the cost of limited scope
audits to moiii.tor its subrecipients in accordance wL - 1 0 . 400 (d) (3) ,
provided the subrecipient does not have a single audit. For purposes of this
part, limited scope audits only include agreed -upon procedures engagements
conducted in accordance with either the AICPA's generally accepted auditing
standards or attestation standards, that are paid for and arranged by a pass -
through entity and - address only one or more of the following types of
compliance requirements: activities allowed Or unallowed; allowable
costs /cost principles; eligibility; matching, level of effort, earmar)_ing;
and, reporting.
0 .235 Program- specific audits,
(a) Program-specific audit guide available. In many cases, a program -
specific audit guide will be available to provide specific guidance to the
auditor with respect to internal control, compliance requirements, suggested
audit procedures, and audit reporting requirements The auditor should
contact the Office of Inspector General of the Federal agency to determine
whether such a guide is available. When a current program- specific audit
guide is available, the auditor shall follow GAGAS and the guide when
performing a program- specific audit.
(b) Program - specific audit cruide not available. (1) When a program -
specific audit guide is not available, the auditee and auditor shall have
basically the same responsibilities for the Federal program as they would have
for an audit of a major program in a single audit.
(2) The auditee shall prepare the financial statement(s) for the
Federal program that includes, at a minimum, a schedule of er >penditures of
Federal awards for the program and notes that describe the significant
accounting policies used in preparing the schedule, a summary schedule of
prior audit findings consistent with the requirements of 0_ .315(b), and a
corrective action plan consistent with the requirements of 0_ .315(c).
(3) The auditor shall:
(i) Perform an audit of the financial statement(s) for the
Federal program in accordance with GAGAS;
(ii.) Obtain an understanding of internal control and
perform tests of internal control over the Federal program consistent with the
requirements of 0_ .500(c) for a major program;
(iii) Perform procedures to determine whether the auditee
has complied with lay's, regulations, and the provisions of contracts or grant
agreements that could have a direct arid. material effect on the Federal program
consistent with the requirements of 0_ •500(d) for a major program; and
13
ATTACH[ViE NT .- -• - - -•
PAGE .__. OF ... 4 > >..._ PAG
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ll 500 (e)
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505 (d) (1) and fi-id�,-,iqs
I a rf I .in a f ormat c or) s 1 s t e n t w i t h
ri I ) I d co s' . : _, consi vi _J _ 1 t he -, e qu *1 r eme n t s of 505 (d) (3)
Report subin! ssion for program-siDecific audits
7; e L) shall be completed and the _reporting requi by par agrapn
(c) (2) 1 (c) (3) of this section -ubmj'_1, w.thin the earlier of 310 da-,,/s,
, �)): i a" r j ,�i , r�)- r f ij� �3 u rj
-Ile ai s -,: epor ( :-, , , . - ,
un I ss a Lo no Pr p e r 7 , Cj r q d Federal. a cj V,
7 j - J f,)nd' r-,q or jj -1 flent -)r:, d J s ^p j- f J A c p r cj ri i -
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_o t t, T - d e a t E, a h m) e d ed ny r*lb
I -d i n accc,l Jarl�� w ti. § .320 (h), as app_ ,
p 2 o a D I - sl:) e - J c , a u d it, a nd L h e r epo r t - 1 n q .. e qu _' r ed by - _he pr () q r am- spe c'
audit w id e t o be r etained as an arch copy . Paso, Lhe auditee shall
submit to the Federal awarding agency or pass-through entity the report ng
required by the program-specific audit guide.
(3) When a program-spec audit guide is not available, the
reporting package for a program- speci audit shall consist of the financial
statement (s) of the Federal program, a sammaxy schedule of priw hudit
findings, and a corrective action plan as described in parpiq-aph (b) (2) )f
this section, and the auditor's reports) s) described in paragraph (b) (4) of
th section. The data collection form prepared in accordance vii'Ll
14
ATTACHMENT ...... .........
PAGE .... O .. PAGES
5._.320(b), as epplic.aL_e tc a program- spec -fic audit, ano 011 E coup of thfS
report�l]g l7aC):age shall be S L"
unll tted i C Elie T' oral Cl ea ?" nC(t,GUSe Clesigr
_1 Ul'IP LO be seta it led a E all al chi Val CC,1:' \'. �_1 sG, when the Scliectule or
findings and questioned costs disclosed audit findings cr t)ie su,i, th sauditee
of rJrior audit findings reported tl,e statue of any audit fil,dir,gs, the auciitee
shall submit one copy of rile reporting package to the Federal clearinghouse or
entity
of the Fecierai awarding agency, or directly to the e
ir, the ease of a subrecipient . Instead of subm? ttilig the 27 el ing package to
he pass- tP,rough entity, when a subrecipient is not required to submit a
reporting package to the pass - through entity, the subrecil_ shall provide
written notification to the pass entity, consistent l.itli t) ,e
requi cements of § .320 (e) (2) . h subrecipient may subndt a col_,y of the
reporting package to the pass - tlirough entity to comply w tli t),is notification
requirement.
(d) Other sections of t) part may apply Program- specific audits
are subject to 5_.100 through §_ •215(b), § .220 -through §2 .230, 900
§_ .300 through §_ .305, § .315, §_.320(f) through §_
through §_ •905, §_ .510 through §_ .515, and other referenced provisions
of this part unless contrary to the provisions of this section, a program
specific audit guide, or program laws and regulations.
Subpart C-- Auditees
§ .300 Auditee responsibilities.
The auditee shall;
(a) Identify, in its accounts, all Federal awards received and
expended and the Federal programs under which they were received. Federal
program and award identification shall include, as applicable, the CFDA title
and number, award number and year, name of the Federal agency, and name of the
pass- through entity.
(b) Maintain internal control over Federal programs that provides
reasonable assurance that the auditee is managing
Federal awards in compliance with laws, regulations, and the provisions of
contracts or grant agreements that could have a material effect on each of its
Federal programs.
(c) Comply with laws, regulations, and the provisions of contracts or
grant agreements related to each of its Federal programs.
(d) Prepare appropriate financial statements, including the schedule
of expenditures of Federal awards in accordance with §_ .310.
(e) Ensure that the audits required by this part are properly
performed and submitted when due. When extensions to the report submission
by the cogni
due date required by §_•320(x) are granted zant or oversight
agency for audit, promptly notify the Federal clearinghouse designated by OMB
and each pass- tiirough entity providing Federal awards of the extension.
(f) Follow up and tale corrective action on audit findings, including
preparation of a summary schedule of prior audit findings and a corrective
action plan in accordance with §_.315(b) and §_.315(c), respectively.
§ .305 Auditor selection.
15
A71 ACHMENT ....... e........
PAGE ...J 5.. OF PAGES
I)I ;i,_.,. nl (1;1111. Iii -s1 -, rl le lo-* lq )l (jr GI'1W and A(A) s 41,
)'_ on S ';f I1; gher FVhj no 1 ; _,,, Map; 0 , , and O'_hyr I)r)[I-k W i t
nYgan.iVH t i 0ns," n IAA FAP ,0 3FP r.art 42n as ap)_)l.cab.le (OMB Cl.r cAar':
dvaiIahJe front tin ),Kne (if Adme n.. t.ra'kAm, Publicatiw, DM ce, room nq,
MnW ,,,:q-,.,,_., 1:;;,!:l,nq, :, ?;., _;;')r,, ;i�' '7503) Inlhene�, x,ssib.'.c,
i
dUditees Mall make positive efforts to utilize small businesses, minor :y
owned firms, and women' business enterprises, in procuring audit as
stated in the A - 3 02 Common Rule, OMB Circular A- 110, or the PAP-. AR CPR )o -.
4N) , an app ic:ahle. In requesting proposals for audit services, the
"Wrt i ves and s -•9pe of the audit should be made clear. Factors to hr
-- i d — d in ova I ua r i ng each prn)_)n ^a l fro audit servi c s inc
-.:,1:) ():lf; 1 «r- ,I( "I^ tU t)l ,- or,juost f o ) p: , opoH<)l
of snaff Willi ))rr,W...1 quaff_ ;Kna'..lon„ and ..e0 - „ica1 ar,ll
-:,f. 4xCeynal quality amoroi nevi -ws, and )_nice,
(h) Rest on auditor preparing ind:i.recl. cost ) >rotaosa,:)_s /a,
auditor who prepares the indnec_.t cost proposal or cost allocation plan may
110t also be selected to perform the audit required by this part when the
i r1 d.i Ygvt qnsrs reno•, ned by the aud:i tee luring the prior year exceeded
nil. i i 1')n. Th1. 9: cI "1"I1'.)n app ,1 1e!, rr) t -hf bc1Se )rear lls-d i.n ' ',he pl:epa ra L:
nho NO (Or f)1 ">p'na 1 or a. 1. rl .'_) O ^dl i.;)n plan and aily -,ubSequent
which the resulting irldi rPrc,_ -,,os t agreement or cost allocation plan is u sed I.:)
recover oasts, To idi iii ne any disruption in existing contracts for audit
services, th.ls paragraph apAles to audits of fiscal years beginning aft - er
Jun- 30, MR
IN Use of Federal auditors Federal auditors may perform all � par -
of the work required under this part if they comply fully with the
requirements of this part.
.310 Financial statements.
I a) Financial statements The aud_i_ tee f:inan.cial
..tat ements shat reflect its f inancial looslt.l Dn, 1 • °Shit (if operations C)r
- ranges in net assets and., where appropriate, cash flows for the f :.seal year
audited, The finanKal statements shall be for he same organizati_ona.1. uni
and fiscal year that is chosen to meet the rerJ, n.rements of this '}_fart".
However, organization- financial statements may also include depa.rtnlen-.s,
agencies, and other organizational units that have separate audits in
accordance with 0_.500(a) and prepare separate financla.l statements.
(b) Schedule of expenditures of Federal awards The auditee sha'::I
also prepare a schedule of expenditures of Federal awards for the ,e,iod
cowered by the audWe's financial statements. While not required, rhG.
audite- may choose to provide 1nfJrnmtlon requested Dy Federal awarding
agencies and pass- through entities to make the schedule easier to use. T%
example, when a. Federal program has multiple award years, the auditee may __..
the amount of Federal awards expended for each award year separately. At a
minimum, the schedule shall:
(1) List individual Federal programs by Federal agency. For
Federal programs included in a cluster of programs, list individual Federal
programs within a cluster of programs. For R &D, total Federal awards expended
shall be shown either by individual award or by Federal agency and major
subdivision within the Federal agency. For example, the National Insti tu`:es
of Health is a major subdivision in the Department of Health and Human
Services.
