RES 2001-1336 - Loan agmt with New Community Development Corporation for micro business program in north and south Omaha . /11-7---
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RECEIVEDPlanning Department
� °s Omaha/Douglas Civic Center
� � p 181.9 Farnam,Street,Suite 1100
U yrrii�,' rr "�; 01 ri N i 18 art �I' 2 Omaha,Nebraska 68183 0110
�ii,,J -r� r. (402)444-5200
ova- gam_alF. May 22, 200 (402)444-5150
LIP(a' C ?}( Telefax(402)444-6140
4TFDFEW' OMAHA, NEBRASKA Robert C.Peters
City of Omaha Acting Director
Hal Daub,Mayor
Honorable President
and Members of the City Council,
The attached proposed Resolution approves a Community Development Block Grant (CDBG)
agreement in the amount of $80,000.00 between the City of Omaha and New Community
Development Corporation, a Nebraska Non-profit Corporation, (NCDC), Michael B. Maroney,
President/CEO, 3147 Ames Avenue, Omaha, Nebraska 68111 for the continuation of the Micro
Business Program. NCDC will use the CDBG funds for administration concerning start-up
businesses and business plan development and may provide business micro-loans. This
Agreement covers the time period from January 1, 2001 through December 31, 2001.
This Project is included in the FY 2001 Consolidated Submission for Community Planning
Programs approved by the City Council on December 19, 2000, by Resolution No. 3377, as
amended. Funds shall be payable from the FY 2001 Economic Development Program, Agency
No. 200, Fund No. 193, Organization No. 8330.
Total project cost is estimated at $160,000.00. Sources of funds are an $80,000.00 CDBG Grant
and $80,000.00 in the form of private financing.
NCDC has been very successful in implementing the Micro Business Program. In 2000, they
were successful in creating 19 jobs; retaining 17 jobs/businesses; providing 266 hours of training
that generated 30 self-employment opportunities; completed 34 business plans; made 12
microloans and 59 participants graduated from the training program.
The Micro Business Program is an innovative approach to assist in providing training and
creating new employment opportunities for home-based businesses.
As a condition of this Economic Development Grant, the Micro Business Program shall assist
start-up or other businesses that shall employ their best efforts to create 41 new job positions
which will benefit low-and-moderate households. In total, the Micro Business Program proposes
to provide technical assistance to eighty(80)businesses.
Honorable President
and Members of the City Council
Page 2
NCDC has a current Annual Contract Compliance Report Form (CC-1) on file. As is City
policy, the Human.Relations Director will review the Contract Compliance Ordinance to ensure
Contractor is in compliance.
Your favorable consideration of this Resolution will be appreciated.
Sincerely, Re - -d to 1 ity Co 1 for o,side .tion:
//I
Robert C. Peters M S Date/ Mayo •fJT44 Date
Acting Planning Director
Approved as to Funding: Approved:
CLUP, (412)-- / ./0/
/24 /
Stanley P. Timm Date Kellie Paris-Asaka ate
Acting Finance Director t' Human Relations Director
P:\PLN1\5819pjm.doc
CDBG AGREEMENT
BETWEEN CITY OF OMAHA AND OMAHA NEW COMMUNITY DEVELOPMENT
CORPORATION,A NEBRASKA NON-PROFIT CORPORATION
FOR
MICRO BUSINESS PROGRAM
JANUARY 1, 2001 THROUGH DECEMBER 31, 2001
Fiscal Year 2001
1
TABLE OF CONTENTS
SECTION 1 DEFINITIONS AND ABBREVIATIONS
SECTION 2 RESPONSIBILITIES OF CONTRACTOR
2.01 Overall Project Performance
2.02 Project Budget
2.03 Term of Agreement
SECTION 3 CONDITIONS FOR RECEIPT OF CITY FINANCING
3.01 Documents Required by City
3.01.1 Matching Funds
3.01.2 MBE/WBE Plan
3.01.3 Eligible Contractors
3.01.4 Funding Compliance Deadline
SECTION 4 PROJECT RESPONSIBILITIES OF THE CONTRACTOR
4.01 Eligible Use of Funds
4.02 Terms and Conditions
4.03 Breach of Agreement
4.04 Ineligible/Eligible Cost
SECTION 5 GENERAL ADMINISTRATION REQUIREMENTS OF CONTRACTOR
5.01 Financial Management
5.02 Documentation and Record-Keeping
5.03 Records
5.04 Financial Status Report
5.05 Record Retention
5.06 Personnel and Participant Conditions
SECTION 6 CONTRACTOR'S COMPLIANCE WITH OTHER FEDERAL REGULATIONS
6.01 Environmental Review
6.02 Uniform Relocation Act
SECTION 7 RESPONSIBILITIES OF THE CITY
7.01 Performance Monitoring
7.02 Payments
7.03 Progress Payments
7.04 Technical Assistance
SECTION 8 MUTUAL AGREEMENTS BETWEEN CITY AND DEVELOPER
8.01 Release of Information Laws
8.02 Applicable Laws
8.03 Interest of the City
8.04 Independent Contractor
8.05 Captions
8.06 Merger
8.07 Modification
8.08 Assignment
8.09 Strict Compliance
8.10 Termination
8.11 Reversion of Assets
8.12 Indemnification
8.13 Unenforceable Provisions
8.14 Disclosure of Lobbying
8.15 Notices
8.16 Applicability
SECTION 9 DEFAULT PROVISIONS
9.01 Remedies
SECTION 10 AGREEMENT TERM
SCHEDULE OF EXHIBITS AND ATTACHMENTS
P:\PLN1\5821pjm.doc
CDBG AGREEMENT
(FOR MICRO BUSINESS PROGRAM)
THIS AGREEMENT is entered into by and between the City of Omaha and the Omaha
New Community Development Corporation, a Nebraska non-profit Corporation, 3147 Ames
Avenue, Omaha, Nebraska 68111 (sometimes hereinafter referred to as "NCDC") based on
terms, conditions and provisions as set forth below.
RECITALS:
WHEREAS, the City of Omaha (hereinafter referred to as "the City") is a municipal
corporation located in Douglas County, Nebraska, and is organized and existing under the laws
of the State of Nebraska, and is authorized and empowered to exercise all powers conferred by
the State constitution, laws, Home Rule Charter of the City of Omaha, 1956, as amended, and
local ordinances, including but not limited to, the power to contract; and,
WHEREAS, the City of Omaha has applied for and received Community Development
Block Grant (hereinafter referred to as "CDBG") Funds under Title I of the Housing and
Community Development Act of 1974, as amended, authorizes the use of CDBG funds for the
development of viable urban communities by providing decent housing, a suitable environment,
and creating and expanding economic opportunities, principally for persons of low and moderate
incomes; and,
WHEREAS, NCDC's Micro Business Program was included in the City's FY 2001
Consolidated Submission for Community Planning and Development Programs (hereinafter
referred to as "Consolidated Plan"), outlining priorities, programs and funding allocations for the
2001 program year, was approved, as amended, on December 19, 2000, by City Council
Resolution No. 3377; and,
WHEREAS, NCDC has submitted an application that provides for partial financing for
the continuation of the administration and loan fund capitalization of the Micro Business
Program for the period from January 1, 2001 through December 31, 2001 (hereafter referred to
as the "Project"); and,
WHEREAS, the Nebraska Legislature has declared that the redevelopment and
rehabilitation of commercial, industrial and residential areas of the City, which are older and
have deteriorated, are a matter of public concern and constitute a public use and public purpose
for which public monies may be expended; and,
WHEREAS, the Consolidated Plan identified that this Project meets Community
Development Block Grant national objective benefiting low and moderate income persons
through the creation of new businesses with employment made available to low and moderate
income persons; and,
WHEREAS, the Project is a CDBG-eligible activity in that the Project qualifies as
Microenterprise Assistance (24 C.F.R. 570.201 (o)) and facilitates economic development by
providing technical assistance training and may provide micro loans to businesses which create
jobs; and,
WHEREAS, the fundamental goals of NCDC in administering this program are to:
1. Create and support a new classification of entrepreneurs by helping economically
disadvantaged persons become self-sufficient and start small home-based
businesses.
2. Enable owners of small businesses to become self-sufficient through self-
employment.
3. Create self-employment opportunities and increase the employability of
participants during this program period.
WHEREAS, the City wishes to enter into an Agreement with NCDC to assist the City in
utilizing such CDBG funds; and,
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WHEREAS, the NCDC Grant Fund was included in the FY 2001 CDBG Program, as
amended, and $80,000.00 was allocated to the Project; and,
WHEREAS, NCDC has indicated the total estimated cost to administer the Micro
Business Program to be $160,000.00 consisting of an $80,000.00 CDBG Grant and $80,000.00
in the form of private financing; and,
WHEREAS, NCDC is organized to aid in generating new jobs in distressed areas in
North and South Omaha by providing technical assistance and by creating a Micro Business
Program; and,
WHEREAS, it is in the best interest of the City and the residents thereof that the City
enter into an Agreement with NCDC to provide CDBG funding in the amount not to exceed
$80,000.00 for the Project.
NOW, THEREFORE, IN CONSIDERATION OF THESE MUTUAL COVENANTS,
the parties do hereby agree as follows:
SECTION 1. DEFINITIONS AND ABBREVIATIONS.
The following terms shall have the following meanings for all purposes in this
Agreement:
1.01 "City" shall mean- the City of Omaha, a Nebraska Municipal Corporation.
1.02 "Contractor" shall mean - the New Community Development Corporation, a
Nebraska non-profit Corporation, (NCDC), 3147 Ames Avenue, Omaha,
Nebraska 68111 (see Exhibit "A").
1.02.1 "NCDC" shall mean the New Community Development Corporation.
1.03 "Director" shall mean -the Planning Director of the City of Omaha.
1.03 "Recipient" shall mean—the City of Omaha.
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1.05 "Subrecipient" shall mean - a public or private non-profit agency, authority or
organization receiving CDBG funds to undertake eligible activities. In this
Agreement, the Subrecipient is the New Community Development Corporation.
1.06 "HUD" shall mean—the U.S. Department of Housing and Urban Development.
1.07 "CDBG Grant Funds" shall mean - that portion of the Community Development
Block Grant Program funds awarded to the City, subject to and conditioned upon
actual receipt of same by the City of Omaha, as may be available to grant during
the FY 2001 program year for the use specified herein in an amount not to exceed
$80,000.00 payable from the CDBG Housing Development Program, Agency No.
200, fund No. 193, Organization No. 8330, subject to the terms, conditions and
requirements of said Grant Fund Agreement.
1.07.1 "Grant" shall mean - Community Development Block Grant funds made
subject to terms, conditions and provisions of this Grant Agreement.
The grant amount of $80,000.00 shall be unsecured. NCDC shall
perform Project responsibilities as outlined in Section 2.01 herein during
the term of this Agreement. In the event these are unencumbered funds
at the expiration of term of the Agreement, these funds shall be de-
obligated by the City. In the event of default, gross negligence or other
substantial non-compliance, the amount of the grant shall be due and
payable immediately from NCDC to the City.
1.08 "Micro Business Program" or "Micro Loan Program" shall mean a program
administered by NCDC that provides micro business training, technical assistance
and small loans to economically disadvantaged persons to assist them in
becoming self-sufficient through small home-based businesses.
1.09 Project Completion" shall mean—(1) the date all funds have been received by the
Contractor, and allocated to the Project, (2) the date all CDBG funds have been
disbursed and(3)the date all job creation/retention goals have been satisfied.
1.10 "Project Close Out" shall mean — the dates all project CDBG funds have been
disbursed and City has completed HUD close out procedures (24 C.F.R. 570.509
and OMB Circular A-110 Subpart A(g)) (Exhibit "B").
1.11 "Neighborhood Revitalization Areas" shall mean - those areas designated
according to CPD Notice 96-01 of the CDBG Program that require partnerships to'
stimulate reinvestment in human and economic capital and coordinated strategies
to address their needs. These areas are primarily residential, economically
distressed areas. See Exhibit"C" for area boundaries.
1.12 "Low-and-Moderate Income Family" shall mean - a family whose annual income
does not exceed 80 percent of the median income for the Omaha NE-IA
Metropolitan Statistical Area as determined by HUD (Exhibit "D").
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1.13 "CDBG shall mean - that portion of the Community.Development Block Grant
awarded to the City, subject to and conditioned upon actual receipt of same by the
City of Omaha, as may be available to grant during the FY 2001 program year for
the use specified herein in an amount not to exceed $80,000.00, subject to the
terms, conditions and requirements of said Agreement.
1.14 "Client" shall mean - a qualified participant making application to NCDC to
participate in technical assistance training or NCDC's Micro Loan Program.
1.15 "Program Income" shall mean - the gross income received by the Recipient or
Subrecipient directly generated from the use of CDBG funds (24 C.F.R. 570.500).
When such income is generated by an activity that is only partially assisted with
CDBG funds, the income shall be prorated to reflect the percentage of CDBG
funds used (see Exhibit "E" attached hereto and incorporated herein by this
reference as though fully set forth). Any program income fund received during
the, term of this Agreement shall be returned to the City within thirty (30) days
prior to any additional distribution of CDBG funds.
SECTION 2. RESPONSIBILITIES OF CONTRACTOR.
2.01 Overall Project Performance
2.01.1 The Contractor shall use the Grant for the continuation of the
administration and loan fund capitalization of the Micro Business Program
in the Target Area and the marketing of the program to qualified low and
moderate income participants (Exhibit"D").
2.01.2 Using 2001 Grant funds, NCDC will provide its best efforts to accomplish
the following goals:
2.01.2.1 8 (eight) week microbusiness training sessions will be held,
including at least three sessions in Spanish;
2.01.2.2 41 full-time equivalent (FTE) jobs will be created and/or
retained; CDBG job requirement may be met by aggregating
jobs created or retained by all businesses receiving technical
assistance(24 C.F.R. 570.208 (a)(4)(vi)(c));
2.01.2.3 80 business participants shall receive technical assistance
training;
2.01.2.4 15 loans will be disbursed;
2.01.2.5 Approximately 20 business plans will be completed;
2.01.2.6 200 hours of technical assistance will be provided;
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2.01.2.7 7 monthly networking meetings will be initiated for businesses
with 50 or fewer employees;
2.01.2.8 one joint marketing event will be held;
2.01.2.9 4 newsletters will be published.
2.01.3 Total Business Participants Assisted
80
2.01.4 Minimum Number of Maximum Percent of Area
Low/Moderate Job Median Income Permitted for
Creations/Retentions Low/Moderate Participants
41 80%
2.02 Project Budget
2.01.3 The Contractor asserts that the funding sources and amounts listed below
are committed prior to disbursement of City Grant funds. Private funding
for this project shall meet or exceed the CDBG participation.
FY 2001 CDBG $ 80,000.00
Private Funds 80,000.00
Estimated Project Cost $160,000.00
2.03 Term of the Agreement
2.03.1 This Agreement shall be in full force and effect and shall end on
December 31, 2001. Services of the Contractor will start effective
January 1, 2001 and the terms of this Agreement and Levels of Project
Performance stated in. Section 2.01 herein shall be completed as of
December 31, 2001. The Planning Director may extend the term of this
Agreement, but in no event shall the date extend beyond December 31,
2001.
SECTION 3. CONDITIONS FOR RECEIPT OF CITY FINANCING.
3.01 In no event shall the City assume any obligation to make any or all of the above-
referenced funding available, nor shall the City incur any liability hereunder,
unless and until the Contractor has submitted for and received the prior approval
of the Director of all of the documents listed below.
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3.01.1 Evidence of Leveraged/Matching Funds. Contractor shall provide written
evidence that funds detailed in the Project Budget described in Section
2.02.1 herein have been committed or secured for this Project.
3.01.2 Minority/Women Owned Business Enterprise Plan. Contractor shall
submit to the Director for his review and approval a minority and women
business participation plan which discusses economic development and
employment opportunities. These plans shall ensure that the Contractor
and its subcontractors will make their best efforts to ensure that
construction services, contracts and employment opportunities are
affirmatively marketed to women and members of minority groups.
3.01.3 Eligible Contractors. Contractor shall obtain a certificate from each
contractor or subcontractor to be used on this Project to the effect that
each contractor or subcontractor has not been disbarred or disqualified by
HUD (24 C.F.R. Part 5 and 24 C.F.R. 570.609). The Director shall
approve all contractors and subcontractors prior to being hired by the
Contractor.
3.01.4 Funding Compliance Deadline. In the event that all conditions of funding
are not met on or before December 31, 2001, then this Agreement shall
automatically become null and void and the City shall not be deemed to
have assumed any obligation or liability hereunder.
SECTION 4. PROJECT RESPONSIBILITIES OF THE CONTRACTOR.
4.01 Eligible Use of Funds. The Contractor does hereby certify, contract and agree
that any and all funding obtained or made available hereunder shall be used solely
and exclusively for the purposes described herein.
4.02 Terms and Conditions. The Contractor shall abide by all terms and conditions of
this Agreement.
4.03 Breach of Agreement. If through breach of this Agreement the Contractor fails to
abide by all terms and conditions as described herein, all CDBG funds previously
provided to the Contractor through fulfillment of this Agreement shall promptly
be returned to the City.
4.04 Ineligible Costs. The Contractor shall be responsible for payment of any Project
costs that exceed those specified in this Agreement.
4.04.1 Eligible Costs. The Contractor shall not request disbursement of funds
under this Agreement until the funds are needed for payment of
eligible costs.
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SECTION 5. GENERAL ADMINISTRATIVE REQUIREMENTS OF CONTRACTOR.
Contractor agrees to comply with the following requirements:
5.01 Financial Management.
5.01.1 Accounting Standards. The Contractor agrees to comply with OMB
Circular A-110 and agrees to adhere to the accounting principles and
procedures required therein, utilize adequate internal controls, and
maintain necessary source documentation for all costs incurred. (Exhibit
"C", attached hereto and incorporated herein as though fully set forth).
5.01.2 Cost Principals. The Contractor shall comply with the requirements and
the standards of OMB Circular No. A-122, "Cost Principles for the
Nonprofit Organizations" (Exhibit "F"), and with the requirements of
OMB Circular A-110 (Exhibit "B"). Both Exhibits are attached hereto
and incorporated herein as though fully set forth.
5.01.2.1 Any deficiencies noted in audit reports must be fully cleared
by the Contractor within 30 days after receipt of audit by the
Contractor. Failure of the Contractor to comply with the
above audit requirements will constitute a violation of this
Agreement and may result in the withholding of future
payments and may constitute a default subject to default
remedies referenced herein in Section 9.
5.02 Documentation and Record-Keeping. All Contractor records with respect to any
matters covered in this Agreement shall be made available to the City, its
designees or the Federal Government, at any time during normal business hours,
as often as the City deems necessary, to audit, examine, and make excerpts or
transcripts of all relevant data. Any contract entered into by the contractor with
any subcontractors shall include this Section to ensure said access.
5.03 Reports. The Contractor shall submit to the City the following reports in
accordance with 24 C.F.R.570.506 with the submission timelines as specified.
5.03.1 Program Reports. The Contractor shall provide reports to the Director and.
any significant problems and/or delays on this project. Reports will be
submitted at the time of each pay request, or, at a minimum, by the 15th
day following the end of the calendar year quarter. The program reports
are required until such time as all funds have been expended and the City
issues the final payment to the Contractor.
5.03.1.1 Documentation. Program reports shall include the following
information regarding quarterly and cumulative activity:
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a. Total number of business participants that received
training, technical assistance, and type of training
provided;
b. Number of participants who qualified as low-and-
moderate income including job creations and retentions
related to Micro Loan recipients and training
participants;
c. Number of business plans completed;
d. Number of micro-loan applications received;
e. Number, type, dollar amount of loans approved and
closed;
£ Amount of funds available for future loan activity;
g. Number of loans denied and reasons for denial.
5.03.2 Employee Report (Exhibit "G"). For each participant in the Micro Loan
Program, the Contractor shall retain the following records for five (5)
years after the expiration of this Agreement as specified in Section 2.03 of
this. Agreement. For this Agreement, records shall be retained until
December 31, 2006.
5.03.2.1 Documentation. Contractor shall be permitted to document
job creation/retention by completing the fully disclosed
information listed below and/or through abbreviated
documentation for qualified participants in Neighborhood
Revitalization Areas:
5.03.2.1.1 name(s) of employee(s)
5.03.2.1.2 home address/business address
5.03.2.1.3 actual household income and calculated as a
percent of Median Family Income (MFI) as
determined by HUD, income verification forms
used in determining MFI (Exhibit "D")
5.03.2.1.4 household size
5.03.2.1.5 job title/number of FTE jobs created or
retained/job start date
5.03.2.1.6 gender of head of household member
5.03.2.1.7 race/ethnicity of head of household
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5.03.2.2 Neighborhood Revitalization Areas. Each participant
receiving technical assistance from Contractor or its
subcontractors shall be presumed low-and-moderate if either
the participant or its business is located in one of the
Neighborhood Revitalization Areas designated in "Exhibit
C"
5.04 Financial Status Reports. Contractor shall submit financial status reports (OMB
Circular A-110) with pay requests. These reports shall be due, at a minimum, 15
calendar days from the end of the calendar year quarter. Attached as Exhibit "H",
and incorporated herein by this reference as though fully set forth, is a sample
financial status report.
5.05 Record Retention. The Contractor and its subcontractors shall maintain such
records and accounts, including property, personnel and financial records, as are
deemed necessary by the City to assure a proper accounting for all expenses. The
Comptroller General of the United States, or any of their duly authorized
representatives, or any duly authorized representatives of the City, as approved by
the Director, shall have access to any books, documents, papers, records and
accounts of the Contractor, or its subcontractors which are directly pertinent to
this Project for the purpose of making audit, examination, excerpts and
transcriptions. Such records and accounts shall be retained for five (5) years after
expiration of the Agreement, or December 31, 2006.
5.06 Personnel and Participant Conditions.
5.06.1 Contract Compliance Clause.
5.06.1.1 Section 10-192 of the Omaha Municipal Code, Equal
Employment Opportunity Clause. The Contractor and its
subcontractors shall not discriminate against any employee or
applicant for employment because of race, religion, color,
sex, age, national origin, familial or handicap status. As used
herein, the word "treated" shall mean and include, without
limitation, the following: recruited, whether by advertising
or by other means; compensated; selected for training,
including apprenticeship; promoted; upgraded; demoted;
downgraded; transferred; laid off; and terminated. The
Contractor and its subcontractors agree to and shall post in
conspicuous places, available to employees and applicants
for employment, notices to be provided by the contracting
officers setting forth the provisions of this nondiscrimination
clause.
5.06.1.2 The Contractor and its subcontractors shall, in all
solicitations or advertisements for employees placed by or on
behalf of the contractor, state that all qualified applicants will
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receive consideration for employment without regard to race,
religion, color, sex, age, national origin, familial or handicap
status.
5.06.1.3 The Contractor and its subcontractors shall send to each
representative of workers with which he has a collective
bargaining agreement or other contract or understanding a
notice advising the labor union or workers' representative of
the contractor's commitments under the equal employment
opportunity clause of the city and shall post copies of the
notice in conspicuous places available to employees and
applicants for employment.
5.06.1.4 The Contractor and its subcontractors shall furnish to the
Human Relations Director all federal forms containing the
information and reports required by the federal government
for federal contracts under federal rules and regulations,
including the information required by sections 10-192 to 10-
194, inclusive, of the Omaha Municipal Code and shall
permit reasonable access to his records. Records accessible
to the Human Relations Director shall be those which related
to paragraphs 5.06.1.1 through 5.06.1.7 of this subsection and
only after reasonable notice is given the contractor. The
purpose of this provision is to .provide for investigation to
ascertain compliance with the program provided herein.
5.06.1.5 The Contractor and its subcontractors shall take such actions
with respect to any subcontractor as the City may direct as a
means of enforcing the provisions of paragraphs 5.06.1.1
through 5.06.1.7 herein, including penalties and sanctions for
noncompliance; however, in the event the contractor
becomes involved in or is threatened with litigation as the
result of such directions by the City, the City will enter into
such litigation as is necessary to protect the interests of the
City and to effectuate the provisions of this division, and, in
the case of contracts receiving federal assistance, the
contractor or the City may request the United States to enter
into such litigation to protect the interests of the United
States.
5.06.1.6 The Contractor shall file and shall cause his subcontractors, if
any, to file compliance reports with the Contractor in the
same form and to the extent as required by the federal
government for federal contracts under federal rules and
regulations. Such compliance reports shall be filed with the
City's Human Relations Director. Compliance reports filed
at such times as directed shall contain information as to the
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employment practices, policies, programs and statistics of the
Contractor, contractor and his subcontractors.
5.06.1.7 The Contractor shall include the provisions of paragraphs
5.06.1.1 through 5.06.1.7 of this section, "Equal Employment
Opportunity Clause," and Section 10-193 in every contract,
subcontract or purchase order so that such provisions will be
binding upon each subcontractor or vendor. (Code 190,
Section 10-192; Ord. No. 35344, Sections 1, 9-26-00,
Executive Order 11246).
5.06.2 Living Wage Contract Clause. The Contractor and its subcontractors
acknowledge that if this contract is over $75,000.00 it may be subject to
the Living Wage Ordinance of the City of Omaha. The Ordinance
requires that, unless specific exemptions apply or a waiver is granted, all.
employers under certain contracts shall provide payment of a minimum
living wage to employees. Included among exemptions set out in
Section 10-319 of the Omaha Municipal Code are nonprofit
corporations, governmental entities, contracts funded by community
development block grant funds and others. Under the provisions of the
Omaha Living Wage Ordinance, the City has the authority, under
appropriate circumstances, to terminate a contract and to seek other
remedies as set forth therein, for violations of the Ordinance. The
Contractor and its subcontractors further acknowledge that a copy of the
Ordinance and the Interpretive Regulations is available upon request
from the City of Omaha, Living Wage Compliance Officer, Room 1003,
1819 Farnam Street, Omaha, Nebraska 68183, Attention: Joe Couch,
Phone Number(402) 444-5409.
5.06.3 Workers' Compensation. The Contractor shall provide Workers'
Compensation Insurance coverage for all employees involved in the
performance in this Agreement.
5.06.4 Employment Insurance and Bonding. The Contractor shall purchase a
blanket fidelity bond covering all employees, at a minimum, in an
amount equal to cash advances from the City. The Contractor shall
comply with bonding and insurance requirements of OMB Circular
A-110, Bonding and Insurance (Exhibit"B").
5.06.5 Minority Business/Women Business Enterprise Plan. The Contractor
shall make its best efforts to ensure that construction services, contracts
and employment opportunities are affirmatively marketed to women and
members of minority groups. As used in this Agreement, the term
"women and members of minority groups" means a business at least
fifty-one percent (51%) owned and controlled by minority group
members or women.
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5.06.6 Section 3 — Employment of Low-Income Persons (Section 3 of HUD
Act of 68, as amended, 1 U.S.C. 1701u). The Contractor shall make its
best efforts to comply with Section 3. The purpose of Section 3 is to
ensure that employment and other economic opportunities generated by
HUD assistance or HUD-assisted projects covered by.Section 3 shall, to
the greatest extent feasible, be directed to low and very low-income
persons, particularly persons who are recipients of HUD assistance for
housing.
5.06.7 Conflict of Interest. The Contractor agrees to abide by the provisions of
24 C.F.R. 570.611 with respect to conflicts of interest, and covenants
that it presently has financial interest and shall not acquire any financial
interest, direct or indirect, which would conflict in any manner or degree
with the performance of services required under this Agreement. The
Contractor further covenants that in the performance of this Agreement
no person having such a financial interest shall be employed or retained
by the Contractor hereunder. These conflict of interest provisions apply
to any person who is an employee, agent, consultant, officer or elected
official or appointed official of the, City or any designated public
agencies or subrecipients which are receiving funds under the CDBG
entitlement program.
SECTION 6. CONTRACTOR'S COMPLIANCE WITH OTHER FEDERAL REGULATIONS.
6.01. Environmental Review. The Contractor, if applicable, agrees to comply with the
following regulations insofar as they apply to the performance of this Agreement:
6.01.1 Clean Air Act, 42,U.S.C., 1857, et seq.
6.01.2 Federal Water Pollution Control Act, as amended, 33 U.S.C. 1251, et
seq., as amended 1318 relating to inspection, monitoring entry, reports
and information as well as other requirements specified in Section 114
and Section 308, and all regulations and guidelines issued thereunder.
6.01.3 Environmental Protection Agency (EPA) regulations pursuant to 40
C.F.R. Part 50, as amended.
6.01.4 National Environmental Policy Act of 1969.
6.01.5 HUD Environmental Review Procedures (24 C.F.R. Part 58).
6.01.6 Flood Disaster Protection Act of 1973 (24 U.S.C. 4106 and P.L. 2234) in
regard to the sale, lease or other transfer of land acquired, cleared or
improved under the:
6.01.7 Historic Preservation requirements set forth in the National Historic
Preservation Act of 1966, as amended (16 U.S.C. 470) and the
procedures set forth in 36 C.F.R., Part 800, Advisory Council on
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Historic Preservation Procedures for Protection of Historic Properties,
insofar as they apply to the performance of this Agreement. In general,
this requires concurrence from the State Historic Preservation Office for
all rehabilitation and demolition of historic properties that are fifty years
old or older or that are included on a Federal, State or local historic
property list.
6.02 Uniform Relocation Act. The Contractor shall comply with the applicable
regulations of the Uniform Relocation Act of 1970, as amended (URA) (42
U.S.C. 4601-4655), or Section 104 (d) of the Housing and Community
Development Act of 1974, as amended (Section 104 (d)), which require relocation
assistance be provided to resident owners, tenants,businesses and other occupants
that are displaced as a result of a federally-assisted project. In the event that the
Contractor or its agent displaces any tenant-occupant of the property, it shall
immediately notify the City in writing of the circumstances surrounding said
displacement.
SECTION 7. RESPONSIBILITIES OF THE CITY.
7.01 Performance Monitoring. The City will monitor the performance standards of the
Contractor as stated herein. Substandard performance as determined by the City
will constitute non-compliance with this Agreement. If action to correct such
substandard performance is not taken by the Contractor within a reasonable
period of time after being notified by the City, contract suspension or termination
procedures may be initiated.
7.02 Payments. It is expressly agreed and understood that the total amount to be paid
by the City under this Agreement shall not exceed $80,000.00 in CDBG funds.
The payment of these funds is subject to and conditioned upon actual receipt by
the City of the same. Should adequate funding not be available to the City, the
City shall notify the Contractor as soon as reasonably possible and the Agreement
will be terminated.
7.02.1 Obligation for Payment. In no event shall the City become obligated to
make any payments for any work performed, materials furnished,
expense incurred, or any other expenditure of any kind whatsoever,
unless same is expressly included in this Agreement, nor shall the City
incur any liability hereunder, unless and until the Contractor has timely
and fully complied with its duties and obligations hereunder. No
payments shall be_ made for any administrative service incurred the
Director deems to be:
7.02.2.1 Unacceptable or substandard; or,
7.02.2.2 Not in accordance with this Agreement or related contracts as
approved for this Project.
- 14
7.03 Progress Payments. Progress payments and final payment, as may be authorized
by the Director or his designated representative, are subject to:
7.03.1 Receipt of requisite financial status reports, and employee and program
reports.
7.04 Technical Assistance. The Director shall assist the Contractor in the same manner
the Director provides technical assistance to other contractors to ensure
compliance with this Agreement.
SECTION 8. MUTUAL AGREEMENTS BETWEEN CITY AND CONTRACTOR.
