MEMORANDUM FOR THE RECORD
FROM: Norwood J. Jackson
Office of Federal Financial Management
SUBJECT: Recompilation of OMB Circular A-110
I certify that the attached document constitutes a recompilation of Office of Management and Budget Circular A-110, "Uniform Administrative Requirements for Grants and Agreements with Institutions of Higher Education, Hospitals, and Other Non-Profit Organizations." The recompilation consists of the last complete revision of the Circular published at 58 FR 62992 (dated November 19, 1993, published November 29, 1993), as further amended at 62 FR 45934 (August 29, 1997).
CIRCULAR A-110 (REVISED 11/19/93, As Further Amended 8/29/97)
CIRCULAR NO. A-110
TO THE HEADS OF EXECUTIVE DEPARTMENTS AND ESTABLISHMENTS
SUBJECT: Uniform Administrative Requirements for Grants and Agreements With Institutions of
Higher Education, Hospitals, and Other Non-Profit Organizations
1. Purpose. This Circular sets forth standards for obtaining consistency and uniformity among
Federal agencies in the administration of grants to and agreements with institutions of higher
education, hospitals, and other non-profit organizations.
2. Authority. Circular A-110 is issued under the authority of 31 U.S.C. 503 (the Chief Financial
Officers Act), 31 U.S.C. 1111, 41 U.S.C. 405 (the Office of Federal Procurement Policy Act),
Reorganization Plan No. 2 of 1970, and E.O. 11541 ("Prescribing the Duties of the Office of
Management and Budget and the Domestic Policy Council in the Executive Office of the
3. Policy. Except as provided herein, the standards set forth in this Circular are applicable to all
Federal agencies. If any statute specifically prescribes policies or specific requirements that differ
from the standards provided herein, the provisions of the statute shall govern.
The provisions of the sections of this Circular shall be applied by Federal agencies to recipients.
Recipients shall apply the provisions of this Circular to subrecipients performing substantive work
under grants and agreements that are passed through or awarded by the primary recipient, if such
subrecipients are organizations described in paragraph 1.
This Circular does not apply to grants, contracts, or other agreements between the Federal
Government and units of State or local governments covered by OMB Circular A-102, "Grants
and Cooperative Agreements with State and Local Governments," and the Federal agencies'
grants management common rule which standardized and codified the administrative requirements
Federal agencies impose on State and local grantees. In addition, subawards and contracts to
State or local governments are not covered by this Circular. However, this Circular applies to
subawards made by State and local governments to organizations covered by this Circular.
Federal agencies may apply the provisions of this Circular to commercial organizations, foreign
governments, organizations under the jurisdiction of foreign governments, and international
4. Definitions. Definitions of key terms used in this Circular are contained in Section ___.2 in the
5. Required Action. The specific requirements and responsibilities of Federal agencies and
institutions of higher education, hospitals, and other non-profit organizations are set forth in this
Circular. Federal agencies responsible for awarding and administering grants to and other
agreements with organizations described in paragraph 1 shall adopt the language in the Circular
unless different provisions are required by Federal statute or are approved by OMB.
6. OMB Responsibilities. OMB will review agency regulations and implementation of this Circular, and will provide interpretations of policy requirements and assistance to insure effective and efficient implementation. Any exceptions will be subject to approval by OMB, as indicated in Section ___.4 in the Attachment. Exceptions will only be made in particular cases where adequate justification is presented.
7. Information Contact. Further information concerning this Circular may be obtained by
contacting the Office of Federal Financial Management, Office of Management and Budget,
Washington, DC 20503, telephone (202) 395-3993.
8. Termination Review Date. This Circular will have a policy review three years from date of
9. Effective Date. The standards set forth in this Circular which affect Federal agencies will be
effective 30 days after publication of the final revision in the Federal Register. Those standards
which Federal agencies impose on grantees will be adopted by agencies in codified regulations
within six months after publication in the Federal Register. Earlier implementation is encouraged.
Grants and Agreements with Institutions of Higher Education,
Hospitals, and Other Non-Profit Organizations
SUBPART A - GENERAL
___.3 Effect on other issuances.
SUBPART B - PRE-AWARD REQUIREMENTS
___.11 Pre-award policies.
___.12 Forms for applying for Federal assistance.
___.13 Debarment and suspension.
___.14 Special award conditions.
___.15 Metric system of measurement.
___.16 Resource Conservation and Recovery Act.
___.17 Certifications and representations.
SUBPART C - POST-AWARD REQUIREMENTS
Financial and Program Management
___.20 Purpose of financial and program management.
___.21 Standards for financial management systems.
___.23 Cost sharing or matching.
___.24 Program income.
___.25 Revision of budget and program plans.
___.26 Non-Federal audits.
___.27 Allowable costs.
___.28 Period of availability of funds.
___.29 Conditional exemptions.
___.30 Purpose of property standards.
___.31 Insurance coverage.
___.32 Real property.
___.33 Federally-owned and exempt property.
___.35 Supplies and other expendable property.
___.36 Intangible property.
___.37 Property trust relationship.
___.40 Purpose of procurement standards.
___.41 Recipient responsibilities.
___.42 Codes of conduct.
___.44 Procurement procedures.
___.45 Cost and price analysis.
___.46 Procurement records.
___.47 Contract administration.
___.48 Contract provisions.
Reports and Records
___.50 Purpose of reports and records.
___.51 Monitoring and reporting program performance.
___.52 Financial reporting.
___.53 Retention and access requirements for records.
Termination and Enforcement
___.60 Purpose of termination and enforcement.
SUBPART D - AFTER-THE-AWARD REQUIREMENTS
___.71 Closeout procedures.
___.72 Subsequent adjustments and continuing responsibilities.
___.73 Collection of amounts due.
APPENDIX A - CONTRACT PROVISIONS
* * * * *
SUBPART A - General
___.1 Purpose. This Circular establishes uniform administrative requirements for Federal grants
and agreements awarded to institutions of higher education, hospitals, and other non-profit
organizations. Federal awarding agencies shall not impose additional or inconsistent
requirements, except as provided in Sections ___.4, and ___.14 or unless specifically required by
Federal statute or executive order. Non-profit organizations that implement Federal programs for
the States are also subject to State requirements.
(a) Accrued expenditures means the charges incurred by the recipient during a given period
requiring the provision of funds for: (1) goods and other tangible property received; (2) services
performed by employees, contractors, subrecipients, and other payees; and, (3) other amounts
becoming owed under programs for which no current services or performance is required.
(b) Accrued income means the sum of: (1) earnings during a given period from (i) services
performed by the recipient, and (ii) goods and other tangible property delivered to purchasers, and
(2) amounts becoming owed to the recipient for which no current services or performance is
required by the recipient.
(c) Acquisition cost of equipment means the net invoice price of the equipment, including the cost
of modifications, attachments, accessories, or auxiliary apparatus necessary to make the property
usable for the purpose for which it was acquired. Other charges, such as the cost of installation,
transportation, taxes, duty or protective in-transit insurance, shall be included or excluded from
the unit acquisition cost in accordance with the recipient's regular accounting practices.
(d) Advance means a payment made by Treasury check or other appropriate payment mechanism
to a recipient upon its request either before outlays are made by the recipient or through the use
of predetermined payment schedules.
(e) Award means financial assistance that provides support or stimulation to accomplish a public
purpose. Awards include grants and other agreements in the form of money or property in lieu of
money, by the Federal Government to an eligible recipient. The term does not include: technical
assistance, which provides services instead of money; other assistance in the form of loans, loan
guarantees, interest subsidies, or insurance; direct payments of any kind to individuals; and,
contracts which are required to be entered into and administered under procurement laws and
(f) Cash contributions means the recipient's cash outlay, including the outlay of money contributed
to the recipient by third parties.
(g) Closeout means the process by which a Federal awarding agency determines that all applicable
administrative actions and all required work of the award have been completed by the recipient
and Federal awarding agency.
(h) Contract means a procurement contract under an award or subaward, and a procurement
subcontract under a recipient's or subrecipient's contract.
(i) Cost sharing or matching means that portion of project or program costs not borne by the
(j) Date of completion means the date on which all work under an award is completed or the date
on the award document, or any supplement or amendment thereto, on which Federal sponsorship
(k) Disallowed costs means those charges to an award that the Federal awarding agency
determines to be unallowable, in accordance with the applicable Federal cost principles or other
terms and conditions contained in the award.
(l) Equipment means tangible nonexpendable personal property including exempt property
charged directly to the award having a useful life of more than one year and an acquisition cost of
$5000 or more per unit. However, consistent with recipient policy, lower limits may be
(m) Excess property means property under the control of any Federal awarding agency that, as
determined by the head thereof, is no longer required for its needs or the discharge of its
(n) Exempt property means tangible personal property acquired in whole or in part with Federal
funds, where the Federal awarding agency has statutory authority to vest title in the recipient
without further obligation to the Federal Government. An example of exempt property authority
is contained in the Federal Grant and Cooperative Agreement Act (31 U.S.C. 6306), for property
acquired under an award to conduct basic or applied research by a non-profit institution of higher
education or non-profit organization whose principal purpose is conducting scientific research.
(o) Federal awarding agency means the Federal agency that provides an award to the recipient.
(p) Federal funds authorized means the total amount of Federal funds obligated by the Federal
Government for use by the recipient. This amount may include any authorized carryover of
unobligated funds from prior funding periods when permitted by agency regulations or agency
(q) Federal share of real property, equipment, or supplies means that percentage of the property's
acquisition costs and any improvement expenditures paid with Federal funds.
(r) Funding period means the period of time when Federal funding is available for obligation by
(s) Intangible property and debt instruments means, but is not limited to, trademarks, copyrights,
patents and patent applications and such property as loans, notes and other debt instruments, lease
agreements, stock and other instruments of property ownership, whether considered tangible or
(t) Obligations means the amounts of orders placed, contracts and grants awarded, services
received and similar transactions during a given period that require payment by the recipient
during the same or a future period.
(u) Outlays or expenditures means charges made to the project or program. They may be
reported on a cash or accrual basis. For reports prepared on a cash basis, outlays are the sum of
cash disbursements for direct charges for goods and services, the amount of indirect expense
charged, the value of third party in-kind contributions applied and the amount of cash advances
and payments made to subrecipients. For reports prepared on an accrual basis, outlays are the
sum of cash disbursements for direct charges for goods and services, the amount of indirect
expense incurred, the value of in-kind contributions applied, and the net increase (or decrease) in
the amounts owed by the recipient for goods and other property received, for services performed
by employees, contractors, subrecipients and other payees and other amounts becoming owed
under programs for which no current services or performance are required.
(v) Personal property means property of any kind except real property. It may be tangible, having
physical existence, or intangible, having no physical existence, such as copyrights, patents, or
(w) Prior approval means written approval by an authorized official evidencing prior consent.
