§18.51 49 cfr subtitle a (10–1–98...

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49 CFR Subtitle A (10–1–98 Edition)§ 18.51

that all applicable administrative ac-tions and all required work of thegrant has been completed.

(b) Reports. Within 90 days after theexpiration or termination of the grant,the grantee must submit all financial,performance, and other reports re-quired as a condition of the grant.Upon request by the grantee, Federalagencies may extend this timeframe.These may include but are not limitedto:

(1) Final performance or progress re-port.

(2) Financial Status Report (SF 269) orOutlay Report and Request for Reim-bursement for Construction Programs(SF–271) (as applicable).

(3) Final request for payment (SF–270)(if applicable).

(4) Invention disclosure (if applicable).(5) Federally-owned property report:

In accordance with § 18.32(f), a granteemust submit an inventory of all feder-ally owned property (as distinct fromproperty acquired with grant funds) forwhich it is accountable and request dis-position instructions from the Federalagency of property no longer needed.

(c) Cost adjustment. The Federal agen-cy will, within 90 days after receipt ofreports in paragraph (b) of this section,make upward or downward adjust-ments to the allowable costs.

(d) Cash adjustments. (1) The Federalagency will make prompt payment tothe grantee for allowable reimbursablecosts.

(2) The grantee must immediately re-fund to the Federal agency any balanceof unobligated (unencumbered) cashadvanced that is not authorized to beretained for use on other grants.

§ 18.51 Later disallowances and adjust-ments.

The closeout of a grant does not af-fect:

(a) The Federal agency’s right to dis-allow costs and recover funds on thebasis of a later audit or other review;

(b) The grantee’s obligation to returnany funds due as a result of later re-funds, corrections, or other trans-actions;

(c) Records retention as required in§ 18.42;

(d) Property management require-ments in §§ 18.31 and 18.32; and

(e) Audit requirements in § 18.26.

§ 18.52 Collection of amounts due.(a) Any funds paid to a grantee in ex-

cess of the amount to which the grant-ee is finally determined to be entitledunder the terms of the award con-stitute a debt to the Federal Govern-ment. If not paid within a reasonableperiod after demand, the Federal agen-cy may reduce the debt by:

(1) Making an adminstrative offsetagainst other requests for reimburse-ments,

(2) Withholding advance paymentsotherwise due to the grantee, or

(3) Other action permitted by law.(b) Except where otherwise provided

by statutes or regulations, the Federalagency will charge interest on an over-due debt in accordance with the Fed-eral Claims Collection Standards (4CFR Ch. II). The date from which inter-est is computed is not extended by liti-gation or the filing of any form of ap-peal.

Subpart E—Entitlements[Reserved]

PART 19—UNIFORM ADMINISTRA-TIVE REQUIREMENTS FOR GRANTSAND AGREEMENTS WITH INSTITU-TIONS OF HIGHER EDUCATION,HOSPITALS, AND OTHER NON-PROFIT ORGANIZATIONS

Subpart A—General

Sec.19.1 Purpose.19.2 Definitions.19.3 Effect on other issuances.19.4 Deviations.19.5 Subawards.19.6 Availability of material referenced in

this part.

Subpart B—Pre-Award Requirements

19.10 Purpose.19.11 Pre-award policies.19.12 Forms for applying for Federal assist-

ance.19.13 Debarment and suspension.19.14 Special award conditions.19.15 Metric system of measurement.19.16 Resource Conservation and Recovery

Act.19.17 Certifications and representations.

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Office of the Secretary of Transportation § 19.2

Subpart C—Post-Award Requirements

FINANCIAL AND PROGRAM MANAGEMENT

19.20 Purpose of financial and program man-agement.

19.21 Standards for financial managementsystems.

19.22 Payment.19.23 Cost sharing or matching.19.24 Program income.19.25 Revision of budget and program plans.19.26 Non-Federal audits.19.27 Allowable costs.19.28 Period of availability of funds.

PROPERTY STANDARDS

19.30 Purpose of property standards.19.31 Insurance coverage.19.32 Real property.19.33 Federally-owned and exempt property.19.34 Equipment.19.35 Supplies and other expendable prop-

erty.19.36 Intangible property.19.37 Property trust relationship.

PROCUREMENT STANDARDS

19.40 Purpose of procurement standards.19.41 Recipient responsibilities.19.42 Codes of conduct.19.43 Competition.19.44 Procurement procedures.19.45 Cost and price analysis.19.46 Procurement records.19.47 Contract administration.19.48 Contract provisions.

REPORTS AND RECORDS

19.50 Purpose of reports and records.19.51 Monitoring and reporting program

performance.19.52 Financial reporting.19.53 Retention and access requirements for

records.

TERMINATION AND ENFORCEMENT

19.60 Purpose of termination and enforce-ment.

19.61 Termination.19.62 Enforcement.

Subpart D—After-the-Award Requirements

19.70 Purpose.19.71 Closeout procedures.19.72 Subsequent adjustments and continu-

ing responsibilities.19.73 Collection of amounts due.

APPENDIX A TO PART 19—CONTRACT PROVI-SIONS

AUTHORITY: 49 U.S.C. 322(a).

SOURCE: 59 FR 15639, Apr. 4, 1994, unlessotherwise noted.

Subpart A—General§ 19.1 Purpose.

This part establishes uniform admin-istrative requirements for Federalgrants and agreements awarded to in-stitutions of higher education, hos-pitals, and other non-profit organiza-tions. Federal awarding agencies shallnot impose additional or inconsistentrequirements, except as provided in§§ 19.4 and 19.14 or unless specificallyrequired by Federal statute or execu-tive order. Non-profit organizationsthat implement Federal programs forthe States are also subject to State re-quirements.

§ 19.2 Definitions.(a) Accrued expenditures means the

charges incurred by the recipient dur-ing a given period requiring the provi-sion of funds for:

(1) Goods and other tangible propertyreceived;

(2) Services performed by employees,contractors, subrecipients, and otherpayees; and,

(3) Other amounts becoming owedunder programs for which no currentservices or performance is required.

(b) Accrued income means the sum of:(1) Earnings during a given periodfrom:

(i) Services performed by the recipi-ent, and

(ii) Goods and other tangible prop-erty delivered to purchasers; and

(2) Amounts becoming owed to therecipient for which no current servicesor performance is required by the re-cipient.

(c) Acquisition cost of equipment meansthe net invoice price of the equipment,including the cost of modifications, at-tachments, accessories, or auxiliaryapparatus necessary to make the prop-erty usable for the purpose for which itwas acquired. Other charges, such asthe cost of installation, transportation,taxes, duty or protective in-transit in-surance, shall be included or excludedfrom the unit acquisition cost in ac-cordance with the recipient’s regularaccounting practices.

(d) Advance means a payment madeby Treasury check or other appropriatepayment mechanism to a recipientupon its request either before outlays


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are made by the recipient or throughthe use of predetermined paymentschedules.

(e) Award means financial assistancethat provides support or stimulation toaccomplish a public purpose. Awardsinclude grants and other agreements inthe form of money or property in lieuof money, by the Federal Governmentto an eligible recipient. The term doesnot include: Technical assistance,which provides services instead ofmoney; other assistance in the form ofloans, loan guarantees, interest sub-sidies, or insurance; direct payments ofany kind to individuals; and, contractswhich are required to be entered intoand administered under procurementlaws and regulations.

(f) Cash contributions means the re-cipient’s cash outlay, including theoutlay of money contributed to the re-cipient by third parties.

(g) Closeout means the process bywhich a Federal awarding agency de-termines that all applicable adminis-trative actions and all required work ofthe award have been completed by therecipient and Federal awarding agency.

(h) Contract means a procurementcontract under an award or subaward,and a procurement subcontract under arecipient’s or subrecipient’s contract.

(i) Cost sharing or matching meansthat portion of project or programcosts not borne by the Federal Govern-ment.

(j) Date of completion means the dateon which all work under an award iscompleted or the date on the awarddocument, or any supplement oramendment thereto, on which Federalsponsorship ends.

(k) Disallowed costs means thosecharges to an award that the Federalawarding agency determines to be un-allowable, in accordance with the ap-plicable Federal cost principles orother terms and conditions containedin the award.

(l) Equipment means tangible non-expendable personal property includingexempt property charged directly tothe award having a useful life of morethan one year and an acquisition costof $5,000 or more per unit. However,consistent with recipient policy, lowerlimits may be established.

(m) Excess property means propertyunder the control of any Federalawarding agency that, as determinedby the head thereof, is no longer re-quired for its needs or the discharge ofits responsibilities.

(n) Exempt property means tangiblepersonal property acquired in whole orin part with Federal funds, where theFederal awarding agency has statutoryauthority to vest title in the recipientwithout further obligation to the Fed-eral Government. An example of ex-empt property authority is containedin the Federal Grant and CooperativeAgreement Act (31 U.S.C. 6306), forproperty acquired under an award toconduct basic or applied research by anon-profit institution of higher edu-cation or non-profit organizationwhose principal purpose is conductingscientific research.

(o) Federal awarding agency meansthe Federal agency that provides anaward to the recipient. Except for thespecific review requirements for devi-ations in § 19.4, for Department ofTransportation (DOT) awards, it meansthe DOT operating administration ordepartmental office that made theaward.

(p) Federal funds authorized means thetotal amount of Federal funds obli-gated by the Federal Government foruse by the recipient. This amount mayinclude any authorized carryover of un-obligated funds from prior funding pe-riods when permitted by agency regula-tions or agency implementing instruc-tions.

(q) Federal share of real property,equipment, or supplies means that per-centage of the property’s acquisitioncosts and any improvement expendi-tures paid with Federal funds.

(r) Funding period means the period oftime when Federal funding is availablefor obligation by the recipient.

(s) Intangible property and debt instru-ments means, but is not limited to,trademarks, copyrights, patents andpatent applications and such propertyas loans, notes and other debt instru-ments, lease agreements, stock andother instruments of property owner-ship, whether considered tangible or in-tangible.

(t) Obligations means the amounts oforders placed, contracts and grants


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awarded, services received and similartransactions during a given period thatrequire payment by the recipient dur-ing the same or a future period.

(u) Outlays or expenditures meanscharges made to the project or pro-gram. They may be reported on a cashor accrual basis. For reports preparedon a cash basis, outlays are the sum ofcash disbursements for direct chargesfor goods and services, the amount ofindirect expense charged, the value ofthird party in-kind contributions ap-plied and the amount of cash advancesand payments made to subrecipients.For reports prepared on an accrualbasis, outlays are the sum of cash dis-bursements for direct charges for goodsand services, the amount of indirect ex-pense incurred, the value of in-kindcontributions applied, and the net in-crease (or decrease) in the amountsowed by the recipient for goods andother property received, for servicesperformed by employees, contractors,subrecipients and other payees andother amounts becoming owed underprograms for which no current servicesor performance are required.

(v) Personal property means propertyof any kind except real property. Itmay be tangible, having physical exist-ence, or intangible, having no physicalexistence, such as copyrights, patents,or securities.

(w) Prior approval means written ap-proval by an authorized official evi-dencing prior consent.

(x) Program income means gross in-come earned by the recipient that is di-rectly generated by a supported activ-ity or earned as a result of the award(see exclusions in §§ 19.24 (e) and (h)).Program income includes, but is notlimited to, income from fees for serv-ices performed, the use or rental of realor personal property acquired underfederally-funded projects, the sale ofcommodities or items fabricated underan award, license fees and royalties onpatents and copyrights, and interest onloans made with award funds. Interestearned on advances of Federal funds isnot program income. Except as other-wise provided in Federal awardingagency regulations or the terms andconditions of the award, program in-come does not include the receipt ofprincipal on loans, rebates, credits, dis-

counts, etc., or interest earned on anyof them.

(y) Project costs means all allowablecosts, as set forth in the applicableFederal cost principles, incurred by arecipient and the value of the contribu-tions made by third parties in accom-plishing the objectives of the awardduring the project period.

(z) Project period means the period es-tablished in the award document dur-ing which Federal sponsorship beginsand ends.

(aa) Property means, unless otherwisestated, real property, equipment, in-tangible property and debt instru-ments.

(bb) Real property means land, includ-ing land improvements, structures andappurtenances thereto, but excludesmovable machinery and equipment.