16
ATTACHMENT ...... E........
PAGE .... OF .3_1.1z ?.... PAGES
( )
For Federal awards received as a subsecipient, the rianie of
Identifying nwnJ er assigned by the Pass -th i
? ougi
the pass - through entity and
entity shall be included.
(3) Provide total Federal awards e>cpended for each individual
Federal program and the CFDA number or other identifying number when 'the CFDA
information is not available.
(4) Include notes that describe the significant accouiating
policies used in preparing the schedule,
(5) To the extent practical, pass- through entities should
identify in the schedule the total amount provided to subrecipients from each
Federal program.
(6) Include, in either the schedule or a note to the schedule,
he value of the Federal awards expended in the form of non -cash assistance,
t
the amount of insurance in effect during the year, and loans or loan
guarantees outstanding at year end. While not required, it is preferable to
present this information in the schedule.
9_.315 Audit findings follow - up.
(a) General The auditee is responsible for follow - up and corrective
action on all audit findings. As part of this responsibility, the auditee
shall prepare a summary schedule of prior audit findings. The auditee shall
also prepare a corrective action plan for current year audit findings. The
summary schedule of prior audit findings and the corrective action plan shall
include the reference numbers the auditor assigns to audit findings under
9 _.51o(c), Since the summary schedule may include audit findings from
multiple years, it shall include the fiscal year in which the finding
initially occurred.
(b) Summ schedule of p audit findings_. The summary schedule of
prior audit findings shall report the status of al audit findings included in
the prior audit's schedule of findings and questioned costs relative to
Federal awards. The summary schedule shall also include audit findings
reported in the prior audit's summary schedule of prior audit findings except
audit findings listed as corrected in accordance with paragraph (b) (1) of this
section, or no longer valid or not warranting further action in accordance
with paragraph (b) (4) of this section,
(a) When audit findings were fully corrected, the summary
schedule need only list the audit findings and state that corrective action
was taken.
(2) When audit findings were not corrected or were only
partially corrected, the summary schedule shall describe the planned
corrective action as well as any partial corrective action taken.
(3) When corrective action taken is significantly different from
corrective action previously reported in a corrective action plan or in the
Federal agency's or pass-through entity's management decision, the summary
schedule shall provide an explanation.
(4) When the auditee believes the audit findings are no longer
valid or do not warrant further action, the reasons for this position shall be
described in the summary schedule. A valid reason for considering an audit
finding as not warranting further action is that all of the following have
occurred:
(i) Two years have passed since the audit report in which
17
ATTACHMENT ....... .......
PAGE ..... 1. OF ... .�?.... PAGES
-.r1 /al _..ihn!I : ed r,; Ci le T a; ��,r : ri� {hsn?�;•_;
„ -r! I c} < 1 u_!r; throe! T!; er!t.l t v , ., !lot
u , midi Vic, or: h!r �nidit f i!!d and
i 1 , , A Tnar I e gerIIe de :.i_s i on was not suAd .
-) Corr actior J�Llan. At ' completion of the audit, the
eudJ '. _ shad. prepare a :701 "l_F ?C ".:] Ve act - .7 on plan to address each audit fa -lea; nq
c!!.!�l i n t.)!e cur! ,r! 'year au(Jjto �s r?}:�orts. The act:iion pia!'!
�.fla ! ;:�,-, -ri de the r!an!r; (;) o` the �:ont.acL l;�ercon (s) respons;.h.Le for
1' - )li, .he cJ EIr'1.7 on Iiiant!ed, and the ant C 3m3Dle.tlon darF
f he audi t.ee does riot agrae with t:he audi t findings or he ieves
act Jon plan sha17 :irir
.320 Report submise.ion.
�!) Gr!nera.i . T}'!e a i i :.ila i 7 he completed and the data rr, I .) r t I m
ir! paragraph (b) o'. r_h:i.s section and reporting package
i.n paragraph, (c) of r.his; ser:L'ion sha11 )-,e suhin e within t.hr
<,a r i -i ^r f s 0 day,^ a f r.r?r 1 r- r:r i p +, o f t: h e audi tor' s report ( s 1 , or nine mon'Ll!s
aft L F, end of Lhe aurti t Her i cad, uril ess a .1 onger pert od is agrF!ed to : T!
�dvanr:e by LhE2 cogriJ_s. ant o? ight. agency for audit. (However, for
1 i)r- !c_tirirri.rig ou or n(� fore .iune 30, i1)9H, tine audit sna17. be compietr!,d rnr:
! data Collection form and reporting package shall )-,e submitted wither,
earlier of 30 days after receipt of the auditor's report(s), or 1 months
after the end of the audit period.) Unless restricted by law or regulation,
,.)le auditee shall make copies available for public inspection,
)-,) Data Collection (1) The auditee shall submit a. data collection:
f-) - ]T1 WI'i - i. ^h states whether the audit was completed in accordance with tCii.s part
and provides information about the auditee, its Federal programs, and the
:su:lts of the audit. The form shall be approved by OMB, available from the
Federal clearinghouse designated by OMB, and include data elements similar t-.
ose presented in this paragraph. A senior level representative of the
dUd (e.g., State controller, director of finance, chief execut)_ve o`
01 c financial officer) shall sign a statement to be included as part of
the fo—ni certifying that: n e auditee complied with the requirements of the
p,.i.-t, the form was prepared in accordance with this part (and the instructions
ac ^urnpanying `he form), and the information included in the form, in its
are accurate and complete,
The data coliect_�,n fore? shall _nclude the follow %�nq �'.a_a
(v) The type of report the auditor issued on compliance for major
iR
A rr t-! t, A F m
PAG .... OF ... 3 T - -- PAGES
-.,hG �: . �rj )F? r,` repo: ":. the aud.l ..- C;SUed. o�l ._).ie ._ :La:'1 c:. . -, '�ft`eTTle;l'.:
=: ,�
e auditee ( e unqual f ed opinion, qua.l.if ed. opi-.ic D,
opinion, or Jisciaimer of opinion)
Where applicable, a. statement that significant deficiencies
control were disclosed by the audit of the financial statemens
and
whether any such conditions were material weaknesses.
A statement as to whether the audit disclosed any noncompliance
which
is material to the financial statements of the auditee.
(iv)
Where applicable, a statement that significant deficiencies in
internal
control over major programs were disclosed by the audit and whether
any such conditions were material weaknesses.
(v) The type of report the auditor issued on compliance for major
iR
A rr t-! t, A F m
PAG .... OF ... 3 T - -- PAGES
programs (i.e. urrqual fled opinion, qualified opinion, adverse
Opinion, Or disclaimer of opinion).
(�;) A list of the Federal awarding agencies which �•aL11 receive a copy of
the reporting pachage pursuant to §_.320( (2) of OAiE Circular
A -1" .
(vii) A yes or no statement as to whether the auditee qua as a low -
ris1: auditee under §._.530 of OMB Circular A -133.
(viii) The dollar threshold used to5di (rog between l.arype AJ`�nd Type B
programs as defined in §_
(i The Catalog of Federal Domestic Assistance (CFDA) numtber for each
Federal program, as applicable.
(x) The name of each Federal program and identification of each major
program. Individual programs within a cluster of programs should be
listed in the same level of detail as they are listed in the schedule
of expenditures of Federal awards.
(ri) The amount of expenditures in the schedule of expenditures of Federal
awards associated with each Federal program.
(xii) For each Federal program, a yes or no statement as to whether there
are audit findings in each of the following types of compliance
requirements and the total amount of any questioned costs:
(A) Activities allowed or unallowed.
(B) Allowable costs /cost principles.
(C) Cash management.
(D) Davis -Bacon Act,
(E) Eligibility
(F) Equipment and real property management
(G) Matching, level of effort, earmarking.
(H) Period of availability of Federal funds.
(I) Procurement and suspension and debarment.
(J) Program income.
(I�) Real property acquisition and relocation assistance.
(L) Reporting.
(M) Subrecipient monitoring.
(N) Special tests and provisions.
(xiii) Auditee Name, Employer Identification Number(s) , Dame and Title of
Certifying Official, Telephone Number, Signature, and Date.
O[:iv) Auditor Name, Name and Title of Contact Person, Auditor Address,
Auditor Telephone Dumber, Signature, and Date.
( Whether the auditee has either a cognizant or oversight agency for
audit.
( The name of the cognizant or oversight agency for audit determined in
accordance with §- ___.400(a) and §_.400(b), respectively.
(3) Using the information included in the reporting package
described in paragraph (c) of this section, the auditor shall complete the
applicable sections of the form. The auditor shall sign a statement to be
included as part of the data collection form that indicates, at a minimum, the
source of the information included in the form, the auditor's responsibility
for the information, that the form is not a substitute for the reporting
package described in paragraph (c) of this section, and that the content of
ups
/ GE .ACH1 _..._.. ......
PAGE .... OF -.3` P/�GES
I'. ,n1 "! j ))c, ,,,rl" oqr-, R'IIF' ,r,rf , nq ,a':I;,ic(R shrl i i 11 I u jIr
P_,,ar.. a ! Ile r;t_., ar,d _ r ,if L _),
nV'1cI �, rl i ^,c,,AwoI i n �_— 310 (a) ,.nd § . 310 (2.1) , re ^1-u -,ct i , 7e.i y;
I;:) ',unuuar, .,chc!du]e o` I,rior audit f.indi -ngs discussed it
d _i.n S.505; and
r ecl:i ve action plan discussed in 5.315 (c )
Ju1>m.i.tas,:io), '. clearinghouse A]] audi tees snit suNUH ") 'Aw .W -:��,�
ring {tiou�.�� l smmated by OIAR a single copy of the data c0i jcY ; —
1. =s, , b'•d .: n P, Ar: aqr al >Ii 'b of A 1 x secK on and the report inq ,_>a T. J
'e) / <;ubmissi.on by subrecipients (1) In addition no the
Yqu:rements discussed. A paragraph (d) of this section, auditees that are
a.sa PubrecIpients sha 11 :-:ubm:t to each pass- through entity one copy of
eporning package descrihed in paragraph (c) of this section for ea.c:n pass -
007oug_h entity when the schedule of findings and questioned costs disclosed
audit findings relating to Federal awards that the pass - through entity
prDvi pled or the summary schedule of prior audit findings reported the
-,f -, -n; :a 1 -u t. findings . e .a ing to Federal awards that the pass -th; ough <" - ".