(x) Program income means gross income earned by the recipient that is directly generated by a
supported activity or earned as a result of the award (see exclusions in paragraphs ___.24 (e) and
(h)). Program income includes, but is not limited to, income from fees for services performed, the
use or rental of real or personal property acquired under federally-funded projects, the sale of
commodities or items fabricated under an award, license fees and royalties on patents and
copyrights, and interest on loans made with award funds. Interest earned on advances of Federal
funds is not program income. Except as otherwise provided in Federal awarding agency
regulations or the terms and conditions of the award, program income does not include the receipt
of principal on loans, rebates, credits, discounts, etc., or interest earned on any of them.
(y) Project costs means all allowable costs, as set forth in the applicable Federal cost principles,
incurred by a recipient and the value of the contributions made by third parties in accomplishing
the objectives of the award during the project period.
(z) Project period means the period established in the award document during which Federal
sponsorship begins and ends.
(aa) Property means, unless otherwise stated, real property, equipment, intangible property and
(bb) Real property means land, including land improvements, structures and appurtenances
thereto, but excludes movable machinery and equipment.
(cc) Recipient means an organization receiving financial assistance directly from Federal awarding
agencies to carry out a project or program. The term includes public and private institutions of
higher education, public and private hospitals, and other quasi-public and private non-profit
organizations such as, but not limited to, community action agencies, research institutes,
educational associations, and health centers. The term may include commercial organizations,
foreign or international organizations (such as agencies of the United Nations) which are
recipients, subrecipients, or contractors or subcontractors of recipients or subrecipients at the
discretion of the Federal awarding agency. The term does not include government-owned
contractor-operated facilities or research centers providing continued support for
mission-oriented, large-scale programs that are government-owned or controlled, or are
designated as federally-funded research and development centers.
(dd) Research and development means all research activities, both basic and applied, and all
development activities that are supported at universities, colleges, and other non-profit
institutions. "Research" is defined as a systematic study directed toward fuller scientific
knowledge or understanding of the subject studied. "Development" is the systematic use of
knowledge and understanding gained from research directed toward the production of useful
materials, devices, systems, or methods, including design and development of prototypes and
processes. The term research also includes activities involving the training of individuals in
research techniques where such activities utilize the same facilities as other research and
development activities and where such activities are not included in the instruction function.
(ee) Small awards means a grant or cooperative agreement not exceeding the small purchase
threshold fixed at 41 U.S.C. 403(11) (currently $25,000).
(ff) Subaward means an award of financial assistance in the form of money, or property in lieu of
money, made under an award by a recipient to an eligible subrecipient or by a subrecipient to a
lower tier subrecipient. The term includes financial assistance when provided by any legal
agreement, even if the agreement is called a contract, but does not include procurement of goods
and services nor does it include any form of assistance which is excluded from the definition of
"award" in paragraph (e).
(gg) Subrecipient means the legal entity to which a subaward is made and which is accountable to
the recipient for the use of the funds provided. The term may include foreign or international
organizations (such as agencies of the United Nations) at the discretion of the Federal awarding
(hh) Supplies means all personal property excluding equipment, intangible property, and debt instruments as defined in this section, and inventions of a contractor conceived or first actually reduced to practice in the performance of work under a funding agreement ("subject inventions"), as defined in 37 CFR part 401, "Rights to Inventions Made by Nonprofit Organizations and Small Business Firms Under Government Grants, Contracts, and Cooperative Agreements."
(ii) Suspension means an action by a Federal awarding agency that temporarily withdraws Federal
sponsorship under an award, pending corrective action by the recipient or pending a decision to
terminate the award by the Federal awarding agency. Suspension of an award is a separate action
from suspension under Federal agency regulations implementing E.O.s 12549 and 12689,
"Debarment and Suspension."
(jj) Termination means the cancellation of Federal sponsorship, in whole or in part, under an
agreement at any time prior to the date of completion.
(kk) Third party in-kind contributions means the value of non-cash contributions provided by
non-Federal third parties. Third party in-kind contributions may be in the form of real property,
equipment, supplies and other expendable property, and the value of goods and services directly
benefiting and specifically identifiable to the project or program.
(ll) Unliquidated obligations, for financial reports prepared on a cash basis, means the amount of obligations incurred by the recipient that have not been paid. For reports prepared on an accrued expenditure basis, they represent the amount of obligations incurred by the recipient for which an outlay has not been recorded.
(mm) Unobligated balance means the portion of the funds authorized by the Federal awarding
agency that has not been obligated by the recipient and is determined by deducting the cumulative
obligations from the cumulative funds authorized.
(nn) Unrecovered indirect cost means the difference between the amount awarded and the amount
which could have been awarded under the recipient's approved negotiated indirect cost rate.
(oo) Working capital advance means a procedure where by funds are advanced to the recipient to cover its estimated disbursement needs for a given initial period.
___.3 Effect on other issuances. For awards subject to this Circular, all administrative
requirements of codified program regulations, program manuals, handbooks and other
nonregulatory materials which are inconsistent with the requirements of this Circular shall be
superseded, except to the extent they are required by statute, or authorized in accordance with the
deviations provision in Section ___.4.
___.4 Deviations. The Office of Management and Budget (OMB) may grant exceptions for
classes of grants or recipients subject to the requirements of this Circular when exceptions are not
prohibited by statute. However, in the interest of maximum uniformity, exceptions from the
requirements of this Circular shall be permitted only in unusual circumstances. Federal awarding
agencies may apply more restrictive requirements to a class of recipients when approved by OMB.
Federal awarding agencies may apply less restrictive requirements when awarding small awards,
except for those requirements which are statutory. Exceptions on a case-by-case basis may also
be made by Federal awarding agencies.
___.5 Subawards. Unless sections of this Circular specifically exclude subrecipients from
coverage, the provisions of this Circular shall be applied to subrecipients performing work under
awards if such subrecipients are institutions of higher education, hospitals or other non-profit
organizations. State and local government subrecipients are subject to the provisions of
regulations implementing the grants management common rule,"Uniform Administrative
Requirements for Grants and Cooperative Agreements to State and Local Governments,"
published at 53 FR 8034 (3/11/88).
SUBPART B - Pre-Award Requirements
___.10 Purpose. Sections ___.11 through ___.17 prescribes forms and instructions and other
pre-award matters to be used in applying for Federal awards.
___.11 Pre-award policies.
(a) Use of Grants and Cooperative Agreements, and Contracts. In each instance, the Federal
awarding agency shall decide on the appropriate award instrument (i.e., grant, cooperative
agreement, or contract). The Federal Grant and Cooperative Agreement Act (31 U.S.C.
6301-08) governs the use of grants, cooperative agreements and contracts. A grant or
cooperative agreement shall be used only when the principal purpose of a transaction is to
accomplish a public purpose of support or stimulation authorized by Federal statute. The
statutory criterion for choosing between grants and cooperative agreements is that for the latter,
"substantial involvement is expected between the executive agency and the State, local
government, or other recipient when carrying out the activity contemplated in the agreement."
Contracts shall be used when the principal purpose is acquisition of property or services for the
direct benefit or use of the Federal Government.
(b) Public Notice and Priority Setting. Federal awarding agencies shall notify the public of its
intended funding priorities for discretionary grant programs, unless funding priorities are
established by Federal statute.
___.12 Forms for applying for Federal assistance.
(a) Federal awarding agencies shall comply with the applicable report clearance requirements of 5
CFR part 1320, "Controlling Paperwork Burdens on the Public," with regard to all forms used by
the Federal awarding agency in place of or as a supplement to the Standard Form 424 (SF-424)
(b) Applicants shall use the SF-424 series or those forms and instructions prescribed by the
Federal awarding agency.
(c) For Federal programs covered by E.O. 12372, "Intergovernmental Review of Federal
Programs," the applicant shall complete the appropriate sections of the SF-424 (Application for
Federal Assistance) indicating whether the application was subject to review by the State Single
Point of Contact (SPOC). The name and address of the SPOC for a particular State can be
obtained from the Federal awarding agency or the Catalog of Federal Domestic Assistance. The
SPOC shall advise the applicant whether the program for which application is made has been
selected by that State for review.
(d) Federal awarding agencies that do not use the SF-424 form should indicate whether the
application is subject to review by the State under E.O. 12372.
___.13 Debarment and suspension. Federal awarding agencies and recipients shall comply with
the nonprocurement debarment and suspension common rule implementing E.O.s 12549 and
12689, "Debarment and Suspension." This common rule restricts subawards and contracts with
certain parties that are debarred, suspended or otherwise excluded from or ineligible for
participation in Federal assistance programs or activities.
___.14 Special award conditions. If an applicant or recipient: (a) has a history of poor
performance, (b) is not financially stable, (c) has a management system that does not meet the
standards prescribed in this Circular, (d) has not conformed to the terms and conditions of a
previous award, or (e) is not otherwise responsible, Federal awarding agencies may impose
additional requirements as needed, provided that such applicant or recipient is notified in writing
as to: the nature of the additional requirements, the reason why the additional requirements are
being imposed, the nature of the corrective action needed, the time allowed for completing the
corrective actions, and the method for requesting reconsideration of the additional requirements
imposed. Any special conditions shall be promptly removed once the conditions that prompted
them have been corrected.
___.15 Metric system of measurement. The Metric Conversion Act, as amended by the Omnibus
Trade and Competitiveness Act (15 U.S.C. 205) declares that the metric system is the preferred
measurement system for U.S. trade and commerce. The Act requires each Federal agency to
establish a date or dates in consultation with the Secretary of Commerce, when the metric system
of measurement will be used in the agency's procurements, grants, and other business-related
activities. Metric implementation may take longer where the use of the system is initially
impractical or likely to cause significant inefficiencies in the accomplishment of federally-funded
activities. Federal awarding agencies shall follow the provisions of E.O. 12770, "Metric Usage in
Federal Government Programs."
___.16 Resource Conservation and Recovery Act (RCRA) (Pub. L. 94-580 codified at 42 U.S.C.
6962). Under the Act, any State agency or agency of a political subdivision of a State which is
using appropriated Federal funds must comply with Section 6002. Section 6002 requires that
preference be given in procurement programs to the purchase of specific products containing
recycled materials identified in guidelines developed by the Environmental Protection Agency
(EPA) (40 CFR parts 247-254). Accordingly, State and local institutions of higher education,
hospitals, and non-profit organizations that receive direct Federal awards or other Federal funds
shall give preference in their procurement programs funded with Federal funds to the purchase of
recycled products pursuant to the EPA guidelines.
___.17 Certifications and representations. Unless prohibited by statute or codified regulation,
each Federal awarding agency is authorized and encouraged to allow recipients to submit
certifications and representations required by statute, executive order, or regulation on an annual
basis, if the recipients have ongoing and continuing relationships with the agency. Annual
certifications and representations shall be signed by responsible officials with the authority to
ensure recipients' compliance with the pertinent requirements.