8.01 Release of Information Laws. The Contractor specifically hereby states, agrees
and certifies that it is familiar with the limited purpose set forth in the Federal
Laws, Rules and Regulations, and in the laws of the State of Nebraska, for which
personal information requested may be used and that the information received
will be used solely for those limited purposes and not to harass, degrade or
humiliate any person. The information released shall be used for the limited
purposes stated, and the Contractor further agrees to indemnify and hold harmless
the City of Omaha for any liability arising out the improper use by the Contractor
of information provided.
8.02 Applicable Laws. Parties to this Agreement shall conform with all existing and
applicable City ordinances, resolutions, state laws, federal laws, and all existing
and applicable rules and regulations. Nebraska law will govern the term and the
performance under this Agreement.
8.03 Interest of the City. Pursuant to Section 8.05 of the Home Rule Charter, no
elected official or any officer or employee of the City shall have a financial
interest, direct or indirect, in any City agreement. Any violation of this section
with the knowledge of the person or corporation contracting with the City shall
render the Agreement voidable by the Mayor or Council.
8.04 Independent Contractor. Nothing contained in this Agreement is intended to, or
shall be construed in any manner, as creating or establishing the relationship of
employer/employee between the parties. The Contractor shall at all times remain
an independent contractor with respect to the services to be performed under this
Agreement. The City shall be exempt from payment of all Unemployment
Compensation, FICA, retirement, life and/or medical insurance and Worker's
Compensation Insurance as the Contractor is an Independent Contractor.
8.05 Captions. Captions used in this Agreement are for convenience and are not used
in the construction of this Agreement.
8.06 Merger. This Agreement shall not be merged into any other oral or written
agreement, lease or deed of any type.
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L�
8.07 Modification. This Agreement and any related documents securing the financing
contain the entire agreement of the parties. No representations were made or
relied upon by either party other than those that are expressly set forth herein. No
agent, employee, or other representative of either party is empowered to alter any
of the terms herein unless done in writing and signed by an authorized officer of
the respective parties,pursuant to Section 10-142 of the Omaha Municipal Code.
8.08 Assignment. The Contractor may not assign its rights or obligations under this
Agreement without the express prior written consent of the City.
8.09 Strict Compliance. All provisions of this Agreement and each and every
document that shall be attached shall be strictly complied with as written, and no
substitution or change shall be made upon written direction from authorized
representatives of the parties.
8.10 Termination. This Agreement may be suspended or terminated in accordance
with 24 C.F.R. 85.43, Enforcement or C.F.R. 85.44, Termination for Convenience
(Exhibit "I", attached hereto and incorporated herein by this reference as though
fully set forth). Upon termination of this Agreement, all funds and interest in any
account hereunder shall become the property of the City and shall be returned to
the City.
8.11 Reversion of Assets. Upon the expiration of this Agreement, the Contractor shall
transfer to the City of Omaha any CDBG funds on hand at the time of expiration
and any accounts receivable attributable to the use CDBG funds (24 C.F.R.
570.503(b)(8)).
8.12 Indemnification. The Contractor shall indemnify and hold the City harmless from
and against: (1) any and all claims arising from contracts between the Contractor
and third parties made to effectuate the purposes of this Agreement; and, (2) any
and all claims, liabilities or damages arising from the preparation or presentation
of any of the work covered by this Agreement.
8.13 Unenforceable Provisions. Any provision of this Agreement which is prohibited
or unenforceable in any jurisdiction shall, as to such jurisdiction, be in effect to
the extent of such prohibition or enforceability without invalidating the remaining
provisions hereof or affecting the validity or enforceability of such provision in.
any other jurisdiction.
8.14 Disclosure of Lobbying. The Contractor shall certify and disclose, to the best of
its knowledge and belief, that:
8.14.1 No Federal appropriated funds have been paid or will be paid, by or on
behalf of the Contractor, to any person for influencing or attempting to
influence an officer or employee of Congress, or an employee of a
Member of Congress in connection with the awarding of any Federal
contract, the making of any Federal grant, the making of any Federal
- 16 -
L
loan, the entering into of any cooperative agreement, and the extension,
continuation, renewal, amendment or modification of any Federal
contract, grant, loan, or cooperative agreement.
8.14.2 If any funds other than Federal appropriated funds have been paid or
will be paid to any person for influencing or attempting to influence an
officer or employee of any agency, a Member of Congress, an officer of
employee of Congress, or an employee of a Member of Congress in
connection with this Federal contract, grant, loan, or cooperative
agreement, the Contractor shall complete and submit standard Form-
LLL, "Disclosure Form to Report Lobbying", in accordance with its
instructions.
8.14.3 The language of this certification be included in the award documents
for all subawards at all tiers, (including subcontracts, subgrants, and
contracts under grants, loans, and cooperative agreements) and that all
subrecipients shall certify and disclose accordingly.
8.15 Notices. The City and the Contractor hereby expressly agree that for purposes of
notice, including legal service or process, during the term of this Agreement, and
for the period of any applicable statute of limitations thereafter, the following
named individuals shall be authorized representatives of the parties:
1) City:
City of Omaha
Planning Department
1819 Farnam Street, Room 1111
Omaha,Nebraska 68183
2) Contractor:
New Community Development Corporation,
A Nebraska Non-profit Corporation
Michael B. Maroney, President/CEO
3147 Ames Avenue
Omaha, Nebraska 68111
In the event the authorized representative changes during the term of this
Agreement, prior written notice will be given to the respective party at the address
noted above.
8.16 Applicability. This Agreement shall be binding upon the parties hereto.
- 17 -
SECTION 9. DEFAULT PROVISIONS.
9.01 Remedies. If, through any cause, the Contractor shall fail to fulfill in a timely and
proper manner any obligations under this Agreement, or violate any of the
covenants, representations or agreements hereof, the City may upon written notice
terminate this Agreement or such parts thereof as to this Agreement, and may
require repayment of Grant, in part or in full, for any damages caused to the City
by reasons of such default and teuuination.
SECTION 10. AGREEMENT TERM.
This Agreement shall be in full force and effect commencing January 1, 2001 through
December 31, 2001.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
indicated below:
ATTEST: ? 7
CITY O. •MAH
oP4d. 7 4:
1112i 572//a/
C WY-OF-OMAHA M•"YOR OF THE CITY OF OMAHA
•
NEW COMMUNITY DEVELOPMENT
CORPORATION, a Nebraska Non-profit
Corporation
B :
ichael B.Maroney,President/CEO 7
l`6 0( //v7oi
Date Date
APPROVED AS TO FORM:
64 6-I -
AS ANT CITY ATTORNEY Date
P:\PLN1\5822pjm.doc
- 18 -
SCHEDULE OF EXHIBITS
Agreement
Exhibit Location Description
A 1.02 Article of Incorporation, Bylaws, Corporate
Resolution, Board Members
B 1.10, 5.01.1, OMB Circular A-110
5.01.2, 5.04,
5.05 & 5.06.4
C 1.11 and 5.03.2.2 Neighborhood Revitalization Areas
D 1.12 and 2.01.1 Median Family Income Chart
E 1.15 Definition—Program Income
F 5.01.2 OMB Circular A-122
G 5.03.2 Employee Report
H 5.04 Financial Status Report
I 8.10 Termination—C.F.R. 85.43 — 85.44
ATTACHMENTS:
1 City of Omaha Definition of Income
2 Equal Opportunity Clause
3 Section 3 Clause
4 Minority and Women Business Plan
P:\PLN1\5822pjm.doc
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EXHIBIT "A"
NEW COMMUNITY DEVELOPMENT CORPORATION
RESOLUTION
At its meeting on January 29, 2001 the Board of Directors unanimously approved the
following resolution:
BE IT RESOLVED,that New Community Development Corporation(NCDC) enter
into an agreement with the City of Omaha's Community Development Block Grant program to
continue the operation of the Microbusiness Program.
BE IT FURTHER RESOLVE,that Michael B. Maroney, President/CEO is authorize to
as are necessaryfor and on behalf of the corporation.
execute such documents rp
me Jackso ,-Mille , Secretary
oard of Directors
New Community Development Corporation
L
05/10/2001 THU 14:58 FAX 402 451 2595 NEW COMMUNITY DEV.CORP. ( j002/023
EXHIBIT "A"
NEW COMMUNITY DEVELOPMENT CORPORATION
BOARD OF DIRECTORS
ROSTER
2000 - 2001
Terrence Ferguson Michael B. Maroney
Of Counsel President/CEO
Fraser, Stryker, Vaughn, Meusey New Community
500 Energy Plaza Development Corporation Omaha,
409 South 17th Street 3147 Ames Avenue
• Omaha,NE 68102 Omaha, NE 68111
341-6000 (0)Fax 978-5200 451-2939 (0) Fax 451-2595
Board Member Board Member,Non-Voting
Rodney A. Conser
Retired Terrie Jackson-Miller
Distinguished Engineer Director
Lucent Technologies, Inc. Minority Economic
12410 Rose Lane Development Council
Omaha,NE 68154-1469 1301 Harney Strcct
493-4810(H) Fax 493-4812 Omaha, NE 68102
Chairman 978-7939 (0) Fax 346-7050
Secretary
James C. Freeman
Senior Consultant
Deloitte & Touche LLP Harlan Noddle
Management Solutions and Services Chairman
16`'' & Dodge Street Noddle Development Company
Omaha, NE 68102 First National Business Park
346-7788 (0) Fax 346-0711 13710 FNB Parkway
Vice Chairman Omaha,NE 68154-5200
496-1616 (0) Fax 496-6250
Board Member
Sherrye L. Hutcherson Wallace R. Weitz
Division Managcr,2000 President
Omaha Public Power District Wallace R. Weitz & Company
444 South 16`h Street One Pacific Place, Suite 600
Omaha,NE 68102 1125 South 103rd Street
636-3739 Omaha, NE 68124-6008
Treasurer 391-1980 (0)Fax 391-2125
Board Member
05/10/2001 THU 14:58 FAX 402 451 2595 NEW COMMUNITY DEV.CORP- C 003/023
EXHIBIT "A"
ARTICLES OF INCORPORATION
OP
NEW COMMUNITY DEVELOPMENT coRPORATION
The undersigned citizen of thu ftata-ef Nebraska, acting as
Incorporator of a corporation organized under the 2iebraska
Nonprofit Corporation Act, adopts the following Articles of
. Incorporation: —.
�,_..�.., - - - ARTICLE X
The` name of L1is corporation -1n: New Community Uovelopmoft
Corporation.
ARTICLE
• DURATION
•
The corporation shall Aavo perpetual existence.
ARTICLE III.
maims
The corporation shall have no members_
ARTICLE Iv,
i'w roars
The corporation is organised exclusively for charitable
purposes, including, for cuoh::purposes, the making of distributions
to orgnnizatinnn that qualify as exempt organizations undor Section
0O1(0 (3) oS Lhe Internal Revenue Code nr corresponding section of
any future Federal Tax Code, and elio including, without
limitation, the development, eonatrudtion, financing, and
• management of affordable housing for low-income persons, and any
lawful activity appropriate or otherwise related to the
accomplishment of such purposes.
ARTICLE V.
ORGANIZATION Awn OPERATION IN )SUPPORT OF
UNITED METHODIST COMMUNITY CENTERS, INC.
The corporation is hereby organised, and shall at all times bo
operated exclusively for the benefit of, to perform the functions
of, or to carry cut the purpomme of United Methodist Community
centers, Inc. of Omaha, Nebraoha, an existing Section S01(c) (3)
corporation of the kind described in Sootionc 609(a) (1) and
5Q9(r,) (2) of the Tnternel Revenue Code, and shall at ell times be
operated, rupvrvied or controlled by or in connection with said
United Methodist community Centers, Inc. The corporation shall
never be controlled by one or more dicqualifie4 persons (as defined
in nactiOn 4946 of the Tnternal Revenue Code) , other than as may be
expre* ity permitted Ly the provisions of Section 509(a) (3) (C) of .
the Code, or corresponding section of any future Federal Tax Code_
ARTICLE VI.
BOARD OF DIRECTOR$
Tho management and direction of this corporation shall be
vested in its Board of Directors.
The number or Directors of the corporation shall be fixed by
the bylaws of the corporation, but shall not be lees than three
(3) . The names and addresses of the persona Who shall corVe ac the
• initial Dirantnrm arp an follows: -
Deborah L. Brockman
FAMILY HOUSING ADVISORY SERVICES, INC.
2416 Take Street
Omaha, Nebreekn 68111411
05/10/2001 THU 14:58 FAX 402 451 2595 NEW COMMUNITY DEV.CORP. a 004/023
r
Rodney A. Conger
AT&T HRTWORX SYSTEMS
120th & oI" Streets
Omaha, Nebraska 68137
Charles P. Fike
SCXMID, MOONEY & FREDERICX,. PC
11104 WCOt Dodge Rood
700 First National Plaza
Omaha, Nebraska 68154
Delmar R. Givehand, Jr.
—'" RVMAN--co`il°IUNITY-RF.riA'IIQhb UKPARTJiKI T
OMAiHA PHALTC 8CF1oOL3
3215 Cuning Street
Omaha, Nebraska 68131
Michael D. Romney
UNITED METHODIST COMMUNITY CENTERS, INC.
2001 North 33th Street
Omaha, Nebraska 68111
Charles A. Peters
ME'OA CORPORATION
12046 Pacific Street
Omaha, Nebraska 68154
ARTICLE VIT.
POWERS
Subject to the oxproso limitation that the corporation shall
• neither have nor axereise any power, nor shall it engage directly
or indirectly in any activity that shall invalidate its (tatua (a)
ao a corporation that is exempt from federal income taxation as an
organization described in Section 6u10) (3) of the Internal Revenue
Coda, or aorrooponding section of any future Federal Tux Code, or
(b) ao a corporation to which contributions are deductible under
Section 170(c) (2) of the Internal Revenue Coda, or corresponding
section of any future Federal' Tax Coda, the corporation shall have
and peacoats all powers and rights nonferred upon corporatiOno by
the Nebraska Nonprofit Corporation Act and any enlargement of Such
powers rnnfarred by subsequent legislative acts' and, in addition,
the corporation shall havo and exercise all pnvare and rights, not
• otherwieo deniod nonprofit corporations by the laver of the State of
Nebraska, as are necessary, .sultable, proper, convenient or
expedient to the atteinsent of the. purpooe3 set forth in Article
IV. hereof.
ARTICLE VIII.
LImmTATIONs er POWER
WV part of the net earnings of the corporation shall lnurc to
the benefit of, or be diatribatable to its memborn, directors,
officers or other private persons, except that the corporation
shall be Authorized and empowered to pay reasonable companeation
for services rendered and to take payments anti distributions in
• furtherance of the purposes set forth in these Articles. No
substantial part of the activities of the corporation shall be the
carrying on of propaganda, or otherwise attempting to influence
legislation, and the corporation shall not participates in, or
intervene in (including the publishing or distribution of
otatemente) any political canpa1gn on behalf of or in opposition to
any candidate nor public office. Notwithstanding any other
provision or these Artioleo, the corporation shall not carry on any
activities not permitted to ha carried un (a) by a corporation
cxompt from Federal Income Tax under Section 601(o) (3) of thA
Internal Revenue Code, or corresponding section of any future
Federal Tax Law, or (b) by a Corporation, contributionsto whichare deductible under Section 17o(c) (2) or the Internal Revanuc Coda
or corresponding section of a future Internal Revenue Code.
05/10/2001 THU 14:58 FAX 402 451 2595 NEW COMMtUNITY DEV.CORP. a005/023
Alt1'1Ci.S IX. -
• nTSPOSTTTON OP AA91:TS UPON DTnsOLDTION
Upon tho dioaolution of the corporation, the Board of
Dirootora *hall, after paying or making rovieion for the payment
of all of the liabilities of the corporation, dispose of ell of the
assets of the corporation, exclusively to Organisations which
qualify updor the provisions of section 501(c) (3) of the Internal
ROVonue Code and its regulations, or to a 1coal or Mate government
or the federal governments or an agency thereof for a public
purpose.
"^ ARTICLE x.
- — --- TWTITAI, RE4111PRRRn 0Pt'TCR-AND TWI7`Ild RIYTRTTRRn-XM k r. ----The etroot address of the initial registered office of the
corporation is 700 first National Plaza, 11404 West Dodge Road,
Omaha, Nebraska de154.
The name of its initial registered agent at such address is
harlem P. Pike.
The Board of Directors by appropriate resolution shall have
the power and authority to change the location of the registered
• officP of they c•ATI.ArAi_inn And to nhAnge the designation of the
regiet&re4 4yeonl. of Lhe uurpuralicon.
ARTICLE XI.
• BYtkW8
• The initial Bylaws of the corporation shall bo adopted by the
Board of Directors and may be amended by the Board of Direetore at
Any regular or a ecial meeting called for that purpose.
AE2'1CLL' XlL.
AMRNnMFRT
These Articles of Incorporation spay be amended upon adoption
by the Board of Dirootoro of a resolution setting forth the
• amendment in the manner provided by law; provided, however, no
amendment of the Articles may be adopted which Changes or afrecta
in any way the exempt arlaLuu of the corporation as an organization
existing exclusively for charitable purpogee.
ARTICLE XIII.
INCORPORATOR
The names and addreccoc of the incorporator is as follows:
•
•
Address: Charles P. Fike
SCH IID, MOONEY & FREDERICA, P.C.
700 First National Plaza • • •
51404 West Dodge Road
Omaha, Nebraska 68154
TN WITNESS WHEREOF,' the above and foregoing Articles of
Incorporation are executed this 18th day of Novombor, 1991.
•
•
Marian P. FiXe, Incorporator
ti -3-
05/10/2001 THU 14:58 FAX 402 451 2595 NEW COMMUNITY DEV.CORP. 1j001/023
NEW COMMUNITY DEVELOPMENT CORPORATION
3147 AMES AVENUE
OMAHA, NE 68111
(402) 451-2939
. . (4_0.2) 451-2595 (FAX)
FAX COVER SHEET
6 2-- 0-'61 I
DATE:
PLEASE DELIVER THE FOLLOWING PAGE(S)TO:
NAME • pixAvyAl______
COMPANY C
FAX NUMBER `T - 6 I `I" 0 .
FROM
COMMENTS ThLL2L-
\-2)4. .se,,,ft.o/tipz„v
\irt- .
TOTAL NUMBER OF PAGES(INCLUDING COVER SHEET)
IF YOU DO NOT RECEIVE ALL PAGES OR EXPERIENCE ANY PROBLEMS,
PLEASE CALL(402)451-2939.
05/10/2001 THU 14:58 FAX 402 451 2595 NEW COMMUNITY DEV.CORP. 1711006/023
EXHIBIT "A" .
•
BYLAWS •
OF
NEW COMMUNITY DEVELOPMENT CORPORATION
05/10/2001 THU 14:59 FAX 402 451 2595 NEW COMMUNITY DEV.CORP. 2007/023
r;• Jam.
•
TABLE OF CONTENTS 41-
'Page
Cover Page
Table of contents - ii
TEXT
ARTICLE I
offices 1
ARTICLE II
Purposes and Operation in Support of
• United Methodist Community Centers, Inc. . . 1
ARTICLE III
Membership 2
ARTICLE IV
Board of Directors • • 2
Section 1 General Powers . . . . . 2
Section 2 Number 3
Section 3 Tenure and Election 3
Section 4 Qualifications • 4
Section 5 Regular Meetings 4
Section 6 Special Meetings 5
Section 7 Telephonic and Other
Electronic Meetings 6
Section 8 Notice 6
Section 9 Quorum 7
Section 10 Manner of Acting 7
Section- 11 Vacancies 7
Section 12 Informal Action by Directors . 8
ARTICLE V
Officers 8
Section 1 Officers 8
section 2 Election and Term of Office. . 8
Section 3 Removal 9
Section 4 Vacancies 9
Section 5 President 9
Section 6 Vice President 10 •
Section 7 Treasurer 10
Section 8 Secretary 10
Section 9 Assistant Trdasurers and
Assistant Secretaries 11
05/10/2001 THU 14:59 FAX 402 451 2595 NEW COMMUNITY DEV.CORP. 12008/020
•
•
?.14 !!
•
ARTICLE VI •
Committees 11
Section 1 Committees of Directors 11
Section 2 Other Committees 12
Section 3 Term of Office 13
Section 4 Chairman 13
Section 5 Vacancies 13
_.Sect_ion 6 _ Quorum 13
Section 7 Rules 13
ARTICLE VII
Contracts, Checks, Deposits and Funds 13
Section 1 Contracts 14 •
Section 2 Checks, Drafts, etc 14
Section 3 Deposits 14
Section 4 Gifts 14
ARTICLE VIII
Books, Records and Fiscal Year 14-15
ARTICLE IX •
Seal 16
ARTICLE X
Waiver of Notice 16
ARTICLE XI
Amendments to Bylaws 16
•
1110
05/10/2001 THU 14:59 FAX 402 451 2595 NEW COMMUNITY DEV.CORP. Z009/023
BYLAWS
OF
NEW COMMUNITY DEVELOPMENT CORPORATION
ARTICLE I.
i ----------. _ _ _. ...Offices
The principal office of the corporation in the State of
Nebraska shall be located in the City of Omaha, County of Douglas.
The corporation may have such other offices, either within or
without the State of Nebraska as the Board of Directors may
determine or as the affairs of the may corporation require from
P Y
time to time.
The corporation shall have and continuouslymaintain in the
P h
State of Nebraska a registered office, and a registered agent
whose office is identical with such registered office, as required
by. the Nebraska Nonprofit Corporation Act. The registered office
maybe, but need not be, identical with the principal office in
P P
the State, of Nebraska, and the address of the registered office
may be changed from time to time by the Board of Directors.
ARTICLE II.
Purposes and Operation in Support of
United Methodist Community Centers, Inc.
The corporation is organized exclusively for charitable
purposes, including, for such purposes, the making of
distributions to organizations that qualify as exempt •
organizations under Section 501(c) (3) of the Internal Revenue code
05/10/2001 THU 14:59 FAX 402 451 2595 NOV COMMUNITY DEV.CORP. Z010/023
or corresponding Section of any future Federal Tax Code, and also
including, without limitation, the development, construction,
financing, and management of affordable housing for low-income
persons, and any lawful activity appropriate or otherwise related
to the accomplishment-of such purposes.
The Corporation shall at all times be operated exclusively
for the benefit of, to perform the functions of, or to carry out
the purposes of United Methodist Community Centers, Inc. of Omaha,
Nebraska, an existing Section 501(c) (3) corporation of the kind
described in Sections 509 (a) (1) and 509 (a) (2) of the Internal
Revenue code, and shall at all times be operated, supervised or
controlled by or in connection with said United Methodist
Community Centers, Inc. The corporation shall never be controlled
by one or more disqualified persons (as defined in Section 4946 of
the Internal Revenue Code) , other than as may be expressly
permitted by the provisions of Section 509 (a) (3) (C) of the Code,
or corresponding Section of any future Federal Tax Code.
ARTICLE III.
Membership
The corporation shall have no members, but shall be operated
and managed by its Board of Directors as set forth herein.
ARTICLE IV.
Board of Directors
Section 1. General Powers. The affairs of the corporation
shall be managed by its Board of Directors. Directors need not be
residents of the State of Nebraska or members of the corporation.
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05/10/2001 THU 14:59 FAX 402 451 2595 NEW COMMUNITY DEV.CORP_ Z 011/023
Section 2. Number. The number of Directors shall be no less
than five (5) nor more than seven (7) .
Section 3. Tenure and Election. Except as provided
hereafter in this Section 3, or in Section 11 of this Article,
• Directors shall be elected at the annual meeting of directors for
a stated term of two years, or until their successors are elected
and qualified.
Notwithstanding the foregoing, the Directors shall be
classified into two classes. If the total number of Directors
authorized is even, the Directors shall be divided equally between
each class. If the total number of Directors authorized is odd,
the class shall be arranged so that Class II has one more Director
than class I.
The class I Directors shall serve until the election of their
successors at the annual meeting of Directors in 1993. The Class
II Directors shall serve until election of their successors at the
annual meeting of Directors in 1994.
From and after the election of class I Directors in 1993 and
Class II Directors in 1994, members of each Class shall serve for
terms of two years from the date of election of' such members.
Subject to the requirement for appointment or approval of a
majority of the Board of Directors of United Methodist Community
Centers, Inc. , as more specifically provided in Section 4
hereafter, election of new Directors of either class shall be by 1
majority vote of the entire then-existing Board of Directors.
05/10/2001 THU 14:59 FAX 402 451 2595 NEW COMMUNITY DEV.CORP. Z 012/023
Section 4. Qualifications. Directors need not be residents
of the State of Nebraska.
A majority of the Board of Directors serving at any time,
whether elected at an annual meeting of the Board, appointed to
fill a vacancy, or otherwise, must consist of Directors appointed
or otherwise approved by United Methodist Community Centers, Inc. ,
of Omaha, Nebraska, to the end that this corporation is operated,
supervised or controlled by said United Methodist Community
Centers, Inc. within the meaning of Section 509 (a) (3) (B) of the
Internal Revenue Code, or any corresponding Section of any future
Federal Tax Code.
With regard to a Board consisting of five (5) Directors, one
(1) Director from Class I and two (2) Directors from Class II
shall be appointed or otherwise approved by United Methodist
Community Centers, Inc. With regard to a Board consisting of
either six (6) or seven 7 Directors, two Directors from Class I
and two Directors from Class II shall be appointed or otherwise
approved by United Methodist Community Centers, Inc.
It is contemplated and encouraged, but not required, that one
or more members of the Board of Directors of this corporation also
be members of the Board or staff of United Methodist Community
Centers, Inc.
Section 5. Regular Meetings. A regular annual meeting of
the Board of Directors shall be held on the second Tuesday in the
month of June in each year, beginning with the year 1993 , at the
hour of 5: 00 P.M. for the purpose of electing Directors for the
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transaction of such other business as may come before the meeting.
If the day fixed for the annual meeting shall be a legal holiday
in the State of Nebraska, such meeting shall be held on the next
succeeding business day. If the election of Directors shall not
be held on the day designated herein for any annual meeting, or at
any adjournment thereof, the Board of Directors shall cause the
election to be held at a special meeting of the members as soon
thereafter as conveniently may be.
As provided in Section 4 of this Article IV, at least two
Directors in each Class who are elected (out of a total Board of
seven members) must be appointed or otherwise approved by United
Methodist Community Centers, Inc. , to the end that a majority of
the Board serving at any time must have been so appointed or
approved.
The Board of Directors may provide by resolution the time and
place, either within or without the State of Nebraska, for the
holding of additional regular meetings of the Board without other
notice than such resolution.
Section 6. Special Meetings. special meetings of the Board
may be called by or at the request of the Chairman, the President
or any two Directors. The person or persons authorized to call
special meetings of the Board may fix any place, either within or
without the State of Nebraska, as the place for holding any
special meeting of the Board called by them.
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Section 7. Telephonic and Other Electronic Meetings. To the
extent permitted by the laws of the State of Nebraska, any regular .
or special meeting of the Board may be held by means of
communication in which all persons can simultaneously hear each
other during the meeting, including such meetings held by means of
telephonic communication.
Section 8 . Notice. Notice of any special meeting of the
Board shall be given at least seven (7) days previously thereto by
written notice delivered personally or sent by mail or telegram to
each Director at his or her address as shown by the records of the
Corporation. If mailed, such notice shall be deemed to be
delivered when deposited in the United States mail in a sealed
envelope so addressed, with postage thereon prepaid. Any Director• .
may waive notice of any meeting. The attendance of a Director at
any meeting shall constitute a waiver of notice of such meeting,
except where a Director attends a meeting for the express purpose
of objecting to the transaction of any business because the
meeting is not lawfully called or convened. Neither the business
to be transacted at, nor the purpose of, any regular or special
meeting of the Board need be specified in the notice or waiver of
notice of such meeting, unless specifically required by law or by
these Bylaws.
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Section 9. Quorum. A majority of the Board shall constitute
a quorum for the transaction of business at any meeting of the
Board; but if less than a majority of the Directors are present at
said meeting, a majority of the Directors present may adjourn the
meeting from time to time without further notice.
Section 10. Manner of Acting. The act of a majority of the
Directors present at a meeting at which a quorum is present shall
be the act of the Board, unless the act of a greater number is
required by law or by these Bylaws.
section 11. Vacancies. Any vacancy occurring in the Board
of Directors, and any directorship to be filled by reason of any
increase in the number of Directors, shall be filled by the Board
of Directors. A Director elected to fill a vacancy shall be
elected for the unexpired term of his predecessor in office.
Notwithstanding any provision in this Section 11 to the contrary,
any such election or appointment shall be governed by the
provisions of Section 4 of this Article IV, regarding the
necessity that a majority of the Board serving at any time be
appointed or otherwise approved by United Methodist Community
Centers, Inc. , and regarding the necessity that such appointment
or approval be of the number of each class of Directors as
specified in said Section 4.
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Section 12 . Informal Action by Directors. Any action
required by law to be taken at a meeting of Directors, or any
action which may be taken at a meeting of Directors, may be taken
without a meeting if a consent in writing, setting forth the
• action so taken, shall be signed by all of the Directors.
ARTICLE V.
Officers
Section 1. Officers. The officers of the corporation shall
be a President, one or more Vice Presidents (the number thereof to
be determined by the Board of Directors) , a Secretary, a Treasurer
and such other officers as may be elected in accordance with the
provisions of this Article. The Board of Directors may elect or
appoint such other officers, including one (1) or more Assistant
Secretaries and one (1) or more Assistant Treasurers, as it shall
deem desirable, such officers to have the authority and perform
the duties prescribed, from time to time, by the Board of
Directors. Any two (2) or more offices may be held by the same
person, except the offices of President and Secretary.
Section 2 . Election and Term of Office. The officers of the
corporation shall be elected annually by the Board of Directors at
the regular annual meeting of the Board of Directors. If the
election of officers shall not be held at such meeting, such
election shall be held as soon thereafter as conveniently may be.
New offices may be created and filled at any meeting of the Board
of Directors. Each officer shall hold office until his successor ,
shall have been duly elected and shall have qualified.
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Section 3 . Removal. Any officer elected or appointed by the
Board of Directors may be removed by the Board of Directors
whenever in its judgment the best interests of the corporation
would be served thereby, but such removal shall be without
prejudice to the contract rights, if any, of the officer so
removed. •
Section 4. Vacancies. A vacancy in any office because of
death, resignation, removal, disqualification or otherwise may be
filled by the Board of Directors for the unexpired portion of the
term.
Section 5. President. The President shall be the principal
executive officer of the corporation and shall in general
supervise and control all of the business and affairs of the
corporation. He shall preside at all meetings of the members and
of the Board of Directors. He may sign, with the Secretary or any
other proper officer of the corporation authorized by the Board of
Directors, any deeds, mortgages, bonds, contracts, or other
instruments which the Board of Directors has authorized to be
executed, except in cases where the signing and execution thereof
shall be expressly delegated by the Board of Directors or by these
Bylaws or by statute to some other officer or agent of the
corporation; and in general he shall perform all duties incident
to the office of the President and such other duties as may be
prescribed by the Board of Directors from time to time.
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•
Section 6. Vice President. In the absence of the President
or in event of his inability or refusal to act, the Vice President
(or in the event there be more than one (1) Vice President, the
Vice Presidents in the order of their election) shall perform the
• duties of the President;- and when so acting, shall have all the
powers of and be subject to all the restrictions upon the
President. Any Vice President shall perform such other duties as
from time to time may be assigned to him by the President or by
the Board of Directors.
