RES 2023-0095 - Agreement with Mercy Mountain Plains Timbercreek Apts to rehabilitate 180 housing units at 6816 South 137th Plaza
ACKNOWLEDGEMENT OF COVENANT
RUNNING WITH LAND
WHEREAS, on _________ ___, 2023, by Resolution No. 2023-____, the City Council of the City of Omaha authorized the execution of a HOME Program Agreement (hereafter referred
to as the “Agreement”) between the City of Omaha, a Municipal Corporation of the Metropolitan
class in the State of Nebraska (hereafter referred to as “the City”) and Mercy Housing Mountain
Plains, a Colorado nonprofit corporation (“MHMP”), and MHMP 18 Timbercreek Apartments,
LP, a Nebraska limited partnership (the “Owner”), with the Owner as the owner of Timbercreek
Apartments, wherein the City would provide a loan to the Owner in an amount of $700,000.00 to
assist in the construction work of the property and improvements thereon, and legally described
as:
Timbercreek Replat Four, Lot 2, Block 0 IRREG 10.562 AC, an Addition to the City of
Omaha, as surveyed, platted and recorded in Douglas County, Nebraska (commonly
known as 6816 South 137 Plaza, Omaha, Nebraska).
NOW, THEREFORE, MHMP 18 Timbercreek Apartments, LP, a Nebraska limited
partnership, (hereinafter referred to as the “Owner”) for theirselves, their successors and assigns,
agrees that the restrictions and covenants in the Agreement shall be covenants running with the
land, and that it, in any event and without regard to technical classification and designation, legal
or otherwise, shall be binding, to the fullest extent permitted by law and equity, and enforceable
by the City, its successors and assigns, against the Owner, their successors and assigns, to any
part of the property that is the subject of the Agreement, or any interest therein and any party in
the possession or occupancy of any part of said property. The Owner, for theirselves, their
successors and assigns, further covenants and agrees, that without regard to whether the City or
the United States is an owner of any interest in the land to which the covenants relate, the
covenants running with the land shall remain in effect for twenty (20) years after the date of
Project Close Out of the project, the period specified or referred to in Section 1.11 in the
Agreement, or until such date thereafter to which it may be modified by proper amendment of
the Agreement, on which date such covenants may terminate. The Owner, for theirselves, their
successors and assigns, further covenants and agrees that this property shall continue to be used
as rental residential for qualified tenant families, as described in Section 1.13 and 1.14 in the
Agreement, for the term of this covenant. In the event of default, gross negligence or other
substantial noncompliance, the outstanding amount of the loan at the time of default shall be due
and payable immediately from the Owner, their successors and assigns, to the City.
Page 1 of 2 Revised and approved 3/14/2016
Exhibit B
COVENANT
PAGE 2
By MHMP 18 Timbercreek Apartments, LP, a Nebraska limited partnership By MHMP 18 Timbercreek Apartments GP, LLC, a Nebraska limited liability company, its general partner By Mercy Housing Mountain Plains, a Colorado Nonprofit corporation, its manager
By: ________________________________________
Shelly Marquez, SVP
STATE OF NEBRASKA )
) § COUNTY OF DOUGLAS )
On this day of , 2023, before me, the undersigned, a Notary Public duly
commissioned and qualified in and for said county, personally came , to me known to be
the person(s) named in and who executed the foregoing instrument, and acknowledged that they
executed the same as their voluntary act and deed for the purposes therein stated.
Witness my hand and notarial seal the day and year last above written.
Notary Public
My Commission expires .
Page 2 of 2 Revised and approved 3/14/2016
1
HOME PROGRAM
NON-RECOURSE REPAYABLE LOAN PROMISSORY NOTE
PROJECT: Timbercreek Apartments
PLACE: 6816 South 137 Plaza
Omaha, NE 68137
DATE:
LEGAL DESCRIPTIONS: Timbercreek Replat Four, Lot 2, Block 0 IRREG 10.562 AC as
platted and recorded in Douglas County, Nebraska
FLOATING HOME-ASSISTED UNITS (initial unit mix)
Bedrooms HOME Funds
Two 1 BR
Four 2BR
Two 3BR
TOTAL $700,000.00
FOR VALUE RECEIVED, the Undersigned jointly and severally promises to pay to the
order of the CITY OF OMAHA (hereinafter referred to as the “City”), acting by and through the
Director of the Planning Department or its successors, the Principal sum of Seven Hundred
Thousand and 00/100 ($700,000.00), plus accrued zero percent interest that shall be paid as
follows: The principal loan amount of $700,000.00 shall be due and payable on the first day
following the end of the Affordability Period. In the event the Developer sells, conveys, grants,
mortgages or otherwise transfers any portion of the interest in the property, without prior written
notice to the City, during the Affordability Period (twenty years) and prior to the Maturity Date,
the HOME Program Non-Recourse Repayable Loan shall become due and payable. The loan
may only be used for the purposes described herein. The Project funding will include
approximately $35,106,917.00 in other funding sources, including but not limited to, Low-
Income-Housing Tax Credit (LIHTC) funds, Omaha Housing Authority loan, and private loans
All payments on this Note shall be made in lawful money of the United States at the
principal office of the City of Omaha, Planning Department, 1819 Farnam Street, Suite 1111,
Omaha, Nebraska, or at such other place or places the City shall designate in writing for such
purposes.
2
The Undersigned reserve(s) the right to prepay at any time all or any part of the principal
amount and interest of this Note without the payment of penalties or premiums.
In the event that the Undersigned shall fail to pay any installment of principal and interest
when due, and such default in payment continues for a period of fifteen (15) days after written
notice thereof has been given by the City to the Undersigned, the City may at any time thereafter,
at its option, declare the entire unpaid balance of principal and interest at once due and owing,
without further notice. Failure of the City to exercise such option shall not constitute a waiver of
such default. No default shall exist by reason of nonpayment of any required installment of
principal and interest so long as the amount of any optional prepayments already made pursuant
hereto equals or exceeds the amount of the required installments. If the principal and interest are
not paid during the calendar month which includes the due date, the Undersigned shall pay to the
City a late charge of 4% per calendar month, or fraction thereof, on the amount past due and
remaining unpaid.
This note is secured by no less than a seventh Deed of Trust subordinate to superior liens
in an aggregate amount not to exceed $35,806,917.00 during construction and upon completion
and repayment of construction loan (or a higher amount approved by the Assistant Planning
Director after all contractor and subcontractor bids have been received), filed in the Douglas
County Register of Deeds Office.
In the event that this Note should be reduced to judgment, such judgment shall bear
interest thereon at the statutory rate, but not to exceed 9% per annum.
If suit is instituted by the City to recover upon this Note, the Undersigned agrees to pay
all costs of such collection, including reasonable attorneys’ fees and court costs.
This loan is a non-recourse loan; therefore, in the event of a default, the City shall rely
solely upon the Property which is secured by the deed of trust which is the security for the non-
recourse repayable loan promissory note and will not initiate or participate in any claim or
proceedings against the maker of the non-recourse repayable loan promissory note or its partners
(or the members, partners, officers, directors or shareholders of any partner) for payment of any
sum due under this non-recourse repayable loan promissory note or any other sum due under the
deed of trust.
DEMAND, protest and notice of demand and protest are hereby waived, and the
Undersigned hereby waives, to the extent authorized by law, any and all homestead and other
exemption rights which otherwise would apply to the debt evidenced by this Note.
3
IN WITNESS WHEREOF, this Note has been duly executed by the Undersigned, as of
the day and year set forth below.
MHMP 18 Timbercreek Apartments, LP,
a Nebraska limited partnership
By: MHMP 18 Timbercreek Apartments
GP, LLC, a Nebraska limited liability
company, its general partner
By: Mercy Housing Mountain Plains, a
Colorado non-profit corporation, its
manager
By:
Shelly Marquez Date
Title: SVP Mercy Housing Mountain Plains
APPROVED AS TO FORM:
ASSISTANT CITY ATTORNEY DATE
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Exhibit C
Allowances for City of Omaha Planning Department
Tenant-Paid Utilities Housing and Community Development Department
Single Family Mid Housing (2 to 4)
Effective 1/1/2022-12/31/2022
Circle bedroom size and all utilities that are to be paid by the tenant.
0 BR 1 BR 2 BR 3 BR 4 BR 5 BR
Heating Natural Gas $27 $32 $39 $43 $48 $52
Electric Resistance $28 $33 $44 $54 $64 $74
Electric Heat Pump $20 $24 $29 $33 $36 $41
Cooking Natural Gas $3 $3 $4 $6 $6 $8
Electric $4 $5 $7 $9 $11 $13
Water Heating Natural Gas $6 $8 $11 $16 $20 $24
Electric $13 $16 $20 $27 $31 $36
Other Electric $20 $23 $33 $44 $53 $63
Air Conditioning $7 $9 $11 $14 $17 $19
Water $26 $27 $39 $52 $64 $81
Sewer $28 $29 $43 $60 $81 $99
Trash Collection
Tenant provided range $4 $4 $5 $5 $6 $6
Tenant provided refrigerator $4 $4 $4 $5 $5 $7
Total
Project Address:
Total Allowance: $
Prepared by:
Spreadsheet (ver13) based on form HUD-52667 (12/97).
ref. Handbook 7420.8
Exhibit C
Revised and approved 12/3/2009
EXHIBIT
DEFINITION OF PROGRAM INCOME
“Program income” means gross income received by the Recipient or a Subrecipient directly generated from the uses of
CDBG/HOME/NSP and other federal funds. When such income is generated by an activity that is only partially assisted
with CDBG/HOME/NSP and other federal funds, the income shall be prorated to reflect the percentage of
CDBG/HOME/NSP and other federal 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/HOME/NSP and other federal funds;
(ii) Proceeds from the disposition of equipment purchased with CDBG/HOME/NSP and other federal funds;
(iii) Gross income from the use or rental of real or personal property acquired by the Recipient or a
Subrecipient with CDBG/HOME/NSP and other federal 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/HOME/NSP and other federal funds, less the costs incidental to the
generation of such income;
(v) Payments of principal and interest on loans made using CDBG/HOME/NSP and other federal funds;
(vi) Proceeds from the sale of loans made with CDBG/HOME/NSP and other federal funds;
(vii) Proceeds from the sale of obligations secured by loans made with CDBG/HOME/NSP and other federal
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/HOME/NSP and other federal 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 US Treasury. Such interest shall be remitted to HUD for transmittal to the US 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/HOME/NSP and
other federal assistance; funds collected through special assessments used to recover the non-CDBG/HOME/NSP
and other federal portion of a public improvement; and proceeds from the disposition of real property acquired or
improved with CDBG/HOME/NSP and other federal 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 for CDBG program funds and §92.503 for HOME/NSP program funds.
(3) Any program income generated by NSP funds through March 31, 2013 shall be used to construct housing units
east of 72nd Street affordable to low-, moderate-, and middle-income (LMMI) households. After March 31, 2013,
all program income generated by NSP funds will be limited to eligible CDBG activities, including the benefit to
low- and moderate-income (LMI) (not LMMI) households during the term of this Agreement, the program
income shall be returned to the City within thirty (30) days.
D
79
CHAPTER II—OFFICE OF MANAGEMENT AND
BUDGET GUIDANCE
Part Page
200 Uniform administrative requirements, cost principles,
and audit requirements for Federal awards .....81
201–299 [Reserved]
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Exhibit E
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PART 200—UNIFORM ADMINISTRA-
TIVE REQUIREMENTS, COST PRIN-
CIPLES, AND AUDIT REQUIRE-
MENTS FOR FEDERAL AWARDS
Subpart A—Acronyms and Definitions
ACRONYMS
Sec.
200.0 Acronyms.
200.1 Definitions.
Subpart B—General Provisions
200.100 Purpose.
200.101 Applicability.
200.102 Exceptions.
200.103 Authorities.
200.104 Supersession.
200.105 Effect on other issuances.
200.106 Agency implementation.
200.107 OMB responsibilities.
200.108 Inquiries.
200.109 Review date.
200.110 Effective/applicability date.
200.111 English language.
200.112 Conflict of interest.
200.113 Mandatory disclosures.
Subpart C—Pre-Federal Award Require-
ments and Contents of Federal Awards
200.200 Purpose.
200.201 Use of grant agreements (including
fixed amount awards), cooperative agree-
ments, and contracts.
200.202 Program planning and design.
200.203 Requirement to provide public no-
tice of Federal financial assistance pro-
grams.
200.204 Notices of funding opportunities.
200.205 Federal awarding agency review of
merit of proposals.
200.206 Federal awarding agency review of
risk posed by applicants.
200.207 Standard application requirements.
200.208 Specific conditions.
200.209 Certifications and representations.
200.210 Pre-award costs.
200.211 Information contained in a Federal
award.
200.212 Public access to Federal award infor-
mation.
200.213 Reporting a determination that a
non-Federal entity is not qualified for a
Federal award.
200.214 Suspension and debarment.
200.215 Never contract with the enemy.
200.216 Prohibition on certain telecommuni-
cations and video surveillance services or
equipment.
Subpart D—Post Federal Award
Requirements
200.300 Statutory and national policy re-
quirements.
200.301 Performance measurement.
200.302 Financial management.
200.303 Internal controls.
200.304 Bonds.
200.305 Federal payment.
200.306 Cost sharing or matching.
200.307 Program income.
200.308 Revision of budget and program
plans.
200.309 Modifications to period of perform-
ance.
PROPERTY STANDARDS
200.310 Insurance coverage.
200.311 Real property.
200.312 Federally-owned and exempt prop-
erty.
200.313 Equipment.
200.314 Supplies.
200.315 Intangible property.
200.316 Property trust relationship.
PROCUREMENT STANDARDS
200.317 Procurements by states.
200.318 General procurement standards.
200.319 Competition.
200.320 Methods of procurement to be fol-
lowed.
200.321 Contracting with small and minority
businesses, women’s business enterprises,
and labor surplus area firms.
200.322 Domestic preferences for procure-
ments.
200.323 Procurement of recovered materials.
200.324 Contract cost and price.
200.325 Federal awarding agency or pass-
through entity review.
200.326 Bonding requirements.
200.327 Contract provisions.
PERFORMANCE AND FINANCIAL MONITORING
AND REPORTING
200.328 Financial reporting.
200.329 Monitoring and reporting program
performance.
200.330 Reporting on real property.
SUBRECIPIENT MONITORING AND MANAGEMENT
200.331 Subrecipient and contractor deter-
minations.
200.332 Requirements for pass-through enti-
ties.
200.333 Fixed amount subawards.
RECORD RETENTION AND ACCESS
200.334 Retention requirements for records.
200.335 Requests for transfer of records.
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2 CFR Ch. II (1–1–22 Edition) Pt. 200
200.336 Methods for collection, trans-
mission, and storage of information.
200.337 Access to records.
200.338 Restrictions on public access to
records.
REMEDIES FOR NONCOMPLIANCE
200.339 Remedies for noncompliance.
200.340 Termination.
200.341 Notification of termination require-
ment.
200.342 Opportunities to object, hearings,
and appeals.
200.343 Effects of suspension and termi-
nation.
CLOSEOUT
200.344 Closeout.
POST-CLOSEOUT ADJUSTMENTS AND
CONTINUING RESPONSIBILITIES
200.345 Post-closeout adjustments and con-
tinuing responsibilities.
COLLECTION OF AMOUNTS DUE
200.346 Collection of amounts due.
Subpart E—Cost Principles
GENERAL PROVISIONS
200.400 Policy guide.
200.401 Application.
BASIC CONSIDERATIONS
200.402 Composition of costs.
200.403 Factors affecting allowability of
costs.
200.404 Reasonable costs.
200.405 Allocable costs.
200.406 Applicable credits.
200.407 Prior written approval (prior ap-
proval).
200.408 Limitation on allowance of costs.
200.409 Special considerations.
200.410 Collection of unallowable costs.
200.411 Adjustment of previously negotiated
indirect (F&A) cost rates containing un-
allowable costs.
DIRECT AND INDIRECT (F&A) COSTS
200.412 Classification of costs.
200.413 Direct costs.
200.414 Indirect (F&A) costs.
200.415 Required certifications.
SPECIAL CONSIDERATIONS FOR STATES, LOCAL
GOVERNMENTS AND INDIAN TRIBES
200.416 Cost allocation plans and indirect
cost proposals.
200.417 Interagency service.
SPECIAL CONSIDERATIONS FOR INSTITUTIONS OF
HIGHER EDUCATION
200.418 Costs incurred by states and local
governments.
200.419 Cost accounting standards and dis-
closure statement.
GENERAL PROVISIONS FOR SELECTED ITEMS OF
COST
200.420 Considerations for selected items of
cost.
200.421 Advertising and public relations.
200.422 Advisory councils.
200.423 Alcoholic beverages.
200.424 Alumni/ae activities.
200.425 Audit services.
200.426 Bad debts.
200.427 Bonding costs.
200.428 Collections of improper payments.
200.429 Commencement and convocation
costs.
200.430 Compensation—personal services.
200.431 Compensation—fringe benefits.
200.432 Conferences.
200.433 Contingency provisions.
200.434 Contributions and donations.
200.435 Defense and prosecution of criminal
and civil proceedings, claims, appeals
and patent infringements.
200.436 Depreciation.
200.437 Employee health and welfare costs.
200.438 Entertainment costs.
200.439 Equipment and other capital expend-
itures.
200.440 Exchange rates.
200.441 Fines, penalties, damages and other
settlements.
200.442 Fund raising and investment man-
agement costs.
200.443 Gains and losses on disposition of de-
preciable assets.
200.444 General costs of government.
200.445 Goods or services for personal use.
200.446 Idle facilities and idle capacity.
200.447 Insurance and indemnification.
200.448 Intellectual property.
200.449 Interest.
200.450 Lobbying.
200.451 Losses on other awards or contracts.
200.452 Maintenance and repair costs.
200.453 Materials and supplies costs, includ-
ing costs of computing devices.
200.454 Memberships, subscriptions, and pro-
fessional activity costs.
200.455 Organization costs.
200.456 Participant support costs.
200.457 Plant and security costs.
200.458 Pre-award costs.
200.459 Professional service costs.
200.460 Proposal costs.
200.461 Publication and printing costs.
200.462 Rearrangement and reconversion
costs.
200.463 Recruiting costs.
200.464 Relocation costs of employees.
200.465 Rental costs of real property and
equipment.
200.466 Scholarships and student aid costs.
200.467 Selling and marketing costs.
200.468 Specialized service facilities.
200.469 Student activity costs.
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OMB Guidance §200.0
200.470 Taxes (including Value Added Tax).
200.471 Telecommunication costs and video
surveillance costs.
200.472 Termination costs.
200.473 Training and education costs.
200.474 Transportation costs.
200.475 Travel costs.
200.476 Trustees.
Subpart F—Audit Requirements
GENERAL
200.500 Purpose.
AUDITS
200.501 Audit requirements.
200.502 Basis for determining Federal
awards expended.
200.503 Relation to other audit require-
ments.
200.504 Frequency of audits.
200.505 Sanctions.
200.506 Audit costs.
200.507 Program-specific audits.
AUDITEES
200.508 Auditee responsibilities.
200.509 Auditor selection.
200.510 Financial statements.
200.511 Audit findings follow-up.
200.512 Report submission.
FEDERAL AGENCIES
200.513 Responsibilities.
AUDITORS
200.514 Scope of audit.
200.515 Audit reporting.
200.516 Audit findings.
200.517 Audit documentation.
200.518 Major program determination.
200.519 Criteria for Federal program risk.
200.520 Criteria for a low-risk auditee.
MANAGEMENT DECISIONS
200.521 Management decision.
APPENDIX I TO PART 200—FULL TEXT OF NO-
TICE OF FUNDING OPPORTUNITY
APPENDIX II TO PART 200—CONTRACT PROVI-
SIONS FOR NON-FEDERAL ENTITY CON-
TRACTS UNDER FEDERAL AWARDS
APPENDIX III TO PART 200—INDIRECT (F&A)
COSTS IDENTIFICATION AND ASSIGNMENT,
AND RATE DETERMINATION FOR INSTITU-
TIONS OF HIGHER EDUCATION (IHES)
APPENDIX IV TO PART 200—INDIRECT (F&A)
COSTS IDENTIFICATION AND ASSIGNMENT,
AND RATE DETERMINATION FOR NONPROFIT
ORGANIZATIONS
APPENDIX V TO PART 200— STATE/LOCAL GOV-
ERNMENTWIDE CENTRAL SERVICE COST AL-
LOCATION PLANS
APPENDIX VI TO PART 200—PUBLIC ASSIST-
ANCE COST ALLOCATION PLANS
APPENDIX VII TO PART 220—STATES AND
LOCAL GOVERNMENT AND INDIAN TRIBE IN-
DIRECT COST PROPOSALS
APPENDIX VIII TO PART 200—NONPROFIT OR-
GANIZATIONS EXEMPTED FROM SUBPART E
OF PART 200
APPENDIX IX TO PART 200—HOSPITAL COST
PRINCIPLES
APPENDIX X TO PART 200—DATA COLLECTION
FORM (FORM SF–SAC)
APPENDIX XI TO PART 200—COMPLIANCE SUP-
PLEMENT
APPENDIX XII TO PART 200—AWARD TERM AND
CONDITION FOR RECIPIENT INTEGRITY AND
PERFORMANCE MATTERS
AUTHORITY: 31 U.S.C. 503
SOURCE: 78 FR 78608, Dec. 26, 2013, unless
otherwise noted.
Subpart A—Acronyms and
Definitions
ACRONYMS
§200.0 Acronyms.
ACRONYM TERM
CAS Cost Accounting Standards
CFR Code of Federal Regulations
CMIA Cash Management Improve-
ment Act
COG Councils Of Governments
COSO Committee of Sponsoring Orga-
nizations of the Treadway Commis-
sion
EPA Environmental Protection Agen
cy
ERISA Employee Retirement Income
Security Act of 1974 (29 U.S.C. 1301–
1461)
EUI Energy Usage Index
F&A Facilities and Administration
FAC Federal Audit Clearinghouse
FAIN Federal Award Identification
Number
FAPIIS Federal Awardee Perform-
ance and Integrity Information Sys-
tem
FAR Federal Acquisition Regulation
FFATA Federal Funding Account-
ability and Transparency Act of 2006
or Transparency Act—Public Law
109–282, as amended by section 6202(a)
of Public Law 110–252 (31 U.S.C. 6101)
FICA Federal Insurance Contribu-
tions Act
FOIA Freedom of Information Act
FR Federal Register
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2 CFR Ch. II (1–1–22 Edition) §200.1
FTE Full-time equivalent
GAAP Generally Accepted Account-
ing Principles
GAGAS Generally Accepted Govern-
ment Auditing Standards
GAO Government Accountability Of-
fice
GOCO Government owned, contractor
operated
GSA General Services Administration
IBS Institutional Base Salary
IHE Institutions of Higher Education
IRC Internal Revenue Code
ISDEAA Indian Self-Determination
and Education and Assistance Act
MTC Modified Total Cost
MTDC Modified Total Direct Cost
NFE Non-Federal Entity
OMB Office of Management and Budg-
et
PII Personally Identifiable Informa-
tion
PMS Payment Management System
PRHP Post-retirement Health Plans
PTE Pass-through Entity
REUI Relative Energy Usage Index
SAM System for Award Management
SFA Student Financial Aid
SNAP Supplemental Nutrition Assist-
ance Program
SPOC Single Point of Contact
TANF Temporary Assistance for
Needy Families
TFM Treasury Financial Manual
U.S.C. United States Code
VAT Value Added Tax
[78 FR 78608, Dec. 26, 2013, as amended at 79
FR 75880, Dec. 19, 2014; 80 FR 43308, July 22,
2015; 85 FR 49529, Aug. 13, 2020]
§200.1 Definitions.
These are the definitions for terms
used in this part. Different definitions
may be found in Federal statutes or
regulations that apply more specifi-
cally to particular programs or activi-
ties. These definitions could be supple-
mented by additional instructional in-
formation provided in governmentwide
standard information collections. For
purposes of this part, the following
definitions apply:
Acquisition cost means the cost of the
asset including the cost to ready the
asset for its intended use. Acquisition
cost for equipment, for example, means
the net invoice price of the equipment,
including the cost of any modifica-
tions, attachments, accessories, or aux-
iliary apparatus necessary to make it
usable for the purpose for which it is
acquired. Acquisition costs for soft-
ware includes those development costs
capitalized in accordance with gen-
erally accepted accounting principles
(GAAP). Ancillary charges, such as
taxes, duty, protective in transit insur-
ance, freight, and installation may be
included in or excluded from the acqui-
sition cost in accordance with the non-
Federal entity’s regular accounting
practices.
Advance payment means a payment
that a Federal awarding agency or
pass-through entity makes by any ap-
propriate payment mechanism, includ-
ing a predetermined payment schedule,
before the non-Federal entity disburses
the funds for program purposes.
Allocation means the process of as-
signing a cost, or a group of costs, to
one or more cost objective(s), in rea-
sonable proportion to the benefit pro-
vided or other equitable relationship.
The process may entail assigning a
cost(s) directly to a final cost objective
or through one or more intermediate
cost objectives.
Assistance listings refers to the pub-
licly available listing of Federal assist-
ance programs managed and adminis-
tered by the General Services Adminis-
tration, formerly known as the Catalog
of Federal Domestic Assistance
(CFDA).
Assistance listing number means a
unique number assigned to identify a
Federal Assistance Listings, formerly
known as the CFDA Number.
Assistance listing program title means
the title that corresponds to the Fed-
eral Assistance Listings Number, for-
merly known as the CFDA program
title.
Audit finding means deficiencies
which the auditor is required by
§200.516(a) to report in the schedule of
findings and questioned costs.
Auditee means any non-Federal enti-
ty that expends Federal awards which
must be audited under subpart F of
this part.
Auditor means an auditor who is a
public accountant or a Federal, State,
local government, or Indian tribe audit
organization, which meets the general
standards specified for external audi-
tors in generally accepted government
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OMB Guidance §200.1
auditing standards (GAGAS). The term
auditor does not include internal audi-
tors of nonprofit organizations.
Budget means the financial plan for
the Federal award that the Federal
awarding agency or pass-through enti-
ty approves during the Federal award
process or in subsequent amendments
to the Federal award. It may include
the Federal and non-Federal share or
only the Federal share, as determined
by the Federal awarding agency or
pass-through entity.
Budget period means the time inter-
val from the start date of a funded por-
tion of an award to the end date of that
funded portion during which recipients
are authorized to expend the funds
awarded, including any funds carried
forward or other revisions pursuant to
§200.308.
Capital assets means:
(1) Tangible or intangible assets used
in operations having a useful life of
more than one year which are capital-
ized in accordance with GAAP. Capital
assets include:
(i) Land, buildings (facilities), equip-
ment, and intellectual property (in-
cluding software) whether acquired by
purchase, construction, manufacture,
exchange, or through a lease accounted
for as financed purchase under Govern-
ment Accounting Standards Board
(GASB) standards or a finance lease
under Financial Accounting Standards
Board (FASB) standards; and
(ii) Additions, improvements, modi-
fications, replacements, rearrange-
ments, reinstallations, renovations or
alterations to capital assets that mate-
rially increase their value or useful life
(not ordinary repairs and mainte-
nance).
(2) For purpose of this part, capital
assets do not include intangible right-
to-use assets (per GASB) and right-to-
use operating lease assets (per FASB).
For example, assets capitalized that
recognize a lessee’s right to control the
use of property and/or equipment for a
period of time under a lease contract.
See also §200.465.
Capital expenditures means expendi-
tures to acquire capital assets or ex-
penditures to make additions, improve-
ments, modifications, replacements,
rearrangements, reinstallations, ren-
ovations, or alterations to capital as-
sets that materially increase their
value or useful life.
Central service cost allocation plan
means the documentation identifying,
accumulating, and allocating or devel-
oping billing rates based on the allow-
able costs of services provided by a
State or local government or Indian
tribe on a centralized basis to its de-
partments and agencies. The costs of
these services may be allocated or
billed to users.
Claim means, depending on the con-
text, either:
(1) A written demand or written as-
sertion by one of the parties to a Fed-
eral award seeking as a matter of
right:
(i) The payment of money in a sum
certain;
(ii) The adjustment or interpretation
of the terms and conditions of the Fed-
eral award; or
(iii) Other relief arising under or re-
lating to a Federal award.
(2) A request for payment that is not
in dispute when submitted.
Class of Federal awards means a group
of Federal awards either awarded under
a specific program or group of pro-
grams or to a specific type of non-Fed-
eral entity or group of non-Federal en-
tities to which specific provisions or
exceptions may apply.
Closeout means the process by which
the Federal awarding agency or pass-
through entity determines that all ap-
plicable administrative actions and all
required work of the Federal award
have been completed and takes actions
as described in §200.344.
Cluster of programs means a grouping
of closely related programs that share
common compliance requirements. The
types of clusters of programs are re-
search and development (R&D), student
financial aid (SFA), and other clusters.
‘‘Other clusters’’ are as defined by OMB
in the compliance supplement or as
designated by a State for Federal
awards the State provides to its sub-
recipients that meet the definition of a
cluster of programs. When designating
an ‘‘other cluster,’’ a State must iden-
tify the Federal awards included in the
cluster and advise the subrecipients of
compliance requirements applicable to
the cluster, consistent with §200.332(a).
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A cluster of programs must be consid-
ered as one program for determining
major programs, as described in
§200.518, and, with the exception of
R&D as described in §200.501(c), wheth-
er a program-specific audit may be
elected.
Cognizant agency for audit means the
Federal agency designated to carry out
the responsibilities described in
§200.513(a). The cognizant agency for
audit is not necessarily the same as the
cognizant agency for indirect costs. A
list of cognizant agencies for audit can
be found on the Federal Audit Clear-
inghouse (FAC) website.
Cognizant agency for indirect costs
means the Federal agency responsible
for reviewing, negotiating, and approv-
ing cost allocation plans or indirect
cost proposals developed under this
part on behalf of all Federal agencies.
The cognizant agency for indirect cost
is not necessarily the same as the cog-
nizant agency for audit. For assign-
ments of cognizant agencies see the
following:
(1) For Institutions of Higher Edu-
cation (IHEs): Appendix III to this
part, paragraph C.11.
(2) For nonprofit organizations: Ap-
pendix IV to this part, paragraph C.2.a.
(3) For State and local governments:
Appendix V to this part, paragraph F.1.
(4) For Indian tribes: Appendix VII to
this part, paragraph D.1.
Compliance supplement means an an-
nually updated authoritative source for
auditors that serves to identify exist-
ing important compliance require-
ments that the Federal Government
expects to be considered as part of an
audit. Auditors use it to understand
the Federal program’s objectives, pro-
cedures, and compliance requirements,
as well as audit objectives and sug-
gested audit procedures for deter-
mining compliance with the relevant
Federal program.
Computing devices means machines
used to acquire, store, analyze, process,
and publish data and other information
electronically, including accessories
(or ‘‘peripherals’’) for printing, trans-
mitting and receiving, or storing elec-
tronic information. See also the defini-
tions of supplies and information tech-
nology systems in this section.
Contract means, for the purpose of
Federal financial assistance, a legal in-
strument by which a recipient or sub-
recipient purchases property or serv-
ices needed to carry out the project or
program under a Federal award. For
additional information on subrecipient
and contractor determinations, see
§200.331. See also the definition of
subaward in this section.
Contractor means an entity that re-
ceives a contract as defined in this sec-
tion.
Cooperative agreement means a legal
instrument of financial assistance be-
tween a Federal awarding agency and a
recipient or a pass-through entity and
a subrecipient that, consistent with 31
U.S.C. 6302–6305:
(1) Is used to enter into a relation-
ship the principal purpose of which is
to transfer anything of value to carry
out a public purpose authorized by a
law of the United States (see 31 U.S.C.
6101(3)); and not to acquire property or
services for the Federal Government or
pass-through entity’s direct benefit or
use;
(2) Is distinguished from a grant in
that it provides for substantial involve-
ment of the Federal awarding agency
in carrying out the activity con-
templated by the Federal award.
(3) The term does not include:
(i) A cooperative research and devel-
opment agreement as defined in 15
U.S.C. 3710a; or
(ii) An agreement that provides only:
(A) Direct United States Government
cash assistance to an individual;
(B) A subsidy;
(C) A loan;
(D) A loan guarantee; or
(E) Insurance.
Cooperative audit resolution means the
use of audit follow-up techniques which
promote prompt corrective action by
improving communication, fostering
collaboration, promoting trust, and de-
veloping an understanding between the
Federal agency and the non-Federal en-
tity. This approach is based upon:
(1) A strong commitment by Federal
agency and non-Federal entity leader-
ship to program integrity;
(2) Federal agencies strengthening
partnerships and working coopera-
tively with non-Federal entities and
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OMB Guidance §200.1
their auditors; and non-Federal enti-
ties and their auditors working coop-
eratively with Federal agencies;
(3) A focus on current conditions and
corrective action going forward;
(4) Federal agencies offering appro-
priate relief for past noncompliance
when audits show prompt corrective
action has occurred; and
(5) Federal agency leadership sending
a clear message that continued failure
to correct conditions identified by au-
dits which are likely to cause improper
payments, fraud, waste, or abuse is un-
acceptable and will result in sanctions.
Corrective action means action taken
by the auditee that:
(1) Corrects identified deficiencies;
(2) Produces recommended improve-
ments; or
(3) Demonstrates that audit findings
are either invalid or do not warrant
auditee action.
Cost allocation plan means central
service cost allocation plan or public
assistance cost allocation plan.
Cost objective means a program, func-
tion, activity, award, organizational
subdivision, contract, or work unit for
which cost data are desired and for
which provision is made to accumulate
and measure the cost of processes,
products, jobs, capital projects, etc. A
cost objective may be a major function
of the non-Federal entity, a particular
service or project, a Federal award, or
an indirect (Facilities & Administra-
tive (F&A)) cost activity, as described
in subpart E of this part. See also the
definitions of final cost objective and in-
termediate cost objective in this section.
Cost sharing or matching means the
portion of project costs not paid by
Federal funds or contributions (unless
otherwise authorized by Federal stat-
ute). See also §200.306.
Cross-cutting audit finding means an
audit finding where the same under-
lying condition or issue affects all Fed-
eral awards (including Federal awards
of more than one Federal awarding
agency or pass-through entity).
Disallowed costs means those charges
to a Federal award that the Federal
awarding agency or pass-through enti-
ty determines to be unallowable, in ac-
cordance with the applicable Federal
statutes, regulations, or the terms and
conditions of the Federal award.
Discretionary award means an award
in which the Federal awarding agency,
in keeping with specific statutory au-
thority that enables the agency to ex-
ercise judgment (‘‘discretion’’), selects
the recipient and/or the amount of Fed-
eral funding awarded through a com-
petitive process or based on merit of
proposals. A discretionary award may
be selected on a non-competitive basis,
as appropriate.
Equipment means tangible personal
property (including information tech-
nology systems) having a useful life of
more than one year and a per-unit ac-
quisition cost which equals or exceeds
the lesser of the capitalization level es-
tablished by the non-Federal entity for
financial statement purposes, or $5,000.
See also the definitions of capital as-
sets, computing devices, general purpose
equipment, information technology sys-
tems, special purpose equipment, and sup-
plies in this section.
Expenditures means charges made by
a non-Federal entity to a project or
program for which a Federal award was
received.
(1) The charges may be reported on a
cash or accrual basis, as long as the
methodology is disclosed and is con-
sistently applied.
(2) For reports prepared on a cash
basis, expenditures are the sum of:
(i) Cash disbursements for direct
charges for property and services;
(ii) The amount of indirect expense
charged;
(iii) The value of third-party in-kind
contributions applied; and
(iv) The amount of cash advance pay-
ments and payments made to sub-
recipients.
(3) For reports prepared on an ac-
crual basis, expenditures are the sum
of:
(i) Cash disbursements for direct
charges for property and services;
(ii) The amount of indirect expense
incurred;
(iii) The value of third-party in-kind
contributions applied; and
(iv) The net increase or decrease in
the amounts owed by the non-Federal
entity for:
(A) Goods and other property re-
ceived;
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2 CFR Ch. II (1–1–22 Edition) §200.1
(B) Services performed by employees,
contractors, subrecipients, and other
payees; and
(C) Programs for which no current
services or performance are required
such as annuities, insurance claims, or
other benefit payments.
Federal agency means an ‘‘agency’’ as
defined at 5 U.S.C. 551(1) and further
clarified by 5 U.S.C. 552(f).
Federal Audit Clearinghouse (FAC)
means the clearinghouse designated by
OMB as the repository of record where
non-Federal entities are required to
transmit the information required by
subpart F of this part.
Federal award has the meaning, de-
pending on the context, in either para-
graph (1) or (2) of this definition:
(1)(i) The Federal financial assistance
that a recipient receives directly from
a Federal awarding agency or indi-
rectly from a pass-through entity, as
described in §200.101; or
(ii) The cost-reimbursement contract
under the Federal Acquisition Regula-
tions that a non-Federal entity re-
ceives directly from a Federal award-
ing agency or indirectly from a pass-
through entity, as described in §200.101.
(2) The instrument setting forth the
terms and conditions. The instrument
is the grant agreement, cooperative
agreement, other agreement for assist-
ance covered in paragraph (2) of the
definition of Federal financial assistance
in this section, or the cost-reimburse-
ment contract awarded under the Fed-
eral Acquisition Regulations.
(3) Federal award does not include
other contracts that a Federal agency
uses to buy goods or services from a
contractor or a contract to operate
Federal Government owned, contractor
operated facilities (GOCOs).
(4) See also definitions of Federal fi-
nancial assistance, grant agreement,
and cooperative agreement.
Federal award date means the date
when the Federal award is signed by
the authorized official of the Federal
awarding agency.
Federal awarding agency means the
Federal agency that provides a Federal
award directly to a non-Federal entity.
Federal financial assistance means
(1) Assistance that non-Federal enti-
ties receive or administer in the form
of:
(i) Grants;
(ii) Cooperative agreements;
(iii) Non-cash contributions or dona-
tions of property (including donated
surplus property);
(iv) Direct appropriations;
(v) Food commodities; and
(vi) Other financial assistance (ex-
cept assistance listed in paragraph (2)
of this definition).