SUBPART C - Post-Award Requirements
Financial and Program Management
___.20 Purpose of financial and program management. Sections ___.21 through ___.28
prescribe standards for financial management systems, methods for making payments and rules
for: satisfying cost sharing and matching requirements, accounting for program income, budget
revision approvals, making audits, determining allowability of cost, and establishing fund
___.21 Standards for financial management systems.
(a) Federal awarding agencies shall require recipients to relate financial data to performance data
and develop unit cost information whenever practical.
(b) Recipients' financial management systems shall provide for the following.
(1) Accurate, current and complete disclosure of the financial results of each federally-sponsored
project or program in accordance with the reporting requirements set forth in Section ___.52. If a
Federal awarding agency requires reporting on an accrual basis from a recipient that maintains its
records on other than an accrual basis, the recipient shall not be required to establish an accrual
accounting system. These recipients may develop such accrual data for its reports on the basis of
an analysis of the documentation on hand.
(2) Records that identify adequately the source and application of funds for federally-sponsored
activities. These records shall contain information pertaining to Federal awards, authorizations,
obligations, unobligated balances, assets, outlays, income and interest.
(3) Effective control over and accountability for all funds, property and other assets. Recipients
shall adequately safeguard all such assets and assure they are used solely for authorized purposes.
(4) Comparison of outlays with budget amounts for each award. Whenever appropriate, financial
information should be related to performance and unit cost data.
(5) Written procedures to minimize the time elapsing between the transfer of funds to the
recipient from the U.S. Treasury and the issuance or redemption of checks, warrants or payments
by other means for program purposes by the recipient. To the extent that the provisions of the
Cash Management Improvement Act (CMIA) (Pub. L. 101-453) govern, payment methods of
State agencies, instrumentalities, and fiscal agents shall be consistent with CMIA Treasury-State
Agreements or the CMIA default procedures codified at 31 CFR part 205, "Withdrawal of Cash
from the Treasury for Advances under Federal Grant and Other Programs."
(6) Written procedures for determining the reasonableness, allocability and allowability of costs in
accordance with the provisions of the applicable Federal cost principles and the terms and
conditions of the award.
(7) Accounting records including cost accounting records that are supported by source
(c) Where the Federal Government guarantees or insures the repayment of money borrowed by
the recipient, the Federal awarding agency, at its discretion, may require adequate bonding and
insurance if the bonding and insurance requirements of the recipient are not deemed adequate to
protect the interest of the Federal Government.
(d) The Federal awarding agency may require adequate fidelity bond coverage where the recipient
lacks sufficient coverage to protect the Federal Government's interest.
(e) Where bonds are required in the situations described above, the bonds shall be obtained from
companies holding certificates of authority as acceptable sureties, as prescribed in 31 CFR part
223, "Surety Companies Doing Business with the United States."
(a) Payment methods shall minimize the time elapsing between the transfer of funds from the
United States Treasury and the issuance or redemption of checks, warrants, or payment by other
means by the recipients. Payment methods of State agencies or instrumentalities shall be
consistent with Treasury-State CMIA agreements or default procedures codified at 31 CFR part
(b) Recipients are to be paid in advance, provided they maintain or demonstrate the willingness to maintain: (1) written procedures that minimize the time elapsing between the transfer of funds and disbursement by the recipient, and (2) financial management systems that meet the standards for fund control and accountability as established in Section ___.21. Cash advances to a recipient organization shall be limited to the minimum amounts needed and be timed to be in accordance with the actual, immediate cash requirements of the recipient organization in carrying out the purpose of the approved program or project. The timing and amount of cash advances shall be as close as is administratively feasible to the actual disbursements by the recipient organization for direct program or project costs and the proportionate share of any allowable indirect costs.
(c) Whenever possible, advances shall be consolidated to cover anticipated cash needs for all
awards made by the Federal awarding agency to the recipient.
(1) Advance payment mechanisms include, but are not limited to, Treasury check and electronic
(2) Advance payment mechanisms are subject to 31 CFR part 205.
(3) Recipients shall be authorized to submit requests for advances and reimbursements at least
monthly when electronic fund transfers are not used.
(d) Requests for Treasury check advance payment shall be submitted on SF-270, "Request for
Advance or Reimbursement," or other forms as may be authorized by OMB. This form is not to
be used when Treasury check advance payments are made to the recipient automatically through
the use of a predetermined payment schedule or if precluded by special Federal awarding agency
instructions for electronic funds transfer.
(e) Reimbursement is the preferred method when the requirements in paragraph (b) cannot be
met. Federal awarding agencies may also use this method on any construction agreement, or if
the major portion of the construction project is accomplished through private market financing or
Federal loans, and the Federal assistance constitutes a minor portion of the project.
(1) When the reimbursement method is used, the Federal awarding agency shall make payment
within 30 days after receipt of the billing, unless the billing is improper.
(2) Recipients shall be authorized to submit request for reimbursement at least monthly when
electronic funds transfers are not used.
(f) If a recipient cannot meet the criteria for advance payments and the Federal awarding agency has determined that reimbursement is not feasible because the recipient lacks sufficient working capital, the Federal awarding agency may provide cash on a working capital advance basis. Under this procedure, the Federal awarding agency shall advance cash to the recipient to cover its estimated disbursement needs for an initial period generally geared to the awardee's disbursing cycle. Thereafter, the Federal awarding agency shall reimburse the recipient for its actual cash disbursements. The working capital advance method of payment shall not be used for recipients unwilling or unable to provide timely advances to their subrecipient to meet the subrecipient's actual cash disbursements.
(g) To the extent available, recipients shall disburse funds available from repayments to and
interest earned on a revolving fund, program income, rebates, refunds, contract settlements, audit
recoveries and interest earned on such funds before requesting additional cash payments.
(h) Unless otherwise required by statute, Federal awarding agencies shall not withhold payments
for proper charges made by recipients at any time during the project period unless (1) or (2)
(1) A recipient has failed to comply with the project objectives, the terms and conditions of the
award, or Federal reporting requirements.
(2) The recipient or subrecipient is delinquent in a debt to the United States as defined in OMB
Circular A-129, "Managing Federal Credit Programs." Under such conditions, the Federal
awarding agency may, upon reasonable notice, inform the recipient that payments shall not be
made for obligations incurred after a specified date until the conditions are corrected or the
indebtedness to the Federal Government is liquidated.
(i) Standards governing the use of banks and other institutions as depositories of funds advanced
under awards are as follows.
(1) Except for situations described in paragraph (i)(2), Federal awarding agencies shall not require separate depository accounts for funds provided to a recipient or establish any eligibility requirements for depositories for funds provided to a recipient. However, recipients must be able to account for the receipt, obligation and expenditure of funds.
(2) Advances of Federal funds shall be deposited and maintained in insured accounts whenever
(j) Consistent with the national goal of expanding the opportunities for women-owned and
minority-owned business enterprises, recipients shall be encouraged to use women- owned and
minority-owned banks (a bank which is owned at least 50 percent by women or minority group
(k) Recipients shall maintain advances of Federal funds in interest bearing accounts, unless (1), (2)
or (3) apply.
(1) The recipient receives less than $120,000 in Federal awards per year.
(2) The best reasonably available interest bearing account would not be expected to earn interest
in excess of $250 per year on Federal cash balances.
(3) The depository would require an average or minimum balance so high that it would not be feasible within the expected Federal and non-Federal cash resources.
(l) For those entities where CMIA and its implementing regulations do not apply, interest earned
on Federal advances deposited in interest bearing accounts shall be remitted annually to
Department of Health and Human Services, Payment Management System, Rockville, MD 20852.
Interest amounts up to $250 per year may be retained by the recipient for administrative expense.
State universities and hospitals shall comply with CMIA, as it pertains to interest. If an entity
subject to CMIA uses its own funds to pay pre-award costs for discretionary awards without prior
written approval from the Federal awarding agency, it waives its right to recover the interest
(m) Except as noted elsewhere in this Circular, only the following forms shall be authorized for
the recipients in requesting advances and reimbursements. Federal agencies shall not require more
than an original and two copies of these forms.
(1) SF-270, Request for Advance or Reimbursement. Each Federal awarding agency shall adopt
the SF-270 as a standard form for all nonconstruction programs when electronic funds transfer or
predetermined advance methods are not used. Federal awarding agencies, however, have the
option of using this form for construction programs in lieu of the SF-271, "Outlay Report and
Request for Reimbursement for Construction Programs."
(2) SF-271, Outlay Report and Request for Reimbursement for Construction Programs. Each Federal awarding agency shall adopt the SF-271 as the standard form to be used for requesting reimbursement for construction programs. However, a Federal awarding agency may substitute the SF-270 when the Federal awarding agency determines that it provides adequate information to meet Federal needs.
___.23 Cost sharing or matching.
(a) All contributions, including cash and third party in-kind, shall be accepted as part of the
recipient's cost sharing or matching when such contributions meet all of the following criteria.
(1) Are verifiable from the recipient's records.
(2) Are not included as contributions for any other federally-assisted project or program.
(3) Are necessary and reasonable for proper and efficient accomplishment of project or program
(4) Are allowable under the applicable cost principles.
(5) Are not paid by the Federal Government under another award, except where authorized by
Federal statute to be used for cost sharing or matching.
(6) Are provided for in the approved budget when required by the Federal awarding agency.
(7) Conform to other provisions of this Circular, as applicable.
(b) Unrecovered indirect costs may be included as part of cost sharing or matching only with the
prior approval of the Federal awarding agency.
(c) Values for recipient contributions of services and property shall be established in accordance
with the applicable cost principles. If a Federal awarding agency authorizes recipients to donate
buildings or land for construction/facilities acquisition projects or long-term use, the value of the
donated property for cost sharing or matching shall be the lesser of (1) or (2).
(1) The certified value of the remaining life of the property recorded in the recipient's accounting
records at the time of donation.
(2) The current fair market value. However, when there is sufficient justification, the Federal
awarding agency may approve the use of the current fair market value of the donated property,
even if it exceeds the certified value at the time of donation to the project.
(d) Volunteer services furnished by professional and technical personnel, consultants, and other
skilled and unskilled labor may be counted as cost sharing or matching if the service is an integral
and necessary part of an approved project or program. Rates for volunteer services shall be
consistent with those paid for similar work in the recipient's organization. In those instances in
which the required skills are not found in the recipient organization, rates shall be consistent with
those paid for similar work in the labor market in which the recipient competes for the kind of
services involved. In either case, paid fringe benefits that are reasonable, allowable, and allocable
may be included in the valuation.
(e) When an employer other than the recipient furnishes the services of an employee, these services shall be valued at the employee's regular rate of pay (plus an amount of fringe benefits that are reasonable, allowable, and allocable, but exclusive of overhead costs), provided these services are in the same skill for which the employee is normally paid.