Section 7. Treasurer. If required by the Board of
Directors, the Treasurer shall give a bond for the faithful
discharge of his duties in such sum and with such surety or
sureties as the Board of Directors shall determine. He shall have
charge and custody of and be responsible for all funds and
securities of the corporation; receive and give receipts for
moneys due and payable to the corporation from any source
whatsoever, and deposit all such moneys in the name of the
corporation in such banks, trust companies or other depositaries
as shall be selected in accordance with the provisions of Article
VII of these Bylaws; and in general perform all the duties
incident to the office of Treasurer and such other duties as from
time to time may be assigned to him by the President or by the
Board of Directors.
Section 8 . Secretary. The Secretary shall keep the minutes
of the meetings of the members and of the Board of Directors in
one (1) or more books provided for that purpose; see that all
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notices are duly given in accordance with the provisions of these
Bylaws or as required by law; be custodian of the corporate
records and of the seal of the corporation and see that the seal
of the corporation is affixed to all documents, the execution of
which on behalf of the corporation under its seal is duly
authorized in accordance with the provisions of these Bylaws; keep
a register of the post-office address of each member which shall
be furnished to the Secretary by such member; and in general
perform all duties incident to the office of Secretary and such
other duties as from time to time may be assigned to the Secretary
by the President or by the Board of Directors.
Section 9 . Assistant Treasurers and Assistant Secretaries.
If required by the Board of Directors, the Assistant Treasurers
shall give bonds for the faithful discharge of their duties in
such sums and with such sureties as the Board of Directors shall
determine. The Assistant Treasurers and Assistant Secretaries, in
general, shall perform such duties as shall be assigned to them by
the Treasurer or the Secretary or by the President or the Board of
Directors.
ARTICLE VI.
Committees
Section 1. Committees of Directors. The Board of Directors,
by resolution adopted by a majority of the Directors in office,
may designate and appoint one (1) or more committees, each of
which shall consist of two (2) or more Directors, which ,
committees, to the extent provided in said resolution, shall have
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and exercise the authority of the Board of Directors the
management of the corporation; provided, however, that 'no such
committee shall have the authority of the Board of Directors in
reference to amending, altering or repealing the Bylaws; electing,
appointing or removing any member of any such committee or any
Director or officer of the corporation; amending the articles of
incorporation; adopting a plan or merger or adopting a plan of
consolidation with another corporation; authorizing the sale,
lease, exchange or mortgage of all or substantially all of the
property and assets of the corporation; authorizing the voluntary
dissolution of the corporation or revoking proceedings therefor;
adopting a plan for the distribution of the assets of the
corporation; or amending, altering or repealing any resolution of
the Board of Directors which by its terms provides that it shall
not be amended, altered or repealed by such committee. The
designation and appointment of any such committee and the
delegation thereto of authority shall not operate to relieve the
Board of Directors, or any individual Director of any
responsibility imposed upon it or him by law.
Section 2 . Other committees. other committees not having
and exercising the authority of the Board of Directors in the
management of the corporation may be designated by a resolution
adopted by a majority of the Directors present at a meeting at
which a quorum is present. Except as otherwise provided in such
resolution, members of each such committee shall be members of the
corporation, and the President of the corporation shall appoint
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the members thereof. Any member thereof may be removed by the
person or persons authorized to appoint such member whenever in
their judgment the best interests of the corporation shall be
served by such removal.
Section 3 . Term of Office. Each member of a committee shall
continue as such until the next annual meeting of the members of
the corporation and until his successor is appointed, unless the
committee shall be sooner terminated, or unless such member be
removed from such committee, or unless such member shall cease to
qualify as a member thereof.
Section 4 . Chairman. One (1) member of each committee shall
be appointed chairman by the person or persons authorized to
appoint the members thereof.
Section s. Vacancies. Vacancies in the membership of any
committee may be filled by appointments made in the same manner .as
provided in the case of the original appointments.
Section 6 . Quorum. Unless otherwise provided in the
resolution of the Board of Directors designating a committee, a
majority of the whole committee shall constitute a quorum and the
act of a majority of the members present at a meeting at which a
quorum is present shall be the act of the committee.
Section 7. Rules. Each committee may adopt rules for its
own government not inconsistent with these Bylaws or with rules
adopted by the Board of Directors.
ARTICLE VII.
. Contracts, Checks, Deposits and Funds
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•
•
Section 1. Contracts. The Board of Directors may authorize
any officer or officers, agent or agents of the corporation, in
addition to the officers so authorized by these Bylaws, to enter
into any contract or execute and deliver any instrument in the
name of and on behalf of the corporation, and such authority may
be general or confined to specific instances.
Section 2 . Checks, Drafts, etc. All checks, drafts or
orders for the payment of money, notes or other evidences of
indebtedness issued in the name of the corporation, shall be
signed by such officer or officers, agent or agents of the
corporation and in such manner as shall from time to time be
determined by resolution of the Board of Directors. In the
absence of such determination by the Board of Directors, such
instruments shall be signed by the Treasurer or an Assistant
Treasurer and countersigned by the President or a Vice President
of the corporation.
Section 3. Deposits. All funds of the corporation shall be
deposited from time to time to the credit of the corporation in
such banks, trust companies or other depositaries as the Board of
Directors may select.
Section 4 . Gifts. The Board of Directors may accept on
behalf of the corporation any contribution, gift, bequest or
devise for the general purposes or for any special purpose of the
corporation.
ARTICLE VIII.
Books, Records and Fiscal Year
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The fiscal year of the corporation shall be a calendar year.'' " •
The corporation shall keep correct and complete books and records
of account and shall also keep minutes of the proceedings of its
members, Board of Directors and committees having any of the
authority of the Board of Directors, and shall keep at the
registered or principal office a record giving the names and
dresses of the members entitled to vote. All books and records of
the corporation may be inspected by any member, or his agent or
attorney for any proper purpose at any reasonable time.
In addition, all books and records of the corporation may be
inspected by the President or the Treasurer of United Methodist
community Centers, Inc. , or by any duly authorized or designated
agent appointed for such purposes by the President, or by the
Board of Directors. Further, this corporation shall furnish to
United Methodist Community Centers, Inc. , such financial
statements and reports as it may request from time to time.
This corporation shall also furnish United Methodist
Community Centers, Inc. , at least annually, and no less than sixty
(60) days following termination of its fiscal year., the audited
financial statements of this corporation for such fiscal year,
together with the audited financial statements of any partnership
of which this corporation is a general partner [unless the fiscal
year of such partnership is other than the fiscal year of this
corporation, in which case such partnership statements will be
furnished within sixty (60) days following the termination of such
partnership's fiscal year] .
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•
•
ARTICLE IX.
Seal
The Board of Directors shall provide a corporate seal, which
shall be in the form of a circle and shall have inscribed thereon
the name of the corporation .
ARTICLE X.
Waiver of Notice
Whenever any notice is required to be given under the
provisions of the Nebraska Nonprofit Corporation Act or under the
provisions of the Articles of Incorporation or the Bylaws of the
corporation, a waiver thereof in writing signed by the person or
persons entitled to such notice, whether before or after the time
stated therein, shall be deemed equivalent to the giving of such
notice.
ARTICLE XI.
Amendments to Bylaws
Except as otherwise provided hereafter, these Bylaws may be
altered, amended or repealed and new Bylaws may be adopted to a
majority of the Directors present at any regular meeting or at any
special meeting, if at least seven (7) days' written notice is
given of intention to alter, amend or repeal or to adopt new
Bylaws at such meeting.
Notwithstanding the foregoing, neither the provisions of
Article IV, Section 4 (Qualifications) , nor the provisions of
Article VIII (Fiscal Year Books and Records) , may be amended .
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•
•
without the additional consent of a majority of the Board of
Directors of United Methodist Community Centers, Inc. present at a
duly authorized meeting of such Board.
we, the undersigned Directors of the New Community
Development Corporation, do hereby assent to the foregoing Bylaws
and do adopt the same as the Bylaws of the Corporation; and in
witness whereof, we have hereunto subscribed our names, this
07?0. day of November, 1991.
'34r.cAr°)-
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•
ARTICLE IX. of
Seal �t a
The Board of Directors shall provide a corporate seal, which
11 be in the form of a circle and shall have inscribed thereon pity
name of the corporation . laws
ARTICLE X. I in
Waiver of Notice this
Whenever any notice is required to be given under the
visions of the Nebraska Nonprofit Corporation Act or under the
visions of the Articles of Incorporation or the Bylaws of the
poration, a waiver thereof in writing signed by the person or
sons entitled to such notice, whether before or after the time
ted therein, shall be deemed equivalent to the giving of such •
ice.
ARTICLE XI_ dam'
Amendments to Bylaws
Except as otherwise provided hereafter, these Bylaws may be
ered, amended or repealed and new Bylaws may be adopted to a
ority of the Directors present at any regular meeting or at any
cial meeting, if at least seven (7) days' written notice is
en of intention to alter, amend or repeal or to adopt new
aws at such meeting.
Notwithstanding the foregoing, neither the provisions of
icle IV, Section 4 (Qualifications) , nor the provisions of
icle VIII (Fiscal Year Books and Records) , may be amended .
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OMB Circular A-110 Page 1 of 41
EXHIBIT 13
CIRCULAR A-110
(REVISED 11/19/93,As Further Amended 9/30/99)
CIRCULAR NO. A-110
Revised
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 President").
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 organizations.
4. Definitions. Definitions of key terms used in this Circular are contained in Section_.2 in the
Attachment.
S.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.
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OMB Circular A-110 Page 2 of 41
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
issuance.
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.
Attachment
Grants and Agreements with Institutions of Higher Education,
Hospitals,and Other Non-Profit Organizations
SUBPART A-GENERAL
See.
.1 Purpose.
.2 Definitions.
.3 Effect oil other issuances.
.4 Deviations.
•
.5 Subawards.
SUBPART B-PRE-AWARD REQUIREMENTS
.10 Purpose.
.11 Ere-award_policies.
.12 Forms for applying for Federal assistance.
_.13 Debarment and:suspension.
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. OMB Circular A-1 to Page 3 of 41
.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 fnancialmanagement systems.
_.22 Payment.
_.23 Cost sharing or matching.
.24 Program_income.
_.25 Revision of budget.and_proeram....plans.
.26 Non-Federal audits.
.27 Allowable costs. •
.28 Period of availability o f funds.
_.29 Conditional exemptions.
Property Standards
.30 Purpose of property standards.
.31 Insurance coverage.
_.3 2 Real property.
_.33 Federally-owned and exempt property.
.34 Fuipment.
.35 Supplies:and other expendable property.
_.36intangible property.
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OMB Circular A-110 Page 4 of 41
_.37 Property:trust relationship.
Procurement Standards
.40 Purpose ofprocurement standards.
.41 Recipient responsibilities.
.42 Codes of conduct.
.43 Competition.
.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.
.61 Termination.
_.62 Enforcement.
SUBPART D-AFTER-THE-AWARD REQUIREMENTS
.70 Purpose.
.71 Closeout procedures.
.72 Subsequentadjustments._and continuing responsibilities.
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OMB Circular A-1 t tf Page 5 of 41
.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.
.2 Definitions.
(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 regulations.
(0 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
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OMB Circular A-110 Page 6 of 41
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
Federal Government.
(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
ends.
(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.
(1)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 established.
(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
responsibilities.
(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
implementing instructions.
(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 the recipient.
(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
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considered tangible or intangible.
(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
securities.
(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
debt instruments.
(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
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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 agency.
(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.
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(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.
(11)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.
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(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)series.
(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 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
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requesting reconsideration of the additional requirements imposed. Any special
ecial 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 availability.
.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
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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
documentation,
(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."
_.22 Payment.
(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 205.
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•
(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 funds transfer.
(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.
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(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)
apply.
(1)A recipient has failed to comply with the project objectives,the terms and conditions
of the award, or Federal reporting requirements.
(2)The recipient or subrecipient is delinquent in a debt to the United States as defined in
OMB Circular A-129, "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 possible.
(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
members).
(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.
(1)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.
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•
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 under CMIA.
(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 objectives.
(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).
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(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
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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
following.
(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
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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 Fedei`al'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.
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(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 appropriation.
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(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 .27.
(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.
(1) 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."
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(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 rule.
(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
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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:
Property Standards
.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 td 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 following.
(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 er needed for the g purpose ofthe original ro'ec p rPproject. Use in other projects
under federally-sponsored
p sects shall be limited to those
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
disposition instructions.
(1)The recipient may be permitted to retain title without further obligation to the Federal
Government after it compensates the Federal Government for that percentage of the current fair
market value of the property 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
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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 utilization.
(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.
_.34 Equipment.
(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
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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)and cost.
(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 conditiotlof 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
ownership.
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(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 condition.
• (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 govern.
(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.
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(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
standards.
(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 for equipment.
(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)The Federal Government has the right to:
(1)obtain,reproduce, publish or otherwise use the data first produced under an award;
and
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(2)authorize others to receive,reproduce,publish,or otherwise use such data for Federal
purposes.
(d)(1)In addition, in response to a Freedom of Information Act(FOIA)request for research
data relating to published research findings produced under an award that were used by the Federal
Government in developing an agency action that has the force and effect of law,the Federal awarding
agency shall request, and the recipient shall provide,within a reasonable time, the research data so
that they can be made available to the public through the procedures established under the FOIA:If
the Federal awarding agency obtains the research data solely in response to a FOIA request,the
agency may charge the requester a reasonable fee equaling the full incremental cost of obtaining the
research data. This fee should reflect costs incurred by the agency,the recipient,and applicable
subrecipients. This fee is in addition to any fees the agency may assess under the FOIA(5 U.S.C. 552
(a)(4)(A)).
(2)The following definitions apply for purposes of paragraph(d)of this section:
(i)Research data is defined as the recorded factual material commonly accepted in
the scientific community as necessary to validate research findings,but not any of the
following: preliminary analyses,drafts of scientific papers,plans for future research,peer
reviews, or communications with colleagues. This "recorded"material excludes physical
objects(e.g., laboratory samples). Research data also do not include:
(A)Trade secrets,commercial information,materials necessary to be held
confidential by a researcher until they are published, or similar information which
is protected under law; and
(B)Personnel and medical information and similar information the
disclosure of which would constitute a clearly unwarranted invasion of personal
privacy, such as information that could be used to identify a particular person in a
research study.
(ii)Published is defined as either when:
(A)Research findings are published in a peer-reviewed scientific or
technical journal; or
(B)A Federal agency publicly and officially cites the research findings in
support of an agency action that has the force and effect of law.
(iii) Used by the Federal Government in developing an agency action that has the
force and effect of law is defined as when an agency publicly and officially cites the
research findings in support of an agency action that has the force and effect of law.
(e)Title to intangible property and debt instruments acquired under an award or 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_.34(g).
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.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.
Procurement Standards
_.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
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may be rejected when it is in the recipient's interest to do so.
.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 acceptable standards.
(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.
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(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
individually.
(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 enterprises.
(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 name"product.
(4)The proposed award over the small purchase threshold is to be awarded to other than
the apparent tow 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.
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_.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 be
appropriate.
(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 contract.
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(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
transcriptions.
(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
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cost overruns or high unit costs.
(e)Recipients shall not be required to submit more than the original and two copies of
performance reports.
(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-27.0 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.
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(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 balances.
(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 year.
(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 necessary.
(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
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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 quartdrly 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 retained.
(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.
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(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.
.61 Termination.
(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.
.62 Enforcement.
(a)Remedies for noncompliance. If a recipient materially fails to comply with the terms and
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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 the
circumstances.
(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.
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(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 implementing
instructions.
(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 fmal 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.
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(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."
Appendix A
Contract Provisions
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
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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 tate of not less than 1 %: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 Agency(EPA).
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.
I OMB Home Page I Budget Information f Legislative Information I Management Reform/GPRA
I Grants Management I Financial Management (Procurement Policy
http://www.whitehouse.gov/OMB/circulars/a110/a110.html 6/20/00
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EXHIBIT D
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EXHIBIT E
Community Development Block Grant Program Handbook 6500
Entitlement Grant Regulations
September 1988
"Program income" means gross income received by the Recipient or a
Subrecipient directly generated from the use of CDBG funds. When such income
is generated by an activity that is only partially assisted with CDBG funds,
the income shall be prorated to reflect the percentage of CDBG funds used .
(1) Program income includes, but is not limited to the following:
(i) Proceeds from the disposition by sale or long term lease of real
property purchased or improved with CDBG funds ;
(ii) Proceeds from the disposition of equipment purchased with CDBG
funds;
(iii) Gross income from the use or rental of real or personal property
acquired by the Recipient or. a Subrecipient with CDBG funds, less
the costs incidental to the generation of such income;
(iv) Gross income from the use or rental of real property owned by the
Recipient or a Subrecipient that was constructed or improved with
CDBG funds, less the costs incidental to the generation of such
income;
(v) Payments of principal and interest on loans made using CDBG funds;
(vi) Proceeds from the sale of loans made with CDBG funds;
(vii) Proceeds from the sale of obligations secured by loans made with
CDBG funds;
(viii) Interest earned on funds held in a revolving fund account;
(ix) Interest earned on program income pending disposition of such
income; and,
(x) Funds collected through special assessments made against
properties owned and occupied by households not of low and
• moderate income, where such assessments are used to recover all
or part of the CDBG portion of a public improvement.
(2) Program income does not include interest earned (except for interest
described in § 570.513) on cash advances from the U.S. Treasury. Such
interest shall .be remitted to HUD for transmittal to the U. S. Treasury
and will not be reallocated under section 106(c) or (d) of the Act.
Examples of other receipts that are not considered program income are
proceeds from fundraising activities carried out by Subrecipients
receiving CDBG assistance; funds collected through special assessments
used to recover the non-CDBG portion of a public improvement ; and
proceeds from the disposition of real property acquired or improved with
CDBG funds when such disposition occurs after the applicable time period
specified in § 570.503(b) (8) for Subrecipient-controlled property or §
570.505 for Recipient-controlled property.
OMB Circular A-122 http://www.whitehouse.gov/omb/circulars/a122/a122.html
OFFICE OF MANAGEMENT AND BUDGET
Cost Principles for Non-Profit Organizations
AGENCY: Office of Management and Budget
ACTION:Final revision of OMB Circular A-122, "Cost Principles for Non-Profit Organizations"
SUMMARY: The Office of Management and Budget(OMB)revises OMB Circular A-122 by amending
the definition for equipment; requiring the breakout of indirect costs into two categories(facilities and
administration) for certain nonprofit organizations;modifying the multiple allocation basis; and, clarifying
the treatment of certain cost items.
DATES: The revision is effective on June 1, 1998.
FOR FURTHER INFORMATION CONTACT: Federal agencies should contact Gilbert Tran, Office of
Federal Financial Management, Office of Management and Budget, (202) 395-3993.Non-Federal
organizations should contact the organization's Federal cognizant agency.
SUPPLEMENTARY INFORMATION:
A. Background
On October 6, 1995;the Office of Management and Budget(OMB) issued a final revision to OMB
Circular A-122, "Cost Principles for Non-Profit Organizations," in the Federal Register(60 FR 52516)
regarding interest allowability. The revision was made in a continuing effort to increase consistency across
OMB's cost principles circulars A-122, A-21, "Cost Principles for Educational Institutions," and A-87,
"Cost Principles for State, Local and Indian Tribal Governments." To further the goals of consistency,
OMB proposed on the same date(60 FR 52522)to revise the definition of equipment,to clarify the
treatment of certain types of costs, to modify the multiple allocation base method for computing indirect
cost rate(s), and to place an upper-limit on payments of administrative expenses for certain non-profit
organizations.
With this final revision, Circular A-122 consists of the Circular as issued in 1980(45 FR 46022; July 8,
1980), as amended in 1984(49 FR 18260; April 27, 1984), in 1987 (52 FR 19788; May 27, 1987), in 1995
(60 FR 52516; October 6, 1995), in 1997 (62 FR 45934; August 29, 1997), and in this notice. A
recompilation of the entire Circular A-122,with all its amendments, accompanies the notice and is
available in electronic form on the OMB Home Page at http://www.whitehouse.gov/OMB.
B. Current Revisions
Circular A-122 is revised in this notice to:
1. Amend the definition of equipment by increasing the capitalization threshold to the lesser amount used
for financial statement purposes or$5,000(see paragraph 15).
2. Require major non-profit organizations(those receiving more than$10 million in direct Federal funding)
to report indirect cost rates by two major component categories: facilities and administration(see paragraph
D, Attachment A).
1 of 63 6/21/00 2:34 PM
OMB Circular A-122 http://www.whitehouse.gov/omb/circulars/a122/a122.html
3. Modify the multiple allocation base method(MAB)to be consistent with OMB Circular A-21 (see
paragraph D.3). However,major non-profit organizations are not required to use the multiple allocation
base method. MAB remains one of the three available methodologies for computing indirect costs.
•
4. Clarify the treatment of the following cost items to provide consistency across OMB's cost principles
circulars (A-21 and A-87) and the Federal Acquisition Regulations,where applicable:
• Alcoholic beverages
• Advertising and public relations costs
• Organization-furnished automobiles
• Defense and prosecution of criminal and civil proceedings, claims, appeals and patent infringements
• Housing and living expenses
• Insurance
• Memberships
• Selling or marketing of goods and services
• Severance pay for foreign nationals
OMB is not implementing the proposed restrictions on trustees'travel expenses at non-profit organizations.
In line with this decision, and to further consistency between cost circulars, OMB will be amending
Circular A-21 to allow trustees'travel expenses.
OMB defers considering an upper-limit on payment of administrative expenses until better data on indirect
costs at non-profit organizations are collected. .
C. Comments and Responses
OMB received about 185 comments from non-profit organizations, Federal agencies,professional
organizations and accounting firms. A summary of comments and OMB's responses are included in this
notice. Several comments resulted in modifications to OMB's original proposal.
The comments and OMB's responses are summarized by section as follow.
Equipment Definition
Comment: Clarification is needed on the treatment of depreciation of those assets which had costs between
the old$500 threshold and the new $5,000.
Response: In order to clarify the accounting for the undepreciated portion of any equipment costs as a
result of a change in capitalization levels,paragraph 15 has been added to explain that the undepreciated
amount may be recovered by continuing to claim otherwise allowable use allowances or depreciation on
the equipment, or by amortizing the amount to be written off over a period of years as negotiated with the
Federal cognizant agency.
Comment: Clarification is needed on whether equipment under the $5,000 threshold, as established by the
non-profit organizations'policy, requires Federal approval prior to acquisition.
Response: Equipment under the$5,000 threshold, as established by the non-profit organization's policy,
can be directly charged to sponsored agreements (subparagraph 15.b)without prior Federal approval.
Comment: Current subparagraph 13.b requires prior approval for special purpose equipment, as direct
2of63 • 6/21/002:34PM
OMB Circular A-122 http://www.whrtehouse.gov/omb/circulars/a122/a122.html
costs,with a unit cost of$1,000 or more. This requirement is not consistent with the higher threshold of
$5,000 allowed in the proposed revision. This requirement should be revised to be consistent with the
proposed revision.
Response: OMB agrees. The Circular is revised to require prior Federal approval only for special purpose
equipment with a unit cost of$5,000 or more.
Unallowable Cost Items
These ten revised cost items are already unallowable under OMB Circulars A-21, "Cost Principles for
Educational Institutions," and A-87, "Cost Principles for State, Local and Indian Tribal Governments,"
and/or the Federal Acquisition Regulations. OMB addressed the issue of trustees'travel in response to the
comments received. For the other items, consistency across Federal cost regulations was a more significant
issue than most of the commenters'concerns. Comments related to specific cost items are presented below,
followed by OMB's responses.
Advertising and Public Relations Costs
Comment: Current paragraph 37,Public information service costs, should be combined with the
"Advertising" to be consistent with other OMB cost principles in Circulars A-21 and A-87.
p P
Response: The commenter is correct. The treatment of public information service costs is now addressed in
revised paragraph 1,Advertising and public relations costs. Current paragraph 37 is deleted.
Comment:Clarify the types of activities that are allowable as public relations costs. Public relations costs
to carry out certain functions, such as legitimate program outreach, that are required under sponsored
programs and contracts should be allowable.
Response: The Circular is revised to clarify that certain public relations costs for the purpose of
communicating specific activities related to the sponsored programs to the public or the press are allowable
costs. When they are necessary for program outreach effort as required by sponsored programs,public
relations costs are allowable. Costs of advertising and public relations incurred solely to promote the
organization are unallowable.
Comment: Clarify whether advertising media costs such as radio and television are allowable.
Response: As long as the public relations costs are specifically required by the sponsored programs or are
related to the promotion of sponsored programs, any reasonable advertising media, including magazines,
newspapers,radio, television, direct mail, exhibits, and the like, can be used and its costs are allowable.
See paragraph l.a.
Comment: Community relation costs should be allowable as part of program outreach effort for Federal
sponsored programs.
Response: Community relations are defined in subparagraph 1.b as "those activities dedicated to maintain
the image of the organization or promoting understanding and favorable relations with the community or
public at large or any segment of the public." Costs related to community relations are allowable when the
costs are required or necessary to the performance of the sponsored programs.
Organization-furnished automobiles for personal use
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Comment: For security and economic reasons,non-profit organizations often furnish automobiles and
housing for its personnel working on Federal projects(e.g., overseas projects sponsored by the U.S.
Agency for International Development or the U.S. State Department). These costs should be allowable as
direct costs.
Response: The Circular is revised to allow these costs when they are necessary to perform the Federal
projects,particularly the overseas sponsored projects with prior approval by the Federal awarding agency.
These costs are allowable only as direct costs to the Federal projects, and not as fringe benefit or indirect
costs.
Comment: The Circular should specify which types of automobiles are allowable or unallowable(e.g., cars,
vans, trucks and buses).
Response: The types of automobiles are irrelevant for the purpose of determining the allowability of
automobile costs. Rather, the determinant factors should be whether the automobile costs are reasonable
and necessary for the performance of the Federal projects and authorized by the Federal awarding agency.
Defense and prosecution of criminal and civil proceedings, claims, appeals and patent infringements
Comment: Current paragraph 35.d, Professional service costs, should be combined with new paragraph 10.
Response: OMB agrees. Current paragraph 35.d is deleted. Professional service costs related to defense of
antitrust suits,prosecution of claims against the Federal Government and patent infringement litigation are
discussed in new paragraph 10. Professional service costs incurred for organization and reorganization are
discussed in paragraph 31, Organization costs.
Comment: Clarification is needed as to when legal costs related to claims, appeals or proceeding become
unallowable. Commenters noted that Federal agencies are inconsistent in the determination of the
allowability of legal costs as one agency would allow legal costs up to the point where the case goes out of
the Federal agency appeal process and to the courts, whereas other agencies would only allow legal costs
through the first phase of appeals within the Federal agency.
Response: The policy makes unallowable legal and related costs for either defending against claims made
by the Federal Government or prosecuting claims against the Government. As such, once a final
management decision letter is issued by the agency(for example, a disallowance letter), all legal and
related costs are unallowable from that point forward. Unallowable costs would include claims and
defenses pursued through agencies' formal appeal procedures such as administrative law judges and agency
appeal boards. Note that legal and related costs may be allowable if the non-profit organization's position is
sustained by the administrative appeal process or an agreement is reached between the organization and the
Federal Government(see subparagraghs 10.b, 10.c, 10.d and 10.e). This revision is consistent with the
language contained in OMB Circular A-21, "Cost Principles for Educational Institutions."
Comment: Some commenters objected to the proposed 80 percent limitation on reimbursement when the
institution is found innocent.
Response: The proposed revision was retained because it provides consistency with procurement contracts.
This limitation is based on the statutory language of Public Law 100-700, Major Fraud Act of 1988,
November 19, 1988 (41 U.S.C., 256(k)(5)),which only allows recovery of 80 percent of the legal costs.
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Comment: Legal expenses to defend against lawsuits brought by a foreign government for violation of that
country's law should be allowable.
Response: The Circular is revised in subparagraph 10.d to authorize Federal agencies to allow legal
expenses to defend against lawsuits brought by a foreign government for violation of its law when such
costs were necessary or were direct results of the performance of Federal sponsored programs. The same
authorizations apply for legal costs for defense against lawsuits brought by state or local governments.
Comment: Legal fees to defend against lawsuits filed by former employees for termination or by
subrecipients should be allowable.
Response: Legal fees incurred in defense of lawsuits not brought by a Federal, State, local or foreign
government, except when the suits are brought by former employees under Section 2 of the Major Fraud
Act of 1988 (Pub. L. 100-700), are allowable.
Housing and living expenses
Comment: For security and economic reasons,non-profit organizations often furnish automobiles and
housing for its personnel working on overseas Federal projects (e.g., overseas projects sponsored by the
U.S. Agency for International Development). These costs should be allowable as direct costs.
Response: As previously noted(in the discussion of automobiles),the Circular is revised to allow these
costs when they are necessary to perform the Federal projects and when they are approved by the Federal
awarding agency. These costs are allowable only as direct costs to the Federal projects, and not as fringe
benefit or indirect costs.
Insurance
Comment: General and casualty liability insurance costs for organization's directors and administrators
should be allowable.
Response: General and casualty liability insurance costs for organization's directors and administrators are
allowable, subject to limitations, as described in subparagraph 22.a.(2). New subparagraph 22.a.(2).f,
Insurance against defects,prohibits the reimbursement of costs against Federally sponsored awards for
product(or services) liability insurance costs.
Comment: Medical liability insurance costs for participants in Federal training programs should be
allowable.
Response: Medical liability insurance costs associated with participants in Federal training programs are
allowable to Federal programs as direct costs.
Comment: Malpractice insurance costs for physicians should be direct charged to Federal programs while
malpractice insurance costs for nurses or laboratory assistants,which are immaterial in most cases, should
be charged as indirect costs.
Response: Subparagraph B.2 of Attachment A provides that when a direct cost is of minor amounts, it may
be treated as an indirect cost for reasons of practicality and efficiency,provided that the accounting
treatment for such cost is consistently applied to all final cost objectives. Therefore,when malpractice
insurance costs for nurses or lab technicians are immaterial in relation to its effect on the overall indirect
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cost rates of the organization,they may be treated as indirect costs.
Memberships
Comment: Membership costs in civic and community organizations should be allowable.
Response: Membership costs are allowable for business and professional organizations. The Circular is
further revised to allow membership costs in civic and community organizations when associations with
these organizations are essential to the performance of the Federal programs(as an outreach function).
These membership costs must be approved by the Federal cognizant agency.
Comment: Costs of membership in organizations that lobby should be unallowable.
Response: Paragraph 25 of the Circular disallows lobbying costs. Membership dues to lobbying
organizations are therefore unallowable. The unallowable portion of membership dues is determined by the
percentage of lobbying activities versus other allowable activities of the lobbying organization.
Selling or Marketing of Goods and Services
Comment: Clarification is needed for what types of activities are considered to be the selling or marketing
of goods and services.
Response: Selling or marketing of goods and services generally include an organization's efforts to market
the organization's products or services such as through advertising, organizational image enhancement,
market planning and direct selling. Direct selling efforts are those acts or actions used to induce particular
customers to purchase particular products or services of the organization. The allowability provisions for
advertising costs are described in paragraph 1.
Comment: The guidelines for selling or marketing of goods and services should be consistent with those in
FAR 31.205.38(c)(1).