(2) For §200.203 and subpart F of this
part, Federal financial assistance also in-
cludes assistance that non-Federal en-
tities receive or administer in the form
of:
(i) Loans;
(ii) Loan Guarantees;
(iii) Interest subsidies; and
(iv) Insurance.
(3) For §200.216, Federal financial as-
sistance includes assistance that non-
Federal entities receive or administer
in the form of:
(i) Grants;
(ii) Cooperative agreements;
(iii) Loans; and
(iv) Loan Guarantees.
(4) Federal financial assistance does
not include amounts received as reim-
bursement for services rendered to in-
dividuals as described in §200.502(h) and
(i).
Federal interest means, for purposes of
§200.330 or when used in connection
with the acquisition or improvement of
real property, equipment, or supplies
under a Federal award, the dollar
amount that is the product of the:
(1) The percentage of Federal partici-
pation in the total cost of the real
property, equipment, or supplies; and
(2) Current fair market value of the
property, improvements, or both, to
the extent the costs of acquiring or im-
proving the property were included as
project costs.
Federal program means:
(1) All Federal awards which are as-
signed a single Assistance Listings
Number.
(2) When no Assistance Listings
Number is assigned, all Federal awards
from the same agency made for the
same purpose must be combined and
considered one program.
(3) Notwithstanding paragraphs (1)
and (2) of this definition, a cluster of
programs. The types of clusters of pro-
grams are:
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OMB Guidance §200.1
(i) Research and development (R&D);
(ii) Student financial aid (SFA); and
(iii) ‘‘Other clusters,’’ as described in
the definition of cluster of programs in
this section.
Federal share means the portion of
the Federal award costs that are paid
using Federal funds.
Final cost objective means a cost ob-
jective which has allocated to it both
direct and indirect costs and, in the
non-Federal entity’s accumulation sys-
tem, is one of the final accumulation
points, such as a particular award, in-
ternal project, or other direct activity
of a non-Federal entity. See also the
definitions of cost objective and inter-
mediate cost objective in this section.
Financial obligations, when ref-
erencing a recipient’s or subrecipient’s
use of funds under a Federal award,
means orders placed for property and
services, contracts and subawards
made, and similar transactions that re-
quire payment.
Fixed amount awards means a type of
grant or cooperative agreement under
which the Federal awarding agency or
pass-through entity provides a specific
level of support without regard to ac-
tual costs incurred under the Federal
award. This type of Federal award re-
duces some of the administrative bur-
den and record-keeping requirements
for both the non-Federal entity and
Federal awarding agency or pass-
through entity. Accountability is based
primarily on performance and results.
See §§200.102(c), 200.201(b), and 200.333.
Foreign organization means an entity
that is:
(1) A public or private organization
located in a country other than the
United States and its territories that is
subject to the laws of the country in
which it is located, irrespective of the
citizenship of project staff or place of
performance;
(2) A private nongovernmental orga-
nization located in a country other
than the United States that solicits
and receives cash contributions from
the general public;
(3) A charitable organization located
in a country other than the United
States that is nonprofit and tax ex-
empt under the laws of its country of
domicile and operation, and is not a
university, college, accredited degree-
granting institution of education, pri-
vate foundation, hospital, organization
engaged exclusively in research or sci-
entific activities, church, synagogue,
mosque or other similar entities orga-
nized primarily for religious purposes;
or
(4) An organization located in a coun-
try other than the United States not
recognized as a foreign public entity.
Foreign public entity means:
(1) A foreign government or foreign
governmental entity;
(2) A public international organiza-
tion, which is an organization entitled
to enjoy privileges, exemptions, and
immunities as an international organi-
zation under the International Organi-
zations Immunities Act (22 U.S.C. 288–
288f);
(3) An entity owned (in whole or in
part) or controlled by a foreign govern-
ment; or
(4) Any other entity consisting whol-
ly or partially of one or more foreign
governments or foreign governmental
entities.
General purpose equipment means
equipment which is not limited to re-
search, medical, scientific or other
technical activities. Examples include
office equipment and furnishings, mod-
ular offices, telephone networks, infor-
mation technology equipment and sys-
tems, air conditioning equipment, re-
production and printing equipment,
and motor vehicles. See also the defini-
tions of equipment and special purpose
equipment in this section.
Generally accepted accounting prin-
ciples (GAAP) has the meaning specified
in accounting standards issued by the
GASB and the FASB.
Generally accepted government auditing
standards (GAGAS), also known as the
Yellow Book, means generally accepted
government auditing standards issued
by the Comptroller General of the
United States, which are applicable to
financial audits.
Grant agreement means a legal instru-
ment of financial assistance between a
Federal awarding agency or pass-
through entity and a non-Federal enti-
ty that, consistent with 31 U.S.C. 6302,
6304:
(1) Is used to enter into a relation-
ship the principal purpose of which is
to transfer anything of value to carry
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out a public purpose authorized by a
law of the United States (see 31 U.S.C.
6101(3)); and not to acquire property or
services for the Federal awarding agen-
cy or pass-through entity’s direct ben-
efit or use;
(2) Is distinguished from a coopera-
tive agreement in that it does not pro-
vide for substantial involvement of the
Federal awarding agency in carrying
out the activity contemplated by the
Federal award.
(3) Does not include an agreement
that provides only:
(i) Direct United States Government
cash assistance to an individual;
(ii) A subsidy;
(iii) A loan;
(vi) A loan guarantee; or
(v) Insurance.
Highest level owner means the entity
that owns or controls an immediate
owner of the offeror, or that owns or
controls one or more entities that con-
trol an immediate owner of the offeror.
No entity owns or exercises control of
the highest-level owner as defined in
the Federal Acquisition Regulations
(FAR) (48 CFR 52.204–17).
Hospital means a facility licensed as
a hospital under the law of any state or
a facility operated as a hospital by the
United States, a state, or a subdivision
of a state.
Improper payment means:
(1) Any payment that should not
have been made or that was made in an
incorrect amount under statutory, con-
tractual, administrative, or other le-
gally applicable requirements.
(i) Incorrect amounts are overpay-
ments or underpayments that are made
to eligible recipients (including inap-
propriate denials of payment or serv-
ice, any payment that does not account
for credit for applicable discounts, pay-
ments that are for an incorrect
amount, and duplicate payments). An
improper payment also includes any
payment that was made to an ineli-
gible recipient or for an ineligible good
or service, or payments for goods or
services not received (except for such
payments authorized by law).
Note 1 to paragraph (1)(i) of this defini-
tion. Applicable discounts are only
those discounts where it is both advan-
tageous and within the agency’s con-
trol to claim them.
(ii) When an agency’s review is un-
able to discern whether a payment was
proper as a result of insufficient or
lack of documentation, this payment
should also be considered an improper
payment. When establishing docu-
mentation requirements for payments,
agencies should ensure that all docu-
mentation requirements are necessary
and should refrain from imposing addi-
tional burdensome documentation re-
quirements.
(iii) Interest or other fees that may
result from an underpayment by an
agency are not considered an improper
payment if the interest was paid cor-
rectly. These payments are generally
separate transactions and may be nec-
essary under certain statutory, con-
tractual, administrative, or other le-
gally applicable requirements.
(iv) A ‘‘questioned cost’’ (as defined
in this section) should not be consid-
ered an improper payment until the
transaction has been completely re-
viewed and is confirmed to be im-
proper.
(v) The term ‘‘payment’’ in this defi-
nition means any disbursement or
transfer of Federal funds (including a
commitment for future payment, such
as cash, securities, loans, loan guaran-
tees, and insurance subsidies) to any
non-Federal person, non-Federal enti-
ty, or Federal employee, that is made
by a Federal agency, a Federal con-
tractor, a Federal grantee, or a govern-
mental or other organization admin-
istering a Federal program or activity.
(vi) The term ‘‘payment’’ includes
disbursements made pursuant to prime
contracts awarded under the Federal
Acquisition Regulation and Federal
awards subject to this part that are ex-
pended by recipients.
(2) See definition of improper pay-
ment in OMB Circular A–123 appendix
C, part I A (1) ‘‘What is an improper
payment?’’ Questioned costs, including
those identified in audits, are not an
improper payment until reviewed and
confirmed to be improper as defined in
OMB Circular A–123 appendix C.
Indian tribe means any Indian tribe,
band, nation, or other organized group
or community, including any Alaska
Native village or regional or village
corporation as defined in or established
pursuant to the Alaska Native Claims
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OMB Guidance §200.1
Settlement Act (43 U.S.C. Chapter 33),
which is recognized as eligible for the
special programs and services provided
by the United States to Indians be-
cause of their status as Indians (25
U.S.C. 450b(e)). See annually published
Bureau of Indian Affairs list of Indian
Entities Recognized and Eligible to Re-
ceive Services.
Institutions of Higher Education (IHEs)
is defined at 20 U.S.C. 1001.
Indirect (facilities & administrative
(F&A)) costs means those costs incurred
for a common or joint purpose benefit-
ting more than one cost objective, and
not readily assignable to the cost ob-
jectives specifically benefitted, with-
out effort disproportionate to the re-
sults achieved. To facilitate equitable
distribution of indirect expenses to the
cost objectives served, it may be nec-
essary to establish a number of pools of
indirect (F&A) costs. Indirect (F&A)
cost pools must be distributed to bene-
fitted cost objectives on bases that will
produce an equitable result in consider-
ation of relative benefits derived.
Indirect cost rate proposal means the
documentation prepared by a non-Fed-
eral entity to substantiate its request
for the establishment of an indirect
cost rate as described in appendices III
through VII and appendix IX to this
part.
Information technology systems means
computing devices, ancillary equip-
ment, software, firmware, and similar
procedures, services (including support
services), and related resources. See
also the definitions of computing devices
and equipment in this section.
Intangible property means property
having no physical existence, such as
trademarks, copyrights, patents and
patent applications and property, such
as loans, notes and other debt instru-
ments, lease agreements, stock and
other instruments of property owner-
ship (whether the property is tangible
or intangible).
Intermediate cost objective means a
cost objective that is used to accumu-
late indirect costs or service center
costs that are subsequently allocated
to one or more indirect cost pools or
final cost objectives. See also the defi-
nitions of cost objective and final cost ob-
jective in this section.
Internal controls for non-Federal enti-
ties means:
(1) Processes designed and imple-
mented by non-Federal entities to pro-
vide reasonable assurance regarding
the achievement of objectives in the
following categories:
(i) Effectiveness and efficiency of op-
erations;
(ii) Reliability of reporting for inter-
nal and external use; and
(iii) Compliance with applicable laws
and regulations.
(2) Federal awarding agencies are re-
quired to follow internal control com-
pliance requirements in OMB Circular
No. A–123, Management’s Responsi-
bility for Enterprise Risk Management
and Internal Control.
Loan means a Federal loan or loan
guarantee received or administered by
a non-Federal entity, except as used in
the definition of program income in this
section.
(1) The term ‘‘direct loan’’ means a
disbursement of funds by the Federal
Government to a non-Federal borrower
under a contract that requires the re-
payment of such funds with or without
interest. The term includes the pur-
chase of, or participation in, a loan
made by another lender and financing
arrangements that defer payment for
more than 90 days, including the sale of
a Federal Government asset on credit
terms. The term does not include the
acquisition of a federally guaranteed
loan in satisfaction of default claims or
the price support loans of the Com-
modity Credit Corporation.
(2) The term ‘‘direct loan obligation’’
means a binding agreement by a Fed-
eral awarding agency to make a direct
loan when specified conditions are ful-
filled by the borrower.
(3) The term ‘‘loan guarantee’’ means
any Federal Government guarantee, in-
surance, or other pledge with respect
to the payment of all or a part of the
principal or interest on any debt obli-
gation of a non-Federal borrower to a
non-Federal lender, but does not in-
clude the insurance of deposits, shares,
or other withdrawable accounts in fi-
nancial institutions.
(4) The term ‘‘loan guarantee com-
mitment’’ means a binding agreement
by a Federal awarding agency to make
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2 CFR Ch. II (1–1–22 Edition) §200.1
a loan guarantee when specified condi-
tions are fulfilled by the borrower, the
lender, or any other party to the guar-
antee agreement.
Local government means any unit of
government within a state, including a:
(1) County;
(2) Borough;
(3) Municipality;
(4) City;
(5) Town;
(6) Township;
(7) Parish;
(8) Local public authority, including
any public housing agency under the
United States Housing Act of 1937;
(9) Special district;
(10) School district;
(11) Intrastate district;
(12) Council of governments, whether
or not incorporated as a nonprofit cor-
poration under State law; and
(13) Any other agency or instrumen-
tality of a multi-, regional, or intra-
State or local government.
Major program means a Federal pro-
gram determined by the auditor to be a
major program in accordance with
§200.518 or a program identified as a
major program by a Federal awarding
agency or pass-through entity in ac-
cordance with §200.503(e).
Management decision means the Fed-
eral awarding agency’s or pass-through
entity’s written determination, pro-
vided to the auditee, of the adequacy of
the auditee’s proposed corrective ac-
tions to address the findings, based on
its evaluation of the audit findings and
proposed corrective actions.
Micro-purchase means a purchase of
supplies or services, the aggregate
amount of which does not exceed the
micro-purchase threshold. Micro-pur-
chases comprise a subset of a non-Fed-
eral entity’s small purchases as defined
in §200.320.
Micro-purchase threshold means the
dollar amount at or below which a non-
Federal entity may purchase property
or services using micro-purchase proce-
dures (see §200.320). Generally, the
micro-purchase threshold for procure-
ment activities administered under
Federal awards is not to exceed the
amount set by the FAR at 48 CFR part
2, subpart 2.1, unless a higher threshold
is requested by the non-Federal entity
and approved by the cognizant agency
for indirect costs.
Modified Total Direct Cost (MTDC)
means all direct salaries and wages, ap-
plicable fringe benefits, materials and
supplies, services, travel, and up to the
first $25,000 of each subaward (regard-
less of the period of performance of the
subawards under the award). MTDC ex-
cludes equipment, capital expendi-
tures, charges for patient care, rental
costs, tuition remission, scholarships
and fellowships, participant support
costs and the portion of each subaward
in excess of $25,000. Other items may
only be excluded when necessary to
avoid a serious inequity in the dis-
tribution of indirect costs, and with
the approval of the cognizant agency
for indirect costs.
Non-discretionary award means an
award made by the Federal awarding
agency to specific recipients in accord-
ance with statutory, eligibility and
compliance requirements, such that in
keeping with specific statutory author-
ity the agency has no ability to exer-
cise judgement (‘‘discretion’’). A non-
discretionary award amount could be
determined specifically or by formula.
Non-Federal entity (NFE) means a
State, local government, Indian tribe,
Institution of Higher Education (IHE),
or nonprofit organization that carries
out a Federal award as a recipient or
subrecipient.
Nonprofit organization means any cor-
poration, trust, association, coopera-
tive, or other organization, not includ-
ing IHEs, that:
(1) Is operated primarily for sci-
entific, educational, service, chari-
table, or similar purposes in the public
interest;
(2) Is not organized primarily for
profit; and
(3) Uses net proceeds to maintain,
improve, or expand the operations of
the organization.
Notice of funding opportunity means a
formal announcement of the avail-
ability of Federal funding through a fi-
nancial assistance program from a Fed-
eral awarding agency. The notice of
funding opportunity provides informa-
tion on the award, who is eligible to
apply, the evaluation criteria for selec-
tion of an awardee, required compo-
nents of an application, and how to
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OMB Guidance §200.1
submit the application. The notice of
funding opportunity is any paper or
electronic issuance that an agency uses
to announce a funding opportunity,
whether it is called a ‘‘program an-
nouncement,’’ ‘‘notice of funding avail-
ability,’’ ‘‘broad agency announce-
ment,’’ ‘‘research announcement,’’
‘‘solicitation,’’ or some other term.
Office of Management and Budget
(OMB) means the Executive Office of
the President, Office of Management
and Budget.
Oversight agency for audit means the
Federal awarding agency that provides
the predominant amount of funding di-
rectly (direct funding) (as listed on the
schedule of expenditures of Federal
awards, see §200.510(b)) to a non-Fed-
eral entity unless OMB designates a
specific cognizant agency for audit.
When the direct funding represents less
than 25 percent of the total Federal ex-
penditures (as direct and sub-awards)
by the non-Federal entity, then the
Federal agency with the predominant
amount of total funding is the des-
ignated oversight agency for audit.
When there is no direct funding, the
Federal awarding agency which is the
predominant source of pass-through
funding must assume the oversight re-
sponsibilities. The duties of the over-
sight agency for audit and the process
for any reassignments are described in
§200.513(b).
Participant support costs means direct
costs for items such as stipends or sub-
sistence allowances, travel allowances,
and registration fees paid to or on be-
half of participants or trainees (but not
employees) in connection with con-
ferences, or training projects.
Pass-through entity (PTE) means a
non-Federal entity that provides a
subaward to a subrecipient to carry out
part of a Federal program.
Performance goal means a target level
of performance expressed as a tangible,
measurable objective, against which
actual achievement can be compared,
including a goal expressed as a quan-
titative standard, value, or rate. In
some instances (e.g., discretionary re-
search awards), this may be limited to
the requirement to submit technical
performance reports (to be evaluated in
accordance with agency policy).
Period of performance means the total
estimated time interval between the
start of an initial Federal award and
the planned end date, which may in-
clude one or more funded portions, or
budget periods. Identification of the
period of performance in the Federal
award per §200.211(b)(5) does not com-
mit the awarding agency to fund the
award beyond the currently approved
budget period.
Personal property means property
other than real property. It may be
tangible, having physical existence, or
intangible.
Personally Identifiable Information
(PII) means information that can be
used to distinguish or trace an individ-
ual’s identity, either alone or when
combined with other personal or iden-
tifying information that is linked or
linkable to a specific individual. Some
information that is considered to be
PII is available in public sources such
as telephone books, public websites,
and university listings. This type of in-
formation is considered to be Public
PII and includes, for example, first and
last name, address, work telephone
number, email address, home telephone
number, and general educational cre-
dentials. The definition of PII is not
anchored to any single category of in-
formation or technology. Rather, it re-
quires a case-by-case assessment of the
specific risk that an individual can be
identified. Non-PII can become PII
whenever additional information is
made publicly available, in any me-
dium and from any source, that, when
combined with other available infor-
mation, could be used to identify an in-
dividual.
Program income means gross income
earned by the non-Federal entity that
is directly generated by a supported ac-
tivity or earned as a result of the Fed-
eral award during the period of per-
formance except as provided in
§200.307(f). (See the definition of period
of performance in this section.) Program
income includes but is not limited to
income from fees for services per-
formed, the use or rental or real or per-
sonal property acquired under Federal
awards, the sale of commodities or
items fabricated under a Federal
award, license fees and royalties on
patents and copyrights, and principal
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2 CFR Ch. II (1–1–22 Edition) §200.1
and interest on loans made with Fed-
eral award funds. Interest earned on
advances of Federal funds is not pro-
gram income. Except as otherwise pro-
vided in Federal statutes, regulations,
or the terms and conditions of the Fed-
eral award, program income does not
include rebates, credits, discounts, and
interest earned on any of them. See
also §200.407. See also 35 U.S.C. 200–212
‘‘Disposition of Rights in Educational
Awards’’ applies to inventions made
under Federal awards.
Project cost means total allowable
costs incurred under a Federal award
and all required cost sharing and vol-
untary committed cost sharing, includ-
ing third-party contributions.
Property means real property or per-
sonal property. See also the definitions
of real property and personal property in
this section.
Protected Personally Identifiable Infor-
mation (Protected PII) means an individ-
ual’s first name or first initial and last
name in combination with any one or
more of types of information, includ-
ing, but not limited to, social security
number, passport number, credit card
numbers, clearances, bank numbers,
biometrics, date and place of birth,
mother’s maiden name, criminal, med-
ical and financial records, educational
transcripts. This does not include PII
that is required by law to be disclosed.
See also the definition of Personally
Identifiable Information (PII) in this sec-
tion.
Questioned cost means a cost that is
questioned by the auditor because of an
audit finding:
(1) Which resulted from a violation or
possible violation of a statute, regula-
tion, or the terms and conditions of a
Federal award, including for funds used
to match Federal funds;
(2) Where the costs, at the time of
the audit, are not supported by ade-
quate documentation; or
(3) Where the costs incurred appear
unreasonable and do not reflect the ac-
tions a prudent person would take in
the circumstances.
(4) Questioned costs are not an im-
proper payment until reviewed and
confirmed to be improper as defined in
OMB Circular A–123 appendix C. (See
also the definition of Improper payment
in this section).
Real property means land, including
land improvements, structures and ap-
purtenances thereto, but excludes
moveable machinery and equipment.
Recipient means an entity, usually
but not limited to non-Federal entities
that receives a Federal award directly
from a Federal awarding agency. The
term recipient does not include sub-
recipients or individuals that are bene-
ficiaries of the award.
Renewal award means an award made
subsequent to an expiring Federal
award for which the start date is con-
tiguous with, or closely follows, the
end of the expiring Federal award. A
renewal award’s start date will begin a
distinct period of performance.
Research and Development (R&D)
means all research activities, both
basic and applied, and all development
activities that are performed by non-
Federal entities. 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. ‘‘Research’’ is de-
fined as a systematic study directed to-
ward fuller scientific knowledge or un-
derstanding of the subject studied.
‘‘Development’’ is the systematic use
of knowledge and understanding gained
from research directed toward the pro-
duction of useful materials, devices,
systems, or methods, including design
and development of prototypes and
processes.
Simplified acquisition threshold means
the dollar amount below which a non-
Federal entity may purchase property
or services using small purchase meth-
ods (see §200.320). Non-Federal entities
adopt small purchase procedures in
order to expedite the purchase of items
at or below the simplified acquisition
threshold. The simplified acquisition
threshold for procurement activities
administered under Federal awards is
set by the FAR at 48 CFR part 2, sub-
part 2.1. The non-Federal entity is re-
sponsible for determining an appro-
priate simplified acquisition threshold
based on internal controls, an evalua-
tion of risk, and its documented pro-
curement procedures. However, in no
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OMB Guidance §200.1
circumstances can this threshold ex-
ceed the dollar value established in the
FAR (48 CFR part 2, subpart 2.1) for the
simplified acquisition threshold. Re-
cipients should determine if local gov-
ernment laws on purchasing apply.
Special purpose equipment means
equipment which is used only for re-
search, medical, scientific, or other
technical activities. Examples of spe-
cial purpose equipment include micro-
scopes, x-ray machines, surgical instru-
ments, and spectrometers. See also the
definitions of equipment and general
purpose equipment in this section.
State means any state of the United
States, the District of Columbia, the
Commonwealth of Puerto Rico, U.S.
Virgin Islands, Guam, American
Samoa, the Commonwealth of the
Northern Mariana Islands, and any
agency or instrumentality thereof ex-
clusive of local governments.
Student Financial Aid (SFA) means
Federal awards under those programs
of general student assistance, such as
those authorized by Title IV of the
Higher Education Act of 1965, as
amended, (20 U.S.C. 1070–1099d), which
are administered by the U.S. Depart-
ment of Education, and similar pro-
grams provided by other Federal agen-
cies. It does not include Federal awards
under programs that provide fellow-
ships or similar Federal awards to stu-
dents on a competitive basis, or for
specified studies or research.
Subaward means an award provided
by a pass-through entity to a sub-
recipient for the subrecipient to carry
out part of a Federal award received by
the pass-through entity. It does not in-
clude payments to a contractor or pay-
ments to an individual that is a bene-
ficiary of a Federal program. A
subaward may be provided through any
form of legal agreement, including an
agreement that the pass-through enti-
ty considers a contract.
Subrecipient means an entity, usually
but not limited to non-Federal entities,
that receives a subaward from a pass-
through entity to carry out part of a
Federal award; but does not include an
individual that is a beneficiary of such
award. A subrecipient may also be a re-
cipient of other Federal awards di-
rectly from a Federal awarding agency.
Subsidiary means an entity in which
more than 50 percent of the entity is
owned or controlled directly by a par-
ent corporation or through another
subsidiary of a parent corporation.
Supplies means all tangible personal
property other than those described in
the definition of equipment in this sec-
tion. A computing device is a supply if
the acquisition cost is less than the
lesser of the capitalization level estab-
lished by the non-Federal entity for fi-
nancial statement purposes or $5,000,
regardless of the length of its useful
life. See also the definitions of com-
puting devices and equipment in this sec-
tion.
Telecommunications cost means the
cost of using communication and te-
lephony technologies such as mobile
phones, land lines, and internet.
Termination means the ending of a
Federal award, in whole or in part at
any time prior to the planned end of
period of performance. A lack of avail-
able funds is not a termination.
Third-party in-kind contributions
means the value of non-cash contribu-
tions (i.e., property or services) that—
(1) Benefit a federally-assisted
project or program; and
(2) Are contributed by non-Federal
third parties, without charge, to a non-
Federal entity under a Federal award.
Unliquidated financial obligations
means, for financial reports prepared
on a cash basis, financial obligations
incurred by the non-Federal entity
that have not been paid (liquidated).
For reports prepared on an accrual ex-
penditure basis, these are financial ob-
ligations incurred by the non-Federal
entity for which an expenditure has
not been recorded.
Unobligated balance means the
amount of funds under a Federal award
that the non-Federal entity has not ob-
ligated. The amount is computed by
subtracting the cumulative amount of
the non-Federal entity’s unliquidated
financial obligations and expenditures
of funds under the Federal award from
the cumulative amount of the funds
that the Federal awarding agency or
pass-through entity authorized the
non-Federal entity to obligate.
Voluntary committed cost sharing
means cost sharing specifically pledged
on a voluntary basis in the proposal’s
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2 CFR Ch. II (1–1–22 Edition) §200.100
budget on the part of the non-Federal
entity and that becomes a binding re-
quirement of Federal award. See also
§200.306.
[85 FR 49529, Aug. 13, 2020, as amended at 86
FR 10439, Feb. 22, 2021]
Subpart B—General Provisions
§200.100 Purpose.
(a) Purpose. (1) This part establishes
uniform administrative requirements,
cost principles, and audit requirements
for Federal awards to non-Federal enti-
ties, as described in §200.101. Federal
awarding agencies must not impose ad-
ditional or inconsistent requirements,
except as provided in §§200.102 and
200.211, or unless specifically required
by Federal statute, regulation, or Ex-
ecutive order.
(2) This part provides the basis for a
systematic and periodic collection and
uniform submission by Federal agen-
cies of information on all Federal fi-
nancial assistance programs to the Of-
fice of Management and Budget (OMB).
It also establishes Federal policies re-
lated to the delivery of this informa-
tion to the public, including through
the use of electronic media. It pre-
scribes the manner in which General
Services Administration (GSA), OMB,
and Federal agencies that administer
Federal financial assistance programs
are to carry out their statutory respon-
sibilities under the Federal Program
Information Act (31 U.S.C. 6101–6106).
(b) Administrative requirements. Sub-
parts B through D of this part set forth
the uniform administrative require-
ments for grant and cooperative agree-
ments, including the requirements for
Federal awarding agency management
of Federal grant programs before the
Federal award has been made, and the
requirements Federal awarding agen-
cies may impose on non-Federal enti-
ties in the Federal award.
(c) Cost principles. Subpart E of this
part establishes principles for deter-
mining the allowable costs incurred by
non-Federal entities under Federal
awards. The principles are for the pur-
pose of cost determination and are not
intended to identify the circumstances
or dictate the extent of Federal Gov-
ernment participation in the financing
of a particular program or project. The
principles are designed to provide that
Federal awards bear their fair share of
cost recognized under these principles
except where restricted or prohibited
by statute.
(d) Single Audit Requirements and
Audit Follow-up. Subpart F of this part
is issued pursuant to the Single Audit
Act Amendments of 1996, (31 U.S.C.
7501–7507). It sets forth standards for
obtaining consistency and uniformity
among Federal agencies for the audit
of non-Federal entities expending Fed-
eral awards. These provisions also pro-
vide the policies and procedures for
Federal awarding agencies and pass-
through entities when using the results
of these audits.
(e) Guidance on challenges and prizes.
For OMB guidance to Federal awarding
agencies on challenges and prizes,
please see memo M–10–11 Guidance on
the Use of Challenges and Prizes to
Promote Open Government, issued
March 8, 2010, or its successor.
[78 FR 78608, Dec. 26, 2013, as amended at 85
FR 49536, Aug. 13, 2020]
§200.101 Applicability.
(a) General applicability to Federal
agencies. (1) The requirements estab-
lished in this part apply to Federal
agencies that make Federal awards to
non-Federal entities. These require-
ments are applicable to all costs re-
lated to Federal awards.
(2) Federal awarding agencies may
apply subparts A through E of this part
to Federal agencies, for-profit entities,
foreign public entities, or foreign orga-
nizations, except where the Federal
awarding agency determines that the
application of these subparts would be
inconsistent with the international re-
sponsibilities of the United States or
the statutes or regulations of a foreign
government.
(b) Applicability to different types of
Federal awards. (1) Throughout this
part when the word ‘‘must’’ is used it
indicates a requirement. Whereas, use
of the word ‘‘should’’ or ‘‘may’’ indi-
cates a best practice or recommended
approach rather than a requirement
and permits discretion.
(2) The following table describes what
portions of this part apply to which
types of Federal awards. The terms and
conditions of Federal awards (including
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OMB Guidance §200.101
this part) flow down to subawards to
subrecipients unless a particular sec-
tion of this part or the terms and con-
ditions of the Federal award specifi-
cally indicate otherwise. This means
that non-Federal entities must comply
with requirements in this part regard-
less of whether the non-Federal entity
is a recipient or subrecipient of a Fed-
eral award. Pass-through entities must
comply with the requirements de-
scribed in subpart D of this part,
§§200.331 through 200.333, but not any
requirements in this part directed to-
wards Federal awarding agencies un-
less the requirements of this part or
the terms and conditions of the Federal
award indicate otherwise.
TABLE 1 TO PARAGRAPH (b)
The following portions of this Part
Are applicable to the following types of
Federal Awards and Fixed-Price Con-
tracts and Subcontracts (except as
noted in paragraphs (d) and (e) of this
section):
Are NOT applicable to the following
types of Federal Awards and Fixed-Price
Contracts and Subcontracts:
Subpart A—Acronyms and Definitions ...... —All.
Subpart B—General Provisions, except
for §§200.111 English Language,
200.112 Conflict of Interest, 200.113
Mandatory Disclosures.
—All.
§§200.111 English Language, 200.112
Conflict of Interest, 200.113 Mandatory
Disclosures.
—Grant Agreements and cooperative
agreements.
—Agreements for loans, loan guaran-
tees, interest subsidies and insurance.
—Procurement contracts awarded by
Federal Agencies under the Federal
Acquisition Regulation and sub-
contracts under those contracts.
Subparts C–D, except for §§200.203 Re-
quirement to provide public notice of
Federal financial assistance programs,
200.303 Internal controls, 200.331–333
Subrecipient Monitoring and Manage-
ment.
—Grant Agreements and cooperative
agreements.
—Agreements for loans, loan guaran-
tees, interest subsidies and insurance.
—Procurement contracts awarded by
Federal Agencies under the Federal
Acquisition Regulation and sub-
contracts under those contracts.
§200.203 Requirement to provide public
notice of Federal financial assistance
programs.
—Grant Agreements and cooperative
agreements.
—Agreements for loans, loan guaran-
tees, interest subsidies and insurance.
—Procurement contracts awarded by
Federal Agencies under the Federal
Acquisition Regulation and sub-
contracts under those contracts.
§§200.303 Internal controls, 200.331–333
Subrecipient Monitoring and Manage-
ment.
—All.
Subpart E—Cost Principles ....................... —Grant Agreements and cooperative
agreements, except those providing
food commodities.
—All procurement contracts under the
Federal Acquisition Regulations ex-
cept those that are not negotiated.
—Grant agreements and cooperative
agreements providing foods commod-
ities.
—Fixed amount awards.
—Agreements for loans, loans guaran-
tees, interest subsidies and insurance.
—Federal awards to hospitals (see Ap-
pendix IX Hospital Cost Principles).
Subpart F—Audit Requirements ............... —Grant Agreements and cooperative
agreements.
—Contracts and subcontracts, except for
fixed price contacts and subcontracts,
awarded under the Federal Acquisition
Regulation.
—Agreements for loans, loans guaran-
tees, interest subsidies and insurance
and other forms of Federal Financial
Assistance as defined by the Single
Audit Act Amendment of 1996.
—Fixed-price contracts and subcontracts
awarded under the Federal Acquisition
Regulation.
(c) Federal award of cost-reimbursement
contract under the FAR to a non-Federal
entity. When a non-Federal entity is
awarded a cost-reimbursement con-
tract, only subpart D, §§200.331 through
200.333, and subparts E and F of this
part are incorporated by reference into
the contract, but the requirements of
subparts D, E, and F are supplementary
to the FAR and the contract. When the
Cost Accounting Standards (CAS) are
applicable to the contract, they take
precedence over the requirements of
this part, including subpart F of this
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2 CFR Ch. II (1–1–22 Edition) §200.101
part, which are supplementary to the
CAS requirements. In addition, costs
that are made unallowable under 10
U.S.C. 2324(e) and 41 U.S.C. 4304(a) as
described in the FAR 48 CFR part 31,
subpart 31.2, and 48 CFR 31.603 are al-
ways unallowable. For requirements
other than those covered in subpart D,
§§200.331 through 200.333, and subparts
E and F of this part, the terms of the
contract and the FAR apply. Note that
when a non-Federal entity is awarded a
FAR contract, the FAR applies, and
the terms and conditions of the con-
tract shall prevail over the require-
ments of this part.
(d) Governing provisions. With the ex-
ception of subpart F of this part, which
is required by the Single Audit Act, in
any circumstances where the provi-
sions of Federal statutes or regulations
differ from the provisions of this part,
the provision of the Federal statutes or
regulations govern. This includes, for
agreements with Indian tribes, the pro-
visions of the Indian Self-Determina-
tion and Education and Assistance Act
(ISDEAA), as amended, 25 U.S.C 450–
458ddd–2.
(e) Program applicability. Except for
§§200.203, 200.216, and 200.331 through
200.333, the requirements in subparts C,
D, and E of this part do not apply to
the following programs:
(1) The block grant awards author-
ized by the Omnibus Budget Reconcili-
ation Act of 1981 (including Community
Services), except to the extent that
subpart E of this part apply to sub-
recipients of Community Services
Block Grant funds pursuant to 42
U.S.C. 9916(a)(1)(B);
(2) Federal awards to local education
agencies under 20 U.S.C. 7702–7703b,
(portions of the Impact Aid program);
(3) Payments under the Department
of Veterans Affairs’ State Home Per
Diem Program (38 U.S.C. 1741); and
(4) Federal awards authorized under
the Child Care and Development Block
Grant Act of 1990, as amended:
(i) Child Care and Development Block
Grant (42 U.S.C. 9858).
(ii) Child Care Mandatory and Match-
ing Funds of the Child Care and Devel-
opment Fund (42 U.S.C. 9858).
(f) Additional program applicability.
Except for §§200.203 and 200.216, the
guidance in subpart C of this part does
not apply to the following programs:
(1) Entitlement Federal awards to
carry out the following programs of the
Social Security Act:
(i) Temporary Assistance for Needy
Families (title IV–A of the Social Secu-
rity Act, 42 U.S.C. 601–619);
(ii) Child Support Enforcement and
Establishment of Paternity (title IV–D
of the Social Security Act, 42 U.S.C.
651–669b);
(iii) Foster Care and Adoption Assist-
ance (title IV–E of the Act, 42 U.S.C.
670–679c);
(iv) Aid to the Aged, Blind, and Dis-
abled (titles I, X, XIV, and XVI–AABD
of the Act, as amended);
(v) Medical Assistance (Medicaid)
(title XIX of the Act, 42 U.S.C. 1396–
1396w–5) not including the State Med-
icaid Fraud Control program author-
ized by section 1903(a)(6)(B) of the So-
cial Security Act (42 U.S.C.
1396b(a)(6)(B)); and
(vi) Children’s Health Insurance Pro-
gram (title XXI of the Act, 42 U.S.C.
1397aa–1397mm).
(2) A Federal award for an experi-
mental, pilot, or demonstration project
that is also supported by a Federal
award listed in paragraph (f)(1) of this
section.
(3) Federal awards under subsection
412(e) of the Immigration and Nation-
ality Act and subsection 501(a) of the
Refugee Education Assistance Act of
1980 (Pub. L. 96–422, 94 Stat. 1809), for
cash assistance, medical assistance,
and supplemental security income ben-
efits to refugees and entrants and the
administrative costs of providing the
assistance and benefits (8 U.S.C.
1522(e)).
(4) Entitlement awards under the fol-
lowing programs of The National
School Lunch Act:
(i) National School Lunch Program
(section 4 of the Act, 42 U.S.C. 1753);
(ii) Commodity Assistance (section 6
of the Act, 42 U.S.C. 1755);
(iii) Special Meal Assistance (section
11 of the Act, 42 U.S.C. 1759a);
(iv) Summer Food Service Program
for Children (section 13 of the Act, 42
U.S.C. 1761); and
(v) Child and Adult Care Food Pro-
gram (section 17 of the Act, 42 U.S.C.
1766).
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OMB Guidance §200.104
(5) Entitlement awards under the fol-
lowing programs of The Child Nutri-
tion Act of 1966:
(i) Special Milk Program (section 3 of
the Act, 42 U.S.C. 1772);
(ii) School Breakfast Program (sec-
tion 4 of the Act, 42 U.S.C. 1773); and
(iii) State Administrative Expenses
(section 7 of the Act, 42 U.S.C. 1776).
(6) Entitlement awards for State Ad-
ministrative Expenses under The Food
and Nutrition Act of 2008 (section 16 of
the Act, 7 U.S.C. 2025).
(7) Non-discretionary Federal awards
under the following non-entitlement
programs:
(i) Special Supplemental Nutrition
Program for Women, Infants and Chil-
dren (section 17 of the Child Nutrition
Act of 1966) 42 U.S.C. 1786;
(ii) The Emergency Food Assistance
Programs (Emergency Food Assistance
Act of 1983) 7 U.S.C. 7501 note; and
(iii) Commodity Supplemental Food
Program (section 5 of the Agriculture
and Consumer Protection Act of 1973) 7
U.S.C. 612c note.