„ lot.
%) Instead of submitting the reporting package to a pass -
uc ;P, a su, is not requi.j.ed to Submit a. , ep __Tjg ;
pannade ,_q a pass- through entity pursuant to paragraph (e) (1) of this
ae su,r�_ �._.Iplent sha.. p1 "GV:�3e wr, ��eT, notification to the pass - through
at; an audit of the subrecipient was conducted in accordance with - -h:-s
inc;ad -i_ng the period covered by the audit and the name, amount, and 7FDT,
number of the Federal award(s) by the pass- through entityl , the
schedule of findings and �-pestioned costs disclosed no audit findings W, . _
to the Federal a- ward.(s) that the pass- through entity probAed; and, the
summary schedule of prior audit findings did not eport on the status of a:.y
audit findings relating to the Federal award(s) that the pass - through ent_
provided, A subrec:ipient may submit a copy of the reporting package d.esn , :,- _;
i n paragraph (C) of this section to a. pass- imrough enti-.y to coI[lply with
notification requirement,
(f) Requests for report conies In response to requests by a Federal
agency or pass - through entity, auditees shall submit the appropriate copies of
the reporting package described in paragraph (c) of this section and, if
requested, a copy of any management letters issued by the auditor.
(g) Report retention reguirernents Auditees shall keep one copy of
the data collection form described in paragraph (b) of this section and one
copy of the reporting package described in paragraph (c) of this section on
file for three years from the date of submission to the Federal clearinghouse
20
��..r,rvitrV I
LP . . . . I
. ... OF .....���... PAGES I
designated by 014B. pass - through entities shall ).eel, subrecil;ients'
submissions on file for Lhree years from dare of receipt.
(h) Clear al,ous� , espons;hd - i ti -es . The Federal clearinghouse
designated by 01 ✓iB shall distribute the reporting pachages received :,.n
accordance with, paragraph (d) (2) of this section and 5_ .235(c)(3) to
applicable Federal awarding agencies, maintain a data base of completed
audits, provide appropriate information to Federal agencies, and fculln\, up
with ).novn� auditees which have not submitted the required data collect
J
forms and reporting packages.
(i) Clearinghouse address The address of the Federal clearinghouse
currently designated by O1vIB is Federal Audit Clearinghouse, Bureau of the
Census, 1201 E. 10th Street, Jeffersonville, Ih 47132.
(j) Electronic filing Nothing in this part shall preclude electronic
submissions to the Federal clearinghouse in such manner as may be approved by
01B. With O1✓1B approval, the Federal clearinghouse may pilot test methods of
electronic submissions.
Subpart D-- Federal Agencies and Pass - Through Entities
§.400 Responsibilities.
(a) Co gnizant agency for audit resp Recipients expending
more than $25 million ($50 million for fiscal yea end ing after December 31,
2003) a year in Federal awards shall have a cognizant agency for audit. The
designated cognizant agency for audit shall be the Federal awarding agency
that provides the predominant amount of direct funding to a recipient unless
OMB makes a specific cognizant agency for audit assignment.
Following is effective for fiscal ? ending on or before December 31, 2003:
To provide for continuity of cognizance, the determination of the predominant
amount of direct funding shall be based upon direct Federal awards expended in
the recipient's fiscal years ending in 1995, 2000, 2005, and every fifth year
thereafter. For example, audit cognizance for periods ending in 1997 through
2000 will be determined based on Federal awards expended in 1995. (However,
Z States and local governments that expend more than $25 million a year in udit, the
Federal awards and have previously assigned cognizant agencies o a beginning
requirements of this paragraph are not effective until fiscal )rears
after June 30, 2000.)
Following is effective for fiscal years ending after December 31, 2003:
The determination of the predominant amount of direct funding shall be based
upon direct Federal awards expended in the recipient's fiscal } ears
2004, 2009, 2014, and every fifth year thereafter. For example, audit
cognizance for periods ending in 2006 through 2010 will be determined based on
Federal awards expended in 2004. (However, for 2001 through 2005,the of
cognizant agency for audit is determined based on the predominant a o in t 2000).
direct Federal awards expended in the recipient's fiscal year
Notwithstanding the manner in w hich audit cognizance is determined, a Federal
awarding agency with cognizance for an auditee may reassign cognizance to
another Federal awarding agency which provides substantial direct funding and
agrees to be the cognizant agency for audit. Within 30 days after any
reassignment, both the old and the new cognizant agency for audit shall notify
the auditee, and, if )mown, the auditor of the reassignment. The cognizant
agency for audit shall:
(1) provide technical audit advice and liaison to auditees and
auditors.
(2) Consider auditee requests for extensions to the report
21
A =.
PAGE .... ... OF
320(a
I P71.a i i, I- ;orldu Ju;I ,;i' I �,J ^ r, G „ns �� ._ „)
11J I1 1, 1un,- i _.dera] and t c„ � ar1c1 ), vj �:]e ..he I esui: w)1eI
interested organiza'
9) Prorn):ItJy inform other affected Federal agencies and
iat.e Federal law enforcement officials of any direct reporting by the
audi : (, r)r I is and i for Of lrregulari t), or ii J ecfial acts, as required by Gh,GA`'
n ] ay.l- and qu l a t ; an
Advise '_he aud:i.t.or and, where appropriate, the auditree of
f 1 C l ellC) �:..^ f nul')d I n the FlUdl es when the def ] clencles require �.orp- —:r j •,�.�
,j 1 )n by 1 aurli Irinen advised of d(-!ficiencies, the auditee ;Jia i_1 wc,,
�d, _h :_he audi t;,r ,_o t.al;F i act i on . i f corrective acti on i s ))Ol
<i!: 1 71'I, the CoCfIl J. tint. aclen( :y f ur audit shaIJ notify the a1)ditor, t.1r' 11)
I.1d a):IpJ.icab7e Federal. award -i.ng agencies a.nd pass - through entiLies c,f t.),
and make for fo]_JOw -up actiol,. Major. inadequacie^ c,
rep -tit:: , ie whs,tandard pr2rformar)r:e by audj tors sha7.1 be referred to
and Pr of e ; i .'anal hodi es for i:' ; clp 1 '1ar
iG) = u�l-a�.nate, '_;� file .�;ctent pract.i.ca7., audits of l�wi• =�w::
InH`)e by OI fo) Feder63, dQe1 - 1Q.1 es Lhat a e .i.1 "1 add.1 t C) 1 tO Lhe al1dJ is made
nur <:uant to this part., so r.hijt t additional aud. t_s or reviews ! id apr n
udi 1:s performed in accordance w.i th this part,
(7) Coordinate a management decision for audit findings '_
he F ederate programs of more than one agency
!8) Coordinate the audit work and reporting .esponsik)ili.ties
lirjng auditors to achieve the most cost- effective audit.
(9) For hiennial audits permitted under §_.220, consider
r to qualify as a low -risl: auditee under §—.530(a) .
n) Oversight a.crency for audit responsJj )j.lities , Pan audi -tee w)
.:iues
not have a_ designated cognizant agency for audit will be under the
rerleral oversight of the Federal agency determined in accordance with
S_ .105. The oversight agency for audit:
(1) Sha.li provide techrjicai advice to auditees and auditors as
ested
(2) May assume a.i.l or some of the responsini_iiLies normal`y
per�,rmed b a cognizant agency for audit.
(ci Federal awarding agency responsibilities The Federal awarding
aqe icy .shall perform the following for the Federal awards it makes:
(1) identify Federal awards made by informing each recipient
of the CFDA title and number, award name and number, award year, and if the
award is for RbD. When some of this information is not available, the Federal
agency shall provide information necessary to clearly describe the Federal
award.
(2) Advise recipients of requirements imposed or) them by
Federal laws, regulations, and the provisions of contacts or grant
agreements.
(3) Ensure that audits are completed and reports are
22
PAGE OF ... __. P
in a timely manner and in accordance W. th the requirements of this pai
(4) Provide technical advice and counsel to auditee-- and
auditors as requested,
(5) Issue a management decision ol, audit findings within six
months after receipt of the audit report and ensure that the recipient tales
appropriate and timely corrective action,
(6) Assign a person responsible for providing annual updates
of the compliance supplement to OMB.
(d) Pass - through entity responsil;ilities. A pass - through entity shall
perform the following for the Federal awards it makes:
(I) Identify Federal awards made by informing each
subrecipient of CFD7 title and number, award name and number, award year, if
the award is R &D, and name of Federal agency. When some of this information
is not available, the pass - through entity shall provide the best information
available to describe the Federal award.
(z) Advise subrecipients of requirements imposed on them by
Federal laws, regulations, and the provisions of contracts or grant agreements
as well as any supplemental requirements imposed by the pass - through entity.
(3) Monitor the activities of subrecipients as necessary to
ensure that Federal awards are used for authorized purposes in compliance with
laws, regulations, and the provisions of contracts or grant agreements and
that performance goals are achieved.
(g) Ensure that subrecipients expending $300,000 ($500,000 for
fiscal years ending after December 31, 2003) or more in Federal awards during
the subrecipient's fiscal year have met the audit requirements of this part
for that fiscal year.
(5) Issue a management decision on audit findings within six
months after receipt of the subrecipient's audit report and ensure that the
subrecipient takes appropriate and timely corrective action.
(6) Consider whether subrecipient audits necessitate
adjustment of the pass- through entity's own records.
('7) Require each subrecipient to permit the pass - through
entity and auditors
ass t h ave ac
entity to th
comply recor d s
with
this fin a ncia l statements as
necessary for the p hrough
§_.405 Management decision.
(a) General The management decision shall clearly state whether or
not the audit finding is sustained, the reasons for the decision, and the
expected auditee action to repay disallowed costs, make f inancial adjustments,
or tale other action. If the auditee has not completed corrective action, a
timetable for follow -up should be given. Prior to issuing the management
decision, the Federal agency or pass- through entity may request
additional information or documentation from the auditee, including a request
for llowed� costs. t he mitig
an) appeal
disal
available to the auditee,
(b)
Federal agency As provided in g_•400(a)(7), the cognizant
agency for audit shall be responsible for coordinating a management decision
for audit findings that affect the programs of more than one Federal agency.