(cc) Recipient means an organizationreceiving financial assistance directlyfrom Federal awarding agencies tocarry out a project or program. Theterm includes public and private insti-tutions of higher education, public andprivate hospitals, and other quasi-pub-lic and private non-profit organizationssuch as, but not limited to, communityaction agencies, research institutes,educational associations, and healthcenters. The term may include com-mercial organizations, foreign or inter-national organizations (such as agen-cies of the United Nations) which arerecipients, subrecipients, or contrac-tors or subcontractors of recipients orsubrecipients at the discretion of theFederal awarding agency. The termdoes not include government-ownedcontractor-operated facilities or re-search centers providing continuedsupport for mission-oriented, large-scale programs that are government-owned or controlled, or are designatedas federally-funded research and devel-opment centers.

(dd) Research and development meansall research activities, both basic andapplied, and all development activitiesthat are supported at universities, col-leges, and other non-profit institu-tions. ‘‘Research’’ is defined as a sys-tematic study directed toward fullerscientific knowledge or understandingof the subject studied. ‘‘Development’’is the systematic use of knowledge and


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understanding gained from research di-rected toward the production of usefulmaterials, devices, systems, or meth-ods, including design and developmentof prototypes and processes. The termresearch also includes activities in-volving the training of individuals inresearch techniques where such activi-ties utilize the same facilities as otherresearch and development activitiesand where such activities are not in-cluded in the instruction function.

(ee) Small awards means a grant orcooperative agreement not exceedingthe small purchase threshold fixed at41 U.S.C. 403(11) (currently $25,000).

(ff) Subaward means an award of fi-nancial assistance in the form ofmoney, or property in lieu of money,made under an award by a recipient toan eligible subrecipient or by a sub-recipient to a lower tier subrecipient.The term includes financial assistancewhen provided by any legal agreement,even if the agreement is called a con-tract, but does not include procure-ment of goods and services nor does itinclude any form of assistance which isexcluded from the definition of‘‘award’’ in paragraph (e) of this sec-tion.

(gg) Subrecipient means the legal en-tity to which a subaward is made andwhich is accountable to the recipientfor the use of the funds provided. Theterm may include foreign or inter-national organizations (such as agen-cies of the United Nations) at the dis-cretion of the Federal awarding agen-cy.

(hh) Supplies means all personal prop-erty excluding equipment, intangibleproperty, and debt instruments as de-fined in this section, and inventions ofa contractor conceived or first actuallyreduced to practice in the performanceof work under a funding agreement(‘‘subject inventions’’), as defined in 37CFR part 401, ‘‘Rights to InventionsMade by Nonprofit Organizations andSmall Business Firms Under Govern-ment Grants, Contracts, and Coopera-tive Agreements.’’

(ii) Suspension means an action by aFederal awarding agency that tempo-rarily withdraws Federal sponsorshipunder an award, pending corrective ac-tion by the recipient or pending a deci-sion to terminate the award by the

Federal awarding agency. Suspensionof an award is a separate action fromsuspension under Federal agency regu-lations implementing E.O.s 12549 and12689, ‘‘Debarment and Suspension.’’

(jj) Termination means the cancella-tion of Federal sponsorship, in whole orin part, under an agreement at anytime prior to the date of completion.

(kk) Third party in-kind contributionsmeans the value of non-cash contribu-tions provided by non-Federal thirdparties. 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 ofgoods and services directly benefitingand specifically identifiable to theproject or program.

(ll) Unliquidated obligations, for finan-cial reports prepared on a cash basis,means the amount of obligations in-curred by the recipient that have notbeen paid. For reports prepared on anaccrued expenditure basis, they rep-resent the amount of obligations in-curred by the recipient for which anoutlay has not been recorded.

(mm) Unobligated balance means theportion of the funds authorized by theFederal awarding agency that has notbeen obligated by the recipient and isdetermined by deducting the cumu-lative obligations from the cumulativefunds authorized.

(nn) Unrecovered indirect cost meansthe difference between the amountawarded and the amount which couldhave been awarded under the recipi-ent’s approved negotiated indirect costrate.

(oo) Working capital advance means aprocedure whereby funds are advancedto the recipient to cover its estimateddisbursement needs for a given initialperiod.

§ 19.3 Effect on other issuances.

For awards subject to this part, alladministrative requirements of codi-fied program regulations, programmanuals, handbooks and other non-reg-ulatory materials which are inconsist-ent with the requirements of this partare superseded, except to the extentthey are required by statute, or au-thorized in accordance with the devi-ations provision in § 19.4.


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§ 19.4 Deviations.

The Office of Management and Budg-et (OMB) may grant exceptions forclasses of grants or recipients subjectto the requirements of this part whenexceptions are not prohibited by stat-ute. However, in the interest of maxi-mum uniformity, exceptions from therequirements of this part shall be per-mitted only in unusual circumstances.Federal awarding agencies may applymore restrictive requirements to aclass of recipients when approved byOMB. All requests for class deviationsshall be processed through the Assist-ant Secretary for Administration. Fed-eral awarding agencies may apply lessrestrictive requirements when award-ing small awards, except for those re-quirements which are statutory, sub-ject to the concurrence of the Assist-ant Secretary for Administration. Ex-ceptions on a case-by-case basis mayalso be made by Federal awardingagencies, with the concurrence of theAssistant Secretary for Administrationto ensure conformance with Depart-ment of Transportation grant adminis-tration policies.

§ 19.5 Subawards.

Unless sections of this part specifi-cally exclude subrecipients from cov-erage, the provisions of this part shallbe applied to subrecipients performingwork under awards if such subrecipi-ents are institutions of higher edu-cation, hospitals or other non-profit or-ganizations. State and local govern-ment subrecipients are subject to theprovisions of 49 CFR part 18, ‘‘UniformAdministrative Requirements forGrants and Cooperative Agreements toState and Local Governments.’’

§ 19.6 Availability of material ref-erenced in this part.

(a) Copies of Federal Transit Admin-istration (FTA) documents identifiedin this part may be obtained by callingthe FTA Administrative Services Divi-sion at (202) 366–4865.

(b) Copies of Federal Aviation Ad-ministration (FAA) documents identi-fied in this part may be obtained bycalling the FAA Program GuidanceBranch at (202) 267–3831.

Subpart B—Pre-AwardRequirements

§ 19.10 Purpose.

Sections 19.11 through 19.17 pre-scribes forms and instructions andother pre-award matters to be used inapplying for Federal awards.

§ 19.11 Pre-award policies.

(a) Use of grants and cooperative agree-ments, and contracts. In each instance,the Federal awarding agency shall de-cide on the appropriate award instru-ment (i.e., grant, cooperative agree-ment, or contract). The Federal Grantand Cooperative Agreement Act (31U.S.C. 6301–08) governs the use ofgrants, cooperative agreements andcontracts. A grant or cooperativeagreement shall be used only when theprincipal purpose of a transaction is toaccomplish a public purpose of supportor stimulation authorized by Federalstatute. The statutory criterion forchoosing between grants and coopera-tive agreements is that for the latter,‘‘substantial involvement is expectedbetween the executive agency and theState, local government, or other re-cipient when carrying out the activitycontemplated in the agreement.’’ Con-tracts shall be used when the principalpurpose is acquisition of property orservices for the direct benefit or use ofthe Federal Government.

(b) Public notice and priority setting.Federal awarding agencies shall notifythe public of its intended funding prior-ities for discretionary grant programs,unless funding priorities are estab-lished by Federal statute.

§ 19.12 Forms for applying for Federalassistance.

(a) Federal awarding agencies shallcomply with the applicable reportclearance requirements of 5 CFR part1320, ‘‘Controlling Paperwork Burdenson the Public,’’ with regard to allforms used by the Federal awardingagency in place of or as a supplementto the Standard Form 424 (SF–424) se-ries.

(b) Applicants shall use the SF–424series or those forms and instructionsprescribed by the Federal awardingagency.


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(c) For Federal programs covered byE.O. 12372, ‘‘Intergovernmental Reviewof Federal Programs,’’ as implementedat 49 CFR part 17, Intergovernmentalreview of Department of Transpor-tation programs and activities, the ap-plicant shall complete the appropriatesections of the SF–424 (Application forFederal Assistance) indicating whetherthe application was subject to reviewby the State Single Point of Contact(SPOC). The name and address of theSPOC for a particular State can be ob-tained from the Federal awarding agen-cy or the Catalog of Federal DomesticAssistance. The SPOC shall advise theapplicant whether the program forwhich application is made has been se-lected by that State for review.

(d) Federal awarding agencies that donot use the SF–424 form should indi-cate whether the application is subjectto review by the State under E.O. 12372.

§ 19.13 Debarment and suspension.Federal awarding agencies and re-

cipients shall comply with the non-procurement debarment and suspensionrule, 49 CFR part 29, ‘‘GovernmentwideDebarment and Suspension (Non-procurement) and Governmentwide Re-quirements for Drug-Free Workplace(Grants),’’ implementing E.O.s 12549and 12689, ‘‘Debarment and Suspen-sion.’’ This rule restricts subawardsand contracts with certain parties thatare debarred, suspended or otherwiseexcluded from or ineligible for partici-pation in Federal assistance programsor activities.

§ 19.14 Special award conditions.(a) Federal awarding agencies may

impose additional requirements asneeded, if an applicant or recipient:

(1) Has a history of poor performance,(2) Is not financially stable,(3) Has a management system that

does not meet the standards prescribedin this part,

(4) Has not conformed to the termsand conditions of a previous award, or

(5) Is not otherwise responsible.(b) Additional requirements may

only be imposed provided that such ap-plicant or recipient is notified in writ-ing as to:

(1) The nature of the additional re-quirements,

(2) The reason why the additional re-quirements are being imposed,

(3) The nature of the corrective ac-tion needed,

(4) The time allowed for completingthe corrective actions, and

(5) The method for requesting recon-sideration of the additional require-ments imposed.

(c) A copy of such notices shall besent to the Assistant Secretary for Ad-ministration. Any special conditionsshall be promptly removed once theconditions that prompted them havebeen corrected.

§ 19.15 Metric system of measurement.

The Metric Conversion Act, asamended by the Omnibus Trade andCompetitiveness Act (15 U.S.C. 205), de-clares that the metric system is thepreferred measurement system for U.S.trade and commerce. The Act requireseach Federal agency to establish a dateor dates in consultation with the Sec-retary of Commerce, when the metricsystem of measurement will be used inthe agency’s procurements, grants, andother business-related activities. Met-ric implementation may take longerwhere the use of the system is initiallyimpractical or likely to cause signifi-cant inefficiencies in the accomplish-ment of federally-funded activities.Federal awarding agencies shall followthe provisions of E.O. 12770, ‘‘MetricUsage in Federal Government Pro-grams.’’

§ 19.16 Resource Conservation and Re-covery Act.

Under the Act, any State agency oragency of a political subdivision of aState which is using appropriated Fed-eral funds must comply with section6002. Section 6002 requires that pref-erence be given in procurement pro-grams to the purchase of specific prod-ucts containing recycled materialsidentified in guidelines developed bythe Environmental Protection Agency(EPA) (40 CFR parts 247–254). Accord-ingly, State and local institutions ofhigher education, hospitals, and non-profit organizations that receive directFederal awards or other Federal fundsshall give preference in their procure-ment programs funded with Federal


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funds to the purchase of recycled prod-ucts pursuant to the EPA guidelines.

§ 19.17 Certifications and representa-tions.

Unless prohibited by statute or codi-fied regulation, each Federal awardingagency is authorized and encouraged toallow recipients to submit certifi-cations and representations requiredby statute, executive order, or regula-tion on an annual basis, if the recipi-ents have ongoing and continuing rela-tionships with the agency. Annual cer-tifications and representations shall besigned by responsible officials with theauthority to ensure recipients’ compli-ance with the pertinent requirements.

Subpart C—Post-AwardRequirements

FINANCIAL AND PROGRAM MANAGEMENT

§ 19.20 Purpose of financial and pro-gram management.

Sections 19.21 through 19.28 prescribestandards for financial managementsystems, methods for making pay-ments and rules for: satisfying costsharing and matching requirements,accounting for program income, budgetrevision approvals, making audits, de-termining allowability of cost, and es-tablishing fund availability.

§ 19.21 Standards for financial man-agement systems.

(a) Federal awarding agencies shallrequire recipients to relate financialdata to performance data and developunit cost information whenever prac-tical.