[85 FR 49536, Aug. 13, 2020, as amended at 86
FR 10439, Feb. 22, 2021]
§200.102 Exceptions.
(a) With the exception of subpart F of
this part, OMB may allow exceptions
for classes of Federal awards or non-
Federal entities subject to the require-
ments of this part when exceptions are
not prohibited by statute. In the inter-
est of maximum uniformity, exceptions
from the requirements of this part will
be permitted as described in this sec-
tion.
(b) Exceptions on a case-by-case basis
for individual non-Federal entities may
be authorized by the Federal awarding
agency or cognizant agency for indirect
costs, except where otherwise required
by law or where OMB or other approval
is expressly required by this part.
(c) The Federal awarding agency may
adjust requirements to a class of Fed-
eral awards or non-Federal entities
when approved by OMB, or when re-
quired by Federal statutes or regula-
tions, except for the requirements in
subpart F of this part. A Federal
awarding agency may apply less re-
strictive requirements when making
fixed amount awards as defined in sub-
part A of this part, except for those re-
quirements imposed by statute or in
subpart F of this part.
(d) Federal awarding agencies may
request exceptions in support of inno-
vative program designs that apply a
risk-based, data-driven framework to
alleviate select compliance require-
ments and hold recipients accountable
for good performance. See also §200.206.
[85 FR 49538, Aug. 13, 2020, as amended at 86
FR 10439, Feb. 22, 2021]
§200.103 Authorities.
This part is issued under the fol-
lowing authorities.
(a) Subparts B through D of this part
are authorized under 31 U.S.C. 503 (the
Chief Financial Officers Act, Functions
of the Deputy Director for Manage-
ment), 41 U.S.C. 1101–1131 (the Office of
Federal Procurement Policy Act), Re-
organization Plan No. 2 of 1970, and Ex-
ecutive Order 11541 (‘‘Prescribing the
Duties of the Office of Management
and Budget and the Domestic Policy
Council in the Executive Office of the
President’’), the Single Audit Act
Amendments of 1996, (31 U.S.C. 7501–
7507), as well as The Federal Program
Information Act (Pub. L. 95–220 and
Pub. L. 98–169, as amended, codified at
31 U.S.C. 6101–6106).
(b) Subpart E of this part is author-
ized under the Budget and Accounting
Act of 1921, as amended; the Budget
and Accounting Procedures Act of 1950,
as amended (31 U.S.C. 1101–1125); the
Chief Financial Officers Act of 1990 (31
U.S.C. 503–504); Reorganization Plan
No. 2 of 1970; and Executive Order 11541,
‘‘Prescribing the Duties of the Office of
Management and Budget and the Do-
mestic Policy Council in the Executive
Office of the President.’’
(c) Subpart F of this part is author-
ized under the Single Audit Act
Amendments of 1996, (31 U.S.C. 7501–
7507).
[85 FR 49538, Aug. 13, 2020]
§200.104 Supersession.
As described in §200.110, this part su-
persedes the following OMB guidance
documents and regulations under title
2 of the Code of Federal Regulations:
(a) A–21, ‘‘Cost Principles for Edu-
cational Institutions’’ (2 CFR part 220);
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2 CFR Ch. II (1–1–22 Edition) §200.105
(b) A–87, ‘‘Cost Principles for State,
Local and Indian Tribal Governments’’
(2 CFR part 225) and also FEDERAL REG-
ISTER notice 51 FR 552 (January 6, 1986);
(c) A–89, ‘‘Federal Domestic Assist-
ance Program Information’’;
(d) A–102, ‘‘Grant Awards and Cooper-
ative Agreements with State and Local
Governments’’;
(e) A–110, ‘‘Uniform Administrative
Requirements for Awards and Other
Agreements with Institutions of Higher
Education, Hospitals, and Other Non-
profit Organizations’’ (codified at 2
CFR 215);
(f) A–122, ‘‘Cost Principles for Non-
Profit Organizations’’ (2 CFR part 230);
(g) A–133, ‘‘Audits of States, Local
Governments and Non-Profit Organiza-
tions’’; and
(h) Those sections of A–50 related to
audits performed under subpart F of
this part.
[78 FR 78608, Dec. 26, 2013, as amended at 79
FR 75882, Dec. 19, 2014; 85 FR 49538, Aug. 13,
2020]
§200.105 Effect on other issuances.
(a) Superseding inconsistent require-
ments. For Federal awards subject to
this part, all administrative require-
ments, program manuals, handbooks
and other non-regulatory materials
that are inconsistent with the require-
ments of this part must be superseded
upon implementation of this part by
the Federal agency, except to the ex-
tent they are required by statute or au-
thorized in accordance with the provi-
sions in §200.102.
(b) Imposition of requirements on recipi-
ents. Agencies may impose legally
binding requirements on recipients
only through the notice and public
comment process through an approved
agency process, including as authorized
by this part, other statutes or regula-
tions, or as incorporated into the terms
of a Federal award.
[85 FR 49538, Aug. 13, 2020]
§200.106 Agency implementation.
The specific requirements and re-
sponsibilities of Federal agencies and
non-Federal entities are set forth in
this part. Federal agencies making
Federal awards to non-Federal entities
must implement the language in sub-
parts C through F of this part in codi-
fied regulations unless different provi-
sions are required by Federal statute
or are approved by OMB.
[85 FR 49538, Aug. 13, 2020]
§200.107 OMB responsibilities.
OMB will review Federal agency reg-
ulations and implementation of this
part, and will provide interpretations
of policy requirements and assistance
to ensure effective and efficient imple-
mentation. Any exceptions will be sub-
ject to approval by OMB. Exceptions
will only be made in particular cases
where adequate justification is pre-
sented.
§200.108 Inquiries.
Inquiries concerning this part may be
directed to the Office of Federal Finan-
cial Management Office of Manage-
ment and Budget, in Washington, DC.
Non-Federal entities’ inquiries should
be addressed to the Federal awarding
agency, cognizant agency for indirect
costs, cognizant or oversight agency
for audit, or pass-through entity as ap-
propriate.
§200.109 Review date.
OMB will review this part at least
every five years after December 26,
2013.
§200.110 Effective/applicability date.
(a) The standards set forth in this
part that affect the administration of
Federal awards issued by Federal
awarding agencies become effective
once implemented by Federal awarding
agencies or when any future amend-
ment to this part becomes final.
(b) Existing negotiated indirect cost
rates (as of the publication date of the
revisions to the guidance) will remain
in place until they expire. The effective
date of changes to indirect cost rates
must be based upon the date that a
newly re-negotiated rate goes into ef-
fect for a specific non-Federal entity’s
fiscal year. Therefore, for indirect cost
rates and cost allocation plans, the re-
vised Uniform Guidance (as of the pub-
lication date for revisions to the guid-
ance) become effective in generating
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OMB Guidance §200.201
proposals and negotiating a new rate
(when the rate is re-negotiated).
[85 FR 49538, Aug. 13, 2020]
§200.111 English language.
(a) All Federal financial assistance
announcements and Federal award in-
formation must be in the English lan-
guage. Applications must be submitted
in the English language and must be in
the terms of U.S. dollars. If the Federal
awarding agency receives applications
in another currency, the Federal
awarding agency will evaluate the ap-
plication by converting the foreign cur-
rency to United States currency using
the date specified for receipt of the ap-
plication.
(b) Non-Federal entities may trans-
late the Federal award and other docu-
ments into another language. In the
event of inconsistency between any
terms and conditions of the Federal
award and any translation into another
language, the English language mean-
ing will control. Where a significant
portion of the non-Federal entity’s em-
ployees who are working on the Fed-
eral award are not fluent in English,
the non-Federal entity must provide
the Federal award in English and the
language(s) with which employees are
more familiar.
§200.112 Conflict of interest.
The Federal awarding agency must
establish conflict of interest policies
for Federal awards. The non-Federal
entity must disclose in writing any po-
tential conflict of interest to the Fed-
eral awarding agency or pass-through
entity in accordance with applicable
Federal awarding agency policy.
§200.113 Mandatory disclosures.
The non-Federal entity or applicant
for a Federal award must disclose, in a
timely manner, in writing to the Fed-
eral awarding agency or pass-through
entity all violations of Federal crimi-
nal law involving fraud, bribery, or
gratuity violations potentially affect-
ing the Federal award. Non-Federal en-
tities that have received a Federal
award including the term and condi-
tion outlined in appendix XII to this
part are required to report certain
civil, criminal, or administrative pro-
ceedings to SAM (currently FAPIIS).
Failure to make required disclosures
can result in any of the remedies de-
scribed in §200.339. (See also 2 CFR part
180, 31 U.S.C. 3321, and 41 U.S.C. 2313.)
[85 FR 49539, Aug. 13, 2020]
Subpart C—Pre-Federal Award
Requirements and Contents of
Federal Awards
SOURCE: 85 FR 49539, Aug. 13, 2020, unless
otherwise noted.
§200.200 Purpose.
Sections 200.201 through 200.216 pre-
scribe instructions and other pre-award
matters to be used by Federal awarding
agencies in the program planning, an-
nouncement, application and award
processes.
§200.201 Use of grant agreements (in-
cluding fixed amount awards), co-
operative agreements, and con-
tracts.
(a) Federal award instrument. The Fed-
eral awarding agency or pass-through
entity must decide on the appropriate
instrument for the Federal award (i.e.,
grant agreement, cooperative agree-
ment, or contract) in accordance with
the Federal Grant and Cooperative
Agreement Act (31 U.S.C. 6301–08).
(b) Fixed amount awards. In addition
to the options described in paragraph
(a) of this section, Federal awarding
agencies, or pass-through entities as
permitted in §200.333, may use fixed
amount awards (see Fixed amount
awards in §200.1) to which the following
conditions apply:
(1) The Federal award amount is ne-
gotiated using the cost principles (or
other pricing information) as a guide.
The Federal awarding agency or pass-
through entity may use fixed amount
awards if the project scope has measur-
able goals and objectives and if ade-
quate cost, historical, or unit pricing
data is available to establish a fixed
amount award based on a reasonable
estimate of actual cost. Payments are
based on meeting specific requirements
of the Federal award. Accountability is
based on performance and results. Ex-
cept in the case of termination before
completion of the Federal award, there
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2 CFR Ch. II (1–1–22 Edition) §200.202
is no governmental review of the ac-
tual costs incurred by the non-Federal
entity in performance of the award.
Some of the ways in which the Federal
award may be paid include, but are not
limited to:
(i) In several partial payments, the
amount of each agreed upon in ad-
vance, and the ‘‘milestone’’ or event
triggering the payment also agreed
upon in advance, and set forth in the
Federal award;
(ii) On a unit price basis, for a de-
fined unit or units, at a defined price or
prices, agreed to in advance of perform-
ance of the Federal award and set forth
in the Federal award; or,
(iii) In one payment at Federal award
completion.
(2) A fixed amount award cannot be
used in programs which require manda-
tory cost sharing or match.
(3) The non-Federal entity must cer-
tify in writing to the Federal awarding
agency or pass-through entity at the
end of the Federal award that the
project or activity was completed or
the level of effort was expended. If the
required level of activity or effort was
not carried out, the amount of the Fed-
eral award must be adjusted.
(4) Periodic reports may be estab-
lished for each Federal award.
(5) Changes in principal investigator,
project leader, project partner, or scope
of effort must receive the prior written
approval of the Federal awarding agen-
cy or pass-through entity.
§200.202 Program planning and de-
sign.
The Federal awarding agency must
design a program and create an Assist-
ance Listing before announcing the No-
tice of Funding Opportunity. The pro-
gram must be designed with clear goals
and objectives that facilitate the deliv-
ery of meaningful results consistent
with the Federal authorizing legisla-
tion of the program. Program perform-
ance shall be measured based on the
goals and objectives developed during
program planning and design. See
§200.301 for more information on per-
formance measurement. Performance
measures may differ depending on the
type of program. The program must
align with the strategic goals and ob-
jectives within the Federal awarding
agency’s performance plan and should
support the Federal awarding agency’s
performance measurement, manage-
ment, and reporting as required by
Part 6 of OMB Circular A–11 (Prepara-
tion, Submission, and Execution of the
Budget). The program must also be de-
signed to align with the Program Man-
agement Improvement Accountability
Act (Pub. L. 114–264).
§200.203 Requirement to provide pub-
lic notice of Federal financial as-
sistance programs.
(a) The Federal awarding agency
must notify the public of Federal pro-
grams in the Federal Assistance List-
ings maintained by the General Serv-
ices Administration (GSA).
(1) The Federal Assistance Listings is
the single, authoritative, government-
wide comprehensive source of Federal
financial assistance program informa-
tion produced by the executive branch
of the Federal Government.
(2) The information that the Federal
awarding agency must submit to GSA
for approval by OMB is listed in para-
graph (b) of this section. GSA must
prescribe the format for the submission
in coordination with OMB.
(3) The Federal awarding agency may
not award Federal financial assistance
without assigning it to a program that
has been included in the Federal As-
sistance Listings as required in this
section unless there are exigent cir-
cumstances requiring otherwise, such
as timing requirements imposed by
statute.
(b) For each program that awards
discretionary Federal awards, non-dis-
cretionary Federal awards, loans, in-
surance, or any other type of Federal
financial assistance, the Federal
awarding agency must, to the extent
practicable, create, update, and man-
age Assistance Listings entries based
on the authorizing statute for the pro-
gram and comply with additional guid-
ance provided by GSA in consultation
with OMB to ensure consistent, accu-
rate information is available to pro-
spective applicants. Accordingly, Fed-
eral awarding agencies must submit
the following information to GSA:
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OMB Guidance §200.204
(1) Program Description, Purpose,
Goals, and Measurement. A brief sum-
mary of the statutory or regulatory re-
quirements of the program and its in-
tended outcome. Where appropriate,
the Program Description, Purpose,
Goals, and Measurement should align
with the strategic goals and objectives
within the Federal awarding agency’s
performance plan and should support
the Federal awarding agency’s per-
formance measurement, management,
and reporting as required by Part 6 of
OMB Circular A–11;
(2) Identification. Identification of
whether the program makes Federal
awards on a discretionary basis or the
Federal awards are prescribed by Fed-
eral statute, such as in the case of for-
mula grants.
(3) Projected total amount of funds
available for the program. Estimates
based on previous year funding are ac-
ceptable if current appropriations are
not available at the time of the sub-
mission;
(4) Anticipated source of available
funds. The statutory authority for
funding the program and, to the extent
possible, agency, sub-agency, or, if
known, the specific program unit that
will issue the Federal awards, and asso-
ciated funding identifier (e.g., Treasury
Account Symbol(s));
(5) General eligibility requirements. The
statutory, regulatory or other eligi-
bility factors or considerations that de-
termine the applicant’s qualification
for Federal awards under the program
(e.g., type of non-Federal entity); and
(6) Applicability of Single Audit Re-
quirements. Applicability of Single
Audit Requirements as required by
subpart F of this part.
§200.204 Notices of funding opportuni-
ties.
For discretionary grants and cooper-
ative agreements that are competed,
the Federal awarding agency must an-
nounce specific funding opportunities
by providing the following information
in a public notice:
(a) Summary information in notices of
funding opportunities. The Federal
awarding agency must display the fol-
lowing information posted on the OMB-
designated governmentwide website for
funding and applying for Federal finan-
cial assistance, in a location preceding
the full text of the announcement:
(1) Federal Awarding Agency Name;
(2) Funding Opportunity Title;
(3) Announcement Type (whether the
funding opportunity is the initial an-
nouncement of this funding oppor-
tunity or a modification of a pre-
viously announced opportunity);
(4) Funding Opportunity Number (re-
quired, if applicable). If the Federal
awarding agency has assigned or will
assign a number to the funding oppor-
tunity announcement, this number
must be provided;
(5) Assistance Listings Number(s);
(6) Key Dates. Key dates include due
dates for applications or Executive
Order 12372 submissions, as well as for
any letters of intent or pre-applica-
tions. For any announcement issued
before a program’s application mate-
rials are available, key dates also in-
clude the date on which those mate-
rials will be released; and any other ad-
ditional information, as deemed appli-
cable by the relevant Federal awarding
agency.
(b) Availability period. The Federal
awarding agency must generally make
all funding opportunities available for
application for at least 60 calendar
days. The Federal awarding agency
may make a determination to have a
less than 60 calendar day availability
period but no funding opportunity
should be available for less than 30 cal-
endar days unless exigent cir-
cumstances require as determined by
the Federal awarding agency head or
delegate.
(c) Full text of funding opportunities.
The Federal awarding agency must in-
clude the following information in the
full text of each funding opportunity.
For specific instructions on the con-
tent required in this section, refer to
appendix I to this part.
(1) Full programmatic description of
the funding opportunity.
(2) Federal award information, in-
cluding sufficient information to help
an applicant make an informed deci-
sion about whether to submit an appli-
cation. (See also §200.414(c)(4)).
(3) Specific eligibility information,
including any factors or priorities that
affect an applicant’s or its applica-
tion’s eligibility for selection.
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2 CFR Ch. II (1–1–22 Edition) §200.205
(4) Application Preparation and Sub-
mission Information, including the ap-
plicable submission dates and time.
(5) Application Review Information
including the criteria and process to be
used to evaluate applications. See also
§§200.205 and 200.206.
(6) Federal Award Administration In-
formation. See also §200.211.
(7) Applicable terms and conditions
for resulting awards, including any ex-
ceptions from these standard terms.
§200.205 Federal awarding agency re-
view of merit of proposals.
For discretionary Federal awards,
unless prohibited by Federal statute,
the Federal awarding agency must de-
sign and execute a merit review process
for applications, with the objective of
selecting recipients most likely to be
successful in delivering results based
on the program objectives outlined in
section §200.202. A merit review is an
objective process of evaluating Federal
award applications in accordance with
written standards set forth by the Fed-
eral awarding agency. This process
must be described or incorporated by
reference in the applicable funding op-
portunity (see appendix I to this part.).
See also §200.204. The Federal awarding
agency must also periodically review
its merit review process.
§200.206 Federal awarding agency re-
view of risk posed by applicants.
(a) Review of OMB-designated reposi-
tories of governmentwide data. (1) Prior
to making a Federal award, the Fed-
eral awarding agency is required by the
Payment Integrity Information Act of
2019, 31 U.S.C. 3301 note, and 41 U.S.C.
2313 to review information available
through any OMB-designated reposi-
tories of governmentwide eligibility
qualification or financial integrity in-
formation as appropriate. See also sus-
pension and debarment requirements
at 2 CFR part 180 as well as individual
Federal agency suspension and debar-
ment regulations in title 2 of the Code
of Federal Regulations.
(2) In accordance 41 U.S.C. 2313, the
Federal awarding agency is required to
review the non-public segment of the
OMB-designated integrity and perform-
ance system accessible through SAM
(currently the Federal Awardee Per-
formance and Integrity Information
System (FAPIIS)) prior to making a
Federal award where the Federal share
is expected to exceed the simplified ac-
quisition threshold, defined in 41 U.S.C.
134, over the period of performance. As
required by Public Law 112–239, Na-
tional Defense Authorization Act for
Fiscal Year 2013, prior to making a
Federal award, the Federal awarding
agency must consider all of the infor-
mation available through FAPIIS with
regard to the applicant and any imme-
diate highest level owner, predecessor
(i.e.; a non-Federal entity that is re-
placed by a successor), or subsidiary,
identified for that applicant in FAPIIS,
if applicable. At a minimum, the infor-
mation in the system for a prior Fed-
eral award recipient must demonstrate
a satisfactory record of executing pro-
grams or activities under Federal
grants, cooperative agreements, or pro-
curement awards; and integrity and
business ethics. The Federal awarding
agency may make a Federal award to a
recipient who does not fully meet these
standards, if it is determined that the
information is not relevant to the cur-
rent Federal award under consideration
or there are specific conditions that
can appropriately mitigate the effects
of the non-Federal entity’s risk in ac-
cordance with §200.208.
(b) Risk evaluation. (1) The Federal
awarding agency must have in place a
framework for evaluating the risks
posed by applicants before they receive
Federal awards. This evaluation may
incorporate results of the evaluation of
the applicant’s eligibility or the qual-
ity of its application. If the Federal
awarding agency determines that a
Federal award will be made, special
conditions that correspond to the de-
gree of risk assessed may be applied to
the Federal award. Criteria to be evalu-
ated must be described in the an-
nouncement of funding opportunity de-
scribed in §200.204.
(2) In evaluating risks posed by appli-
cants, the Federal awarding agency
may use a risk-based approach and
may consider any items such as the fol-
lowing:
(i) Financial stability. Financial sta-
bility;
(ii) Management systems and stand-
ards. Quality of management systems
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OMB Guidance §200.208
and ability to meet the management
standards prescribed in this part;
(iii) History of performance. The appli-
cant’s record in managing Federal
awards, if it is a prior recipient of Fed-
eral awards, including timeliness of
compliance with applicable reporting
requirements, conformance to the
terms and conditions of previous Fed-
eral awards, and if applicable, the ex-
tent to which any previously awarded
amounts will be expended prior to fu-
ture awards;
(iv) Audit reports and findings. Re-
ports and findings from audits per-
formed under subpart F of this part or
the reports and findings of any other
available audits; and
(v) Ability to effectively implement re-
quirements. The applicant’s ability to
effectively implement statutory, regu-
latory, or other requirements imposed
on non-Federal entities.
(c) Risk-based requirements adjustment.
The Federal awarding agency may ad-
just requirements when a risk-evalua-
tion indicates that it may be merited
either pre-award or post-award.
(d) Suspension and debarment compli-
ance. (1) The Federal awarding agency
must comply with the guidelines on
governmentwide suspension and debar-
ment in 2 CFR part 180, and must re-
quire non-Federal entities to comply
with these provisions. These provisions
restrict Federal awards, subawards and
contracts with certain parties that are
debarred, suspended or otherwise ex-
cluded from or ineligible for participa-
tion in Federal programs or activities.
[85 FR 49539, Aug. 13, 2020, as amended at 86
FR 10439, Feb. 22, 2021]
§200.207 Standard application re-
quirements.
(a) Paperwork clearances. The Federal
awarding agency may only use applica-
tion information collections approved
by OMB under the Paperwork Reduc-
tion Act of 1995 and OMB’s imple-
menting regulations in 5 CFR part 1320
and in alignment with OMB-approved,
governmentwide data elements avail-
able from the OMB-designated stand-
ards lead. Consistent with these re-
quirements, OMB will authorize addi-
tional information collections only on
a limited basis.
(b) Information collection. If applica-
ble, the Federal awarding agency may
inform applicants and recipients that
they do not need to provide certain in-
formation otherwise required by the
relevant information collection.
§200.208 Specific conditions.
(a) Federal awarding agencies are re-
sponsible for ensuring that specific
Federal award conditions are con-
sistent with the program design re-
flected in §200.202 and include clear
performance expectations of recipients
as required in §200.301.
(b) The Federal awarding agency or
pass-through entity may adjust spe-
cific Federal award conditions as need-
ed, in accordance with this section,
based on an analysis of the following
factors:
(1) Based on the criteria set forth in
§200.206;
(2) The applicant or recipient’s his-
tory of compliance with the general or
specific terms and conditions of a Fed-
eral award;
(3) The applicant or recipient’s abil-
ity to meet expected performance goals
as described in §200.211; or
(4) A responsibility determination of
an applicant or recipient.
(c) Additional Federal award condi-
tions may include items such as the
following:
(1) Requiring payments as reimburse-
ments rather than advance payments;
(2) Withholding authority to proceed
to the next phase until receipt of evi-
dence of acceptable performance within
a given performance period;
(3) Requiring additional, more de-
tailed financial reports;
(4) Requiring additional project mon-
itoring;
(5) Requiring the non-Federal entity
to obtain technical or management as-
sistance; or
(6) Establishing additional prior ap-
provals.
(d) If the Federal awarding agency or
pass-through entity is imposing addi-
tional requirements, they must notify
the applicant or non-Federal entity as
to:
(1) The nature of the additional re-
quirements;
(2) The reason why the additional re-
quirements are being imposed;
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2 CFR Ch. II (1–1–22 Edition) §200.209
(3) The nature of the action needed to
remove the additional requirement, if
applicable;
(4) The time allowed for completing
the actions if applicable; and
(5) The method for requesting recon-
sideration of the additional require-
ments imposed.
(e) Any additional requirements must
be promptly removed once the condi-
tions that prompted them have been
satisfied.
§200.209 Certifications and represen-
tations.
Unless prohibited by the U.S. Con-
stitution, Federal statutes or regula-
tions, each Federal awarding agency or
pass-through entity is authorized to re-
quire the non-Federal entity to submit
certifications and representations re-
quired by Federal statutes, or regula-
tions on an annual basis. Submission
may be required more frequently if the
non-Federal entity fails to meet a re-
quirement of a Federal award.
§200.210 Pre-award costs.
For requirements on costs incurred
by the applicant prior to the start date
of the period of performance of the
Federal award, see §200.458.
§200.211 Information contained in a
Federal award.
A Federal award must include the
following information:
(a) Federal award performance goals.
Performance goals, indicators, targets,
and baseline data must be included in
the Federal award, where applicable.
The Federal awarding agency must
also specify how performance will be
assessed in the terms and conditions of
the Federal award, including the tim-
ing and scope of expected performance.
See §§200.202 and 200.301 for more infor-
mation on Federal award performance
goals.
(b) General Federal award information.
The Federal awarding agency must in-
clude the following general Federal
award information in each Federal
award:
(1) Recipient name (which must
match the name associated with its
unique entity identifier as defined at 2
CFR 25.315);
(2) Recipient’s unique entity identi-
fier;
(3) Unique Federal Award Identifica-
tion Number (FAIN);
(4) Federal Award Date (see Federal
award date in §200.201);
(5) Period of Performance Start and
End Date;
(6) Budget Period Start and End
Date;
(7) Amount of Federal Funds Obli-
gated by this action;
(8) Total Amount of Federal Funds
Obligated;
(9) Total Approved Cost Sharing or
Matching, where applicable;
(10) Total Amount of the Federal
Award including approved Cost Sharing
or Matching;
(11) Budget Approved by the Federal
Awarding Agency;
(11) Federal award description, (to
comply with statutory requirements
(e.g., FFATA));
(12) Name of Federal awarding agen-
cy and contact information for award-
ing official,
(13) Assistance Listings Number and
Title;
(14) Identification of whether the
award is R&D; and
(15) Indirect cost rate for the Federal
award (including if the de minimis rate
is charged per §200.414).
(c) General terms and conditions. (1)
Federal awarding agencies must incor-
porate the following general terms and
conditions either in the Federal award
or by reference, as applicable:
(i) Administrative requirements. Admin-
istrative requirements implemented by
the Federal awarding agency as speci-
fied in this part.
(ii) National policy requirements. These
include statutory, executive order,
other Presidential directive, or regu-
latory requirements that apply by spe-
cific reference and are not program-
specific. See §200.300 Statutory and na-
tional policy requirements.
(iii) Recipient integrity and perform-
ance matters. If the total Federal share
of the Federal award may include more
than $500,000 over the period of per-
formance, the Federal awarding agency
must include the term and condition
available in appendix XII of this part.
See also §200.113.
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OMB Guidance §200.213
(iv) Future budget periods. If it is an-
ticipated that the period of perform-
ance will include multiple budget peri-
ods, the Federal awarding agency must
indicate that subsequent budget peri-
ods are subject to the availability of
funds, program authority, satisfactory
performance, and compliance with the
terms and conditions of the Federal
award.
(v) Termination provisions. Federal
awarding agencies must make recipi-
ents aware, in a clear and unambiguous
manner, of the termination provisions
in §200.340, including the applicable
termination provisions in the Federal
awarding agency’s regulations or in
each Federal award.
(2) The Federal award must incor-
porate, by reference, all general terms
and conditions of the award, which
must be maintained on the agency’s
website.
(3) If a non-Federal entity requests a
copy of the full text of the general
terms and conditions, the Federal
awarding agency must provide it.
(4) Wherever the general terms and
conditions are publicly available, the
Federal awarding agency must main-
tain an archive of previous versions of
the general terms and conditions, with
effective dates, for use by the non-Fed-
eral entity, auditors, or others.
(d) Federal awarding agency, program,
or Federal award specific terms and con-
ditions. The Federal awarding agency
must include with each Federal award
any terms and conditions necessary to
communicate requirements that are in
addition to the requirements outlined
in the Federal awarding agency’s gen-
eral terms and conditions. See also
§200.208. Whenever practicable, these
specific terms and conditions also
should be shared on the agency’s
website and in notices of funding op-
portunities (as outlined in §200.204) in
addition to being included in a Federal
award. See also §200.207.
(e) Federal awarding agency require-
ments. Any other information required
by the Federal awarding agency.
§200.212 Public access to Federal
award information.
(a) In accordance with statutory re-
quirements for Federal spending trans-
parency (e.g., FFATA), except as noted
in this section, for applicable Federal
awards the Federal awarding agency
must announce all Federal awards pub-
licly and publish the required informa-
tion on a publicly available OMB-des-
ignated governmentwide website.
(b) All information posted in the des-
ignated integrity and performance sys-
tem accessible through SAM (currently
FAPIIS) on or after April 15, 2011 will
be publicly available after a waiting
period of 14 calendar days, except for:
(1) Past performance reviews required
by Federal Government contractors in
accordance with the Federal Acquisi-
tion Regulation (FAR) 48 CFR part 42,
subpart 42.15;
(2) Information that was entered
prior to April 15, 2011; or
(3) Information that is withdrawn
during the 14-calendar day waiting pe-
riod by the Federal Government offi-
cial.
(c) Nothing in this section may be
construed as requiring the publication
of information otherwise exempt under
the Freedom of Information Act (5
U.S.C 552), or controlled unclassified
information pursuant to Executive
Order 13556.
§200.213 Reporting a determination
that a non-Federal entity is not
qualified for a Federal award.
(a) If a Federal awarding agency does
not make a Federal award to a non-
Federal entity because the official de-
termines that the non-Federal entity
does not meet either or both of the
minimum qualification standards as
described in §200.206(a)(2), the Federal
awarding agency must report that de-
termination to the designated integ-
rity and performance system accessible
through SAM (currently FAPIIS), only
if all of the following apply:
(1) The only basis for the determina-
tion described in this paragraph (a) is
the non-Federal entity’s prior record of
executing programs or activities under
Federal awards or its record of integ-
rity and business ethics, as described in
§200.206(a)(2) (i.e., the entity was deter-
mined to be qualified based on all fac-
tors other than those two standards);
and
(2) The total Federal share of the
Federal award that otherwise would be
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2 CFR Ch. II (1–1–22 Edition) §200.214
made to the non-Federal entity is ex-
pected to exceed the simplified acquisi-
tion threshold over the period of per-
formance.
(b) The Federal awarding agency is
not required to report a determination
that a non-Federal entity is not quali-
fied for a Federal award if they make
the Federal award to the non-Federal
entity and include specific award terms
and conditions, as described in §200.208.
(c) If a Federal awarding agency re-
ports a determination that a non-Fed-
eral entity is not qualified for a Fed-
eral award, as described in paragraph
(a) of this section, the Federal award-
ing agency also must notify the non-
Federal entity that—
(1) The determination was made and
reported to the designated integrity
and performance system accessible
through SAM, and include with the no-
tification an explanation of the basis
for the determination;
(2) The information will be kept in
the system for a period of five years
from the date of the determination, as
required by section 872 of Public Law
110–417, as amended (41 U.S.C. 2313),
then archived;
(3) Each Federal awarding agency
that considers making a Federal award
to the non-Federal entity during that
five year period must consider that in-
formation in judging whether the non-
Federal entity is qualified to receive
the Federal award when the total Fed-
eral share of the Federal award is ex-
pected to include an amount of Federal
funding in excess of the simplified ac-
quisition threshold over the period of
performance;
(4) The non-Federal entity may go to
the awardee integrity and performance
portal accessible through SAM (cur-
rently the Contractor Performance As-
sessment Reporting System (CPARS))
and comment on any information the
system contains about the non-Federal
entity itself; and
(5) Federal awarding agencies will
consider that non-Federal entity’s
comments in determining whether the
non-Federal entity is qualified for a fu-
ture Federal award.
(d) If a Federal awarding agency en-
ters information into the designated
integrity and performance system ac-
cessible through SAM about a deter-
mination that a non-Federal entity is
not qualified for a Federal award and
subsequently:
(1) Learns that any of that informa-
tion is erroneous, the Federal awarding
agency must correct the information in
the system within three business days;
and
(2) Obtains an update to that infor-
mation that could be helpful to other
Federal awarding agencies, the Federal
awarding agency is strongly encour-
aged to amend the information in the
system to incorporate the update in a
timely way.
(e) Federal awarding agencies must
not post any information that will be
made publicly available in the non-
public segment of designated integrity
and performance system that is cov-
ered by a disclosure exemption under
the Freedom of Information Act. If the
recipient asserts within seven calendar
days to the Federal awarding agency
that posted the information that some
or all of the information made publicly
available is covered by a disclosure ex-
emption under the Freedom of Infor-
mation Act, the Federal awarding
agency that posted the information
must remove the posting within seven
calendar days of receiving the asser-
tion. Prior to reposting the releasable
information, the Federal awarding
agency must resolve the issue in ac-
cordance with the agency’s Freedom of
Information Act procedures.
§200.214 Suspension and debarment.
Non-Federal entities are subject to
the non-procurement debarment and
suspension regulations implementing
Executive Orders 12549 and 12689, 2 CFR
part 180. The regulations in 2 CFR part
180 restrict awards, subawards, and
contracts with certain parties that are
debarred, suspended, or otherwise ex-
cluded from or ineligible for participa-
tion in Federal assistance programs or
activities.
§200.215 Never contract with the
enemy.
Federal awarding agencies and re-
cipients are subject to the regulations
implementing Never Contract with the
Enemy in 2 CFR part 183. The regula-
tions in 2 CFR part 183 affect covered
contracts, grants and cooperative
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OMB Guidance §200.300
agreements that are expected to exceed
$50,000 within the period of perform-
ance, are performed outside the United
States and its territories, and are in
support of a contingency operation in
which members of the Armed Forces
are actively engaged in hostilities.
§200.216 Prohibition on certain tele-
communications and video surveil-
lance services or equipment.
(a) Recipients and subrecipients are
prohibited from obligating or expend-
ing loan or grant funds to:
(1) Procure or obtain;
(2) Extend or renew a contract to pro-
cure or obtain; or
(3) Enter into a contract (or extend
or renew a contract) to procure or ob-
tain equipment, services, or systems
that uses covered telecommunications
equipment or services as a substantial
or essential component of any system,
or as critical technology as part of any
system. As described in Public Law
115–232, section 889, covered tele-
communications equipment is tele-
communications equipment produced
by Huawei Technologies Company or
ZTE Corporation (or any subsidiary or
affiliate of such entities).
(i) For the purpose of public safety,
security of government facilities, phys-
ical security surveillance of critical in-
frastructure, and other national secu-
rity purposes, video surveillance and
telecommunications equipment pro-
duced by Hytera Communications Cor-
poration, Hangzhou Hikvision Digital
Technology Company, or Dahua Tech-
nology Company (or any subsidiary or
affiliate of such entities).
(ii) Telecommunications or video sur-
veillance services provided by such en-
tities or using such equipment.
(iii) Telecommunications or video
surveillance equipment or services pro-
duced or provided by an entity that the
Secretary of Defense, in consultation
with the Director of the National Intel-
ligence or the Director of the Federal
Bureau of Investigation, reasonably be-
lieves to be an entity owned or con-
trolled by, or otherwise connected to,
the government of a covered foreign
country.
(b) In implementing the prohibition
under Public Law 115–232, section 889,
subsection (f), paragraph (1), heads of
executive agencies administering loan,
grant, or subsidy programs shall
prioritize available funding and tech-
nical support to assist affected busi-
nesses, institutions and organizations
as is reasonably necessary for those af-
fected entities to transition from cov-
ered communications equipment and
services, to procure replacement equip-
ment and services, and to ensure that
communications service to users and
customers is sustained.
(c) See Public Law 115–232, section 889
for additional information.
(d) See also §200.471.
Subpart D—Post Federal Award
Requirements
SOURCE: 85 FR 49543, Aug. 13, 2020, unless
otherwise noted.
§200.300 Statutory and national policy
requirements.
(a) The Federal awarding agency
must manage and administer the Fed-
eral award in a manner so as to ensure
that Federal funding is expended and
associated programs are implemented
in full accordance with the U.S. Con-
stitution, Federal Law, and public pol-
icy requirements: Including, but not
limited to, those protecting free
speech, religious liberty, public wel-
fare, the environment, and prohibiting
discrimination. The Federal awarding
agency must communicate to the non-
Federal entity all relevant public pol-
icy requirements, including those in
general appropriations provisions, and
incorporate them either directly or by
reference in the terms and conditions
of the Federal award.
(b) The non-Federal entity is respon-
sible for complying with all require-
ments of the Federal award. For all
Federal awards, this includes the provi-
sions of FFATA, which includes re-
quirements on executive compensation,
and also requirements implementing
the Act for the non-Federal entity at 2
CFR parts 25 and 170. See also statu-
tory requirements for whistleblower
protections at 10 U.S.C. 2409, 41 U.S.C.
4712, and 10 U.S.C. 2324, 41 U.S.C. 4304
and 4310.
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2 CFR Ch. II (1–1–22 Edition) §200.301
§200.301 Performance measurement.
(a) The Federal awarding agency
must measure the recipient’s perform-
ance to show achievement of program
goals and objectives, share lessons
learned, improve program outcomes,
and foster adoption of promising prac-
tices. Program goals and objectives
should be derived from program plan-
ning and design. See §200.202 for more
information. Where appropriate, the
Federal award may include specific
program goals, indicators, targets,
baseline data, data collection, or ex-
pected outcomes (such as outputs, or
services performance or public impacts
of any of these) with an expected
timeline for accomplishment. Where
applicable, this should also include any
performance measures or independent
sources of data that may be used to
measure progress. The Federal award-
ing agency will determine how per-
formance progress is measured, which
may differ by program. Performance
measurement progress must be both
measured and reported. See §200.329 for
more information on monitoring pro-
gram performance. The Federal award-
ing agency may include program-spe-
cific requirements, as applicable. These
requirements must be aligned, to the
extent permitted by law, with the Fed-
eral awarding agency strategic goals,
strategic objectives or performance
goals that are relevant to the program.