Response: FAR 31.205.38(c)(1) allows direct selling costs at commercial contractors if they are reasonable
in amount. By contrast to the commercial contract context, direct selling costs are generally not considered
to be necessary costs for the performance of Federal sponsored programs by non-profit organizations. In
those cases where they are essential for certain Federal sponsored programs, these costs can be charged as
direct costs to the Federal sponsored programs if they are approved by the Federal awarding agency.
Comment: Given that the Bayh-Dole Act encouraged technology transfer, selling or marketing costs of
goods or services should be allowable costs. At the minimum,these costs should be allowable as direct
costs to the Federal projects.
Response: The Circular is revised to allow selling or marketing costs as direct costs to some Federal
sponsored programs when approved by the Federal awarding agency.
Severance Pay
Comment: Early retirement benefits should be allowable costs.
Response: Early retirement benefit costs are allowable costs, subject to limitations, and are discussed in
subparagraph 6.f,Fringe Benefits, along with other forms of fringe benefits. Paragraph 49, Severance Pay,
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deals only with severance policy, i.e., dismissal, and the reimbursement of its costs.
Comment: Guidelines for costs of severance pay to foreign nationals in excess of customary or prevailing.
practices should be consistent with section 2151 of the Federal Acquisition Streamlining Act of 1994
(FASA).
Response: OMB agrees. The Circular is revised to be consistent with FASA guidelines for severance pay to
foreign nationals in excess of customary or prevailing practices. As a result, the Federal awarding agency
may allow these costs when they are necessary for the performance of the Federal sponsored programs.
Trustees' Travel
Comment: Several commenters opposed the proposal to disallow trustees'travel costs citing the difficulty
of retaining or obtaining members to serve voluntarily on the Board of Trustees (or Directors) of a
non-profit organization, if Board members have to pay for their own travel expenses to attend Board
meetings. The commenters added that since serving on a non-profit organization's Board is often not as
prestigious and desirable as serving on a University's Board(where trustees'travel costs are unallowable
under Circular A-21),non-reimbursement of the travel costs would inhibit the recruitment of Board
members.
Response: OMB concurs that disallowing the reimbursement of trustees'travel costs could inhibit the
recruitment of qualified Board members (particularly at smaller non-profit organizations),thereby
hampering the operations of a non-profit organization. OMB also recognizes that trustees'travel costs are
reasonable and necessary business costs. As a result, trustees'travel costs remain allowable.
Comment: Trustees'travel costs should be allowable if they are reasonable. Some suggested tests for
reasonableness of trustees'travel costs are: limit number of allowed trips per year, restriction of trips to
organization's principal place of business or reasonable surroundings, distinction between scheduled Board
meetings and emergency Board meetings, and disallowance of first-class airfare travels.
Response: All costs charged to Federal projects must satisfy a reasonableness test. Although some of the
suggested reasonableness tests appear to be good, OMB does not believe it is necessary at this time to
impose specific restrictions on trustees'travel expenses. The reasonableness of a particular travel expense
remains at the judgement of Federal negotiators.
Comment: At Head Start organizations, some Trustee members are first sent for training in the operations
of a Head Start program. These travel costs related to training should be allowable.
Response: Travel costs related to training and education are allowable, subject to limitations, and are
addressed in paragraph 53 of the Circular,Training and education costs.
Comment: At Head Start organizations,there often are several advisory boards in addition to the Board of
Trustees(or Directors). These advisory boards are involved in day-to-day operations of the organizations
and often incur travel costs. Are these costs subject to the same restrictions as trustees'travel?
Response: Travel costs for members of advisory groups are allowable, subject to the limitations in
paragraph 55, Travel costs.
Multiple Allocation Basis (MAB)
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Comment: The multiple allocation method for calculating indirect costs rates is much more complicated
and burdensome than the simplified method and it will cost non-profit organizations much more to prepare
the indirect cost proposal. Several commenters recommended the flexibility of using one of the three
different allocation methods as they are currently described in the Circular. The multiple allocation basis
(MAB) should remain an optional allocation methodology rather than a required methodology for certain
organizations.
Response: The use of MAB for major non-profit organizations promotes consistency in the calculation and
the reporting of indirect costs. It would facilitate the accumulation of indirect cost data by cost components
(i.e., facilities and administration) and provide comparable rates between major research non-profit
organizations and universities. However, OMB recognizes that a conversion to MAB may require some
substantial changes in the organization's accounting system and that MAB is not practical for,
single-function organizations. Therefore, the Circular continues to allow non-profit organizations to use
any of the current three allocation methodologies.
Comment: Several commenters suggested raising the threshold for the requirement to $25 million in direct
Federal funding. Several commenters also suggested an exemption from this requirement for
single-function organizations regardless of Federal funding levels.
Response: The Circular is revised to allow the use of the current three allocation methodologies for all
non-profit organizations. For organizations that receive more than$10 million in direct Federal funding, a
breakout of indirect costs into two components, facilities and administration, is required regardless of the
selected allocation methodology.
Comment: The allocation methodology for general administration under MAB on the basis of modified
total direct costs conflicts with the required methodology under Cost Accounting Standard(CAS)410
applicable to contracts using the salaries and wages basis. One commenter suggested that a fully
CAS-covered non-profit organization be exempted from the MAB requirement.
Response: MAB is not a requirement for non-profit organizations and remains one of the three available
methodologies in the Circular for computing indirect costs. In addition, CAS-covered non-profit
organizations should continue to follow CAS with respect to the measurement, assignment and allocation
of costs.
Comment: The revision should clarify that the modified total direct cost base should only include the first
$25,000 of a subcontract regardless of the period during which the project is started(consistent with OMB
Circular A-21).
Response: The modified total direct cost base, described in subparagraph D.3.f of the Circular, includes the
first $25,000 of each subgrant or subcontract regardless of the period covered by the subgrant or
subcontract. Subgrant or subcontract costs above$25,000 shall be excluded from the modified total direct
cost base. For example, for a$300,000 subgrant that lasts three years, only the first$25,000 incurred on the
award should be included in the modified total direct cost base.
Administrative Cap of 26 percent •
Comment: Most commenters strongly opposed the 26 percent administrative cap stating that such
limitation on cost reimbursement is arbitrary, capricious, and unnecessary. Some argued that a cap would
be financially disastrous to non-profit organizations because they receive most of their funding from
Federal sources (unlike universities). A detailed analysis is urged to determine the average administrative
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costs applicable to non-profit organizations, if an administrative cap is to be implemented at non-profit
organizations.
Response: Based on the comments against the implementation of an administrative cap at non-profit
organizations, OMB defers the consideration of establishing any administrative cap until better data on
indirect costs at non-profit organizations can be collected. If OMB believes that an administrative cap
should be implemented, it would be proposed in a subsequent notice.
Other
Comment: Attachment C of the Circular should be updated since a few listed organizations no longer exist.
Response: OMB agrees. Attachment C is updated to delete those organizations that no longer exist or are
no longer exempted from OMB Circular A-122.
Franklin D. Raines
Director
Attachments A,B and C of Circular A-122 are revised as follows:
A. Attachment A
1. Add subparagraph 3 to paragraph C ("Indirect Costs").
3. Indirect costs shall be classified within two broad categories: "Facilities" and "Administration."
"Facilities" is defined as depreciation and use allowances on buildings, equipment and capital
improvement, interest on debt associated with certain buildings, equipment and capital improvements, and
operations and maintenance expenses. "Administration" is defined as general administration and general
expenses such as the director's office, accounting,personnel, library expenses and all other types of
expenditures not listed specifically under one of the subcategories of"Facilities" (including cross
allocations from other pools,where applicable). See indirect cost rate reporting requirements in
subparagraphs D.2.e and D.3.g.
2. Add subparagraph 2.e to paragraph D.
e. For an organization that receives more than$10 million in Federal funding of direct costs in a fiscal year,
a breakout of the indirect cost component into two broad categories, Facilities and Administration as
defined in subparagraph C.3, is required. The rate in each case shall be stated as the percentage which the
amount of the particular indirect cost category(i.e., Facilities or Administration) is of the distribution base
identified with that category.
3. Replace subparagraph D.3 with the following:
3. Multiple allocation base method.
a. General. Where an organization's indirect costs benefit its major functions in varying degrees, indirect
costs shall be accumulated into separate cost groupings, as described in subparagraph b. Each grouping
shall then be allocated individually to benefitting functions by means of a base which best measures the
relative benefits. The default allocation bases by cost pool are described in subparagraph c.
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b. Identification of indirect costs. Cost groupings shall be established so as to permit the allocation of each
grouping on the basis of benefits provided to the major functions. Each grouping shall constitute a pool of
expenses that are of like character in terms of functions they benefit and in terms of the allocation base
which best measures the relative benefits provided to each function. The groupings are classified within the
two broad categories: "Facilities" and "Administration," as described in subparagraph C.3. The indirect
cost pools are defined as follows:
(1)Depreciation and use allowances. The expenses under this heading are the portion of the costs of the
organization's buildings, capital improvements to land and buildings, and equipment which are computed
in accordance with paragraph 11 of Attachment B ("Depreciation and use allowances").
(2)Interest. Interest on debt associated with certain buildings, equipment and capital improvements are
computed in accordance with paragraph 23 of Attachment B ("Interest, fund raising, and investment
management costs").
(3) Operation and maintenance expenses. The expenses under this heading are those that have been
incurred for the administration, operation, maintenance,preservation, and protection of the organization's
physical plant. They include expenses normally incurred for such items as:janitorial and utility services;
repairs and ordinary or normal alterations of buildings, furniture and equipment; care of grounds;
maintenance and operation of buildings and other plant facilities; security; earthquake and disaster
preparedness; environmental safety; hazardous waste disposal;property, liability and other insurance
relating to property; space and capital leasing; facility planning and management; and, central receiving.
The operation and maintenance expenses category shall also include its allocable share of fringe benefit
costs, depreciation and use allowances, and interest costs.
(4) General administration and general expenses. The expenses under this heading are those that have been
incurred for the overall general executive and administrative offices of the organization and other expenses
of a general nature which do not relate solely to any major function of the organization. This category shall
also include its allocable share of fringe benefit costs, operation and maintenance expense, depreciation
and use allowances, and interest costs. Examples of this category include central offices, such as the
director's office, the office of finance,business services, budget and planning,personnel, safety and risk
management, general counsel, management information systems, and library costs.
In developing this cost pool, special care should be exercised to ensure that costs incurred for the same
purpose in like circumstances are treated consistently as either direct or indirect costs. For example,
salaries of technical staff,project supplies, project publication,telephone toll charges, computer costs,
travel costs, and specialized services costs shall be treated as direct costs wherever identifiable to a
particular program. The salaries and wages of administrative and pooled clerical staff should normally be
treated as indirect costs. Direct charging of these costs may be appropriate where a major project or activity
explicitly requires and budgets for administrative or clerical services and other individuals involved can be
identified with the program or activity. Items such as office supplies,postage, local telephone costs,
periodicals and memberships should normally be treated as indirect costs.
c. Allocation bases. Actual conditions shall be taken into account in selecting the base to be used in
allocating the expenses in each grouping to benefitting functions. The essential consideration in selecting a
method or a base is that it is the one best suited for assigning the pool of costs to cost objectives in
accordance with benefits derived; a traceable cause and effect relationship; or logic and reason,where
neither the cause nor the effect of the relationship is determinable. When an allocation can be made by
assignment of a cost grouping directly to the function benefited, the allocation shall be made in that
manner. When the expenses in a cost grouping are more general in nature, the allocation shall be made
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through the use of a selected base which produces results that are equitable to both the Federal Government
and the organization. The distribution shall be made in accordance with the bases described herein unless it
can be demonstrated that the use of a different base would result in a more equitable allocation of the costs,
or that a more readily available base would not increase the costs charged to sponsored awards. The results
of special cost studies(such as an engineering utility study) shall not be used to determine and allocate the
indirect costs to sponsored awards.
(1)Depreciation and use allowances. Depreciation and use allowances expenses shall be allocated in the
following manner:
(a)Depreciation or use allowances on buildings used exclusively in the conduct of a single function, and on
capital improvements and equipment used in such buildings, shall be assigned to that function.
(b)Depreciation or use allowances on buildings used for more than one function, and on capital
improvements and equipment used in such buildings, shall be allocated to the individual functions
performed in each building on the basis of usable square feet of space, excluding common areas, such as
hallways, stairwells, and restrooms.
(c)Depreciation or use allowances on buildings, capital improvements and equipment related space(e.g.,
individual rooms, and laboratories)used jointly by more than one function(as determined by the users of
the space) shall be treated as follows. The cost of each jointly used unit of space shall be allocated to the
benefitting functions on the basis of:
(i)the employees and other users on a full-time equivalent(FTE)basis or salaries and wages of those
individual functions benefitting from the use of that space; or
(ii)organization-wide employee FTEs or salaries and wages applicable to the benefitting functions of the
organization.
(d)Depreciation or use allowances on certain capital improvements to land, such as paved parking areas,
fences, sidewalks, and the like,not included in the cost of buildings, shall be allocated to user categories on
a FTE basis and distributed to major functions in proportion to the salaries and wages of all employees
applicable to the functions.
(2)Interest. Interest costs shall be allocated in the same manner as the depreciation or use allowances on
the buildings, equipment and capital equipments to which the interest relates.
(3) Operation and maintenance expenses. Operation and maintenance expenses shall be allocated in the
same manner as the depreciation and use allowances.
(4) General administration and general expenses. General administration and general expenses shall be
allocated to benefitting functions based on modified total direct costs (MTDC), as described in
subparagraph D.3.f. The expenses included in this category could be grouped first according to major
functions of the organization to which they render services or provide benefits. The aggregate expenses of
each group shall then be allocated to benefitting functions based on MTDC.
d. Order of distribution.
(1)Indirect cost categories consisting of depreciation and use allowances, interest, operation and
maintenance, and general administration and general expenses shall be allocated in that order to the
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remaining indirect cost categories as well as to the major functions of the organization. Other cost
categories could be allocated in the order determined to be most appropriate by the organization. When
cross allocation of costs is made as provided in subparagraph(2),this order of allocation does not apply.
(2)Normally, an indirect cost category will be considered closed once it has been allocated to other cost
objectives, and costs shall not be subsequently allocated to it. However, a cross allocation of costs between
two or more indirect costs categories could be used if such allocation will result in a more equitable
allocation of costs. If a cross allocation is used, an appropriate modification to the composition of the
indirect cost categories is required.
e. Application of indirect cost rate or rates. Except where a special indirect cost rate(s) is required in
accordance with subparagraph D.5, the separate groupings of indirect costs allocated to each major
function shall be aggregated and treated as a common pool for that function. The costs in the common pool
shall then be distributed to individual awards included in that function by use of a single indirect cost rate.
f. Distribution basis. Indirect costs shall be distributed to applicable sponsored awards and other benefitting
activities within each major function on the basis of MTDC. MTDC consists of all salaries and wages,
fringe benefits,materials and supplies, services, travel, and subgrants and subcontracts up to the first
$25,000 of each subgrant or subcontract(regardless of the period covered by the subgrant or subcontract).
Equipment, capital expenditures, charges for patient care,rental costs and the portion in excess of$25,000
shall be excluded from MTDC. Participant support costs shall generally be excluded from MTDC. Other
items may only be excluded when the Federal cost cognizant agency determines that an exclusion is
necessary to avoid a serious inequity in the distribution of indirect costs.
g. Individual Rate Components. An indirect cost rate shall be determined for each separate indirect cost
pool developed. The rate in each case shall be stated as the percentage which the amount of the particular
indirect cost pool is of the distribution base identified with that pool. Each indirect cost rate negotiation or
determination agreement shall include development of the rate for each indirect cost pool as well as the
overall indirect cost rate. The indirect cost pools shall be classified within two broad categories: "Facilities"
and "Administration," as described in subparagraph C.3.
B. Attachment B
Revise the following cost items in Attachment B to Circular A-122 ("Selected Items of Cost").
1. Revise the Table of Contents for Attachment B to read:
1. Advertising and public relations costs
2. Alcoholic beverages
3. Bad debts
4. Bid and proposal costs(reserved)
5. Bonding costs
6. Communication costs
7. Compensation for personal services
8. Contingency provisions
9. Contributions
10. Defense and prosecution of criminal and civil proceedings, claims, appeals and patent infringement
11. Depreciation and use allowances
12. Donations
13. Employee morale, health, and welfare costs and credits
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14. Entertainment costs
15. Equipment and other capital expenditures
16. Fines and penalties
17. Fringe benefits
18. Goods or services for personal use
19. Housing and personal living expenses
20. Idle facilities and idle capacity
21. Independent research and development(reserved)
22. Insurance and indemnification
23. Interest, fund raising, and investment management costs
24. Labor relations costs
25. Lobbying costs
26. Losses on other awards
27. Maintenance and repair costs
28. Materials and supplies
29. Meetings and conferences
30. Memberships, subscriptions, and professional activity costs
31. Organization costs
32. Overtime, extra-pay shift, and multi-shift premiums
33. Page charges in professional journals
34. Participant support costs
35. Patent costs
36. Pension plans
37. Plant security costs
38. Pre-award costs
39. Professional service costs
40. Profits and losses on disposition of depreciable property or other capital assets
41. Publication and printing costs
42. Rearrangement and alteration costs
43. Reconversion costs
44. Recruiting costs
45. Relocation costs
46. Rental costs
47. Royalties and other costs for use of patents and copyrights
48. Selling and marketing
49. Severance pay
50. Specialized service facilities
51. Taxes
52. Termination costs
53. Training and education costs
54. Transportation costs
55. Travel costs
56. Trustees
2. Revise and retitle paragraph 1 to read:
1. Advertising and public relations costs.
a. The term advertising costs means the costs of advertising media and corollary administrative costs.
Advertising media include magazines, newspapers,radio and television programs,direct mail, exhibits,
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and the like.
b. The term public relations includes community relations and means those activities dedicated to
maintaining the image of the organization or maintaining or promoting understanding and favorable
relations with the community or public at large or any segment of the public.
c. The only allowable advertising costs are those which are solely for:
(1)The recruitment of personnel required for the performance by the organization of obligations arising
under a sponsored award,when considered in conjunction with all other recruitment costs, as set forth in
paragraph 44("Recruiting costs");
(2)The procurement of goods and services for the performance of a sponsored award;
(3) The disposal of scrap or surplus materials acquired in the performance of a sponsored award except
when organizations are reimbursed for disposal costs at a predetermined amount in accordance with OMB
Circular A-110, Sec. .34, "Equipment"; or
(4) Other specific purposes necessary to meet the requirements of the sponsored award.
d. The only allowable public relations costs are:
(1) Costs specifically required by sponsored awards;
(2) Costs of communicating with the public and press pertaining to specific activities or accomplishments
which result from performance of sponsored awards (these costs are considered necessary as part of the
outreach effort for the sponsored awards); or
(3) Costs of conducting general liaison with news media and government public relations officers, to the
extent that such activities are limited to communication and liaison necessary to keep the public informed
on matters of public concern, such as notices of contract/grant awards, financial matters, etc.
e. Costs identified in subparagraphs c and d if incurred for more than one sponsored award or for both
sponsored work and other work of the organization, are allowable to the extent that the principles in
paragraphs B ("Direct Costs") and C ("Indirect Costs")of Attachment A are observed.
f. Unallowable advertising and public relations costs include the following:
(1)All advertising and public relations costs other than as specified in subparagraphs c, d, and e;
(2) Costs of meetings or other events related to fund raising or other organizational activities including:
(i) Costs of displays, demonstrations, and exhibits;
(ii) Costs of meeting rooms,hospitality suites, and other special facilities used in conjunction with shows
and other special events; and
(iii) Salaries and wages of employees or cost of services engaged in setting up and displaying exhibits,
making demonstrations, and providing briefings;
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(3) Costs of promotional items and memorabilia, including models, gifts, and souvenirs;
(4) Costs of advertising and public relations designed solely to promote the organization.
3. Renumber current paragraphs 2 through 8 as paragraphs 3 through 9,respectively.
4. Add the following new paragraph 2:
2. Alcoholic beverages.Costs of alcoholic beverages are unallowable.
5. In paragraph 7 ("Compensation for personal services"), as renumbered above in item 3,rename the
current subparagraph g("Pension costs"), as subparagraph h. Add a new subparagraph g:
g. Organization-furnished automobiles. That portion of the cost of organization-furnished automobiles
that relates to personal use by employees (including transportation to and from work) is unallowable as
fringe benefit or indirect costs regardless of whether the cost is reported as taxable income to the
employees. These costs are allowable as direct costs to sponsored award when necessary for the
performance of the sponsored award and approved by awarding agencies.
6. Renumber current paragraphs 9 through 15 as paragraphs 11 through 17,respectively.
7. Add new paragraph 10:
10. Defense and prosecution of criminal and civil proceedings, claims, appeals and patent
infringement.
a. Definitions.
(1) Conviction, as used herein,means a judgment or a conviction of a criminal offense by any court of
competent jurisdiction,whether entered upon as a verdict or a plea, including a conviction due to a plea of
nolo contendere.
(2) Costs include,but are not limited to, administrative and clerical expenses; the cost of legal services,
whether performed by in-house or private counsel; and the costs of the services of accountants, consultants,
or others retained by the organization to assist it; costs of employees, officers and trustees, and any similar
costs incurred before, during, and after commencement of a judicial or administrative proceeding that bears
a direct relationship to the proceedings.
(3)Fraud, as used herein,means (i) acts of fraud corruption or attempts to defraud the Federal Government
or to corrupt its agents, (ii) acts that constitute a cause for debarment or suspension(as specified in agency
regulations), and(iii) acts which violate the False Claims Act, 31 U.S.C., sections 3729-3731, or the
Anti-Kickback Act,41 U.S.C., sections 51 and 54.
(4)Penalty does not include restitution, reimbursement, or compensatory damages.
(5)Proceeding includes an investigation.
b. (1)Except as otherwise described herein, costs incurred in connection with any criminal, civil or
administrative proceeding(including filing of a false certification) commenced by the Federal Government,
or a State, local or foreign government, are not allowable if the-proceeding: (1)relates to a violation of, or
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failure to comply with, a Federal, State, local or foreign statute or regulation by the organization(including
its agents and employees), and(2)results in any of the following dispositions:
(a)In a criminal proceeding, a conviction.
(b)In a civil or administrative proceeding involving an allegation of fraud or similar misconduct, a
determination of organizational liability.
(c) In the case of any civil or administrative proceeding, the imposition of a monetary penalty.
(d)A final decision by an appropriate Federal official to debar or suspend the organization,to rescind or
void an award, or to terminate an award for default by reason of a violation or failure to comply with a law
or regulation.
(e) A disposition by consent or compromise, if the action could have resulted in any of the dispositions
described in(a), (b), (c)or(d).
(2)If more than one proceeding involves the same alleged misconduct, the costs of all such proceedings
shall be unallowable if any one of them results in one of the dispositions shown in subparagraph b.(1).
c. If a proceeding referred to in subparagraph b is commenced by the Federal Government and is resolved
by consent or compromise pursuant to an agreement entered into by the organization and the Federal
Government, then the costs incurred by the organization in connection with such proceedings that are
otherwise not allowable under subparagraph b may be allowed to the extent specifically provided in such
agreement.
d. If a proceeding referred to in subparagraph b is commenced by a State, local or foreign government,the
authorized Federal official may allow the costs incurred by the organization for such proceedings, if such
authorized official determines that the costs were incurred as a result of(1) a specific term or condition of a
federally-sponsored award, or(2) specific written direction of an authorized official of the sponsoring
agency.
e. Costs incurred in connection with proceedings described in subparagraph b,but which are not made
unallowable by that subparagraph, may be allowed by the Federal Government,but only to the extent that:
(1)The costs are reasonable in relation to the activities required to deal with the proceeding and the
underlying cause of action;
(2)Payment of the costs incurred, as allowable and allocable costs, is not prohibited by any other
provision(s) of the sponsored award;
(3) The costs are not otherwise recovered from the Federal Government or a third party, either directly as a
result of the proceeding or otherwise; and,
(4) The percentage of costs allowed does not exceed the percentage determined by an authorized Federal
official to be appropriate, considering the complexity of the litigation, generally accepted principles
governing the award of legal fees in civil actions involving the United States as a party, and such other
factors as may be appropriate. Such percentage shall not exceed 80 percent. However, if an agreement
reached under subparagraph c has explicitly considered this 80 percent limitation and permitted a higher
percentage, then the full amount of costs resulting from that agreement shall be allowable.
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f. Costs incurred by the organization in connection with the defense of suits brought by its employees or
ex-employees under section 2 of the Major Fraud Act of 1988 (Pub. L. 100-700), including the cost of all
relief necessary to make such employee whole,where the organization was found liable or settled, are
unallowable.
g. Costs of legal, accounting, and consultant services, and related costs, incurred in connection with
defense against Federal Government claims or appeals, antitrust suits, or the prosecution of claims or
appeals against the Federal Government, are unallowable.
h. Costs of legal, accounting, and consultant services, and related costs, incurred in connection with patent
infringement litigation, are unallowable unless otherwise provided for in the sponsored awards.
i. Costs which may be unallowable under this paragraph, including directly associated costs, shall be
segregated and accounted for by the organization separately. During the pendency of any proceeding
covered by subparagraphs b and f, the Federal Government shall generally withhold payment of such costs.
However, if in the best interests of the Federal Government,the Federal Government may provide for
conditional payment upon provision of adequate security, or other adequate assurance, and agreements by
the organization to repay all unallowable costs,plus interest, if the costs are subsequently determined to be
unallowable.
8. In paragraph 15 ("Equipment and other capital expenditures"), as renumbered in item 6 above,replace
subparagraphs 15.a.(1) and 15.b.(2)to read:
15.a.(1) "Equipment" means an article of nonexpendable,tangible personal property having a useful life of
more than one year and an acquisition cost which equals or exceeds the lesser of(a)the capitalization level
established by the organization for the financial statement purposes, or(b) $5000. The unamortized portion
of any equipment written off as a result of a change in capitalization levels may be recovered by continuing
to claim the otherwise allowable use allowances or depreciation on the equipment, or by amortizing the
amount to be written off over a period of years as negotiated with the Federal cognizant agency.
15.b.(2) Capital expenditures for special purpose equipment are allowable as direct costs,provided that
items with a unit cost of$5000 or more have the prior approval of awarding agency.
9. Renumber current paragraphs 16 through 36 as paragraphs 20 through 40, respectively.
10. Add new paragraph 18:
18. Goods or services for personal use. Costs of goods or services for personal use of the organization's
employees are unallowable regardless of whether the cost is reported as taxable income to the employees.
11. Add new paragraph 19:
19. Housing and personal living expenses.
a. Costs of housing(e.g., depreciation,maintenance, utilities, furnishings,rent, etc.),housing allowances
and personal living expenses for/of the organization's officers are unallowable as fringe benefit or indirect
costs regardless of whether the cost is reported as taxable income to the employees. These costs are
allowable as direct costs to sponsored awards when necessary for the performance of the sponsored award
and approved by awarding agencies.
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b. The term"officers" includes current and past officers and employees.
12. Add to paragraph 22.a.(2) ("Insurance and indemnification"), as renumbered in item 9, subparagraphs
(f)and(g):
(f)Insurance against defects. Costs of insurance with respect to any costs incurred to correct defects in the
organization's materials or workmanship are unallowable.
(g)Medical liability(malpractice) insurance. Medical liability insurance is an allowable cost of Federal
research programs only to the extent that the Federal research programs involve human subjects or training
of participants in research techniques. Medical liability insurance costs shall be treated as a direct cost and
shall be assigned to individual projects based on the manner in which the insurer allocates the risk to the
population covered by the insurance.
13. Revise paragraph 30, as renumbered in item 9,to read:
30. Memberships,subscriptions and professional activity costs.
a. Costs of the organization's membership in business, technical, and professional organizations are
allowable.
b. Costs of the organization's subscriptions to business,professional, and technical periodicals are
allowable.
c. Costs of meetings and conferences, when the primary purpose is the dissemination of technical
information, are allowable. This includes costs of meals, transportation, rental of facilities, and other items
incidental to such meetings or conferences.
d. Costs of membership in any civic or community organization are allowable with prior approval by
Federal cognizant agency.
e. Costs of membership in any country club or social or dining club or organization are unallowable.
14. Delete subparagraph 39.d, as renumbered in item 9.
15. Delete current paragraph 37 ("Public service costs").
16. Renumber current paragraphs 38 through 44 as paragraphs 41 through 47,respectively.
17. Revise paragraph 44, as renumbered in item 16,to read:
44. Recruiting costs.
a. Subject to subparagraphs b, c, and d, and provided that the size of the staff recruited and maintained is in
keeping with workload requirements, costs of"help wanted" advertising, operating costs of an employment
office necessary to secure and maintain an adequate staff, costs of operating an aptitude and educational
testing program, travel costs of employees while engaged in recruiting personnel, travel costs of applicants
for interviews for prospective employment, and relocation costs incurred incident to recruitment of new
employees, are allowable to the extent that such costs are incurred pursuant to a well-managed recruitment
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program. Where the organization uses employment agencies, costs that are not in excess of standard
commercial rates for such services are allowable.
b. In publications, costs of help wanted advertising that includes color, includes advertising material for
other than recruitment purposes, or is excessive in size(taking into consideration recruitment purposes for
which intended and normal organizational practices in this respect), are unallowable.
c. Costs of help wanted advertising, special emoluments, fringe benefits, and salary allowances incurred to
attract professional personnel from other organizations that do not meet the test of reasonableness or do not
conform with the established practices of the organization, are unallowable.
d. Where relocation costs incurred incident to recruitment of a new employee have been allowed either as
an allocable direct or indirect cost, and the newly hired employee resigns for reasons within his control
within twelve months after being hired, the organization will be required to refund or credit such relocation
costs to the Federal Government.
18. Renumber current paragraphs 45 through 51 as paragraphs 49 through 55,respectively.
19. Add new paragraph 48:
48. Selling and marketing. Costs of selling and marketing any products or services of the organization
(unless allowed under paragraph 1 as allowable public relations costs) are unallowable. These costs,
however, are allowable as direct costs,with prior approval by awarding agencies,when they are necessary
for the performance of Federal programs.
20. Add new subparagraphs c, d and e to paragraph 49 ("Severance pay"), as renumbered in item 18, as
follow:
c. Costs incurred in certain severance pay packages(commonly known as "a golden parachute"payment)
which are in an amount in excess of the normal severance pay paid by the organization to an employee
upon termination of employment and are paid to the employee contingent upon a change in management
control over, or ownership of,the organization's assets are unallowable.
d. Severance payments to foreign nationals employed by the organization outside the United States,to the
extent that the amount exceeds the customary or prevailing practices for the organization in the United
States are unallowable, unless they are necessary for the performance of Federal programs and approved by
awarding agencies.
e. Severance payments to foreign nationals employed by the organization outside the United States due to
the termination of the foreign national as a result of the closing of, or curtailment of activities by, the
organization in that country, are unallowable, unless they are necessary for the performance of Federal
programs and approved by awarding agencies.
21. Add new paragraph 56:
56. Trustees. Travel and subsistence costs of trustees (or directors) are allowable. The costs are subject to
restrictions regarding lodging, subsistence and air travel costs provided in paragraph 55.
C. Attachment C
.)
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1. Delete the following organizations from Attachment C. These organizations either no longer exist or are
no longer exempted from complying with Circular A-122.
• Associated Universities,Incorporated,Washington,D.C.