(b) Recipients’ financial managementsystems shall provide for the following.

(1) Accurate, current and completedisclosure of the financial results ofeach federally-sponsored project orprogram in accordance with the report-ing requirements set forth in § 19.52. Ifa Federal awarding agency requires re-porting on an accrual basis from a re-cipient that maintains its records onother than an accrual basis, the recipi-ent shall not be required to establishan accrual accounting system. Theserecipients may develop such accrualdata for its reports on the basis of ananalysis of the documentation on hand.

(2) Records that identify adequatelythe source and application of funds forfederally-sponsored activities. Theserecords 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 andother assets. Recipients shall ade-quately safeguard all such assets andassure they are used solely for author-ized purposes.

(4) Comparison of outlays with budg-et amounts for each award. Wheneverappropriate, financial informationshould be related to performance andunit cost data.

(5) Written procedures to minimizethe time elapsing between the transferof funds to the recipient from the U.S.Treasury and the issuance or redemp-tion of checks, warrants or paymentsby other means for program purposesby the recipient. To the extent that theprovisions of the Cash Management Im-provement Act (CMIA) (Pub. L. 101–453)govern, payment methods of Stateagencies, instrumentalities, and fiscalagents shall be consistent with CMIATreasury-State Agreements or theCMIA default procedures codified at 31CFR part 205, ‘‘Withdrawal of Cashfrom the Treasury for Advances underFederal Grant and Other Programs.’’

(6) Written procedures for determin-ing the reasonableness, allocabilityand allowability of costs in accordancewith the provisions of the applicableFederal cost principles and the termsand conditions of the award.

(7) Accounting records including costaccounting records that are supportedby source documentation.

(c) Where the Federal Governmentguarantees or insures the repayment ofmoney borrowed by the recipient, theFederal awarding agency, at its discre-tion, may require adequate bondingand insurance if the bonding and insur-ance requirements of the recipient arenot deemed adequate to protect the in-terest of the Federal Government.

(d) The Federal awarding agency mayrequire adequate fidelity bond coveragewhere the recipient lacks sufficientcoverage to protect the Federal Gov-ernment’s interest.


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(e) Where bonds are required in thesituations described above, the bondsshall be obtained from companies hold-ing certificates of authority as accept-able sureties, as prescribed in 31 CFRpart 223, ‘‘Surety Companies DoingBusiness with the United States.’’

§ 19.22 Payment.(a) Payment methods shall minimize

the time elapsing between the transferof funds from the United States Treas-ury and the issuance or redemption ofchecks, warrants, or payment by othermeans by the recipients. Paymentmethods of State agencies or instru-mentalities shall be consistent withTreasury-State CMIA agreements ordefault procedures codified at 31 CFRpart 205.

(b)(1) Recipients are to be paid in ad-vance, provided they maintain or dem-onstrate the willingness to maintain:

(i) Written procedures that minimizethe time elapsing between the transferof funds and disbursement by the recip-ient, and

(ii) Financial management systemsthat meet the standards for fund con-trol and accountability as establishedin section § 19.21.

(2) Cash advances to a recipient orga-nization shall be limited to the mini-mum amounts needed and be timed tobe in accordance with the actual, im-mediate cash requirements of the re-cipient organization in carrying outthe purpose of the approved program orproject. The timing and amount of cashadvances shall be as close as is admin-istratively feasible to the actual dis-bursements by the recipient organiza-tion for direct program or project costsand the proportionate share of any al-lowable indirect costs.

(c) Whenever possible, advances shallbe consolidated to cover anticipatedcash needs for all awards made by theFederal awarding agency to the recipi-ent.

(1) Advance payment mechanisms in-clude, but are not limited to, Treasurycheck and electronic funds transfer.

(2) Advance payment mechanisms aresubject to 31 CFR part 205.

(3) Recipients shall be authorized tosubmit requests for advances and reim-bursements at least monthly whenelectronic fund transfers are not used.

(d) Requests for Treasury check ad-vance payment shall be submitted onSF–270, ‘‘Request for Advance or Reim-bursement,’’ or other forms as may beauthorized by OMB. This form is not tobe used when Treasury check advancepayments are made to the recipientautomatically through the use of a pre-determined payment schedule or if pre-cluded by special Federal awardingagency instructions for electronicfunds transfer.

(e) Reimbursement is the preferredmethod when the requirements in para-graph (b) cannot be met. Federalawarding agencies may also use thismethod on any construction agree-ment, or if the major portion of theconstruction project is accomplishedthrough private market financing orFederal loans, and the Federal assist-ance constitutes a minor portion of theproject.

(1) When the reimbursement methodis used, the Federal awarding agencyshall make payment within 30 daysafter receipt of the billing, unless thebilling is improper.

(2) Recipients shall be authorized tosubmit request for reimbursement atleast monthly when electronic fundstransfers are not used.

(f) If a recipient cannot meet the cri-teria for advance payments and theFederal awarding agency has deter-mined that reimbursement is not fea-sible because the recipient lacks suffi-cient working capital, the Federalawarding agency may provide cash on aworking capital advance basis. Underthis procedure, the Federal awardingagency shall advance cash to the recip-ient to cover its estimated disburse-ment needs for an initial period gen-erally geared to the awardee’s disburs-ing cycle. Thereafter, the Federalawarding agency shall reimburse therecipient for its actual cash disburse-ments. The working capital advancemethod of payment shall not be usedfor recipients unwilling or unable toprovide 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 fromrepayments to and interest earned on arevolving fund, program income, re-bates, refunds, contract settlements,


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audit recoveries and interest earned onsuch funds before requesting additionalcash payments.

(h) Unless otherwise required by stat-ute, Federal awarding agencies shallnot withhold payments for propercharges made by recipients at any timeduring the project period unless theconditions in paragraphs (h)(1) or (2) ofthis section apply.

(1) A recipient has failed to complywith the project objectives, the termsand conditions of the award, or Federalreporting requirements.

(2) The recipient or subrecipient isdelinquent in a debt to the UnitedStates as defined in OMB Circular A–129, ‘‘Managing Federal Credit Pro-grams.’’ Under such conditions, theFederal awarding agency may, uponreasonable notice, inform the recipientthat payments shall not be made forobligations incurred after a specifieddate until the conditions are correctedor the indebtedness to the Federal Gov-ernment is liquidated.

(i) Standards governing the use ofbanks and other institutions as deposi-tories of funds advanced under awardsare as follows.

(1) Except for situations described inparagraph (i)(2) of this section, Federalawarding agencies shall not requireseparate depository accounts for fundsprovided to a recipient or establish anyeligibility requirements for deposi-tories for funds provided to a recipient.However, recipients must be able to ac-count for the receipt, obligation andexpenditure of funds.

(2) Advances of Federal funds shall bedeposited and maintained in insuredaccounts whenever possible.

(j) Consistent with the national goalof expanding the opportunities forwomen-owned and minority-ownedbusiness enterprises, recipients shall beencouraged to use women-owned andminority-owned banks (a bank which isowned at least 50 percent by women orminority group members).

(k) Recipients shall maintain ad-vances of Federal funds in interestbearing accounts, unless the conditionsin paragraphs (k)(1), (2) or (3) of thissection 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 $250per year on Federal cash balances.

(3) The depository would require anaverage or minimum balance so highthat it would not be feasible within theexpected Federal and non-Federal cashresources.

(l) For those entities where CMIAand its implementing regulations donot apply, interest earned on Federaladvances deposited in interest bearingaccounts shall be remitted annually toDepartment of Health and HumanServices, Payment Management Sys-tem, P.O. Box 6021, Rockville, MD20852. Interest amounts up to $250 peryear may be retained by the recipientfor administrative expense. In keepingwith Electric Funds Transfer rules, (31CFR part 206), interest should be remit-ted to the HHS Payment ManagementSystem through an electric mediumsuch as the FEDWIRE Deposit system.Recipients which do not have this ca-pability should use a check. State uni-versities and hospitals shall complywith CMIA, as it pertains to interest. Ifan entity subject to CMIA uses its ownfunds to pay pre-award costs for discre-tionary awards without prior writtenapproval from the Federal awardingagency, it waives its right to recoverthe interest under CMIA.

(m) Except as noted elsewhere in thispart, only the following forms shall beauthorized for the recipients in re-questing advances and reimburse-ments. Federal agencies shall not re-quire more than an original and twocopies of these forms.

(1) SF–270, Request for Advance orReimbursement. Each Federal award-ing agency shall adopt the SF–270 as astandard form for all nonconstructionprograms when electronic funds trans-fer or predetermined advance methodsare not used. Federal awarding agen-cies, however, have the option of usingthis form for construction programs inlieu of the SF–271, ‘‘Outlay Report andRequest for Reimbursement for Con-struction Programs.’’

(2) SF–271, Outlay Report and Re-quest for Reimbursement for Construc-tion Programs. Each Federal awardingagency shall adopt the SF–271 as thestandard form to be used for requesting


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reimbursement for construction pro-grams. However, a Federal awardingagency may substitute the SF–270when the Federal awarding agency de-termines that it provides adequate in-formation to meet Federal needs.

§ 19.23 Cost sharing or matching.(a) All contributions, including cash

and third party in-kind, shall be ac-cepted as part of the recipient’s costsharing or matching when such con-tributions meet all of the following cri-teria.

(1) Are verifiable from the recipient’srecords.

(2) Are not included as contributionsfor any other federally-assisted projector program.

(3) Are necessary and reasonable forproper and efficient accomplishment ofproject or program objectives.

(4) Are allowable under the applica-ble cost principles.

(5) Are not paid by the Federal Gov-ernment under another award, exceptwhere authorized by Federal statute tobe used for cost sharing or matching.

(6) Are provided for in the approvedbudget when required by the Federalawarding agency.

(7) Conform to other provisions ofthis part, as applicable.

(b) Unrecovered indirect costs may beincluded as part of cost sharing ormatching only with the prior approvalof the Federal awarding agency.

(c) Values for recipient contributionsof services and property shall be estab-lished in accordance with the applica-ble cost principles. If a Federal award-ing agency authorizes recipients to do-nate buildings or land for construction/facilities acquisition projects or long-term use, the value of the donatedproperty for cost sharing or matchingshall be the lesser of (1) or (2).

(1) The certified value of the remain-ing life of the property recorded in therecipient’s accounting records at thetime of donation.

(2) The current fair market value.However, when there is sufficient jus-tification, the Federal awarding agen-cy may approve the use of the currentfair market value of the donated prop-erty, even if it exceeds the certifiedvalue at the time of donation to theproject.

(d) Volunteer services furnished byprofessional and technical personnel,consultants, and other skilled and un-skilled labor may be counted as costsharing or matching if the service is anintegral and necessary part of an ap-proved project or program. Rates forvolunteer services shall be consistentwith those paid for similar work in therecipient’s organization. In those in-stances in which the required skills arenot found in the recipient organization,rates shall be consistent with thosepaid for similar work in the labor mar-ket in which the recipient competes forthe kind of services involved. In eithercase, paid fringe benefits that are rea-sonable, allowable, and allocable maybe included in the valuation.

(e) When an employer other than therecipient furnishes the services of anemployee, these services shall be val-ued at the employee’s regular rate ofpay (plus an amount of fringe benefitsthat are reasonable, allowable, and al-locable, but exclusive of overheadcosts), provided these services are inthe same skill for which the employeeis normally paid.

(f) Donated supplies may includesuch items as expendable equipment,office supplies, laboratory supplies orworkshop and classroom supplies.Value assessed to donated supplies in-cluded in the cost sharing or matchingshare shall be reasonable and shall notexceed the fair market value of theproperty at the time of the donation.

(g) The method used for determiningcost sharing or matching for donatedequipment, buildings and land forwhich title passes to the recipient maydiffer according to the purpose of theaward, if the conditions in paragraph(g)(1) or (2) of this section apply.

(1) If the purpose of the award is toassist the recipient in the acquisitionof equipment, buildings or land, thetotal value of the donated propertymay be claimed as cost sharing ormatching.

(2) If the purpose of the award is tosupport activities that require the useof equipment, buildings or land, nor-mally only depreciation or use chargesfor equipment and buildings may bemade. However, the full value of equip-ment or other capital assets and fairrental charges for land may be allowed,


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provided that the Federal awardingagency has approved the charges.