See also OMB Circular A–11, Prepara-
tion, Submission, and Execution of the
Budget Part 6.
(b) The Federal awarding agency
should provide recipients with clear
performance goals, indicators, targets,
and baseline data as described in
§200.211. Performance reporting fre-
quency and content should be estab-
lished to not only allow the Federal
awarding agency to understand the re-
cipient progress but also to facilitate
identification of promising practices
among recipients and build the evi-
dence upon which the Federal awarding
agency’s program and performance de-
cisions are made. See §200.328 for more
information on reporting program per-
formance.
(c) This provision is designed to oper-
ate in tandem with evidence-related
statutes (e.g.; The Foundations for Evi-
dence-Based Policymaking Act of 2018,
which emphasizes collaboration and co-
ordination to advance data and evi-
dence-building functions in the Federal
government). The Federal awarding
agency should also specify any require-
ments of award recipients’ participa-
tion in a federally funded evaluation,
and any evaluation activities required
to be conducted by the Federal award.
§200.302 Financial management.
(a) Each state must expend and ac-
count for the Federal award in accord-
ance with state laws and procedures for
expending and accounting for the
state’s own funds. In addition, the
state’s and the other non-Federal enti-
ty’s financial management systems, in-
cluding records documenting compli-
ance with Federal statutes, regula-
tions, and the terms and conditions of
the Federal award, must be sufficient
to permit the preparation of reports re-
quired by general and program-specific
terms and conditions; and the tracing
of funds to a level of expenditures ade-
quate to establish that such funds have
been used according to the Federal
statutes, regulations, and the terms
and conditions of the Federal award.
See also §200.450.
(b) The financial management sys-
tem of each non-Federal entity must
provide for the following (see also
§§200.334, 200.335, 200.336, and 200.337):
(1) Identification, in its accounts, of
all Federal awards received and ex-
pended and the Federal programs under
which they were received. Federal pro-
gram and Federal award identification
must include, as applicable, the Assist-
ance Listings title and number, Fed-
eral award identification number and
year, name of the Federal agency, and
name of the pass-through entity, if
any.
(2) Accurate, current, and complete
disclosure of the financial results of
each Federal award or program in ac-
cordance with the reporting require-
ments set forth in §§200.328 and 200.329.
If a Federal awarding agency requires
reporting on an accrual basis from a re-
cipient that maintains its records on
other than an accrual basis, the recipi-
ent must not be required to establish
an accrual accounting system. This re-
cipient may develop accrual data for
its reports on the basis of an analysis
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OMB Guidance §200.305
of the documentation on hand. Simi-
larly, a pass-through entity must not
require a subrecipient to establish an
accrual accounting system and must
allow the subrecipient to develop ac-
crual data for its reports on the basis
of an analysis of the documentation on
hand.
(3) Records that identify adequately
the source and application of funds for
federally-funded activities. These
records must contain information per-
taining to Federal awards, authoriza-
tions, financial obligations, unobli-
gated balances, assets, expenditures,
income and interest and be supported
by source documentation.
(4) Effective control over, and ac-
countability for, all funds, property,
and other assets. The non-Federal enti-
ty must adequately safeguard all assets
and assure that they are used solely for
authorized purposes. See §200.303.
(5) Comparison of expenditures with
budget amounts for each Federal
award.
(6) Written procedures to implement
the requirements of §200.305.
(7) Written procedures for deter-
mining the allowability of costs in ac-
cordance with subpart E of this part
and the terms and conditions of the
Federal award.
§200.303 Internal controls.
The non-Federal entity must:
(a) Establish and maintain effective
internal control over the Federal
award that provides reasonable assur-
ance that the non-Federal entity is
managing the Federal award in compli-
ance with Federal statutes, regula-
tions, and the terms and conditions of
the Federal award. These internal con-
trols should be in compliance with
guidance in ‘‘Standards for Internal
Control in the Federal Government’’
issued by the Comptroller General of
the United States or the ‘‘Internal Con-
trol Integrated Framework’’, issued by
the Committee of Sponsoring Organiza-
tions of the Treadway Commission
(COSO).
(b) Comply with the U.S. Constitu-
tion, Federal statutes, regulations, and
the terms and conditions of the Federal
awards.
(c) Evaluate and monitor the non-
Federal entity’s compliance with stat-
utes, regulations and the terms and
conditions of Federal awards.
(d) Take prompt action when in-
stances of noncompliance are identified
including noncompliance identified in
audit findings.
(e) Take reasonable measures to safe-
guard protected personally identifiable
information and other information the
Federal awarding agency or pass-
through entity designates as sensitive
or the non-Federal entity considers
sensitive consistent with applicable
Federal, State, local, and tribal laws
regarding privacy and responsibility
over confidentiality.
§200.304 Bonds.
The Federal awarding agency may in-
clude a provision on bonding, insur-
ance, or both in the following cir-
cumstances:
(a) Where the Federal Government
guarantees or insures the repayment of
money borrowed by the recipient, the
Federal awarding agency, at its discre-
tion, may require adequate bonding
and insurance if the bonding and insur-
ance requirements of the non-Federal
entity are not deemed adequate to pro-
tect the interest of the Federal Govern-
ment.
(b) The Federal awarding agency may
require adequate fidelity bond coverage
where the non-Federal entity lacks suf-
ficient coverage to protect the Federal
Government’s interest.
(c) Where bonds are required in the
situations described above, the bonds
must be obtained from companies hold-
ing certificates of authority as accept-
able sureties, as prescribed in 31 CFR
part 223.
§200.305 Federal payment.
(a) For states, payments are gov-
erned by Treasury-State Cash Manage-
ment Improvement Act (CMIA) agree-
ments and default procedures codified
at 31 CFR part 205 and Treasury Finan-
cial Manual (TFM) 4A–2000, ‘‘Overall
Disbursing Rules for All Federal Agen-
cies’’.
(b) For non-Federal entities other
than states, payments methods must
minimize the time elapsing between
the transfer of funds from the United
States Treasury or the pass-through
entity and the disbursement by the
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2 CFR Ch. II (1–1–22 Edition) §200.305
non-Federal entity whether the pay-
ment is made by electronic funds
transfer, or issuance or redemption of
checks, warrants, or payment by other
means. See also §200.302(b)(6). Except
as noted elsewhere in this part, Federal
agencies must require recipients to use
only OMB-approved, governmentwide
information collection requests to re-
quest payment.
(1) The non-Federal entity must be
paid in advance, provided it maintains
or demonstrates the willingness to
maintain both written procedures that
minimize the time elapsing between
the transfer of funds and disbursement
by the non-Federal entity, and finan-
cial management systems that meet
the standards for fund control and ac-
countability as established in this part.
Advance payments to a non-Federal en-
tity must be limited to the minimum
amounts needed and be timed to be in
accordance with the actual, immediate
cash requirements of the non-Federal
entity in carrying out the purpose of
the approved program or project. The
timing and amount of advance pay-
ments must be as close as is adminis-
tratively feasible to the actual dis-
bursements by the non-Federal entity
for direct program or project costs and
the proportionate share of any allow-
able indirect costs. The non-Federal
entity must make timely payment to
contractors in accordance with the
contract provisions.
(2) Whenever possible, advance pay-
ments must be consolidated to cover
anticipated cash needs for all Federal
awards made by the Federal awarding
agency to the recipient.
(i) Advance payment mechanisms in-
clude, but are not limited to, Treasury
check and electronic funds transfer and
must comply with applicable guidance
in 31 CFR part 208.
(ii) Non-Federal entities must be au-
thorized to submit requests for advance
payments and reimbursements at least
monthly when electronic fund transfers
are not used, and as often as they like
when electronic transfers are used, in
accordance with the provisions of the
Electronic Fund Transfer Act (15
U.S.C. 1693–1693r).
(3) Reimbursement is the preferred
method when the requirements in this
paragraph (b) cannot be met, when the
Federal awarding agency sets a specific
condition per §200.208, or when the non-
Federal entity requests payment by re-
imbursement. This method may be
used on any Federal award for con-
struction, or if the major portion of the
construction project is accomplished
through private market financing or
Federal loans, and the Federal award
constitutes a minor portion of the
project. When the reimbursement
method is used, the Federal awarding
agency or pass-through entity must
make payment within 30 calendar days
after receipt of the billing, unless the
Federal awarding agency or pass-
through entity reasonably believes the
request to be improper.
(4) If the non-Federal entity cannot
meet the criteria for advance payments
and the Federal awarding agency or
pass-through entity has determined
that reimbursement is not feasible be-
cause the non-Federal entity lacks suf-
ficient working capital, the Federal
awarding agency or pass-through enti-
ty may provide cash on a working cap-
ital advance basis. Under this proce-
dure, the Federal awarding agency or
pass-through entity must advance cash
payments to the non-Federal entity to
cover its estimated disbursement needs
for an initial period generally geared
to the non-Federal entity’s disbursing
cycle. Thereafter, the Federal award-
ing agency or pass-through entity must
reimburse the non-Federal entity for
its actual cash disbursements. Use of
the working capital advance method of
payment requires that the pass-
through entity provide timely advance
payments to any subrecipients in order
to meet the subrecipient’s actual cash
disbursements. The working capital ad-
vance method of payment must not be
used by the pass-through entity if the
reason for using this method is the un-
willingness or inability of the pass-
through entity to provide timely ad-
vance payments to the subrecipient to
meet the subrecipient’s actual cash dis-
bursements.
(5) To the extent available, the non-
Federal entity must disburse funds
available from program income (in-
cluding repayments to a revolving
fund), rebates, refunds, contract settle-
ments, audit recoveries, and interest
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OMB Guidance §200.305
earned on such funds before requesting
additional cash payments.
(6) Unless otherwise required by Fed-
eral statutes, payments for allowable
costs by non-Federal entities must not
be withheld at any time during the pe-
riod of performance unless the condi-
tions of §200.208, subpart D of this part,
including §200.339, or one or more of
the following applies:
(i) The non-Federal entity has failed
to comply with the project objectives,
Federal statutes, regulations, or the
terms and conditions of the Federal
award.
(ii) The non-Federal entity is delin-
quent in a debt to the United States as
defined in OMB Circular A–129, ‘‘Poli-
cies for Federal Credit Programs and
Non-Tax Receivables.’’ Under such con-
ditions, the Federal awarding agency
or pass-through entity may, upon rea-
sonable notice, inform the non-Federal
entity that payments must not be
made for financial obligations incurred
after a specified date until the condi-
tions are corrected or the indebtedness
to the Federal Government is liq-
uidated.
(iii) A payment withheld for failure
to comply with Federal award condi-
tions, but without suspension of the
Federal award, must be released to the
non-Federal entity upon subsequent
compliance. When a Federal award is
suspended, payment adjustments will
be made in accordance with §200.343.
(iv) A payment must not be made to
a non-Federal entity for amounts that
are withheld by the non-Federal entity
from payment to contractors to assure
satisfactory completion of work. A
payment must be made when the non-
Federal entity actually disburses the
withheld funds to the contractors or to
escrow accounts established to assure
satisfactory completion of work.
(7) Standards governing the use of
banks and other institutions as deposi-
tories of advance payments under Fed-
eral awards are as follows.
(i) The Federal awarding agency and
pass-through entity must not require
separate depository accounts for funds
provided to a non-Federal entity or es-
tablish any eligibility requirements for
depositories for funds provided to the
non-Federal entity. However, the non-
Federal entity must be able to account
for funds received, obligated, and ex-
pended.
(ii) Advance payments of Federal
funds must be deposited and main-
tained in insured accounts whenever
possible.
(8) The non-Federal entity must
maintain advance payments of Federal
awards in interest-bearing accounts,
unless the following apply:
(i) The non-Federal entity receives
less than $250,000 in Federal awards per
year.
(ii) The best reasonably available in-
terest-bearing account would not be ex-
pected to earn interest in excess of $500
per year on Federal cash balances.
(iii) 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.
(iv) A foreign government or banking
system prohibits or precludes interest-
bearing accounts.
(9) Interest earned amounts up to $500
per year may be retained by the non-
Federal entity for administrative ex-
pense. Any additional interest earned
on Federal advance payments deposited
in interest-bearing accounts must be
remitted annually to the Department
of Health and Human Services Pay-
ment Management System (PMS)
through an electronic medium using ei-
ther Automated Clearing House (ACH)
network or a Fedwire Funds Service
payment.
(i) For returning interest on Federal
awards paid through PMS, the refund
should:
(A) Provide an explanation stating
that the refund is for interest;
(B) List the PMS Payee Account
Number(s) (PANs);
(C) List the Federal award number(s)
for which the interest was earned; and
(D) Make returns payable to: Depart-
ment of Health and Human Services.
(ii) For returning interest on Federal
awards not paid through PMS, the re-
fund should:
(A) Provide an explanation stating
that the refund is for interest;
(B) Include the name of the awarding
agency;
(C) List the Federal award number(s)
for which the interest was earned; and
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2 CFR Ch. II (1–1–22 Edition) §200.306
(D) Make returns payable to: Depart-
ment of Health and Human Services.
(10) Funds, principal, and excess cash
returns must be directed to the origi-
nal Federal agency payment system.
The non-Federal entity should review
instructions from the original Federal
agency payment system. Returns
should include the following informa-
tion:
(i) Payee Account Number (PAN), if
the payment originated from PMS, or
Agency information to indicate whom
to credit the funding if the payment
originated from ASAP, NSF, or an-
other Federal agency payment system.
(ii) PMS document number and sub-
account(s), if the payment originated
from PMS, or relevant account num-
bers if the payment originated from an-
other Federal agency payment system.
(iii) The reason for the return (e.g.,
excess cash, funds not spent, interest,
part interest part other, etc.)
(11) When returning funds or interest
to PMS you must include the following
as applicable:
(i) For ACH Returns:
Routing Number: 051036706
Account number: 303000
Bank Name and Location: Credit Gate-
way—ACH Receiver St. Paul, MN
(ii) For Fedwire Returns 1:
Routing Number: 021030004
Account number: 75010501
Bank Name and Location: Federal Re-
serve Bank Treas NYC/Funds Trans-
fer Division New York, NY
1 Please note that the organization
initiating payment is likely to incur a
charge from their Financial Institution
for this type of payment.
(iii) For International ACH Returns:
Beneficiary Account: Federal Reserve
Bank of New York/ITS (FRBNY/ITS)
Bank: Citibank N.A. (New York)
Swift Code: CITIUS33
Account Number: 36838868
Bank Address: 388 Greenwich Street,
New York, NY 10013 USA
Payment Details (Line 70): Agency Lo-
cator Code (ALC): 75010501
Name (abbreviated when possible) and
ALC Agency POC
(iv) For recipients that do not have
electronic remittance capability,
please make check 2 payable to: ‘‘The
Department of Health and Human
Services.’’
Mail Check to Treasury approved
lockbox:
HHS Program Support Center, P.O.
Box 530231, Atlanta, GA 30353–0231
2 Please allow 4–6 weeks for proc-
essing of a payment by check to be ap-
plied to the appropriate PMS account.
(v) Questions can be directed to PMS
at 877–614–5533 or
PMSSupport@psc.hhs.gov.
§200.306 Cost sharing or matching.
(a) Under Federal research proposals,
voluntary committed cost sharing is
not expected. It cannot be used as a
factor during the merit review of appli-
cations or proposals, but may be con-
sidered if it is both in accordance with
Federal awarding agency regulations
and specified in a notice of funding op-
portunity. Criteria for considering vol-
untary committed cost sharing and
any other program policy factors that
may be used to determine who may re-
ceive a Federal award must be explic-
itly described in the notice of funding
opportunity. See also §§200.414 and
200.204 and appendix I to this part.
(b) For all Federal awards, any
shared costs or matching funds and all
contributions, including cash and
third-party in-kind contributions,
must be accepted as part of the non-
Federal entity’s cost sharing or match-
ing when such contributions meet all
of the following criteria:
(1) Are verifiable from the non-Fed-
eral entity’s records;
(2) Are not included as contributions
for any other Federal award;
(3) Are necessary and reasonable for
accomplishment of project or program
objectives;
(4) Are allowable under subpart E of
this part;
(5) Are not paid by the Federal Gov-
ernment under another Federal award,
except where the Federal statute au-
thorizing a program specifically pro-
vides that Federal funds made avail-
able for such program can be applied to
matching or cost sharing requirements
of other Federal programs;
(6) Are provided for in the approved
budget when required by the Federal
awarding agency; and
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OMB Guidance §200.306
(7) Conform to other provisions of
this part, as applicable.
(c) Unrecovered indirect costs, in-
cluding indirect costs on cost sharing
or matching may be included as part of
cost sharing or matching only with the
prior approval of the Federal awarding
agency. Unrecovered indirect cost
means the difference between the
amount charged to the Federal award
and the amount which could have been
charged to the Federal award under the
non-Federal entity’s approved nego-
tiated indirect cost rate.
(d) Values for non-Federal entity
contributions of services and property
must be established in accordance with
the cost principles in subpart E of this
part. If a Federal awarding agency au-
thorizes the non-Federal entity to do-
nate buildings or land for construction/
facilities acquisition projects or long-
term use, the value of the donated
property for cost sharing or matching
must be the lesser of paragraph (d)(1)
or (2) of this section.
(1) The value of the remaining life of
the property recorded in the non-Fed-
eral entity’s accounting records at the
time of donation.
(2) The current fair market value.
However, when there is sufficient jus-
tification, the Federal awarding agen-
cy may approve the use of the current
fair market value of the donated prop-
erty, even if it exceeds the value de-
scribed in paragraph (d)(1) of this sec-
tion at the time of donation.
(e) Volunteer services furnished by
third-party 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 third-party volunteer serv-
ices must be consistent with those paid
for similar work by the non-Federal en-
tity. In those instances in which the
required skills are not found in the
non-Federal entity, rates must be con-
sistent with those paid for similar
work in the labor market in which the
non-Federal entity competes for the
kind of services involved. In either
case, paid fringe benefits that are rea-
sonable, necessary, allocable, and oth-
erwise allowable may be included in
the valuation.
(f) When a third-party organization
furnishes the services of an employee,
these services must be valued at the
employee’s regular rate of pay plus an
amount of fringe benefits that is rea-
sonable, necessary, allocable, and oth-
erwise allowable, and indirect costs at
either the third-party organization’s
approved federally-negotiated indirect
cost rate or, a rate in accordance with
§200.414(d) provided these services em-
ploy the same skill(s) for which the
employee is normally paid. Where do-
nated services are treated as indirect
costs, indirect cost rates will separate
the value of the donated services so
that reimbursement for the donated
services will not be made.
(g) Donated property from third par-
ties may include such items as equip-
ment, office supplies, laboratory sup-
plies, or workshop and classroom sup-
plies. Value assessed to donated prop-
erty included in the cost sharing or
matching share must not exceed the
fair market value of the property at
the time of the donation.
(h) The method used for determining
cost sharing or matching for third-
party-donated equipment, buildings
and land for which title passes to the
non-Federal entity may differ accord-
ing to the purpose of the Federal
award, if paragraph (h)(1) or (2) of this
section applies.
(1) If the purpose of the Federal
award is to assist the non-Federal enti-
ty in the acquisition of equipment,
buildings or land, the aggregate value
of the donated property may be
claimed as cost sharing or matching.
(2) If the purpose of the Federal
award is to support activities that re-
quire the use of equipment, buildings
or land, normally only depreciation
charges for equipment and buildings
may be made. However, the fair market
value of equipment or other capital as-
sets and fair rental charges for land
may be allowed, provided that the Fed-
eral awarding agency has approved the
charges. See also §200.420.
(i) The value of donated property
must be determined in accordance with
the usual accounting policies of the
non-Federal entity, with the following
qualifications:
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2 CFR Ch. II (1–1–22 Edition) §200.307
(1) The value of donated land and
buildings must not exceed its fair mar-
ket value at the time of donation to
the non-Federal entity as established
by an independent appraiser (e.g., cer-
tified real property appraiser or Gen-
eral Services Administration rep-
resentative) and certified by a respon-
sible official of the non-Federal entity
as required by the Uniform Relocation
Assistance and Real Property Acquisi-
tion Policies Act of 1970, as amended,
(42 U.S.C. 4601–4655) (Uniform Act) ex-
cept as provided in the implementing
regulations at 49 CFR part 24, ‘‘Uni-
form Relocation Assistance And Real
Property Acquisition For Federal And
Federally-Assisted Programs’’.
(2) The value of donated equipment
must not exceed the fair market value
of equipment of the same age and con-
dition at the time of donation.
(3) The value of donated space must
not exceed the fair rental value of com-
parable space as established by an inde-
pendent appraisal of comparable space
and facilities in a privately-owned
building in the same locality.
(4) The value of loaned equipment
must not exceed its fair rental value.
(j) For third-party in-kind contribu-
tions, the fair market value of goods
and services must be documented and
to the extent feasible supported by the
same methods used internally by the
non-Federal entity.
(k) For IHEs, see also OMB memo-
randum M–01–06, dated January 5, 2001,
Clarification of OMB A–21 Treatment
of Voluntary Uncommitted Cost Shar-
ing and Tuition Remission Costs.
§200.307 Program income.
(a) General. Non-Federal entities are
encouraged to earn income to defray
program costs where appropriate.
(b) Cost of generating program income.
If authorized by Federal regulations or
the Federal award, costs incidental to
the generation of program income may
be deducted from gross income to de-
termine program income, provided
these costs have not been charged to
the Federal award.
(c) Governmental revenues. Taxes, spe-
cial assessments, levies, fines, and
other such revenues raised by a non-
Federal entity are not program income
unless the revenues are specifically
identified in the Federal award or Fed-
eral awarding agency regulations as
program income.
(d) Property. Proceeds from the sale
of real property, equipment, or supplies
are not program income; such proceeds
will be handled in accordance with the
requirements of the Property Stand-
ards §§200.311, 200.313, and 200.314, or as
specifically identified in Federal stat-
utes, regulations, or the terms and con-
ditions of the Federal award.
(e) Use of program income. If the Fed-
eral awarding agency does not specify
in its regulations or the terms and con-
ditions of the Federal award, or give
prior approval for how program income
is to be used, paragraph (e)(1) of this
section must apply. For Federal awards
made to IHEs and nonprofit research
institutions, if the Federal awarding
agency does not specify in its regula-
tions or the terms and conditions of
the Federal award how program income
is to be used, paragraph (e)(2) of this
section must apply. In specifying alter-
natives to paragraphs (e)(1) and (2) of
this section, the Federal awarding
agency may distinguish between in-
come earned by the recipient and in-
come earned by subrecipients and be-
tween the sources, kinds, or amounts
of income. When the Federal awarding
agency authorizes the approaches in
paragraphs (e)(2) and (3) of this section,
program income in excess of any
amounts specified must also be de-
ducted from expenditures.
(1) Deduction. Ordinarily program in-
come must be deducted from total al-
lowable costs to determine the net al-
lowable costs. Program income must be
used for current costs unless the Fed-
eral awarding agency authorizes other-
wise. Program income that the non-
Federal entity did not anticipate at the
time of the Federal award must be used
to reduce the Federal award and non-
Federal entity contributions rather
than to increase the funds committed
to the project.
(2) Addition. With prior approval of
the Federal awarding agency (except
for IHEs and nonprofit research insti-
tutions, as described in this paragraph
(e)) program income may be added to
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OMB Guidance §200.308
the Federal award by the Federal agen-
cy and the non-Federal entity. The pro-
gram income must be used for the pur-
poses and under the conditions of the
Federal award.
(3) Cost sharing or matching. With
prior approval of the Federal awarding
agency, program income may be used
to meet the cost sharing or matching
requirement of the Federal award. The
amount of the Federal award remains
the same.
(f) Income after the period of perform-
ance. There are no Federal require-
ments governing the disposition of in-
come earned after the end of the period
of performance for the Federal award,
unless the Federal awarding agency
regulations or the terms and condi-
tions of the Federal award provide oth-
erwise. The Federal awarding agency
may negotiate agreements with recipi-
ents regarding appropriate uses of in-
come earned after the period of per-
formance as part of the grant closeout
process. See also §200.344.
(g) License fees and royalties. Unless
the Federal statute, regulations, or
terms and conditions for the Federal
award provide otherwise, the non-Fed-
eral entity is not accountable to the
Federal awarding agency with respect
to program income earned from license
fees and royalties for copyrighted ma-
terial, patents, patent applications,
trademarks, and inventions made
under a Federal award to which 37 CFR
part 401 is applicable.
§200.308 Revision of budget and pro-
gram plans.
(a) The approved budget for the Fed-
eral award summarizes the financial
aspects of the project or program as ap-
proved during the Federal award proc-
ess. It may include either the Federal
and non-Federal share (see definition
for Federal share in §200.1) or only the
Federal share, depending upon Federal
awarding agency requirements. The
budget and program plans include con-
siderations for performance and pro-
gram evaluation purposes whenever re-
quired in accordance with the terms
and conditions of the award.
(b) Recipients are required to report
deviations from budget or project scope
or objective, and request prior approv-
als from Federal awarding agencies for
budget and program plan revisions, in
accordance with this section.
(c) For non-construction Federal
awards, recipients must request prior
approvals from Federal awarding agen-
cies for the following program or budg-
et-related reasons:
(1) Change in the scope or the objec-
tive of the project or program (even if
there is no associated budget revision
requiring prior written approval).
(2) Change in a key person specified
in the application or the Federal
award.
(3) The disengagement from the
project 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 inclusion, unless waived by
the Federal awarding agency, of costs
that require prior approval in accord-
ance with subpart E of this part as ap-
plicable.
(5) The transfer of funds budgeted for
participant support costs to other cat-
egories of expense.
(6) Unless described in the applica-
tion and funded in the approved Fed-
eral awards, the subawarding, transfer-
ring or contracting out of any work
under a Federal award, including fixed
amount subawards as described in
§200.333. This provision does not apply
to the acquisition of supplies, material,
equipment or general support services.
(7) Changes in the approved cost-
sharing or matching provided by the
non-Federal entity.
(8) The need arises for additional
Federal funds to complete the project.
(d) No other prior approval require-
ments for specific items may be im-
posed unless an exception has been ap-
proved by OMB. See also §§200.102 and
200.407.
(e) Except for requirements listed in
paragraphs (c)(1) through (8) of this
section, the Federal awarding agency is
authorized, at its option, to waive
other cost-related and administrative
prior written approvals contained in
subparts D and E of this part. Such
waivers may include authorizing re-
cipients to do any one or more of the
following:
(1) Incur project costs 90 calendar
days before the Federal awarding agen-
cy makes the Federal award. Expenses
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2 CFR Ch. II (1–1–22 Edition) §200.308
more than 90 calendar days pre-award
require prior approval of the Federal
awarding agency. All costs incurred be-
fore the Federal awarding agency
makes the Federal award are at the re-
cipient’s risk (i.e., the Federal award-
ing agency is not required to reimburse
such costs if for any reason the recipi-
ent does not receive a Federal award or
if the Federal award is less than antici-
pated and inadequate to cover such
costs). See also §200.458.
(2) Initiate a one-time extension of
the period of performance by up to 12
months unless one or more of the con-
ditions outlined in paragraphs (e)(2)(i)
through (iii) of this section apply. For
one-time extensions, the recipient
must notify the Federal awarding
agency in writing with the supporting
reasons and revised period of perform-
ance at least 10 calendar days before
the end of the period of performance
specified in the Federal award. This
one-time extension must not be exer-
cised merely for the purpose of using
unobligated balances. Extensions re-
quire explicit prior Federal awarding
agency approval when:
(i) The terms and conditions of the
Federal award prohibit the extension.
(ii) The extension requires additional
Federal funds.
(iii) The extension involves any
change in the approved objectives or
scope of the project.
(3) Carry forward unobligated bal-
ances to subsequent budget periods.
(4) For Federal awards that support
research, unless the Federal awarding
agency provides otherwise in the Fed-
eral award or in the Federal awarding
agency’s regulations, the prior ap-
proval requirements described in this
paragraph (e) are automatically waived
(i.e., recipients need not obtain such
prior approvals) unless one of the con-
ditions included in paragraph (e)(2) of
this section 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 Federal awards in which the Fed-
eral share of the project exceeds the
simplified acquisition threshold and
the cumulative amount of such trans-
fers exceeds or is expected to exceed 10
percent of the total budget as last ap-
proved by the Federal awarding agen-
cy. The Federal awarding agency can-
not permit a transfer that would cause
any Federal appropriation to be used
for purposes other than those con-
sistent with the appropriation.
(g) All other changes to non-con-
struction budgets, except for the
changes described in paragraph (c) of
this section, do not require prior ap-
proval (see also §200.407).
(h) For construction Federal awards,
the recipient must request prior writ-
ten approval promptly from the Fed-
eral awarding agency for budget revi-
sions whenever paragraph (h)(1), (2), or
(3) of this section applies:
(1) The revision results from changes
in the scope or the objective of the
project or program.
(2) The need arises for additional
Federal funds to complete the project.
(3) A revision is desired which in-
volves specific costs for which prior
written approval requirements may be
imposed consistent with applicable
OMB cost principles listed in subpart
E.
(4) No other prior approval require-
ments for budget revisions may be im-
posed unless an exception has been ap-
proved by OMB.
(5) When a Federal awarding agency
makes a Federal award that provides
support for construction and non-con-
struction work, the Federal awarding
agency may require the recipient to ob-
tain prior approval from the Federal
awarding agency before making any
fund or budget transfers between the
two types of work supported.
(i) When requesting approval for
budget revisions, the recipient must
use the same format for budget infor-
mation that was used in the applica-
tion, unless the Federal awarding agen-
cy indicates a letter of request suffices.
(j) Within 30 calendar days from the
date of receipt of the request for budg-
et revisions, the Federal awarding
agency must review the request and
notify the recipient whether the budget
revisions have been approved. If the re-
vision is still under consideration at
the end of 30 calendar days, the Federal
awarding agency must inform the re-
cipient in writing of the date when the
recipient may expect the decision.
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OMB Guidance §200.312
§200.309 Modifications to Period of
Performance.
If a Federal awarding agency or pass-
through entity approves an extension,
or if a recipient extends under
§200.308(e)(2), the Period of Perform-
ance will be amended to end at the
completion of the extension. If a termi-
nation occurs, the Period of Perform-
ance will be amended to end upon the
effective date of termination. If a re-
newal award is issued, a distinct Period
of Performance will begin.
PROPERTY STANDARDS
§200.310 Insurance coverage.
The non-Federal entity must, at a
minimum, provide the equivalent in-
surance coverage for real property and
equipment acquired or improved with
Federal funds as provided to property
owned by the non-Federal entity. Fed-
erally-owned property need not be in-
sured unless required by the terms and
conditions of the Federal award.
§200.311 Real property.
(a) Title. Subject to the requirements
and conditions set forth in this section,
title to real property acquired or im-
proved under a Federal award will vest
upon acquisition in the non-Federal en-
tity.
(b) Use. Except as otherwise provided
by Federal statutes or by the Federal
awarding agency, real property will be
used for the originally authorized pur-
pose as long as needed for that purpose,
during which time the non-Federal en-
tity must not dispose of or encumber
its title or other interests.
(c) Disposition. When real property is
no longer needed for the originally au-
thorized purpose, the non-Federal enti-
ty must obtain disposition instructions
from the Federal awarding agency or
pass-through entity. The instructions
must provide for one of the following
alternatives:
(1) Retain title after compensating
the Federal awarding agency. The
amount paid to the Federal awarding
agency will be computed by applying
the Federal awarding agency’s percent-
age of participation in the cost of the
original purchase (and costs of any im-
provements) to the fair market value
of the property. However, in those situ-
ations where the non-Federal entity is
disposing of real property acquired or
improved with a Federal award and ac-
quiring replacement real property
under the same Federal award, the net
proceeds from the disposition may be
used as an offset to the cost of the re-
placement property.
(2) Sell the property and compensate
the Federal awarding agency. The
amount due to the Federal awarding
agency will be calculated by applying
the Federal awarding agency’s percent-
age of participation in the cost of the
original purchase (and cost of any im-
provements) to the proceeds of the sale
after deduction of any actual and rea-
sonable selling and fixing-up expenses.
If the Federal award has not been
closed out, the net proceeds from sale
may be offset against the original cost
of the property. When the non-Federal
entity is directed to sell property, sales
procedures must be followed that pro-
vide for competition to the extent
practicable and result in the highest
possible return.
(3) Transfer title to the Federal
awarding agency or to a third party
designated/approved by the Federal
awarding agency. The non-Federal en-
tity is entitled to be paid an amount
calculated by applying the non-Federal
entity’s percentage of participation in
the purchase of the real property (and
cost of any improvements) to the cur-
rent fair market value of the property.
§200.312 Federally-owned and exempt
property.
(a) Title to federally-owned property
remains vested in the Federal Govern-
ment. The non-Federal entity must
submit annually an inventory listing of
federally-owned property in its custody
to the Federal awarding agency. Upon
completion of the Federal award or
when the property is no longer needed,
the non-Federal entity must report the
property to the Federal awarding agen-
cy for further Federal agency utiliza-
tion.
(b) If the Federal awarding agency
has no further need for the property, it
must declare the property excess and
report it for disposal to the appropriate
Federal disposal authority, unless the
Federal awarding agency has statutory
authority to dispose of the property by
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2 CFR Ch. II (1–1–22 Edition) §200.313
alternative methods (e.g., the author-
ity provided by the Federal Technology
Transfer Act (15 U.S.C. 3710 (i)) to do-
nate research equipment to edu-
cational and nonprofit organizations in
accordance with Executive Order 12999,
‘‘Educational Technology: Ensuring
Opportunity for All Children in the
Next Century.’’). The Federal awarding
agency must issue appropriate instruc-
tions to the non-Federal entity.
(c) Exempt property means property
acquired under a Federal award where
the Federal awarding agency has cho-
sen to vest title to the property to the
non-Federal entity without further re-
sponsibility to the Federal Govern-
ment, based upon the explicit terms
and conditions of the Federal award.
The Federal awarding agency may ex-
ercise this option when statutory au-
thority exists. Absent statutory au-
thority and specific terms and condi-
tions of the Federal award, title to ex-
empt property acquired under the Fed-
eral award remains with the Federal
Government.
§200.313 Equipment.
See also §200.439.
(a) Title. Subject to the requirements
and conditions set forth in this section,
title to equipment acquired under a
Federal award will vest upon acquisi-
tion in the non-Federal entity. Unless
a statute specifically authorizes the
Federal agency to vest title in the non-
Federal entity without further respon-
sibility to the Federal Government,
and the Federal agency elects to do so,
the title must be a conditional title.
Title must vest in the non-Federal en-
tity subject to the following condi-
tions:
(1) Use the equipment for the author-
ized purposes of the project during the
period of performance, or until the
property is no longer needed for the
purposes of the project.
(2) Not encumber the property with-
out approval of the Federal awarding
agency or pass-through entity.
(3) Use and dispose of the property in
accordance with paragraphs (b), (c),
and (e) of this section.
(b) General. A state must use, manage
and dispose of equipment acquired
under a Federal award by the state in
accordance with state laws and proce-
dures. Other non-Federal entities must
follow paragraphs (c) through (e) of
this section.
(c) Use. (1) Equipment must be used
by the non-Federal entity in the pro-
gram or project for which it was ac-
quired as long as needed, whether or
not the project or program continues
to be supported by the Federal award,
and the non-Federal entity must not
encumber the property without prior
approval of the Federal awarding agen-
cy. The Federal awarding agency may
require the submission of the applica-
ble common form for equipment. When
no longer needed for the original pro-
gram or project, the equipment may be
used in other activities supported by
the Federal awarding agency, in the
following order of priority:
(i) Activities under a Federal award
from the Federal awarding agency
which funded the original program or
project, then
(ii) Activities under Federal awards
from other Federal awarding agencies.
This includes consolidated equipment
for information technology systems.
(2) During the time that equipment is
used on the project or program for
which it was acquired, the non-Federal
entity must also make equipment
available for use on other projects or
programs currently or previously sup-
ported by the Federal Government,
provided that such use will not inter-
fere with the work on the projects or
program for which it was originally ac-
quired. First preference for other use
must be given to other programs or
projects supported by Federal awarding
agency that financed the equipment
and second preference must be given to
programs or projects under Federal
awards from other Federal awarding
agencies. Use for non-federally-funded
programs or projects is also permis-
sible. User fees should be considered if
appropriate.
(3) Notwithstanding the encourage-
ment in §200.307 to earn program in-
come, the non-Federal entity must not
use equipment acquired with the Fed-
eral award to provide services for a fee
that is less than private companies
charge for equivalent services unless
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OMB Guidance §200.314
specifically authorized by Federal stat-
ute for as long as the Federal Govern-
ment retains an interest in the equip-
ment.
(4) When acquiring replacement
equipment, the non-Federal entity may
use the equipment to be replaced as a
trade-in or sell the property and use
the proceeds to offset the cost of the
replacement property.
(d) Management requirements. Proce-
dures for managing equipment (includ-
ing replacement equipment), whether
acquired in whole or in part under a
Federal award, until disposition takes
place will, as a minimum, meet the fol-
lowing requirements:
(1) Property records must be main-
tained that include a description of the
property, a serial number or other
identification number, the source of
funding for the property (including the
FAIN), who holds title, the acquisition
date, and cost of the property, percent-
age of Federal participation in the
project costs for the Federal award
under which the property was acquired,
the location, use and condition of the
property, and any ultimate disposition
data including the date of disposal and
sale price of the property.
(2) A physical inventory of the prop-
erty must be taken and the results rec-
onciled with the property records at
least once every two years.
(3) A control system must be devel-
oped to ensure adequate safeguards to
prevent loss, damage, or theft of the
property. Any loss, damage, or theft
must be investigated.
(4) Adequate maintenance procedures
must be developed to keep the property
in good condition.
(5) If the non-Federal entity is au-
thorized or required to sell the prop-
erty, proper sales procedures must be
established to ensure the highest pos-
sible return.