•
• Associated Universities for Research and Astronomy, Tucson, Arizona
• Center for Energy and Environmental Research(CEER), (University of Puerto Rico),
Commonwealth of Puerto Rico
• Comparative Animal Research Laboratory(CARL), (University of Tennessee), Oak Ridge,
Tennessee
• Institute of Gas Technology,Chicago, Illinois
• Montana Energy Research and Development Institute, Inc., (MERDI), Butte,Montana
• Project Management Corporation, Oak Ridge, Tennessee
• Sandia Corporation, Albuquerque,New Mexico
• Universities Corporation for Atmospheric Research,Boulder, Colorado
2. Change Argonne Universities Association, Chicago,Illinois to Argonne National Laboratory, Chicago,
Illinois.
3. Change the location of the Institute for Defense Analysis in Virginia from Arlington to Alexandria.
4. Replace Midwest Research Institute,Headquartered in Kansas City, Missouri to National Renewable
Energy Laboratory, Golden, Colorado.
D. A recompilation of the entire Circular A-122, with all its amendments, follows:
CIRCULAR NO. A-122
Revised
TO THE HEADS OF EXECUTIVE DEPARTMENTS AND ESTABLISHMENTS
SUBJECT: Cost Principles for Non-Profit Organizations
1. Purpose. This Circular establishes principles for determining costs of grants, contracts and other
agreements with non-profit organizations. It does not apply to colleges and universities which are covered
by Office of Management and Budget(OMB) Circular A-21, "Cost Principles for Educational Institutions";
State, local, and federally-recognized Indian tribal governments which are covered by OMB Circular A-87,
"Cost Principles for State, Local, and Indian Tribal Governments"; or hospitals. The principles are designed
to provide that the Federal Government bear its fair share of costs except where restricted or prohibited by
law. The principles do not attempt to prescribe the extent of cost sharing or matching on grants, contracts,
or other agreements. However, such cost sharing or matching shall not be accomplished through arbitrary
limitations on individual cost elements by Federal agencies. Provision for profit or other increment above
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cost is outside the scope of this Circular.
2. Supersession. This Circular supersedes cost principles issued by individual agencies for non-profit
organizations.
3. Applicability.
a. These principles shall be used by all Federal agencies in determining the costs of work performed by
non-profit organizations under grants, cooperative agreements, cost reimbursement contracts, and other
contracts in which costs are used in pricing, administration, or settlement. All of these instruments are
hereafter referred to as awards. The principles do not apply to awards under which an organization is not
required to account to the Federal Government for actual costs incurred.
b. All cost reimbursement subawards(subgrants, subcontracts, etc.) are subject to those Federal cost
principles applicable to the particular organization concerned. Thus, if a subaward is to a non-profit
organization,this Circular shall apply; if a subaward is to a commercial organization,the cost principles
applicable to commercial concerns shall apply; if a subaward is to a college or university, Circular A-21
shall apply; if a subaward is to a State, local,or federally-recognized Indian tribal government, Circular
A-87 shall apply.
4. Definitions.
a. Non-profit organization means any corporation, trust, association, cooperative, or other organization
which:
(1) is operated primarily for scientific, educational, service, charitable, or similar purposes in the public
interest;
(2) is not organized primarily for profit; and
(3)uses its net proceeds to maintain, improve, and/or expand its operations. For this purpose, the term
"non-profit organization" excludes (i)colleges and universities; (ii)hospitals; (iii) State, local, and
federally-recognized Indian tribal governments; and(iv)those non-profit organizations which are excluded
from coverage of this Circular in accordance with paragraph 5.
b. Prior approval means securing the awarding agency's permission in advance to incur cost for those
items that are designated as requiring prior approval by the Circular. Generally this permission will be in
writing. Where an item of cost requiring prior approval is specified in the budget of an award, approval of
the budget constitutes approval of that cost.
5. Exclusion of some non-profit organizations. Some non-profit organizations,because of their size and
nature of operations, can be considered to be similar to commercial concerns for purpose of applicability of
cost principles. Such non-profit organizations shall operate under Federal cost principles applicable to
commercial concerns. A listing of these organizations is contained in Attachment C. Other organizations
may be added from time to time.
6. Responsibilities. Agencies responsible for administering programs that involve awards to non-profit
organizations shall implement the provisions of this Circular. Upon request, implementing instruction shall
be furnished to OMB. Agencies shall designate a liaison official to serve as the agency representative on
matters relating to the implementation of this Circular. The name and title of such representative shall be L
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furnished to OMB within 30 days of the date of this Circular.
7. Attachments. The principles and related policy guides are set forth in the following Attachments:
Attachment A- General Principles
Attachment B - Selected Items of Cost
Attachment C -Non-Profit Organizations Not Subject To This Circular
8. Requests for exceptions. OMB may grant exceptions to the requirements of this Circular when
permissible under existing law. However, in the interest of achieving maximum uniformity, exceptions will
be permitted only in highly unusual circumstances.
9. Effective Date. The provisions of this Circular are effective immediately. Implementation shall be
phased in by incorporating the provisions into new awards made after the start of the organization's next
fiscal year. For existing awards, the new principles may be applied if an organization and the cognizant
Federal agency agree. Earlier implementation, or a delay in implementation of individual provisions, is also
permitted by mutual agreement between an organization and the cognizant Federal agency.
10. Inquiries. Further information concerning this Circular may be obtained by contacting the Office of
Federal Financial Management, OMB, Washington, DC 20503, telephone (202) 395-3993.
Attachments
ATTACHMENT A
Circular No. A-122
GENERAL PRINCIPLES
Table of Contents
A. Basic Considerations
1. Composition of total costs
2. Factors affecting allowability of costs
3. Reasonable costs
4. Allocable costs
5. Applicable credits
6. Advance understandings
7. Conditional exemptions
B. Direct Costs
•
C. Indirect Costs
D. Allocation of Indirect Costs and Determination of Indirect Cost Rates
1. General
2. Simplified allocation method
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3. Multiple allocation base method
4. Direct allocation method
5. Special indirect cost rates
E.Negotiation and Approval of Indirect Cost Rates
1. Definitions
2. Negotiation and approval of rates
ATTACHMENT A
Circular No. A-122 •
GENERAL PRINCIPLES
A. Basic Considerations
1. Composition of total costs. The total cost of an award is the sum of the allowable direct and allocable
indirect costs less any applicable credits.
2.Factors affecting allowability of costs. To be allowable under an award, costs must meet the following
general criteria:
a. Be reasonable for the performance of the award and be allocable thereto under these principles.
b. Conform to any limitations or exclusions set forth in these principles or in the award as to types or
amount of cost items.
c. Be consistent with policies and procedures that apply uniformly to both federally-financed and other
activities of the organization.
d. Be accorded consistent treatment.
e. Be determined in accordance with generally accepted accounting principles (GAAP).
f. Not be included as a cost or used to meet cost sharing or matching requirements of any other
federally-financed program in either the current or a prior period.
g. Be adequately documented.
3.Reasonable costs. A cost is reasonable if, in its nature or amount,it does not exceed that which would be
incurred by a prudent person under the circumstances prevailing at the time the decision was made to incur
the costs. The question of the reasonableness of specific costs must be scrutinized with particular care in
connection with organizations or separate divisions thereof which receive the preponderance of their
support from awards made by Federal agencies. In determining the reasonableness of a given cost,
consideration shall be given to:
a. Whether the cost is of a type generally recognized as ordinary and necessary for the operation of the
organization or the performance of the award.
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b. The restraints or requirements imposed by such factors as generally accepted sound business practices,
arms length bargaining, Federal and State laws and regulations, and terms and conditions of the award.
c. Whether the individuals concerned acted with prudence in the circumstances,considering their
responsibilities to the organization, its members, employees, and clients,the public at large, and the
Federal Government.
d. Significant deviations from the established practices of the organization which may unjustifiably
increase the award costs.
4.Allocable costs.
a. A cost is allocable to a particular cost objective, such as a grant,contract,project, service, or other
activity, in accordance with the relative benefits received. A cost is allocable to a Federal award if it is
treated consistently with other costs incurred for the same purpose in like circumstances and if it:
(1) Is incurred specifically for the award.
(2)Benefits both the award and other work and can be distributed in reasonable proportion to the benefits
received, or
(3)Is necessary to the overall operation of the organization, although a direct relationship to any particular
cost objective cannot be shown.
b. Any cost allocable to a particular award or other cost objective under these principles may not be shifted
to other Federal awards to overcome funding deficiencies, or to avoid restrictions imposed by law or by the
terms of the award.
5.Applicable credits.
a. The term applicable credits refers to those receipts, or reduction of expenditures which operate to offset
or reduce expense items that are allocable to awards as direct or indirect costs. Typical examples of such
transactions are: purchase discounts,rebates or allowances,recoveries or indemnities on losses,insurance
refunds, and adjustments of overpayments or erroneous charges. To the extent that such credits accruing or
received by the organization relate to allowable cost, they shall be credited to the Federal Government
either as a cost reduction or cash refund, as appropriate.
b. In some instances, the amounts received from the Federal Government to finance organizational
activities or service operations should be treated as applicable credits. Specifically, the concept of netting
such credit items against related expenditures should be applied by the organization in determining the
rates or amounts to be charged to Federal awards for services rendered whenever the facilities or other
resources used in providing such services have been financed directly, in whole or in part,by Federal
funds.
c. For rules covering program income(i.e., gross income earned from federally-supported activities) see
Sec. ' .24 of Office of Management and Budget(OMB) Circular A-110, "Uniform Administrative
Requirements for Grants and Agreements with Institutions of Higher Education,Hospitals, and Other
Non-Profit Organizations."
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6.Advance understandings. Under any given award, the reasonableness and allocability of certain items of
costs may be difficult to determine. This is particularly true in connection with organizations that receive a
preponderance of their support from Federal agencies. In order to avoid subsequent disallowance or dispute
based on unreasonableness or nonallocability,it is often desirable to seek a written agreement with the
cognizant or awarding agency in advance of the incurrence of special or unusual costs. The absence of an
advance agreement on any element of cost will not, in itself, affect the reasonableness or allocability of that
element.
7. 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 rule.
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.
B. Direct Costs
1. Direct costs are those that can be identified specifically with a particular final cost objective, i.e., a
particular award,project, service, or other direct activity of an organization. However, a cost may not be
assigned to an award as a direct cost if any other cost incurred for the same purpose, in like circumstance,
has been allocated to an award as an indirect cost. Costs identified specifically with awards are direct costs
of the awards and are to be assigned directly thereto. Costs identified specifically with other final cost
objectives of the organization are direct costs of those cost objectives and are not to be assigned to other
awards directly or indirectly.
2. Any direct cost of a minor amount may be treated as an indirect cost for reasons of practicality where the
accounting treatment for such cost is consistently applied to all final cost objectives.
3. The cost of certain activities are not allowable as charges to Federal awards (see, for example,
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fundraising costs in paragraph 23 of Attachment B). However, even though these costs are unallowable
for purposes of computing charges to Federal awards, they nonetheless must be treated as direct costs for
purposes of determining indirect cost rates and be allocated their share of the organization's indirect costs if
they represent activities which(1)include the salaries of personnel, (2) occupy space, and(3)benefit from
the organization's indirect costs.
4. The costs of activities performed primarily as a service to members, clients, or the general public when
significant and necessary to the organization's mission must be treated as direct costs whether or not
allowable and be allocated an equitable share of indirect costs. Some examples of these types of activities
include:
a. Maintenance of membership rolls, subscriptions,publications, and related functions.
b. Providing services and information to members, legislative or administrative bodies, or the public.
c. Promotion, lobbying, and other forms of public relations.
d. Meetings and conferences except those held to conduct the general administration of the organization.
e. Maintenance, protection, and investment of special funds not used in operation of the organization.
f. Administration of group benefits on behalf of members or clients, including life and hospital insurance,
annuity or retirement plans, financial aid, etc.
C. Indirect Costs
1. Indirect costs are those that have been incurred for common or joint objectives and cannot be readily
identified with a particular final cost objective. Direct cost of minor amounts may be treated as indirect
costs under the conditions described in subparagraph B.2. After direct costs have been determined and
assigned directly to awards or other work as appropriate, indirect costs are those remaining to be allocated
to benefiting cost objectives. A cost may not be allocated to an award as an indirect cost if any other cost
incurred for the same purpose, in like circumstances,has been assigned to an award as a direct cost.
2. Because of the diverse characteristics and accounting practices of non-profit organizations, it is not
possible to specify the types of cost which may be classified as indirect cost in all situations. However,
typical examples of indirect cost for many non-profit organizations may include depreciation or use
allowances on buildings and equipment,the costs of operating and maintaining facilities, and general
administration and general expenses, such as the salaries and expenses of executive officers,personnel
administration, and accounting.
3. Indirect costs shall be classified within two broad categories: "Facilities" and "Administration."
"Facilities" is defined as depreciation and use allowances on buildings, equipment and capital
improvement, interest on debt associated with certain buildings, equipment and capital improvements, and
operations and maintenance expenses. "Administration" is defined as general administration and general
expenses such as the director's office, accounting,personnel, library expenses and all other types of
expenditures not listed specifically under one of the subcategories of"Facilities" (including cross
allocations from other pools, where applicable). See indirect cost rate reporting requirements in
subparagraphs D.2.e and D.3.g.
D. Allocation of Indirect Costs and Determination of Indirect Cost Rates
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•
1. General.
a. Where a non-profit organization has only one major function, or where all its major functions benefit
from its indirect costs to approximately the same degree,the allocation of indirect costs and the
computation of an indirect cost rate may be accomplished through simplified allocation procedures, as
described in subparagraph 2.
b. Where an organization has several major functions which benefit from its indirect costs in varying
degrees, allocation of indirect costs may require the accumulation of such costs into separate cost
groupings which then are allocated individually to benefiting functions by means of a base which best
measures the relative degree of benefit. The indirect costs allocated to each function are then distributed to
individual awards and other activities included in that function by means of an indirect cost rate(s).
c. The determination of what constitutes an organization's major functions will depend on its purpose in
being; the types of services it renders to the public, its clients, and its members; and the amount of effort it
devotes to such activities as fundraising,public information and membership activities.
d. Specific methods for allocating indirect costs and computing indirect cost rates along with the conditions
under which each method should be used are described in subparagraphs 2 through 5.
e. The base period for the allocation of indirect costs is the period in which such costs are incurred and
accumulated for allocation to work performed in that period. The base period normally should coincide
with the organization's fiscal year but, in any event, shall be so selected as to avoid inequities in the
allocation of the costs.
2. Simplified allocation method.
a. Where an organization's major functions benefit from its indirect costs to approximately the same
degree, the allocation of indirect costs may be accomplished by(i) separating the organization's total costs
for the base period as either direct or indirect, and(ii)dividing the total allowable indirect costs(net of
applicable credits)by an equitable distribution base. The result of this process is an indirect cost rate which
is used to distribute indirect costs to individual awards. The rate should be expressed as the percentage
which the total amount of allowable indirect costs bears to the base selected. This method should also be
used where an organization has only one major function encompassing a number of individual projects or
activities, and may be used where the level of Federal awards to an organization is relatively small.
b. Both the direct costs and the indirect costs shall exclude capital expenditures and unallowable costs.
However,unallowable costs which represent activities must be included in the direct costs under the
conditions described in subparagraph B.3.
c. The distribution base may be total direct costs(excluding capital expenditures and other distorting items,
such as major subcontracts or subgrants), direct salaries and wages, or other base which results in an
equitable distribution. The distribution base shall generally exclude participant support costs as defined in
paragraph 34 of Attachment B.
d. Except where a special rate(s) is required in accordance with subparagraph 5,the indirect cost rate
developed under the above principles is applicable to all awards at the organization. If a special rate(s) is
required, appropriate modifications shall be made in order to develop the special rate(s).
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e. For an organization that receives more than$10 million in Federal funding of direct costs in a fiscal year,
a breakout of the indirect cost component into two broad categories, Facilities and Administration as
defined in subparagraph C.3, is required. The rate in each case shall be stated as the percentage which the
amount of the particular indirect cost category(i.e.,Facilities or Administration) is of the distribution base
identified with that category.
3. Multiple allocation base method
a. General. Where an organization's indirect costs benefit its major functions in varying degrees, indirect
costs shall be accumulated into separate cost groupings, as described in subparagraph b. Each grouping
shall then be allocated individually to benefitting functions by means of a base which best measures the
relative benefits. The default allocation bases by cost pool are described in subparagraph c.
b. Identification of indirect costs. Cost groupings shall be established so as to permit the allocation of each
grouping on the basis of benefits provided to the major functions. Each grouping shall constitute a pool of
expenses that are of like character in terms of functions they benefit and in terms of the allocation base
which best measures the relative benefits provided to each function. The groupings are classified within the
two broad categories: "Facilities" and "Administration," as described in subparagraph C.3. The indirect
cost pools are defined as follows:
(1)Depreciation and use allowances. The expenses under this heading are the portion of the costs of the
organization's buildings, capital improvements to land and buildings, and equipment which are computed
in accordance with paragraph 11 of Attachment B ("Depreciation and use allowances").
(2)Interest.Interest on debt associated with certain buildings, equipment and capital improvements are
computed in accordance with paragraph 23 of Attachment B ("Interest, fundraising, and investment
management costs").
(3) Operation and maintenance expenses. The expenses under this heading are those that have been
incurred for the administration, operation,maintenance,preservation, and protection of the organization's
physical plant. They include expenses normally incurred for such items as:janitorial and utility services;
repairs and ordinary or normal alterations of buildings, furniture and equipment; care of grounds;
maintenance and operation of buildings and other plant facilities; security; earthquake and disaster
preparedness; environmental safety; hazardous waste disposal; property, liability and other insurance
relating to property; space and capital leasing; facility planning and management; and, central receiving.
The operation and maintenance expenses category shall also include its allocable share of fringe benefit
costs, depreciation and use allowances, and interest costs.
(4) General administration and general expenses. The expenses under this heading are those that have been
incurred for the overall general executive and administrative offices of the organization and other expenses
of a general nature which do not relate solely to any major function of the organization. This category shall
also include its allocable share of fringe benefit costs,operation and maintenance expense, depreciation
and use allowances, and interest costs. Examples of this category include central offices, such as the
director's office, the office of finance,business services,budget and planning, personnel, safety and risk
management, general counsel,management information systems, and library costs.
In developing this cost pool, special care should be exercised to ensure that costs incurred for the same
purpose in like circumstances are treated consistently as either direct or indirect costs. For example,
salaries of technical staff,project supplies,project publication, telephone toll charges, computer costs,
travel costs, and specialized services costs shall be treated as direct costs wherever identifiable to a
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particular program. The salaries and wages of administrative and pooled clerical staff should normally be
treated as indirect costs. Direct charging of these costs may be appropriate where a major project or activity
explicitly requires and budgets for administrative or clerical services and other individuals involved can be
identified with the program or activity. Items such as office supplies,postage, local telephone costs,
periodicals and memberships should normally be treated as indirect costs.
c. Allocation bases. Actual conditions shall be taken into account in selecting the base to be used in
allocating the expenses in each grouping to benefitting functions. The essential consideration in selecting a
method or a base is that it is the one best suited for assigning the pool of costs to cost objectives in
accordance with benefits derived; a traceable cause and effect relationship; or logic and reason,where
neither the cause nor the effect of the relationship is determinable. When an allocation can be made by
assignment of a cost grouping directly to the function benefited, the allocation shall be made in that
manner. When the expenses in a cost grouping are more general in nature, the allocation shall be made
through the use of a selected base which produces results that are equitable to both the Federal Government
and the organization. The distribution shall be made in accordance with the bases described herein unless it
can be demonstrated that the use of a different base would result in a more equitable allocation of the costs,
or that a more readily available base would not increase the costs charged to sponsored awards. The results
of special cost studies (such as an engineering utility study) shall not be used to determine and allocate the
indirect costs to sponsored awards.
(1)Depreciation and use allowances. Depreciation and use allowances expenses shall be allocated in the
following manner:
(a)Depreciation or use allowances on buildings used exclusively in the conduct of a single function, and on
capital improvements and equipment used in such buildings, shall be assigned to that function.
(b)Depreciation or use allowances on buildings used for more than one function, and on capital
improvements and equipment used in such buildings, shall be allocated to the individual functions
performed in each building on the basis of usable square feet of space, excluding common areas, such as
hallways, stairwells, and restrooms.
(c)Depreciation or use allowances on buildings, capital improvements and equipment related space (e.g.,
individual rooms, and laboratories)used jointly by more than one function(as determined by the users of
the space) shall be treated as follows. The cost of each jointly used unit of space shall be allocated to the
benefitting functions on the basis of:
(i)the employees and other users on a full-time equivalent(FTE)basis or salaries and wages of those
individual functions benefitting from the use of that space; or
(ii)organization-wide employee FTEs or salaries and wages applicable to the benefitting functions of the
organization.
(d)Depreciation or use allowances on certain capital improvements to land, such as paved parking areas,
fences, sidewalks, and the like,not included in the cost of buildings, shall be allocated to user categories on
a FTE basis and distributed to major functions in proportion to the salaries and wages of all employees
applicable to the functions.
(2) Interest. Interest costs shall be allocated in the same manner as the depreciation or use allowances on
the buildings, equipment and capital equipments to which the interest relates.
0
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(3) Operation and maintenance expenses. Operation and maintenance expenses shall be allocated in the
same manner as the depreciation and use allowances.
(4) General administration and general expenses. General administration and general expenses shall be
allocated to benefitting functions based on modified total direct costs (MTDC), as described in
subparagraph D.3.f. The expenses included in this category could be grouped first according to major
functions of the organization to which they render services or provide benefits. The aggregate expenses of
each group shall then be allocated to benefitting functions based on.MTDC.
d. Order of distribution.
(1) Indirect cost categories consisting of depreciation and use allowances, interest, operation and
maintenance, and general administration and general expenses shall be allocated in that order to the
remaining indirect cost categories as well as to the major functions of the organization. Other cost
categories could be allocated in the order determined to be most appropriate by the organization. When
cross allocation of costs is made as provided in subparagraph (2), this order of allocation does not apply.
(2)Normally, an indirect cost category will be considered closed once it has been allocated to other cost
objectives, and costs shall not be subsequently allocated to it. However, a cross allocation of costs between
two or more indirect costs categories could be used if such allocation will result in a more equitable
allocation of costs. If a cross allocation is used, an appropriate modification to the composition of the
indirect cost categories is required.
e. Application of indirect cost rate or rates. Except where a special indirect cost rate(s) is required in
accordance with subparagraph D.5, the separate groupings of indirect costs allocated to each major
function shall be aggregated and treated as a common pool for that function. The costs in the common pool
shall then be distributed to individual awards included in that function by use of a single indirect cost rate.
f. Distribution basis. Indirect costs shall be distributed to applicable sponsored awards and other benefitting
activities within each major function on the basis of MTDC. MTDC consists of all salaries and wages,
fringe-benefits,materials and supplies, services,travel, and subgrants and subcontracts up to the first
$25,000 of each subgrant or subcontract (regardless of the period covered by the subgrant or subcontract).
Equipment, capital expenditures, charges for patient care,rental costs and the portion in excess of$25,000
shall be excluded from MTDC. Participant support costs shall generally be excluded from MTDC. Other
items may only be excluded when the Federal cost cognizant agency determines that an exclusion is
necessary to avoid a serious inequity in the distribution of indirect costs.
g. Individual Rate Components. An indirect cost rate shall be determined for each separate indirect cost
pool developed. The rate in each case shall be stated as the percentage which the amount of the particular
indirect cost pool is of the distribution base identified with that pool. Each indirect cost rate negotiation or
determination agreement shall include development of the rate for each indirect cost pool as well as the
overall indirect cost rate. The indirect cost pools shall be classified within two broad categories: "Facilities"
and "Administration," as described in subparagraph C.3.
4. Direct allocation method.
a. Some non-profit organizations treat all costs as direct costs except general administration and general
expenses. These organizations generally separate their costs into three basic categories: (i) General
administration and general expenses, (ii) fundraising, and(iii) other direct functions(including projects
performed under Federal awards). Joint costs, such as depreciation, rental costs, operation and maintenance
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of facilities, telephone expenses, and the like are prorated individually as direct costs to each category and
to each award or other activity using a base most appropriate to the particular cost being prorated.
b. This method is acceptable,provided each joint cost is prorated using a base which accurately measures
the benefits provided to each award or other activity. The bases must be established in accordance with
reasonable criteria, and be supported by current data.;This method is compatible with the Standards of
Accounting and Financial Reporting for Voluntary Health and Welfare Organizations issued jointly by the
National Health Council, Inc., the National Assembly of Voluntary Health and Social Welfare
Organizations, and the United Way of America.
c. Under this method, indirect costs consist exclusively of general administration and general expenses. In
all other respects, the organization's indirect cost rates shall be computed in the same manner as that
described in subparagraph 2.
5. Special indirect cost rates. In some instances, a single indirect cost rate for all activities of an
organization or for each major function of the organization may not be appropriate, since it would not take
into account those different factors which may substantially affect the indirect costs applicable to a
particular segment of work. For this purpose, a particular segment of work may be that performed under a
single award or it may consist of work under a group of awards performed in a common environment.
These factors may include the physical location of the work,the level of administrative support required,
the nature of the facilities or other resources employed, the scientific disciplines or technical skills
involved, the organizational arrangements used, or any combination thereof. When a particular segment of
work is performed in an environment which appears to generate a significantly different level of indirect
costs,provisions should be made for a separate indirect cost pool applicable to such work. The separate
indirect cost pool should be developed during the course of the regular allocation process, and the separate
indirect cost rate resulting therefrom should be used,provided it is determined that(i)the rate differs
significantly from that which would have been obtained under subparagraphs 2,3, and 4, and(ii)the
volume of work to which the rate would apply is material.
E. Negotiation and Approval of Indirect Cost Rates
1. Definitions. As used in this section,the following terms have the meanings set forth below:
a. Cognizant agency means the Federal agency responsible for negotiating and approving indirect cost
rates for a non-profit organization on behalf of all Federal agencies.
b. Predetermined rate means an indirect cost rate, applicable to a specified current or future period,
usually the organization's fiscal year. The rate is based on an estimate of the costs to be incurred during the
period. A predetermined rate is not subject to adjustment.
c. Fixed rate means an indirect cost rate which has the same characteristics as a predetermined rate, except
that the difference between the estimated costs and the actual costs of the period covered by the rate is
carried forward as an adjustment to the rate computation of a subsequent period.
d. Final rate means an indirect cost rate applicable to a specified past period which is based on the actual
costs of the period. A final rate is not subject to adjustment.
e. Provisional rate or billing rate means a temporary indirect cost rate applicable to a specified period
which is used for funding, interim reimbursement, and reporting indirect costs on awards pending the
establishment of a final rate for the period.
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f. Indirect cost proposal means the documentation prepared by an organization to substantiate its claim
for the reimbursement of indirect costs. This proposal provides the basis for the review and negotiation
leading to the establishment of an organization's indirect cost rate.
g. Cost objective means a function, organizational subdivision, contract, grant, or other work unit for
which cost data are desired and for which provision is made to accumulate and measure the cost of
processes,projects,jobs and capitalized projects. •
2. Negotiation and approval of rates.
a. Unless different arrangements are agreed to by the agencies concerned, the Federal agency with the
largest dollar value of awards with an organization will be designated as the cognizant agency for the
negotiation and approval of the indirect cost rates and,where necessary, other rates such as fringe benefit
and computer charge-out rates. Once an agency is assigned cognizance for a particular non-profit
organization, the assignment will not be changed unless there is a major long-term shift in the dollar
volume of the Federal awards to the organization. All concerned Federal agencies shall be given the
opportunity to participate in the negotiation process but, after a rate has been agreed upon, it will be
accepted by all Federal agencies. When a Federal agency has reason to believe that special operating
factors affecting its awards necessitate special indirect cost rates in accordance with subparagraph D.5, it
will,prior to the time the rates are negotiated,notify the cognizant agency.
b. A non-profit organization which has not previously established an indirect cost rate with a Federal
agency shall submit its initial indirect cost proposal immediately after the organization is advised that an
award will be made and, in no event,.later than three months after the effective date of the award.
c. Organizations that have previously established indirect cost rates must submit a new indirect cost
proposal to the cognizant agency within six months after the close of each fiscal year.
d. A predetermined rate may be negotiated for use on awards where there is reasonable assurance,based on
past experience and reliable projection of the organization's costs,that the rate is not likely to exceed a rate
based on the organization's actual costs.
e. Fixed rates may be negotiated where predetermined rates are not considered appropriate. A fixed rate,
however, shall not be negotiated if(i) all or a substantial portion of the organization's awards are expected
to expire before the carry-forward adjustment can be made; (ii)the mix of Federal and non-Federal work at
the organization is too erratic to permit an equitable carry-forward adjustment; or(iii)the organization's
operations fluctuate significantly from year to year.
f. Provisional and final rates shall be negotiated where neither predetermined nor fixed rates are
appropriate.
g. The results of each negotiation shall be formalized in a written agreement between the cognizant agency
and the non-profit organization. The cognizant agency shall distribute copies of the agreement to all
concerned Federal agencies.
h. If a dispute arises in a negotiation of an indirect cost rate between the cognizant agency and the
non-profit organization, the dispute shall be resolved in accordance with the appeals procedures of the
pPs
cognizant agency.
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1. To the extent that problems are encountered among the Federal agencies in connection with the
negotiation and approval process, OMB will lend assistance as required to resolve such problems in a
timely manner.
ATTACHMENT B
Circular No. A-122
SELECTED ITEMS OF COST
Table of Contents
1. Advertising and public relations costs
2. Alcoholic beverages
3. Bad debts .
4. Bid and proposal costs (reserved)
5. Bonding costs
6. Communication costs
7. Compensation for personal services
8. Contingency provisions
9. Contributions
10. Defense and prosecution of criminal and civil proceedings, claims, appeals and patent infringement
11. Depreciation and use allowances
12. Donations
13. Employee morale,health, and welfare costs and credits
14. Entertainment costs
15. Equipment and other capital expenditures
16. Fines and penalties
17. Fringe benefits
18. Goods or services for personal use
19. Housing and personal living expenses
20. Idle facilities and idle capacity
21. Independent research and development(reserved)
22. Insurance and indemnification
23. Interest, fund raising, and investment management costs
24. Labor relations costs
25. Lobbying
26. Losses on other awards
27. Maintenance and repair costs
28. Materials and supplies
29. Meetings and conferences
30. Memberships, subscriptions, and professional activity costs
31. Organization costs
32. Overtime, extra-pay shift, and multi-shift premiums
33. Page charges in professional journals
34. Participant support costs
35. Patent costs
36. Pension plans
37. Plant security costs
38. Pre-award costs4111
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39. Professional service costs
40. Profits and losses on disposition of depreciable property or other capital assets
41. Publication and printing costs
42. Rearrangement and alteration costs
43. Reconversion costs
44. Recruiting costs
45. Relocation costs
46. Rental costs
47. Royalties and other costs for use of patents and copyrights
48. Selling and marketing
49. Severance pay
50. Specialized service facilities
51. Taxes
52. Termination costs
53. Training and education costs
54. Transportation costs
55. Travel costs
56. Trustees
ATTACHMENT B
Circular No. A-122
SELECTED ITEMS OF COST
Paragraphs 1 through 56 provide principles to be applied in establishing the allowability of certain items
of cost. These principles apply whether a cost is treated as direct or indirect. Failure to mention a particular
item of cost is not intended to imply that it is unallowable; rather, determination as to allowability in each
case should be based on the treatment or principles provided for similar or related items of cost.
1. Advertising and public relations costs.
a. The term advertising costs means the costs of advertising media and corollary administrative costs.