(h) The value of donated propertyshall be determined in accordance withthe usual accounting policies of the re-cipient, with the following qualifica-tions.

(1) The value of donated land andbuildings shall not exceed its fair mar-ket value at the time of donation tothe recipient as established by an inde-pendent appraiser (e.g., certified realproperty appraiser or General ServicesAdministration representative) andcertified by a responsible official of therecipient.

(2) The value of donated equipmentshall not exceed the fair market valueof equipment of the same age and con-dition at the time of donation.

(3) The value of donated space shallnot exceed the fair rental value of com-parable space as established by an inde-pendent appraisal of comparable spaceand facilities in a privately-ownedbuilding in the same locality.

(4) The value of loaned equipmentshall not exceed its fair rental value.

(5) The following requirements per-tain to the recipient’s supportingrecords for in-kind contributions fromthird parties.

(i) Volunteer services shall be docu-mented and, to the extent feasible, sup-ported by the same methods used bythe recipient for its own employees.

(ii) The basis for determining thevaluation for personal service, mate-rial, equipment, buildings and landshall be documented.

(iii) Section 18(e) of the FederalTransit Act, as amended, (49 U.S.C.app. 1614(e)) provides that the Federalshare for operating assistance shall notexceed 50 percent of the net cost. Atleast 50 percent of the remainder (thelocal share) must be derived fromsources other than Federal funds orrevenues of the system; and up to halfof the local share may be derived fromother Federal funds. For purposes ofdetermining local share for section 18operating assistance, the term ‘‘Fed-eral funds or revenues’’ does not in-clude funds received pursuant to aservice agreement with a State or localservice agency or a private social serv-ice organization. Nonregulatory guid-ance is contained in FTA Circular

9040.1B, section 18 Program Guidanceand Grant Application Instructions,Chapter III, section 7.

§ 19.24 Program income.(a) Federal awarding agencies shall

apply the standards set forth in thissection in requiring recipient organiza-tions to account for program incomerelated to projects financed in whole orin part with Federal funds.

(b) Except as provided in paragraph(h) of this section, program incomeearned during the project period shallbe retained by the recipient and, in ac-cordance with Federal awarding agencyregulations or the terms and condi-tions of the award, shall be used in oneor more of the ways listed in the fol-lowing.

(1) Added to funds committed to theproject by the Federal awarding agencyand recipient and used to further eligi-ble project or program objectives.

(2) Used to finance the non-Federalshare of the project or program.

(3) Deducted from the total project orprogram allowable cost in determiningthe net allowable costs on which theFederal share of costs is based.

(c) When an agency authorizes thedisposition of program income as de-scribed in paragraph (b)(1) or (b)(2) ofthis section, program income in excessof any limits stipulated shall be used inaccordance with paragraph (b)(3) ofthis section.

(d) In the event that the Federalawarding agency does not specify in itsregulations or the terms and condi-tions of the award how program incomeis to be used, paragraph (b)(3) of thissection shall apply automatically toall projects or programs except re-search. For awards that support re-search, paragraph (b)(1) of this sectionshall apply automatically unless theawarding agency indicates in the termsand conditions another alternative onthe award or the recipient is subject tospecial award conditions, as indicatedin § 19.14.

(e) Unless Federal awarding agencyregulations or the terms and condi-tions of the award provide otherwise,recipients shall have no obligation tothe Federal Government regarding pro-gram income earned after the end ofthe project period.


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(f) If authorized by Federal awardingagency regulations or the terms andconditions of the award, costs incidentto the generation of program incomemay be deducted from gross income todetermine program income, providedthese costs have not been charged tothe award.

(g) Proceeds from the sale of propertyshall be handled in accordance with therequirements of the Property Stand-ards (See §§ 19.30 through 19.37).

(h) Unless Federal awarding agencyregulations or the terms and conditionof the award provide otherwise, recipi-ents shall have no obligation to theFederal Government with respect toprogram income earned from licensefees and royalties for copyrighted ma-terial, patents, patent applications,trademarks, and inventions producedunder an award. However, Patent andTrademark Amendments (35 U.S.C. 18)apply to inventions made under an ex-perimental, developmental, or researchaward.

(i) Section 4(a) of the Federal TransitAct, as amended, (49 U.S.C. app. 1603(a))allows FTA recipients to retain pro-gram income for allowable capital oroperating expenses, but program in-come may not be used to refund or re-duce the local share of a grant. Thesection 16 and 18 programs, however,operate differently. Under the specialauthority to set appropriate terms andconditions for the section 16(b)(2) pro-gram, program income in the form ofcontract service revenue may be usedas local share without a proportionatereduction in the Federal share. Simi-larly, section 18 allows the use of pro-gram income in the form of contractservice revenue as local share withoutrequiring a proportionate reduction inthe Federal share. Grantees must ac-count for program income in their ac-counting systems, which are subject toaudit. The accounting system must becapable of identifying program incomeand the purpose for which it was used.Nonregulatory guidance is contained inFTA notice N 5.5005.1, Guidance on Pro-gram Income and Sales Proceeds.

§ 19.25 Revision of budget and pro-gram plans.

(a) The budget plan is the financialexpression of the project or program as

approved during the award process. Itmay include either the Federal andnon-Federal share, or only the Federalshare, depending upon Federal award-ing agency requirements. It shall be re-lated to performance for program eval-uation purposes whenever appropriate.

(b) Recipients are required to reportdeviations from budget and programplans, and request prior approvals forbudget and program plan revisions, inaccordance with this section.

(c) For nonconstruction awards, re-cipients shall request prior approvalsfrom Federal awarding agencies for oneor more of the following program orbudget related reasons.

(1) Change in the scope or the objec-tive of the project or program (even ifthere is no associated budget revisionrequiring prior written approval).

(2) Change in a key person specifiedin the application or award document.

(3) The absence for more than threemonths, or a 25 percent reduction intime devoted to the project, by the ap-proved project director or principal in-vestigator.

(4) The need for additional Federalfunding.

(5) The transfer of amounts budgetedfor indirect costs to absorb increases indirect costs, or vice versa, if approvalis required by the Federal awardingagency.

(6) The inclusion, unless waived bythe Federal awarding agency, of coststhat require prior approval in accord-ance with OMB Circular A–21, ‘‘CostPrinciples for Institutions of HigherEducation,’’ OMB Circular A–122, ‘‘CostPrinciples for Non-Profit Organiza-tions,’’ or 45 CFR part 74 Appendix E,‘‘Principles for Determining Costs Ap-plicable to Research and Developmentunder Grants and Contracts with Hos-pitals,’’ or 48 CFR part 31, ‘‘ContractCost Principles and Procedures,’’ as ap-plicable.

(7) The transfer of funds allotted fortraining allowances (direct payment totrainees) to other categories of ex-pense.

(8) Unless described in the applica-tion and funded in the approvedawards, the subaward, transfer or con-tracting out of any work under anaward. This provision does not apply to


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the purchase of supplies, material,equipment or general support services.

(d) No other prior approval require-ments for specific items may be im-posed unless a deviation has been ap-proved by OMB.

(e) Except for requirements listed inparagraphs (c)(1) and (c)(4) of this sec-tion, Federal awarding agencies are au-thorized, at their option, to waive cost-related and administrative prior writ-ten approvals required by this part andOMB Circulars A–21 and A–122. Suchwaivers may include authorizing re-cipients to do any one or more of thefollowing:

(1) Incur pre-award costs 90 calendardays prior to award or more than 90calendar days with the prior approvalof the Federal awarding agency. Allpre-award costs are incurred at the re-cipient’s risk (i.e., the Federal award-ing agency is under no obligation to re-imburse such costs if for any reasonthe recipient does not receive an awardor if the award is less than anticipatedand inadequate to cover such costs).

(2) Initiate a one-time extension ofthe expiration date of the award of upto 12 months unless one or more of thefollowing conditions apply. For one-time extensions, the recipient must no-tify the Federal awarding agency inwriting with the supporting reasonsand revised expiration date at least 10days before the expiration date speci-fied in the award. This one-time exten-sion may not be exercised merely forthe purpose of using unobligated bal-ances.

(i) The terms and conditions of awardprohibit the extension.

(ii) The extension requires additionalFederal funds.

(iii) The extension involves anychange in the approved objectives orscope of the project.

(3) Carry forward unobligated bal-ances to subsequent funding periods.

(4) For awards that support research,unless the Federal awarding agencyprovides otherwise in the award or inthe agency’s regulations, the prior ap-proval requirements described in para-graph (e) of this section are automati-cally waived (i.e., recipients need notobtain such prior approvals) unless oneof the conditions included in paragraph(e)(2) of this section applies.

(f) The Federal awarding agencymay, at its option, restrict the transferof funds among direct cost categoriesor programs, functions and activitiesfor awards in which the Federal shareof the project exceeds $100,000 and thecumulative amount of such transfersexceeds or is expected to exceed 10 per-cent of the total budget as last ap-proved by the Federal awarding agen-cy. No Federal awarding agency shallpermit a transfer that would cause anyFederal appropriation or part thereofto be used for purposes other thanthose 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 Federal awardingagencies for budget revisions wheneverthe conditions in paragraphs (h) (1), (2)or (3) of this section apply.

(1) The revision results from changesin the scope or the objective of theproject or program.

(2) The need arises for additionalFederal funds to complete the project.

(3) A revision is desired which in-volves specific costs for which priorwritten approval requirements may beimposed consistent with applicableOMB cost principles listed in § 19.27.

(i) No other prior approval require-ments for specific items may be im-posed unless a deviation has been ap-proved by OMB.

(j) When a Federal awarding agencymakes an award that provides supportfor both construction and nonconstruc-tion work, the Federal awarding agen-cy may require the recipient to requestprior approval from the Federal award-ing agency before making any fund orbudget transfers between the two typesof work supported.

(k) For both construction and non-construction awards, Federal awardingagencies shall require recipients to no-tify the Federal awarding agency inwriting promptly whenever the amountof Federal authorized funds is expectedto exceed the needs of the recipient forthe project period by more than $5,000or five percent of the Federal award,whichever is greater. This notification


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shall not be required if an applicationfor additional funding is submitted fora continuation award.

(l) When requesting approval forbudget revisions, recipients shall usethe budget forms that were used in theapplication unless the Federal award-ing agency indicates a letter of requestsuffices.

(m) Within 30 calendar days from thedate of receipt of the request for budg-et revisions, Federal awarding agenciesshall review the request and notify therecipient whether the budget revisionshave been approved. If the revision isstill under consideration at the end of30 calendar days, the Federal awardingagency shall inform the recipient inwriting of the date when the recipientmay expect the decision.

§ 19.26 Non-Federal audits.(a) Recipients and subrecipients that

are institutions of higher education orother non-profit organizations (includ-ing hospitals) shall be subject to theaudit requirements contained in theSingle Audit Act Amendments of 1996(31 U.S.C. 7501–7507) and revised OMBCircular A–133, ‘‘Audits of States,Local Governments, and Non-Profit Or-ganizations.’’

(b) State and local governments shallbe subject to the audit requirementscontained in the Single Audit ActAmendments 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 coveredby the audit provisions of revised OMBCircular A–133 shall be subject to theaudit requirements of the Federalawarding agencies.

(d) Commercial organizations shallbe subject to the audit requirements ofthe Federal awarding agency or theprime recipient as incorporated intothe award document.

[59 FR 15639, Apr. 4, 1994, as amended at 62FR 45939, 45947, Aug. 29, 1997]

§ 19.27 Allowable costs.For each kind of recipient, there is a

set of Federal principles for determin-ing allowable costs. Allowability ofcosts shall be determined in accord-ance with the cost principles applicableto the entity incurring the costs. Thus,

allowability of costs incurred by State,local or federally-recognized Indiantribal governments is determined inaccordance with the provisions of OMBCircular A–87, ‘‘Cost Principles forState and Local Governments.’’ The al-lowability of costs incurred by non-profit organizations is determined inaccordance with the provisions of OMBCircular A–122, ‘‘Cost Principles forNon-Profit Organizations.’’ The allow-ability of costs incurred by institutionsof higher education is determined inaccordance with the provisions of OMBCircular A–21, ‘‘Cost Principles forEducational Institutions.’’ The allow-ability of costs incurred by hospitals isdetermined in accordance with the pro-visions of Appendix E of 45 CFR part 74,‘‘Principles for Determining Costs Ap-plicable to Research and DevelopmentUnder Grants and Contracts with Hos-pitals.’’ The allowability of costs in-curred by commercial organizationsand those non-profit organizations list-ed in Attachment C to Circular A–122 isdetermined in accordance with the pro-visions of the Federal Acquisition Reg-ulation (FAR) at 48 CFR part 31.