(e) Disposition. When original or re-
placement equipment acquired under a
Federal award is no longer needed for
the original project or program or for
other activities currently or previously
supported by a Federal awarding agen-
cy, except as otherwise provided in
Federal statutes, regulations, or Fed-
eral awarding agency disposition in-
structions, the non-Federal entity
must request disposition instructions
from the Federal awarding agency if
required by the terms and conditions of
the Federal award. Disposition of the
equipment will be made as follows, in
accordance with Federal awarding
agency disposition instructions:
(1) Items of equipment with a current
per unit fair market value of $5,000 or
less may be retained, sold or otherwise
disposed of with no further responsi-
bility to the Federal awarding agency.
(2) Except as provided in §200.312(b),
or if the Federal awarding agency fails
to provide requested disposition in-
structions within 120 days, items of
equipment with a current per-unit fair
market value in excess of $5,000 may be
retained by the non-Federal entity or
sold. The Federal awarding agency is
entitled to an amount calculated by
multiplying the current market value
or proceeds from sale by the Federal
awarding agency’s percentage of par-
ticipation in the cost of the original
purchase. If the equipment is sold, the
Federal awarding agency may permit
the non-Federal entity to deduct and
retain from the Federal share $500 or
ten percent of the proceeds, whichever
is less, for its selling and handling ex-
penses.
(3) The non-Federal entity may
transfer title to the property to the
Federal Government or to an eligible
third party provided that, in such
cases, the non-Federal entity must be
entitled to compensation for its attrib-
utable percentage of the current fair
market value of the property.
(4) In cases where a non-Federal enti-
ty fails to take appropriate disposition
actions, the Federal awarding agency
may direct the non-Federal entity to
take disposition actions.
§200.314 Supplies.
See also §200.453.
(a) Title to supplies will vest in the
non-Federal entity upon acquisition. If
there is a residual inventory of unused
supplies exceeding $5,000 in total aggre-
gate value upon termination or com-
pletion of the project or program and
the supplies are not needed for any
other Federal award, the non-Federal
entity must retain the supplies for use
on other activities or sell them, but
must, in either case, compensate the
Federal Government for its share. The
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2 CFR Ch. II (1–1–22 Edition) §200.315
amount of compensation must be com-
puted in the same manner as for equip-
ment. See §200.313 (e)(2) for the calcula-
tion methodology.
(b) As long as the Federal Govern-
ment retains an interest in the sup-
plies, the non-Federal entity must not
use supplies acquired under a Federal
award to provide services to other or-
ganizations for a fee that is less than
private companies charge for equiva-
lent services, unless specifically au-
thorized by Federal statute.
§200.315 Intangible property.
(a) Title to intangible property (see
definition for Intangible property in
§200.1) acquired under a Federal award
vests upon acquisition in the non-Fed-
eral entity. The non-Federal entity
must use that property for the origi-
nally-authorized purpose, and must not
encumber the property without ap-
proval of the Federal awarding agency.
When no longer needed for the origi-
nally authorized purpose, disposition of
the intangible property must occur in
accordance with the provisions in
§200.313(e).
(b) The non-Federal entity may copy-
right any work that is subject to copy-
right and was developed, or for which
ownership was acquired, under a Fed-
eral award. The Federal awarding agen-
cy reserves a royalty-free, nonexclu-
sive and irrevocable right to reproduce,
publish, or otherwise use the work for
Federal purposes, and to authorize oth-
ers to do so.
(c) The non-Federal entity is subject
to applicable regulations governing
patents and inventions, including gov-
ernmentwide 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
Awards, Contracts and Cooperative
Agreements.’’
(d) The Federal Government has the
right to:
(1) Obtain, reproduce, publish, or oth-
erwise use the data produced under a
Federal award; and
(2) Authorize others to receive, repro-
duce, publish, or otherwise use such
data for Federal purposes.
(e)(1) In response to a Freedom of In-
formation Act (FOIA) request for re-
search data relating to published re-
search findings produced under a Fed-
eral award that were used by the Fed-
eral Government in developing an
agency action that has the force and
effect of law, the Federal awarding
agency must request, and the non-Fed-
eral entity must provide, within a rea-
sonable time, the research data so that
they can be made available to the pub-
lic through the procedures established
under the FOIA. If the Federal award-
ing agency obtains the research data
solely in response to a FOIA request,
the Federal awarding 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
Federal agency and the non-Federal en-
tity. This fee is in addition to any fees
the Federal awarding agency may as-
sess under the FOIA (5 U.S.C.
552(a)(4)(A)).
(2) Published research findings means
when:
(i) Research findings are published in
a peer-reviewed scientific or technical
journal; or
(ii) A Federal agency publicly and of-
ficially cites the research findings in
support of an agency action that has
the force and effect of law. ‘‘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 agen-
cy action that has the force and effect
of law.
(3) Research data means the recorded
factual material commonly accepted in
the scientific community as necessary
to validate research findings, but not
any of the following: Preliminary anal-
yses, drafts of scientific papers, plans
for future research, peer reviews, or
communications with colleagues. This
‘‘recorded’’ material excludes physical
objects (e.g., laboratory samples). Re-
search data also do not include:
(i) Trade secrets, commercial infor-
mation, materials necessary to be held
confidential by a researcher until they
are published, or similar information
which is protected under law; and
(ii) Personnel and medical informa-
tion and similar information the dis-
closure of which would constitute a
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OMB Guidance §200.318
clearly unwarranted invasion of per-
sonal privacy, such as information that
could be used to identify a particular
person in a research study.
§200.316 Property trust relationship.
Real property, equipment, and intan-
gible property, that are acquired or im-
proved with a Federal award must be
held in trust by the non-Federal entity
as trustee for the beneficiaries of the
project or program under which the
property was acquired or improved.
The Federal awarding agency may re-
quire the non-Federal entity to record
liens or other appropriate notices of
record to indicate that personal or real
property has been acquired or improved
with a Federal award and that use and
disposition conditions apply to the
property.
PROCUREMENT STANDARDS
§200.317 Procurements by states.
When procuring property and serv-
ices under a Federal award, a State
must follow the same policies and pro-
cedures it uses for procurements from
its non-Federal funds. The State will
comply with §§200.321, 200.322, and
200.323 and ensure that every purchase
order or other contract includes any
clauses required by §200.327. All other
non-Federal entities, including sub-
recipients of a State, must follow the
procurement standards in §§200.318
through 200.327.
§200.318 General procurement stand-
ards.
(a) The non-Federal entity must have
and use documented procurement pro-
cedures, consistent with State, local,
and tribal laws and regulations and the
standards of this section, for the acqui-
sition of property or services required
under a Federal award or subaward.
The non-Federal entity’s documented
procurement procedures must conform
to the procurement standards identi-
fied in §§200.317 through 200.327.
(b) Non-Federal entities must main-
tain oversight to ensure that contrac-
tors perform in accordance with the
terms, conditions, and specifications of
their contracts or purchase orders.
(c)(1) The non-Federal entity must
maintain written standards of conduct
covering conflicts of interest and gov-
erning the actions of its employees en-
gaged in the selection, award and ad-
ministration of contracts. No em-
ployee, officer, or agent may partici-
pate in the selection, award, or admin-
istration of a contract supported by a
Federal award if he or she has a real or
apparent conflict of interest. Such a
conflict of interest would arise when
the employee, officer, or agent, any
member of his or her immediate fam-
ily, his or her partner, or an organiza-
tion which employs or is about to em-
ploy any of the parties indicated here-
in, has a financial or other interest in
or a tangible personal benefit from a
firm considered for a contract. The of-
ficers, employees, and agents of the
non-Federal entity may neither solicit
nor accept gratuities, favors, or any-
thing of monetary value from contrac-
tors or parties to subcontracts. How-
ever, non-Federal entities may set
standards for situations in which the
financial interest is not substantial or
the gift is an unsolicited item of nomi-
nal value. The standards of conduct
must provide for disciplinary actions
to be applied for violations of such
standards by officers, employees, or
agents of the non-Federal entity.
(2) If the non-Federal entity has a
parent, affiliate, or subsidiary organi-
zation that is not a State, local govern-
ment, or Indian tribe, the non-Federal
entity must also maintain written
standards of conduct covering organi-
zational conflicts of interest. Organiza-
tional conflicts of interest means that
because of relationships with a parent
company, affiliate, or subsidiary orga-
nization, the non-Federal entity is un-
able or appears to be unable to be im-
partial in conducting a procurement
action involving a related organiza-
tion.
(d) The non-Federal entity’s proce-
dures must avoid acquisition of unnec-
essary or duplicative items. Consider-
ation should be given to consolidating
or breaking out procurements to ob-
tain a more economical purchase.
Where appropriate, an analysis will be
made of lease versus purchase alter-
natives, and any other appropriate
analysis to determine the most eco-
nomical approach.
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2 CFR Ch. II (1–1–22 Edition) §200.319
(e) To foster greater economy and ef-
ficiency, and in accordance with efforts
to promote cost-effective use of shared
services across the Federal Govern-
ment, the non-Federal entity is encour-
aged to enter into state and local inter-
governmental agreements or inter-en-
tity agreements where appropriate for
procurement or use of common or
shared goods and services. Competition
requirements will be met with docu-
mented procurement actions using
strategic sourcing, shared services, and
other similar procurement arrange-
ments.
(f) The non-Federal entity is encour-
aged to use Federal excess and surplus
property in lieu of purchasing new
equipment and property whenever such
use is feasible and reduces project
costs.
(g) The non-Federal entity is encour-
aged to use value engineering clauses
in contracts for construction projects
of sufficient size to offer reasonable op-
portunities for cost reductions. Value
engineering is a systematic and cre-
ative analysis of each contract item or
task to ensure that its essential func-
tion is provided at the overall lower
cost.
(h) The non-Federal entity must
award contracts only to responsible
contractors possessing the ability to
perform successfully under the terms
and conditions of a proposed procure-
ment. Consideration will be given to
such matters as contractor integrity,
compliance with public policy, record
of past performance, and financial and
technical resources. See also §200.214.
(i) The non-Federal entity must
maintain records sufficient to detail
the history of procurement. These
records will include, but are not nec-
essarily limited to, the following: Ra-
tionale for the method of procurement,
selection of contract type, contractor
selection or rejection, and the basis for
the contract price.
(j)(1) The non-Federal entity may use
a time-and-materials type contract
only after a determination that no
other contract is suitable and if the
contract includes a ceiling price that
the contractor exceeds at its own risk.
Time-and-materials type contract
means a contract whose cost to a non-
Federal entity is the sum of:
(i) The actual cost of materials; and
(ii) Direct labor hours charged at
fixed hourly rates that reflect wages,
general and administrative expenses,
and profit.
(2) Since this formula generates an
open-ended contract price, a time-and-
materials contract provides no positive
profit incentive to the contractor for
cost control or labor efficiency. There-
fore, each contract must set a ceiling
price that the contractor exceeds at its
own risk. Further, the non-Federal en-
tity awarding such a contract must as-
sert a high degree of oversight in order
to obtain reasonable assurance that
the contractor is using efficient meth-
ods and effective cost controls.
(k) The non-Federal entity alone
must be responsible, in accordance
with good administrative practice and
sound business judgment, for the set-
tlement of all contractual and adminis-
trative issues arising out of procure-
ments. These issues include, but are
not limited to, source evaluation, pro-
tests, disputes, and claims. These
standards do not relieve the non-Fed-
eral entity of any contractual respon-
sibilities under its contracts. The Fed-
eral awarding agency will not sub-
stitute its judgment for that of the
non-Federal entity unless the matter is
primarily a Federal concern. Viola-
tions of law will be referred to the
local, state, or Federal authority hav-
ing proper jurisdiction.
[85 FR 49543, Aug. 13, 2020, as amended at 86
FR 10440, Feb. 22, 2021]
§200.319 Competition.
(a) All procurement transactions for
the acquisition of property or services
required under a Federal award must
be conducted in a manner providing
full and open competition consistent
with the standards of this section and
§200.320.
(b) In order to ensure objective con-
tractor performance and eliminate un-
fair competitive advantage, contrac-
tors that develop or draft specifica-
tions, requirements, statements of
work, or invitations for bids or re-
quests for proposals must be excluded
from competing for such procurements.
Some of the situations considered to be
restrictive of competition include but
are not limited to:
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OMB Guidance §200.320
(1) Placing unreasonable require-
ments on firms in order for them to
qualify to do business;
(2) Requiring unnecessary experience
and excessive bonding;
(3) Noncompetitive pricing practices
between firms or between affiliated
companies;
(4) Noncompetitive contracts to con-
sultants that are on retainer contracts;
(5) Organizational conflicts of inter-
est;
(6) Specifying only a ‘‘brand name’’
product instead of allowing ‘‘an equal’’
product to be offered and describing
the performance or other relevant re-
quirements of the procurement; and
(7) Any arbitrary action in the pro-
curement process.
(c) The non-Federal entity must con-
duct procurements in a manner that
prohibits the use of statutorily or ad-
ministratively imposed state, local, or
tribal geographical preferences in the
evaluation of bids or proposals, except
in those cases where applicable Federal
statutes expressly mandate or encour-
age geographic preference. Nothing in
this section preempts state licensing
laws. When contracting for architec-
tural and engineering (A/E) services,
geographic location may be a selection
criterion provided its application
leaves an appropriate number of quali-
fied firms, given the nature and size of
the project, to compete for the con-
tract.
(d) The non-Federal entity must have
written procedures for procurement
transactions. These procedures must
ensure that all solicitations:
(1) Incorporate a clear and accurate
description of the technical require-
ments for the material, product, or
service to be procured. Such descrip-
tion must not, in competitive procure-
ments, contain features which unduly
restrict competition. The description
may include a statement of the quali-
tative nature of the material, product
or service to be procured and, when
necessary, must set forth those min-
imum essential characteristics and
standards to which it must conform if
it is to satisfy its intended use. De-
tailed product specifications should be
avoided if at all possible. When it is
impractical or uneconomical to make a
clear and accurate description of the
technical requirements, a ‘‘brand name
or equivalent’’ description may be used
as a means to define the performance
or other salient requirements of pro-
curement. The specific features of the
named brand which must be met by of-
fers must be clearly stated; and
(2) Identify all requirements which
the offerors must fulfill and all other
factors to be used in evaluating bids or
proposals.
(e) The non-Federal entity must en-
sure that all prequalified lists of per-
sons, firms, or products which are used
in acquiring goods and services are cur-
rent and include enough qualified
sources to ensure maximum open and
free competition. Also, the non-Federal
entity must not preclude potential bid-
ders from qualifying during the solici-
tation period.
(f) Noncompetitive procurements can
only be awarded in accordance with
§200.320(c).
§200.320 Methods of procurement to
be followed.
The non-Federal entity must have
and use documented procurement pro-
cedures, consistent with the standards
of this section and §§200.317, 200.318,
and 200.319 for any of the following
methods of procurement used for the
acquisition of property or services re-
quired under a Federal award or sub-
award.
(a) Informal procurement methods.
When the value of the procurement for
property or services under a Federal
award does not exceed the simplified ac-
quisition threshold (SAT), as defined in
§200.1, or a lower threshold established
by a non-Federal entity, formal pro-
curement methods are not required.
The non-Federal entity may use infor-
mal procurement methods to expedite
the completion of its transactions and
minimize the associated administra-
tive burden and cost. The informal
methods used for procurement of prop-
erty or services at or below the SAT in-
clude:
(1) Micro-purchases—(i) Distribution.
The acquisition of supplies or services,
the aggregate dollar amount of which
does not exceed the micro-purchase
threshold (See the definition of micro-
purchase in §200.1). To the maximum
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2 CFR Ch. II (1–1–22 Edition) §200.320
extent practicable, the non-Federal en-
tity should distribute micro-purchases
equitably among qualified suppliers.
(ii) Micro-purchase awards. Micro-pur-
chases may be awarded without solic-
iting competitive price or rate
quotations if the non-Federal entity
considers the price to be reasonable
based on research, experience, purchase
history or other information and docu-
ments it files accordingly. Purchase
cards can be used for micro-purchases
if procedures are documented and ap-
proved by the non-Federal entity.
(iii) Micro-purchase thresholds. The
non-Federal entity is responsible for
determining and documenting an ap-
propriate micro-purchase threshold
based on internal controls, an evalua-
tion of risk, and its documented pro-
curement procedures. The micro-pur-
chase threshold used by the non-Fed-
eral entity must be authorized or not
prohibited under State, local, or tribal
laws or regulations. Non-Federal enti-
ties may establish a threshold higher
than the Federal threshold established
in the Federal Acquisition Regulations
(FAR) in accordance with paragraphs
(a)(1)(iv) and (v) of this section.
(iv) Non-Federal entity increase to the
micro-purchase threshold up to $50,000.
Non-Federal entities may establish a
threshold higher than the micro-pur-
chase threshold identified in the FAR
in accordance with the requirements of
this section. The non-Federal entity
may self-certify a threshold up to
$50,000 on an annual basis and must
maintain documentation to be made
available to the Federal awarding
agency and auditors in accordance with
§200.334. The self-certification must in-
clude a justification, clear identifica-
tion of the threshold, and supporting
documentation of any of the following:
(A) A qualification as a low-risk
auditee, in accordance with the criteria
in §200.520 for the most recent audit;
(B) An annual internal institutional
risk assessment to identify, mitigate,
and manage financial risks; or,
(C) For public institutions, a higher
threshold consistent with State law.
(v) Non-Federal entity increase to the
micro-purchase threshold over $50,000.
Micro-purchase thresholds higher than
$50,000 must be approved by the cog-
nizant agency for indirect costs. The
non-federal entity must submit a re-
quest with the requirements included
in paragraph (a)(1)(iv) of this section.
The increased threshold is valid until
there is a change in status in which the
justification was approved.
(2) Small purchases—(i) Small purchase
procedures. The acquisition of property
or services, the aggregate dollar
amount of which is higher than the
micro-purchase threshold but does not
exceed the simplified acquisition
threshold. If small purchase procedures
are used, price or rate quotations must
be obtained from an adequate number
of qualified sources as determined ap-
propriate by the non-Federal entity.
(ii) Simplified acquisition thresholds.
The non-Federal entity is responsible
for determining an appropriate sim-
plified acquisition threshold based on
internal controls, an evaluation of risk
and its documented procurement proce-
dures which must not exceed the
threshold established in the FAR.
When applicable, a lower simplified ac-
quisition threshold used by the non-
Federal entity must be authorized or
not prohibited under State, local, or
tribal laws or regulations.
(b) Formal procurement methods. When
the value of the procurement for prop-
erty or services under a Federal finan-
cial assistance award exceeds the SAT,
or a lower threshold established by a
non-Federal entity, formal procure-
ment methods are required. Formal
procurement methods require following
documented procedures. Formal pro-
curement methods also require public
advertising unless a non-competitive
procurement can be used in accordance
with §200.319 or paragraph (c) of this
section. The following formal methods
of procurement are used for procure-
ment of property or services above the
simplified acquisition threshold or a
value below the simplified acquisition
threshold the non-Federal entity deter-
mines to be appropriate:
(1) Sealed bids. A procurement method
in which bids are publicly solicited and
a firm fixed-price contract (lump sum
or unit price) is awarded to the respon-
sible bidder whose bid, conforming with
all the material terms and conditions
of the invitation for bids, is the lowest
in price. The sealed bids method is the
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OMB Guidance §200.320
preferred method for procuring con-
struction, if the conditions.
(i) In order for sealed bidding to be
feasible, the following conditions
should be present:
(A) A complete, adequate, and real-
istic specification or purchase descrip-
tion is available;
(B) Two or more responsible bidders
are willing and able to compete effec-
tively for the business; and
(C) The procurement lends itself to a
firm fixed price contract and the selec-
tion of the successful bidder can be
made principally on the basis of price.
(ii) If sealed bids are used, the fol-
lowing requirements apply:
(A) Bids must be solicited from an
adequate number of qualified sources,
providing them sufficient response
time prior to the date set for opening
the bids, for local, and tribal govern-
ments, the invitation for bids must be
publicly advertised;
(B) The invitation for bids, which
will include any specifications and per-
tinent attachments, must define the
items or services in order for the bidder
to properly respond;
(C) All bids will be opened at the
time and place prescribed in the invita-
tion for bids, and for local and tribal
governments, the bids must be opened
publicly;
(D) A firm fixed price contract award
will be made in writing to the lowest
responsive and responsible bidder.
Where specified in bidding documents,
factors such as discounts, transpor-
tation cost, and life cycle costs must
be considered in determining which bid
is lowest. Payment discounts will only
be used to determine the low bid when
prior experience indicates that such
discounts are usually taken advantage
of; and
(E) Any or all bids may be rejected if
there is a sound documented reason.
(2) Proposals. A procurement method
in which either a fixed price or cost-re-
imbursement type contract is awarded.
Proposals are generally used when con-
ditions are not appropriate for the use
of sealed bids. They are awarded in ac-
cordance with the following require-
ments:
(i) Requests for proposals must be
publicized and identify all evaluation
factors and their relative importance.
Proposals must be solicited from an
adequate number of qualified offerors.
Any response to publicized requests for
proposals must be considered to the
maximum extent practical;
(ii) The non-Federal entity must
have a written method for conducting
technical evaluations of the proposals
received and making selections;
(iii) Contracts must be awarded to
the responsible offeror whose proposal
is most advantageous to the non-Fed-
eral entity, with price and other fac-
tors considered; and
(iv) The non-Federal entity may use
competitive proposal procedures for
qualifications-based procurement of ar-
chitectural/engineering (A/E) profes-
sional services whereby offeror’s quali-
fications are evaluated and the most
qualified offeror is selected, subject to
negotiation of fair and reasonable com-
pensation. The method, where price is
not used as a selection factor, can only
be used in procurement of A/E profes-
sional services. It cannot be used to
purchase other types of services though
A/E firms that are a potential source to
perform the proposed effort.
(c) Noncompetitive procurement. There
are specific circumstances in which
noncompetitive procurement can be
used. Noncompetitive procurement can
only be awarded if one or more of the
following circumstances apply:
(1) The acquisition of property or
services, the aggregate dollar amount
of which does not exceed the micro-
purchase threshold (see paragraph
(a)(1) of this section);
(2) The item is available only from a
single source;
(3) The public exigency or emergency
for the requirement will not permit a
delay resulting from publicizing a com-
petitive solicitation;
(4) The Federal awarding agency or
pass-through entity expressly author-
izes a noncompetitive procurement in
response to a written request from the
non-Federal entity; or
(5) After solicitation of a number of
sources, competition is determined in-
adequate.
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2 CFR Ch. II (1–1–22 Edition) §200.321
§200.321 Contracting with small and
minority businesses, women’s busi-
ness enterprises, and labor surplus
area firms.
(a) The non-Federal entity must take
all necessary affirmative steps to as-
sure that minority businesses, women’s
business enterprises, and labor surplus
area firms are used when possible.
(b) Affirmative steps must include:
(1) Placing qualified small and mi-
nority businesses and women’s business
enterprises on solicitation lists;
(2) Assuring that small and minority
businesses, and women’s business en-
terprises are solicited whenever they
are potential sources;
(3) Dividing total requirements, when
economically feasible, into smaller
tasks or quantities to permit max-
imum participation by small and mi-
nority businesses, and women’s busi-
ness enterprises;
(4) Establishing delivery schedules,
where the requirement permits, which
encourage participation by small and
minority businesses, and women’s busi-
ness enterprises;
(5) Using the services and assistance,
as appropriate, of such organizations as
the Small Business Administration and
the Minority Business Development
Agency of the Department of Com-
merce; and
(6) Requiring the prime contractor, if
subcontracts are to be let, to take the
affirmative steps listed in paragraphs
(b)(1) through (5) of this section.
§200.322 Domestic preferences for pro-
curements.
(a) As appropriate and to the extent
consistent with law, the non-Federal
entity should, to the greatest extent
practicable under a Federal award, pro-
vide a preference for the purchase, ac-
quisition, or use of goods, products, or
materials produced in the United
States (including but not limited to
iron, aluminum, steel, cement, and
other manufactured products). The re-
quirements of this section must be in-
cluded in all subawards including all
contracts and purchase orders for work
or products under this award.
(b) For purposes of this section:
(1) ‘‘Produced in the United States’’
means, for iron and steel products, that
all manufacturing processes, from the
initial melting stage through the appli-
cation of coatings, occurred in the
United States.
(2) ‘‘Manufactured products’’ means
items and construction materials com-
posed in whole or in part of non-ferrous
metals such as aluminum; plastics and
polymer-based products such as poly-
vinyl chloride pipe; aggregates such as
concrete; glass, including optical fiber;
and lumber.
§200.323 Procurement of recovered
materials.
A non-Federal entity that is a state
agency or agency of a political subdivi-
sion of a state and its contractors must
comply with section 6002 of the Solid
Waste Disposal Act, as amended by the
Resource Conservation and Recovery
Act. The requirements of Section 6002
include procuring only items des-
ignated in guidelines of the Environ-
mental Protection Agency (EPA) at 40
CFR part 247 that contain the highest
percentage of recovered materials prac-
ticable, consistent with maintaining a
satisfactory level of competition,
where the purchase price of the item
exceeds $10,000 or the value of the
quantity acquired during the preceding
fiscal year exceeded $10,000; procuring
solid waste management services in a
manner that maximizes energy and re-
source recovery; and establishing an af-
firmative procurement program for
procurement of recovered materials
identified in the EPA guidelines.
§200.324 Contract cost and price.
(a) The non-Federal entity must per-
form a cost or price analysis in connec-
tion with every procurement action in
excess of the Simplified Acquisition
Threshold including contract modifica-
tions. The method and degree of anal-
ysis is dependent on the facts sur-
rounding the particular procurement
situation, but as a starting point, the
non-Federal entity must make inde-
pendent estimates before receiving bids
or proposals.
(b) The non-Federal entity must ne-
gotiate profit as a separate element of
the price for each contract in which
there is no price competition and in all
cases where cost analysis is performed.
To establish a fair and reasonable prof-
it, consideration must be given to the
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OMB Guidance §200.326
complexity of the work to be per-
formed, the risk borne by the con-
tractor, the contractor’s investment,
the amount of subcontracting, the
quality of its record of past perform-
ance, and industry profit rates in the
surrounding geographical area for
similar work.
(c) Costs or prices based on estimated
costs for contracts under the Federal
award are allowable only to the extent
that costs incurred or cost estimates
included in negotiated prices would be
allowable for the non-Federal entity
under subpart E of this part. The non-
Federal entity may reference its own
cost principles that comply with the
Federal cost principles.
(d) The cost plus a percentage of cost
and percentage of construction cost
methods of contracting must not be
used.
§200.325 Federal awarding agency or
pass-through entity review.
(a) The non-Federal entity must
make available, upon request of the
Federal awarding agency or pass-
through entity, technical specifica-
tions on proposed procurements where
the Federal awarding agency or pass-
through entity believes such review is
needed to ensure that the item or serv-
ice specified is the one being proposed
for acquisition. This review generally
will take place prior to the time the
specification is incorporated into a so-
licitation document. However, if the
non-Federal entity desires to have the
review accomplished after a solicita-
tion has been developed, the Federal
awarding agency or pass-through enti-
ty may still review the specifications,
with such review usually limited to the
technical aspects of the proposed pur-
chase.
(b) The non-Federal entity must
make available upon request, for the
Federal awarding agency or pass-
through entity pre-procurement re-
view, procurement documents, such as
requests for proposals or invitations
for bids, or independent cost estimates,
when:
(1) The non-Federal entity’s procure-
ment procedures or operation fails to
comply with the procurement stand-
ards in this part;
(2) The procurement is expected to
exceed the Simplified Acquisition
Threshold 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 ex-
pected to exceed the Simplified Acqui-
sition Threshold, specifies a ‘‘brand
name’’ product;
(4) The proposed contract is more
than the Simplified Acquisition
Threshold and is to be awarded to
other than the apparent low bidder
under a sealed bid procurement; or
(5) A proposed contract modification
changes the scope of a contract or in-
creases the contract amount by more
than the Simplified Acquisition
Threshold.
(c) The non-Federal entity is exempt
from the pre-procurement review in
paragraph (b) of this section if the Fed-
eral awarding agency or pass-through
entity determines that its procurement
systems comply with the standards of
this part.
(1) The non-Federal entity may re-
quest that its procurement system be
reviewed by the Federal awarding
agency or pass-through entity to deter-
mine whether its system meets these
standards in order for its system to be
certified. Generally, these reviews
must occur where there is continuous
high-dollar funding, and third-party
contracts are awarded on a regular
basis;
(2) The non-Federal entity may self-
certify its procurement system. Such
self-certification must not limit the
Federal awarding agency’s right to sur-
vey the system. Under a self-certifi-
cation procedure, the Federal awarding
agency may rely on written assurances
from the non-Federal entity that it is
complying with these standards. The
non-Federal entity must cite specific
policies, procedures, regulations, or
standards as being in compliance with
these requirements and have its system
available for review.
§200.326 Bonding requirements.
For construction or facility improve-
ment contracts or subcontracts exceed-
ing the Simplified Acquisition Thresh-
old, the Federal awarding agency or
pass-through entity may accept the
bonding policy and requirements of the
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2 CFR Ch. II (1–1–22 Edition) §200.327
non-Federal entity provided that the
Federal awarding agency or pass-
through entity has made a determina-
tion that the Federal interest is ade-
quately protected. If such a determina-
tion has not been made, the minimum
requirements must be as follows:
(a) A bid guarantee from each bidder
equivalent to five percent of the bid
price. The ‘‘bid guarantee’’ must con-
sist of a firm commitment such as a
bid bond, certified check, or other ne-
gotiable instrument accompanying a
bid as assurance that the bidder will,
upon acceptance of the bid, execute
such contractual documents as may be
required within the time specified.
(b) 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 requirements under such
contract.
(c) A payment bond on the part of the
contractor for 100 percent of the con-
tract price. A ‘‘payment bond’’ is one
executed in connection with a contract
to assure payment as required by law
of all persons supplying labor and ma-
terial in the execution of the work pro-
vided for in the contract.
§200.327 Contract provisions.
The non-Federal entity’s contracts
must contain the applicable provisions
described in appendix II to this part.
PERFORMANCE AND FINANCIAL
MONITORING AND REPORTING
§200.328 Financial reporting.
Unless otherwise approved by OMB,
the Federal awarding agency must so-
licit only the OMB-approved govern-
mentwide data elements for collection
of financial information (at time of
publication the Federal Financial Re-
port or such future, OMB-approved,
governmentwide data elements avail-
able from the OMB-designated stand-
ards lead. This information must be
collected with the frequency required
by the terms and conditions of the Fed-
eral award, but no less frequently than
annually nor more frequently than
quarterly except in unusual cir-
cumstances, for example where more
frequent reporting is necessary for the
effective monitoring of the Federal
award or could significantly affect pro-
gram outcomes, and preferably in co-
ordination with performance reporting.
The Federal awarding agency must use
OMB-approved common information
collections, as applicable, when pro-
viding financial and performance re-
porting information.
§200.329 Monitoring and reporting
program performance.
(a) Monitoring by the non-Federal enti-
ty. The non-Federal entity is respon-
sible for oversight of the operations of
the Federal award supported activities.
The non-Federal entity must monitor
its activities under Federal awards to
assure compliance with applicable Fed-
eral requirements and performance ex-
pectations are being achieved. Moni-
toring by the non-Federal entity must
cover each program, function or activ-
ity. See also §200.332.
(b) Reporting program performance.
The Federal awarding agency must use
OMB-approved common information
collections, as applicable, when pro-
viding financial and performance re-
porting information. As appropriate
and in accordance with above men-
tioned information collections, the
Federal awarding agency must require
the recipient to relate financial data
and accomplishments to performance
goals and objectives of the Federal
award. Also, in accordance with above
mentioned common information collec-
tions, and when required by the terms
and conditions of the Federal award,
recipients must provide cost informa-
tion to demonstrate cost effective
practices (e.g., through unit cost data).
In some instances (e.g., discretionary
research awards), this will be limited
to the requirement to submit technical
performance reports (to be evaluated in
accordance with Federal awarding
agency policy). Reporting require-
ments must be clearly articulated such
that, where appropriate, performance
during the execution of the Federal
award has a standard against which
non-Federal entity performance can be
measured.
(c) Non-construction performance re-
ports. The Federal awarding agency
must use standard, governmentwide
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OMB Guidance §200.330
OMB-approved data elements for col-
lection of performance information in-
cluding performance progress reports,
Research Performance Progress Re-
ports.
(1) The non-Federal entity must sub-
mit performance reports at the inter-
val required by the Federal awarding
agency or pass-through entity to best
inform improvements in program out-
comes and productivity. Intervals must
be no less frequent than annually nor
more frequent than quarterly except in
unusual circumstances, for example
where more frequent reporting is nec-
essary for the effective monitoring of
the Federal award or could signifi-
cantly affect program outcomes. Re-
ports submitted annually by the non-
Federal entity and/or pass-through en-
tity must be due no later than 90 cal-
endar days after the reporting period.
Reports submitted quarterly or semi-
annually must be due no later than 30
calendar days after the reporting pe-
riod. Alternatively, the Federal award-
ing agency or pass-through entity may
require annual reports before the anni-
versary dates of multiple year Federal
awards. The final performance report
submitted by the non-Federal entity
and/or pass-through entity must be due
no later than 120 calendar days after
the period of performance end date. A
subrecipient must submit to the pass-
through entity, no later than 90 cal-
endar days after the period of perform-
ance end date, all final performance re-
ports as required by the terms and con-
ditions of the Federal award. See also
§200.344. If a justified request is sub-
mitted by a non-Federal entity, the
Federal agency may extend the due
date for any performance report.
(2) As appropriate in accordance with
above mentioned performance report-
ing, these reports will contain, for each
Federal award, brief information on
the following unless other data ele-
ments are approved by OMB in the
agency information collection request:
(i) A comparison of actual accom-
plishments to the objectives of the
Federal award established for the pe-
riod. Where the accomplishments of
the Federal award can be quantified, a
computation of the cost (for example,
related to units of accomplishment)
may be required if that information
will be useful. Where performance
trend data and analysis would be in-
formative to the Federal awarding
agency program, the Federal awarding
agency should include this as a per-
formance reporting requirement.
(ii) The reasons why established
goals were not met, if appropriate.
(iii) Additional pertinent information
including, when appropriate, analysis
and explanation of cost overruns or
high unit costs.
(d) Construction performance reports.
For the most part, onsite technical in-
spections and certified percentage of
completion data are relied on heavily
by Federal awarding agencies and pass-
through entities to monitor progress
under Federal awards and subawards
for construction. The Federal awarding
agency may require additional per-
formance reports only when considered
necessary.
(e) Significant developments. Events
may occur between the scheduled per-
formance reporting dates that have sig-
nificant impact upon the supported ac-
tivity. In such cases, the non-Federal
entity must inform the Federal award-
ing agency or pass-through entity as
soon as the following types of condi-
tions become known:
(1) Problems, delays, or adverse con-
ditions which will materially impair
the ability to meet the objective of the
Federal award. This disclosure must in-
clude a statement of the action taken,
or contemplated, and any assistance
needed to resolve the situation.
(2) Favorable developments which en-
able meeting time schedules and objec-
tives sooner or at less cost than antici-
pated or producing more or different
beneficial results than originally
planned.
(f) Site visits. The Federal awarding
agency may make site visits as war-
ranted by program needs.
(g) Performance report requirement
waiver. The Federal awarding agency
may waive any performance report re-
quired by this part if not needed.
§200.330 Reporting on real property.
The Federal awarding agency or pass-
through entity must require a non-Fed-
eral entity to submit reports at least
annually on the status of real property
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2 CFR Ch. II (1–1–22 Edition) §200.331
in which the Federal Government re-
tains an interest, unless the Federal in-
terest in the real property extends 15
years or longer. In those instances
where the Federal interest attached is
for a period of 15 years or more, the
Federal awarding agency or pass-
through entity, at its option, may re-
quire the non-Federal entity to report
at various multi-year frequencies (e.g.,
every two years or every three years,
not to exceed a five-year reporting pe-
riod; or a Federal awarding agency or
pass-through entity may require an-
nual reporting for the first three years
of a Federal award and thereafter re-
quire reporting every five years).
SUBRECIPIENT MONITORING AND
MANAGEMENT
§200.331 Subrecipient and contractor
determinations.
The non-Federal entity may concur-
rently receive Federal awards as a re-
cipient, a subrecipient, and a con-
tractor, depending on the substance of
its agreements with Federal awarding
agencies and pass-through entities.
Therefore, a pass-through entity must
make case-by-case determinations
whether each agreement it makes for
the disbursement of Federal program
funds casts the party receiving the
funds in the role of a subrecipient or a
contractor. The Federal awarding
agency may supply and require recipi-
ents to comply with additional guid-
ance to support these determinations
provided such guidance does not con-
flict with this section.
(a) Subrecipients. A subaward is for
the purpose of carrying out a portion of
a Federal award and creates a Federal
assistance relationship with the sub-
recipient. See definition for Subaward
in §200.1 of this part. Characteristics
which support the classification of the
non-Federal entity as a subrecipient
include when the non-Federal entity:
(1) Determines who is eligible to re-
ceive what Federal assistance;
(2) Has its performance measured in
relation to whether objectives of a Fed-
eral program were met;
(3) Has responsibility for pro-
grammatic decision-making;
(4) Is responsible for adherence to ap-
plicable Federal program requirements
specified in the Federal award; and
(5) In accordance with its agreement,
uses the Federal funds to carry out a
program for a public purpose specified
in authorizing statute, as opposed to
providing goods or services for the ben-
efit of the pass-through entity.
(b) Contractors. A contract is for the
purpose of obtaining goods and services
for the non-Federal entity’s own use
and creates a procurement relationship
with the contractor. See the definition
of contract in §200.1 of this part. Char-
acteristics indicative of a procurement
relationship between the non-Federal
entity and a contractor are when the
contractor:
(1) Provides the goods and services
within normal business operations;
(2) Provides similar goods or services
to many different purchasers;
(3) Normally operates in a competi-
tive environment;
(4) Provides goods or services that
are ancillary to the operation of the
Federal program; and
(5) Is not subject to compliance re-
quirements of the Federal program as a
result of the agreement, though similar
requirements may apply for other rea-
sons.