(f) Donated supplies may include such items as expendable equipment, office supplies, laboratory
supplies or workshop and classroom supplies. Value assessed to donated supplies included in the
cost sharing or matching share shall be reasonable and shall not exceed the fair market value of
the property at the time of the donation.
(g) The method used for determining cost sharing or matching for donated equipment, buildings
and land for which title passes to the recipient may differ according to the purpose of the award, if
(1) or (2) apply.
(1) If the purpose of the award is to assist the recipient in the acquisition of equipment, buildings
or land, the total value of the donated property may be claimed as cost sharing or matching.
(2) If the purpose of the award is to support activities that require the use of equipment, buildings
or land, normally only depreciation or use charges for equipment and buildings may be made.
However, the full value of equipment or other capital assets and fair rental charges for land may
be allowed, provided that the Federal awarding agency has approved the charges.
(h) The value of donated property shall be determined in accordance with the usual accounting
policies of the recipient, with the following qualifications.
(1) The value of donated land and buildings shall not exceed its fair market value at the time of donation to the recipient as established by an independent appraiser (e.g., certified real property appraiser or General Services Administration representative) and certified by a responsible official of the recipient.
(2) The value of donated equipment shall not exceed the fair market value of equipment of the
same age and condition at the time of donation.
(3) The value of donated space shall not exceed the fair rental value of comparable space as
established by an independent appraisal of comparable space and facilities in a privately-owned
building in the same locality.
(4) The value of loaned equipment shall not exceed its fair rental value.
(5) The following requirements pertain to the recipient's supporting records for in-kind
contributions from third parties.
(i) Volunteer services shall be documented and, to the extent feasible, supported by the same
methods used by the recipient for its own employees.
(ii) The basis for determining the valuation for personal service, material, equipment, buildings
and land shall be documented.
___.24 Program income.
(a) Federal awarding agencies shall apply the standards set forth in this section in requiring
recipient organizations to account for program income related to projects financed in whole or in
part with Federal funds.
(b) Except as provided in paragraph (h) below, program income earned during the project period
shall be retained by the recipient and, in accordance with Federal awarding agency regulations or
the terms and conditions of the award, shall be used in one or more of the ways listed in the
(1) Added to funds committed to the project by the Federal awarding agency and recipient and
used to further eligible project or program objectives.
(2) Used to finance the non-Federal share of the project or program.
(3) Deducted from the total project or program allowable cost in determining the net allowable
costs on which the Federal share of costs is based.
(c) When an agency authorizes the disposition of program income as described in paragraphs
(b)(1) or (b)(2), program income in excess of any limits stipulated shall be used in accordance
with paragraph (b)(3).
(d) In the event that the Federal awarding agency does not specify in its regulations or the terms
and conditions of the award how program income is to be used, paragraph (b)(3) shall apply
automatically to all projects or programs except research. For awards that support research,
paragraph (b)(1) shall apply automatically unless the awarding agency indicates in the terms and
conditions another alternative on the award or the recipient is subject to special award conditions,
as indicated in Section ___.14.
(e) Unless Federal awarding agency regulations or the terms and conditions of the award provide
otherwise, recipients shall have no obligation to the Federal Government regarding program
income earned after the end of the project period.
(f) If authorized by Federal awarding agency regulations or the terms and conditions of the award,
costs incident to the generation of program income may be deducted from gross income to
determine program income, provided these costs have not been charged to the award.
(g) Proceeds from the sale of property shall be handled in accordance with the requirements of the
Property Standards (See Sections ___.30 through ___.37).
(h) Unless Federal awarding agency regulations or the terms and condition of the award provide
otherwise, recipients shall have no obligation to the Federal Government with respect to program
income earned from license fees and royalties for copyrighted material, patents, patent
applications, trademarks, and inventions produced under an award. However, Patent and
Trademark Amendments (35 U.S.C. 18) apply to inventions made under an experimental,
developmental, or research award.
___.25 Revision of budget and program plans.
(a) The budget plan is the financial expression of the project or program as approved during the
award process. It may include either the Federal and non-Federal share, or only the Federal share,
depending upon Federal awarding agency requirements. It shall be related to performance for
program evaluation purposes whenever appropriate.
(b) Recipients are required to report deviations from budget and program plans, and request prior
approvals for budget and program plan revisions, in accordance with this section.
(c) For nonconstruction awards, recipients shall request prior approvals from Federal awarding
agencies for one or more of the following program or budget related reasons.
(1) Change in the scope or the objective of the project or program (even if there is no associated
budget revision requiring prior written approval).
(2) Change in a key person specified in the application or award document.
(3) The absence for more than three months, or a 25 percent reduction in time devoted to the
project, by the approved project director or principal investigator.
(4) The need for additional Federal funding.
(5) The transfer of amounts budgeted for indirect costs to absorb increases in direct costs, or vice
versa, if approval is required by the Federal awarding agency.
(6) The inclusion, unless waived by the Federal awarding agency, of costs that require prior
approval in accordance with OMB Circular A-21, "Cost Principles for Educational Institutions,"
OMB Circular A-122, "Cost Principles for Non-Profit Organizations," or 45 CFR part 74
Appendix E, "Principles for Determining Costs Applicable to Research and Development under
Grants and Contracts with Hospitals," or 48 CFR part 31, "Contract Cost Principles and
Procedures," as applicable.
(7) The transfer of funds allotted for training allowances (direct payment to trainees) to other
categories of expense.
(8) Unless described in the application and funded in the approved awards, the subaward, transfer
or contracting out of any work under an award. This provision does not apply to the purchase of
supplies, material, equipment or general support services.
(d) No other prior approval requirements for specific items may be imposed unless a deviation has
been approved by OMB.
(e) Except for requirements listed in paragraphs (c)(1) and (c)(4) of this section, Federal awarding
agencies are authorized, at their option, to waive cost-related and administrative prior written
approvals required by this Circular and OMB Circulars A-21 and A-122. Such waivers may
include authorizing recipients to do any one or more of the following.
(1) Incur pre-award costs 90 calendar days prior to award or more than 90 calendar days with the
prior approval of the Federal awarding agency. All pre-award costs are incurred at the recipient's
risk (i.e., the Federal awarding agency is under no obligation to reimburse such costs if for any
reason the recipient does not receive an award or if the award is less than anticipated and
inadequate to cover such costs).
(2) Initiate a one-time extension of the expiration date of the award of up to 12 months unless one
or more of the following conditions apply. For one-time extensions, the recipient must notify the
Federal awarding agency in writing with the supporting reasons and revised expiration date at
least 10 days before the expiration date specified in the award. This one-time extension may not
be exercised merely for the purpose of using unobligated balances.
(i) The terms and conditions of award prohibit the extension.
(ii) The extension requires additional Federal funds.
(iii) The extension involves any change in the approved objectives or scope of the project.
(3) Carry forward unobligated balances to subsequent funding periods.
(4) For awards that support research, unless the Federal awarding agency provides otherwise in
the award or in the agency's regulations, the prior approval requirements described in paragraph
(e) are automatically waived (i.e., recipients need not obtain such prior approvals) unless one of
the conditions included in paragraph (e)(2) applies.
(f) The Federal awarding agency may, at its option, restrict the transfer of funds among direct cost
categories or programs, functions and activities for awards in which the Federal share of the
project exceeds $100,000 and the cumulative amount of such transfers exceeds or is expected to
exceed 10 percent of the total budget as last approved by the Federal awarding agency. No
Federal awarding agency shall permit a transfer that would cause any Federal appropriation or
part thereof to be used for purposes other than those consistent with the original intent of the
(g) All other changes to nonconstruction budgets, except for the changes described in paragraph (j), do not require prior approval.
(h) For construction awards, recipients shall request prior written approval promptly from
Federal awarding agencies for budget revisions whenever (1), (2) or (3) apply.
(1) The revision results from changes in the scope or the objective of the project or program.
(2) The need arises for additional Federal funds to complete the project.
(3) A revision is desired which involves specific costs for which prior written approval
requirements may be imposed consistent with applicable OMB cost principles listed in Section
(i) No other prior approval requirements for specific items may be imposed unless a deviation has been approved by OMB.
(j) When a Federal awarding agency makes an award that provides support for both construction
and nonconstruction work, the Federal awarding agency may require the recipient to request prior
approval from the Federal awarding agency before making any fund or budget transfers between
the two types of work supported.
(k) For both construction and nonconstruction awards, Federal awarding agencies shall require
recipients to notify the Federal awarding agency in writing promptly whenever the amount of
Federal authorized funds is expected to exceed the needs of the recipient for the project period by
more than $5000 or five percent of the Federal award, whichever is greater. This notification
shall not be required if an application for additional funding is submitted for a continuation award.
(l) When requesting approval for budget revisions, recipients shall use the budget forms that were
used in the application unless the Federal awarding agency indicates a letter of request suffices.
(m) Within 30 calendar days from the date of receipt of the request for budget revisions, Federal
awarding agencies shall review the request and notify the recipient whether the budget revisions
have been approved. If the revision is still under consideration at the end of 30 calendar days, the
Federal awarding agency shall inform the recipient in writing of the date when the recipient may
expect the decision.
___.26 Non-Federal audits.
(a) Recipients and subrecipients that are institutions of higher education or other non-profit
organizations (including hospitals) shall be subject to the audit requirements contained in the
Single Audit Act Amendments of 1996 (31 USC 7501-7507) and revised OMB Circular A-133,
"Audits of States, Local Governments, and Non-Profit Organizations."
(b) State and local governments shall be subject to the audit requirements contained in the Single
Audit Act Amendments of 1996 (31 USC 7501-7507) and revised OMB Circular A-133, "Audits
of States, Local Governments, and Non-Profit Organizations."
(c) For-profit hospitals not covered by the audit provisions of revised OMB Circular A-133 shall
be subject to the audit requirements of the Federal awarding agencies.
(d) Commercial organizations shall be subject to the audit requirements of the Federal awarding
agency or the prime recipient as incorporated into the award document.
___.27 Allowable costs. For each kind of recipient, there is a set of Federal principles for
determining allowable costs. Allowability of costs shall be determined in accordance with the cost
principles applicable to the entity incurring the costs. Thus, allowability of costs incurred by State,
local or federally-recognized Indian tribal governments is determined in accordance with the
provisions of OMB Circular A-87, "Cost Principles for State, Local, and Indian Tribal
Governments." The allowability of costs incurred by non-profit organizations is determined in
accordance with the provisions of OMB Circular A-122, "Cost Principles for Non-Profit
Organizations." The allowability of costs incurred by institutions of higher education is
determined in accordance with the provisions of OMB Circular A-21, "Cost Principles for
Educational Institutions." The allowability of costs incurred by hospitals is determined in
accordance with the provisions of Appendix E of 45 CFR part 74, "Principles for Determining
Costs Applicable to Research and Development Under Grants and Contracts with Hospitals."