§ 19.28 Period of availability of funds.Where a funding period is specified, a

recipient may charge to the grant onlyallowable costs resulting from obliga-tions incurred during the funding pe-riod and any pre-award costs author-ized by the Federal awarding agency.

PROPERTY STANDARDS

§ 19.30 Purpose of property standards.(a) Sections 19.31 through 19.37 set

forth uniform standards governingmanagement and disposition of prop-erty furnished by the Federal Govern-ment whose cost was charged to aproject supported by a Federal award.Federal awarding agencies shall re-quire recipients to observe these stand-ards under awards and shall not imposeadditional requirements, unless specifi-cally required by Federal statute. Therecipient may use its own propertymanagement standards and proceduresprovided it observes the provisions of§§ 19.31 through 19.37.

(b) Transfer of capital assets. Section12(k) of the Federal Transit Act, asamended, (49 U.S.C. app. 1608(k)) allows


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the transfer without compensation ofreal property (including land) andequipment acquired under the Act foranother public purpose under certainconditions. Procedures to allow thesetransfers have not been issued.

§ 19.31 Insurance coverage.Recipients shall, at a minimum, pro-

vide the equivalent insurance coveragefor real property and equipment ac-quired with Federal funds as providedto property owned by the recipient.Federally-owned property need not beinsured unless required by the termsand conditions of the award.

§ 19.32 Real property.Each Federal awarding agency shall

prescribe requirements for recipientsconcerning the use and disposition ofreal property acquired in whole or inpart under awards. Unless otherwiseprovided by statute, such require-ments, at a minimum, shall containthe following.

(a) Title to real property shall vest inthe recipient subject to the conditionthat the recipient shall use the realproperty for the authorized purpose ofthe project as long as it is needed andshall not encumber the property with-out approval of the Federal awardingagency.

(b) The recipient shall obtain writtenapproval by the Federal awarding agen-cy for the use of real property in otherfederally-sponsored projects when therecipient determines that the propertyis no longer needed for the purpose ofthe original project. Use in otherprojects shall be limited to those underfederally-sponsored projects (i.e.,awards) or programs that have pur-poses consistent with those authorizedfor support by the Department ofTransportation.

(c) When the real property is nolonger needed as provided in para-graphs (a) and (b) of this section, therecipient shall request disposition in-structions from the Federal awardingagency or its successor Federal award-ing agency. The Federal awardingagency shall observe one or more of thefollowing disposition instructions.

(1) The recipient may be permitted toretain title without further obligationto the Federal Government after it

compensates the Federal Governmentfor that percentage of the current fairmarket value of the property attrib-utable to the Federal participation inthe project.

(2) The recipient may be directed tosell the property under guidelines pro-vided by the Federal awarding agencyand pay the Federal Government forthat percentage of the current fairmarket value of the property attrib-utable to the Federal participation inthe project (after deducting actual andreasonable selling and fix-up expenses,if any, from the sales proceeds). Whenthe recipient is authorized or requiredto sell the property, proper sales proce-dures shall be established that providefor competition to the extent prac-ticable and result in the highest pos-sible return.

(3) The recipient may be directed totransfer title to the property to theFederal Government or to an eligiblethird party provided that, in suchcases, the recipient shall be entitled tocompensation for its attributable per-centage of the current fair marketvalue of the property.

§ 19.33 Federally-owned and exemptproperty.

(a) Federally-owned property. (1) Titleto federally-owned property remainsvested in the Federal Government. Re-cipients shall submit annually an in-ventory listing of federally-ownedproperty in their custody to the Fed-eral awarding agency. Upon completionof the award or when the property is nolonger needed, the recipient shall re-port the property to the Federal award-ing agency for further Federal agencyutilization.

(2) If the Federal awarding agencyhas no further need for the property, itshall be declared excess and reported tothe General Services Administration,unless the Federal awarding agencyhas statutory authority to dispose ofthe property by alternative methods(e.g., the authority provided by theFederal Technology Transfer Act (15U.S.C. 3710(I)) to donate research equip-ment to educational and non-profit or-ganizations in accordance with E.O.12821, ‘‘Improving Mathematics andScience Education in Support of the


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National Education Goals.’’) Appro-priate instructions shall be issued tothe recipient by the Federal awardingagency.

(b) Exempt property. When statutoryauthority exists, the Federal awardingagency has the option to vest title toproperty acquired with Federal fundsin the recipient without further obliga-tion to the Federal Government andunder conditions the Federal awardingagency considers appropriate. Suchproperty is ‘‘exempt property.’’ Shoulda Federal awarding agency not estab-lish conditions, title to exempt prop-erty upon acquisition shall vest in therecipient without further obligation tothe Federal Government.

§ 19.34 Equipment.(a) Title to equipment acquired by a

recipient with Federal funds shall vestin the recipient, subject to conditionsof this section.

(b) The recipient shall not use equip-ment acquired with Federal funds toprovide services to non-Federal outsideorganizations for a fee that is less thanprivate companies charge for equiva-lent services, unless specifically au-thorized by Federal statute, for as longas the Federal Government retains aninterest in the equipment.

(c) The recipient shall use the equip-ment in the project or program forwhich 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 theproperty without approval of the Fed-eral awarding agency. When no longerneeded for the original project or pro-gram, the recipient shall use the equip-ment in connection with its other fed-erally-sponsored activities, in the fol-lowing order of priority:

(1) Activities sponsored by the Fed-eral awarding agency which funded theoriginal project, then

(2) Activities sponsored by other Fed-eral awarding agencies.

(d) During the time that equipmentis used on the project or program forwhich it was acquired, the recipientshall make it available for use on otherprojects or programs if such other usewill not interfere with the work on theproject or program for which the equip-ment was originally acquired. First

preference for such other use shall begiven to other projects or programssponsored by the Federal awardingagency that financed the equipment;second preference shall be given toprojects or programs sponsored byother Federal awarding agencies. If theequipment is owned by the FederalGovernment, use on other activitiesnot sponsored by the Federal Govern-ment shall be permissible if authorizedby the Federal awarding agency. Usercharges shall be treated as program in-come.

(e) When acquiring replacementequipment, the recipient may use theequipment to be replaced as trade-in orsell the equipment and use the pro-ceeds to offset the costs of the replace-ment equipment subject to the ap-proval of the Federal awarding agency.

(f) The recipient’s property manage-ment standards for equipment acquiredwith Federal funds and federally-ownedequipment shall include all of the fol-lowing.

(1) Equipment records shall be main-tained accurately and shall include thefollowing information.

(i) A description of the equipment.(ii) Manufacturer’s serial number,

model number, Federal stock number,national stock number, or other identi-fication number.

(iii) Source of the equipment, includ-ing the award number.

(iv) Whether title vests in the recipi-ent or the Federal Government.

(v) Acquisition date (or date re-ceived, if the equipment was furnishedby the Federal Government) and cost.

(vi) Information from which one cancalculate the percentage of Federalparticipation in the cost of the equip-ment (not applicable to equipment fur-nished by the Federal Government).

(vii) Location and condition of theequipment and the date the informa-tion was reported.

(viii) Unit acquisition cost.(ix) Ultimate disposition data, in-

cluding date of disposal and sales priceor the method used to determine cur-rent fair market value where a recipi-ent compensates the Federal awardingagency for its share.

(2) Equipment owned by the FederalGovernment shall be identified to indi-cate Federal ownership.


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(3) A physical inventory of equipmentshall be taken and the results rec-onciled with the equipment records atleast once every two years. Any dif-ferences between quantities deter-mined by the physical inspection andthose shown in the accounting recordsshall be investigated to determine thecauses of the difference. The recipientshall, in connection with the inven-tory, verify the existence, current uti-lization, and continued need for theequipment.

(4) A control system shall be in effectto insure adequate safeguards to pre-vent loss, damage, or theft of theequipment. Any loss, damage, or theftof equipment shall be investigated andfully documented; if the equipment wasowned by the Federal Government, therecipient shall promptly notify theFederal awarding agency.

(5) Adequate maintenance proceduresshall be implemented to keep theequipment in good condition.

(6) Where the recipient is authorizedor required to sell the equipment, prop-er sales procedures shall be establishedwhich provide for competition to theextent practicable and result in thehighest possible return.

(g) When the recipient no longerneeds the equipment, the equipmentmay be used for other activities in ac-cordance with the following standards.For equipment with a current per unitfair market value of $5,000 or more, therecipient may retain the equipment forother uses provided that compensationis made to the original Federal award-ing agency or its successor. Theamount of compensation shall be com-puted by applying the percentage ofFederal participation in the cost of theoriginal project or program to the cur-rent fair market value of the equip-ment. If the recipient has no need forthe equipment, the recipient shall re-quest disposition instructions from theFederal awarding agency. The Federalawarding agency shall determinewhether the equipment can be used tomeet the agency’s requirements. If norequirement exists within that agency,the availability of the equipment shallbe reported to the General Services Ad-ministration by the Federal awardingagency to determine whether a require-ment for the equipment exists in other

Federal agencies. The Federal award-ing agency shall issue instructions tothe recipient no later than 120 calendardays after the recipient’s request andthe following procedures shall govern.

(1) If so instructed or if dispositioninstructions are not issued within 120calendar days after the recipient’s re-quest, the recipient shall sell theequipment and reimburse the Federalawarding agency an amount computedby applying to the sales proceeds thepercentage of Federal participation inthe cost of the original project or pro-gram. However, the recipient shall bepermitted to deduct and retain fromthe Federal share $500 or ten percent ofthe proceeds, whichever is less, for therecipient’s selling and handling ex-penses.

(2) If the recipient is instructed toship the equipment elsewhere, the re-cipient shall be reimbursed by the Fed-eral Government by an amount whichis computed by applying the percent-age of the recipient’s participation inthe cost of the original project or pro-gram to the current fair market valueof the equipment, plus any reasonableshipping or interim storage costs in-curred.

(3) If the recipient is instructed tootherwise dispose of the equipment, therecipient shall be reimbursed by theFederal awarding agency for such costsincurred in its disposition.

(4) The Federal awarding agency mayreserve the right to transfer the titleto the Federal Government or to athird party named by the Federal Gov-ernment when such third party is oth-erwise eligible under existing statutes.Such transfer shall be subject to thefollowing standards.

(i) The equipment shall be appro-priately identified in the award or oth-erwise made known to the recipient inwriting.

(ii) The Federal awarding agencyshall issue disposition instructionswithin 120 calendar days after receiptof a final inventory. The final inven-tory shall list all equipment acquiredwith grant funds and federally-ownedequipment. If the Federal awardingagency fails to issue disposition in-structions within the 120 calendar dayperiod, the recipient shall apply the


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standards of this section, as appro-priate.

(iii) When the Federal awardingagency exercises its right to take title,the equipment shall be subject to theprovisions for federally-owned equip-ment.

§ 19.35 Supplies and other expendableproperty.

(a) Title to supplies and other ex-pendable property shall vest in the re-cipient upon acquisition. If there is aresidual inventory of unused suppliesexceeding $5000 in total aggregatevalue upon termination or completionof the project or program and the sup-plies are not needed for any other fed-erally-sponsored project or program,the recipient shall retain the suppliesfor 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 amount ofcompensation shall be computed in thesame manner as for equipment.

(b) The recipient shall not use sup-plies acquired with Federal funds toprovide services to non-Federal outsideorganizations for a fee that is less thanprivate companies charge for equiva-lent services, unless specifically au-thorized by Federal statute as long asthe Federal Government retains an in-terest in the supplies.

§ 19.36 Intangible property.(a) The recipient may copyright any

work that is subject to copyright andwas developed, or for which ownershipwas purchased, under an award. TheFederal awarding agency(ies) reserve aroyalty-free, nonexclusive and irrev-ocable right to reproduce, publish, orotherwise use the work for Federal pur-poses, and to authorize others to do so.

(b) Recipients are subject to applica-ble regulations governing patents andinventions, including government-wideregulations issued by the Departmentof 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) Unless waived by the Federalawarding agency, the Federal Govern-ment has the right to the following:

(1) Obtain, reproduce, publish or oth-erwise use the data first producedunder an award.