(c) Use of judgment in making deter-
mination. In determining whether an
agreement between a pass-through en-
tity and another non-Federal entity
casts the latter as a subrecipient or a
contractor, the substance of the rela-
tionship is more important than the
form of the agreement. All of the char-
acteristics listed above may not be
present in all cases, and the pass-
through entity must use judgment in
classifying each agreement as a
subaward or a procurement contract.
§200.332 Requirements for pass-
through entities.
All pass-through entities must:
(a) Ensure that every subaward is
clearly identified to the subrecipient as
a subaward and includes the following
information at the time of the
subaward and if any of these data ele-
ments change, include the changes in
subsequent subaward modification.
When some of this information is not
available, the pass-through entity
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OMB Guidance §200.332
must provide the best information
available to describe the Federal award
and subaward. Required information
includes:
(1) Federal award identification.
(i) Subrecipient name (which must
match the name associated with its
unique entity identifier);
(ii) Subrecipient’s unique entity
identifier;
(iii) Federal Award Identification
Number (FAIN);
(iv) Federal Award Date (see the defi-
nition of Federal award date in §200.1 of
this part) of award to the recipient by
the Federal agency;
(v) Subaward Period of Performance
Start and End Date;
(vi) Subaward Budget Period Start
and End Date;
(vii) Amount of Federal Funds Obli-
gated by this action by the pass-
through entity to the subrecipient;
(viii) Total Amount of Federal Funds
Obligated to the subrecipient by the
pass-through entity including the cur-
rent financial obligation;
(ix) Total Amount of the Federal
Award committed to the subrecipient
by the pass-through entity;
(x) Federal award project description,
as required to be responsive to the Fed-
eral Funding Accountability and
Transparency Act (FFATA);
(xi) Name of Federal awarding agen-
cy, pass-through entity, and contact
information for awarding official of the
Pass-through entity;
(xii) Assistance Listings number and
Title; the pass-through entity must
identify the dollar amount made avail-
able under each Federal award and the
Assistance Listings Number at time of
disbursement;
(xiii) Identification of whether the
award is R&D; and
(xiv) Indirect cost rate for the Fed-
eral award (including if the de minimis
rate is charged) per §200.414.
(2) All requirements imposed by the
pass-through entity on the sub-
recipient so that the Federal award is
used in accordance with Federal stat-
utes, regulations and the terms and
conditions of the Federal award;
(3) Any additional requirements that
the pass-through entity imposes on the
subrecipient in order for the pass-
through entity to meet its own respon-
sibility to the Federal awarding agency
including identification of any required
financial and performance reports;
(4)(i) An approved federally recog-
nized indirect cost rate negotiated be-
tween the subrecipient and the Federal
Government. If no approved rate exists,
the pass-through entity must deter-
mine the appropriate rate in collabora-
tion with the subrecipient, which is ei-
ther:
(A) The negotiated indirect cost rate
between the pass-through entity and
the subrecipient; which can be based on
a prior negotiated rate between a dif-
ferent PTE and the same subrecipient.
If basing the rate on a previously nego-
tiated rate, the pass-through entity is
not required to collect information jus-
tifying this rate, but may elect to do
so;
(B) The de minimis indirect cost
rate.
(ii) The pass-through entity must not
require use of a de minimis indirect
cost rate if the subrecipient has a Fed-
erally approved rate. Subrecipients can
elect to use the cost allocation method
to account for indirect costs in accord-
ance with §200.405(d).
(5) A requirement that the sub-
recipient permit the pass-through enti-
ty and auditors to have access to the
subrecipient’s records and financial
statements as necessary for the pass-
through entity to meet the require-
ments of this part; and
(6) Appropriate terms and conditions
concerning closeout of the subaward.
(b) Evaluate each subrecipient’s risk
of noncompliance with Federal stat-
utes, regulations, and the terms and
conditions of the subaward for purposes
of determining the appropriate sub-
recipient monitoring described in para-
graphs (d) and (e) of this section, which
may include consideration of such fac-
tors as:
(1) The subrecipient’s prior experi-
ence with the same or similar sub-
awards;
(2) The results of previous audits in-
cluding whether or not the sub-
recipient receives a Single Audit in ac-
cordance with Subpart F of this part,
and the extent to which the same or
similar subaward has been audited as a
major program;
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2 CFR Ch. II (1–1–22 Edition) §200.333
(3) Whether the subrecipient has new
personnel or new or substantially
changed systems; and
(4) The extent and results of Federal
awarding agency monitoring (e.g., if
the subrecipient also receives Federal
awards directly from a Federal award-
ing agency).
(c) Consider imposing specific
subaward conditions upon a sub-
recipient if appropriate as described in
§200.208.
(d) Monitor the activities of the sub-
recipient as necessary to ensure that
the subaward is used for authorized
purposes, in compliance with Federal
statutes, regulations, and the terms
and conditions of the subaward; and
that subaward performance goals are
achieved. Pass-through entity moni-
toring of the subrecipient must in-
clude:
(1) Reviewing financial and perform-
ance reports required by the pass-
through entity.
(2) Following-up and ensuring that
the subrecipient takes timely and ap-
propriate action on all deficiencies per-
taining to the Federal award provided
to the subrecipient from the pass-
through entity detected through au-
dits, on-site reviews, and written con-
firmation from the subrecipient, high-
lighting the status of actions planned
or taken to address Single Audit find-
ings related to the particular
subaward.
(3) Issuing a management decision for
applicable audit findings pertaining
only to the Federal award provided to
the subrecipient from the pass-through
entity as required by §200.521.
(4) The pass-through entity is respon-
sible for resolving audit findings spe-
cifically related to the subaward and
not responsible for resolving cross-
cutting findings. If a subrecipient has a
current Single Audit report posted in
the Federal Audit Clearinghouse and
has not otherwise been excluded from
receipt of Federal funding (e.g., has
been debarred or suspended), the pass-
through entity may rely on the sub-
recipient’s cognizant audit agency or
cognizant oversight agency to perform
audit follow-up and make management
decisions related to cross-cutting find-
ings in accordance with section
§200.513(a)(3)(vii). Such reliance does
not eliminate the responsibility of the
pass-through entity to issue subawards
that conform to agency and award-spe-
cific requirements, to manage risk
through ongoing subaward monitoring,
and to monitor the status of the find-
ings that are specifically related to the
subaward.
(e) Depending upon the pass-through
entity’s assessment of risk posed by
the subrecipient (as described in para-
graph (b) of this section), the following
monitoring tools may be useful for the
pass-through entity to ensure proper
accountability and compliance with
program requirements and achieve-
ment of performance goals:
(1) Providing subrecipients with
training and technical assistance on
program-related matters; and
(2) Performing on-site reviews of the
subrecipient’s program operations;
(3) Arranging for agreed-upon-proce-
dures engagements as described in
§200.425.
(f) Verify that every subrecipient is
audited as required by Subpart F of
this part when it is expected that the
subrecipient’s Federal awards expended
during the respective fiscal year
equaled or exceeded the threshold set
forth in §200.501.
(g) Consider whether the results of
the subrecipient’s audits, on-site re-
views, or other monitoring indicate
conditions that necessitate adjust-
ments to the pass-through entity’s own
records.
(h) Consider taking enforcement ac-
tion against noncompliant subrecipi-
ents as described in §200.339 of this part
and in program regulations.
[85 FR 49543, Aug. 13, 2020, as amended at 86
FR 10440, Feb. 22, 2021]
§200.333 Fixed amount subawards.
With prior written approval from the
Federal awarding agency, a pass-
through entity may provide subawards
based on fixed amounts up to the Sim-
plified Acquisition Threshold, provided
that the subawards meet the require-
ments for fixed amount awards in
§200.201.
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OMB Guidance §200.336
RECORD RETENTION AND ACCESS
§200.334 Retention requirements for
records.
Financial records, supporting docu-
ments, statistical records, and all
other non-Federal entity records perti-
nent to a Federal award must be re-
tained for a period of three years from
the date of submission of the final ex-
penditure report or, for Federal awards
that are renewed quarterly or annu-
ally, from the date of the submission of
the quarterly or annual financial re-
port, respectively, as reported to the
Federal awarding agency or pass-
through entity in the case of a sub-
recipient. Federal awarding agencies
and pass-through entities must not im-
pose any other record retention re-
quirements upon non-Federal entities.
The only exceptions are the following:
(a) If any litigation, claim, or audit
is started before the expiration of the
3-year period, the records must be re-
tained until all litigation, claims, or
audit findings involving the records
have been resolved and final action
taken.
(b) When the non-Federal entity is
notified in writing by the Federal
awarding agency, cognizant agency for
audit, oversight agency for audit, cog-
nizant agency for indirect costs, or
pass-through entity to extend the re-
tention period.
(c) Records for real property and
equipment acquired with Federal funds
must be retained for 3 years after final
disposition.
(d) When records are transferred to or
maintained by the Federal awarding
agency or pass-through entity, the 3-
year retention requirement is not ap-
plicable to the non-Federal entity.
(e) Records for program income
transactions after the period of per-
formance. In some cases recipients
must report program income after the
period of performance. Where there is
such a requirement, the retention pe-
riod for the records pertaining to the
earning of the program income starts
from the end of the non-Federal enti-
ty’s fiscal year in which the program
income is earned.
(f) Indirect cost rate proposals and
cost allocations plans. This paragraph
applies to the following types of docu-
ments and their supporting records: In-
direct cost rate computations or pro-
posals, 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
proposal, plan, or other computation is
required to be submitted to the Federal
Government (or to the pass-through
entity) to form the basis for negotia-
tion of the rate, then the 3-year reten-
tion period for its supporting records
starts from the date of such submis-
sion.
(2) If not submitted for negotiation. If
the proposal, plan, or other computa-
tion is not required to be submitted to
the Federal Government (or to the
pass-through entity) for negotiation
purposes, then the 3-year retention pe-
riod for the proposal, plan, or computa-
tion and its supporting records starts
from the end of the fiscal year (or
other accounting period) covered by
the proposal, plan, or other computa-
tion.
§200.335 Requests for transfer of
records.
The Federal awarding agency must
request transfer of certain records to
its custody from the non-Federal enti-
ty when it determines that the records
possess long-term retention value.
However, in order to avoid duplicate
recordkeeping, the Federal awarding
agency may make arrangements for
the non-Federal entity to retain any
records that are continuously needed
for joint use.
§200.336 Methods for collection, trans-
mission, and storage of information.
The Federal awarding agency and the
non-Federal entity should, whenever
practicable, collect, transmit, and
store Federal award-related informa-
tion in open and machine-readable for-
mats rather than in closed formats or
on paper in accordance with applicable
legislative requirements. A machine-
readable format is a format in a stand-
ard computer language (not English
text) that can be read automatically by
a web browser or computer system. The
Federal awarding agency or pass-
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2 CFR Ch. II (1–1–22 Edition) §200.337
through entity must always provide or
accept paper versions of Federal award-
related information to and from the
non-Federal entity upon request. If
paper copies are submitted, the Federal
awarding agency or pass-through enti-
ty must not require more than an
original and two copies. When original
records are electronic and cannot be al-
tered, there is no need to create and re-
tain paper copies. When original
records are paper, electronic versions
may be substituted through the use of
duplication or other forms of elec-
tronic media provided that they are
subject to periodic quality control re-
views, provide reasonable safeguards
against alteration, and remain read-
able.
§200.337 Access to records.
(a) Records of non-Federal entities. The
Federal awarding agency, Inspectors
General, the Comptroller General of
the United States, and the pass-
through entity, or any of their author-
ized representatives, must have the
right of access to any documents, pa-
pers, or other records of the non-Fed-
eral entity which are pertinent to the
Federal award, in order to make au-
dits, examinations, excerpts, and tran-
scripts. The right also includes timely
and reasonable access to the non-Fed-
eral entity’s personnel for the purpose
of interview and discussion related to
such documents.
(b) Extraordinary and rare cir-
cumstances. Only under extraordinary
and rare circumstances would such ac-
cess include review of the true name of
victims of a crime. Routine monitoring
cannot be considered extraordinary and
rare circumstances that would neces-
sitate access to this information. When
access to the true name of victims of a
crime is necessary, appropriate steps to
protect this sensitive information must
be taken by both the non-Federal enti-
ty and the Federal awarding agency.
Any such access, other than under a
court order or subpoena pursuant to a
bona fide confidential investigation,
must be approved by the head of the
Federal awarding agency or delegate.
(c) Expiration of right of access. The
rights of access in this section are not
limited to the required retention pe-
riod but last as long as the records are
retained. Federal awarding agencies
and pass-through entities must not im-
pose any other access requirements
upon non-Federal entities.
§200.338 Restrictions on public access
to records.
No Federal awarding agency may
place restrictions on the non-Federal
entity that limit public access to the
records of the non-Federal entity perti-
nent to a Federal award, except for
protected personally identifiable infor-
mation (PII) or when the Federal
awarding agency can demonstrate that
such records will be kept confidential
and would have been exempted from
disclosure pursuant to the Freedom of
Information Act (5 U.S.C. 552) or con-
trolled unclassified information pursu-
ant to Executive Order 13556 if the
records had belonged to the Federal
awarding agency. The Freedom of In-
formation Act (5 U.S.C. 552) (FOIA)
does not apply to those records that re-
main under a non-Federal entity’s con-
trol except as required under §200.315.
Unless required by Federal, state,
local, and tribal statute, non-Federal
entities are not required to permit pub-
lic access to their records. The non-
Federal entity’s records provided to a
Federal agency generally will be sub-
ject to FOIA and applicable exemp-
tions.
REMEDIES FOR NONCOMPLIANCE
§200.339 Remedies for noncompliance.
If a non-Federal entity fails to com-
ply with the U.S. Constitution, Federal
statutes, regulations or the terms and
conditions of a Federal award, the Fed-
eral awarding agency or pass-through
entity may impose additional condi-
tions, as described in §200.208. If the
Federal awarding agency or pass-
through entity determines that non-
compliance cannot be remedied by im-
posing additional conditions, the Fed-
eral awarding agency or pass-through
entity may take one or more of the fol-
lowing actions, as appropriate in the
circumstances:
(a) Temporarily withhold cash pay-
ments pending correction of the defi-
ciency by the non-Federal entity or
more severe enforcement action by the
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OMB Guidance §200.340
Federal awarding agency or pass-
through entity.
(b) 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.
(c) Wholly or partly suspend or ter-
minate the Federal award.
(d) Initiate suspension or debarment
proceedings as authorized under 2 CFR
part 180 and Federal awarding agency
regulations (or in the case of a pass-
through entity, recommend such a pro-
ceeding be initiated by a Federal
awarding agency).
(e) Withhold further Federal awards
for the project or program.
(f) Take other remedies that may be
legally available.
§200.340 Termination.
(a) The Federal award may be termi-
nated in whole or in part as follows:
(1) By the Federal awarding agency
or pass-through entity, if a non-Fed-
eral entity fails to comply with the
terms and conditions of a Federal
award;
(2) By the Federal awarding agency
or pass-through entity, to the greatest
extent authorized by law, if an award
no longer effectuates the program
goals or agency priorities;
(3) By the Federal awarding agency
or pass-through entity with the con-
sent of the non-Federal entity, in
which case the two parties must agree
upon the termination conditions, in-
cluding the effective date and, in the
case of partial termination, the portion
to be terminated;
(4) By the non-Federal entity upon
sending to the Federal awarding agen-
cy or pass-through entity written noti-
fication 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 or pass-
through entity determines in the case
of partial termination that the reduced
or modified portion of the Federal
award or subaward will not accomplish
the purposes for which the Federal
award was made, the Federal awarding
agency or pass-through entity may ter-
minate the Federal award in its en-
tirety; or
(5) By the Federal awarding agency
or pass-through entity pursuant to ter-
mination provisions included in the
Federal award.
(b) A Federal awarding agency should
clearly and unambiguously specify ter-
mination provisions applicable to each
Federal award, in applicable regula-
tions or in the award, consistent with
this section.
(c) When a Federal awarding agency
terminates a Federal award prior to
the end of the period of performance
due to the non-Federal entity’s mate-
rial failure to comply with the Federal
award terms and conditions, the Fed-
eral awarding agency must report the
termination to the OMB-designated in-
tegrity and performance system acces-
sible through SAM (currently FAPIIS).
(1) The information required under
paragraph (c) of this section is not to
be reported to designated integrity and
performance system until the non-Fed-
eral entity either—
(i) Has exhausted its opportunities to
object or challenge the decision, see
§200.342; or
(ii) Has not, within 30 calendar days
after being notified of the termination,
informed the Federal awarding agency
that it intends to appeal the Federal
awarding agency’s decision to termi-
nate.
(2) If a Federal awarding agency,
after entering information into the
designated integrity and performance
system about a termination, subse-
quently:
(i) Learns that any of that informa-
tion is erroneous, the Federal awarding
agency must correct the information in
the system within three business days;
(ii) Obtains an update to that infor-
mation that could be helpful to other
Federal awarding agencies, the Federal
awarding agency is strongly encour-
aged to amend the information in the
system to incorporate the update in a
timely way.
(3) Federal awarding agencies, must
not post any information that will be
made publicly available in the non-
public segment of designated integrity
and performance system that is cov-
ered by a disclosure exemption under
the Freedom of Information Act. If the
non-Federal entity asserts within
seven calendar days to the Federal
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2 CFR Ch. II (1–1–22 Edition) §200.341
awarding agency who posted the infor-
mation, that some of the information
made publicly available is covered by a
disclosure exemption under the Free-
dom of Information Act, the Federal
awarding agency who posted the infor-
mation must remove the posting with-
in seven calendar days of receiving the
assertion. Prior to reposting the releas-
able information, the Federal agency
must resolve the issue in accordance
with the agency’s Freedom of Informa-
tion Act procedures.
(d) When a Federal award is termi-
nated or partially terminated, both the
Federal awarding agency or pass-
through entity and the non-Federal en-
tity remain responsible for compliance
with the requirements in §§200.344 and
200.345.
§200.341 Notification of termination
requirement.
(a) The Federal agency or pass-
through entity must provide to the
non-Federal entity a notice of termi-
nation.
(b) If the Federal award is terminated
for the non-Federal entity’s material
failure to comply with the U.S. Con-
stitution, Federal statutes, regula-
tions, or terms and conditions of the
Federal award, the notification must
state that—
(1) The termination decision will be
reported to the OMB-designated integ-
rity and performance system accessible
through SAM (currently FAPIIS);
(2) The information will be available
in the OMB-designated integrity and
performance system for a period of five
years from the date of the termination,
then archived;
(3) Federal awarding agencies that
consider making a Federal award to
the non-Federal entity during that five
year period must consider that infor-
mation in judging whether the non-
Federal entity is qualified to receive
the Federal award, when the Federal
share of the Federal award is expected
to exceed the simplified acquisition
threshold over the period of perform-
ance;
(4) The non-Federal entity may com-
ment on any information the OMB-des-
ignated integrity and performance sys-
tem contains about the non-Federal en-
tity for future consideration by Fed-
eral awarding agencies. The non-Fed-
eral entity may submit comments to
the awardee integrity and performance
portal accessible through SAM (cur-
rently (CPARS).
(5) Federal awarding agencies will
consider non-Federal entity comments
when determining whether the non-
Federal entity is qualified for a future
Federal award.
(c) Upon termination of a Federal
award, the Federal awarding agency
must provide the information required
under FFATA to the Federal website
established to fulfill the requirements
of FFATA, and update or notify any
other relevant governmentwide sys-
tems or entities of any indications of
poor performance as required by 41
U.S.C. 417b and 31 U.S.C. 3321 and im-
plementing guidance at 2 CFR part 77
(forthcoming at time of publication).
See also the requirements for Suspen-
sion and Debarment at 2 CFR part 180.
§200.342 Opportunities to object, hear-
ings, and appeals.
Upon taking any remedy for non-
compliance, the Federal awarding
agency must provide the non-Federal
entity an opportunity to object and
provide information and documenta-
tion challenging the suspension or ter-
mination action, in accordance with
written processes and procedures pub-
lished by the Federal awarding agency.
The Federal awarding agency or pass-
through entity must comply with any
requirements for hearings, appeals or
other administrative proceedings to
which the non-Federal entity is enti-
tled under any statute or regulation
applicable to the action involved.
§200.343 Effects of suspension and ter-
mination.
Costs to the non-Federal entity re-
sulting from financial obligations in-
curred by the non-Federal entity dur-
ing a suspension or after termination
of a Federal award or subaward are not
allowable unless the Federal awarding
agency or pass-through entity ex-
pressly authorizes them in the notice
of suspension or termination or subse-
quently. However, costs during suspen-
sion or after termination are allowable
if:
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OMB Guidance §200.344
(a) The costs result from financial
obligations which were properly in-
curred by the non-Federal entity before
the effective date of suspension or ter-
mination, are not in anticipation of it;
and
(b) The costs would be allowable if
the Federal award was not suspended
or expired normally at the end of the
period of performance in which the ter-
mination takes effect.
CLOSEOUT
§200.344 Closeout.
The Federal awarding agency or pass-
through entity will close out the Fed-
eral award when it determines that all
applicable administrative actions and
all required work of the Federal award
have been completed by the non-Fed-
eral entity. If the non-Federal entity
fails to complete the requirements, the
Federal awarding agency or pass-
through entity will proceed to close
out the Federal award with the infor-
mation available. This section specifies
the actions the non-Federal entity and
Federal awarding agency or pass-
through entity must take to complete
this process at the end of the period of
performance.
(a) The recipient must submit, no
later than 120 calendar days after the
end date of the period of performance,
all financial, performance, and other
reports as required by the terms and
conditions of the Federal award. A sub-
recipient must submit to the pass-
through entity, no later than 90 cal-
endar days (or an earlier date as agreed
upon by the pass-through entity and
subrecipient) after the end date of the
period of performance, all financial,
performance, and other reports as re-
quired by the terms and conditions of
the Federal award. The Federal award-
ing agency or pass-through entity may
approve extensions when requested and
justified by the non-Federal entity, as
applicable.
(b) Unless the Federal awarding agen-
cy or pass-through entity authorizes an
extension, a non-Federal entity must
liquidate all financial obligations in-
curred under the Federal award no
later than 120 calendar days after the
end date of the period of performance
as specified in the terms and conditions
of the Federal award.
(c) The Federal awarding agency or
pass-through entity must make prompt
payments to the non-Federal entity for
costs meeting the requirements in Sub-
part E of this part under the Federal
award being closed out.
(d) The non-Federal entity must
promptly refund any balances of unob-
ligated cash that the Federal awarding
agency or pass-through entity paid in
advance or paid and that are not au-
thorized to be retained by the non-Fed-
eral entity for use in other projects.
See OMB Circular A–129 and see
§200.346, for requirements regarding
unreturned amounts that become de-
linquent debts.
(e) Consistent with the terms and
conditions of the Federal award, the
Federal awarding agency or pass-
through entity must make a settle-
ment for any upward or downward ad-
justments to the Federal share of costs
after closeout reports are received.
(f) The non-Federal entity must ac-
count for any real and personal prop-
erty acquired with Federal funds or re-
ceived from the Federal Government in
accordance with §§200.310 through
200.316 and 200.330.
(g) When a recipient or subrecipient
completes all closeout requirements,
the Federal awarding agency or pass-
through entity must promptly com-
plete all closeout actions for Federal
awards. The Federal awarding agency
must make every effort to complete
closeout actions no later than one year
after the end of the period of perform-
ance unless otherwise directed by au-
thorizing statutes. Closeout actions in-
clude Federal awarding agency actions
in the grants management and pay-
ment systems.
(h) If the non-Federal entity does not
submit all reports in accordance with
this section and the terms and condi-
tions of the Federal Award, the Federal
awarding agency must proceed to close
out with the information available
within one year of the period of per-
formance end date.
(i) If the non-Federal entity does not
submit all reports in accordance with
this section within one year of the pe-
riod of performance end date, the Fed-
eral awarding agency must report the
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2 CFR Ch. II (1–1–22 Edition) §200.345
non-Federal entity’s material failure
to comply with the terms and condi-
tions of the award with the OMB-des-
ignated integrity and performance sys-
tem (currently FAPIIS). Federal
awarding agencies may also pursue
other enforcement actions per §200.339.
POST-CLOSEOUT ADJUSTMENTS AND
CONTINUING RESPONSIBILITIES
§200.345 Post-closeout adjustments
and continuing responsibilities.
(a) The closeout of a Federal award
does not affect any of the following:
(1) The right of the Federal awarding
agency or pass-through entity to dis-
allow costs and recover funds on the
basis of a later audit or other review.
The Federal awarding agency or pass-
through entity must make any cost
disallowance determination and notify
the non-Federal entity within the
record retention period.
(2) The requirement for the non-Fed-
eral entity to return any funds due as
a result of later refunds, corrections, or
other transactions including final indi-
rect cost rate adjustments.
(3) The ability of the Federal award-
ing agency to make financial adjust-
ments to a previously closed award
such as resolving indirect cost pay-
ments and making final payments.
(4) Audit requirements in subpart F
of this part.
(5) Property management and dis-
position requirements in §§200.310
through 200.316 of this subpart.
(6) Records retention as required in
§§200.334 through 200.337 of this sub-
part.
(b) After closeout of the Federal
award, a relationship created under the
Federal award may be modified or
ended in whole or in part with the con-
sent of the Federal awarding agency or
pass-through entity and the non-Fed-
eral entity, provided the responsibil-
ities of the non-Federal entity referred
to in paragraph (a) of this section, in-
cluding those for property management
as applicable, are considered and provi-
sions made for continuing responsibil-
ities of the non-Federal entity, as ap-
propriate.
COLLECTION OF AMOUNTS DUE
§200.346 Collection of amounts due.
(a) Any funds paid to the non-Federal
entity in excess of the amount to
which the non-Federal entity is finally
determined to be entitled under the
terms of the Federal award constitute
a debt to the Federal Government. If
not paid within 90 calendar days after
demand, the Federal awarding agency
may reduce the debt by:
(1) Making an administrative offset
against other requests for reimburse-
ments;
(2) Withholding advance payments
otherwise due to the non-Federal enti-
ty; or
(3) Other action permitted by Federal
statute.
(b) Except where otherwise provided
by statutes or regulations, the Federal
awarding agency will charge interest
on an overdue debt in accordance with
the Federal Claims Collection Stand-
ards (31 CFR parts 900 through 999). The
date from which interest is computed
is not extended by litigation or the fil-
ing of any form of appeal.
Subpart E—Cost Principles
GENERAL PROVISIONS
§200.400 Policy guide.
The application of these cost prin-
ciples is based on the fundamental
premises that:
(a) The non-Federal entity is respon-
sible for the efficient and effective ad-
ministration of the Federal award
through the application of sound man-
agement practices.
(b) The non-Federal entity assumes
responsibility for administering Fed-
eral funds in a manner consistent with
underlying agreements, program objec-
tives, and the terms and conditions of
the Federal award.
(c) The non-Federal entity, in rec-
ognition of its own unique combination
of staff, facilities, and experience, has
the primary responsibility for employ-
ing whatever form of sound organiza-
tion and management techniques may
be necessary in order to assure proper
and efficient administration of the
Federal award.
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OMB Guidance §200.401
(d) The application of these cost prin-
ciples should require no significant
changes in the internal accounting
policies and practices of the non-Fed-
eral entity. However, the accounting
practices of the non-Federal entity
must be consistent with these cost
principles and support the accumula-
tion of costs as required by the prin-
ciples, and must provide for adequate
documentation to support costs
charged to the Federal award.
(e) In reviewing, negotiating and ap-
proving cost allocation plans or indi-
rect cost proposals, the cognizant agen-
cy for indirect costs should generally
assure that the non-Federal entity is
applying these cost accounting prin-
ciples on a consistent basis during
their review and negotiation of indirect
cost proposals. Where wide variations
exist in the treatment of a given cost
item by the non-Federal entity, the
reasonableness and equity of such
treatments should be fully considered.
See the definition of indirect (facilities &
administrative (F&A)) costs in §200.1 of
this part.
(f) For non-Federal entities that edu-
cate and engage students in research,
the dual role of students as both train-
ees and employees (including pre- and
post-doctoral staff) contributing to the
completion of Federal awards for re-
search must be recognized in the appli-
cation of these principles.
(g) The non-Federal entity may not
earn or keep any profit resulting from
Federal financial assistance, unless ex-
plicitly authorized by the terms and
conditions of the Federal award. See
also §200.307.
[78 FR 78608, Dec. 26, 2013, as amended at 79
FR 75885, Dec. 19, 2014; 85 FR 49561, Aug. 13,
2020]
§200.401 Application.
(a) General. These principles must be
used in determining the allowable costs
of work performed by the non-Federal
entity under Federal awards. These
principles also must be used by the
non-Federal entity as a guide in the
pricing of fixed-price contracts and
subcontracts where costs are used in
determining the appropriate price. The
principles do not apply to:
(1) Arrangements under which Fed-
eral financing is in the form of loans,
scholarships, fellowships, traineeships,
or other fixed amounts based on such
items as education allowance or pub-
lished tuition rates and fees.
(2) For IHEs, capitation awards,
which are awards based on case counts
or number of beneficiaries according to
the terms and conditions of the Federal
award.
(3) Fixed amount awards. See also
§200.1 Definitions and 200.201.
(4) Federal awards to hospitals (see
appendix IX to this part).
(5) Other awards under which the
non-Federal entity is not required to
account to the Federal Government for
actual costs incurred.
(b) Federal contract. Where a Federal
contract awarded to a non-Federal en-
tity is subject to the Cost Accounting
Standards (CAS), it incorporates the
applicable CAS clauses, Standards, and
CAS administration requirements per
the 48 CFR Chapter 99 and 48 CFR part
30 (FAR Part 30). CAS applies directly
to the CAS-covered contract and the
Cost Accounting Standards at 48 CFR
parts 9904 or 9905 takes precedence over
the cost principles in this subpart E
with respect to the allocation of costs.
When a contract with a non-Federal
entity is subject to full CAS coverage,
the allowability of certain costs under
the cost principles will be affected by
the allocation provisions of the Cost
Accounting Standards (e.g., CAS 414—
48 CFR 9904.414, Cost of Money as an
Element of the Cost of Facilities Cap-
ital, and CAS 417—48 CFR 9904.417, Cost
of Money as an Element of the Cost of
Capital Assets Under Construction),
apply rather the allowability provi-
sions of §200.449. In complying with
those requirements, the non-Federal
entity’s application of cost accounting
practices for estimating, accumu-
lating, and reporting costs for other
Federal awards and other cost objec-
tives under the CAS-covered contract
still must be consistent with its cost
accounting practices for the CAS-cov-
ered contracts. In all cases, only one
set of accounting records needs to be
maintained for the allocation of costs
by the non-Federal entity.
(c) Exemptions. Some nonprofit orga-
nizations, because of their size and na-
ture of operations, can be considered to
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2 CFR Ch. II (1–1–22 Edition) §200.402
be similar to for-profit entities for pur-
pose of applicability of cost principles.
Such nonprofit organizations must op-
erate under Federal cost principles ap-
plicable to for-profit entities located at
48 CFR 31.2. A listing of these organiza-
tions is contained in appendix VIII to
this part. Other organizations, as ap-
proved by the cognizant agency for in-
direct costs, may be added from time
to time.
[78 FR 78608, Dec. 26, 2013, as amended at 85
FR 49562, Aug. 13, 2020]
BASIC CONSIDERATIONS
§200.402 Composition of costs.
Total cost. The total cost of a Federal
award is the sum of the allowable di-
rect and allocable indirect costs less
any applicable credits.
§200.403 Factors affecting allowability
of costs.
Except where otherwise authorized
by statute, costs must meet the fol-
lowing general criteria in order to be
allowable under Federal awards:
(a) Be necessary and reasonable for
the performance of the Federal award
and be allocable thereto under these
principles.
(b) Conform to any limitations or ex-
clusions set forth in these principles or
in the Federal 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 ac-
tivities of the non-Federal entity.
(d) Be accorded consistent treatment.
A cost may not be assigned to a Fed-
eral award as a direct cost if any other
cost incurred for the same purpose in
like circumstances has been allocated
to the Federal award as an indirect
cost.
(e) Be determined in accordance with
generally accepted accounting prin-
ciples (GAAP), except, for state and
local governments and Indian tribes
only, as otherwise provided for in this
part.
(f) Not be included as a cost or used
to meet cost sharing or matching re-
quirements of any other federally-fi-
nanced program in either the current
or a prior period. See also §200.306(b).
(g) Be adequately documented. See
also §§200.300 through 200.309 of this
part.
(h) Cost must be incurred during the
approved budget period. The Federal
awarding agency is authorized, at its
discretion, to waive prior written ap-
provals to carry forward unobligated
balances to subsequent budget periods
pursuant to §200.308(e)(3).
[78 FR 78608, Dec. 26, 2013, as amended at 85
FR 49562, Aug. 13, 2020]
§200.404 Reasonable costs.
A cost is reasonable if, in its nature
and amount, it does not exceed that
which would be incurred by a prudent
person under the circumstances pre-
vailing at the time the decision was
made to incur the cost. The question of
reasonableness is particularly impor-
tant when the non-Federal entity is
predominantly federally-funded. In de-
termining reasonableness of a given
cost, consideration must be given to:
(a) Whether the cost is of a type gen-
erally recognized as ordinary and nec-
essary for the operation of the non-
Federal entity or the proper and effi-
cient performance of the Federal
award.
(b) The restraints or requirements
imposed by such factors as: sound busi-
ness practices; arm’s-length bar-
gaining; Federal, state, local, tribal,
and other laws and regulations; and
terms and conditions of the Federal
award.
(c) Market prices for comparable
goods or services for the geographic
area.
(d) Whether the individuals con-
cerned acted with prudence in the cir-
cumstances considering their respon-
sibilities to the non-Federal entity, its
employees, where applicable its stu-
dents or membership, the public at
large, and the Federal Government.
(e) Whether the non-Federal entity
significantly deviates from its estab-
lished practices and policies regarding
the incurrence of costs, which may
unjustifiably increase the Federal
award’s cost.
[78 FR 78608, Dec. 26, 2013, as amended at 79
FR 75885, Dec. 19, 2014]
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OMB Guidance §200.407
§200.405 Allocable costs.
(a) A cost is allocable to a particular
Federal award or other cost objective if
the goods or services involved are
chargeable or assignable to that Fed-
eral award or cost objective in accord-
ance with relative benefits received.
This standard is met if the cost:
(1) Is incurred specifically for the
Federal award;
(2) Benefits both the Federal award
and other work of the non-Federal en-
tity and can be distributed in propor-
tions that may be approximated using
reasonable methods; and
(3) Is necessary to the overall oper-
ation of the non-Federal entity and is
assignable in part to the Federal award
in accordance with the principles in
this subpart.
(b) All activities which benefit from
the non-Federal entity’s indirect (F&A)
cost, including unallowable activities
and donated services by the non-Fed-
eral entity or third parties, will receive
an appropriate allocation of indirect
costs.
(c) Any cost allocable to a particular
Federal award under the principles pro-
vided for in this part may not be
charged to other Federal awards to
overcome fund deficiencies, to avoid re-
strictions imposed by Federal statutes,
regulations, or terms and conditions of
the Federal awards, or for other rea-
sons. However, this prohibition would
not preclude the non-Federal entity
from shifting costs that are allowable
under two or more Federal awards in
accordance with existing Federal stat-
utes, regulations, or the terms and con-
ditions of the Federal awards.
(d) Direct cost allocation principles:
If a cost benefits two or more projects
or activities in proportions that can be
determined without undue effort or
cost, the cost must be allocated to the
projects based on the proportional ben-
efit. If a cost benefits two or more
projects or activities in proportions
that cannot be determined because of
the interrelationship of the work in-
volved, then, notwithstanding para-
graph (c) of this section, the costs may
be allocated or transferred to bene-
fitted projects on any reasonable docu-
mented basis. Where the purchase of
equipment or other capital asset is spe-
cifically authorized under a Federal
award, the costs are assignable to the
Federal award regardless of the use
that may be made of the equipment or
other capital asset involved when no
longer needed for the purpose for which
it was originally required. See also
§§200.310 through 200.316 and 200.439.
(e) If the contract is subject to CAS,
costs must be allocated to the contract
pursuant to the Cost Accounting
Standards. To the extent that CAS is
applicable, the allocation of costs in
accordance with CAS takes precedence
over the allocation provisions in this
part.
[78 FR 78608, Dec. 26, 2013, as amended at 79
FR 75885, Dec. 19, 2014; 85 FR 49562, Aug. 13,
2020]
§200.406 Applicable credits.
(a) Applicable credits refer to those
receipts or reduction-of-expenditure-
type transactions that offset or reduce
expense items allocable to the Federal
award as direct or indirect (F&A) costs.
Examples of such transactions are: pur-
chase discounts, rebates or allowances,
recoveries or indemnities on losses, in-
surance refunds or rebates, and adjust-
ments of overpayments or erroneous
charges. To the extent that such cred-
its accruing to or received by the non-
Federal entity relate to allowable
costs, they must be credited to the
Federal award either as a cost reduc-
tion or cash refund, as appropriate.
(b) In some instances, the amounts
received from the Federal Government
to finance activities or service oper-
ations of the non-Federal entity should
be treated as applicable credits. Spe-
cifically, the concept of netting such
credit items (including any amounts
used to meet cost sharing or matching
requirements) must be recognized in
determining the rates or amounts to be
charged to the Federal award. (See
§§200.436 and 200.468, for areas of poten-
tial application in the matter of Fed-
eral financing of activities.)
[78 FR 78608, Dec. 26, 2013, as amended at 79
FR 75885, Dec. 19, 2014; 85 FR 49562, Aug. 13,
2020]
§200.407 Prior written approval (prior
approval).
Under any given Federal award, the
reasonableness and allocability of cer-
tain items of costs may be difficult to
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2 CFR Ch. II (1–1–22 Edition) §200.408
determine. In order to avoid subse-
quent disallowance or dispute based on
unreasonableness or nonallocability,
the non-Federal entity may seek the
prior written approval of the cognizant
agency for indirect costs or the Federal
awarding agency in advance of the in-
currence of special or unusual costs.