The allowability of costs incurred by commercial organizations and those non-profit organizations
listed in Attachment C to Circular A-122 is determined in accordance with the provisions of the
Federal Acquisition Regulation (FAR) at 48 CFR part 31.
___.28 Period of availability of funds. Where a funding period is specified, a recipient may
charge to the grant only allowable costs resulting from obligations incurred during the funding
period and any pre-award costs authorized by the Federal awarding agency.
___.29 Conditional exemptions.
(a) OMB authorizes conditional exemption from OMB administrative requirements and cost
principles circulars for certain Federal programs with statutorily-authorized consolidated planning
and consolidated administrative funding, that are identified by a Federal agency and approved by
the head of the Executive department or establishment. A Federal agency shall consult with OMB
during its consideration of whether to grant such an exemption.
(b) To promote efficiency in State and local program administration, when Federal
non-entitlement programs with common purposes have specific statutorily-authorized
consolidated planning and consolidated administrative funding and where most of the State
agency's resources come from non-Federal sources, Federal agencies may exempt these covered
State-administered, non-entitlement grant programs from certain OMB grants management
requirements. The exemptions would be from all but the allocability of costs provisions of OMB
Circulars A-87 (Attachment A, subsection C.3), "Cost Principles for State, Local, and Indian
Tribal Governments," A-21 (Section C, subpart 4), "Cost Principles for Educational Institutions,"
and A-122 (Attachment A, subsection A.4), "Cost Principles for Non-Profit Organizations," and
from all of the administrative requirements provisions of OMB Circular A-110, "Uniform
Administrative Requirements for Grants and Agreements with Institutions of Higher Education,
Hospitals, and Other Non-Profit Organizations," and the agencies' grants management common
(c) When a Federal agency provides this flexibility, as a prerequisite to a State's exercising this
option, a State must adopt its own written fiscal and administrative requirements for expending
and accounting for all funds, which are consistent with the provisions of OMB Circular A-87, and
extend such policies to all subrecipients. These fiscal and administrative requirements must be
sufficiently specific to ensure that: funds are used in compliance with all applicable Federal
statutory and regulatory provisions, costs are reasonable and necessary for operating these
programs, and funds are not be used for general expenses required to carry out other
responsibilities of a State or its subrecipients.
___.30 Purpose of property standards. Sections ___.31 through ___.37 set forth uniform
standards governing management and disposition of property furnished by the Federal
Government whose cost was charged to a project supported by a Federal award. Federal
awarding agencies shall require recipients to observe these standards under awards and shall not
impose additional requirements, unless specifically required by Federal statute. The recipient may
use its own property management standards and procedures provided it observes the provisions of
Sections ___.31 through ___.37.
___.31 Insurance coverage. Recipients shall, at a minimum, provide the equivalent insurance
coverage for real property and equipment acquired with Federal funds as provided to property
owned by the recipient. Federally-owned property need not be insured unless required by the
terms and conditions of the award.
___.32 Real property. Each Federal awarding agency shall prescribe requirements for recipients
concerning the use and disposition of real property acquired in whole or in part under awards.
Unless otherwise provided by statute, such requirements, at a minimum, shall contain the
(a) Title to real property shall vest in the recipient subject to the condition that the recipient shall
use the real property for the authorized purpose of the project as long as it is needed and shall not
encumber the property without approval of the Federal awarding agency.
(b) The recipient shall obtain written approval by the Federal awarding agency for the use of real
property in other federally-sponsored projects when the recipient determines that the property is
no longer needed for the purpose of the original project. Use in other projects shall be limited to
those under federally-sponsored projects (i.e., awards) or programs that have purposes consistent
with those authorized for support by the Federal awarding agency.
(c) When the real property is no longer needed as provided in paragraphs (a) and (b), the recipient
shall request disposition instructions from the Federal awarding agency or its successor Federal
awarding agency. The Federal awarding agency shall observe one or more of the following
(1) The recipient may be permitted to retain title without further obligation to the Federal Government after it compensates the Federal Government for that percentage of the current fair market value of the property attributable to the Federal participation in the project.
(2) The recipient may be directed to sell the property under guidelines provided by the Federal
awarding agency and pay the Federal Government for that percentage of the current fair market
value of the property attributable to the Federal participation in the project (after deducting actual
and reasonable selling and fix-up expenses, if any, from the sales proceeds). When the recipient is
authorized or required to sell the property, proper sales procedures shall be established that
provide for competition to the extent practicable and result in the highest possible return.
(3) The recipient may be directed to transfer title to the property to the Federal Government or to
an eligible third party provided that, in such cases, the recipient shall be entitled to compensation
for its attributable percentage of the current fair market value of the property.
___.33 Federally-owned and exempt property.
(a) Federally-owned property.
(1) Title to federally-owned property remains vested in the Federal Government. Recipients shall
submit annually an inventory listing of federally-owned property in their custody to the Federal
awarding agency. Upon completion of the award or when the property is no longer needed, the
recipient shall report the property to the Federal awarding agency for further Federal agency
(2) If the Federal awarding agency has no further need for the property, it shall be declared excess
and reported to the General Services Administration, unless the Federal awarding agency has
statutory authority to dispose of the property by alternative methods (e.g., the authority provided
by the Federal Technology Transfer Act (15 U.S.C. 3710 (I)) to donate research equipment to
educational and non-profit organizations in accordance with E.O. 12821, "Improving
Mathematics and Science Education in Support of the National Education Goals.") Appropriate
instructions shall be issued to the recipient by the Federal awarding agency.
(b) Exempt property. When statutory authority exists, the Federal awarding agency has the option to vest title to property acquired with Federal funds in the recipient without further obligation to the Federal Government and under conditions the Federal awarding agency considers appropriate. Such property is "exempt property." Should a Federal awarding agency not establish conditions, title to exempt property upon acquisition shall vest in the recipient without further obligation to the Federal Government.
(a) Title to equipment acquired by a recipient with Federal funds shall vest in the recipient, subject
to conditions of this section.
(b) The recipient shall not use equipment acquired with Federal funds to provide services to non-Federal outside organizations for a fee that is less than private companies charge for equivalent services, unless specifically authorized by Federal statute, for as long as the Federal Government retains an interest in the equipment.
(c) The recipient shall use the equipment in the project or program for which it was acquired as
long as needed, whether or not the project or program continues to be supported by Federal funds
and shall not encumber the property without approval of the Federal awarding agency. When no
longer needed for the original project or program, the recipient shall use the equipment in
connection with its other federally-sponsored activities, in the following order of priority: (i)
Activities sponsored by the Federal awarding agency which funded the original project, then (ii)
activities sponsored by other Federal awarding agencies.
(d) During the time that equipment is used on the project or program for which it was acquired,
the recipient shall make it available for use on other projects or programs if such other use will
not interfere with the work on the project or program for which the equipment was originally
acquired. First preference for such other use shall be given to other projects or programs
sponsored by the Federal awarding agency that financed the equipment; second preference shall
be given to projects or programs sponsored by other Federal awarding agencies. If the equipment
is owned by the Federal Government, use on other activities not sponsored by the Federal
Government shall be permissible if authorized by the Federal awarding agency. User charges shall
be treated as program income.
(e) When acquiring replacement equipment, the recipient may use the equipment to be replaced as
trade-in or sell the equipment and use the proceeds to offset the costs of the replacement
equipment subject to the approval of the Federal awarding agency.
(f) The recipient's property management standards for equipment acquired with Federal funds and
federally-owned equipment shall include all of the following.
(1) Equipment records shall be maintained accurately and shall include the following information.
(i) A description of the equipment.
(ii) Manufacturer's serial number, model number, Federal stock number, national stock number, or
other identification number.
(iii) Source of the equipment, including the award number.
(iv) Whether title vests in the recipient or the Federal Government.
(v) Acquisition date (or date received, if the equipment was furnished by the Federal Government)
(vi) Information from which one can calculate the percentage of Federal participation in the cost
of the equipment (not applicable to equipment furnished by the Federal Government).
(vii) Location and condition of the equipment and the date the information was reported.
(viii) Unit acquisition cost.
(ix) Ultimate disposition data, including date of disposal and sales price or the method used to
determine current fair market value where a recipient compensates the Federal awarding agency
for its share.
(2) Equipment owned by the Federal Government shall be identified to indicate Federal
(3) A physical inventory of equipment shall be taken and the results reconciled with the equipment
records at least once every two years. Any differences between quantities determined by the
physical inspection and those shown in the accounting records shall be investigated to determine
the causes of the difference. The recipient shall, in connection with the inventory, verify the
existence, current utilization, and continued need for the equipment.
(4) A control system shall be in effect to insure adequate safeguards to prevent loss, damage, or
theft of the equipment. Any loss, damage, or theft of equipment shall be investigated and fully
documented; if the equipment was owned by the Federal Government, the recipient shall promptly
notify the Federal awarding agency.
(5) Adequate maintenance procedures shall be implemented to keep the equipment in good
(6) Where the recipient is authorized or required to sell the equipment, proper sales procedures
shall be established which provide for competition to the extent practicable and result in the
highest possible return.
(g) When the recipient no longer needs the equipment, the equipment may be used for other
activities in accordance with the following standards. For equipment with a current per unit fair
market value of $5000 or more, the recipient may retain the equipment for other uses provided
that compensation is made to the original Federal awarding agency or its successor. The amount
of compensation shall be computed by applying the percentage of Federal participation in the cost
of the original project or program to the current fair market value of the equipment. If the
recipient has no need for the equipment, the recipient shall request disposition instructions from
the Federal awarding agency. The Federal awarding agency shall determine whether the
equipment can be used to meet the agency's requirements. If no requirement exists within that
agency, the availability of the equipment shall be reported to the General Services Administration
by the Federal awarding agency to determine whether a requirement for the equipment exists in
other Federal agencies. The Federal awarding agency shall issue instructions to the recipient no
later than 120 calendar days after the recipient's request and the following procedures shall
(1) If so instructed or if disposition instructions are not issued within 120 calendar days after the
recipient's request, the recipient shall sell the equipment and reimburse the Federal awarding
agency an amount computed by applying to the sales proceeds the percentage of Federal
participation in the cost of the original project or program. However, the recipient shall be
permitted to deduct and retain from the Federal share $500 or ten percent of the proceeds,
whichever is less, for the recipient's selling and handling expenses.
(2) If the recipient is instructed to ship the equipment elsewhere, the recipient shall be reimbursed
by the Federal Government by an amount which is computed by applying the percentage of the
recipient's participation in the cost of the original project or program to the current fair market
value of the equipment, plus any reasonable shipping or interim storage costs incurred.
(3) If the recipient is instructed to otherwise dispose of the equipment, the recipient shall be
reimbursed by the Federal awarding agency for such costs incurred in its disposition.