(2) Authorize others to receive, repro-duce, publish, or otherwise use suchdata for Federal purposes.

(d) Title to intangible property anddebt instruments acquired under anaward or subaward vests upon acquisi-tion in the recipient. The recipientshall use that property for the origi-nally-authorized purpose, and the re-cipient shall not encumber the prop-erty without approval of the Federalawarding agency. When no longer need-ed for the originally authorized pur-pose, disposition of the intangible prop-erty shall occur in accordance with theprovisions of paragraph § 19.34(g).

§ 19.37 Property trust relationship.

Real property, equipment, intangibleproperty and debt instruments that areacquired or improved with Federalfunds shall be held in trust by the re-cipient as trustee for the beneficiariesof the project or program under whichthe property was acquired or improved.Agencies may require recipients torecord liens or other appropriate no-tices of record to indicate that per-sonal or real property has been ac-quired or improved with Federal fundsand that use and disposition conditionsapply to the property.

PROCUREMENT STANDARDS

§ 19.40 Purpose of procurement stand-ards.

Sections 19.41 through 19.48 set forthstandards for use by recipients in es-tablishing procedures for the procure-ment of supplies and other expendableproperty, equipment, real property andother services with Federal funds.These standards are furnished to en-sure that such materials and servicesare obtained in an effective mannerand in compliance with the provisionsof applicable Federal statutes and ex-ecutive orders. No additional procure-ment standards or requirements shallbe imposed by the Federal awardingagencies upon recipients, unless spe-cifically required by Federal statute orexecutive order or approved by OMB.


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§ 19.41 Recipient responsibilities.The standards contained in this sec-

tion do not relieve the recipient of thecontractual responsibilities arisingunder its contract(s). The recipient isthe responsible authority, without re-course to the Federal awarding agency,regarding the settlement and satisfac-tion of all contractual and administra-tive issues arising out of procurementsentered into in support of an award orother agreement. This includes dis-putes, claims, protests of award, sourceevaluation or other matters of a con-tractual nature. Matters concerningviolation of statute are to be referredto such Federal, State or local author-ity as may have proper jurisdiction.

§ 19.42 Codes of conduct.The recipient shall maintain written

standards of conduct governing theperformance of its employees engagedin the award and administration ofcontracts. No employee, officer, oragent shall participate in the selection,award, or administration of a contractsupported by Federal funds if a real orapparent conflict of interest would beinvolved. Such a conflict would arisewhen the employee, officer, or agent,any member of his or her immediatefamily, his or her partner, or an orga-nization which employs or is about toemploy any of the parties indicatedherein, has a financial or other interestin the firm selected for an award. Theofficers, employees, and agents of therecipient shall neither solicit nor ac-cept gratuities, favors, or anything ofmonetary value from contractors, orparties to subagreements. However, re-cipients may set standards for situa-tions in which the financial interest isnot substantial or the gift is an unso-licited item of nominal value. Thestandards of conduct shall provide fordisciplinary actions to be applied forviolations of such standards by offi-cers, employees, or agents of the recip-ient.

§ 19.43 Competition.All procurement transactions shall

be conducted in a manner to provide,to the maximum extent practical, openand free competition. The recipientshall be alert to organizational con-flicts of interest as well as noncompeti-

tive practices among contractors thatmay restrict or eliminate competitionor otherwise restrain trade. In order toensure objective contractor perform-ance and eliminate unfair competitiveadvantage, contractors that develop ordraft specifications, requirements,statements of work, invitations forbids and/or requests for proposals shallbe excluded from competing for suchprocurements. Awards shall be made tothe bidder or offeror whose bid or offeris responsive to the solicitation and ismost advantageous to the recipient,price, quality and other factors consid-ered. Solicitations shall clearly setforth all requirements that the bidderor offeror shall fulfill in order for thebid or offer to be evaluated by the re-cipient. Any and all bids or offers maybe rejected when it is in the recipient’sinterest to do so.

§ 19.44 Procurement procedures.

(a) All recipients shall establish writ-ten procurement procedures. Theseprocedures shall provide for, at a mini-mum, that the conditions in para-graphs (a)(1), (2) and (3) of this sectionapply.

(1) Recipients avoid purchasing un-necessary items.

(2) Where appropriate, an analysis ismade of lease and purchase alter-natives to determine which would bethe most economical and practical pro-curement for the Federal Government.

(3) Solicitations for goods and serv-ices provide for all of the following:

(i) A clear and accurate descriptionof the technical requirements for thematerial, product or service to be pro-cured. In competitive procurements,such a description shall not containfeatures which unduly restrict com-petition.

(ii) Requirements which the bidder/offeror must fulfill and all other fac-tors to be used in evaluating bids orproposals.

(iii) A description, whenever prac-ticable, of technical requirements interms of functions to be performed orperformance required, including therange of acceptable characteristics orminimum acceptable standards.


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(iv) The specific features of ‘‘brandname or equal’’ descriptions that bid-ders are required to meet when suchitems are included in the solicitation.

(v) The acceptance, to the extentpracticable and economically feasible,of products and services dimensioned inthe metric system of measurement.

(vi) Preference, to the extent prac-ticable and economically feasible, forproducts and services that conservenatural resources and protect the envi-ronment and are energy efficient.

(b) Positive efforts shall be made byrecipients to utilize small businesses,minority-owned firms, and women’sbusiness enterprises, whenever pos-sible. Recipients of Federal awardsshall take all of the following steps tofurther this goal.

(1) Ensure that small businesses, mi-nority-owned firms, and women’s busi-ness enterprises are used to the fullestextent practicable.

(2) Make information on forthcomingopportunities available and arrangetimeframes for purchases and contractsto encourage and facilitate participa-tion by small businesses, minority-owned firms, and women’s business en-terprises.

(3) Consider in the contract processwhether firms competing for largercontracts intend to subcontract withsmall businesses, minority-ownedfirms, and women’s business enter-prises.

(4) Encourage contracting with con-sortiums of small businesses, minority-owned firms and women’s business en-terprises when a contract is too largefor one of these firms to handle individ-ually.

(5) Use the services and assistance, asappropriate, of such organizations asthe Small Business Administration andthe Department of Commerce’s Minor-ity Business Development Agency inthe solicitation and utilization ofsmall businesses, minority-ownedfirms, and women’s business enter-prises.

(c) The type of procuring instrumentsused (e.g., fixed price contracts, costreimbursable contracts, purchase or-ders, and incentive contracts) shall bedetermined by the recipient but shallbe 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 constructioncost’’ methods of contracting shall notbe used.

(d) Contracts shall be made only withresponsible contractors who possessthe potential ability to perform suc-cessfully under the terms and condi-tions of the proposed procurement.Consideration shall be given to suchmatters as contractor integrity, recordof past performance, financial andtechnical resources or accessibility toother necessary resources. In certaincircumstances, contracts with certainparties are restricted by 49 CFR part29, the implementation of E.O.’s 12549and 12689, ‘‘Debarment and Suspen-sion.’’

(e) Recipients shall, on request, makeavailable for the Federal awardingagency, pre-award review and procure-ment documents, such as request forproposals or invitations for bids, inde-pendent cost estimates, etc., when anyof the following conditions apply.

(1) A recipient’s procurement proce-dures or operation fails to comply withthe procurement standards in this part.

(2) The procurement is expected toexceed the small purchase thresholdfixed at 41 U.S.C. 403 (11) (currently$25,000) and is to be awarded withoutcompetition or only one bid or offer isreceived in response to a solicitation.

(3) The procurement, which is ex-pected to exceed the small purchasethreshold, specifies a ‘‘brand name’’product.

(4) The proposed award over thesmall purchase threshold is to beawarded to other than the apparentlow bidder under a sealed bid procure-ment.

(5) A proposed contract modificationchanges the scope of a contract or in-creases the contract amount by morethan the amount of the small purchasethreshold.

(f) Additional procurement proce-dures.

(1) Section 165 of the STAA of 1982, asamended; section 337 of the SurfaceTransportation and Uniform Reloca-tion Assistance Act (STURAA) of 1987,49 U.S.C. 1601, section 1048 of the Inter-modal Surface Transportation Effi-ciency Act of 1991, and section 9129 of


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the Aviation Safety and Capacity Ex-pansion Act of 1990, 49 U.S.C. app. 2226,impose Buy America requirements onthe procurement of foreign productsand materials by all recipients ofFHWA, FTA, and Federal Aviation Ad-ministration (FAA) funds. Proceduresare contained in 49 CFR part 660, BuyAmerica Requirements and part 661,Buy America Requirements—STAA of1982. In addition, for FTA recipients,nonregulatory guidance is contained inFTA Circular 4220.1B, Third Party Con-tracting Guidelines, Chapter I, section11. Non-regulatory guidance for FAAprograms is contained in FAA Order5100.38A and special conditions in grantawards.

(2) Section 511(a)(16) of the Airportand Airway Improvement Act of 1982,49 U.S.C. app. 2210, requires FAA recipi-ents and subrecipients to extend theuse of qualifications-based (e.g., archi-tectural and engineering services) con-tract selection procedures to certainother related areas and to award suchcontracts in the same manner as Fed-eral contracts for architectural and en-gineering services are negotiated underTitle IX of the 1949 Federal Propertyand Administrative Services Act, orequivalent airport sponsor qualifica-tions based requirements. Non-regu-latory guidance for FAA programs iscontained in FAA Order 5100.38A andspecial conditions in grant awards.

(3) Section 3(a)(2)(C) of the FederalTransit Act, as amended, (49 U.S.C.app. 1602(a)(2)(C)) prohibits the use ofgrant or loan funds to support procure-ments utilizing exclusionary or dis-criminatory specifications. Nonregula-tory guidance is contained in FTA Cir-cular 4220.1B, Third Party ContractingGuidelines, Chapter I, section 15 andAttachment A.

(4) Section 1241(b)(1) of 46 U.S.C. and46 CFR part 381, Cargo Preference—U.S. Flag Vessels impose cargo pref-erence requirements on the shipmentof foreign made goods for FTA recipi-ents. Nonregulatory guidance is con-tained in FTA Circular 4220.1B, ThirdParty Contracting Guidelines, ChapterI, section 10.

§ 19.45 Cost and price analysis.Some form of cost or price analysis

shall be made and documented in the

procurement files in connection withevery procurement action. Price analy-sis may be accomplished in variousways, including the comparison ofprice quotations submitted, marketprices and similar indicia, togetherwith discounts. Cost analysis is the re-view and evaluation of each element ofcost to determine reasonableness,allocability and allowability.

§ 19.46 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,(b) Justification for lack of competi-

tion when competitive bids or offersare not obtained, and

(c) Basis for award cost or price.

§ 19.47 Contract administration.A system for contract administration

shall be maintained to ensure contrac-tor conformance with the terms, condi-tions and specifications of the contractand to ensure adequate and timely fol-low up of all purchases. Recipientsshall evaluate contractor performanceand document, as appropriate, whethercontractors have met the terms, condi-tions, and specifications of the con-tract.

§ 19.48 Contract provisions.The recipient shall include, in addi-

tion to provisions to define a sound andcomplete agreement, the following pro-visions in all contracts. The followingprovisions shall also be applied to sub-contracts.

(a) Contracts in excess of the smallpurchase threshold shall contain con-tractual provisions or conditions thatallow for administrative, contractual,or legal remedies in instances in whicha contractor violates or breaches thecontract terms, and provide for suchremedial actions as may be appro-priate.

(b) All contracts in excess of thesmall purchase threshold shall containsuitable provisions for termination bythe recipient, including the manner bywhich termination shall be effectedand the basis for settlement. In addi-tion, such contracts shall describe con-ditions under which the contract may


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be terminated for default as well asconditions where the contract may beterminated because of circumstancesbeyond the control of the contractor.

(c) Except as otherwise required bystatute, an award that requires thecontracting (or subcontracting) forconstruction or facility improvementsshall provide for the recipient to followits own requirements relating to bidguarantees, performance bonds, andpayment bonds unless the constructioncontract or subcontract exceeds$100,000. For those contracts or sub-contracts exceeding $100,000, the Fed-eral awarding agency may accept thebonding policy and requirements of therecipient, provided the Federal award-ing agency has made a determinationthat the Federal Government’s interestis adequately protected. If such a de-termination has not been made, theminimum requirements shall be as fol-lows:

(1) A bid guarantee from each bidderequivalent to five percent of the bidprice. The ‘‘bid guarantee’’ shall con-sist of a firm commitment such as abid bond, certified check, or other ne-gotiable instrument accompanying abid as assurance that the bidder shall,upon acceptance of his bid, executesuch contractual documents as may berequired within the time specified.