Advertising media include magazines, newspapers,radio and television programs, direct mail, exhibits,
and the like.
b. The term public relations includes community relations and means those activities dedicated to
maintaining the image of the organization or maintaining or promoting understanding and favorable
relations with the community or public at large or any segment of the public.
c. The only allowable advertising costs are those which are solely for:
(1) The recruitment of personnel required for the performance by the organization of obligations arising
under a sponsored award, when considered in conjunction with all other recruitment costs, as set forth in
paragraph 44 ("Recruiting costs");
(2) The procurement of goods and services for the performance of a sponsored award;
•
(3) The disposal of scrap or surplus materials acquired in the performance of a sponsored award except
when organizations are reimbursed for disposal costs at a predetermined amount in accordance with OMB
Circular A-110, Sec. .34, "Equipment"; or
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(4) Other specific purposes necessary to meet the requirements of the sponsored award.
d. The only allowable public relations costs are:
(1) Costs specifically required by sponsored awards;;
(2) Costs of communicating with the public and press pertaining to specific activities or accomplishments
which result from performance of sponsored awards(these costs are considered necessary as part of the
outreach effort for the sponsored awards); or
(3) Costs of conducting general liaison with news media and government public relations officers,to the
extent that such activities are limited to communication and liaison necessary to keep the public informed
on matters of public concern, such as notices of contract/grant awards, financial matters, etc.
e. Costs identified in subparagraphs c and d if incurred for more than one sponsored award or for both
sponsored work and other work of the organization, are allowable to the extent that the principles in
paragraphs B ("Direct Costs") and C ("Indirect Costs") of Attachment A are observed.
f. Unallowable advertising and public relations costs include the following:
(1)All advertising and public relations costs other than as specified in subparagraphs c,d, and e;
(2) Costs of meetings or other events related to fund raising or other organizational activities including:
(i)Costs of displays, demonstrations, and exhibits;
(ii) Costs of meeting rooms, hospitality suites, and other special facilities used in conjunction with shows
and other special events; and
(iii) Salaries and wages of employees or cost of services engaged in setting up and displaying exhibits,
making demonstrations, and providing briefings;
(3) Costs of promotional items and memorabilia, including models, gifts, and souvenirs;
(4) Costs of advertising and public relations designed solely to promote the organization.
2. Alcoholic beverages. Costs of alcoholic beverages are unallowable.
3. Bad debts. Bad debts, including losses (whether actual or estimated) arising from uncollectible accounts
' and other claims, related collection costs, and related legal costs, are unallowable.
4. Bid and proposal costs. (reserved)
5. Bonding costs.
a. Bonding costs arise when the Federal Government requires assurance against financial loss to itself or
others by reason of the act or default of the organization. They arise also in instances where the
organization requires similar assurance. Included are such bonds as bid,performance,payment, advance
payment, infringement, and fidelity bonds.
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b. Costs of bonding required pursuant to the terms of the award are allowable.
c. Costs of bonding required by the organization in the general conduct of its operations are allowable to
the extent that such bonding is in accordance with sound business practice and the rates and premiums are
reasonable under the circumstances.
6. Communication costs. Costs incurred for telephone services, local and long distance telephone calls,
telegrams,radiograms,postage and the like are allowable.
7. Compensation for personal services.
a. Definition. Compensation for personal services includes all compensation paid currently or accrued by
the organization for services of employees rendered during the period of the award(except as otherwise
provided in subparagraph h). It includes,but is not limited to, salaries,wages, director's and executive
committee member's fees, incentive awards, fringe benefits,pension plan costs, allowances for off-site pay,
incentive pay, location allowances,hardship pay, and cost of living differentials.
b. Allowability. Except as otherwise specifically provided in this paragraph,the costs of such
compensation are allowable to the extent that:
(1) Total compensation to individual employees is reasonable for the services rendered and conforms to the
established policy of the organization consistently applied to both Federal and non-Federal activities; and
(2) Charges to awards whether treated as direct or indirect costs are determined and supported as required
in this paragraph.
c. Reasonableness.
(1) When the organization is predominantly engaged in activities other than those sponsored by the Federal
Government, compensation for employees on federally-sponsored work will be considered reasonable to
the extent that it is consistent with that paid for similar work in the organization's other activities.
(2) When the organization is predominantly engaged in federally-sponsored activities and in cases where
the kind of employees required for the Federal activities are not found in the organization's other activities,
compensation for employees on federally-sponsored work will be considered reasonable to the extent that it
is comparable to that paid for similar work in the labor markets in which the organization competes for the
kind of employees involved.
d. Special considerations in determining allowability. Certain conditions require special consideration
and possible limitations in determining costs under Federal awards where amounts or types of
compensation appear unreasonable. Among such conditions are the following:
(1) Compensation to members of non-profit organizations, trustees, directors, associates, officers, or the
immediate families thereof. Determination should be made that such compensation is reasonable for the
actual personal services rendered rather than a distribution of earnings in excess of costs.
(2)Any change in an organization's compensation policy resulting in a substantial increase in the
organization's level of compensation,particularly when it was concurrent with an increase in the ratio of
Federal awards to other activities of the organization or any change in the treatment of allowability of
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specific types of compensation due to changes in Federal policy.
e. Unallowable costs. Costs which are unallowable under other paragraphs of this Attachment shall not be
allowable under this paragraph solely on the basis that they constitute personal compensation.
f. Fringe benefits.
(1)Fringe benefits in the form of regular compensation paid to employees during periods of authorized
absences from the job, such as vacation leave, sick leave,military leave, and the like, are allowable,
provided such costs are absorbed by all organization activities in proportion to the relative amount of time
or effort actually devoted to each.
(2)Fringe benefits in the form of employer contributions or expenses for social security, employee
insurance,workmen's compensation insurance,pension plan costs(see subparagraph h), and the like, are
allowable,provided such benefits are granted in accordance with established written organization policies.
Such benefits whether treated as indirect costs or as direct costs, shall be distributed to particular awards
and other activities in a manner consistent with the pattern of benefits accruing to the individuals or group
of employees whose salaries and wages are chargeable to such awards and other activities.
(3) (a)Provisions for a reserve under a self-insurance program for unemployment compensation or
workers'compensation are allowable to the extent that the provisions represent reasonable estimates of the
liabilities for such compensation, and the types of coverage,extent of coverage, and rates and premiums
would have been allowable had insurance been purchased to cover the risks. However,provisions for
self-insured liabilities which do not become payable for more than one year after the provision is made
shall not exceed the present value of the liability.
(b) Where an organization follows a consistent policy of expensing actual payments to, or on behalf of,
employees or former employees for unemployment compensation or workers' compensation, such
payments are allowable in the year of payment with the prior approval of the awarding agency,provided
they are allocated to all activities of the organization.
•
(4) Costs of insurance on the lives of trustees, officers, or other employees holding positions of similar
responsibility are allowable only to the extent that the insurance represents additional compensation. The
costs of such insurance when the organization is named as beneficiary are unallowable.
g. Organization-furnished automobiles. That portion of the cost of organization-furnished automobiles
that relates to personal use by employees(including transportation to and from work) is unallowable as
fringe benefit or indirect costs regardless of whether the cost is reported as taxable income to the
employees. These costs are allowable as direct costs to sponsored award when necessary for the
performance of the sponsored award and approved by awarding agencies.
h. Pension plan costs.
(1) Costs of the organization's pension plan which are incurred in accordance with the established policies
of the organization are allowable,provided:
(a) Such policies meet the test of reasonableness;
(b)The methods of cost allocation are not discriminatory;
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(c) The cost assigned to each fiscal year is determined in accordance with generally accepted accounting
principles(GAAP), as prescribed in Accounting Principles Board Opinion No. 8 issued by the American
Institute of Certified Public Accountants; and
(d) The costs assigned to a given fiscal year are funded for all plan participants within six months after the
end of that year. However, increases to normal and past service pension costs caused by a delay in funding
the actuarial liability beyond 30 days after each quarter of the year to which such costs are assignable are
unallowable.
(2)Pension plan termination insurance premiums paid pursuant to the Employee Retirement Income
Security Act(ERISA) of 1974(Pub. L. 93-406) are allowable. Late payment charges on such premiums are
unallowable.
(3)Excise taxes on accumulated funding deficiencies and other penalties imposed under ERISA are
unallowable.
i. Incentive compensation. Incentive compensation to employees based on cost reduction, or efficient
performance, suggestion awards, safety awards, etc., are allowable to the extent that the overall
compensation is determined to be reasonable and such costs are paid or accrued pursuant to an agreement
entered into in good faith between the organization and the employees before the services were rendered, or
pursuant to an established plan followed by the organization so consistently as to imply, in effect, an
agreement to make such payment.
j. Overtime,extra-pay shift, and multi-shift premiums. See paragraph 32.
k. Severance pay. See paragraph 49.
1. Training and education costs. See paragraph 53.
m. Support of salaries and wages. •
(1) Charges to awards for salaries and wages, whether treated as direct costs or indirect costs,will be based
on documented payrolls approved by a responsible official(s) of the organization. The distribution of
salaries and wages to awards must be supported by personnel activity reports, as prescribed in
subparagraph (2), except when a substitute system has been approved in writing by the cognizant agency.
(See subparagraph E.2 of Attachment A.)
(2)Reports reflecting the distribution of activity of each employee must be maintained for all staff
members (professionals and nonprofessionals)whose compensation is charged, in whole or in part, directly
to awards. In addition, in order to support the allocation of indirect costs, such reports must also be
maintained for other employees whose work involves two or more functions or activities if a distribution of
their compensation between such functions or activities is needed in the determination of the organization's
indirect cost rate(s) (e.g., an employee engaged part-time in indirect cost activities and part-time in a direct
function). Reports maintained by non-profit organizations to satisfy these requirements must meet the
following standards:
(a)The reports must reflect an after-the-fact determination of the actual activity of each employee. Budget
estimates (i.e., estimates determined before the services are performed)do not qualify as support for
charges to awards.
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(b)Each report must account for the total activity for which employees are compensated and which is
required in fulfillment of their obligations to the organization.
(c)The reports must be signed by the individual employee, or by a responsible supervisory official having
first hand knowledge of the activities performed by the employee, that the distribution of activity represents
a reasonable estimate of the actual work performed by the employee during the periods covered by the
reports.
(d) The reports must be prepared at least monthly and must coincide with one or more pay periods.
(3) Charges for the salaries and wages of nonprofessional employees, in addition to the supporting
documentation described in subparagraphs(1) and (2),must also be supported by records indicating the
total number of hours worked each day maintained in conformance with Department of Labor regulations
implementing the Fair Labor Standards Act(FLSA) (29 CFR Part 516). For this purpose, the term
"nonprofessional employee" shall have the same meaning as "nonexempt employee," under FLSA.
(4) Salaries and wages of employees used in meeting cost sharing or matching requirements on awards
must be supported in the same manner as salaries and wages claimed for reimbursement from awarding
agencies.
8. Contingency provisions. Contributions to a contingency reserve or any similar provision made for
events the occurrence of which cannot be foretold with certainty as to time, intensity, or with an assurance
of their happening, are unallowable. The term "contingency reserve" excludes self-insurance reserves (see
subparagraphs 7.f(3) and 22.a(2)(d);pension funds (see subparagraph 7.h); and reserves for normal
severance pay(see subparagraph 49.b(1)).
9. Contributions. Contributions and donations by the organization to others are unallowable.
10. Defense and prosecution of criminal and civil proceedings,claims, appeals and patent
infringement.
a. Definitions.
(1) Conviction, as used herein, means a judgment or a conviction of a criminal offense by any court of
competent jurisdiction,whether entered upon as a verdict or a plea, including a conviction due to a plea of
nolo contendere.
(2) Costs include,but are not limited to, administrative and clerical expenses; the cost of legal services,
whether performed by in-house or private counsel; and the costs of the services of accountants, consultants,
or others retained by the organization to assist it; costs of employees, officers and trustees, and any similar
costs incurred before, during, and after commencement of a judicial or administrative proceeding that bears
a direct relationship to the proceedings.
(3)Fraud, as used herein, means(i) acts of fraud corruption or attempts to defraud the Federal Government
or to corrupt its agents, (ii) acts that constitute a cause for debarment or suspension(as specified in agency
regulations), and (iii) acts which violate the False Claims Act, 31 U.S.C., sections 3729-3731, or the
Anti-Kickback Act, 41 U.S.C., sections 51 and 54.
(4)Penalty does not include restitution, reimbursement, or compensatory damages.
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(5)Proceeding includes an investigation.
b. (1)Except as otherwise described herein, costs incurred in connection with any criminal, civil or
administrative proceeding(including filing of a false certification)commenced by the Federal Government,
or a State, local or foreign government, are not allowable if the proceeding: (1)relates to a violation of,or
failure to comply with, a Federal, State, local or foreign statute or regulation by the organization(including
its agents and employees), and(2) results in any of the following dispositions:
(a)In a criminal proceeding, a conviction.
(b) In a civil or administrative proceeding involving an allegation of fraud or similar misconduct, a
determination of organizational liability.
(c)In the case of any civil or administrative proceeding, the imposition of a monetary penalty.
(d)A final decision by an appropriate Federal official to debar or suspend the organization,to rescind or
void an award, or to terminate an award for default by reason of a violation or failure to comply with a law
or regulation.
(e)A disposition by consent or compromise, if the action could have resulted in any of the dispositions
described in(a), (b), (c) or(d).
(2) If more than one proceeding involves the same alleged misconduct, the costs of all such proceedings
shall be unallowable if any one of them results in one of the dispositions shown in subparagraph b.(1).
c. If a proceeding referred to in subparagraph b is commenced by the Federal Government and is resolved
by consent or compromise pursuant to an agreement entered into by the organization and the Federal
Government, then the costs incurred by the organization in connection with such proceedings that are
otherwise not allowable under subparagraph b may be allowed to the extent specifically provided in such
agreement.
d. If a proceeding referred to in subparagraph b is commenced by a State, local or foreign government,
the authorized Federal official may allow the costs incurred by the organization for such proceedings, if
such authorized official determines that the costs were incurred as a result of(1) a specific term or
condition of a federally-sponsored award, or(2) specific written direction of an authorized official of the
sponsoring agency.
e. Costs incurred in connection with proceedings described in subparagraph b,but which are not made
unallowable by that subparagraph,may be allowed by the Federal Government,but only to the extent that:
(1) The costs are reasonable in relation to the activities required to deal with the proceeding and the
underlying cause of action;
(2)Payment of the costs incurred, as allowable and allocable costs, is not prohibited by any other
provision(s) of the sponsored award;
(3)The costs are not otherwise recovered from the Federal Government or a third party, either directly as a
result of the proceeding or otherwise; and,
(4) The percentage of costs allowed does not exceed the percentage determined by an authorized Federal
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official to be appropriate, considering the complexity of the litigation, generally accepted principles
governing the award of legal fees in civil actions involving the United States as a party, and such other
factors as may be appropriate. Such percentage shall not exceed 80 percent. However, if an agreement
reached under subparagraph c has explicitly considered this 80 percent limitation and permitted a higher
percentage, then the full amount of costs resulting from that agreement shall be allowable.
f. Costs incurred by the organization in connection with the defense of suits brought by its employees or
ex-employees under section 2 of the Major Fraud Act of 1988 (Pub. L. 100-700), including the cost of all
relief necessary to make such employee whole,where the organization was found liable or settled, are
unallowable.
g. Costs of legal, accounting, and consultant services, and related costs, incurred in connection with
defense against Federal Government claims or appeals, antitrust suits, or the prosecution of claims or
appeals against the Federal Government, are unallowable.
h. Costs of legal, accounting, and consultant services, and related costs, incurred in connection with patent
infringement litigation, are unallowable unless otherwise provided for in the sponsored awards.
i. Costs which may be unallowable under this paragraph, including directly associated costs, shall be
segregated and accounted for by the organization separately. During the pendency of any proceeding
covered by subparagraphs b and f,the Federal Government shall generally withhold payment of such
costs. However, if in the best interests of the Federal Government, the Federal Government may provide
for conditional payment upon provision of adequate security, or other adequate assurance, and agreements
by the organization to repay all unallowable costs,plus interest, if the costs are subsequently determined to
be unallowable.
11. Depreciation and use allowances.
a. Compensation for the use of buildings, other capital improvements, and equipment on hand may be
made through use allowances or depreciation. However,except as provided in subparagraph f, a
combination of the two methods may not be used in connection with a single class of fixed assets(e.g.,
buildings, office equipment, computer equipment, etc.).
b. The computation of use allowances or depreciation shall be based on the acquisition cost of the assets
involved. The acquisition cost of an asset donated to the organization by a third party shall be its fair
market value at the time of the donation.
c. The computation of use allowances or depreciation will exclude:
(1)The cost of land;
(2)Any portion of the cost of buildings and equipment borne by or donated by the Federal Government
irrespective of where title was originally vested or where it presently resides; and
(3)Any portion of the cost of buildings and equipment contributed by or for the organization in satisfaction
of a statutory matching requirement.
d. Where the use allowance method is followed,the use allowance for buildings and improvement
(including land improvements, such as paved parking areas, fences, and sidewalks)will be computed at an
annual rate not exceeding two percent of acquisition cost. The use allowance for equipment will be
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computed at an annual rate not exceeding six and two-thirds percent of acquisition cost. When the use
allowance method is used for buildings,the entire building must be treated as a single asset; the building's
components (e.g.,plumbing system,heating and air conditioning, etc.) cannot be segregated from the
building's shell. The two percent limitation, however,need not be applied to equipment which is merely
attached or fastened to the building but not permanently fixed to it and which is used as furnishings or
decorations or for specialized purposes (e.g., dentist chairs and dental treatment units, counters, laboratory
benches bolted to the floor, dishwashers, carpeting, etc.). Such equipment will be considered as not being
permanently fixed to the building if it can be removed without the need for costly or extensive alterations
or repairs to the building or the equipment. Equipment that meets these criteria will be subject to the six
and two-thirds percent equipment use allowance limitation.
e. Where depreciation method is followed, the period of useful service(useful life) established in each case
for usable capital assets must take into consideration such factors as type of construction,nature of the
equipment used, technological developments in the particular program area, and the renewal and
replacement policies followed for the individual items or classes of assets involved. The method of
depreciation used to assign the cost of an asset(or group of assets)to accounting periods shall reflect the
pattern of consumption of the asset during its useful life. In the absence of clear evidence indicating that
the expected consumption of the asset will be significantly greater or lesser in the early portions of its
useful life than in the later portions, the straight-line method shall be presumed to be the appropriate
method. Depreciation methods once used shall not be changed unless approved in advance by the cognizant
Federal agency. When the depreciation method is introduced for application to assets previously subject to
a use allowance, the combination of use allowances and depreciation applicable to such assets must not
exceed the total acquisition cost of the assets. When the depreciation method is used for buildings, a
building's shell may be segregated from each building component(e.g.,plumbing system,heating, and air
conditioning system, etc.) and each item depreciated over its estimated useful life; or the entire building
(i.e., the shell and all components)may be treated as a single asset and depreciated over a single useful life.
f. When the depreciation method is used for a particular class of assets, no depreciation may be allowed on
any such assets that, under subparagraph e,would be viewed as fully depreciated. However, a reasonable
use allowance may be negotiated for such assets if warranted after taking into consideration the amount of
depreciation previously charged to the Federal Government, the estimated useful life remaining at time of
negotiation, the effect of any increased maintenance charges or decreased efficiency due to age, and any
other factors pertinent to the utilization of the asset for the purpose contemplated.
g. Charges for use allowances or depreciation must be supported by adequate property records and physical
inventories must be taken at least once every two years (a statistical sampling basis is acceptable)to ensure
that assets exist and are usable and needed. When the depreciation method is followed, adequate
depreciation records indicating the amount of depreciation taken each period must also be maintained.
12. Donations.
a. Services received.
(1)Donated or volunteer services may be furnished to an organization by professional and technical
personnel, consultants, and other skilled and unskilled labor. The value of these services is not
reimbursable either as a direct or indirect cost.
(2)The value of donated services utilized in the performance of a direct cost activity shall be considered in
the determination of the organization's indirect cost rate(s) and, accordingly, shall be allocated a
proportionate share of applicable indirect costs when the following circumstances exist:
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(a) aggregate The e ate value of the services is material;
(b)The services are supported by a significant amount of the indirect costs incurred by the organization;
(c)The direct cost activity is not pursued primarily for the benefit of the Federal Government,
(3)In those instances where there is no basis for determining the fair market value of the services rendered,
the recipient and the cognizant agency shall negotiate an appropriate allocation of indirect cost to the
services.
(4) Where donated services directly benefit a project supported by an award, the indirect costs allocated to
the services will be considered as a part of the total costs of the project. Such indirect costs may be
reimbursed under the award or used to meet cost sharing or matching requirements.
(5)The value of the donated services may be used to meet cost sharing or matching requirements under
conditions described in Sec._.23 of Circular A-110. Where donated services are treated as indirect costs,
indirect cost rates will separate the value of the donations so that reimbursement will not be made.
(6)Fair market value of donated services shall be computed as follows:
(a)Rates for volunteer services. Rates for volunteers shall be consistent with those regular rates paid for
similar work in other activities of the organization. In cases where the kinds of skills involved are not
found in other activities of the organization,the rates used shall be consistent with those paid for similar
work in the labor market in which the organization competes for such skills.
(b) Services donated by other organizations. When an employer donates the services of an employee,
these services shall be valued at the employee's regular rate of pay(exclusive of fringe benefits and indirect
costs),provided the services are in the same skill for which the employee is normally paid. If the services
are not in the same skill for which the employee is normally paid, fair market value shall be computed in
accordance with subparagraph (a).
b. Goods and space.
(1)Donated goods; i.e., expendable personal property/supplies, and donated use of space may be furnished
to an organization. The value of the goods and space is not reimbursable either as a direct or indirect cost.
(2)The value of the donations may be used to meet cost sharing or matching share requirements under the
conditions described in Sec._.23 of Circular A-110. The value of the donations shall be determined in
accordance with Sec._.23 of Circular A-110. Where donations are treated as indirect costs, indirect cost
rates will separate the value of the donations so that reimbursement will not be made.
13. Employee morale, health, and welfare costs and credits. The costs of house publications,health or
first-aid clinics, and/or infirmaries,recreational activities, employees'counseling services, and other
expenses incurred in accordance with the organization's established practice or custom for the improvement
of working conditions, employer-employee relations, employee morale, and employee performance are
allowable. Such costs will be equitably apportioned to all activities of the organization. Income generated
from any of these activities will be credited to the cost thereof unless such income has been irrevocably set
over to employee welfare organizations.
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14. Entertainment costs. Costs of amusement,diversion, social activities, ceremonials, and costs relating
thereto, such as meals, lodging, rentals, transportation, and gratuities are unallowable (but see paragraphs
13 and 30).
15. Equipment and other capital expenditures.
a. As used in this paragraph,the following terms have the meanings set forth below:
(1) "Equipment" means an article of nonexpendable, tangible personal property having a useful life of more
than one year and an acquisition cost which equals or exceeds the lesser of(a)the capitalization level
established by the organization for the financial statement purposes, or(b) $5000. The unamortized portion
of any equipment written off as a result of a change in capitalization levels may be recovered by continuing
to claim the otherwise allowable use allowances or depreciation on the equipment, or by amortizing the
amount to be written off over a period of years as negotiated with the Federal cognizant agency.
(2)Acquisition cost means the net invoice unit price of an item of equipment, including the cost of any
modifications, attachments, accessories, or auxiliary apparatus necessary to make it usable for the purpose
for which it is acquired. Ancillary charges, such as taxes, duty,protective in-transit insurance, freight, and
installation shall be included in or excluded from acquisition cost in accordance with the organization's
regular written accounting practices.
(3) Special purpose equipment means equipment which is usable only for research,medical, scientific, or
technical activities. Examples of special purpose equipment include microscopes,x-ray machines, surgical
instruments, and spectrometers.
(4) General purpose equipment means equipment which is usable for other than research,medical,
scientific, or technical activities,whether or not special modifications are needed to make them suitable for
a particular purpose. Examples of general purpose equipment include office equipment and furnishings, air
conditioning equipment,reproduction and printing equipment,motor vehicles, and automatic data
processing equipment.
b. (1) Capital expenditures for general purpose equipment are unallowable as a direct cost except with the
prior approval of the awarding agency.
(2) Capital expenditures for special purpose equipment are allowable as direct costs,provided that items
with a unit cost of$5000 or more have the prior approval of awarding agency.
c. Capital expenditures for land or buildings are unallowable as a direct cost except with the prior approval
of the awarding agency.
d. Capital expenditures for improvements to land,buildings, or equipment which materially increase their
value or useful life are unallowable as a direct cost except with the prior approval of the awarding agency.
e. Equipment and other capital expenditures are unallowable as indirect costs. However, see paragraph 11
for allowability of use allowances or depreciation on buildings, capital improvements, and equipment.
Also, see paragraph 46 for allowability of rental costs for land,buildings, and equipment.
16. Fines and penalties. Costs of fines and penalties resulting from violations of, or failure of the
organization to comply with Federal, State, and local laws and regulations are unallowable except when
incurred as a result of compliance with specific provisions of an award or instructions in writing from the
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awarding agency.
17. Fringe benefits. See subparagraph 7.f.
18. Goods or services for personal use. Costs of goods or services for personal use of the organization's
employees are unallowable regardless of whether the cost is reported as taxable income to the employees.
19. Housing and personal living expenses.
a. Costs of housing(e.g., depreciation,maintenance,utilities, furnishings, rent, etc.), housing allowances
and personal living expenses for/of the organization's officers are unallowable as fringe benefit or indirect
costs regardless of whether the cost is reported as taxable income to the employees. These costs are
allowable as direct costs to sponsored award when necessary for the performance of the sponsored award
and approved by awarding agencies.
b. The term"officers" includes current and past officers and employees.
20. Idle facilities and idle capacity.
a. As used in this paragraph, the following terms have the meanings set forth below:
(1) Facilities means land and buildings or any portion thereof, equipment individually or collectively, or
any other tangible capital asset,wherever located, and whether owned or leased by the organization.
(2) Idle facilities means completely unused facilities that are excess to the organization's current needs.
(3)Idle capacity means the unused capacity of partially used facilities. It is the difference between that
which a facility could achieve under 100 percent operating time on a one-shift basis less operating
interruptions resulting from time lost for repairs, setups, unsatisfactory materials, and other normal delays,
and the extent to which the facility was actually used to meet demands during the accounting period. A
multi-shift basis may be used if it can be shown that this amount of usage could normally be expected for
the type of facility involved.
(4) Costs of idle facilities or idle capacity means costs such as maintenance,repair,housing, rent, and
other related costs, e.g.,property taxes, insurance, and depreciation or use allowances.
b. The costs of idle facilities are unallowable except to the extent that:
(1)They are necessary to meet fluctuations in workload; or
(2)Although not necessary to meet fluctuations in workload, they were necessary when acquired and are
now idle because of changes in program requirements, efforts to achieve more economical operations,
reorganization, termination, or other causes which could not have been reasonably foreseen. Under the
exception stated in this subparagraph, costs of idle facilities are allowable for a reasonable period of time,
ordinarily not to exceed one year, depending upon the initiative taken to use, lease, or dispose of such
facilities (but see subparagraphs 48.b and d).
c. The costs of idle capacity are normal costs of doing business and are a factor in the normal fluctuations
of usage or indirect cost rates from period to period. Such costs are allowable, provided the capacity is
reasonably anticipated to be necessary or was originally reasonable and is not subject to reduction or
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elimination by subletting, renting, or sale, in accordance with sound business, economics,or security
practices. Widespread idle capacity throughout an entire facility or among a group of assets having
substantially the same function may be idle facilities.
21. Independent research and development. [Reserved]
•
22. Insurance and indemnification.
a. Insurance includes insurance which the organization is required to carry, or which is approved,under the
terms of the award and any other insurance which the organization maintains in connection with the
general conduct of its operations. This paragraph does not apply to insurance which represents fringe
benefits for employees (see subparagraphs 7.f and 7.h(2)).
(1) Costs of insurance required or approved, and maintained,pursuant to the award are allowable.
(2) Costs of other insurance maintained by the organization in connection with the general conduct of its
operations are allowable subject to the following limitations:
(a) Types and extent of coverage shall be in accordance with sound business practice and the rates and
premiums shall be reasonable under the circumstances.
(b) Costs allowed for business interruption or other similar insurance shall be limited to exclude coverage
of management fees.
(c) Costs of insurance or of any provisions for a reserve covering the risk of loss or damage to Federal
property are allowable only to the extent that the organization is liable for such loss or damage.
(d)Provisions for a reserve under a self-insurance program are allowable to the extent that types of .
coverage, extent of coverage, rates, and premiums would have been allowed had insurance been purchased
to cover the risks. However,provision for known or reasonably estimated self-insured liabilities,which do
not become payable for more than one year after the provision is made, shall not exceed the present value
of the liability.
(e) Costs of insurance on the lives of trustees, officers, or other employees holding positions of similar
responsibilities are allowable only to the extent that the insurance represents additional compensation(see
subparagraph 7.f(4)). The cost of such insurance when the organization is identified as the beneficiary is
unallowable.
(f)Insurance against defects. Costs of insurance with respect to any costs incurred to correct defects in the
organization's materials or workmanship are unallowable.
(g)Medical liability(malpractice) insurance. Medical liability insurance is an allowable cost of Federal
research programs only to the extent that the Federal research programs involve human subjects or training
of participants in research techniques. Medical liability insurance costs shall be treated as a direct cost and
shall be assigned to individual projects based on the manner in which the insurer allocates the risk to the
population covered by the insurance.
(3)Actual losses which could have been covered by permissible insurance(through the purchase of
insurance or a self-insurance program) are unallowable unless expressly provided for in the award, except:
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(a) Costs incurred because of losses not covered under nominal deductible insurance coverage provided in
keeping with sound business practice are allowable.
(b)Minor losses not covered by insurance, such as spoilage,breakage, and disappearance of supplies,
which occur in the ordinary course of operations, are allowable.
b. Indemnification includes securing the organization against liabilities to third persons and any other loss
or damage, not compensated by insurance or otherwise. The Federal Government is obligated to indemnify
the organization only to the extent expressly provided in the award.
23. Interest,fundraising, and investment management costs.
a. Interest. -
(1) Costs incurred for interest on borrowed capital or temporary use of endowment funds,however
represented, are unallowable. However, interest on debt incurred after the effective date of this revision to
acquire or replace capital assets (including renovations, alterations, equipment, land, and capital assets
acquired through capital leases), acquired after the effective date of this revision and used in support of
sponsored agreements is allowable,provided that:
(a)For facilities acquisitions (excluding renovations and alterations) costing over$10 million where the
Federal Government's reimbursement is expected to equal or exceed 40 percent of an asset's cost,the
non-profit organization prepares,prior to the acquisition or replacement of the capital asset(s), a
justification that demonstrates the need for the facility in the conduct of federally-sponsored activities.