(4) The Federal awarding agency may reserve the right to transfer the title to the Federal
Government or to a third party named by the Federal Government when such third party is
otherwise eligible under existing statutes. Such transfer shall be subject to the following
(i) The equipment shall be appropriately identified in the award or otherwise made known to the
recipient in writing.
(ii) The Federal awarding agency shall issue disposition instructions within 120 calendar days after receipt of a final inventory. The final inventory shall list all equipment acquired with grant funds and federally-owned equipment. If the Federal awarding agency fails to issue disposition instructions within the 120 calendar day period, the recipient shall apply the standards of this section, as appropriate.
(iii) When the Federal awarding agency exercises its right to take title, the equipment shall be subject to the provisions for federally-owned equipment.
___.35 Supplies and other expendable property.
(a) Title to supplies and other expendable property shall vest in the recipient upon acquisition. If
there is a residual inventory of unused supplies exceeding $5000 in total aggregate value upon
termination or completion of the project or program and the supplies are not needed for any other
federally-sponsored project or program, the recipient shall retain the supplies for use on
non-Federal sponsored activities or sell them, but shall, in either case, compensate the Federal
Government for its share. The amount of compensation shall be computed in the same manner as
(b) The recipient shall not use supplies acquired with Federal funds to provide services to
non-Federal outside organizations for a fee that is less than private companies charge for
equivalent services, unless specifically authorized by Federal statute as long as the Federal
Government retains an interest in the supplies.
___.36 Intangible property.
(a) The recipient may copyright any work that is subject to copyright and was developed, or for
which ownership was purchased, under an award. The Federal awarding agency(ies) reserve a
royalty-free, nonexclusive and irrevocable right to reproduce, publish, or otherwise use the work
for Federal purposes, and to authorize others to do so.
(b) Recipients are subject to applicable regulations governing patents and inventions, including
government-wide regulations issued by the Department of Commerce at 37 CFR part 401,
"Rights to Inventions Made by Nonprofit Organizations and Small Business Firms Under
Government Grants, Contracts and Cooperative Agreements."
(c) Unless waived by the Federal awarding agency, the Federal Government has the right to (1)
(1) Obtain, reproduce, publish or otherwise use the data first produced under an award.
(2) Authorize others to receive, reproduce, publish, or otherwise use such data for Federal
(d) Title to intangible property and debt instruments acquired under an award or subaward vests
upon acquisition in the recipient. The recipient shall use that property for the
originally-authorized purpose, and the recipient shall not encumber the property without approval
of the Federal awarding agency. When no longer needed for the originally authorized purpose,
disposition of the intangible property shall occur in accordance with the provisions of paragraph
___.37 Property trust relationship. Real property, equipment, intangible property and debt
instruments that are acquired or improved with Federal funds shall be held in trust by the recipient
as trustee for the beneficiaries of the project or program under which the property was acquired
or improved. Agencies may require recipients to record liens or other appropriate notices of
record to indicate that personal or real property has been acquired or improved with Federal funds
and that use and disposition conditions apply to the property.
___.40 Purpose of procurement standards. Sections ___.41 through ___.48 set forth standards
for use by recipients in establishing procedures for the procurement of supplies and other
expendable property, equipment, real property and other services with Federal funds. These
standards are furnished to ensure that such materials and services are obtained in an effective
manner and in compliance with the provisions of applicable Federal statutes and executive orders.
No additional procurement standards or requirements shall be imposed by the Federal awarding
agencies upon recipients, unless specifically required by Federal statute or executive order or
approved by OMB.
___.41 Recipient responsibilities. The standards contained in this section do not relieve the
recipient of the contractual responsibilities arising under its contract(s). The recipient is the
responsible authority, without recourse to the Federal awarding agency, regarding the settlement
and satisfaction of all contractual and administrative issues arising out of procurements entered
into in support of an award or other agreement. This includes disputes, claims, protests of award,
source evaluation or other matters of a contractual nature. Matters concerning violation of
statute are to be referred to such Federal, State or local authority as may have proper jurisdiction.
___.42 Codes of conduct. The recipient shall maintain written standards of conduct governing
the performance of its employees engaged in the award and administration of contracts. No
employee, officer, or agent shall participate in the selection, award, or administration of a contract
supported by Federal funds if a real or apparent conflict of interest would be involved. Such a
conflict would arise when the employee, officer, or agent, any member of his or her immediate
family, his or her partner, or an organization which employs or is about to employ any of the
parties indicated herein, has a financial or other interest in the firm selected for an award. The
officers, employees, and agents of the recipient shall neither solicit nor accept gratuities, favors, or
anything of monetary value from contractors, or parties to subagreements. However, recipients
may set standards for situations in which the financial interest is not substantial or the gift is an
unsolicited item of nominal value. The standards of conduct shall provide for disciplinary actions
to be applied for violations of such standards by officers, employees, or agents of the recipient.
___.43 Competition. All procurement transactions shall be conducted in a manner to provide, to
the maximum extent practical, open and free competition. The recipient shall be alert to
organizational conflicts of interest as well as noncompetitive practices among contractors that
may restrict or eliminate competition or otherwise restrain trade. In order to ensure objective
contractor performance and eliminate unfair competitive advantage, contractors that develop or
draft specifications, requirements, statements of work, invitations for bids and/or requests for
proposals shall be excluded from competing for such procurements. Awards shall be made to the
bidder or offeror whose bid or offer is responsive to the solicitation and is most advantageous to
the recipient, price, quality and other factors considered. Solicitations shall clearly set forth all
requirements that the bidder or offeror shall fulfill in order for the bid or offer to be evaluated by
the recipient. Any and all bids or offers may be rejected when it is in the recipient's interest to do
___.44 Procurement procedures.
(a) All recipients shall establish written procurement procedures. These procedures shall provide
for, at a minimum, that (1), (2) and (3) apply.
(1) Recipients avoid purchasing unnecessary items.
(2) Where appropriate, an analysis is made of lease and purchase alternatives to determine which
would be the most economical and practical procurement for the Federal Government.
(3) Solicitations for goods and services provide for all of the following.
(i) A clear and accurate description of the technical requirements for the material, product or
service to be procured. In competitive procurements, such a description shall not contain features
which unduly restrict competition.
(ii) Requirements which the bidder/offeror must fulfill and all other factors to be used in
evaluating bids or proposals.
(iii) A description, whenever practicable, of technical requirements in terms of functions to be
performed or performance required, including the range of acceptable characteristics or minimum
(iv) The specific features of "brand name or equal" descriptions that bidders are required to meet
when such items are included in the solicitation.
(v) The acceptance, to the extent practicable and economically feasible, of products and services
dimensioned in the metric system of measurement.
(vi) Preference, to the extent practicable and economically feasible, for products and services that
conserve natural resources and protect the environment and are energy efficient.
(b) Positive efforts shall be made by recipients to utilize small businesses, minority-owned firms,
and women's business enterprises, whenever possible. Recipients of Federal awards shall take all
of the following steps to further this goal.
(1) Ensure that small businesses, minority-owned firms, and women's business enterprises are
used to the fullest extent practicable.
(2) Make information on forthcoming opportunities available and arrange time frames for
purchases and contracts to encourage and facilitate participation by small businesses,
minority-owned firms, and women's business enterprises.
(3) Consider in the contract process whether firms competing for larger contracts intend to
subcontract with small businesses, minority-owned firms, and women's business enterprises.
(4) Encourage contracting with consortiums of small businesses, minority-owned firms and
women's business enterprises when a contract is too large for one of these firms to handle
(5) Use the services and assistance, as appropriate, of such organizations as the Small Business
Administration and the Department of Commerce's Minority Business Development Agency in the
solicitation and utilization of small businesses, minority- owned firms and women's business
(c) The type of procuring instruments used (e.g., fixed price contracts, cost reimbursable
contracts, purchase orders, and incentive contracts) shall be determined by the recipient but shall
be appropriate for the particular procurement and for promoting the best interest of the program
or project involved. The "cost-plus-a-percentage-of-cost" or "percentage of construction cost"
methods of contracting shall not be used.
(d) Contracts shall be made only with responsible contractors who possess the potential ability to
perform successfully under the terms and conditions of the proposed procurement. Consideration
shall be given to such matters as contractor integrity, record of past performance, financial and
technical resources or accessibility to other necessary resources. In certain circumstances,
contracts with certain parties are restricted by agencies' implementation of E.O.s 12549 and
12689, "Debarment and Suspension."
(e) Recipients shall, on request, make available for the Federal awarding agency, pre-award
review and procurement documents, such as request for proposals or invitations for bids,
independent cost estimates, etc., when any of the following conditions apply.
(1) A recipient's procurement procedures or operation fails to comply with the procurement standards in the Federal awarding agency's implementation of this Circular.
(2) The procurement is expected to exceed the small purchase threshold fixed at 41 U.S.C. 403
(11) (currently $25,000) and is to be awarded without competition or only one bid or offer is
received in response to a solicitation.
(3) The procurement, which is expected to exceed the small purchase threshold, specifies a "brand
(4) The proposed award over the small purchase threshold is to be awarded to other than the
apparent low bidder under a sealed bid procurement.
(5) A proposed contract modification changes the scope of a contract or increases the contract
amount by more than the amount of the small purchase threshold.
___.45 Cost and price analysis. Some form of cost or price analysis shall be made and
documented in the procurement files in connection with every procurement action. Price analysis
may be accomplished in various ways, including the comparison of price quotations submitted,
market prices and similar indicia, together with discounts. Cost analysis is the review and
evaluation of each element of cost to determine reasonableness, allocability and allowability.
___.46 Procurement records. Procurement records and files for purchases in excess of the small
purchase threshold shall include the following at a minimum: (a) basis for contractor selection, (b)
justification for lack of competition when competitive bids or offers are not obtained, and (c) basis
for award cost or price.
___.47 Contract administration. A system for contract administration shall be maintained to
ensure contractor conformance with the terms, conditions and specifications of the contract and
to ensure adequate and timely follow up of all purchases. Recipients shall evaluate contractor
performance and document, as appropriate, whether contractors have met the terms, conditions
and specifications of the contract.
___.48 Contract provisions. The recipient shall include, in addition to provisions to define a
sound and complete agreement, the following provisions in all contracts. The following
provisions shall also be applied to subcontracts.
(a) Contracts in excess of the small purchase threshold shall contain contractual provisions or
conditions that allow for administrative, contractual, or legal remedies in instances in which a
contractor violates or breaches the contract terms, and provide for such remedial actions as may
(b) All contracts in excess of the small purchase threshold shall contain suitable provisions for
termination by the recipient, including the manner by which termination shall be effected and the
basis for settlement. In addition, such contracts shall describe conditions under which the
contract may be terminated for default as well as conditions where the contract may be terminated
because of circumstances beyond the control of the contractor.