Prior written approval should include
the timeframe or scope of the agree-
ment. The absence of prior written ap-
proval on any element of cost will not,
in itself, affect the reasonableness or
allocability of that element, unless
prior approval is specifically required
for allowability as described under cer-
tain circumstances in the following
sections of this part:
(a) §200.201 Use of grant agreements
(including fixed amount awards), coop-
erative agreements, and contracts,
paragraph (b)(5);
(b) §200.306 Cost sharing or matching;
(c) §200.307 Program income;
(d) §200.308 Revision of budget and
program plans;
(e) §200.311 Real property;
(f) §200.313 Equipment;
(g) §200.333 Fixed amount subawards;
(h) §200.413 Direct costs, paragraph
(c);
(i) §200.430 Compensation—personal
services, paragraph (h);
(j) §200.431 Compensation—fringe ben-
efits;
(k) §200.438 Entertainment costs;
(l) §200.439 Equipment and other cap-
ital expenditures;
(m) §200.440 Exchange rates;
(n) §200.441 Fines, penalties, damages
and other settlements;
(o) §200.442 Fund raising and invest-
ment management costs;
(p) §200.445 Goods or services for per-
sonal use;
(q) §200.447 Insurance and indem-
nification;
(r) §200.454 Memberships, subscrip-
tions, and professional activity costs,
paragraph (c);
(s) §200.455 Organization costs;
(t) §200.456 Participant support costs;
(u) §200.458 Pre-award costs;
(v) §200.462 Rearrangement and re-
conversion costs;
(w) §200.467 Selling and marketing
costs;
(x) §200.470 Taxes (including Value
Added Tax); and
(y) §200.475 Travel costs.
[78 FR 78608, Dec. 26, 2013, as amended at 79
FR 75885, Dec. 19, 2014; 85 FR 49562, Aug. 13,
2020]
§200.408 Limitation on allowance of
costs.
The Federal award may be subject to
statutory requirements that limit the
allowability of costs. When the max-
imum amount allowable under a limi-
tation is less than the total amount de-
termined in accordance with the prin-
ciples in this part, the amount not re-
coverable under the Federal award may
not be charged to the Federal award.
§200.409 Special considerations.
In addition to the basic consider-
ations regarding the allowability of
costs highlighted in this subtitle, other
subtitles in this part describe special
considerations and requirements appli-
cable to states, local governments, In-
dian tribes, and IHEs. In addition, cer-
tain provisions among the items of cost
in this subpart are only applicable to
certain types of non-Federal entities,
as specified in the following sections:
(a) Direct and Indirect (F&A) Costs
(§§200.412–200.415) of this subpart;
(b) Special Considerations for States,
Local Governments and Indian Tribes
(§§200.416 and 200.417) of this subpart;
and
(c) Special Considerations for Insti-
tutions of Higher Education (§§200.418
and 200.419) of this subpart.
[85 FR 49562, Aug. 13, 2020]
§200.410 Collection of unallowable
costs.
Payments made for costs determined
to be unallowable by either the Federal
awarding agency, cognizant agency for
indirect costs, or pass-through entity,
either as direct or indirect costs, must
be refunded (including interest) to the
Federal Government in accordance
with instructions from the Federal
agency that determined the costs are
unallowable unless Federal statute or
regulation directs otherwise. See also
§§200.300 through 200.309 in subpart D of
this part.
[85 FR 49562, Aug. 13, 2020]
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OMB Guidance §200.413
§200.411 Adjustment of previously ne-
gotiated indirect (F&A) cost rates
containing unallowable costs.
(a) Negotiated indirect (F&A) cost
rates based on a proposal later found to
have included costs that:
(1) Are unallowable as specified by
Federal statutes, regulations or the
terms and conditions of a Federal
award; or
(2) Are unallowable because they are
not allocable to the Federal award(s),
must be adjusted, or a refund must be
made, in accordance with the require-
ments of this section. These adjust-
ments or refunds are designed to cor-
rect the proposals used to establish the
rates and do not constitute a reopening
of the rate negotiation. The adjust-
ments or refunds will be made regard-
less of the type of rate negotiated (pre-
determined, final, fixed, or provi-
sional).
(b) For rates covering a future fiscal
year of the non-Federal entity, the un-
allowable costs will be removed from
the indirect (F&A) cost pools and the
rates appropriately adjusted.
(c) For rates covering a past period,
the Federal share of the unallowable
costs will be computed for each year
involved and a cash refund (including
interest chargeable in accordance with
applicable regulations) will be made to
the Federal Government. If cash re-
funds are made for past periods covered
by provisional or fixed rates, appro-
priate adjustments will be made when
the rates are finalized to avoid dupli-
cate recovery of the unallowable costs
by the Federal Government.
(d) For rates covering the current pe-
riod, either a rate adjustment or a re-
fund, as described in paragraphs (b) and
(c) of this section, must be required by
the cognizant agency for indirect costs.
The choice of method must be at the
discretion of the cognizant agency for
indirect costs, based on its judgment as
to which method would be most prac-
tical.
(e) The amount or proportion of unal-
lowable costs included in each year’s
rate will be assumed to be the same as
the amount or proportion of unallow-
able costs included in the base year
proposal used to establish the rate.
DIRECT AND INDIRECT (F&A) COSTS
§200.412 Classification of costs.
There is no universal rule for
classifying certain costs as either di-
rect or indirect (F&A) under every ac-
counting system. A cost may be direct
with respect to some specific service or
function, but indirect with respect to
the Federal award or other final cost
objective. Therefore, it is essential
that each item of cost incurred for the
same purpose be treated consistently
in like circumstances either as a direct
or an indirect (F&A) cost in order to
avoid possible double-charging of Fed-
eral awards. Guidelines for determining
direct and indirect (F&A) costs charged
to Federal awards are provided in this
subpart.
§200.413 Direct costs.
(a) General. Direct costs are those
costs that can be identified specifically
with a particular final cost objective,
such as a Federal award, or other inter-
nally or externally funded activity, or
that can be directly assigned to such
activities relatively easily with a high
degree of accuracy. Costs incurred for
the same purpose in like circumstances
must be treated consistently as either
direct or indirect (F&A) costs. See also
§200.405.
(b) Application to Federal awards.
Identification with the Federal award
rather than the nature of the goods and
services involved is the determining
factor in distinguishing direct from in-
direct (F&A) costs of Federal awards.
Typical costs charged directly to a
Federal award are the compensation of
employees who work on that award,
their related fringe benefit costs, the
costs of materials and other items of
expense incurred for the Federal award.
If directly related to a specific award,
certain costs that otherwise would be
treated as indirect costs may also be
considered direct costs. Examples in-
clude extraordinary utility consump-
tion, the cost of materials supplied
from stock or services rendered by spe-
cialized facilities, program evaluation
costs, or other institutional service op-
erations.
(c) The salaries of administrative and
clerical staff should normally be treat-
ed as indirect (F&A) costs. Direct
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2 CFR Ch. II (1–1–22 Edition) §200.414
charging of these costs may be appro-
priate only if all of the following condi-
tions are met:
(1) Administrative or clerical serv-
ices are integral to a project or activ-
ity;
(2) Individuals involved can be spe-
cifically identified with the project or
activity;
(3) Such costs are explicitly included
in the budget or have the prior written
approval of the Federal awarding agen-
cy; and
(4) The costs are not also recovered
as indirect costs.
(d) Minor items. Any direct cost of
minor amount may be treated as an in-
direct (F&A) cost for reasons of practi-
cality where such accounting treat-
ment for that item of cost is consist-
ently applied to all Federal and non-
Federal cost objectives.
(e) The costs of certain activities are
not allowable as charges to Federal
awards. However, even though these
costs are unallowable for purposes of
computing charges to Federal awards,
they nonetheless must be treated as di-
rect costs for purposes of determining
indirect (F&A) cost rates and be allo-
cated their equitable share of the non-
Federal entity’s indirect costs if they
represent activities which:
(1) Include the salaries of personnel,
(2) Occupy space, and
(3) Benefit from the non-Federal enti-
ty’s indirect (F&A) costs.
(f) For nonprofit organizations, the
costs of activities performed by the
non-Federal entity primarily as a serv-
ice to members, clients, or the general
public when significant and necessary
to the non-Federal entity’s mission
must be treated as direct costs whether
or not allowable, and be allocated an
equitable share of indirect (F&A) costs.
Some examples of these types of activi-
ties include:
(1) Maintenance of membership rolls,
subscriptions, publications, and related
functions. See also §200.454.
(2) Providing services and informa-
tion to members, legislative or admin-
istrative bodies, or the public. See also
§§200.454 and 200.450.
(3) Promotion, lobbying, and other
forms of public relations. See also
§§200.421 and 200.450.
(4) Conferences except those held to
conduct the general administration of
the non-Federal entity. See also
§200.432.
(5) Maintenance, protection, and in-
vestment of special funds not used in
operation of the non-Federal entity.
See also §200.442.
(6) Administration of group benefits
on behalf of members or clients, in-
cluding life and hospital insurance, an-
nuity or retirement plans, and finan-
cial aid. See also §200.431.
[78 FR 78608, Dec. 26, 2013, as amended at 79
FR 75885, Dec. 19, 2014; 85 FR 49562, Aug. 13,
2020]
§200.414 Indirect (F&A) costs.
(a) Facilities and administration classi-
fication. For major Institutions of
Higher Education (IHE) and major non-
profit organizations, indirect (F&A)
costs must be classified within two
broad categories: ‘‘Facilities’’ and
‘‘Administration.’’ ‘‘Facilities’’ is de-
fined as depreciation on buildings,
equipment and capital improvement,
interest on debt associated with cer-
tain buildings, equipment and capital
improvements, and operations and
maintenance expenses. ‘‘Administra-
tion’’ is defined as general administra-
tion and general expenses such as the
director’s office, accounting, personnel
and all other types of expenditures not
listed specifically under one of the sub-
categories of ‘‘Facilities’’ (including
cross allocations from other pools,
where applicable). For nonprofit orga-
nizations, library expenses are included
in the ‘‘Administration’’ category; for
IHEs, they are included in the ‘‘Facili-
ties’’ category. Major IHEs are defined
as those required to use the Standard
Format for Submission as noted in ap-
pendix III to this part, and Rate Deter-
mination for Institutions of Higher
Education paragraph C. 11. Major non-
profit organizations are those which re-
ceive more than $10 million dollars in
direct Federal funding.
(b) Diversity of nonprofit organizations.
Because of the diverse characteristics
and accounting practices of nonprofit
organizations, it is not possible to
specify the types of cost which may be
classified as indirect (F&A) cost in all
situations. Identification with a Fed-
eral award rather than the nature of
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OMB Guidance §200.414
the goods and services involved is the
determining factor in distinguishing
direct from indirect (F&A) costs of
Federal awards. However, typical ex-
amples of indirect (F&A) cost for many
nonprofit organizations may include
depreciation on buildings and equip-
ment, the costs of operating and main-
taining facilities, and general adminis-
tration and general expenses, such as
the salaries and expenses of executive
officers, personnel administration, and
accounting.
(c) Federal Agency Acceptance of Nego-
tiated Indirect Cost Rates. (See also
§200.306.)
(1) The negotiated rates must be ac-
cepted by all Federal awarding agen-
cies. A Federal awarding agency may
use a rate different from the negotiated
rate for a class of Federal awards or a
single Federal award only when re-
quired by Federal statute or regula-
tion, or when approved by a Federal
awarding agency head or delegate
based on documented justification as
described in paragraph (c)(3) of this
section.
(2) The Federal awarding agency head
or delegate must notify OMB of any ap-
proved deviations.
(3) The Federal awarding agency
must implement, and make publicly
available, the policies, procedures and
general decision-making criteria that
their programs will follow to seek and
justify deviations from negotiated
rates.
(4) As required under §200.204, the
Federal awarding agency must include
in the notice of funding opportunity
the policies relating to indirect cost
rate reimbursement, matching, or cost
share as approved under paragraph
(e)(1) of this section. As appropriate,
the Federal agency should incorporate
discussion of these policies into Fed-
eral awarding agency outreach activi-
ties with non-Federal entities prior to
the posting of a notice of funding op-
portunity.
(d) Pass-through entities are subject
to the requirements in §200.332(a)(4).
(e) Requirements for development
and submission of indirect (F&A) cost
rate proposals and cost allocation
plans are contained in Appendices III–
VII and Appendix IX as follows:
(1) Appendix III to Part 200—Indirect
(F&A) Costs Identification and Assign-
ment, and Rate Determination for In-
stitutions of Higher Education (IHEs);
(2) Appendix IV to Part 200—Indirect
(F&A) Costs Identification and Assign-
ment, and Rate Determination for Non-
profit Organizations;
(3) Appendix V to Part 200—State/
Local Governmentwide Central Service
Cost Allocation Plans;
(4) Appendix VI to Part 200—Public
Assistance Cost Allocation Plans;
(5) Appendix VII to Part 200—States
and Local Government and Indian
Tribe Indirect Cost Proposals; and
(6) Appendix IX to Part 200—Hospital
Cost Principles.
(f) In addition to the procedures out-
lined in the appendices in paragraph (e)
of this section, any non-Federal entity
that does not have a current nego-
tiated (including provisional) rate, ex-
cept for those non-Federal entities de-
scribed in appendix VII to this part,
paragraph D.1.b, may elect to charge a
de minimis rate of 10% of modified
total direct costs (MTDC) which may
be used indefinitely. No documentation
is required to justify the 10% de mini-
mis indirect cost rate. As described in
§200.403, costs must be consistently
charged as either indirect or direct
costs, but may not be double charged
or inconsistently charged as both. If
chosen, this methodology once elected
must be used consistently for all Fed-
eral awards until such time as a non-
Federal entity chooses to negotiate for
a rate, which the non-Federal entity
may apply to do at any time.
(g) Any non-Federal entity that has a
current federally-negotiated indirect
cost rate may apply for a one-time ex-
tension of the rates in that agreement
for a period of up to four years. This
extension will be subject to the review
and approval of the cognizant agency
for indirect costs. If an extension is
granted the non-Federal entity may
not request a rate review until the ex-
tension period ends. At the end of the
4-year extension, the non-Federal enti-
ty must re-apply to negotiate a rate.
Subsequent one-time extensions (up to
four years) are permitted if a renegoti-
ation is completed between each exten-
sion request.
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2 CFR Ch. II (1–1–22 Edition) §200.415
(h) The federally negotiated indirect
rate, distribution base, and rate type
for a non-Federal entity (except for the
Indian tribes or tribal organizations, as
defined in the Indian Self Determina-
tion, Education and Assistance Act, 25
U.S.C. 450b(1)) must be available pub-
licly on an OMB-designated Federal
website.
[78 FR 78608, Dec. 26, 2013, as amended at 79
FR 75886, Dec. 19, 2014; 85 FR 49563, Aug. 13,
2020]
§200.415 Required certifications.
Required certifications include:
(a) To assure that expenditures are
proper and in accordance with the
terms and conditions of the Federal
award and approved project budgets,
the annual and final fiscal reports or
vouchers requesting payment under the
agreements must include a certifi-
cation, signed by an official who is au-
thorized to legally bind the non-Fed-
eral entity, which reads as follows: ‘‘By
signing this report, I certify to the best
of my knowledge and belief that the re-
port is true, complete, and accurate,
and the expenditures, disbursements
and cash receipts are for the purposes
and objectives set forth in the terms
and conditions of the Federal award. I
am aware that any false, fictitious, or
fraudulent information, or the omis-
sion of any material fact, may subject
me to criminal, civil or administrative
penalties for fraud, false statements,
false claims or otherwise. (U.S. Code
Title 18, Section 1001 and Title 31, Sec-
tions 3729–3730 and 3801–3812).’’
(b) Certification of cost allocation
plan or indirect (F&A) cost rate pro-
posal. Each cost allocation plan or in-
direct (F&A) cost rate proposal must
comply with the following:
(1) A proposal to establish a cost allo-
cation plan or an indirect (F&A) cost
rate, whether submitted to a Federal
cognizant agency for indirect costs or
maintained on file by the non-Federal
entity, must be certified by the non-
Federal entity using the Certificate of
Cost Allocation Plan or Certificate of
Indirect Costs as set forth in appen-
dices III through VII, and IX of this
part. The certificate must be signed on
behalf of the non-Federal entity by an
individual at a level no lower than vice
president or chief financial officer of
the non-Federal entity that submits
the proposal.
(2) Unless the non-Federal entity has
elected the option under §200.414(f), the
Federal Government may either dis-
allow all indirect (F&A) costs or uni-
laterally establish such a plan or rate
when the non-Federal entity fails to
submit a certified proposal for estab-
lishing such a plan or rate in accord-
ance with the requirements. Such a
plan or rate may be based upon audited
historical data or such other data that
have been furnished to the cognizant
agency for indirect costs and for which
it can be demonstrated that all unal-
lowable costs have been excluded.
When a cost allocation plan or indirect
cost rate is unilaterally established by
the Federal Government because the
non-Federal entity failed to submit a
certified proposal, the plan or rate es-
tablished will be set to ensure that po-
tentially unallowable costs will not be
reimbursed.
(c) Certifications by nonprofit orga-
nizations as appropriate that they did
not meet the definition of a major non-
profit organization as defined in
§200.414(a).
(d) See also §200.450 for another re-
quired certification.
[78 FR 78608, Dec. 26, 2013, as amended at 79
FR 75886, Dec. 19, 2014; 85 FR 49563, Aug. 13,
2020]
SPECIAL CONSIDERATIONS FOR STATES,
LOCAL GOVERNMENTS AND INDIAN
TRIBES
§200.416 Cost allocation plans and in-
direct cost proposals.
(a) For states, local governments and
Indian tribes, certain services, such as
motor pools, computer centers, pur-
chasing, accounting, etc., are provided
to operating agencies on a centralized
basis. Since Federal awards are per-
formed within the individual operating
agencies, there needs to be a process
whereby these central service costs can
be identified and assigned to benefitted
activities on a reasonable and con-
sistent basis. The central service cost
allocation plan provides that process.
(b) Individual operating agencies
(governmental department or agency),
normally charge Federal awards for in-
direct costs through an indirect cost
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OMB Guidance §200.419
rate. A separate indirect cost rate(s)
proposal for each operating agency is
usually necessary to claim indirect
costs under Federal awards. Indirect
costs include:
(1) The indirect costs originating in
each department or agency of the gov-
ernmental unit carrying out Federal
awards and
(2) The costs of central governmental
services distributed through the cen-
tral service cost allocation plan and
not otherwise treated as direct costs.
(c) The requirements for development
and submission of cost allocation plans
(for central service costs and public as-
sistance programs) and indirect cost
rate proposals are contained in appen-
dices V, VI and VII to this part.
[78 FR 78608, Dec. 26, 2013, as amended at 86
FR 10440, Feb. 22, 2021]
§200.417 Interagency service.
The cost of services provided by one
agency to another within the govern-
mental unit may include allowable di-
rect costs of the service plus a pro-
rated share of indirect costs. A stand-
ard indirect cost allowance equal to
ten percent of the direct salary and
wage cost of providing the service (ex-
cluding overtime, shift premiums, and
fringe benefits) may be used in lieu of
determining the actual indirect costs
of the service. These services do not in-
clude centralized services included in
central service cost allocation plans as
described in Appendix V to Part 200.
[85 FR 49564, Aug. 13, 2020]
SPECIAL CONSIDERATIONS FOR
INSTITUTIONS OF HIGHER EDUCATION
§200.418 Costs incurred by states and
local governments.
Costs incurred or paid by a state or
local government on behalf of its IHEs
for fringe benefit programs, such as
pension costs and FICA and any other
costs specifically incurred on behalf of,
and in direct benefit to, the IHEs, are
allowable costs of such IHEs whether
or not these costs are recorded in the
accounting records of the institutions,
subject to the following:
(a) The costs meet the requirements
of §200.402–411 of this subpart;
(b) The costs are properly supported
by approved cost allocation plans in ac-
cordance with applicable Federal cost
accounting principles in this part; and
(c) The costs are not otherwise borne
directly or indirectly by the Federal
Government.
[78 FR 78608, Dec. 26, 2013, as amended at 85
FR 49564, Aug. 13, 2020]
§200.419 Cost accounting standards
and disclosure statement.
(a) An IHE that receive an aggregate
total $50 million or more in Federal
awards and instruments subject to this
subpart (as specified in §200.101) in its
most recently completed fiscal year
must comply with the Cost Accounting
Standards Board’s cost accounting
standards located at 48 CFR 9905.501,
9905.502, 9905.505, and 9905.506. CAS-cov-
ered contracts and subcontracts award-
ed to the IHEs are subject to the broad-
er range of CAS requirements at 48
CFR 9900 through 9999 and 48 CFR part
30 (FAR Part 30).
(b) Disclosure statement. An IHE that
receives an aggregate total $50 million
or more in Federal awards and instru-
ments subject to this subpart (as speci-
fied in §200.101) during its most re-
cently completed fiscal year must dis-
close their cost accounting practices
by filing a Disclosure Statement (DS–
2), which is reproduced in Appendix III
to Part 200. With the approval of the
cognizant agency for indirect costs, an
IHE may meet the DS–2 submission by
submitting the DS–2 for each business
unit that received $50 million or more
in Federal awards and instruments.
(1) The DS–2 must be submitted to
the cognizant agency for indirect costs
with a copy to the IHE’s cognizant
agency for audit. The initial DS–2 and
revisions to the DS–2 must be sub-
mitted in coordination with the IHE’s
indirect (F&A) rate proposal, unless an
earlier submission is requested by the
cognizant agency for indirect costs.
IHEs with CAS-covered contracts or
subcontracts meeting the dollar
threshold in 48 CFR 9903.202–1(f) must
submit their initial DS–2 or revisions
no later than prior to the award of a
CAS-covered contract or subcontract.
(2) An IHE must maintain an accu-
rate DS–2 and comply with disclosed
cost accounting practices. An IHE
must file amendments to the DS–2 to
the cognizant agency for indirect costs
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2 CFR Ch. II (1–1–22 Edition) §200.420
in advance of a disclosed practice being
changed to comply with a new or modi-
fied standard, or when a practice is
changed for other reasons. An IHE may
proceed with implementing the change
after it has notified the Federal cog-
nizant agency for indirect costs. If the
change represents a variation from 2
CFR part 200, the change may require
approval by the Federal cognizant
agency for indirect costs, in accordance
with §200.102(b). Amendments of a DS–
2 may be submitted at any time. Re-
submission of a complete, updated DS–
2 is discouraged except when there are
extensive changes to disclosed prac-
tices.
(3) Cost and funding adjustments. Cost
adjustments must be made by the cog-
nizant agency for indirect costs if an
IHE fails to comply with the cost poli-
cies in this part or fails to consistently
follow its established or disclosed cost
accounting practices when estimating,
accumulating or reporting the costs of
Federal awards, and the aggregate cost
impact on Federal awards is material.
The cost adjustment must normally be
made on an aggregate basis for all af-
fected Federal awards through an ad-
justment of the IHE’s future F&A costs
rates or other means considered appro-
priate by the cognizant agency for indi-
rect costs. Under the terms of CAS cov-
ered contracts, adjustments in the
amount of funding provided may also
be required when the estimated pro-
posal costs were not determined in ac-
cordance with established cost ac-
counting practices.
(4) Overpayments. Excess amounts
paid in the aggregate by the Federal
Government under Federal awards due
to a noncompliant cost accounting
practice used to estimate, accumulate,
or report costs must be credited or re-
funded, as deemed appropriate by the
cognizant agency for indirect costs. In-
terest applicable to the excess amounts
paid in the aggregate during the period
of noncompliance must also be deter-
mined and collected in accordance with
applicable Federal agency regulations.
(5) Compliant cost accounting practice
changes. Changes from one compliant
cost accounting practice to another
compliant practice that are approved
by the cognizant agency for indirect
costs may require cost adjustments if
the change has a material effect on
Federal awards and the changes are
deemed appropriate by the cognizant
agency for indirect costs.
(6) Responsibilities. The cognizant
agency for indirect cost must:
(i) Determine cost adjustments for
all Federal awards in the aggregate on
behalf of the Federal Government. Ac-
tions of the cognizant agency for indi-
rect cost in making cost adjustment
determinations must be coordinated
with all affected Federal awarding
agencies to the extent necessary.
(ii) Prescribe guidelines and establish
internal procedures to promptly deter-
mine on behalf of the Federal Govern-
ment that a DS–2 adequately discloses
the IHE’s cost accounting practices
and that the disclosed practices are
compliant with applicable CAS and the
requirements of this part.
(iii) Distribute to all affected Federal
awarding agencies any DS–2 determina-
tion of adequacy or noncompliance.
[78 FR 78608, Dec. 26, 2013, as amended at 79
FR 75886, Dec. 19, 2014; 85 FR 49564, Aug. 13,
2020]
GENERAL PROVISIONS FOR SELECTED
ITEMS OF COST
§200.420 Considerations for selected
items of cost.
This section provides principles to be
applied in establishing the allowability
of certain items involved in deter-
mining cost, in addition to the require-
ments of Subtitle II of this subpart.
These principles apply whether or not a
particular item of cost is properly
treated as direct cost or indirect (F&A)
cost. Failure to mention a particular
item of cost is not intended to imply
that it is either allowable or unallow-
able; rather, determination as to allow-
ability in each case should be based on
the treatment provided for similar or
related items of cost, and based on the
principles described in §§200.402
through 200.411. In case of a discrep-
ancy between the provisions of a spe-
cific Federal award and the provisions
below, the Federal award governs. Cri-
teria outlined in §200.403 must be ap-
plied in determining allowability. See
also §200.102.
[85 FR 49564, Aug. 13, 2020]
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OMB Guidance §200.425
§200.421 Advertising and public rela-
tions.
(a) The term advertising costs means
the costs of advertising media and cor-
ollary administrative costs. Adver-
tising media include magazines, news-
papers, radio and television, direct
mail, exhibits, electronic or computer
transmittals, and the like.
(b) The only allowable advertising
costs are those which are solely for:
(1) The recruitment of personnel re-
quired by the non-Federal entity for
performance of a Federal award (See
also §200.463);
(2) The procurement of goods and
services for the performance of a Fed-
eral award;
(3) The disposal of scrap or surplus
materials acquired in the performance
of a Federal award except when non-
Federal entities are reimbursed for dis-
posal costs at a predetermined amount;
or
(4) Program outreach and other spe-
cific purposes necessary to meet the re-
quirements of the Federal award.
(c) The term ‘‘public relations’’ in-
cludes community relations and means
those activities dedicated to maintain-
ing the image of the non-Federal entity
or maintaining or promoting under-
standing and favorable relations with
the community or public at large or
any segment of the public.
(d) The only allowable public rela-
tions costs are:
(1) Costs specifically required by the
Federal award;
(2) Costs of communicating with the
public and press pertaining to specific
activities or accomplishments which
result from performance of the Federal
award (these costs are considered nec-
essary as part of the outreach effort for
the Federal award); or
(3) Costs of conducting general liai-
son with news media and government
public relations officers, to the extent
that such activities are limited to com-
munication and liaison necessary to
keep the public informed on matters of
public concern, such as notices of fund-
ing opportunities, financial matters,
etc.
(e) Unallowable advertising and pub-
lic relations costs include the fol-
lowing:
(1) All advertising and public rela-
tions costs other than as specified in
paragraphs (b) and (d) of this section;
(2) Costs of meetings, conventions,
convocations, or other events related
to other activities of the entity (see
also §200.432), including:
(i) Costs of displays, demonstrations,
and exhibits;
(ii) Costs of meeting rooms, hospi-
tality suites, and other special facili-
ties used in conjunction with shows
and other special events; and
(iii) Salaries and wages of employees
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 re-
lations designed solely to promote the
non-Federal entity.
[78 FR 76808, Dec. 26, 2013, as amended at 85
FR 49564, Aug. 13, 2020]
§200.422 Advisory councils.
Costs incurred by advisory councils
or committees are unallowable unless
authorized by statute, the Federal
awarding agency or as an indirect cost
where allocable to Federal awards. See
§200.444, applicable to States, local gov-
ernments, and Indian tribes.
[85 FR 49564, Aug. 13, 2020]
§200.423 Alcoholic beverages.
Costs of alcoholic beverages are unal-
lowable.
§200.424 Alumni/ae activities.
Costs incurred by IHEs for, or in sup-
port of, alumni/ae activities are unal-
lowable.
§200.425 Audit services.
(a) A reasonably proportionate share
of the costs of audits required by, and
performed in accordance with, the Sin-
gle Audit Act Amendments of 1996 (31
U.S.C. 7501–7507), as implemented by re-
quirements of this part, are allowable.
However, the following audit costs are
unallowable:
(1) Any costs when audits required by
the Single Audit Act and subpart F of
this part have not been conducted or
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2 CFR Ch. II (1–1–22 Edition) §200.426
have been conducted but not in accord-
ance therewith; and
(2) Any costs of auditing a non-Fed-
eral entity that is exempted from hav-
ing an audit conducted under the Sin-
gle Audit Act and subpart F of this
part because its expenditures under
Federal awards are less than $750,000
during the non-Federal entity’s fiscal
year.
(b) The costs of a financial statement
audit of a non-Federal entity that does
not currently have a Federal award
may be included in the indirect cost
pool for a cost allocation plan or indi-
rect cost proposal.
(c) Pass-through entities may charge
Federal awards for the cost of agreed-
upon-procedures engagements to mon-
itor subrecipients (in accordance with
subpart D, §§200.331–333) who are ex-
empted from the requirements of the
Single Audit Act and subpart F of this
part. This cost is allowable only if the
agreed-upon-procedures engagements
are:
(1) Conducted in accordance with
GAGAS attestation standards;
(2) Paid for and arranged by the pass-
through entity; and
(3) Limited in scope to one or more of
the following types of compliance re-
quirements: activities allowed or
unallowed; allowable costs/cost prin-
ciples; eligibility; and reporting.
[78 FR 78608, Dec. 26, 2013, as amended at 85
FR 49564, Aug. 13, 2020]
§200.426 Bad debts.
Bad debts (debts which have been de-
termined to be uncollectable), includ-
ing losses (whether actual or esti-
mated) arising from uncollectable ac-
counts and other claims, are unallow-
able. Related collection costs, and re-
lated legal costs, arising from such
debts after they have been determined
to be uncollectable are also unallow-
able. See also §200.428.
[85 FR 49565, Aug. 13, 2020]
§200.427 Bonding costs.
(a) Bonding costs arise when the Fed-
eral awarding agency requires assur-
ance against financial loss to itself or
others by reason of the act or default
of the non-Federal entity. They arise
also in instances where the non-Fed-
eral entity requires similar assurance,
including: bonds as bid, performance,
payment, advance payment, infringe-
ment, and fidelity bonds for employees
and officials.
(b) Costs of bonding required pursu-
ant to the terms and conditions of the
Federal award are allowable.
(c) Costs of bonding required by the
non-Federal entity in the general con-
duct of its operations are allowable as
an indirect cost to the extent that such
bonding is in accordance with sound
business practice and the rates and pre-
miums are reasonable under the cir-
cumstances.
§200.428 Collections of improper pay-
ments.
The costs incurred by a non-Federal
entity to recover improper payments
are allowable as either direct or indi-
rect costs, as appropriate. Amounts
collected may be used by the non-Fed-
eral entity in accordance with cash
management standards set forth in
§200.305.
[85 FR 49565, Aug. 13, 2020]
§200.429 Commencement and convoca-
tion costs.
For IHEs, costs incurred for com-
mencements and convocations are un-
allowable, except as provided for in
(B)(9) Student Administration and
Services, in appendix III to this part,
as activity costs.
[85 FR 49565, Aug. 13, 2020]
§200.430 Compensation—personal
services.
(a) General. Compensation for per-
sonal services includes all remunera-
tion, paid currently or accrued, for
services of employees rendered during
the period of performance under the
Federal award, including but not nec-
essarily limited to wages and salaries.
Compensation for personal services
may also include fringe benefits which
are addressed in §200.431. Costs of com-
pensation are allowable to the extent
that they satisfy the specific require-
ments of this part, and that the total
compensation for individual employ-
ees:
(1) Is reasonable for the services ren-
dered and conforms to the established
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OMB Guidance §200.430
written policy of the non-Federal enti-
ty consistently applied to both Federal
and non-Federal activities;
(2) Follows an appointment made in
accordance with a non-Federal entity’s
laws and/or rules or written policies
and meets the requirements of Federal
statute, where applicable; and
(3) Is determined and supported as
provided in paragraph (i) of this sec-
tion, when applicable.
(b) Reasonableness. Compensation for
employees engaged in work on Federal
awards will be considered reasonable to
the extent that it is consistent with
that paid for similar work in other ac-
tivities of the non-Federal entity. In
cases where the kinds of employees re-
quired for Federal awards are not found
in the other activities of the non-Fed-
eral entity, compensation will be con-
sidered reasonable to the extent that it
is comparable to that paid for similar
work in the labor market in which the
non-Federal entity competes for the
kind of employees involved.
(c) Professional activities outside the
non-Federal entity. Unless an arrange-
ment is specifically authorized by a
Federal awarding agency, a non-Fed-
eral entity must follow its written non-
Federal entity-wide policies and prac-
tices concerning the permissible extent
of professional services that can be pro-
vided outside the non-Federal entity
for non-organizational compensation.
Where such non-Federal entity-wide
written policies do not exist or do not
adequately define the permissible ex-
tent of consulting or other non-organi-
zational activities undertaken for
extra outside pay, the Federal Govern-
ment may require that the effort of
professional staff working on Federal
awards be allocated between:
(1) Non-Federal entity activities, and
(2) Non-organizational professional
activities. If the Federal awarding
agency considers the extent of non-or-
ganizational professional effort exces-
sive or inconsistent with the conflicts-
of-interest terms and conditions of the
Federal award, appropriate arrange-
ments governing compensation will be
negotiated on a case-by-case basis.
(d) Unallowable costs. (1) Costs which
are unallowable under other sections of
these principles must not be allowable
under this section solely on the basis
that they constitute personnel com-
pensation.
(2) The allowable compensation for
certain employees is subject to a ceil-
ing in accordance with statute. For the
amount of the ceiling for cost-reim-
bursement contracts, the covered com-
pensation subject to the ceiling, the
covered employees, and other relevant
provisions, see 10 U.S.C. 2324(e)(1)(P),
and 41 U.S.C. 1127 and 4304(a)(16). For
other types of Federal awards, other
statutory ceilings may apply.
(e) Special considerations. Special con-
siderations in determining allowability
of compensation will be given to any
change in a non-Federal entity’s com-
pensation policy resulting in a substan-
tial increase in its employees’ level of
compensation (particularly when the
change was concurrent with an in-
crease in the ratio of Federal awards to
other activities) or any change in the
treatment of allowability of specific
types of compensation due to changes
in Federal policy.
(f) Incentive compensation. Incentive
compensation to employees based on
cost reduction, or efficient perform-
ance, suggestion awards, safety awards,
etc., is 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
non-Federal entity and the employees
before the services were rendered, or
pursuant to an established plan fol-
lowed by the non-Federal entity so
consistently as to imply, in effect, an
agreement to make such payment.
(g) Nonprofit organizations. For com-
pensation to members of nonprofit or-
ganizations, trustees, directors, associ-
ates, officers, or the immediate fami-
lies thereof, determination must be
made that such compensation is rea-
sonable for the actual personal services
rendered rather than a distribution of
earnings in excess of costs. This may
include director’s and executive com-
mittee member’s fees, incentive
awards, allowances for off-site pay, in-
centive pay, location allowances, hard-
ship pay, and cost-of-living differen-
tials.
(h) Institutions of Higher Education
(IHEs). (1) Certain conditions require
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special consideration and possible limi-
tations in determining allowable per-
sonnel compensation costs under Fed-
eral awards. Among such conditions
are the following:
(i) Allowable activities. Charges to
Federal awards may include reasonable
amounts for activities contributing
and directly related to work under an
agreement, such as delivering special
lectures about specific aspects of the
ongoing activity, writing reports and
articles, developing and maintaining
protocols (human, animals, etc.), man-
aging substances/chemicals, managing
and securing project-specific data, co-
ordinating research subjects, partici-
pating in appropriate seminars, con-
sulting with colleagues and graduate
students, and attending meetings and
conferences.
(ii) Incidental activities. Incidental
activities for which supplemental com-
pensation is allowable under written
institutional policy (at a rate not to
exceed institutional base salary) need
not be included in the records described
in paragraph (i) of this section to di-
rectly charge payments of incidental
activities, such activities must either
be specifically provided for in the Fed-
eral award budget or receive prior writ-
ten approval by the Federal awarding
agency.
(2) Salary basis. Charges for work per-
formed on Federal awards by faculty
members during the academic year are
allowable at the IBS rate. Except as
noted in paragraph (h)(1)(ii) of this sec-
tion, in no event will charges to Fed-
eral awards, irrespective of the basis of
computation, exceed the proportionate
share of the IBS for that period. This
principle applies to all members of fac-
ulty at an institution. IBS is defined as
the annual compensation paid by an
IHE for an individual’s appointment,
whether that individual’s time is spent
on research, instruction, administra-
tion, or other activities. IBS excludes
any income that an individual earns
outside of duties performed for the
IHE. Unless there is prior approval by
the Federal awarding agency, charges
of a faculty member’s salary to a Fed-
eral award must not exceed the propor-
tionate share of the IBS for the period
during which the faculty member
worked on the award.
(3) Intra-Institution of Higher Edu-
cation (IHE) consulting. Intra-IHE con-
sulting by faculty should be under-
taken as an IHE responsibility requir-
ing no compensation in addition to
IBS. However, in unusual cases where
consultation is across departmental
lines or involves a separate or remote
operation, and the work performed by
the faculty member is in addition to
his or her regular responsibilities, any
charges for such work representing ad-
ditional compensation above IBS are
allowable provided that such con-
sulting arrangements are specifically
provided for in the Federal award or
approved in writing by the Federal
awarding agency.
(4) Extra Service Pay normally rep-
resents overload compensation, subject
to institutional compensation policies
for services above and beyond IBS.