Upon request, the needs justification must be provided to the Federal agency with cost cognizance
authority as a prerequisite to the continued allowability of interest on debt and depreciation related to the
facility. The needs justification for the acquisition of a facility should include, at a minimum, the
following:
A statement of purpose and justification for facility acquisition or replacement
A statement as to why current facilities are not adequate
A statement of planned future use of the facility
A description of the financing agreement to be arranged for the facility
A summary of the building contract with estimated cost information and statement of source and use of
funds
A schedule of planned occupancy dates
(b)For facilities costing over$500,000,the non-profit organization prepares,prior to the acquisition or
replacement of the facility, a lease/purchase analysis in accordance with the provisions of Sec._.30
through_.37 of Circular A-110,which shows that a financed purchase or capital lease is less costly to the
organization than other leasing alternatives, on a net present value basis. Discount rates used should be
equal to the non-profit organization's anticipated interest rates and should be no higher than the fair market
rate available to the non-profit organization from an unrelated("arm's length")third-party. The
lease/purchase analysis shall include a comparison of the net present value of the projected total cost
comparisons of both alternatives over the period the asset is expected to be used by the non-profit
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organization. The cost comparisons associated with purchasing the facility shall include the estimated
purchase price, anticipated operating and maintenance costs (including property taxes, if applicable)not
included in the debt financing, less any estimated asset salvage value at the end of the period defined
above. The cost comparison for a capital lease shall include the estimated total lease payments, any
estimated bargain purchase option, operating and maintenance costs, and taxes not included in the capital
leasing arrangement, less any estimated credits due under the lease at the end of the period defined above.
Projected operating lease costs shall be based on the anticipated cost of leasing comparable facilities at fair
market rates under rental agreements that would be renewed or reestablished over the period defined above,
and any expected maintenance costs and allowable property taxes to be borne by the non-profit
organization directly or as part of the lease arrangement.
(c) The actual interest cost claimed is predicated upon interest rates that are no higher than the fair market
rate available to the non-profit organization from an unrelated("arm's length")third party.
(d)Investment earnings, including interest income, on bond or loan principal,pending payment of the
construction or acquisition costs, are used to offset allowable interest cost. Arbitrage earnings reportable to
the Internal Revenue Service are not required to be offset against allowable interest costs.
(e)Reimbursements are limited to the least costly alternative based on the total cost analysis required under
subparagraph (b). For example, if an operating lease is determined to be less costly than purchasing
through debt financing, then reimbursement is limited to the amount determined if leasing had been used.
In all cases where a lease/purchase analysis is performed, Federal reimbursement shall be based upon the
least expensive alternative.
(f)Non-profit organizations are also subject to the following conditions:
(i)Interest on debt incurred to finance or refinance assets acquired before or reacquired after the effective
date of this Circular is not allowable.
(ii)For debt arrangements over$1 million,unless the non-profit organization makes an initial equity
contribution to the asset purchase of 25 percent or more, non-profit organizations shall reduce claims for
interest expense by an amount equal to imputed interest earnings on excess cash flow,which is to be
calculated as follows. Annually,non-profit organizations shall prepare a cumulative(from the inception of
the project)report of monthly cash flows that includes inflows and outflows,regardless of the funding
source. Inflows consist of depreciation expense, amortization of capitalized construction interest, and
annual interest expense. For cash flow calculations,the annual inflow figures shall be divided by the
number of months in the year(usually 12)that the building is in service for monthly amounts. Outflows
consist of initial equity contributions, debt principal payments (less the pro rata share attributable to the
unallowable costs of land) and interest payments. Where cumulative inflows exceed cumulative outflows,
interest shall be calculated on the excess inflows for that period and be treated as a reduction to allowable
interest expense. The rate of interest to be used to compute earnings on excess cash flows shall be the three
month Treasury Bill closing rate as of the last business day of that month.
(iii) Substantial relocation of federally-sponsored activities from a facility financed by indebtedness, the
cost of which was funded in whole or part through Federal reimbursements, to another facility prior to the
expiration of a period of 20 years requires notice to the Federal cognizant agency. The extent of the
relocation, the amount of the Federal participation in the financing, and the depreciation and interest
charged to date may require negotiation and/or downward adjustments of replacement space charged to
Federal programs in the future.
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(iv)The allowable costs to acquire facilities and equipment are limited to a fair market value available to
the non-profit organization from an unrelated("arm's length")third party.
(2)For non-profit organizations subject to "full coverage"'under the Cost Accounting Standards(CAS) as
defined at 48 CFR 9903.201, the interest allowability provisions of subparagraph a do not apply. Instead,
these organizations'sponsored agreements are subject to CAS 414 (48 CFR 9903.414), cost of money as an
element of the cost of facilities capital, and CAS 417 (48 CFR 9903.417), cost of money as an element of
the cost of capital assets under construction.
(3) The following definitions are to be used for purposes of paragraph 23:
(a) Re-acquired assets means assets held by the non-profit organization prior to the effective date of this
revision that have again come to be held by the organization,whether through repurchase or refinancing. It
does not include assets acquired to replace older assets.
(b)Initial equity contribution means the amount or value of contributions made by non-Federal entities
for the acquisition of the asset or prior to occupancy of facilities.
(c)Asset costs means the capitalizable costs of an asset, including construction costs, acquisition costs, and
other such costs capitalized in accordance with GAAP.
b. Costs of organized fundraising, including financial campaigns, endowment drives, solicitation of gifts
and bequests, and similar expenses incurred solely to raise capital or obtain contributions are unallowable.
c. Costs of investment counsel and staff and similar expenses incurred solely to enhance income from
investments are unallowable.
d. Fundraising and investment activities shall be allocated an appropriate share of indirect costs under the
conditions described in subparagraph B.3 of Attachment A.
24. Labor relations costs. Costs incurred in maintaining satisfactory relations between the organization
and its employees, including costs of labor management committees, employee publications, and other
related activities are allowable.
25. Lobbying.
a. Notwithstanding other provisions of this Circular, costs associated with the following activities are
unallowable:
(1)Attempts to influence the outcomes of any Federal, State, or local election,referendum, initiative, or
similar procedure, through in kind or cash contributions, endorsements,publicity, or similar activity;
(2)Establishing, administering, contributing to, or paying the expenses of a political party, campaign,
political action committee, or other organization established for the purpose of influencing the outcomes of
elections;
(3)Any attempt to influence: (i)The introduction of Federal or State legislation; or(ii)the enactment or
modification of any pending Federal or State legislation through communication with any member or
employee of the Congress or State legislature(including efforts to influence State or local officials to
engage in similar lobbying activity), or with any Government official or employee in connection with a co
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decision to sign or veto enrolled legislation;
(4)Any attempt to influence: (i) The introduction of Federal or State legislation; or(ii)the enactment or
modification of any pending Federal or State legislation by preparing, distributing or using publicity or
propaganda, or by urging members of the general public or any segment thereof to contribute to or
participate in any mass demonstration, march,rally, fundraising drive, lobbying campaign or letter writing
or telephone campaign; or
(5)Legislative liaison activities, including attendance at legislative sessions or committee hearings,
gathering information regarding legislation, and analyzing the effect of legislation, when such activities are
carried on in support of or in knowing preparation for an effort to engage in unallowable lobbying.
b. The following activities are excepted from the coverage of subparagraph a:
(1)Providing a technical and factual presentation of information on a topic directly related to the
performance of a grant, contract or other agreement through hearing testimony, statements or letters to the
Congress or a State legislature, or subdivision, member, or cognizant staff member thereof, in response to a
documented request(including a Congressional Record notice requesting testimony or statements for the
record at a regularly scheduled hearing)made by the recipient member, legislative body or subdivision, or a
cognizant staff member thereof; provided such information is readily obtainable and can be readily put in
deliverable form; and further provided that costs under this section for travel, lodging or meals are
unallowable unless incurred to offer testimony at a regularly scheduled Congressional hearing pursuant to a
written request for such presentation made by the Chairman or Ranking Minority Member of the
Committee or Subcommittee conducting such hearing.
(2)Any lobbying made unallowable by subparagraph a(3)to influence State legislation in order to
directly reduce the cost, or to avoid material impairment of the organization's authority to perform the
grant, contract, or other agreement.
(3) Any activity specifically authorized by statute to be undertaken with funds from the grant, contract, or
other agreement.
c. (1) When an organization seeks reimbursement for indirect costs, total lobbying costs shall be separately
identified in the indirect cost rate proposal, and thereafter treated as other unallowable activity costs in
accordance with the procedures of subparagraph B.3 of Attachment A.
(2) Organizations shall submit, as part of the annual indirect cost rate proposal, a certification that the
requirements and standards of this paragraph have been complied with.
(3) Organizations shall maintain adequate records to demonstrate that the determination of costs as being
allowable or unallowable pursuant to paragraph 25 complies with the requirements of this Circular.
(4) Time logs, calendars, or similar records shall not be required to be created for purposes of complying
with this paragraph during any particular calendar month when: (1) the employee engages in lobbying(as
defined in subparagraphs (a) and (b)) 25 percent or less of the employee's compensated hours of
employment during that calendar month, and(2)within the preceding five-year period, the organization has
not materially misstated allowable or unallowable costs of any nature, including legislative lobbying costs.
When conditions (1) and(2) are met, organizations are not required to establish records to support the
allowabliliy of claimed costs in addition to records already required or maintained. Also,when conditions
(1) and (2) are met, the absence of time logs, calendars, or similar records will not serve as a basis for
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disallowing costs by contesting estimates of lobbying time spent by employees during a calendar month.
(5)Agencies shall establish procedures for resolving in advance, in consultation with OMB, any significant
questions or disagreements concerning the interpretation or application of paragraph 25. Any such
advance resolution shall be binding in any subsequent settlements, audits or investigations with respect to
that grant or contract for purposes of interpretation of this Circular; provided,however, that this shall not
be construed to prevent a contractor or grantee from contesting the lawfulness of such a determination.
26. Losses on other awards. Any excess of costs over income on any award is unallowable as a cost of
any other award. This includes,but is not limited to,the organization's contributed portion by reason of
cost sharing agreements or any under-recoveries through negotiation of lump sums for, or ceilings on,
indirect costs.
27. Maintenance and repair costs. Costs incurred for necessary maintenance,repair, or upkeep of
buildings and equipment(including Federal property unless otherwise provided for)which neither add to
the permanent value of the property nor appreciably prolong its intended life,but keep it in an efficient
operating condition, are allowable. Costs incurred for improvements which add to the permanent value of
the buildings and equipment or appreciably prolong their intended life shall be treated as capital
expenditures (see paragraph 15).
28. Materials and supplies. The costs of materials and supplies necessary to carry out an award are
allowable. Such costs should be charged at their actual prices after deducting all cash discounts,trade
discounts, rebates, and allowances received by the organization. Withdrawals from general stores or
stockrooms should be charged at cost under any recognized method of pricing consistently applied.
Incoming transportation charges may be a proper part of material cost. Materials and supplies charged as a
direct cost should include only the materials and supplies actually used for the performance of the contract
or grant, and due credit should be given for any excess materials or supplies retained, or returned to
vendors.
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29. Meetings and conferences.
a. Costs associated with the conduct of meetings and conferences include the cost of renting facilities,
meals, speakers'fees, and the like. But see paragraph 14,Entertainment costs, and paragraph 34,
Participant support costs.
b. To the extent that these costs are identifiable with a particular cost objective, they should be charged to
that objective(see paragraph B of Attachment A). These costs are allowable,provided that they meet the
general tests of allowability, shown in paragraph A of Attachment A to this Circular.
c. Costs of meetings and conferences held to conduct the general administration of the organization are
allowable.
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30. Memberships,subscriptions, and professional activity costs.
a. Costs of the organization's membership in business,technical, and professional organizations are
allowable.
b. Costs of the organization's subscriptions to business,professional, and technical periodicals are
allowable.
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C. Costs of meetings and conferences, when the primary purpose is the dissemination of technical
information, are allowable. This includes costs of meals, transportation,rental of facilities, and other items
incidental to such meetings or conferences.
d. Costs of membership in any civic or community organization are allowable with prior approval by
Federal cognizant agency.
e. Costs of membership in any country club or social or dining club or organization are unallowable.
31. Organization costs. Expenditures, such as incorporation fees,brokers' fees, fees to promoters,
organizers or management consultants, attorneys, accountants, or investment counselors,whether or not
employees of the organization, in connection with establishment or reorganization of an organization, are
unallowable except with prior approval of the awarding agency.
32. Overtime,extra-pay shift, and multi-shift premiums. Premiums for overtime, extra-pay shifts, and
multi-shift work are allowable only with the prior approval of the awarding agency except:
a. When necessary to cope with emergencies, such as those resulting from accidents,natural disasters,
breakdowns of equipment, or occasional operational bottlenecks of a sporadic nature.
b. When employees are performing indirect functions, such as administration,maintenance, or accounting.
c. In the performance of tests, laboratory procedures, or other similar operations which are continuous in
nature and cannot reasonably be interrupted or otherwise completed.
d. When lower overall cost to the Federal Government will result.
33. Page charges in professional journals. Page charges for professional journal publications are
allowable as a necessary part of research costs,where:
a. The research papers report work supported by the Federal Government; and
b. The charges are levied impartially on all research papers published by the journal, whether or not by
federally-sponsored authors.
34. Participant support costs. Participant support costs are direct costs for items such as stipends or
subsistence allowances,travel allowances, and registration fees paid to or on behalf of participants or
trainees (but not employees) in connection with meetings, conferences, symposia, or training projects.
These costs are allowable with the prior approval of the awarding agency.
35. Patent costs.
a. Costs of(i)preparing disclosures,reports, and other documents required by the award and of searching
the art to the extent necessary to make such disclosures, (ii)preparing documents and any other patent costs
in connection with the filing and prosecution of a United States patent application where title or
royalty-free license is required by the Federal Government to be conveyed to the Federal Government, and
(iii) general counseling services relating to patent and copyright matters, such as advice on patent and
copyright laws, regulations, clauses, and employee agreements are allowable(but see paragraph 39).
b. Cost of preparing disclosures, reports, and other documents and of searching the art to the extent
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necessary to make disclosures, if not required by the award, are unallowable. Costs in connection with(i)
filing and prosecuting any foreign patent application, or(ii) any United States patent application,where the
award does not require conveying title or a royalty-free license to the Federal Government, are unallowable
(also see paragraph 47).
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36. Pension plans. See subparagraph 7.h.
37. Plant security costs.Necessary expenses incurred to comply with Federal security requirements or for
facilities protection, including wages, uniforms, and equipment of personnel are allowable.
38. Pre-award costs. Pre-award costs are those incurred prior to the effective date of the award directly
pursuant to the negotiation and in anticipation of the award where such costs are necessary to comply with
the proposed delivery schedule or period of performance. Such costs are allowable only to the extent that
they would have been allowable if incurred after the date of the award and only with the written approval
of the awarding agency.
39. Professional service costs.
a. Costs of professional and consultant services rendered by persons who are members of a particular
profession or possess a special skill, and who are not officers or employees of the organization, are
allowable, subject to subparagraphs b and c when reasonable in relation to the services rendered and
when not contingent upon recovery of the costs from the Federal Government.
b. In determining the allowability of costs in a particular case,no single factor or any special combination
of factors is necessarily determinative. However, the following factors are relevant:
(1)The nature and scope of the service rendered in relation to the service required.
(2) The necessity of contracting for the service, considering the organization's capability in the particular
area.
(3)The past pattern of such costs, particularly in the years prior to Federal awards.
(4) The impact of Federal awards on the organization's business (i.e.,what new problems have arisen).
(5) Whether the proportion of Federal work to the organization's total business is such as to influence the
organization in favor of incurring the cost,particularly where the services rendered are not of a continuing
nature and have little relationship to work under Federal grants and contracts.
(6)Whether the service can be performed more economically by direct employment rather than contracting.
(7)The qualifications of the individual or concern rendering the service and the customary fees charged,
especially on non-Federal awards.
(8)Adequacy of the contractual agreement for the service(e.g., description of the service, estimate of time
required,rate of compensation, and termination provisions).
c. In addition to the factors in subparagraph b,retainer fees to be allowable must be supported by
evidence of bona fide services available or rendered.
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40. Profits and losses on disposition of depreciable property or other capital assets.
a. (1) Gains and losses on sale,retirement, or other disposition of depreciable property shall be included in
the year in which they occur as credits or charges to cost grouping(s)in which the depreciation applicable
to such property was included. The amount of the gain or loss to be included as a credit or charge to the
appropriate cost grouping(s)shall be the difference between the amount realized on the property and the
undepreciated basis of the property.
(2) Gains and losses on the disposition of depreciable property shall not be recognized as a separate credit
or charge under the following conditions:
(a) The gain or loss is processed through a depreciation reserve account and is reflected in the depreciation
allowable under paragraph 11.
(b) The property is given in exchange as part of the purchase price of a similar item and the gain or loss is
taken into account in determining the depreciation cost basis of the new item.
(c)A loss results from the failure to maintain permissible insurance, except as otherwise provided in
subparagraph 22.a(3).
(d)Compensation for the use of the property was provided through use allowances in lieu of depreciation
in accordance with paragraph 11.
(e) Gains and losses arising from mass or extraordinary sales,retirements, or other dispositions shall be
considered on a case-by-case basis.
b. Gains or losses of any nature arising from the sale or exchange of property other than the property
covered in subparagraph a shall be excluded in computing award costs.
41. Publication and printing costs.
a. Publication costs include the costs of printing(including the processes of composition,plate-making,
press work,binding, and the end products produced by such processes), distribution,promotion,mailing,
and general handling.
b. If these costs are not identifiable with a particular cost objective, they should be allocated as indirect
costs to all benefiting activities of the organization.
c. Publication and printing costs are unallowable as direct costs except with the prior approval of the
awarding agency.
d. The cost of page charges in journals is addressed paragraph 33.
42. Rearrangement and alteration costs. Costs incurred for ordinary or normal rearrangement and
alteration of facilities are allowable. Special arrangement and alteration costs incurred specifically for the
project are allowable with the prior approval of the awarding agency.
43. Reconversion costs. Costs incurred in the restoration or rehabilitation of the organization's facilities to
approximately the same condition existing immediately prior to commencement of Federal awards, fair
wear and tear excepted, are allowable.
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44. Recruiting costs.
a. Subject to subparagraphs b, c, and d, and provided that the size of the staff recruited and maintained is
in keeping with workload requirements, costs of"help wanted" advertising, operating costs of an
employment office necessary to secure and maintain an adequate staff, costs of operating an aptitude and
educational testing program, travel costs of employees while engaged in recruiting personnel, travel costs
of applicants for interviews for prospective employment, and relocation costs incurred incident to
recruitment of new employees, are allowable to the extent that such costs are incurred pursuant to a
well-managed recruitment program. Where the organization uses employment agencies, costs that are not
in excess of standard commercial rates for such services are allowable.
b. In publications, costs of help wanted advertising that includes color, includes advertising material for
other than recruitment purposes, or is excessive in size(taking into consideration recruitment purposes for
which intended and normal organizational practices in this respect), are unallowable.
c. Costs of help wanted advertising, special emoluments, fringe benefits, and salary allowances incurred to
attract professional personnel from other organizations that do not meet the test of reasonableness or do not
conform with the established practices of the organization, are unallowable.
d. Where relocation costs incurred incident to recruitment of a new employee have been allowed either as
an allocable direct or indirect cost, and the newly hired employee resigns for reasons within his control
within twelve months after being hired, the organization will be required to refund or credit such relocation
costs to the Federal Government.
45. Relocation costs.
a. Relocation costs are costs incident to the permanent change of duty assignment(for an indefinite period
or for a stated period of not less than 12 months)of an existing employee or upon recruitment of a new
employee. Relocation costs are allowable, subject to the limitation described in subparagraphs b, c, and
d,provided that:
(1)The move is for the benefit of the employer.
(2)Reimbursement to the employee is in accordance with an established written policy consistently
followed by the employer.
(3) The reimbursement does not exceed the employee's actual (or reasonably estimated) expenses.
b. Allowable relocation costs for current employees are limited to the following:
(1) The costs of transportation of the employee, members of his immediate family and his household, and
personal effects to the new location.
(2) The costs of finding a new home, such as advance trips by employees and spouses to locate living
quarters and temporary lodging during the transition period,up to maximum period of 30 days, including
advance trip time.
(3) Closing costs, such as brokerage, legal, and appraisal fees, incident to the disposition of the employee's
former home. These costs,together with those described in(4), are limited to 8 per cent of the sales price
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of the employee's former home.
(4)The continuing costs of ownership of the vacant former home after the settlement or lease date of the
employee's new permanent home, such as maintenance of buildings and grounds(exclusive of fixing up
expenses),utilities,taxes, and property insurance.
(5) Other necessary and reasonable expenses normally incident to relocation, such as the costs of canceling
an unexpired lease, disconnecting and reinstalling household appliances, and purchasing insurance against
loss of or damages to personal property. The cost of canceling an unexpired lease is limited to three times
the monthly rental.
c. Allowable relocation costs for new employees are limited to those described in(1) and (2) of
subparagraph b. When relocation costs incurred incident to the recruitment of new employees have been
allowed either as a direct or indirect cost and the employee resigns for reasons within his control within 12
months after hire, the organization shall refund or credit the Federal Government for its share of the cost.
However, the costs of travel to an overseas location shall be considered travel costs in accordance with
paragraph 55 and not relocation costs for the purpose of this paragraph if dependents are not permitted at
the location for any reason and the costs do not include costs of transporting household goods.
d. The following costs related to relocation are unallowable:
(1)Fees and other costs associated with acquiring a new home.
(2) A loss on the sale of a former home.
(3) Continuing mortgage principal and interest payments on a home being sold.
(4) Income taxes paid by an employee related to reimbursed relocation costs.
46. RentaI costs.
a. Subject to the limitations described in subparagraphs b through d,rental costs are allowable to the
extent that the rates are reasonable in light of such factors as: rental costs of comparable property, if any;
market conditions in the area; alternatives available; and the type, life expectancy, condition, and value of
the property leased.
b. Rental costs under sale and leaseback arrangements are allowable only up to the amount that would be
allowed had the organization continued to own the property.
c. Rental costs under less-than-arms-length leases are allowable only up to the amount that would be
allowed had title to the property vested in the organization. For this purpose, a less-than-arms-length lease
is one under which one party to the lease agreement is able to control or substantially influence the actions
of the other. Such leases include,but are not limited to those between(i)divisions of an organization; (ii)
organizations under common control through common officers, directors, or members; and(iii)an
organization and a director,trustee, officer, or key employee of the organization or his immediate family
either directly or through corporations, trusts, or similar arrangements in which they hold a controlling
interest.
d. Rental costs under leases which are required to be treated as capital leases under GAAP, are allowable
only up to the amount that would be allowed had the organization purchased the property on the date the
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lease agreement was executed, i.e., to the amount that minimally would pay for depreciation or use
allowances,maintenance, taxes, and insurance. Interest costs related to capitalized leases are allowable to
the extent they meet criteria in subparagraph 23.a. Unallowable costs include amounts paid for profit,
management fees, and taxes that would not have been incurred had the organization purchased the facility.
47. Royalties and other costs for use of patents and copyrights.
a. Royalties on a patent or copyright or amortization of the cost of acquiring by purchase a copyright,
patent, or rights thereto,necessary for the proper performance of the award are allowable unless:
(1)The Federal Government has a license or the right to free use of the patent or copyright.
(2)The patent or copyright has been adjudicated to be invalid, or has been administratively determined to
be invalid.
(3) The patent or copyright is considered to be unenforceable.
(4) The patent or copyright is expired.
b. Special care should be exercised in determining reasonableness where the royalties may have arrived at
as a result of less-than-arm's-length bargaining, e.g.:
(1)Royalties paid to persons, including corporations, affiliated with the organization.
(2)Royalties paid to unaffiliated parties, including corporations,under an agreement entered into in
contemplation that a Federal award would be made.
(3)Royalties paid under an agreement entered into after an award is made to an organization.
c. In any case involving a patent or copyright formerly owned by the organization, the amount of royalty
allowed should not exceed the cost which would have been allowed had the organization retained title
thereto.
48. Selling and marketing. Costs of selling and marketing any products or services of the organization
(unless allowed under paragraph 1 as allowable public relations costs) are unallowable. These costs,
however, are allowable as direct costs,with prior approval by awarding agencies,when they are necessary
for the performance of Federal programs.
49. Severance pay.
a. Severance pay, also commonly referred to as dismissal wages, is a payment in addition to regular salaries
and wages,by organizations to workers whose employment is being terminated. Costs of severance pay are
allowable only to the extent that in each case, it is required by(i) law, (ii) employer-employee agreement,
(iii) established policy that constitutes, in effect, an implied agreement on the organization's part, or(iv)
circumstances of the particular employment.
b. Costs of severance payments are divided into two categories as follows:
(1)Actual normal turnover severance payments shall be allocated to all activities; or,where the
organization provides for a reserve for normal severances, such method will be acceptable if the charge to
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current operations is reasonable in light of payments actually made for normal severances over a
representative past period, and if amounts charged are allocated to all activities of the organization.
(2)Abnormal or mass severance pay is of such a conjectural nature that measurement of costs by means of
an accrual will not achieve equity to both parties. Thus, accruals for this purpose are not allowable.
However,the Federal Government recognizes its obligation to participate, to the extent of its fair share, in
any specific payment. Thus, allowability will be considered on a case-by-case basis in the event or
occurrence.
c. Costs incurred in certain severance pay packages(commonly known as "a golden parachute"payment)
which are in an amount in excess of the normal severance pay paid by the organization to an employee
upon termination of employment and are paid to the employee contingent upon a change in management
control over, or ownership of,the organization's assets are unallowable.
d. Severance payments to foreign nationals employed by the organization outside the United States, to the
extent that the amount exceeds the customary or prevailing practices for the organization in the United
States are unallowable,unless they are necessary for the performance of Federal programs and approved by
awarding agencies.
e. Severance payments to foreign nationals employed by the organization outside the United States due to
the termination of the foreign national as a result of the closing of, or curtailment of activities by,the
organization in that country, are unallowable, unless they are necessary for the performance of Federal
programs and approved by awarding agencies.
50. Specialized service facilities.
a. The costs of services provided by highly complex or specialized facilities operated by the organization,
such as electronic computers and wind tunnels, are allowable,provided the charges for the services meet
the conditions of either subparagraph b or c and, in addition, take into account any items of income or
Federal financing that qualify as applicable credits under subparagraph A.5 of Attachment A.
b. The costs of such services,when material, must be charged directly to applicable awards based on actual
usage of the services on the basis of a schedule of rates or established methodology that (i) does not
discriminate against federally-supported activities of the organization, including usage by the organization
for internal purposes, and(ii)is designed to recover only the aggregate costs of the services. The costs of
each service shall consist normally of both its direct costs and its allocable share of all indirect costs.
Advance agreements pursuant to subparagraph A.6 of Attachment A are particularly important in this
situation.
c. Where the costs incurred for a service are not material, they may be allocated as indirect costs.
51. Taxes.
a. In general, taxes which the organization is required to pay and which are paid or accrued in accordance
with GAAP, and payments made to local governments in lieu of taxes which are commensurate with the
local government services received are allowable, except for(i) taxes from which exemptions are available
to the organization directly or which are available to the organization based on an exemption afforded the
Federal Government and in the latter case when the awarding agency makes available the necessary
exemption certificates, (ii) special assessments on land which represent capital improvements, and(iii)
Federal income taxes.
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b. Any refund of taxes, and any payment to the organization of interest thereon,which were allowed as
award costs,will be credited either as a cost reduction or cash refund, as appropriate,to the Federal
Government.
52. Termination costs. Termination of awards generally give rise to the incurrence of costs, or the need for
special treatment of costs,which would not have arisen had the award not been terminated. Cost principles
covering these items are set forth below. They are to be used in conjunction with the other provisions of
this Circular in termination situations.
a. Common items. The cost of items reasonably usable on the organization's other work shall not be
allowable unless the organization submits evidence that it would not retain such items at cost without
sustaining a loss. In deciding whether such items are reasonably usable on other work of the organization,
the awarding agency should consider the organization's plans and orders for current and scheduled activity.
Contemporaneous purchases of common items by the organization shall be regarded as evidence that such
items are reasonably usable on the organization's other work. Any acceptance of common items as
allocable to the terminated portion of the award shall be limited to the extent that the quantities of such
items on hand, in transit, and on order are in excess of the reasonable quantitative requirements of other
work.
b. Costs continuing after termination. If in a particular case, despite all reasonable efforts by the
organization, certain costs cannot be discontinued immediately after the effective date of termination, such
costs are generally allowable within the limitations set forth in this Circular, except that any such costs
continuing after termination due to the negligent or willful failure of the organization to discontinue such
costs shall be unallowable.
c. Loss of useful value. Loss of useful value of special tooling, machinery and equipment which was not
charged to the award as a capital expenditure is generally allowable if:
(1) Such special tooling, machinery,or equipment is not reasonably capable of use in the other work of the
organization.
(2) The interest of the Federal Government is protected by transfer of title or by other means deemed
appropriate by the awarding agency;
d. Rental costs. Rental costs under unexpired leases are generally allowable where clearly shown to have
been reasonably necessary for the performance of the terminated award less the residual value of such
leases, if(i)the amount of such rental claimed does not exceed the reasonable use value of the property
leased for the period of the award and such further period as may be reasonable, and(ii)the organization
makes all reasonable efforts to terminate, assign, settle, or otherwise reduce the cost of such lease. There
also may be included the cost of alterations of such leased property,provided such alterations were
necessary for the performance of the award, and of reasonable restoration required by the provisions of the
lease.
e. Settlement expenses. Settlement expenses including the following are generally allowable:
(1) Accounting, legal, clerical, and similar costs reasonably necessary for:
(a) The preparation and presentation to awarding agency of settlement claims and supporting data with
respect to the terminated portion of the award, unless the termination is for default(see Sec. _.61 of
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Circular A-110); and
(b)The termination and settlement of subawards.
(2)Reasonable costs for the storage,transportation,protection, and disposition of property provided by the
Federal Government or acquired or produced for the award, except when grantees or contractors are
reimbursed for disposals at a predetermined amount in accordance with Sec. _.30 through .37 of
Circular A-110.
(3) Indirect costs related to salaries and wages incurred as settlement expenses in subparagraphs (1) and
(2).Normally, such indirect costs shall be limited to fringe benefits, occupancy cost, and immediate
supervision.
f. Claims under subawards. Claims under subawards, including the allocable portion of claims which are
common to the award, and to other work of the organization are generally allowable. An appropriate share
of the organization's indirect expense may be allocated to the amount of settlements with subcontractors
and/or subgrantees,provided that the amount allocated is otherwise consistent with the basic guidelines
contained in Attachment A. The indirect expense so allocated shall exclude the same and similar costs
claimed directly or indirectly as settlement expenses.
53. Training and education costs.
a. Costs of preparation and maintenance of a program of instruction including but not limited to on-the job,
classroom, and apprenticeship training, designed to increase the vocational effectiveness of employees,
including training materials, textbooks, salaries or wages of trainees(excluding overtime compensation
which might arise therefrom), and(i) salaries of the director of training and staff when the training program
is conducted by the organization; or(ii) tuition and fees when the training is in an institution not operated
by the organization, are allowable.
b. Costs of part-time education, at an undergraduate or post-graduate college level, including that provided
at the organization's own facilities, are allowable only when the course or degree pursued is relative to the
field in which the employee is now working or may reasonably be expected to work, and are limited to:
(1)Training materials.
(2) Textbooks.
(3)Fees charges by the educational institution.
(4) Tuition charged by the educational institution or, in lieu of tuition, instructors' salaries and the related
share of indirect costs of the educational institution to the extent that the sum thereof is not in excess of the
tuition which would have been paid to the participating educational institution.
(5) Salaries and related costs of instructors who are employees of the organization.