(c) Except as otherwise required by statute, an award that requires the contracting (or
subcontracting) for construction or facility improvements shall provide for the recipient to follow
its own requirements relating to bid guarantees, performance bonds, and payment bonds unless
the construction contract or subcontract exceeds $100,000. For those contracts or subcontracts
exceeding $100,000, the Federal awarding agency may accept the bonding policy and
requirements of the recipient, provided the Federal awarding agency has made a determination
that the Federal Government's interest is adequately protected. If such a determination has not
been made, the minimum requirements shall be as follows.
(1) A bid guarantee from each bidder equivalent to five percent of the bid price. The "bid
guarantee" shall consist of a firm commitment such as a bid bond, certified check, or other
negotiable instrument accompanying a bid as assurance that the bidder shall, upon acceptance of
his bid, execute such contractual documents as may be required within the time specified.
(2) A performance bond on the part of the contractor for 100 percent of the contract price. A
"performance bond" is one executed in connection with a contract to secure fulfillment of all the
contractor's obligations under such contract.
(3) A payment bond on the part of the contractor for 100 percent of the contract price. A
"payment bond" is one executed in connection with a contract to assure payment as required by
statute of all persons supplying labor and material in the execution of the work provided for in the
(4) Where bonds are required in the situations described herein, the bonds shall be obtained from
companies holding certificates of authority as acceptable sureties pursuant to 31 CFR part 223,
"Surety Companies Doing Business with the United States."
(d) All negotiated contracts (except those for less than the small purchase threshold) awarded by
recipients shall include a provision to the effect that the recipient, the Federal awarding agency,
the Comptroller General of the United States, or any of their duly authorized representatives, shall
have access to any books, documents, papers and records of the contractor which are directly
pertinent to a specific program for the purpose of making audits, examinations, excerpts and
(e) All contracts, including small purchases, awarded by recipients and their contractors shall
contain the procurement provisions of Appendix A to this Circular, as applicable.
Reports and Records
___.50 Purpose of reports and records. Sections ___.51 through ___.53 set forth the procedures
for monitoring and reporting on the recipient's financial and program performance and the
necessary standard reporting forms. They also set forth record retention requirements.
___.51 Monitoring and reporting program performance.
(a) Recipients are responsible for managing and monitoring each project, program, subaward,
function or activity supported by the award. Recipients shall monitor subawards to ensure
subrecipients have met the audit requirements as delineated in Section ___.26.
(b) The Federal awarding agency shall prescribe the frequency with which the performance
reports shall be submitted. Except as provided in paragraph ___.51(f), performance reports shall
not be required more frequently than quarterly or, less frequently than annually. Annual reports
shall be due 90 calendar days after the grant year; quarterly or semi-annual reports shall be due 30
days after the reporting period. The Federal awarding agency may require annual reports before
the anniversary dates of multiple year awards in lieu of these requirements. The final performance
reports are due 90 calendar days after the expiration or termination of the award.
(c) If inappropriate, a final technical or performance report shall not be required after completion
of the project.
(d) When required, performance reports shall generally contain, for each award, brief information
on each of the following.
(1) A comparison of actual accomplishments with the goals and objectives established for the
period, the findings of the investigator, or both. Whenever appropriate and the output of
programs or projects can be readily quantified, such quantitative data should be related to cost
data for computation of unit costs.
(2) Reasons why established goals were not met, if appropriate.
(3) Other pertinent information including, when appropriate, analysis and explanation of cost
overruns or high unit costs.
(e) Recipients shall not be required to submit more than the original and two copies of
(f) Recipients shall immediately notify the Federal awarding agency of developments that have a
significant impact on the award-supported activities. Also, notification shall be given in the case
of problems, delays, or adverse conditions which materially impair the ability to meet the
objectives of the award. This notification shall include a statement of the action taken or
contemplated, and any assistance needed to resolve the situation.
(g) Federal awarding agencies may make site visits, as needed.
(h) Federal awarding agencies shall comply with clearance requirements of 5 CFR part 1320 when
requesting performance data from recipients.
___.52 Financial reporting.
(a) The following forms or such other forms as may be approved by OMB are authorized for
obtaining financial information from recipients.
(1) SF-269 or SF-269A, Financial Status Report.
(i) Each Federal awarding agency shall require recipients to use the SF-269 or SF-269A to report the status of funds for all nonconstruction projects or programs. A Federal awarding agency may, however, have the option of not requiring the SF-269 or SF-269A when the SF-270, Request for Advance or Reimbursement, or SF-272, Report of Federal Cash Transactions, is determined to provide adequate information to meet its needs, except that a final SF-269 or SF-269A shall be required at the completion of the project when the SF-270 is used only for advances.
(ii) The Federal awarding agency shall prescribe whether the report shall be on a cash or accrual
basis. If the Federal awarding agency requires accrual information and the recipient's accounting
records are not normally kept on the accrual basis, the recipient shall not be required to convert
its accounting system, but shall develop such accrual information through best estimates based on
an analysis of the documentation on hand.
(iii) The Federal awarding agency shall determine the frequency of the Financial Status Report for
each project or program, considering the size and complexity of the particular project or program.
However, the report shall not be required more frequently than quarterly or less frequently than
annually. A final report shall be required at the completion of the agreement.
(iv) The Federal awarding agency shall require recipients to submit the SF-269 or SF-269A (an
original and no more than two copies) no later than 30 days after the end of each specified
reporting period for quarterly and semi-annual reports, and 90 calendar days for annual and final
reports. Extensions of reporting due dates may be approved by the Federal awarding agency
upon request of the recipient.
(2) SF-272, Report of Federal Cash Transactions.
(i) When funds are advanced to recipients the Federal awarding agency shall require each recipient
to submit the SF-272 and, when necessary, its continuation sheet, SF-272a. The Federal
awarding agency shall use this report to monitor cash advanced to recipients and to obtain
disbursement information for each agreement with the recipients.
(ii) Federal awarding agencies may require forecasts of Federal cash requirements in the
"Remarks" section of the report.
(iii) When practical and deemed necessary, Federal awarding agencies may require recipients to
report in the "Remarks" section the amount of cash advances received in excess of three days.
Recipients shall provide short narrative explanations of actions taken to reduce the excess
(iv) Recipients shall be required to submit not more than the original and two copies of the
SF-272 15 calendar days following the end of each quarter. The Federal awarding agencies may
require a monthly report from those recipients receiving advances totaling $1 million or more per
(v) Federal awarding agencies may waive the requirement for submission of the SF-272 for any one of the following reasons: (1) When monthly advances do not exceed $25,000 per recipient, provided that such advances are monitored through other forms contained in this section; (2) If, in the Federal awarding agency's opinion, the recipient's accounting controls are adequate to minimize excessive Federal advances; or, (3) When the electronic payment mechanisms provide adequate data.
(b) When the Federal awarding agency needs additional information or more frequent reports, the
following shall be observed.
(1) When additional information is needed to comply with legislative requirements, Federal
awarding agencies shall issue instructions to require recipients to submit such information under
the "Remarks" section of the reports.
(2) When a Federal awarding agency determines that a recipient's accounting system does not
meet the standards in Section ___.21, additional pertinent information to further monitor awards
may be obtained upon written notice to the recipient until such time as the system is brought up to
standard. The Federal awarding agency, in obtaining this information, shall comply with report
clearance requirements of 5 CFR part 1320.
(3) Federal awarding agencies are encouraged to shade out any line item on any report if not
(4) Federal awarding agencies may accept the identical information from the recipients in machine
readable format or computer printouts or electronic outputs in lieu of prescribed formats.
(5) Federal awarding agencies may provide computer or electronic outputs to recipients when
such expedites or contributes to the accuracy of reporting.
___.53 Retention and access requirements for records.
(a) This section sets forth requirements for record retention and access to records for awards to recipients. Federal awarding agencies shall not impose any other record retention or access requirements upon recipients.
(b) Financial records, supporting documents, statistical records, and all other records pertinent to
an award shall be retained for a period of three years from the date of submission of the final
expenditure report or, for awards that are renewed quarterly or annually, from the date of the
submission of the quarterly or annual financial report, as authorized by the Federal awarding
agency. The only exceptions are the following.
(1) If any litigation, claim, or audit is started before the expiration of the 3-year period, the
records shall be retained until all litigation, claims or audit findings involving the records have
been resolved and final action taken.
(2) Records for real property and equipment acquired with Federal funds shall be retained for 3
years after final disposition.
(3) When records are transferred to or maintained by the Federal awarding agency, the 3-year
retention requirement is not applicable to the recipient.
(4) Indirect cost rate proposals, cost allocations plans, etc. as specified in paragraph ___.53(g).
(c) Copies of original records may be substituted for the original records if authorized by the
Federal awarding agency.
(d) The Federal awarding agency shall request transfer of certain records to its custody from
recipients when it determines that the records possess long term retention value. However, in
order to avoid duplicate recordkeeping, a Federal awarding agency may make arrangements for
recipients to retain any records that are continuously needed for joint use.
(e) The Federal awarding agency, the Inspector General, Comptroller General of the United
States, or any of their duly authorized representatives, have the right of timely and unrestricted
access to any books, documents, papers, or other records of recipients that are pertinent to the
awards, in order to make audits, examinations, excerpts, transcripts and copies of such
documents. This right also includes timely and reasonable access to a recipient's personnel for the
purpose of interview and discussion related to such documents. The rights of access in this
paragraph are not limited to the required retention period, but shall last as long as records are
(f) Unless required by statute, no Federal awarding agency shall place restrictions on recipients
that limit public access to the records of recipients that are pertinent to an award, except when the
Federal awarding agency can demonstrate that such records shall be kept confidential and would
have been exempted from disclosure pursuant to the Freedom of Information Act (5 U.S.C. 552)
if the records had belonged to the Federal awarding agency.
(g) Indirect cost rate proposals, cost allocations plans, etc. Paragraphs (g)(1) and (g)(2) apply to
the following types of documents, and their supporting records: indirect cost rate computations or
proposals, cost allocation plans, and any similar accounting computations of the rate at which a
particular group of costs is chargeable (such as computer usage chargeback rates or composite
fringe benefit rates).
(1) If submitted for negotiation. If the recipient submits to the Federal awarding agency or the
subrecipient submits to the recipient the proposal, plan, or other computation to form the basis for
negotiation of the rate, then the 3-year retention period for its supporting records starts on the
date of such submission.
(2) If not submitted for negotiation. If the recipient is not required to submit to the Federal
awarding agency or the subrecipient is not required to submit to the recipient the proposal, plan,
or other computation for negotiation purposes, then the 3-year retention period for the proposal,
plan, or other computation and its supporting records starts at the end of the fiscal year (or other
accounting period) covered by the proposal, plan, or other computation.
Termination and Enforcement
___.60 Purpose of termination and enforcement. Sections ___.61 and ___.62 set forth uniform
suspension, termination and enforcement procedures.