23
f MENT ...... E---------
PAGE ...Z:.._.. OF _..2_`:?... PAGES
I , J
(A, �I
A.; 1 r1l'1 111a"I hr!
J Y C(r -! , Incm, )111()1 Iq I I j lP(
). ou Cf) )
- LZ . P, Fi r) 4 0 0 ( d )(5 the ;:1a�,s.
'hi mqh en - sha.) 1 resl )A-. for malci.ng ,.I management decision C)I
a u d i t fi that relate to F-I= Ide awards it ma),es 'l-o suhrecipients
Tj.me e(III �. 1 , eriLeri L s The en t j t,/ ) spons J- I- I e f or ma). Ing the
jemer) k-r s s; hri , I (J 1) W, I Y) :n x 111oriths- of receipt cf t-he audi
we ) r , t o n
iouJ J he wlthin s- months of ter"
he cjljr)H 'Ind prj)r as ra-pjd]) as poa,sihde.
numbe'-"; . 1 decisions shc�.11 ;.ricl 1)(3p the
assigned to each audit finding ir)
510 (c
Subpart E-- Auditors
q___.500 Scope of audit.
(a ) Ge- 11 E-r al . The audit shall he conducted in accordance
The
audit shall. cover the entire ire opr:rati.ons of the auditee; or, at ,:.he. op! �,n
of the audit.pe, s,ucj-i audit shall include j series of audits that cover
agencies, and other organizational units which expended ur
therwise Itdminj-sceied Federal awards durng such fiscal year, provided
each such audit - ejjcompass, the financial statements and schedule of
expenditures of Federal awards for each such department, agency, and other
orqanj.�ational unit, which shall be considered to be a non - Federal entity,
The financial staternenLs and schedule of e�-perrditures of Federal awards
the I same fiscal year.
ID) Financial statements The auditor shall determine whether the
financial statements of the auditee are presented fairly in all material
respects in conformity with generally accepted accounting principles. The
auditor also determine whether the schedule of nnq of Federal
ki& 2 J � the -
3 i� pres ented fairly in a.]] material respects
aud itee'._, frjancial. statements taken as a whole.
ci - - nal control (1) in addition to the -equireuier)"- of
s l;a.i1 per pro es t obtai an un de- - -and- rig of i n te,
p—r
)_j "
ams soffli C) Plan tl aurj, '-o
s e J ]. ever o f c or t r o 'I risk for rria or pr'�g.rams- .
E> as provided y,. paragraph (c) (3) of - -his -ectJ-Dn,
�n E a r a
,, P , j.n - F n e -! -na ma
- he i ng f �� - I , .,2:amF -.uppr, a J ')Ar asse--sej level of control ish for the
an'- l-ance requirements for each major program; and
(ii) Perform testing of internal control as planned in
paragraph (c) (2) (i) of this section.
(3) When internal control over some or all of the compliance
requirements for a major program are likely to be ineffective in preventing or
detecting noncompliance, the planning and performing of testing described in
paragraph (c) (2) of this section are not required for those compliance
requirements, However, the auditor shall report a significant deficiency
(including whether any such condition is a material weakness) in accordance
with 9 .510, assess the related control risk at the maximum, and consider
whether additional compliance tests are required because of ineffective
24
ATTACHMENT ....
L PAGE ... OF ...
PAGES
internal control.
(d) comp iance (1) In addition to tide requirements of GAGAS, the
auditor shall deternu.ne whether the auditee has complied with laws,
regulations, and tiie provisions of contracts Or grant agreements that may have
a direct and material effect on each of its major programs.
(2) The principal compliance requirements applicable to most
Federal programs and the compliance requirements of the largest Federal
programs are included in the compliance supplement.
(3) For the compliance requirements related to Federal
programs contained in the compliance supplement, ah audit of these compliance
requirements will meet the requirements of this part. Knere there have been
changes to the compliance requirements and the changes are not reflected in
the compliance supplement, the auditor shall determine the current compliance
requirements and modify the audit procedures accordingly. For those Federal
programs not covered in the compliance supplement, the auditor should use the
tees of compliance requirements contained in the compliance supplement as
guidance for identifying the types of compliance requirements to test, and
determine the requirements governing the Federal program by reviewing the
provisions of contracts and grant agreements and the laws and regulations
referred to in such contracts and grant agreements.
(4) The compliance testing shall include tests of transactions
and such other auditing procedures necessary to provide the auditor sufficient
evidence to support an opinion on compliance.
(e) Audit follow -up The auditor shall follow -up on prior audit
findings, perform procedures to assess the reasonableness of the summary
schedule of prior audit findings prepared by the auditee in accordance with
§_.315(b), and report, as a current year audit finding, when the auditor
concludes that the summary schedule of prior audit findings materially
misrepresents the status of any prior audit finding. The auditor shall
perform audit follow -up procedures regardless of whether a prior audit finding
relates to a major program in the current year.
(f) Data Collection Foram As required in §_ .320(b)(3), the auditor
shall complete and sign specified sections of the data collection form.
§_.505 Audit reporting.
The auditor's report(s) may be in the form of either combined or
separate reports and may be organized differently from the manner presented in
this section, The auditor's report(s) shall state that the audit was
conducted in accordance with this part and include the following:
(a) An opinion (or disclaimer of opinion) as to whether the financial
statements are presented fairly in all material respects in conformity with
generally accepted accounting principles and an opinion (or disclaimer of
opinion) as to whether the schedule of expenditures of Federal awards is
presented fairly in all material respects in relation to the financial
statements taken as a whole.
(b) A report on internal control related to the financial statements
and major programs. This report shall describe the scope of testing of
internal control and the results of the tests, and, where applicable, refer to
the separate schedule of findings and questioned costs described in paragraph
(d) of this section.
(c) A report on compliance with laws, regulations, and the provisions
of contracts or grant agreements, noncompliance with which could have a
PAN
ATTACHMENT ....... C.......
PA GE ............ OF... .... PAGE
��.1 ; '�' -j .' =.1111, EAI e
r rat o 1 ; c, nd.;.nc_t a11d -Juest_i011 d t =,
p,ai) naphi (d) of tl').i's s ]on.
)ledu] e f `findings acid -Toe J oned costs v!! h shaa.] :"nc] ucjc
:w: Iq tl.: 'e :omp x)ne.nts:
'Che auditor'.: res") .'- , eariict; cha]]
i) The C of report the auditor issued on the
t,tar =men ±:s of the audit.ee (i.P, unqualified opinion, rn)aLlfied
ire, )n, opi.rlion, or discl timer :,f opinion);
i i) where q)).)]..inahle, a statement t) significant
._.,�.),c.L�_a i.n :.nterrtal control were disclosed by the audit of t) )e f Ina ncl«]
"at9mR1'1 t; =; and %A - )Pl -her any such cond:i t, i J] - IS We) ma terial weak
(iii) A statemennt. as to whether the audit disclosed any
1.1a1yre which is mat.er.a1, to the f.ina.ncial state)lents of t) auffl tee;
iv) Where appJlcahle, a statement that s'igI ,Jficant-
na_i over ma jor py Were di used )-)y t hr W)':: r
•u�'n "01 1dltlOnS WeY(P' MM.e -ill WeaAkneSSeS;
(v) The ty):)e of report the auditor issued on compJ_ian(-
..oy mejoi pr)grams (..e., unqualified opinion, qualified opinion, adverse
);-n.i ,n, -)r disclaimer of opinion)
(vi) A statement as to whether the audit disclosed any
;,lclit_ findings which the auditor is required to report under §_ .510(a);
(vii) An identification of major programs;
(viii)The dollar threshold used to distinguish between
e �•. ;,n�3 "'yp� Ft programs, as d_escr i,hred i_n S_. 520 (b) ; and
ix) P, statement as to whether the auditee qualified a.s
-5J aud.i' e .).nder 9_. 530
2) F.i_nd.ings relating to whe financial --tatemezts which are
pie e or ted - n accGrdance bT_ tf1 7SAG S...5' .
Firld.ings and questioned cyst.. for Federal awards "' !hi-h
rir.;,)de audi i_ findings as defined in §_, 510
(i) Audit findings (e.g. internal cont-roi findings,
- )ml, iiance findings, questioned costs, or fraud) which relate to the same
slue should be presented as a. single audit finding. Where practical, a.ud.it
findings should be organized by Federal agency or pass -- through entity.
(ii) Audit findings which relate to both the financial
statements and Federal awards, as reported under paragraphs (d) (2) and (d) (3)
of this section, respectively, should be reported in both sections of the
schedule, However, the reporting in one section of the schedule may be in
summary form with a. reference to a detailed reporting in the other section of
the schedule.
0_.510 Audit findings.
ATTACFiMFNT t_ _ u y l
I PAGE -- � ' ' I
OF ..�e..._ PAGES
repo
Liie following
The auditor sha1:1 _
as audit findings in a schedule of findings and questioned costs:
(1) significant deficiencies in internal control over major
programs. The auditor's determination of whether a, ctefic eorting i n t
control is a significant deficieicny for he purpose of
finding is in relation to a type of compliance requirement for a major program
or an audit objective identified in the compliance supplement. The auditor
shall identify significant deficiencies which are individually or cumulatively
material weahnesses.
(2) material noncompliance with the provisions of laws,
regulations, contracts, or grant agreements related to a major program. The
auditor's determination of whether a noncompliance with the provisions of
laws, regulations, contracts, or grant agreements is material for the purpose
of reporting an audit finding is in relation to a type of compliance
requirement for a major program or an audit objective identified in the
compliance supplement.
(3) I:nown questioned costs which are greater than $10,000 for
a type of compliance requirement for a major program. P.nown questioned costs
are those specifically identified by the auditor. In evaluating the effect of
questioned costs on the opinion on compliance, the auditor considers the best
estimate of total costs questioned (li)cely questioned costs), not just the
questioned costs specifically identified (known questioned costs), The
auditor shall also report known questioned costs when likely questioned costs
are greater than $10,000 for a type of compliance requirement for a major
program. In reporting questioned costs, the auditor shall include information
to provide proper perspective for judging the prevalence and consequences of
the questioned costs.