(2) A performance bond on the part ofthe contractor for 100 percent of thecontract price. A ‘‘performance bond’’is one executed in connection with acontract to secure fulfillment of all thecontractor’s obligations under suchcontract.

(3) A payment bond on the part of thecontractor for 100 percent of the con-tract price. A ‘‘payment bond’’ is oneexecuted in connection with a contractto assure payment as required by stat-ute of all persons supplying labor andmaterial in the execution of the workprovided for in the contract.

(4) Where bonds are required in thesituations described herein, the bondsshall be obtained from companies hold-ing certificates of authority as accept-able sureties pursuant to 31 CFR part223, ‘‘Surety Companies Doing Businesswith the United States.’’

(d) All negotiated contracts (exceptthose for less than the small purchasethreshold) awarded by recipients shall

include a provision to the effect thatthe recipient, the Federal awardingagency, the Comptroller General of theUnited States, or any of their duly au-thorized representatives, shall have ac-cess to any books, documents, papersand records of the contractor which aredirectly pertinent to a specific pro-gram for the purpose of making audits,examinations, excerpts and tran-scriptions.

(e) All contracts, including smallpurchases, awarded by recipients andtheir contractors shall contain the pro-curement provisions of appendix A tothis part, as applicable.

REPORTS AND RECORDS

§ 19.50 Purpose of reports and records.

Sections 19.51 through 19.53 set forththe procedures for monitoring and re-porting on the recipient’s financial andprogram performance and the nec-essary standard reporting forms. Theyalso set forth record retention require-ments.

§ 19.51 Monitoring and reporting pro-gram performance.

(a) Recipients are responsible formanaging and monitoring each project,program, subaward, function or activ-ity supported by the award. Recipientsshall monitor subawards to ensure sub-recipients have met the audit require-ments as delineated in § 19.26.

(b) The Federal awarding agencyshall prescribe the frequency withwhich the performance reports shall besubmitted. Except as provided in§ 19.51(f), performance reports shall notbe required more frequently than quar-terly or, less frequently than annually.Annual reports shall be due 90 calendardays after the grant year; quarterly orsemi-annual reports shall be due 30days after the reporting period. TheFederal awarding agency may requireannual reports before the anniversarydates of multiple year awards in lieu ofthese requirements. The final perform-ance reports are due 90 calendar daysafter the expiration or termination ofthe award.

(c) If inappropriate, a final technicalor performance report shall not be re-quired after completion of the project.


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(d) When required, performance re-ports shall generally contain, for eachaward, brief information on each of thefollowing:

(1) A comparison of actual accom-plishments with the goals and objec-tives established for the period, thefindings of the investigator, or both.Whenever appropriate and the outputof programs or projects can be readilyquantified, such quantitative datashould be related to cost data for com-putation of unit costs.

(2) Reasons why established goalswere not met, if appropriate.

(3) Other pertinent information in-cluding, when appropriate, analysisand explanation of cost overruns orhigh unit costs.

(e) Recipients shall not be required tosubmit more than the original and twocopies of performance reports.

(f) Recipients shall immediately no-tify the Federal awarding agency of de-velopments that have a significant im-pact on the award-supported activities.Also, notification shall be given in thecase of problems, delays, or adverseconditions which materially impair theability to meet the objectives of theaward. This notification shall include astatement of the action taken or con-templated, and any assistance neededto resolve the situation.

(g) Federal awarding agencies maymake site visits, as needed.

(h) Federal awarding agencies shallcomply with clearance requirements of5 CFR part 1320 when requesting per-formance data from recipients.

§ 19.52 Financial reporting.(a) The following forms or such other

forms as may be approved by OMB areauthorized for obtaining financial in-formation from recipients.

(1) SF–269 or SF–269A, Financial Sta-tus Report.

(i) Each Federal awarding agencyshall require recipients to use the SF–269 or SF–269A to report the status offunds for all nonconstruction projectsor programs. A Federal awarding agen-cy may, however, have the option ofnot requiring the SF–269 or SF–269Awhen the SF–270, Request for Advanceor Reimbursement, or SF–272, Reportof Federal Cash Transactions, is deter-mined to provide adequate information

to meet its needs, except that a finalSF–269 or SF–269A shall be required atthe completion of the project when theSF–270 is used only for advances.

(ii) The Federal awarding agencyshall prescribe whether the report shallbe on a cash or accrual basis. If theFederal awarding agency requires ac-crual information and the recipient’saccounting records are not normallykept on the accrual basis, the recipientshall not be required to convert its ac-counting system, but shall developsuch accrual information through bestestimates based on an analysis of thedocumentation on hand.

(iii) The Federal awarding agencyshall determine the frequency of theFinancial Status Report for eachproject or program, considering thesize and complexity of the particularproject or program. However, the re-port shall not be required more fre-quently than quarterly or less fre-quently than annually. A final reportshall be required at the completion ofthe agreement.

(iv) The Federal awarding agencyshall require recipients to submit theSF–269 or SF–269A (an original and nomore than two copies) no later than 30days after the end of each specified re-porting period for quarterly and semi-annual reports, and 90 calendar daysfor annual and final reports. Exten-sions of reporting due dates may be ap-proved by the Federal awarding agencyupon request of the recipient.

(2) SF–272, Report of Federal CashTransactions.

(i) When funds are advanced to re-cipients the Federal awarding agencyshall require each recipient to submitthe SF–272 and, when necessary, itscontinuation sheet, SF–272a. The Fed-eral awarding agency shall use this re-port to monitor cash advanced to re-cipients and to obtain disbursement in-formation for each agreement with therecipients.

(ii) Federal awarding agencies mayrequire forecasts of Federal cash re-quirements in the ‘‘Remarks’’ sectionof the report.

(iii) When practical and deemed nec-essary, Federal awarding agencies mayrequire recipients to report in the ‘‘Re-marks’’ section the amount of cash ad-vances received in excess of three days.


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Recipients shall provide short nar-rative explanations of actions taken toreduce the excess balances.

(iv) Recipients shall be required tosubmit not more than the original andtwo copies of the SF–272 15 calendardays following the end of each quarter.The Federal awarding agencies may re-quire a monthly report from those re-cipients receiving advances totaling $1million or more per year.

(v) Federal awarding agencies maywaive the requirement for submissionof the SF–272 for any one of the follow-ing reasons:

(A) When monthly advances do notexceed $25,000 per recipient, providedthat such advances are monitoredthrough other forms contained in thissection;

(B) If, in the Federal awarding agen-cy’s opinion, the recipient’s accountingcontrols are adequate to minimize ex-cessive Federal advances; or,

(C) When the electronic paymentmechanisms provide adequate data.

(b) When the Federal awarding agen-cy needs additional information ormore frequent reports, the followingshall be observed.

(1) When additional information isneeded to comply with legislative re-quirements, Federal awarding agenciesshall issue instructions to require re-cipients to submit such informationunder the ‘‘Remarks’’ section of the re-ports.

(2) When a Federal awarding agencydetermines that a recipient’s account-ing system does not meet the standardsin § 19.21, additional pertinent informa-tion to further monitor awards may beobtained upon written notice to the re-cipient until such time as the system isbrought up to standard. The Federalawarding agency, in obtaining this in-formation, shall comply with reportclearance requirements of 5 CFR part1320.

(3) Federal awarding agencies are en-couraged to shade out any line item onany report if not necessary.

(4) Federal awarding agencies mayaccept the identical information fromthe recipients in machine readable for-mat or computer printouts or elec-tronic outputs in lieu of prescribed for-mats.

(5) Federal awarding agencies mayprovide computer or electronic outputsto recipients when such expedites orcontributes to the accuracy of report-ing.

§ 19.53 Retention and access require-ments for records.

(a) This section sets forth require-ments for record retention and accessto records for awards to recipients.Federal awarding agencies shall notimpose any other record retention oraccess requirements upon recipients.

(b) Financial records, supporting doc-uments, statistical records, and allother records pertinent to an awardshall be retained for a period of threeyears from the date of submission ofthe final expenditure report or, forawards that are renewed quarterly orannually, from the date of the submis-sion of the quarterly or annual finan-cial report, as authorized by the Fed-eral awarding agency. The only excep-tions are the following.

(1) If any litigation, claim, or audit isstarted before the expiration of the 3-year period, the records shall be re-tained until all litigation, claims oraudit findings involving the recordshave been resolved and final actiontaken.

(2) Records for real property andequipment acquired with Federal fundsshall be retained for 3 years after finaldisposition.

(3) When records are transferred to ormaintained by the Federal awardingagency, the 3-year retention require-ment is not applicable to the recipient.

(4) Indirect cost rate proposals, costallocations plans, etc. as specified inparagraph § 19.53(g).

(c) Copies of original records may besubstituted for the original records ifauthorized by the Federal awardingagency.

(d) The Federal awarding agencyshall request transfer of certainrecords to its custody from recipientswhen it determines that the recordspossess long term retention value.However, in order to avoid duplicaterecordkeeping, a Federal awardingagency may make arrangements for re-cipients to retain any records that arecontinuously needed for joint use.


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(e) The Federal awarding agency, theInspector General, Comptroller Gen-eral of the United States, or any oftheir duly authorized representatives,have the right of timely and unre-stricted access to any books, docu-ments, papers, or other records of re-cipients that are pertinent to theawards, in order to make audits, ex-aminations, excerpts, transcripts andcopies of such documents. This rightalso includes timely and reasonable ac-cess to a recipient’s personnel for thepurpose of interview and discussion re-lated to such documents. The rights ofaccess in this paragraph are not lim-ited to the required retention period,but shall last as long as records are re-tained.

(f) Unless required by statute, noFederal awarding agency shall placerestrictions on recipients that limitpublic access to the records of recipi-ents that are pertinent to an award, ex-cept when the Federal awarding agencycan demonstrate that such recordsshall be kept confidential and wouldhave been exempted from disclosurepursuant to the Freedom of Informa-tion Act (5 U.S.C. 552) if the recordshad belonged to the Federal awardingagency.

(g) Indirect cost rate proposals, costallocations plans, etc. Paragraphs (g)(1)and (g)(2) of this section apply to thefollowing types of documents, and theirsupporting records: Indirect cost ratecomputations or proposals, cost alloca-tion plans, and any similar accountingcomputations of the rate at which aparticular group of costs is chargeable(such as computer usage chargebackrates or composite fringe benefitrates).

(1) If submitted for negotiation. If therecipient submits to the Federalawarding agency or the subrecipientsubmits to the recipient the proposal,plan, or other computation to form thebasis for negotiation of the rate, thenthe 3-year retention period for its sup-porting records starts on the date ofsuch submission.

(2) If not submitted for negotiation. Ifthe recipient is not required to submitto the Federal awarding agency or thesubrecipient is not required to submitto the recipient the proposal, plan, orother computation for negotiation pur-

poses, then the 3-year retention periodfor the proposal, plan, or other com-putation and its supporting recordsstarts at the end of the fiscal year (orother accounting period) covered bythe proposal, plan, or other computa-tion.

TERMINATION AND ENFORCEMENT

§ 19.60 Purpose of termination and en-forcement.

Sections 19.61 and 19.62 set forth uni-form suspension, termination and en-forcement procedures.

§ 19.61 Termination.(a) Awards may be terminated in

whole or in part only if the conditionsin paragraph (a) (1), (2) or (3) of thissection apply.

(1) By the Federal awarding agency,if a recipient materially fails to com-ply with the terms and conditions of anaward.

(2) By the Federal awarding agencywith the consent of the recipient, inwhich case the two parties shall agreeupon the termination conditions, in-cluding the effective date and, in thecase of partial termination, the portionto be terminated.

(3) By the recipient upon sending tothe Federal awarding agency writtennotification setting forth the reasonsfor such termination, the effectivedate, and, in the case of partial termi-nation, the portion to be terminated.However, if the Federal awarding agen-cy determines in the case of partialtermination that the reduced or modi-fied portion of the grant will not ac-complish the purposes for which thegrant was made, it may terminate thegrant in its entirety under either para-graph (a) (1) or (2) of this section.