(a) Awards may be terminated in whole or in part only if (1), (2) or (3) apply.
(1) By the Federal awarding agency, if a recipient materially fails to comply with the terms and
conditions of an award.
(2) By the Federal awarding agency with the consent of the recipient, in which case the two
parties shall agree upon the termination conditions, including the effective date and, in the case of
partial termination, the portion to be terminated.
(3) By the recipient upon sending to the Federal awarding agency written notification setting forth
the reasons for such termination, the effective date, and, in the case of partial termination, the
portion to be terminated. However, if the Federal awarding agency determines in the case of
partial termination that the reduced or modified portion of the grant will not accomplish the
purposes for which the grant was made, it may terminate the grant in its entirety under either
paragraphs (a)(1) or (2).
(b) If costs are allowed under an award, the responsibilities of the recipient referred to in
paragraph ___.71(a), including those for property management as applicable, shall be considered
in the termination of the award, and provision shall be made for continuing responsibilities of the
recipient after termination, as appropriate.
(a) Remedies for noncompliance. If a recipient materially fails to comply with the terms and
conditions of an award, whether stated in a Federal statute, regulation, assurance, application, or
notice of award, the Federal awarding agency may, in addition to imposing any of the special
conditions outlined in Section ___.14, take one or more of the following actions, as appropriate in
(1) Temporarily withhold cash payments pending correction of the deficiency by the recipient or
more severe enforcement action by the Federal awarding agency.
(2) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of
the cost of the activity or action not in compliance.
(3) Wholly or partly suspend or terminate the current award.
(4) Withhold further awards for the project or program.
(5) Take other remedies that may be legally available.
(b) Hearings and appeals. In taking an enforcement action, the awarding agency shall provide the
recipient an opportunity for hearing, appeal, or other administrative proceeding to which the
recipient is entitled under any statute or regulation applicable to the action involved.
(c) Effects of suspension and termination. Costs of a recipient resulting from obligations incurred
by the recipient during a suspension or after termination of an award are not allowable unless the
awarding agency expressly authorizes them in the notice of suspension or termination or
subsequently. Other recipient costs during suspension or after termination which are necessary
and not reasonably avoidable are allowable if (1) and (2) apply.
(1) The costs result from obligations which were properly incurred by the recipient before the
effective date of suspension or termination, are not in anticipation of it, and in the case of a
termination, are noncancellable.
(2) The costs would be allowable if the award were not suspended or expired normally at the end
of the funding period in which the termination takes effect.
(d) Relationship to debarment and suspension. The enforcement remedies identified in this
section, including suspension and termination, do not preclude a recipient from being subject to
debarment and suspension under E.O.s 12549 and 12689 and the Federal awarding agency
implementing regulations (see Section ___.13).
SUBPART D - After-the-Award Requirements
___.70 Purpose. Sections ___.71 through ___.73 contain closeout procedures and other
procedures for subsequent disallowances and adjustments.
___.71 Closeout procedures.
(a) Recipients shall submit, within 90 calendar days after the date of completion of the award, all
financial, performance, and other reports as required by the terms and conditions of the award.
The Federal awarding agency may approve extensions when requested by the recipient.
(b) Unless the Federal awarding agency authorizes an extension, a recipient shall liquidate all
obligations incurred under the award not later than 90 calendar days after the funding period or
the date of completion as specified in the terms and conditions of the award or in agency
(c) The Federal awarding agency shall make prompt payments to a recipient for allowable
reimbursable costs under the award being closed out.
(d) The recipient shall promptly refund any balances of unobligated cash that the Federal awarding
agency has advanced or paid and that is not authorized to be retained by the recipient for use in
other projects. OMB Circular A-129 governs unreturned amounts that become delinquent debts.
(e) When authorized by the terms and conditions of the award, the Federal awarding agency shall
make a settlement for any upward or downward adjustments to the Federal share of costs after
closeout reports are received.
(f) The recipient shall account for any real and personal property acquired with Federal funds or
received from the Federal Government in accordance with Sections ___.31 through ___.37.
(g) In the event a final audit has not been performed prior to the closeout of an award, the Federal
awarding agency shall retain the right to recover an appropriate amount after fully considering the
recommendations on disallowed costs resulting from the final audit.
___.72 Subsequent adjustments and continuing responsibilities.
(a) The closeout of an award does not affect any of the following.
(1) The right of the Federal awarding agency to disallow costs and recover funds on the basis of a
later audit or other review.
(2) The obligation of the recipient to return any funds due as a result of later refunds, corrections, or other transactions.
(3) Audit requirements in Section ___.26.
(4) Property management requirements in Sections ___.31 through ___.37.
(5) Records retention as required in Section ___.53.
(b) After closeout of an award, a relationship created under an award may be modified or ended in
whole or in part with the consent of the Federal awarding agency and the recipient, provided the
responsibilities of the recipient referred to in paragraph ___.73(a), including those for property
management as applicable, are considered and provisions made for continuing responsibilities of
the recipient, as appropriate.
___.73 Collection of amounts due.
(a) Any funds paid to a recipient in excess of the amount to which the recipient is finally
determined to be entitled under the terms and conditions of the award constitute a debt to the
Federal Government. If not paid within a reasonable period after the demand for payment, the
Federal awarding agency may reduce the debt by (1), (2) or (3).
(1) Making an administrative offset against other requests for reimbursements.
(2) Withholding advance payments otherwise due to the recipient.
(3) Taking other action permitted by statute.
(b) Except as otherwise provided by law, the Federal awarding agency shall charge interest on an overdue debt in accordance with 4 CFR Chapter II, "Federal Claims Collection Standards."
All contracts, awarded by a recipient including small purchases, shall contain the following
provisions as applicable:
1. Equal Employment Opportunity - All contracts shall contain a provision requiring compliance
with E.O. 11246, "Equal Employment Opportunity," as amended by E.O. 11375, "Amending
Executive Order 11246 Relating to Equal Employment Opportunity," and as supplemented by
regulations at 41 CFR part 60, "Office of Federal Contract Compliance Programs, Equal
Employment Opportunity, Department of Labor."
2. Copeland "Anti-Kickback" Act (18 U.S.C. 874 and 40 U.S.C. 276c) - All contracts and
subgrants in excess of $2000 for construction or repair awarded by recipients and subrecipients
shall include a provision for compliance with the Copeland "Anti-Kickback" Act (18 U.S.C. 874),
as supplemented by Department of Labor regulations (29 CFR part 3, "Contractors and
Subcontractors on Public Building or Public Work Financed in Whole or in Part by Loans or
Grants from the United States"). The Act provides that each contractor or subrecipient shall be
prohibited from inducing, by any means, any person employed in the construction, completion, or
repair of public work, to give up any part of the compensation to which he is otherwise entitled.
The recipient shall report all suspected or reported violations to the Federal awarding agency.
3. Davis-Bacon Act, as amended (40 U.S.C. 276a to a-7) - When required by Federal program legislation, all construction contracts awarded by the recipients and subrecipients of more than $2000 shall include a provision for compliance with the Davis-Bacon Act (40 U.S.C. 276a to a-7) and as supplemented by Department of Labor regulations (29 CFR part 5, "Labor Standards Provisions Applicable to Contracts Governing Federally Financed and Assisted Construction"). Under this Act, contractors shall be required to pay wages to laborers and mechanics at a rate not less than the minimum wages specified in a wage determination made by the Secretary of Labor. In addition, contractors shall be required to pay wages not less than once a week. The recipient shall place a copy of the current prevailing wage determination issued by the Department of Labor in each solicitation and the award of a contract shall be conditioned upon the acceptance of the wage determination. The recipient shall report all suspected or reported violations to the Federal awarding agency.
4. Contract Work Hours and Safety Standards Act (40 U.S.C. 327-333) - Where applicable, all contracts awarded by recipients in excess of $2000 for construction contracts and in excess of $2500 for other contracts that involve the employment of mechanics or laborers shall include a provision for compliance with Sections 102 and 107 of the Contract Work Hours and Safety Standards Act (40 U.S.C. 327-333), as supplemented by Department of Labor regulations (29 CFR part 5). Under Section 102 of the Act, each contractor shall be required to compute the wages of every mechanic and laborer on the basis of a standard work week of 40 hours. Work in excess of the standard work week is permissible provided that the worker is compensated at a rate of not less than 1 ½ times the basic rate of pay for all hours worked in excess of 40 hours in the work week. Section 107 of the Act is applicable to construction work and provides that no laborer or mechanic shall be required to work in surroundings or under working conditions which are unsanitary, hazardous or dangerous. These requirements do not apply to the purchases of supplies or materials or articles ordinarily available on the open market, or contracts for transportation or transmission of intelligence.
5. Rights to Inventions Made Under a Contract or Agreement - Contracts or agreements for the performance of experimental, developmental, or research work shall provide for the rights of the Federal Government and the recipient in any resulting invention in accordance with 37 CFR part 401, "Rights to Inventions Made by Nonprofit Organizations and Small Business Firms Under Government Grants, Contracts and Cooperative Agreements," and any implementing regulations issued by the awarding agency.
6. Clean Air Act (42 U.S.C. 7401 et seq.) and the Federal Water Pollution Control Act (33
U.S.C. 1251 et seq.), as amended - Contracts and subgrants of amounts in excess of $100,000
shall contain a provision that requires the recipient to agree to comply with all applicable
standards, orders or regulations issued pursuant to the Clean Air Act (42 U.S.C. 7401 et seq.) and
the Federal Water Pollution Control Act as amended (33 U.S.C. 1251 et seq.). Violations shall be
reported to the Federal awarding agency and the Regional Office of the Environmental Protection
7. Byrd Anti-Lobbying Amendment (31 U.S.C. 1352) - Contractors who apply or bid for an
award of $100,000 or more shall file the required certification. Each tier certifies to the tier above
that it will not and has not used Federal appropriated funds to pay any person or organization for
influencing or attempting to influence an officer or employee of any agency, a member of
Congress, officer or employee of Congress, or an employee of a member of Congress in
connection with obtaining any Federal contract, grant or any other award covered by 31 U.S.C.
1352. Each tier shall also disclose any lobbying with non-Federal funds that takes place in
connection with obtaining any Federal award. Such disclosures are forwarded from tier to tier up
to the recipient.
8. Debarment and Suspension (E.O.s 12549 and 12689) - No contract shall be made to parties listed on the General Services Administration's List of Parties Excluded from Federal Procurement or Nonprocurement Programs in accordance with E.O.s 12549 and 12689, "Debarment and Suspension." This list contains the names of parties debarred, suspended, or otherwise excluded by agencies, and contractors declared ineligible under statutory or regulatory authority other than E.O. 12549. Contractors with awards that exceed the small purchase threshold shall provide the required certification regarding its exclusion status and that of its principal employees.