(a_) Known questioned costs which are greater than $10,000 for
a Federal program which is not audited as a major program. Except for audit
follow -up, the auditor is not required under this part to perform audit
procedures for such a. Federal program; therefore, the auditor will normally
not find questioned costs for a program which is not audited as a major
program. However, if the auditor does become aware of questioned costs for a
Federal program which is not audited as a major program (e.g., as part of
audit follow -up or other audit procedures) and the known questioned costs are
greater than $10,000, then the auditor shall report this as an audit finding.
(5) The circumstances concerning why the auditor's report on
compliance for major programs is other than an unqualified opinion, unless
such circumstances are otherwise reported as audit findings in the schedule of
findings and questioned costs for Federal awards.
(6) Known fraud affecting a Federal award, unless such fraud
is otherwise reported as an audit finding in the schedule of findings and
questioned costs for Federal awards. This paragraph does not require the
auditor to make an additional reporting when the auditor confirms that the
fraud was reported outside of the auditor's reports under the direct reporting
requirements of GAGM.
(7) Instances where the results of audit follow -up procedures
disclosed that the summary schedule of prior audit findings prepared by the
auditee in accordance with §_.315(b) materially misrepresents the status of
an) prior audit finding,
(b) Audit finding detail Audit findings shall be presented in
sufficient detail for the auditee to prepare a corrective action plan and take
corrective action and for Federal agencies and pass - through entities to arrive
at a management decision. The following specific information shall be
27
ATTACHN0ENT .......: .......
PAGC ..Z.. �. OF � - - -- PAG
T � I rn r�c7rarn -nl 3 sl:>e ..` i r Federa �i�nia rd l dent
-)10 ;IVinP,er, F1'1 '11'a IIwa- d nulnl-r- anrdd yea1 :, ,prune .,.
dr,re,l ��ctcl'Iry, 'Ind name of Lhe a) pass - 11
1.rlf U1 ?(1 &t OCI, RUch aS the l e ai 1'1)]11] - ,er n]` FederaI aA11 L_j d I'1 Ullll'> I*,
ava -i a a.L�7 e, t11e auditor s11a1] 1 ;n - ovi de tide hest information available to
the ):edera1. award,
2)
1 cri.' r sjpeoific I eguiremFmt upon which thie audit
�. n !lSJ I'a. ^ - ,eI ,.n—:l url] nrj „�<�t :',]t- :�l�)� ; "f=1 CJuJ 7r0] "/ , UY tither Cl tatlOrl.
?1
Th e IIr]iI j1)n found, n luding .`.ac't S that supp� ,rt thu:
i�lent.ifI �d in I audit f]nd'ing.
1 /�) I dent. i f -it e ; r,n f quosl- i on( -id ,is and blow wG)l r�
fo]` Ud CJI
d1 1d "OT)!,; ,�TII E ?I'l r'e.S Cl '_1 le audj t 1 1.nch nCJs, :,uch as whe.iher 17 1'le au
f :,ndi Iris repI an isolated i'nst'ance ur a :.ysterni.c pl em It'nIere
r.lppr0pri_ate, instances i,dent.i.f]ed sha]_1 be related to the universe and
uunll,er of cases examined and he quantif: i.ed :i n terms of dollar va l ue .
( 6 ) Thp poss.i_b]_e asserted e f f ect to provide suf f ir : :i el lt.
qtr,: mr� t i <rn to the aud]. tee and Federal agency, or pass-through enti ty ir, tlI ,
it `1 F' o a suh -e el l.p]ent, to permit them to determine the cause and el fer't tJ 1
ac.i7..it.ate prompt and proper corrective action
(7) Recommendations to prevent future occurrences of the
d =f.i^ i ency Identified. in the audit finding.
(8) Views of responsible officials of the auditee when there:
sagreement with the audit findings, to the e xtent practical .
c i Reference numbers . rach audit f inding in tine schedule rlf f ]_nding_ s
'Ind :plestioned costs shall include a reference number to allow for easy
I eferencing of the audit findings during follow -up.
S�.515 Audit working papers.
(a) Rete of working papers . The auditor shall retain work.i.ng
papers and reports for a. minimum of three y _-ars after the date of issuance
-he audlfor's report(s) to the a.udiltee unless the auditor is notified
wr. — ing by the cognizant agency for audit, oversight agency for audit, cr
pass- through entity to extend the retention period. nlhen th, auditor i_s a/•�a,�'=
hat the Federal awarding agency, bass- through entity, or auditee is
,:ontesting an audit finding, the auditor shall contact the parties con'e-t:.ng
'-he audit fi- nd.ing for guidance prior to destruction of the working papers and
--epo ts.
(b) Access to workino papers Audit working papers shall be made
a'vaila'ble upon request to the cognizant or oversight agency for audit or its
designee, a Federal agency providing direct or indirect funding, or GAO at the
completion of the audit, as part of a quality review, to resolve audit
findings, or to carry out oversight responsibilities consistent with the
purposes of this part. Access to working papers includes the right of Federal
agencies to obtain copies of working papers, as is reasonable and necessary.
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§_.520 Major program deternination.
(a) General The auditor shall use a risk -Lased approacil to determine-.
which Federal programs are major programs. This nisi: -based approach shall
include consideration of: Current and prior audit experience,ov ersig ]'
Federal agencies and pass - through entities, and the inherent l
Federal program. The process In paragraphs (b) trough (i) of this section
shall be followed,
(b) Stet 1 . (1) The auditor shall identify the Larger Federal
programs, which shall be labeled Type A programs. Type A programs are defined
as Federal programs with Federal awards expended during the audit period
exceeding the larger of:
(i) $300,000 or three percent (.03) of total Federal
awards expended in the case of an auditee for which total Federal awards
expended equal or exceed $300,000 but are less than or equal to $100 million.
(ii) $3 million or three- tenths of one percent (.003) of
total Federal awards expended in the case of an auditee for which total
Federal awards expended exceed $100 million but are less than or equal to $10
billion.
(iii) $30 million or 15 hundredths of one percent (.0015)
of total Federal awards expended in the case of an auditee for which total
Federal awards expended exceed $10 billion.
(2) Federal programs not labeled Type A under paragraph (b) (1)
of this section shall be labeled Type B programs.
(3) The inclusion of large loan and loan guarantees (loans)
should not result in the exclusion of other programs as Type A programs. Vdhen
a Federal program providing loans significantly affects the number or size of
Type A programs, the auditor shall consider this Federal program as a Type A
program and exclude its values in determining other Type A programs.
(4) For biennial audits permitted under §_.220, the
determination of Type A and Type B programs shall be based upon the Federal
awards extended during the two -year period.
(c) Step 2 . (1) The auditor shall identify Type A programs which are
low -risk, For a Type A program to be considered low -risk, it shall have been
audited as a major program in at least one of the two most recent audit
periods (in the most recent audit period in the case of a biennial audit),
and, in the most recent audit period, it shall have had no audit findings
under §_.510(a). However, the auditor may use judgment and consider that
audit findings from questioned costs under §_•510(a)(3) and §_ .510(a)(4),
fraud under §_ .510(a)(6), and audit follow -up for the summary schedule of
prior audit findings under §_.510(a)(7) do not preclude the Type A program
from being low -risk. The auditor shall consider: the criteria in §_ .525(c)
§_.525(4)(1), §_ .525(d)(2), and §_.525(x)(3); the results of audit
follow -up; whether any changes in personnel or systems affecting a Type A
program have significantly increased risk; and apply professional judgment in
determining whether a Type A program is low -risk.
(2) Notwithstanding paragraph (c) (1) of this section, Old may
approve a Federal awarding agency's request that a Type A program at certain
recipients may not be considered low -risk. For example, it may be necessary
for a large Type A program to be audited as major each year at particular
recipients to allow the Federal agency to comply with the Government
Management Reform Act of 1994 (31 U.S.C. 3515) . The Federal agency shall
notify the recipient and, if known, the auditor at least 180 days prior to the
29
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111 C� Ir
f Tv!- P
5 9 V,l
j e i i i d , ' i e r c) a I �
cf,- p - ( e) 2 B
not r-qui 2-id to identi more h gh-r -sk T),)
Wrl than !)he numhr2r r)f ,.mw- T)r A ID11 , E)'Ce)Dt f0l ki'lOvir)
i f I s J I') i nV"ernal control or Compliance )D,'r))DJ_erfis as d]
525(b) (1) $ (2) , and 5 .525(c)(1), a s '11) 91 e crit n
525 V,10niJ(J do ! 1c.n he cans, dered ,k
a uditor i s n ot expec", r2d to pe r J s)" a F; s e s sill- n )n
J y r;ma i P-dc, J J.))—,,.)grams Therefore, the auditor is only
T\Ip- R programs that exceed I-hp ]�Irrle . r o
000 of one
when the al)CIJ t Yeas ] esS Lh .. M
T) ;)'J � :"'a" cl.; awar ezperlded
ii 1 '00 , 000 of one
)))Clj has more m,
e e nti)
I ,w, _' )CJ 'J: =; Mc) )U! ;:)I )�.J I
P, Typ e),r-pt-
t"hr� aurlitor may ->-r'.1i)d- any
aMS, 'Je ]ti Eied ci-; under Step 2 (paragraph (c) (1)
J
High-risk Type B program-- as identified under
7�f - ne fol`owing two options:
(A) Option 1 , At Least one half of the Type E
p:_)qrams identified as high-risk under Step 3 (paragraph (d) of this sect on)
this paragraph (a) (2) (i) (A) does not requ the auditor to audi'. more
� -. ik Type P, programs than the number of low-risk 7-pe A pi-)grams;
n. eJ as l ow -risk Under Step 2
iii ipti 2 . one high - 1 - 4 s)! Ty-pe B program
under
(i Tilhen identifying which high-i.is): Type B prog- to
audl_ as major under either Option I or 2 in paragraph (e) (2)(i) (1- or (B)
he is encouraged T7c) use an approach which provides an
-3, rligh-r.isk 'Type P prr)gams to . ne aud)ted as major over a
3" Such additional programs as may be necessary to comply
v.7i'-.1-i the percentage of coverage rule discussed in paragraph (f) of this
s. e c t 1. on . This paragraph (e) (3) may require the auditor to audit more
as major than the number cf Type A programs.