(b) If costs are allowed under anaward, the responsibilities of the recip-ient referred to in § 19.71(a), includingthose for property management as ap-plicable, shall be considered in the ter-mination of the award, and provisionshall be made for continuing respon-sibilities of the recipient after termi-nation, as appropriate.

§ 19.62 Enforcement.(a) Remedies for noncompliance. If a

recipient materially fails to comply


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with the terms and conditions of anaward, whether stated in a Federalstatute, regulation, assurance, applica-tion, or notice of award, the Federalawarding agency may, in addition toimposing any of the special conditionsoutlined in § 19.14, take one or more ofthe following actions, as appropriate inthe circumstances.

(1) Temporarily withhold cash pay-ments pending correction of the defi-ciency by the recipient or more severeenforcement action by the Federalawarding agency.

(2) Disallow (that is, deny both use offunds and any applicable matchingcredit for) all or part of the cost of theactivity or action not in compliance.

(3) Wholly or partly suspend or ter-minate the current award.

(4) Withhold further awards for theproject or program.

(5) Take other remedies that may belegally available.

(b) Hearings and appeals. In takingan enforcement action, the awardingagency shall provide the recipient anopportunity for hearing, appeal, orother administrative proceeding towhich the recipient is entitled underany statute or regulation applicable tothe action involved.

(c) Effects of suspension and termi-nation. Costs of a recipient resultingfrom obligations incurred by the recip-ient during a suspension or after termi-nation of an award are not allowableunless the awarding agency expresslyauthorizes them in the notice of sus-pension or termination or subse-quently. Other recipient costs duringsuspension or after termination whichare necessary and not reasonablyavoidable are allowable if the condi-tions in paragraph (c) (1) or (2) of thissection apply.

(1) The costs result from obligationswhich 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.

(2) The costs would be allowable ifthe award were not suspended or ex-pired normally at the end of the fund-ing period in which the terminationtakes effect.

(d) Relationship to debarment andsuspension. The enforcement remedies

identified in this section, includingsuspension and termination, do notpreclude a recipient from being subjectto debarment and suspension underE.O.s 12549 and 12689 and 49 CFR part 29(see § 19.13).

Subpart D—After-the-AwardRequirements

§ 19.70 Purpose.Sections 19.71 through 19.73 contain

closeout procedures and other proce-dures for subsequent disallowances andadjustments.

§ 19.71 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 requiredby the terms and conditions of theaward. The Federal awarding agencymay approve extensions when re-quested by the recipient.

(b) Unless the Federal awarding agen-cy authorizes an extension, a recipientshall liquidate all obligations incurredunder the award not later than 90 cal-endar days after the funding period orthe date of completion as specified inthe terms and conditions of the awardor in agency implementing instruc-tions.

(c) The Federal awarding agencyshall make prompt payments to a re-cipient for allowable reimbursablecosts under the award being closed out.

(d) The recipient shall promptly re-fund any balances of unobligated cashthat the Federal awarding agency hasadvanced or paid and that is not au-thorized to be retained by the recipientfor use in other projects. OMB CircularA–129 governs unreturned amounts thatbecome delinquent debts.

(e) When authorized by the terms andconditions of the award, the Federalawarding agency shall make a settle-ment for any upward or downward ad-justments to the Federal share of costsafter closeout reports are received.

(f) The recipient shall account forany real and personal property ac-quired with Federal funds or receivedfrom the Federal Government in ac-cordance with §§ 19.31 through 19.37.

(g) In the event a final audit has notbeen performed prior to the closeout of


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an award, the Federal awarding agencyshall retain the right to recover an ap-propriate amount after fully consider-ing the recommendations on disallowedcosts resulting from the final audit.

§ 19.72 Subsequent adjustments andcontinuing responsibilities.

(a) The closeout of an award does notaffect any of the following.

(1) The right of the Federal awardingagency to disallow costs and recoverfunds on the basis of a later audit orother review.

(2) The obligation of the recipient toreturn any funds due as a result oflater refunds, corrections, or othertransactions.

(3) Audit requirements in § 19.26.(4) Property management require-

ments in §§ 19.31 through 19.37.(5) Records retention as required in

§ 19.53.(b) After closeout of an award, a rela-

tionship created under an award maybe modified or ended in whole or inpart with the consent of the Federalawarding agency and the recipient,provided the responsibilities of the re-cipient referred to in § 19.73(a), includ-ing those for property management asapplicable, are considered and provi-sions made for continuing responsibil-ities of the recipient, as appropriate.

§ 19.73 Collection of amounts due.

(a) Any funds paid to a recipient inexcess of the amount to which the re-cipient is finally determined to be enti-tled under the terms and conditions ofthe award constitute a debt to the Fed-eral Government. If not paid within areasonable period after the demand forpayment, the Federal awarding agencymay reduce the debt by the provisionsof paragraph (a) (1), (2) or (3) of thissection.

(1) Making an administrative offsetagainst other requests for reimburse-ments.

(2) Withholding advance paymentsotherwise due to the recipient.

(3) Taking other action permitted bystatute.

(b) Except as otherwise provided bylaw, the Federal awarding agency shallcharge interest on an overdue debt inaccordance with 4 CFR chapter II,

‘‘Federal Claims Collection Stand-ards.’’

APPENDIX A TO PART 19—CONTRACTPROVISIONS

All contracts, awarded by a recipient in-cluding small purchases, shall contain thefollowing provisions as applicable:

1. Equal Employment Opportunity—All con-tracts shall contain a provision requiringcompliance with E.O. 11246, ‘‘Equal Employ-ment Opportunity,’’ as amended by E.O.11375, ‘‘Amending Executive Order 11246 Re-lating to Equal Employment Opportunity,’’and as supplemented by regulations at 41CFR part 60, ‘‘Office of Federal ContractCompliance Programs, Equal EmploymentOpportunity, Department of Labor.’’

2. Copeland ‘‘Anti-Kickback’’ Act (18 U.S.C.874 and 40 U.S.C. 276c)—All contracts and sub-grants in excess of $2,000 for construction orrepair awarded by recipients and subrecipi-ents shall include a provision for compliancewith the Copeland ‘‘Anti-Kickback’’ Act (18U.S.C. 874), as supplemented by Departmentof Labor regulations (29 CFR part 3, ‘‘Con-tractors and Subcontractors on Public Build-ing or Public Work Financed in Whole or inpart by Loans or Grants from the UnitedStates’’). The Act provides that each con-tractor or subrecipient shall be prohibitedfrom inducing, by any means, any personemployed in the construction, completion, orrepair of public work, to give up any part ofthe compensation to which he is otherwiseentitled. The recipient shall report all sus-pected or reported violations to the Federalawarding agency.

3. Davis-Bacon Act, as amended (40 U.S.C.276a to a–7)—When required by Federal pro-gram legislation, all construction contractsawarded by the recipients and subrecipientsof more than $2000 shall include a provisionfor compliance with the Davis-Bacon Act (40U.S.C. 276a to a(7) and as supplemented byDepartment of Labor regulations (29 CFRpart 5, ‘‘Labor Standards Provisions Applica-ble to Contracts Governing Federally Fi-nanced and Assisted Construction’’). Underthis Act, contractors shall be required to paywages to laborers and mechanics at a ratenot less than the minimum wages specifiedin a wage determination made by the Sec-retary of Labor. In addition, contractorsshall be required to pay wages not less thanonce a week. The recipient shall place a copyof the current prevailing wage determinationissued by the Department of Labor in eachsolicitation and the award of a contract shallbe conditioned upon the acceptance of thewage determination. The recipient shall re-port all suspected or reported violations tothe Federal awarding agency.

4. Contract Work Hours and Safety StandardsAct (40 U.S.C. 327–333)—Where applicable, allcontracts awarded by recipients in excess of


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$2,000 for construction contracts and in ex-cess of $2,500 for other contracts that involvethe employment of mechanics or laborersshall include a provision for compliance withsections 102 and 107 of the Contract WorkHours and Safety Standards Act (40 U.S.C.327–333), as supplemented by Department ofLabor regulations (29 CFR part 5). Under sec-tion 102 of the Act, each contractor shall berequired to compute the wages of every me-chanic and laborer on the basis of a standardwork week of 40 hours. Work in excess of thestandard work week is permissible providedthat the worker is compensated at a rate ofnot less than 11⁄2 times the basic rate of payfor all hours worked in excess of 40 hours inthe work week. Section 107 of the Act is ap-plicable to construction work and providesthat no laborer or mechanic shall be requiredto work in surroundings or under workingconditions which are unsanitary, hazardousor dangerous. These requirements do notapply to the purchases of supplies or mate-rials or articles ordinarily available on theopen market, or contracts for transportationor transmission of intelligence.

5. Rights to Inventions Made Under a Con-tract or Agreement—Contracts or agreementsfor the performance of experimental, devel-opmental, or research work shall provide forthe rights of the Federal Government andthe recipient in any resulting invention inaccordance with 37 CFR part 401, ‘‘Rights toInventions Made by Nonprofit Organizationsand Small Business Firms Under Govern-ment Grants, Contracts and CooperativeAgreements,’’ and any implementing regula-tions issued by the awarding agency.

6. Clean Air Act (42 U.S.C. 7401 et seq.) andthe Federal Water Pollution Control Act (33U.S.C. 1251 et seq.), as amended—Contractsand subgrants of amounts in excess of$100,000 shall contain a provision that re-quires the recipient to agree to comply withall applicable standards, orders or regula-tions issued pursuant to the Clean Air Act(42 U.S.C. 7401 et seq.) and the Federal WaterPollution Control Act as amended (33 U.S.C.1251 et seq.). Violations shall be reported tothe Federal awarding agency and the Re-gional Office of the Environmental Protec-tion Agency (EPA).

7. Byrd Anti-Lobbying Amendment (31 U.S.C.1352)—Contractors who apply or bid for anaward of $100,000 or more shall file the cer-tification required by 49 CFR part 20, ‘‘NewRestrictions on Lobbying.’’ Each tier cer-tifies to the tier above that it will not andhas not used Federal appropriated funds topay any person or organization for influenc-ing or attempting to influence an officer oremployee of any agency, a member of Con-gress, officer or employee of Congress, or anemployee of a member of Congress in connec-tion with obtaining any Federal contract,grant or any other award covered by 31U.S.C. 1352. Each tier shall also disclose any

lobbying with non-Federal funds that takesplace in connection with obtaining any Fed-eral award. Such disclosures are forwardedfrom tier to tier up to the recipient.

8. Debarment and Suspension (E.O.s 12549and 12689)—No contract shall be made to par-ties listed on the General Services Adminis-tration’s List of Parties Excluded from Fed-eral Procurement or Nonprocurement Pro-grams in accordance with E.O.s 12549 and12689, ‘‘Debarment and Suspension’’ and 49CFR part 29. This list contains the names ofparties debarred, suspended, or otherwise ex-cluded by agencies, and contractors declaredineligible under statutory or regulatory au-thority other than E.O. 12549. Contractorswith awards that exceed the small purchasethreshold shall provide the required certifi-cation regarding its exclusion status andthat of its principal employees.

PART 20—NEW RESTRICTIONS ONLOBBYING

Subpart A—General

Sec.20.100 Conditions on use of funds.20.105 Definitions.20.110 Certification and disclosure.

Subpart B–Activities by Own Employees

20.200 Agency and legislative liaison.20.205 Professional and technical services.20.210 Reporting.

Subpart C—Activities by Other than OwnEmployees

20.300 Professional and technical services.

Subpart D—Penalties and Enforcement

20.400 Penalties.20.405 Penalty procedures.20.410 Enforcement.

Subpart E—Exemptions

20.500 Secretary of Defense.

Subpart F—Agency Reports

20.600 Semi-annual compilation.20.605 Inspector General report.

APPENDIX A TO PART 20—CERTIFICATION RE-GARDING LOBBYING

APPENDIX B TO PART 20—DISCLOSURE FORMTO REPORT LOBBYING

AUTHORITY: Sec. 319, Public Law 101–121 (31U.S.C. 1352); 49 U.S.C. 322(a).

SOURCE: 55 FR 6737 and 6756, Feb. 26, 1990,unless otherwise noted.


§18.51 49 cfr subtitle a (10–1–98...

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