(6) Straight-time compensation of each employee for time spent attending classes during working hours not
in excess of 156 hours per year and only to the extent that circumstances do not permit the operation of
classes or attendance at classes after regular working hours; otherwise, such compensation is unallowable.
c. Costs of tuition, fees, training materials, and textbooks (but not subsistence, salary, or any other
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emoluments) in connection with full-time education, including that provided at the organization's own
facilities, at a post-graduate(but not undergraduate)college level, are allowable only when the course or
degree pursued is related to the field in which the employee is now working or may reasonably be expected
to work, and only where the costs receive the prior approval of the awarding agency. Such costs are limited
to the costs attributable to a total period not to exceed one school year for each employee so trained. In
unusual cases the period may be extended.
d. Costs of attendance of up to 16 weeks per employee per year at specialized programs specifically
designed to enhance the effectiveness of executives or managers or to prepare employees for such positions
are allowable. Such costs include enrollment fees,training materials,textbooks and related charges,
employees' salaries, subsistence, and travel. Costs allowable under this paragraph do not include those for
courses that are part of a degree-oriented curriculum, which are allowable only to the extent set forth in
subparagraphs b and c.
e. Maintenance expense, and normal depreciation or fair rental, on facilities owned or leased by the
organization for training purposes are allowable to the extent set forth in paragraphs 11,27, and 46.
f. Contributions or donations to educational or training institutions, including the donation of facilities or
other properties, and scholarships or fellowships, are unallowable.
g. Training and education costs in excess of those otherwise allowable under subparagraphs b and c may
be allowed with prior approval of the awarding agency. To be considered for approval, the organization
must demonstrate that such costs are consistently incurred pursuant to an established training and education
program, and that the course or degree pursued is relative to the field in which the employee is now
working or may reasonably be expected to work.
54. Transportation costs. Transportation costs include freight, express, cartage, and postage charges
relating either to goods purchased,in process, or delivered. These costs are allowable. When such costs can
readily be identified with the items involved,they may be directly charged as transportation costs or added
to the cost of such items(see paragraph 28). Where identification with the materials received cannot
readily be made,transportation costs may be charged to the appropriate indirect cost accounts if the
organization follows a consistent, equitable procedure in this respect.
55. Travel costs.
a. Travel costs are the expenses for transportation, lodging, subsistence, and related items incurred by
employees who are in travel status on official business of the organization. Travel costs are allowable
subject to subparagraphs b through e,when they are directly attributable to specific work under an award
or are incurred in the normal course of administration of the organization.
b. Such costs may be charged on an actual basis,on a per diem or mileage basis in lieu of actual costs
incurred, or on a combination of the two,provided the method used results in charges consistent with those
normally allowed by the organization in its regular operations.
c. The difference in cost between first-class air accommodations and less than first-class air
accommodations is unallowable except when less than first-class air accommodations are not reasonably
available to meet necessary mission requirements, such as where less than first-class accommodations
would(i)require circuitous routing, (ii) require travel during unreasonable hours, (iii) greatly increase the
duration of the flight, (iv)result in additional costs which would offset the transportation savings, or(v)
offer accommodations which are not reasonably adequate for the medical needs of the traveler.
411
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OMB Circular A-122 http://www.whitehouse.gov/omb/circulars/a122/a122.html
•
d.Necessary and reasonable costs of family movements and personnel movements of a special or mass
nature are allowable,pursuant to paragraphs 44 and 45, subject to allocation on the basis of work or time
period benefited when appropriate. Advance agreements are particularly important.
e. Direct charges for foreign travel costs are allowable only when the travel has received prior approval of
the awarding agency. Each separate foreign trip must be approved. For purposes of this provision, foreign
travel is defined as any travel outside of Canada and the United States and its territories and possessions.
However, for an organization located in foreign countries, the term "foreign travel" means travel outside
that country.
56. Trustees. Travel and subsistence costs of trustees(or directors) are allowable. The costs are subject to
restrictions regarding lodging, subsistence and air travel costs provided in paragraph 55.
ATTACHMENT C
Circular No. A-122
NON-PROFIT ORGANIZATIONS NOT SUBJECT TO THIS CIRCULAR
Aerospace Corporation, El Segundo, California
Argonne National Laboratory, Chicago, Illinois
Atomic Casualty Commission, Washington, D.C.
Battelle Memorial Institute, Headquartered in Columbus, Ohio
Brookhaven National Laboratory, Upton,New York
Charles Stark Draper Laboratory, Incorporated, Cambridge,Massachusetts
Environmental Institute of Michigan,Arm Arbor, Michigan
Hanford Environmental Health Foundation, Richland, Washington
IIT Research Institute, Chicago, Illinois
Institute for Defense Analysis, Alexandria, Virginia
Mitre Corporation,Bedford,Massachusetts
National Radiological Astronomy Observatory, Green Bank, West Virginia
National Renewable Energy Laboratory, Golden, Colorado
Oak Ridge Associated Universities, Oak Ridge, Tennessee
Rand Corporation, Santa Monica, California
Research Triangle Institute,Research Triangle Park,North Carolina
Riverside Research Institute,New York,New York
Southern Research Institute, Birmingham, Alabama
Southwest Research Institute, San Antonio,Texas
SRI International, Menlo Park, California
Syracuse Research Corporation, Syracuse,New York
Universities Research Association, Incorporated(National Acceleration Lab), Argonne,Illinois
Non-profit insurance companies, such as Blue Cross and Blue Shield Organizations
Other non-profit organizations as negotiated with awarding agencies
BILLING CODE 3110-01
OMB Home Page ( Budget Information I Legislative Information I Management Reform/GPRA
Grants Management I Financial Management I Procurement Policy
F?of 61 6/21/00 2:27 PM
QM13 Circular A-122 http://www..,.....,..,,use.gov/omb/circulars/a122/a122.huni
Information&Regulatory Policy I Special Topics
Read our Privacy Policy
63 of 63 6/21/00 2:27 PM
EMPLOYEE REPORT EXHIBIT "G"
This employer and/or program has received federal funding assistance. This participation
requires that demographic information be tracked. Please complete the following information.
Employee Name: Job Title;
Race/Ethnicity of employee:
Home Address: Full-time or Part-time position
(please circle one)
Employer Name: Employment Start Date:
Employer Address:
1. Is your home address located within the neighborhood revitalization areas (see attached
map)? Yes No
2. Is the employer's business located within the neighborhood revitalization areas (see
attached map)? Yes No
If you have answered"Yes"to either question 1. or 2.,please sign and date the form return the completed
form to your employer. If you have answered"No"to both questions 1. and 2.,please complete questions
3,4 and 5 as well.
3. Household Income at time hired:$
4. Total number of persons in your household (including yourself):
5. If there are dependents in your family, are you a female head of household? Yes
No
Date:
Signature of Employee
The section below this line should be completed by employer/program administrator
Is this employee's position a new job or a retained position?
If the assistance has been supported by job retention, is this position one that resulted from
turnover of an existing position? Yes No
Is this employee's residence or the location of the business within the neighborhood
revitalization area? Yes No . If"Yes", the above employee is presumed to be
low-and-moderate income. If"No",please complete the remainder of the form.
Confirmed Household Income at time of Employment: $ (item#1)
Household size: (item #2)
Enter 100%median Household (HH) Income per Household Size: (item#3)
Calculate employee's HH income as a percent of median HH income: % (item#4)
Does this employee's household qualify as a low/moderate income? Yes No
Sources: items#1 and#2—from employee section of form
item#3—from current income Omaha Median Family Income Limits established by HUD
item#4—divide item#1/item#3
Date:
Name and Title of Responsible Administrator
EXHIBIT H
FINANCIAL STATUS REPORT FORM
(Please attach AIA G702 form and other supporting documentation for expenditures)
Subrecipient/Contractor: Program: CDBG
HOME
Address: (Circle) ESG
SHP
Grant#: Other
Grant Period:
Reimbursement Period: Project Type: Acquisition
Circle all New Construction
that apply Rehabilitation
PROJECT TOTAL PREVIOUS CURRENT % BUDGET
GRANT FUNDS BUDGET EXPENDITURES MONTH'S COMPLETE REMAINING
EXPENDITURES
Construction Hard Costs
Architect %
Engineering
Legal
Appraisal
Audit %
Developer Overhead
Construction Contingency
Other—Please Specify
TOTALS
Reimbursement Requested: $
Program Income This Month $
TOTAL PAY REQUEST $
PROJECT TOTAL PREVIOUS CURRENT % BUDGET
MATCHING FUNDS BUDGET EXPENDITURES MONTH'S COMPLETE REMAINING
EXPENDITURES
Owner Cash Equity
LIHTC
Private Funds
Other
TOTAL MATCHING
I certify to the best.of my knowledge that the above infoiniation is correct and complete and is for the
purpose set forth in the award documents. Financial records are available for audit or review.
Authorized Certifying Officer Title Date Form 3/01
EXHIBIT I
24 CFR 85.43 ENFORCEMENT
(a) Remedies for noncompliance. If a grantee or subgrantee materially fails
to comply with any term of an award, whether stated in a Federal statute
or regulation, an assurance, in a State plan or application, a notice of
award, or elsewhere, the awarding agency may take one or more of the
following actions, as appropriate in the circumstances:
(1) Temporarily withhold cash payments pending correction of the
deficiency by the grantee or subgrantee or more severe enforcement
action by the awarding agency,.
(2) Disallow (that is, deny both use of funds and matching credit for)
all or part of the cost of the activity or action not in compliance,
(3) Wholly or partly suspend or terminate , the current award for the
grantee's or subgrantee's program,
(4) Withhold further awards for the program, or
(5) Take other remedies that may be legally available.
(b) Hearings , appeals. In taking an enforcement action, the awarding agency
will provide the grantee or subgrantee an opportunity for such hearing,
appeal, or other administrative proceeding to which the grantee or
subgrantee is entitled under any statute or regulation applicable to the
action involved.
(c) Effects of suspension and termination. Costs of grantee or subgrantee
resulting from. obligations incurred by the grantee or subgrantee during a
suspension or after termination of an award are not allowable unless the
awarding agency expressly authorizes them in the notice of suspension or
termination or subsequently. Other grantee or subgrantee . costs during
suspension or after termination which are necessary and not reasonably'
avoidable are allowable if:
(1) The costs result from obligations which were properly incurred by
the grantee or subgrantee before the effective date 'of suspension
or termination, are not in anticipation of it, and, in the case of
a termination, are noncancellable, and,
(2) The costs would be allowable if the award were not suspended or
expired normally at the end of the funding period in 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 grantee or subgrantee from being subject to "Debarment and
Suspension" under E.O. 12549 (see § 85.35).
24 CFR 85.44 TERMINATION FOR CONVENIENCE
Except as provided in § 85.43 awards may be terminated in whole or in part
only as follows:
(a) By the awarding agency with the consent of the grantee or subgrantee 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, or
(b) By the grantee or subgrantee upon written notification to the awarding
agency, setting forth the reasons for such termination, the effective
date, and in the case of partial termination, the portion to be
terminated. However, if, in the , case of a partial termination, the
awarding agency determines that the remaining portion of the award will
not accomplish the purposes for which the award was made, the awarding
agency may terminate the award in its entirety under either § 85.43 or
paragraph (a) of this section.
9124u
ATTACHMENT 1
CITY OF OMAHA
DEFINITION OF INCOME
Annual Income Includes:
1. Wages, salaries, tips, commissions, etc.:
2. Self-employment income from owned non-farm business, including proprietorships and partnerships;
3. Faun self-employment income;
4. Interest, dividends, net rental income, or income from estates or trusts;
5. Social security or railroad retirement;
6. Supplemental Security Income, Aid to Families with Dependent Children, or other public assistance or
public welfare programs;
7. Retirement, survivor, or disability pensions;
8. Any other sources of income received regularly, including Veterans' (VA) payments, unemployment
compensation, child support and alimony; and
9. Income from assets, as shown below:
a. Amounts in savings and checking accounts.
b. Stocks, bonds, savings certificates,money market funds and other investment accounts.
c. Equity in real property or other capital investments. Equity is the estimated current market value of
the asset less the unpaid balance on all loans secured by the asset and reasonable costs (such as
broker fees) that would be incurred in selling the asset. Do not include equity in principle residence
(home equity).
d. The cash value of trusts that are available to the household.
e. IRA, Keogh and similar retirement savings accounts, even though withdrawal would result in a
penalty.
f. Contributions to company retirement/pension funds that can be withdrawn without retiring or
terminating employment.
g. Assets which, although owned by more than one person, allow unrestricted access by the applicant.
h. Lump sum receipts such as inheritances, capital gains, lottery winnings, insurance settlements and
other claims.
i. Personal property held as an investment such as gems,jewelry, coin collections,antique cars, etc.
j. Cash value of life insurance policies.
k. Assets disposed of for less than fair market value during two years preceding certification or
recertification.
10. Actual income from assets if total assets are $5,000 or less.
11. If assets are more than $5,000, the greater of (a) actual income from assets, or (b) total assets times
passbook rate.
Annual Income Does Not Include the Following Assets:
a. Necessary personal property, except as noted in 9 (i).
b. Interest in Indian trust lands.
c. Assets that are a part of an active business or fanning operation.
NOTE: Rental properties are considered personal assets held as an investment rather than business
assets unless real estate is the applicant's/tenant's main occupation.
d. Assets not accessible to the family and which provide no income for the family.
e. Vehicles especially equipped for the handicapped.
f. Equity in owner-occupied cooperatives and manufactured homes in which the family lives.
g. Equity in principle residence (home equity).
Revised 10/3/99
A
ATTACHMENTS 2 & 3
SECTION 3 CLAUSE
All Section 3 covered contracts shall include the following clause (referred to as the Section 3
clause):
A. The work to be performed under this contract is subject to the requirements of Section 3
of the Dousing and Urban Development act of 1968, as amended, 12 U.S.C. 1701u
(Section 3). The purpose of Section 3 is to ensure that employment and other economic
.opportunities generated by HUD assistance or HUD-assisted projects covered by Section
3 shall, to the greatest extent feasible, be directed to low-and very low-income persons,
particularly persons who are recipients of HUD assistance for housing.
B. The parties to this contract agree to comply with HUD's regulations in 24 CFR.part 135,
which implement Section 3. As evidenced by their execution of this contract, the parties
to this contract certify that they are under no contractual or other impediment that would
prevent them from complying with the part 135 regulations.
C. The contractor agrees to send to each labor organization or representative of workers with
which the contractor has a collective bargaining agreement or other understanding, if any,
a notice advising the labor organization or workers' representative of the contractor's
commitments under this Section 3 clause, and will post copies of the notice in
conspicuous places at the work site where both employees and applicants for training and
employment positions can see the notice. The notice shall describe the Section 3
preference, shall set forth minimum number and job titles subject to hire, availability of
apprenticeship and training positions, the qualifications for each; and the name and
location of the person(s) taking applications for each of the positions; and the anticipated
date the work shall begin.
D. The contractor agrees to include this Section 3 clause in every subcontract subject to
compliance with regulations in 24 CFR part 135, an agrees to take appropriate action, as
provided in an applicable provision of the subcontract or in this Section 3 clause, upon a
finding that the subcontractor is in violation of the regulations in 24 CFR part 135. The
contractor will not subcontract with any subcontractor where the contractor has notice or
knowledge that the subcontractor has been found in violation of the regulations in 24
CFR part 135.
E. The contractor will certify that any vacant employment positions, including training
positions, that are filled (1) after the contractor is selected but before the contract is
executed, and (2) with persons other than those to whom the regulations of 24 CFR part
135 require employment opportunities to be directed were not filled to circumvent the
contractor's obligations under 24 CFR part 135.
F. Noncompliance with HUD's regulations in 24 CFR part 135 may result in sanctions,
termination of this contract for default, and debarment or suspension from future HUD-
assisted contracts.
Effective August 1, 1994
G. With respect to work performed in connection with Section 3 covered Indian housing
assistance, Section 7(b) of the Indian Self-Determination and Education Assistance Act
(25 U.S.C. 450e) also applies to the work to be performed under this contract. Section
7(b) requires that to the greatest extent feasible (i) preference and opportunities for
training and employment shall be given to Indians, and (ii) preference in the award of
contracts and subcontracts shall be given to Indian organizations and Indian-owned
Economic Enterprises: Parties to this contract that are subject to the provisions of
Section 8 and Section 7(b) agree to comply with Section 3 to the maximum extent
feasible, but not in derogation of compliance with Section 7(b).
Providing Other Economic Opportunities.
( a) General. In accordance with the findings of the Congress, as stated in Section 3,
that other economic opportunities offer an effective means of empowering low-
incorrie persons, a recipient is encouraged to undertake efforts to provide to low-
income persons economic opportunities other than training, employment and
contract awards, in connection with Section 3 covered assistance.
(b ) Other training and employment-related opportunities. Other economic oppor-
tunities to train and employ, Section 3 residents include, but need not be limited to,
use of"upward mobility", "bridge" and trainee positions to fill vacancies; and hiring
Section 3 residents in part-time positions.
(c ) Other business-related economic opportunities: (1) A recipient or contractor may
provide economic opportunities to establish, stabilize or expand Section 3 business
concerns, including micro-enterprises. Such opportunities include, but are not
limited to the formation of Section 3 joint ventures, financial support for affiliating
with franchise development, use of labor only contracts for building trades,
purchase of supplies an materials from housing authority resident-owned
businesses, purchase of materials and supplies from PHA resident-owned
businesses and use of procedures under 24 CFR part 963 regarding HA contracts to
HA resident-owned businesses. A recipient or contractor may employ these
methods directly or may provide incentives to non-Section 3 businesses to utilize
such methods to provide other economic opportunities to low-income persons. (2)
A Section 3 joint venture means an association of business concerns, one of which
qualifies as a Section 3 business concern, formed by written joint venture agreement
to engage in and carry out a specific business venture for which purpose the
business concerns'combine their efforts, resources, and skills for joint profit, but not
necessarily on a continuing or permanent basis for conducting business generally,
and for which the Section 3 business concern:
(i ) Is responsible for a clearly defined portion of the work to bl; performed and
holds management responsibilities in the joint venture; and
(ii ) Performs at least 25 percent of the work and is contractually entitled to
compensation proportionate to its work.
ATTACHMENT 4
•
MINORITY BUSINESS & WOMEN BUSINESS
ENTERPRISE PLAN
`e ra q,; !3k
AVM
�A• - N
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41'ED FEBRVP PLANNING • OMAHA
March 2001
City of Omaha City of Omaha
Hal Daub,Mayor Planning Depaitment
Omaha/Douglas Civic Center
1819 Farnam Street
Omaha,Nebraska 68183
PLANNING DEPARTMENT
CITY OF OMAHA
MINORITY BUSINESS/WOMEN BUSINESS ENTERPRISE PLAN
INTRODUCTION
Minority and women business sectors play an important part in Omaha's overall plans for future growth,
progress, and prosperity. It is vital to the City's economic condition and well-being that minority and
women businesses expand, thrive and prosper, generating economic stability and increased job
opportunities. Towards the fulfillment and accomplishment of these important objectives, the City of
Omaha remains committed to minority and women business development.
The City of Omaha's approach to minority/women business development is embedded in its policy of non-
discrimination in the conduct of City business including the procurement of goods, materials and services,
construction and community and economic development.projects. The City recognizes its obligations to
each segment of the various communities it serves. It is in recognition of these responsibilities that the
City established the City's Contract Compliance Ordinance.
The Ordinance commits the City to:
1. Require contractors and/or vendors to provide employment opportunities without regard to race, creed,
color, sex religion, or national origin;
2. Monitor contractor and vendor equal opportunity performance; and
3. Increase the total number and total dollar volume of City contracts awarded to minority-owned and
women-owned firms.
GOALS AND OBJECTIVES
The following represents a summary of the goals and objectives of the Planning Department as they relate
to minority and women-owned businesses:
1. Encourage, increase and promote business and procurement opportunities for women-owned
businesses;
2. Increase and expand the awareness and understanding regarding the concerns, obstacles, and
hindrances preventing increased MBE/WBE participation in Planning Department activities;
3. Assist MBE's/WBE's through the revitalization of business districts;
4. Assist minority and female entrepreneurs in the formation and growth of new small businesses; and
5. Provide technical assistance to neighborhood organizations, MBE's and WBE's to increase their
participation in the Planning Department programs and activities at all levels.
1 .
SCOPE OF WORK
In order to accomplish these objectives, the Planning Department will:
1. Require that recipients of grant awards, consulting contracts, or loans to develop and provide a
MBE/WBE Utilization Plan.
2. Ensure that Requests for Proposals require the submission of MBE/WBE Utilization Plans.
3. Ensure that the programs of the Planning Department are advertised in the appropriate new media
whose markets are targeted toward MBE/WBE.
4. Implement an outreach effort informing MBE and WBE firms and capture information on these
firms doing business with the Planning Department.
5. Implement a system to identify MBE and WBE firms and capture information on these firms doing
business with the Planning Department.
6. Require developers, corporations, partnerships and/or sole proprietors to register with the Human
Relations Department and the Purchasing Department. In addition, require these entities to:
A. Complete CC-1 (Human Relations Department)
B. Complete Bid List Registration(Finance Department, Purchasing Division
C. Complete Business Certification (Human Relations Department)
7. Require developers, corporations, partnerships and/or sole proprietors to provide registration
information on all sub-contractors.
8. Require loan agreements to include a statement that jobs created will be made available to low-to-
moderate income persons.
The following application package has been developed to assist you in complying with our request for
information on your business and all sub-contractors providing goods and/or services on projects financed
by and/or implemented through an agreement with the City of Omaha. If you have any questions or
require further assistance in completing the application package, please contact Mr. Kenneth Johnson, Sr.
at 444-5165.
2
MBE/WBE FOR EMPLOYMENT
The following list of organizations is provided to assist you in identifying low-to-moderate income
persons for employment opportunities. You must make concerted efforts to hire low-to-moderate income
persons and document specific actions taken to achieve these objectives.
To help accomplish the above goals, the following agencies should be notified of initial employment
opportunities for low to moderate income persons:
Nebraska Department of Labor-Omaha Job Service Laraza Job Training
5036 Ames Avenue 4911 South 25th Street
Omaha,NE 68111 Omaha,NE 68107
Jack Meyers, Office Supervisor Enrique Brodsky, Executive Director
595-3123 734-1321
Work Force Development of Greater Omaha Omaha Opportunities Industrialization Center
Blue Lion Centre 2724 North 24th Street
2421-23 North 24th Street Omaha,NE 68110
Omaha,NE 68110 Dr. Bernice Dodd, Executive Director
David Catalan, Director 457-4222
444-4700
Urban League of Nebraska, Inc. Girls Incorporated of Omaha
3022-24 North 24th Street 2811 North 45th Street
Omaha,NE 68110 Omaha,NE 68104
William Thompkins, President Norma Deeb, Executive Director
453-9730 457-4676
YWCA
222 South 29th Street
Omaha,NE 68131
Peg Harriott, Executive Director
345-6555
411
MBE/WBE FOR GOODS AND SERVICES
Your company must make vendors aware of your policy to support equal opportunity utilization of
minority, disabled and women-owned businesses. To accomplish this goal, you must provide a copy of
the approved MBE/WBE Participation Plan to all businesses providing goods and/or services to the
project.
Your company must provide the opportunity for Minority Business Enterprises and Women Business
Enterprises to provide goods and services through all phases of the project. A concerted effort must be
made to allow these businesses to actively compete for project contracts. This effort will include
utilization of the following resources and documentation of your actions to achieve these objectives.
Omaha Small Business Network, Inc.
2505 North 24th Street
Omaha,NE 68110
Executive Director
453-5336
Housing and Community Development Division
City Planning
1819 Farnam Street, Room 1111
Omaha,NE 68183
Kenneth E. Johnson, Sr., Economic Development Manager
444-5165
Nebraska Department of Economic Development
Small Business (MBE/WBE/DBE) Assistance
301 Centennial Mall South
Lincoln, NE 68509-4666
Steve Williams, Business Assistance Manager
471-3778
Purchasing Department
1819 Farnam Street, Room 1003
Omaha,NE 68183
Pat Burke, Purchasing Agent
444-5408
Human Relations Department Kellie Paris-Asaka, Director (444-5050)
Contract Compliance (MBE/WBE)
1819 Farnam Street, Room 502
Omaha,NE 68183
Rita Vlademar, Contract Compliance Manager
444-5067
411
MBE/WBE FOR GOODS AND SERVICES
Great Plains Minority Supplier Development Council
Greater Omaha Chamber of Commerce
1301 Harney Street
Omaha,NE 68102
Terrie Miller, Director
345-5000
Laraza Job Training
4911 South 25th Street
Omaha,NE 68107
Enrique Brodsky, Executive Director
734-1321
United Minority Contractors Association
2221 North 24th Street
Omaha,NE 68110
Al Epps, Executive Director
341-2177
Donna B. Hayes, ADDMSB
Capital Ownership Development
Small Business Administration
11145 Mill Valley Road
Omaha,NE 68154
221-4691
Hubert J. Carter, Jr., Deputy for Small Business
U.S. Corps of Engineers
215 North 17th Street
Omaha,NE 68102
221-4110
5 ��
•
City of Omaha
BUSINESS QUALIFICATION RESUME
DATE:
I. FIRM IDENTIFICATION:
COMPANY NAME
STREET ADDRESS
CITY STATE ZIP CODE
BUSINESS PHONE HOME PHONE
MONTH &YEAR ESTABLISHED
II. OWNERSHIP OF FIRM:
IS THE FIRM OWNED AND CONTROLLED BY MEMBER OF MINORITY OR OTHER
DISADVANTAGED GROUP?: YES NO MINORITY
WOMAN N/A
TYPE OF OWNERSHIP: INDIVIDUAL PARTNERSHIP CORPORATION
IS 51% OWNED BY A MINORITY? YES NO
NAME AND ADDRESS OF ALL STOCKHOLDERS AND/OR PARTNERS:
NAME, TITLE, HOME ADDRESS % OF OWNERSHIP
III. MANAGEMENT (USE SAME FORMAT FOR ADDITIONAL MANAGEMENT PERSONNEL):
NAME POSITION
EDUCATION
MANAGEMENT OR TECHNICAL TRAINING
6/22/90
6
City of Omaha
CONTRACTOR INFORMATION FORM:
DATE: PROJECT ADDRESS
OWNER INFORMATION: (To be filled out by the City of Omaha)
OWNER'S NAME
OWNER'S ADDRESS
CITY/STATE/ZIP CODE
OWNER'S PHONE NUMBER
OWNER'S FEDERAL TAX IDENTIFICATION NUMBER: MINORITY INFORMATION:
The Owner meets the following criteria:
MINORITY WOMAN N/A
(If the company does not have a Federal Tax Identification
Number, then provide the Owner's Social Security Number.)
GENERAL CONTRACTOR INFORMATION:
COMPANY'S NAME
COMPANY'S ADDRESS
CITY/STATE/ZIP CODE
COMPANY'S PHONE NUMBER
COMPANY'S FEDERAL TAX IDENTIFICATION NUMBER: MINORITY INFORMATION:
The Company meets the following criteria:
MINORITY WOMAN N/A
CONTRACT AMOUNT:
SUBCONTRACTOR LIST:
SUBCONTRACTOR TRADE FED. I.D. # TELEPHONE# MINORITY INFO.:
MINORITY
WOMAN
CONTRACT AMOUNT: N/A
SUBCONTRACTOR TRADE FED. I.D. # TELEPHONE # MINORITY INFO.:
MINORITY
WOMAN
CONTRACT AMOUNT: N/A
City of Omaha
SUBCONTRACTOR LIST:
(Continuation)
SUBCONTRACTOR TRADE FED. I.D. # TELEPHONE# MINORITY INFO.:
MINORITY
WOMAN
CONTRACT AMOUNT: N/A
SUBCONTRACTOR TRADE FED. I.D. # TELEPHONE# MINORITY INFO.:
MINORITY
WOMAN
CONTRACT AMOUNT: N/A
SUBCONTRACTOR TRADE FED. I.D. # TELEPHONE# MINORITY INFO.:
MINORITY
WOMAN
CONTRACT AMOUNT: N/A
SUBCONTRACTOR TRADE FED. I.D. # TELEPHONE# MINORITY INFO.:
MINORITY
WOMAN
CONTRACT AMOUNT: N/A
SUBCONTRACTOR TRADE FED. I.D. # TELEPHONE# MINORITY INFO.:
MINORITY
WOMAN
CONTRACT AMOUNT: N/A
SUBCONTRACTOR TRADE FED. I.D. # TELEPHONE# MINORITY INFO.:
MINORITY
WOMAN
CONTRACT AMOUNT: N/A
SUBCONTRACTOR TRADE FED. I.D. # TELEPHONE# MINORITY INFO.:
MINORITY
WOMAN
CONTRACT AMOUNT: N/A
SUBCONTRACTOR TRADE FED. I.D. # TELEPHONE# MINORITY INFO.:
MINORITY
WOMAN
CONTRACT AMOUNT: N/A
kjohnson/reports/mbe-2 doc
L
8
C-25A CITY OF OMAHA
LEGISLATIVE CHAMBER
Omaha,Nebr May 22, 2001
RESOLVED BY THE CITY COUNCIL OF THE CITY OF OMAHA:
WHEREAS, the City annually receives Community Development Block Grant
funds under Title 1 of the Housing and Community Development Act of 1974, as amended, for
the purpose of benefiting low and moderate income residents, eliminating slums and blight, and
for other urgent community development needs; and,
WHEREAS, the Mayor recommended various projects in the 2001 Consolidated
Submission for Community Planning and Development Programs (Consolidated Plan), including
the New Community Development Corporation, a Nebraska Non-profit Corporation (NCDC)
Micro Business Loan Program; and,
WHEREAS, the City Council approved the 2001 Consolidated Plan on December
19, 2000,by Resolution No. 3377, as amended; and,
WHEREAS, NCDC has indicated the total estimated cost to administer the Micro
Business Program to be $160,000.00 consisting of an $80,000.00 CDBG Grant and $80,000.00
in the form of private financing; and,
WHEREAS, the establishment of a Micro Business Program for North and South
Omaha is a part of the overall Economic Development Program of the City of Omaha; and,
WHEREAS, a determination has been made that the Micro Business Program will
benefit low and moderate income persons based upon job creation and low and moderate income
area benefits; and,
WHEREAS, NCDC is requesting funding for its Micro Business Program and is
willing to accept the terms and conditions as stated in the attached Agreement; and,
WHEREAS, it is in the best interest of the City of Omaha and the residents
thereof to enter into an Agreement with NCDC for the continuation of the administration and
loan fund capitalization of the Micro Business Program for the period January 1, 2001 through
December 31, 2001.
By
Councilmember
Adopted
City Clerk
411
Approved
Mayor
C-25A CITY OF OMAHA
LEGISLATIVE CHAMBER
Omaha,�iebr May 22, 2001
PAGE 2
NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE
CITY OF OMAHA:
THAT, as recommended by the Mayor, the attached Loan Agreement between the
City of Omaha and the New Community Development Corporation, a Nebraska Non-profit
Corporation (NCDC), Michael B. Maroney, President/CEO, 3147 Ames Avenue, Omaha,
Nebraska 68111 in an amount of$80,000.00 for the continuation of the Micro Business Program
in North and South Omaha by providing 41 new job positions that benefit low-and-moderate
income households and technical assistance to 80 businesses overall for the period from January
1, 2001 through December 31, 2001, is hereby approved. Funds shall be payable from the
Community Development Block Grant Program, Economic Development Program, Agency No.
200, Fund No. 193, Organization 8330.
P:\PLN1\5820pjm.doc APPROVED AS TO FORM:
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5-14-61
CITY ATTORNEY DATE
By
Councilmember
Ado tedY 2 2 2001
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