(f) Percentage of coverage rule. The auditor shall audit as major
programs Federal programs with Federal awards expended that, in the aggregate,
encompass at least 50 percent of total Federal awards expended. if the
audiLee meets the criteria in §—.530 for a low-risk auditee, the auditor
need only audit as major programs Federal programs with Federal awards
expended that, in the aggregate, encompass at least 25 percent of total
Federal awards expended.
(g) Documentation of risk. The auditor shall document in the working
- )0
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O .. 2_.-� PAGES
papers the ris}: analysis p ocess used in determining Major programs.
(1 )
Uuditor's judgment When the major program determination was
performed and documented in accordance with this part, tie auditor's �ucignien
in applying the ris]: -based approach to determine major progzarns small be
presumed correct. Challenges by Federal agencies and l:,ass- tliroug) entities
Shall only be for clearly improper use of the guidance in this P about
Federal agencies and pass - through entities may pro
the risk of a particular Federal program and the auditor shall consider this
guidance in determining major programs in audits not yet completed.
(i) Deviation from use of 3-is }. criteria For first -year audits, the
auditor may elect to determine major programs as all T�gDe A programs plus an)
Type B programs as necessary to meet the percentage of coverage rule discussed
in paragraph (f) of this section. Under this option, the auditor would not e) tbe
required to perform the procedures discussed in paragraphs (c) , (d) , a nd
of this section.
(1) A first -year audit is the first year the entity is audited
under this part or the first year of a change of auditors,
(2) To ensure that a frequent change of auditors would not
preclude audit of high -risk Type B programs, this election for first -year
audits may not be used by an auditee more than once in every three years.
§_,525 Criteria for Federal program risk.
(a) General The auditor's determination should be based on an
overall evaluation of the risk of noncompliance occurring which could be
material to the Federal program. The auditor shall use auditor judgment and
consider criteria, such as described in paragraphs (b), (c), and (d) of this
section, to identify risk, in Federal programs. Also, as part of the risk
analysis, the auditor may wish to discuss a particular Federal program with
auditee management and the Federal agency or pass - through entity.
(b) Cu rrent and prior audit exp (1) Weaknesses in internal
control over Federal programs would indicate h igher risk. Consideration
should be given to the control environment over Federal progra an d su c and
factors as the expectation of management's adherence to app licab l e
regulations and the provisions of contracts and grant agreements and the
competence and experience of personnel who administer the Federal programs.
(i) A Federal program administered under multiple
internal control structures may have higher risk. Vtrhen assessing risk in a
large single audit, the auditor shall consider whether weaknesses are isolated
in a. single operating unit (e.g., one college campus) or pervasive throughout
the entity.
(ii) When significant parts of a Federal program are
passed through to subrecipients, a weak, system for monitoring subrecipients
would indicate higher risk.
(iii) The extent to which computer processing is used to
administer Federal programs, as well as the complexity of that processing,
should be considered by the auditor in assessing risk, New and recently
modified computer systems may also indicate risk,
(2) prior audit findings would indicate higher risk,
particularly when the situations identified in the audit findings could have a
significant impact on a Federal program or have not been corrected.
(3) Federal programs not recently audited as major programs
31
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PA GE .. i ..I.... OF ._. ',L. PAGES
I J
I F; J I I t X I C: J e (I j �\ _/_Le ( I e 'j J cj e I I r - j e s 'I I ) d )I ) a 'c�� -I - LLI ,- �, gi, t
j d 1- .)y & J_ agenc' 91 �; OJ L111: CJUCfh eMt, It-, eS
c, x a mp I e e r" P n t mon7. I (I (,]- C) t Ih P r rev] e w s per f ormed
an oversig el' disc no o �vignj cant prol'jlem2 would indicate
which
ov er r j, s j Ho��'�ever Ilion I I t:_ ( ) r I , . n(f whi d i s c l o s e d <; i cj)i I f i cari t ems wou
Fede ra l a q e n r!s w i t h j I e of rAVIB, II
j "lo I 11, J f i e'Je I-r3 I programs V") I I C" h ar gh e I- I- . OIVrP' plal to
ca t i on in t comp ncr si)pp] erfieiir
) Inherent ris) of rhP Federal 1 aryi I a
1. P I. oCfr aj) Ina Y indi c a t e ris C ons i derat i on shoi) i d be g L C) I.)) )e
:)DIJA ex. -i t Y of ! program and the extent to whi the Federal program
f qnods and �;-)rvll ces . Pc)) e, Federal paroq:-ams Lhr)t Ji;))1i:
1: e a may -,f
h i qher 1- is)� . Pr'dPI"i I progralrl�; prinlar.), I nNic.).; v,i ng , _a f F ),w)yrol I
th t i me &)nd effort nq ;P ! a
The of a Fc!de'ra] program . j _ r) J 1 .1 i f ry(' ) r-" a! le
- =cl agency may . indicate risk For exampje, . a new Federal prugraru v✓j,t_!, i)r-!w
r"CTUI-at..j oliss may have hjqhel I than an established prorf,,jm w-it-ii
11fl, t C] pjgyj fjr c 1ar,ges il F"(-_.deTaI programs
1 e p ] - i on FI O f r: o 1 c I s O r g r a nt a gre emen t c, ma i n c e;.i f
(3) The phase of a Federal program in its life cycle at the
jua may indicate r amp I
, . For ex, _e, during the first and last years that
an -)ijditee participates in a Federal program, the risk may be higher due to
- ta,
t - ,ip or closeout of program activities and staff,
!4) Type R programs with larger Federal awards expended would
of hJ
- rher risk t:han programs with substantiail.y smalier Federal awards
530 Criteria for a low-risk auditee.
An a which meets all of - ,he foilov✓ing coridi� iOYIS f0). eaCh of the
;,. - wo 'Years no, in the case of biennial audi�c, preceding two audl_'
per, , ods) sha-11 qualify as a low ajdi arid. be ei-igible 'L or redu-ed audit
in accordance wi §_.520:
al inr7le aiid.i were T_ r)n an annual
the S., On S of th is pa r A non - Federal that has biennia aud I �s
,J.c not qua]--'L'y as a low - risk: audlttee, age eed to in cv:3varice ' me
or DVerSight agency for a";.di'J_.
The auditor's opinions on the financial statements and she
_hedul o e, :penditures of Federal awards we unoual_'fied. However, the
cognizant or oversight agency for audit may judge that an opinion
qualification does not affect the management of Federal awards and provide a
waiver.
(c) There were no deficiencies in internal control which were
identified as material weaknesses under the requirements of GAGAS, However,
the cognizant or oversight agency for audit may judge that any identified
material weaknesses do not affect the management of Federal awards and provide
a waiver.
(d) 1Qone of the Federal programs had audit findings from any of the
following in either of the preceding Ludo years (or, in the case of biennial
audits, preceding two audit periods) in which they were class fled as Type
programs:
(1) Internal control deficiencies which were identified as
material weaknesses;
(2) Noncompliance with the provisions of laws, regulations,
contracts, or grant agreements which have a material effect on the Type A
program; or
(3) Rnovn or likely questioned costs that exceed five percent
of the total Federal awards expended for a Type A program during the year,
Appendix A to Part _ - Data Collection Form (Form SF -SAC)
[insert SF -SAC after finalized]
Appendix B to Part _ - Circular A -133 Compliance Supplement
Dote: Provisional OMB Circular A -133 Compliance Supplement is available
from the Office of Administration, Publications Office, room 2200, New
Executive office Building, Washington, DC 20503.
33
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CITY OF LONG BEACH
DEPARTMENT OF HEALTH AND HUMAN SERVICES
2525 GRAND AVENUE • LONG BEACH, CALIFORIJIN. 90815 • (562) 570 -4000 • FAX: (562) 570 -4049
Health Information In Compliance With the Health Insurance Portability
And Accountability Act of 1996 (HIPAA) and the Health Information Technology
for Economic and Clinical Health Act (HITECH Act)
BUSINESS ASSOCIATE AGREEMENT
THIS BUSINESS ASSOCIATE AGREEMENT ('Agreement ") is made and
entered as of U� Us� �� 20 by and betwe
ea e i c p A- e s a Ca li - an X01'
[corporation pas +�al-e whose business addr ss is
W. �f wai -Sui +e 50 0 �► CA Rog®
(hereinafter referred t6 as "Business Associate" , and the CITY OF LONG BEACH, a
municipal corporation (hereinafter referred to as "City" or "Covered Entity ").
WHEREAS, the City has a Department of Health that provides a multitude of
health care and related services; and
WHEREAS, in the course of providing health care and related services the City
obtains protected health information; and
WHEREAS, Business Associate performs particular duties and /or provides
particular services to the City; and
WHEREAS, the City wishes to disclose some information to Business Associate,
some of which may contain protected health information; and
WHEREAS, the City and Business Associate intend to protect the privacy and
provide for the security of protected health information in compliance with the Health
Insurance Portability and Accountability Act of 1996, Public Law 104 -191 ( "HIPAA "), the
Health Information Technology for Economic and Clinical Health Act, Public Law 111-
005 (the "HITECH Act "), and regulations promulgated thereunder by the U,S.
Department of Health and Human Services (the "HIPAA Regulations ") and other
applicable laws.
NOW, THEREFORE, in consideration of the mutual terms covenants, and
conditions in this Agreement, the parties agree as follows:
1. DEFINITIONS Terms used, but not otherwise defined, in this Agreement
shall have the same meaning as those terms in the HIPAA Regulations,
including the Privacy Rule and the Security Rule codified in Title 45,
Sections 160 -164 of the Code of Federal Regulations, and under the
HITECH Act.
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2 OBLIGATIONS AND ACTIVITIES OF BUSINESS ASSOCIATE
a. Non- disclosure, Business Associate agrees to not use or disclose
protected health information other than as permitted or required by
the Agreement or as required by law.
b. Safeguards, Business Associate agrees to use appropriate
safeguards to prevent use or disclosure of the protected health
information. Business Associate shall comply with the policies and
procedures and documentation requirements of the HIPAA
Regulations,
C. Mitigation, Business Associate agrees to mitigate, to the extent
practicable, any harmful effect that is known to Business Associate
of a use or disclosure of protected health information by Business
Associate in violation of the requirements of this Agreement.
d. Notice of Use or Disclosure, Security Incident or Breach, Business
Associate agrees to notify the designated privacy official of the
Covered Entity of any use or disclosure of protected health
information by Business Associate not permitted by this Agreement,
any security incident involving electronic protected health
information, and any breach of unsecured protected health
information without unreasonable delay, but in no case more than
thirty (30) days following discovery of breach,
1. Business Associate shall provide the following information in
such notice to Covered Entity:
(a) The identification of each individual whose unsecured
protected health information has been, or is
reasonably believed by Business Associate to have
been, accessed, acquired, or disclosed during such
breach;
(b) A description of the nature of the breach including the
types of unsecured protected health information that
were involved, the date of the breach and the date of
discovery;
(c) A description of the type of unsecured protected
health information acquired, accessed, used or
disclosed in the breach (e.g., full name, social security
number, date of birth, etc.);
(d) The identity of the person who made and who
received (if known) the unauthorized acquisition,
access, use or disclosure;
(e) A description of what the Business Associate is doing
to mitigate the damages and protect against future
breaches; and
(f) Any other details necessary for Covered Entity to
assess risk of harm to individual(s), including
identification of each individual whose unsecurec
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protected health information has been breached and
steps such individuals should take to protect
themselves.
2. Covered Entity shall be responsible for providing notification
to individuals whose unsecured protected health information
has been disclosed, as well as the Secretary and the media,
as required by the HITECH Act.
3, Business Associate agrees to establish procedures to
investigate the breach, mitigate losses, and protect against
any future breaches, and to provide a description of these
procedures and the specific findings of the investigation to
Covered Entity in the time and manner reasonably requested
by Covered Entity,
4. The parties agree that this section satisfies any notice
requirements of Business Associate to Covered Entity of the
ongoing existence and occurrence of attempted but
unsuccessful security incidents for which no additional notice
to Covered Entity shall be required. For purposes of this
Agreement, unsuccessful security incidents include activity
such as pings and other broadcast attacks on Business
Associate's firewall, port scans, unsuccessful log -on
attempts, denials of service and any combination of the
above, so long as no such incident results in unauthorized
access, use or disclosure of electronic public health
information.
e. Reporting of disclosures. Business Associate agrees to report to
Covered Entity any use or disclosure of the protected health
information not provided for by this Agreement of which it becomes
aware.
f. Business Associate's Agents, Business Associate agrees to
ensure that any agent, including a subcontractor, to whom it
provides protected health information received from, or created or
received by Business Associate on behalf of Covered Entity agrees
to the same restrictions and conditions that apply through this
Agreement to Business Associate with respect to such information.
g. Availability of Information to City, Business Associate agrees to
provide prompt access to protected health information in a
designated record set to Covered Entity or, as directed by Covered
Entity, to an individual upon Covered Entity's request in order to
meet the requirements under 45 CFR § 164.524, If Business
Associate maintains an electronic health record, Business
Associate shall provide such information in electronic format to
enable Covered Entity to fulfill its obligations under the HITECH
Act.
h. Amendment of Protected Health Information, Business Associate
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agrees to promptly make any amendment(s) to protected health
information in a designated record set that the Covered Entity
directs or agrees to pursuant to 45 CFR § 164.526 at the regUest of
Covered Entity or an individual.
i. Internal Practices. Business Associate agrees to make internal
practices, books, and records, including policies and procedures
and protected health information, relating to the use and disclosure
of protected health information received from, or created or
received by Business Associate on behalf of, covered entity
available to the Secretary of the U.S. Department of Health and
Human Services for purposes of the Secretary determining the
Business Associate's compliance with the Privacy Rule.
j. Reporting of Disclosures. Business Associate agrees to document
such disclosures of protected health information and information
related to such disclosures as would be required for the City to
respond to a request by an individual for an accounting of
disclosures of protected health information in accordance with the
Privacy Rule, including but not limited to 45 CFR § 164.528, and
the HITECH Act.
k. Availability of Information to Covered Entity. Business Associate
agrees to promptly provide to Covered Entity or an individual
information collected in accordance with Section 20) of this
Agreement, to permit Covered Entity to respond to a request by an
individual for an accounting of disclosures of protected health
information in accordance with the Privacy Rule, including but not
limited to 45 CFR § 164.528, and the HITECH Act.
3. PERMITTED USES AND DISCLOSURES BY BUSINESS ASSOCIATE.
Except as otherwise limited in this Agreement, Business Associate may
use or disclose protected health information to perform functions,
activities, or services for, or on behalf of, Covered Entity as specified in
this Agreement, provided that such use or disclosure would not violate the
Privacy Rule or the HITECH Act if done by Covered Entity or the minimum
necessary policies and procedures of the Covered Entity. The specific
use and disclosure provisions are as follows:
a. Except as otherwise limited in this Agreement, Business Associate
may use protected health information for the proper management
and administration of the Business Associate.
b. Except as otherwise limited in this Agreement, Business Associate
may disclose protected health information for the proper
management and administration of the Business Associate,
provided that disclosures are required by law, or Business
Associate obtains reasonable assurances from the person to whom
the information is disclosed that it will remain confidential and used
or further disclosed only as required by law or for the purpose for
which it was disclosed to the person, and the person notifies the
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Page 5
business associate of any instances of which it is aware in which
the confidentiality of the information has been breached.
C. Except as otherwise limited in this Agreement, Business Associate
may use protected health information to provide data aggregation
services to covered entity as permitted by 42 CFR
164.504(e)(2)(i)(B).
d. Business Associate may use protected health information to report
violations of law to appropriate federal and state authorities,
consistent with § 164.5020)(1).
4. PROHIBITED USES AND DISCLOSURES BY BUSINESS ASSOCIATE.
a. Business Associate shall not use or disclose protected health
information for fundraising or marketing purposes.
b. Business Associate shall not disclose protected health information
to a health plan for payment or health care operations purposes if
the individual has requested this special restriction and has paid out
of pocket in full for the health care item or service to which the
protected health information solely relates.
C. Business Associate shall not directly or indirectly receive payment
or remuneration in exchange for protected health information,
except with the prior written consent of Covered Entity and as
permitted by law, including HIPAA and the HITECH Act. This
prohibition shall not effect payment by Covered Entity to Business
Associate,
5. OBLIGATIONS OF COVERED ENTITY.
a. Notification of Limitations in Notice of Privacy Practices. Covered
Entity shall notify Business Associate of any limitation(s) in its
notice of privacy practices of covered entity in accordance with 45
CFR § 164.520, to the extent that such limitation may affect
Business Associate's use or disclosure of protected health
information.
b. Notification of Change or Revocation of Permission. Covered entity
shall notify Business Associate of any changes in, or revocation of,
permission by individual to use or disclose protected health
information, to the extent that such changes may affect Business
Associate's use or disclosure of protected health information.
C. Notification of Restrictions, Covered Entity shall notify Business
Associate of any restriction to the use or disclosure of protected
health information that Covered Entity has agreed to in accordance
with 45 CFR § 164.522, to the extent that such restriction may
effect Business Associate's use or disclosure of protected health
information.
6. PERMISSIBLE REQUESTS BY COVERED ENTITY, Covered Entity shall
not request Business Associate to use of disclose protected health
information in any manner that would not be permissible under the Privacy
Rule if done by Covered Entity, except that this restriction is not intended
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Page G
and shall not be construed to limit Business Associate's capacity to use or
disclose protected health information for the proper management and
administration of the Business Associate or to provide data aggregation
services to Covered Entity as provided for and expressly permitted under
Section 3 (a), (b), and (c) of this Agreement.
7. TERM AND TERMINATION
a. Term. The term of this Agreement shall be effective upon
execution, and shall terminate when all of the protected health
information provided by Covered Entity to Business Associate, or
created or received by Business Associate on behalf of Covered
Entity, is destroyed or returned to Covered Entity, or, if it is
infeasible to return or destroy protected health information,
protections are extended to such information, in accordance with
the termination provisions in this Section.
b. Termination for Cause. Upon either party's knowledge of a material
breach by the other party, the party with knowledge of the other
party's breach shall either:
1. Provide an opportunity for the breaching party to cure the
breach or end the violation and terminate this Agreement if
the breaching party does not cure the breach or end the
violation within the time specified by the non- breaching
party
2. Immediately terminate this Agreement if Business Associate
has breached a material term of this Agreement and cure is
not possible; or
3. If neither termination nor cure is feasible, the violation shall
be reported to the Secretary.
c. Effect of Termination.
1. Except as provided in paragraph (2) of this Section, upon
termination of this Agreement for any reason, Business
Associate shall return or destroy all protected health
information received from Covered Entity, or created or
received by Business Associate on behalf of Covered Entity.
This provision shall apply to protected health information that
is in the possession of subcontractors or agents of Business
Associate. Business Associate shall retain no copies of the
protected health information,
2. In the event that Business Associate determines that
returning or destroying the protected health information is
infeasible, Business Associate shall provide to Covered
Entity notification of the conditions that make return or
destruction infeasible and shall extend the protections of this
Agreement to such protected health information and limit
further uses and disclosures of such protected health
information to those purposes that make the return or
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destruction infeasible, for so long as Business Associate
maintains such protected health information.
8. ASSISTANCE IN LITIGATION OR ADMINISTRATIVE PROCEEDINGS.
Business Associate shall mane itself and any subcontractors, employees,
or agents assisting Business Associate in the performance of its
obligations under this Agreement with the Covered Entity, available to
Covered Entity, at no cost to Covered Entity to testify as witnesses or
otherwise, in the event of litigation or administrative proceedings
commenced against Covered Entity, its directors, officers, or employees
based on a claimed violation of HIPAA, the HIPAA Regulations, the
HITECH Act, or other laws relating to security or privacy, except where
Business Associate or its subcontractors, employees or agents are named
as an adverse party.
9. MISCELLANEOUS
a. References. A reference in this Agreement to a section in the
HIPAA Regulations or the HITECH Act means the section as in
effect or as amended.
b. Amendment. The parties agree to take such action as is necessary
to amend this Agreement from time to time as is necessary for
covered entity to comply with the requirements of the Privacy Rule,
the Security Rule, HIPAA, the HITECH Act and other privacy laws
governing protected health information. Amendments must be in
writing and signed by the parties to the Agreement.
C. Survival. The respective rights and obligations of Business
Associate under Section 6(c) of this Agreement shall survive the
termination of this Agreement,
d. Interpretation. Any ambiguity in this Agreement shall be resolved to
permit Covered Entity to comply with. the HIPAA Regulations and
the HITECH Act,
10, LAW This Agreement shall be governed by and construed pursuant to
federal law and the laws of the State of California (except those provisions
of California law pertaining to conflicts of laws). Business Associate shall
comply with all laws, ordinances, rules and regulations of all federal, state
and local governmental authorities.
11. ENTIRE AGREEMENT This Agreement, including Exhibits, constitutes
the entire understanding between the parties and supersedes all other
agreements, oral or written, with respect to the subject matter herein.
12. INDEMNITY Business Associate shall protect, defend, indemnify and
hold City, its officials, employees, and agents (collectively in this Section
referred to as "City ") harmless from and against any and all claims,
demands, causes of action, losses, damages, and liabilities, whether or
not reduced to judgment, which may be asserted against City arising from
or attributable to or caused directly or indirectly by Business Associate,
Business Associate's employees, or agents in the performance of the
duties under this Agreement or any alleged negligent or intentional act,
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omission or misrepresentation by Business associate, Business
Associate's employees or agents, which act, omission or
misrepresentation is connected in any way with performance of the duties
under this Agreement. If it is necessary for purposes of resisting,
adjusting, compromising, settling, or defending any claim, demand, cause
of action, loss, damage, or liability, or of enforcing this provision, for City to
incur or to pay any expense or cost, including attorney's fees or court
costs, Business Associate agrees to and shall reimburse City within a
reasonable time. Business Associate shall give City notice of any claim,
demand, cause of action, loss, damage or liability within ten (10) calendar
days.
13. AMBIGUITY In the event of any conflict or ambiguity in this Agreement,
such ambiguity shall be resolved in favor of a meaning that complies and
is consistent with HIPAA, HIPAA Regulations, the HITECH Act and
California law.
14. COSTS If there is any legal proceeding between the parties to enforce or
interpret this Agreement or to protect or establish any rights or remedies
hereunder, the prevailing party shall be entitled to its costs and expenses,
including reasonable attorneys' fees and court costs, including appeals.
15. NOTICES Any notice or approval required hereunder by either party shall
be in writing and personally delivered or deposited in the U.S. Postal
Service, first class, postage prepaid, addressed to Business Associate at
the address first stated herein, and to the City at 333 `Nest Ocean
Boulevard, Long Beach, California 90802 Attention: Director, Health
Department. Notice of change of address shall be given in the same
manner as stated herein for other notices. Notice shall be deemed given
on the date deposited in the mail or on the date personal delivery is made
whichever first occurs,
16. WAIVER The acceptance of any services or the payment of any money
by City shall not operate as a waiver of any provision of this Agreement. or
of any right to damages or indemnity stated in this Agreement. The waiver
of any breach of this Agreement shall not constitute a waiver of any other
or subsequent breach of this Agreement.
17. CONTINUATION Termination or expiration of this Agreement shall not
affect rights or liabilities of the parties which accrued pursuant to Sections
7,12 and 14 prior to termination or expiration of this Agreement, and shall
not extinguish any warranties hereunder.
18. ADVERTISING Business Associate shall not use the name of City, its
officials or employees in any advertising or solicitation for business, nor as
a reference, without the prior approval of the City Manager or designee.
19. THIRD PARTY BENEFICIARY This Agreement is intended by the parties
to benefit themselves only and is not in any way intended or designed to
or entered for the purpose of creating any benefit or right for any person or
entity of any kind that is not a party to this Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused these presents to be
duly executed with all of the formalities required by law as of the date first stated herein.
20 By
Title;
20,
ROBERT E. SHANNON,
City Attorney or designee
LT:b0 02 -05187
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C[TY OF LONG BEACH
DEPARTMENT OF HEALTH AND HUMAN SERVICES
2 GRAND AVEI4UE • L014G BENCH, CALIFORNIk, 90815 • (562) 570 -400D . FAX (562) 570 -4045
CERTIFICATION REGARDING DEBARMENT
By signing and submitting this document, the recipient of federal assistance funds is
providing the certification as set out below:
1. The certification in this clause is a material representation of fact upon which
reliance was placed when this transaction was entered into. If it is later determined
that the recipient of federal assistance funds knowingly rendered an erroneous
certification, in addition to other remedies available to the Federal Government, the
department or agency with which this transaction originated may pursue available
remedies, including suspension and /or debarment.
2. The recipient of Federal assistance funds shall provide immediate written notice to
the person to which this agreement is entered, if at any time the recipient of Federal
Assistance funds learns that its certification was erroneous, when submitted or has
become erroneous by reason of changed .circumstance,
3. The terms "covered transaction," "debarred," "suspended," "ineligible," "lower tier
covered transaction," "participant," "person," "primary covered transaction,"
"principal," "proposal," and "voluntarily excluded," as used in this clause, have the
meanings set out in the Definitions and Coverage sections of rules implementing
Executive Order 12549.
4, The recipient of Federal assistance funds agrees by submitting this document that it
shall not knowingly enter into any lower tier covered transaction with a person who is
debarred, suspended, declared ineligible, or voluntarily excluded from participation in
this covered transaction, unless authorized by the department or agency with which
this transaction originated.
5. The recipient of Federal assistance funds further agrees by submitting this document
that it will include the clause titled "Certification Regarding Debarment, Suspension,
Ineligibility and Voluntary Exclusion — Lower Tier Covered Transactions," without
modification, in all lower tier covered transactions and in all solicitations for lower tier
covered transactions.
A participant in a covered transaction may rely upon a certification of participant in a
lower tier covered transaction that it is not debarred, suspended, ineligible, or
voluntarily excluded from the covered transaction, unless it knows that the
certification is erroneous. A participant may decide the method and frequency by
which it determines the eligibility of its principals. Each participant may, but is not
required to, check the list of parties excluded from procurement or non - procurement
programs.
Nothing contained in the foregoing shall be constructed to require establishment of a
system of records in order to render in good faith the certification required by this
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CERTIFICATION REGARDING DEBARMENT
Page 2
clause. The knowledge and information of a participant is not required to exceed
that which is normally possessed by a prudent person in the ordinary course of
business dealings.
Except for transactions authorized under Paragraph 4 of these instructions, if a
participant in a covered transaction knowingly enters into a lower tier covered
transaction with a person who is suspended, debarred, ineligible, or voluntarily
excluded from participation in this transaction, in addition to other remedies available
to the Federal Government, the department or agency with which the transaction
originated may pursue available remedies, including suspension and /or debarment.
The regulations implementing Executive Order 12549, Debarment and Suspension, 24
CFR Part 24 Section 24,510, Participants' Responsibilities require this certification,
The recipient of Federal assistance funds certifies that neither it nor its
principals are presently debarred, suspended, proposed for debarment,
declared ineligible, or voluntarily excluded from participation in this
transaction by any Federal department or agency.
Where the recipient of Federal assistance funds is unable to certify to any
of the statements in this certification, such participants shall attach an
explanation to this document.
Agreement Number CA4432C9 gp - 11O DContract Agency: nial HPa�� rfYY�'YICA eJeS
Naaie,and Title of Author ed Repr sentative: Ate+
Signature Date
0
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CfTY OF LONG BEACH
DEPARTMENT OF HEALTH AND HUMAN SERVICES
2525 GRA14D AVENUF - LD14G BENCH, CALIFORNIA 90015 • (562) 570 -4000 • FAX (562) 570 -4049
CERTIFICATION REGARDING LOBBYING
Contractor(s) and lobbyist firm(s), as defined in the Los Angeles County Code Chapter
2.160 (ordinance 93- 0031), retained by the Contractor, shall fully comply with the
requirements as set forth in said County Code. The Contractor must also certify in writing
that it is familiar with the Los Angeles County Code Chapter 2.160 and that all persons
acting on behalf of the Contractor will comply with the County Code.
Failure on the part of the Contractor and /or Lobbyist to fully comply with the County's
Lobbyist requirement shall constitute a material breach of the contract upon which the City
of Long Beach may immediately terminate this contract and the Contractor shall be liable for
civil action.
The Contractor is prohibited by the Department of Interior and Related Agencies
Appropriations Act, known as the Byrd Amendments, and the Housing and Urban
Development Code of Federal Regulations 24 part 87, from using federally appropriated
funds for the purpose of influencing or attempting to influence an officer or employee of any
agency, a Member of Congress, an officer or employee of Congress, or any employee of a
Member of Congress in connection with the awarding of any Federal contract, the making of
any Federal grant, loan or cooperative agreement, and any extension, continuation,
renewal, amendment or modification of said documents.
The Contractor must certify in writing that they are familiar with the Federal Lobbyist
Requirements and that all persons and /or subcontractors acting on behalf of the Contractor
will comply with the Lobbyist Requirements.
Failure on the part of the Contractor or persons /subcontractors acting on behalf of the
Contractor to fully comply with Federal Lobbyist Requirements shall be subject to civil
penalties. The undersigned certifies, to the best of his /her knowledge and belief, that;
No Federal appropriated funds have been paid or will be paid, by or on behalf of the
undersigned, to any person for influencing or attempting to influence an officer or
employee of an agency, a Member of Congress, an officer or employee of Congress,
or an employee of a Member of Congress in connection with the awarding of any
Federal contract, the making of any Federal grant, loan or cooperative agreement,
and any extension, continuation, renewal, amendment or modification of said
documents.
2. If any funds other than Federal appropriated funds have been paid or will be paid to
any person for influencing or attempting to influence an officer or employee of any
agency, a Member of Congress, an officer or employee of Congress, or an employee
of a Member of Congress in connection with this Federal contract, grant, loan, or
cooperative agreement, the undersigned shall complete and submit Standard Form —
LLL "Disclosure Form to Report Lobbying" in accordance with its instructions.
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The undersigned shall require that the language of this certification be included in
the award documents for all sub- awards at all tiers (including subcontracts, sub -
grants, and contracts under grants, loans, and cooperative agreements) and that all
sub - recipients shall certify and disclose accordingly.
4. This certification is a material representation of fact upon which reliance was placed
when this transaction was made or entered into, Submission of this certification is a
prerequisite for making or entering into this transaction imposed by Section 1352
Title 31, U.S. Code. Any person who fails to file the required certification shall be
subject to a civil penalty of not less than $10,000 and not more than $100,000 for
each such failure.
Signature Date
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