Where extra service pay is a result of
Intra-IHE consulting, it is subject to
the same requirements of paragraph (b)
above. It is allowable if all of the fol-
lowing conditions are met:
(i) The non-Federal entity estab-
lishes consistent written policies which
apply uniformly to all faculty mem-
bers, not just those working on Federal
awards.
(ii) The non-Federal entity estab-
lishes a consistent written definition of
work covered by IBS which is specific
enough to determine conclusively when
work beyond that level has occurred.
This may be described in appointment
letters or other documentations.
(iii) The supplementation amount
paid is commensurate with the IBS
rate of pay and the amount of addi-
tional work performed. See paragraph
(h)(2) of this section.
(iv) The salaries, as supplemented,
fall within the salary structure and
pay ranges established by and docu-
mented in writing or otherwise applica-
ble to the non-Federal entity.
(v) The total salaries charged to Fed-
eral awards including extra service pay
are subject to the Standards of Docu-
mentation as described in paragraph (i)
of this section.
(5) Periods outside the academic year.
(i) Except as specified for teaching ac-
tivity in paragraph (h)(5)(ii) of this sec-
tion, charges for work performed by
faculty members on Federal awards
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OMB Guidance §200.430
during periods not included in the base
salary period will be at a rate not in
excess of the IBS.
(ii) Charges for teaching activities
performed by faculty members on Fed-
eral awards during periods not included
in IBS period will be based on the nor-
mal written policy of the IHE gov-
erning compensation to faculty mem-
bers for teaching assignments during
such periods.
(6) Part-time faculty. Charges for work
performed on Federal awards by fac-
ulty members having only part-time
appointments will be determined at a
rate not in excess of that regularly
paid for part-time assignments.
(7) Sabbatical leave costs. Rules for
sabbatical leave are as follow:
(i) Costs of leaves of absence by em-
ployees for performance of graduate
work or sabbatical study, travel, or re-
search are allowable provided the IHE
has a uniform written policy on sab-
batical leave for persons engaged in in-
struction and persons engaged in re-
search. Such costs will be allocated on
an equitable basis among all related
activities of the IHE.
(ii) Where sabbatical leave is in-
cluded in fringe benefits for which a
cost is determined for assessment as a
direct charge, the aggregate amount of
such assessments applicable to all
work of the institution during the base
period must be reasonable in relation
to the IHE’s actual experience under
its sabbatical leave policy.
(8) Salary rates for non-faculty mem-
bers. Non-faculty full-time professional
personnel may also earn ‘‘extra service
pay’’ in accordance with the non-Fed-
eral entity’s written policy and con-
sistent with paragraph (h)(1)(i) of this
section.
(i) Standards for Documentation of Per-
sonnel Expenses (1) Charges to Federal
awards for salaries and wages must be
based on records that accurately re-
flect the work performed. These
records must:
(i) Be supported by a system of inter-
nal control which provides reasonable
assurance that the charges are accu-
rate, allowable, and properly allocated;
(ii) Be incorporated into the official
records of the non-Federal entity;
(iii) Reasonably reflect the total ac-
tivity for which the employee is com-
pensated by the non-Federal entity,
not exceeding 100% of compensated ac-
tivities (for IHE, this per the IHE’s def-
inition of IBS);
(iv) Encompass federally-assisted and
all other activities compensated by the
non-Federal entity on an integrated
basis, but may include the use of sub-
sidiary records as defined in the non-
Federal entity’s written policy;
(v) Comply with the established ac-
counting policies and practices of the
non-Federal entity (See paragraph
(h)(1)(ii) above for treatment of inci-
dental work for IHEs.); and
(vi) [Reserved]
(vii) Support the distribution of the
employee’s salary or wages among spe-
cific activities or cost objectives if the
employee works on more than one Fed-
eral award; a Federal award and non-
Federal award; an indirect cost activ-
ity and a direct cost activity; two or
more indirect activities which are allo-
cated using different allocation bases;
or an unallowable activity and a direct
or indirect cost activity.
(viii) Budget estimates (i.e., esti-
mates determined before the services
are performed) alone do not qualify as
support for charges to Federal awards,
but may be used for interim accounting
purposes, provided that:
(A) The system for establishing the
estimates produces reasonable approxi-
mations of the activity actually per-
formed;
(B) Significant changes in the cor-
responding work activity (as defined by
the non-Federal entity’s written poli-
cies) are identified and entered into the
records in a timely manner. Short term
(such as one or two months) fluctua-
tion between workload categories need
not be considered as long as the dis-
tribution of salaries and wages is rea-
sonable over the longer term; and
(C) The non-Federal entity’s system
of internal controls includes processes
to review after-the-fact interim
charges made to a Federal award based
on budget estimates. All necessary ad-
justment must be made such that the
final amount charged to the Federal
award is accurate, allowable, and prop-
erly allocated.
(ix) Because practices vary as to the
activity constituting a full workload
(for IHEs, IBS), records may reflect
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2 CFR Ch. II (1–1–22 Edition) §200.430
categories of activities expressed as a
percentage distribution of total activi-
ties.
(x) It is recognized that teaching, re-
search, service, and administration are
often inextricably intermingled in an
academic setting. When recording sala-
ries and wages charged to Federal
awards for IHEs, a precise assessment
of factors that contribute to costs is
therefore not always feasible, nor is it
expected.
(2) For records which meet the stand-
ards required in paragraph (i)(1) of this
section, the non-Federal entity will not
be required to provide additional sup-
port or documentation for the work
performed, other than that referenced
in paragraph (i)(3) of this section.
(3) In accordance with Department of
Labor regulations implementing the
Fair Labor Standards Act (FLSA) (29
CFR part 516), charges for the salaries
and wages of nonexempt employees, in
addition to the supporting documenta-
tion described in this section, must
also be supported by records indicating
the total number of hours worked each
day.
(4) Salaries and wages of employees
used in meeting cost sharing or match-
ing requirements on Federal awards
must be supported in the same manner
as salaries and wages claimed for reim-
bursement from Federal awards.
(5) For states, local governments and
Indian tribes, substitute processes or
systems for allocating salaries and
wages to Federal awards may be used
in place of or in addition to the records
described in paragraph (1) if approved
by the cognizant agency for indirect
cost. Such systems may include, but
are not limited to, random moment
sampling, ‘‘rolling’’ time studies, case
counts, or other quantifiable measures
of work performed.
(i) Substitute systems which use
sampling methods (primarily for Tem-
porary Assistance for Needy Families
(TANF), the Supplemental Nutrition
Assistance Program (SNAP), Medicaid,
and other public assistance programs)
must meet acceptable statistical sam-
pling standards including:
(A) The sampling universe must in-
clude all of the employees whose sala-
ries and wages are to be allocated
based on sample results except as pro-
vided in paragraph (i)(5)(iii) of this sec-
tion;
(B) The entire time period involved
must be covered by the sample; and
(C) The results must be statistically
valid and applied to the period being
sampled.
(ii) Allocating charges for the sam-
pled employees’ supervisors, clerical
and support staffs, based on the results
of the sampled employees, will be ac-
ceptable.
(iii) Less than full compliance with
the statistical sampling standards
noted in subsection (5)(i) may be ac-
cepted by the cognizant agency for in-
direct costs if it concludes that the
amounts to be allocated to Federal
awards will be minimal, or if it con-
cludes that the system proposed by the
non-Federal entity will result in lower
costs to Federal awards than a system
which complies with the standards.
(6) Cognizant agencies for indirect
costs are encouraged to approve alter-
native proposals based on outcomes
and milestones for program perform-
ance where these are clearly docu-
mented. Where approved by the Federal
cognizant agency for indirect costs,
these plans are acceptable as an alter-
native to the requirements of para-
graph (i)(1) of this section.
(7) For Federal awards of similar pur-
pose activity or instances of approved
blended funding, a non-Federal entity
may submit performance plans that in-
corporate funds from multiple Federal
awards and account for their combined
use based on performance-oriented
metrics, provided that such plans are
approved in advance by all involved
Federal awarding agencies. In these in-
stances, the non-Federal entity must
submit a request for waiver of the re-
quirements based on documentation
that describes the method of charging
costs, relates the charging of costs to
the specific activity that is applicable
to all fund sources, and is based on
quantifiable measures of the activity
in relation to time charged.
(8) For a non-Federal entity where
the records do not meet the standards
described in this section, the Federal
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OMB Guidance §200.431
Government may require personnel ac-
tivity reports, including prescribed cer-
tifications, or equivalent documenta-
tion that support the records as re-
quired in this section.
[78 FR 78608, Dec. 26, 2013, as amended at 79
FR 75886, Dec. 19, 2014; 85 FR 49565, Aug. 13,
2020]
§200.431 Compensation—fringe bene-
fits.
(a) General. Fringe benefits are allow-
ances and services provided by employ-
ers to their employees as compensation
in addition to regular salaries and
wages. Fringe benefits include, but are
not limited to, the costs of leave (vaca-
tion, family-related, sick or military),
employee insurance, pensions, and un-
employment benefit plans. Except as
provided elsewhere in these principles,
the costs of fringe benefits are allow-
able provided that the benefits are rea-
sonable and are required by law, non-
Federal entity-employee agreement, or
an established policy of the non-Fed-
eral entity.
(b) Leave. The cost of fringe benefits
in the form of regular compensation
paid to employees during periods of au-
thorized absences from the job, such as
for annual leave, family-related leave,
sick leave, holidays, court leave, mili-
tary leave, administrative leave, and
other similar benefits, are allowable if
all of the following criteria are met:
(1) They are provided under estab-
lished written leave policies;
(2) The costs are equitably allocated
to all related activities, including Fed-
eral awards; and,
(3) The accounting basis (cash or ac-
crual) selected for costing each type of
leave is consistently followed by the
non-Federal entity or specified group-
ing of employees.
(i) When a non-Federal entity uses
the cash basis of accounting, the cost
of leave is recognized in the period that
the leave is taken and paid for. Pay-
ments for unused leave when an em-
ployee retires or terminates employ-
ment are allowable in the year of pay-
ment.
(ii) The accrual basis may be only
used for those types of leave for which
a liability as defined by GAAP exists
when the leave is earned. When a non-
Federal entity uses the accrual basis of
accounting, allowable leave costs are
the lesser of the amount accrued or
funded.
(c) Fringe benefits. The cost of fringe
benefits in the form of employer con-
tributions or expenses for social secu-
rity; employee life, health, unemploy-
ment, and worker’s compensation in-
surance (except as indicated in
§200.447); pension plan costs (see para-
graph (i) of this section); and other
similar benefits are allowable, provided
such benefits are granted under estab-
lished written policies. Such benefits,
must be allocated to Federal awards
and all other activities in a manner
consistent with the pattern of benefits
attributable to the individuals or
group(s) of employees whose salaries
and wages are chargeable to such Fed-
eral awards and other activities, and
charged as direct or indirect costs in
accordance with the non-Federal enti-
ty’s accounting practices.
(d) Cost objectives. Fringe benefits
may be assigned to cost objectives by
identifying specific benefits to specific
individual employees or by allocating
on the basis of entity-wide salaries and
wages of the employees receiving the
benefits. When the allocation method
is used, separate allocations must be
made to selective groupings of employ-
ees, unless the non-Federal entity dem-
onstrates that costs in relationship to
salaries and wages do not differ signifi-
cantly for different groups of employ-
ees.
(e) Insurance. See also §200.447(d)(1)
and (2).
(1) Provisions for a reserve under a
self-insurance program for unemploy-
ment compensation or workers’ com-
pensation are allowable to the extent
that the provisions represent reason-
able estimates of the liabilities for
such compensation, and the types of
coverage, extent of coverage, and rates
and premiums would have been allow-
able had insurance been purchased to
cover the risks. However, provisions for
self-insured liabilities which do not be-
come payable for more than one year
after the provision is made must not
exceed the present value of the liabil-
ity.
(2) Costs of insurance on the lives of
trustees, officers, or other employees
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2 CFR Ch. II (1–1–22 Edition) §200.431
holding positions of similar responsi-
bility are allowable only to the extent
that the insurance represents addi-
tional compensation. The costs of such
insurance when the non-Federal entity
is named as beneficiary are unallow-
able.
(3) Actual claims paid to or on behalf
of employees or former employees for
workers’ compensation, unemployment
compensation, severance pay, and simi-
lar employee benefits (e.g., post-retire-
ment health benefits), are allowable in
the year of payment provided that the
non-Federal entity follows a consistent
costing policy.
(f) Automobiles. That portion of auto-
mobile costs furnished by the non-Fed-
eral entity that relates to personal use
by employees (including transportation
to and from work) is unallowable as
fringe benefit or indirect (F&A) costs
regardless of whether the cost is re-
ported as taxable income to the em-
ployees.
(g) Pension plan costs. Pension plan
costs which are incurred in accordance
with the established policies of the
non-Federal entity are allowable, pro-
vided that:
(1) Such policies meet the test of rea-
sonableness.
(2) The methods of cost allocation are
not discriminatory.
(3) Except for State and Local Gov-
ernments, the cost assigned to each fis-
cal year should be determined in ac-
cordance with GAAP.
(4) The costs assigned to a given fis-
cal year are funded for all plan partici-
pants within six months after the end
of that year. However, increases to nor-
mal and past service pension costs
caused by a delay in funding the actu-
arial liability beyond 30 calendar days
after each quarter of the year to which
such costs are assignable are unallow-
able. Non-Federal entity may elect to
follow the ‘‘Cost Accounting Standard
for Composition and Measurement of
Pension Costs’’ (48 CFR 9904.412).
(5) Pension plan termination insur-
ance premiums paid pursuant to the
Employee Retirement Income Security
Act (ERISA) of 1974 (29 U.S.C. 1301–1461)
are allowable. Late payment charges
on such premiums are unallowable. Ex-
cise taxes on accumulated funding defi-
ciencies and other penalties imposed
under ERISA are unallowable.
(6) Pension plan costs may be com-
puted using a pay-as-you-go method or
an acceptable actuarial cost method in
accordance with established written
policies of the non-Federal entity.
(i) For pension plans financed on a
pay-as-you-go method, allowable costs
will be limited to those representing
actual payments to retirees or their
beneficiaries.
(ii) Pension costs calculated using an
actuarial cost-based method recognized
by GAAP are allowable for a given fis-
cal year if they are funded for that
year within six months after the end of
that year. Costs funded after the six-
month period (or a later period agreed
to by the cognizant agency for indirect
costs) are allowable in the year funded.
The cognizant agency for indirect costs
may agree to an extension of the six-
month period if an appropriate adjust-
ment is made to compensate for the
timing of the charges to the Federal
Government and related Federal reim-
bursement and the non-Federal enti-
ty’s contribution to the pension fund.
Adjustments may be made by cash re-
fund or other equitable procedures to
compensate the Federal Government
for the time value of Federal reim-
bursements in excess of contributions
to the pension fund.
(iii) Amounts funded by the non-Fed-
eral entity in excess of the actuarially
determined amount for a fiscal year
may be used as the non-Federal enti-
ty’s contribution in future periods.
(iv) When a non-Federal entity con-
verts to an acceptable actuarial cost
method, as defined by GAAP, and funds
pension costs in accordance with this
method, the unfunded liability at the
time of conversion is allowable if am-
ortized over a period of years in accord-
ance with GAAP.
(v) The Federal Government must re-
ceive an equitable share of any pre-
viously allowed pension costs (includ-
ing earnings thereon) which revert or
inure to the non-Federal entity in the
form of a refund, withdrawal, or other
credit.
(h) Post-retirement health. Post-retire-
ment health plans (PRHP) refers to
costs of health insurance or health
services not included in a pension plan
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OMB Guidance §200.431
covered by paragraph (g) of this section
for retirees and their spouses, depend-
ents, and survivors. PRHP costs may
be computed using a pay-as-you-go
method or an acceptable actuarial cost
method in accordance with established
written policies of the non-Federal en-
tity.
(1) For PRHP financed on a pay-as-
you-go method, allowable costs will be
limited to those representing actual
payments to retirees or their bene-
ficiaries.
(2) PRHP costs calculated using an
actuarial cost method recognized by
GAAP are allowable if they are funded
for that year within six months after
the end of that year. Costs funded after
the six-month period (or a later period
agreed to by the cognizant agency) are
allowable in the year funded. The Fed-
eral cognizant agency for indirect costs
may agree to an extension of the six-
month period if an appropriate adjust-
ment is made to compensate for the
timing of the charges to the Federal
Government and related Federal reim-
bursements and the non-Federal enti-
ty’s contributions to the PRHP fund.
Adjustments may be made by cash re-
fund, reduction in current year’s PRHP
costs, or other equitable procedures to
compensate the Federal Government
for the time value of Federal reim-
bursements in excess of contributions
to the PRHP fund.
(3) Amounts funded in excess of the
actuarially determined amount for a
fiscal year may be used as the non-Fed-
eral entity contribution in a future pe-
riod.
(4) When a non-Federal entity con-
verts to an acceptable actuarial cost
method and funds PRHP costs in ac-
cordance with this method, the initial
unfunded liability attributable to prior
years is allowable if amortized over a
period of years in accordance with
GAAP, or, if no such GAAP period ex-
ists, over a period negotiated with the
cognizant agency for indirect costs.
(5) To be allowable in the current
year, the PRHP costs must be paid ei-
ther to:
(i) An insurer or other benefit pro-
vider as current year costs or pre-
miums, or
(ii) An insurer or trustee to maintain
a trust fund or reserve for the sole pur-
pose of providing post-retirement bene-
fits to retirees and other beneficiaries.
(6) The Federal Government must re-
ceive an equitable share of any
amounts of previously allowed post-re-
tirement benefit costs (including earn-
ings thereon) which revert or inure to
the non-Federal entity in the form of a
refund, withdrawal, or other credit.
(i) Severance pay. (1) Severance pay,
also commonly referred to as dismissal
wages, is a payment in addition to reg-
ular salaries and wages, by non-Federal
entities 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 con-
stitutes, in effect, an implied agree-
ment on the non-Federal entity’s part;
or
(iv) Circumstances of the particular
employment.
(2) Costs of severance payments are
divided into two categories as follows:
(i) Actual normal turnover severance
payments must be allocated to all ac-
tivities; or, where the non-Federal en-
tity provides for a reserve for normal
severances, such method will be ac-
ceptable if the charge to current oper-
ations is reasonable in light of pay-
ments actually made for normal
severances over a representative past
period, and if amounts charged are al-
located to all activities of the non-Fed-
eral entity.
(ii) Measurement of costs of abnor-
mal or mass severance pay 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
responsibility to participate, to the ex-
tent of its fair share, in any specific
payment. Prior approval by the Fed-
eral awarding agency or cognizant
agency for indirect cost, as appro-
priate, is required.
(3) Costs incurred in certain sever-
ance pay packages which are in an
amount in excess of the normal sever-
ance pay paid by the non-Federal enti-
ty to an employee upon termination of
employment and are paid to the em-
ployee contingent upon a change in
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2 CFR Ch. II (1–1–22 Edition) §200.432
management control over, or owner-
ship of, the non-Federal entity’s assets,
are unallowable.
(4) Severance payments to foreign na-
tionals employed by the non-Federal
entity outside the United States, to
the extent that the amount exceeds the
customary or prevailing practices for
the non-Federal entity in the United
States, are unallowable, unless they
are necessary for the performance of
Federal programs and approved by the
Federal awarding agency.
(5) Severance payments to foreign na-
tionals employed by the non-Federal
entity outside the United States due to
the termination of the foreign national
as a result of the closing of, or curtail-
ment of activities by, the non-Federal
entity in that country, are unallow-
able, unless they are necessary for the
performance of Federal programs and
approved by the Federal awarding
agency.
(j) For IHEs only. (1) Fringe benefits
in the form of undergraduate and grad-
uate tuition or remission of tuition for
individual employees are allowable,
provided such benefits are granted in
accordance with established non-Fed-
eral entity policies, and are distributed
to all non-Federal entity activities on
an equitable basis. Tuition benefits for
family members other than the em-
ployee are unallowable.
(2) Fringe benefits in the form of tui-
tion or remission of tuition for indi-
vidual employees not employed by
IHEs are limited to the tax-free
amount allowed per section 127 of the
Internal Revenue Code as amended.
(3) IHEs may offer employees tuition
waivers or tuition reductions, provided
that the benefit does not discriminate
in favor of highly compensated employ-
ees. Employees can exercise these ben-
efits at other institutions according to
institutional policy. See §200.466, for
treatment of tuition remission pro-
vided to students.
(k) Fringe benefit programs and other
benefit costs. For IHEs whose costs are
paid by state or local governments,
fringe benefit programs (such as pen-
sion costs and FICA) and any other
benefits costs specifically incurred on
behalf of, and in direct benefit to, the
non-Federal entity, are allowable costs
of such non-Federal entities whether or
not these costs are recorded in the ac-
counting records of the non-Federal en-
tities, subject to the following:
(1) The costs meet the requirements
of Basic Considerations in §§200.402
through 200.411;
(2) The costs are properly supported
by approved cost allocation plans in ac-
cordance with applicable Federal cost
accounting principles; and
(3) The costs are not otherwise borne
directly or indirectly by the Federal
Government.
[85 FR 49565, Aug. 13, 2020]
§200.432 Conferences.
A conference is defined as a meeting,
retreat, seminar, symposium, work-
shop or event whose primary purpose is
the dissemination of technical infor-
mation beyond the non-Federal entity
and is necessary and reasonable for
successful performance under the Fed-
eral award. Allowable conference costs
paid by the non-Federal entity as a
sponsor or host of the conference may
include rental of facilities, speakers’
fees, costs of meals and refreshments,
local transportation, and other items
incidental to such conferences unless
further restricted by the terms and
conditions of the Federal award. As
needed, the costs of identifying, but
not providing, locally available depend-
ent-care resources are allowable. Con-
ference hosts/sponsors must exercise
discretion and judgment in ensuring
that conference costs are appropriate,
necessary and managed in a manner
that minimizes costs to the Federal
award. The Federal awarding agency
may authorize exceptions where appro-
priate for programs including Indian
tribes, children, and the elderly. See
also §§200.438, 200.456, and 200.475.
[85 FR 49567, Aug. 13, 2020]
§200.433 Contingency provisions.
(a) Contingency is that part of a
budget estimate of future costs (typi-
cally of large construction projects, IT
systems, or other items as approved by
the Federal awarding agency) which is
associated with possible events or con-
ditions arising from causes the precise
outcome of which is indeterminable at
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OMB Guidance §200.434
the time of estimate, and that experi-
ence shows will likely result, in aggre-
gate, in additional costs for the ap-
proved activity or project. Amounts for
major project scope changes, unfore-
seen risks, or extraordinary events
may not be included.
(b) It is permissible for contingency
amounts other than those excluded in
paragraph (a) of this section to be ex-
plicitly included in budget estimates,
to the extent they are necessary to im-
prove the precision of those estimates.
Amounts must be estimated using
broadly-accepted cost estimating
methodologies, specified in the budget
documentation of the Federal award,
and accepted by the Federal awarding
agency. As such, contingency amounts
are to be included in the Federal
award. In order for actual costs in-
curred to be allowable, they must com-
ply with the cost principles and other
requirements in this part (see also
§§200.300 and 200.403 of this part); be
necessary and reasonable for proper
and efficient accomplishment of
project or program objectives, and be
verifiable from the non-Federal enti-
ty’s records.
(c) Payments made by the Federal
awarding agency to the non-Federal
entity’s ‘‘contingency reserve’’ or any
similar payment made for events the
occurrence of which cannot be foretold
with certainty as to the time or inten-
sity, or with an assurance of their hap-
pening, are unallowable, except as
noted in §§200.431 and 200.447.
[78 FR 78608, Dec. 26, 2013, as amended at 79
FR 75886, Dec. 19, 2014; 85 FR 49567, Aug. 13,
2020]
§200.434 Contributions and donations.
(a) Costs of contributions and dona-
tions, including cash, property, and
services, from the non-Federal entity
to other entities, are unallowable.
(b) The value of services and property
donated to the non-Federal entity may
not be charged to the Federal award ei-
ther as a direct or indirect (F&A) cost.
The value of donated services and prop-
erty may be used to meet cost sharing
or matching requirements (see
§200.306). Depreciation on donated as-
sets is permitted in accordance with
§200.436, as long as the donated prop-
erty is not counted towards cost shar-
ing or matching requirements.
(c) Services donated or volunteered
to the non-Federal entity may be fur-
nished to a non-Federal entity by pro-
fessional and technical personnel, con-
sultants, and other skilled and un-
skilled labor. The value of these serv-
ices may not be charged to the Federal
award either as a direct or indirect
cost. However, the value of donated
services may be used to meet cost shar-
ing or matching requirements in ac-
cordance with the provisions of
§200.306.
(d) To the extent feasible, services
donated to the non-Federal entity will
be supported by the same methods used
to support the allocability of regular
personnel services.
(e) The following provisions apply to
nonprofit organizations. The value of
services donated to the nonprofit orga-
nization utilized in the performance of
a direct cost activity must be consid-
ered in the determination of the non-
Federal entity’s indirect cost rate(s)
and, accordingly, must be allocated a
proportionate share of applicable indi-
rect costs when the following cir-
cumstances exist:
(1) The aggregate value of the serv-
ices is material;
(2) The services are supported by a
significant amount of the indirect
costs incurred by the non-Federal enti-
ty;
(i) In those instances where there is
no basis for determining the fair mar-
ket value of the services rendered, the
non-Federal entity and the cognizant
agency for indirect costs must nego-
tiate an appropriate allocation of indi-
rect cost to the services.
(ii) Where donated services directly
benefit a project supported by the Fed-
eral 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 Federal award or used to
meet cost sharing or matching require-
ments.
(f) Fair market value of donated
services must be computed as described
in §200.306.
(g) Personal Property and Use of
Space.
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2 CFR Ch. II (1–1–22 Edition) §200.435
(1) Donated personal property and
use of space may be furnished to a non-
Federal entity. The value of the per-
sonal property and space may not be
charged to the Federal award 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 condi-
tions described in §200.300 of this part.
The value of the donations must be de-
termined in accordance with §200.300.
Where donations are treated as indirect
costs, indirect cost rates will separate
the value of the donations so that re-
imbursement will not be made.
[78 FR 78608, Dec. 26, 2013, as amended at 79
FR 75886, Dec. 19, 2014; 85 FR 49567, Aug. 13,
2020]
§200.435 Defense and prosecution of
criminal and civil proceedings,
claims, appeals and patent infringe-
ments.
(a) Definitions for the purposes of this
section. (1) Conviction means a judgment
or conviction of a criminal offense by
any court of competent jurisdiction,
whether entered upon verdict or a plea,
including a conviction due to a plea of
nolo contendere.
(2) Costs include the services of in-
house or private counsel, accountants,
consultants, or others engaged to as-
sist the non-Federal entity before, dur-
ing, and after commencement of a judi-
cial or administrative proceeding, that
bear a direct relationship to the pro-
ceeding.
(3) Fraud means:
(i) Acts of fraud or corruption or at-
tempts to defraud the Federal Govern-
ment 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. 3729–3732) or the
Anti-kickback Act (41 U.S.C. 1320a–
7b(b)).
(4) Penalty does not include restitu-
tion, reimbursement, or compensatory
damages.
(5) Proceeding includes an investiga-
tion.
(b) Costs. (1) Except as otherwise de-
scribed herein, costs incurred in con-
nection with any criminal, civil or ad-
ministrative proceeding (including fil-
ing of a false certification) commenced
by the Federal Government, a state,
local government, or foreign govern-
ment, or joined by the Federal Govern-
ment (including a proceeding under the
False Claims Act), against the non-
Federal entity, (or commenced by third
parties or a current or former em-
ployee of the non-Federal entity who
submits a whistleblower complaint of
reprisal in accordance with 10 U.S.C.
2409 or 41 U.S.C. 4712), are not allowable
if the proceeding:
(i) Relates to a violation of, or failure
to comply with, a Federal, state, local
or foreign statute, regulation or the
terms and conditions of the Federal
award, by the non-Federal entity (in-
cluding its agents and employees); and
(ii) Results in any of the following
dispositions:
(A) In a criminal proceeding, a con-
viction.
(B) In a civil or administrative pro-
ceeding involving an allegation of
fraud or similar misconduct, a deter-
mination of non-Federal entity liabil-
ity.
(C) In the case of any civil or admin-
istrative proceeding, the disallowance
of costs or the imposition of a mone-
tary penalty, or an order issued by the
Federal awarding agency head or dele-
gate to the non-Federal entity to take
corrective action under 10 U.S.C. 2409
or 41 U.S.C. 4712.
(D) A final decision by an appropriate
Federal official to debar or suspend the
non-Federal entity, to rescind or void a
Federal award, or to terminate a Fed-
eral award by reason of a violation or
failure to comply with a statute, regu-
lation, or the terms and conditions of
the Federal award.
(E) A disposition by consent or com-
promise, if the action could have re-
sulted in any of the dispositions de-
scribed in paragraphs (b)(1)(ii)(A)
through (D) of this section.
(2) If more than one proceeding in-
volves the same alleged misconduct,
the costs of all such proceedings are
unallowable if any results in one of the
dispositions shown in paragraph (b) of
this section.
(c) If a proceeding referred to in para-
graph (b) of this section is commenced
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OMB Guidance §200.436
by the Federal Government and is re-
solved by consent or compromise pur-
suant to an agreement by the non-Fed-
eral entity and the Federal Govern-
ment, then the costs incurred may be
allowed to the extent specifically pro-
vided in such agreement.
(d) If a proceeding referred to in para-
graph (b) of this section is commenced
by a state, local or foreign government,
the authorized Federal official may
allow the costs incurred if such author-
ized official determines that the costs
were incurred as a result of:
(1) A specific term or condition of the
Federal award, or
(2) Specific written direction of an
authorized official of the Federal
awarding agency.
(e) Costs incurred in connection with
proceedings described in paragraph (b)
of this section, which are not made un-
allowable by that subsection, may be
allowed but only to the extent that:
(1) The costs are reasonable and nec-
essary in relation to the administra-
tion of the Federal award and activi-
ties required to deal with the pro-
ceeding and the underlying cause of ac-
tion;
(2) Payment of the reasonable, nec-
essary, allocable and otherwise allow-
able costs incurred is not prohibited by
any other provision(s) of the Federal
award;
(3) The costs are not recovered from
the Federal Government or a third
party, either directly as a result of the
proceeding or otherwise; and,
(4) An authorized Federal official
must determine the percentage of costs
allowed considering the complexity of
litigation, generally accepted prin-
ciples governing the award of legal fees
in civil actions involving the United
States, and such other factors as may
be appropriate. Such percentage must
not exceed 80 percent. However, if an
agreement reached under paragraph (c)
of this section has explicitly consid-
ered this 80 percent limitation and per-
mitted a higher percentage, then the
full amount of costs resulting from
that agreement are allowable.
(f) Costs incurred by the non-Federal
entity in connection with the defense
of suits brought by its employees or ex-
employees under section 2 of the Major
Fraud Act of 1988 (18 U.S.C. 1031), in-
cluding the cost of all relief necessary
to make such employee whole, where
the non-Federal entity was found liable
or settled, are unallowable.
(g) Costs of prosecution of claims
against the Federal Government, in-
cluding appeals of final Federal agency
decisions, are unallowable.
(h) Costs of legal, accounting, and
consultant services, and related costs,
incurred in connection with patent in-
fringement litigation, are unallowable
unless otherwise provided for in the
Federal award.
(i) Costs which may be unallowable
under this section, including directly
associated costs, must be segregated
and accounted for separately. During
the pendency of any proceeding covered
by paragraphs (b) and (f) of this sec-
tion, the Federal Government must
generally withhold payment of such
costs. However, if in its best interests,
the Federal Government may provide
for conditional payment upon provision
of adequate security, or other adequate
assurance, and agreement to repay all
unallowable costs, plus interest, if the
costs are subsequently determined to
be unallowable.
[78 FR 78608, Dec. 26, 2013, as amended at 79
FR 75886, Dec. 19, 2014]
§200.436 Depreciation.
(a) Depreciation is the method for al-
locating the cost of fixed assets to peri-
ods benefitting from asset use. The
non-Federal entity may be com-
pensated for the use of its buildings,
capital improvements, equipment, and
software projects capitalized in accord-
ance with GAAP, provided that they
are used, needed in the non-Federal en-
tity’s activities, and properly allocated
to Federal awards. Such compensation
must be made by computing deprecia-
tion.
(b) The allocation for depreciation
must be made in accordance with Ap-
pendices III through IX.
(c) Depreciation is computed apply-
ing the following rules. The computa-
tion of depreciation must be based on
the acquisition cost of the assets in-
volved. For an asset donated to the
non-Federal entity by a third party, its
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2 CFR Ch. II (1–1–22 Edition) §200.437
fair market value at the time of the do-
nation must be considered as the acqui-
sition cost. Such assets may be depre-
ciated or claimed as matching but not
both. For the computation of deprecia-
tion, the acquisition cost will exclude:
(1) The cost of land;
(2) Any portion of the cost of build-
ings and equipment borne by or do-
nated by the Federal Government, irre-
spective of where title was originally
vested or where it is presently located;
(3) Any portion of the cost of build-
ings and equipment contributed by or
for the non-Federal entity that are al-
ready claimed as matching or where
law or agreement prohibits recovery;
(4) Any asset acquired solely for the
performance of a non-Federal award;
and
(d) When computing depreciation
charges, the following must be ob-
served:
(1) The period of useful service or
useful life established in each case for
usable capital assets must take into
consideration such factors as type of
construction, nature of the equipment,
technological developments in the par-
ticular area, historical data, and the
renewal and replacement policies fol-
lowed for the individual items or class-
es of assets involved.
(2) The depreciation method used to
charge the cost of an asset (or group of
assets) to accounting periods must re-
flect the pattern of consumption of the
asset during its useful life. In the ab-
sence of clear evidence indicating that
the expected consumption of the asset
will be significantly greater in the
early portions than in the later por-
tions of its useful life, the straight-line
method must be presumed to be the ap-
propriate method. Depreciation meth-
ods once used may not be changed un-
less approved in advance by the cog-
nizant agency. The depreciation meth-
ods used to calculate the depreciation
amounts for indirect (F&A) rate pur-
poses must be the same methods used
by the non-Federal entity for its finan-
cial statements.
(3) The entire building, including the
shell and all components, may be treat-
ed as a single asset and depreciated
over a single useful life. A building
may also be divided into multiple com-
ponents. Each component item may
then be depreciated over its estimated
useful life. The building components
must be grouped into three general
components of a building: building
shell (including construction and de-
sign costs), building services systems
(e.g., elevators, HVAC, plumbing sys-
tem and heating and air-conditioning
system) and fixed equipment (e.g.,
sterilizers, casework, fume hoods, cold
rooms and glassware/washers). In ex-
ceptional cases, a cognizant agency
may authorize a non-Federal entity to
use more than these three groupings.
When a non-Federal entity elects to de-
preciate its buildings by its compo-
nents, the same depreciation methods
must be used for indirect (F&A) pur-
poses and financial statements pur-
poses, as described in paragraphs (d)(1)
and (2) of this section.
(4) No depreciation may be allowed
on any assets that have outlived their
depreciable lives.
(5) Where the depreciation method is
introduced to replace the use allow-
ance method, depreciation must be
computed as if the asset had been de-
preciated over its entire life (i.e., from
the date the asset was acquired and
ready for use to the date of disposal or
withdrawal from service). The total
amount of use allowance and deprecia-
tion for an asset (including imputed de-
preciation applicable to periods prior
to the conversion from the use allow-
ance method as well as depreciation
after the conversion) may not exceed
the total acquisition cost of the asset.
(e) Charges for depreciation must be
supported by adequate property
records, and physical inventories must
be taken at least once every two years
to ensure that the assets exist and are
usable, used, and needed. Statistical
sampling techniques may be used in
taking these inventories. In addition,
adequate depreciation records showing
the amount of depreciation must be
maintained.
[78 FR 78608, Dec. 26, 2013, as amended at 79
FR 75886, Dec. 19, 2014; 85 FR 49568, Aug. 13,
2020]
§200.437 Employee health and welfare
costs.
(a) Costs incurred in accordance with
the non-Federal entity’s documented
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OMB Guidance §200.440
policies for the improvement of work-
ing conditions, employer-employee re-
lations, employee health, and employee
performance are allowable.
(b) Such costs will be equitably ap-
portioned to all activities of the non-
Federal entity. Income generated from
any of these activities will be credited
to the cost thereof unless such income
has been irrevocably sent to employee
welfare organizations.
(c) Losses resulting from operating
food services are allowable only if the
non-Federal entity’s objective is to op-
erate such services on a break-even
basis. Losses sustained because of oper-
ating objectives other than the above
are allowable only:
(1) Where the non-Federal entity can
demonstrate unusual circumstances;
and
(2) With the approval of the cog-
nizant agency for indirect costs.
§200.438 Entertainment costs.
Costs of entertainment, including
amusement, diversion, and social ac-
tivities and any associated costs are
unallowable, except where specific
costs that might otherwise be consid-
ered entertainment have a pro-
grammatic purpose and are authorized
either in the approved budget for the
Federal award or with prior written ap-
proval of the Federal awarding agency.
§200.439 Equipment and other capital
expenditures.
(a) See §200.1 for the definitions of
capital expenditures, equipment, special
purpose equipment, general purpose
equipment, acquisition cost, and capital
assets.
(b) The following rules of allow-
ability must apply to equipment and
other capital expenditures:
(1) Capital expenditures for general
purpose equipment, buildings, and land
are unallowable as direct charges, ex-
cept with the prior written approval of
the Federal awarding agency or pass-
through entity.
(2) Capital expenditures for special
purpose equipment are allowable as di-
rect costs, provided that items with a
unit cost of $5,000 or more have the
prior written approval of the Federal
awarding agency or pass-through enti-
ty.
(3) Capital expenditures for improve-
ments to land, buildings, or equipment
which materially increase their value
or useful life are unallowable as a di-
rect cost except with the prior written
approval of the Federal awarding agen-
cy, or pass-through entity. See §200.436,
for rules on the allowability of depre-
ciation on buildings, capital improve-
ments, and equipment. See also
§200.465.
(4) When approved as a direct charge
pursuant to paragraphs (b)(1) through
(3) of this section, capital expenditures
will be charged in the period in which
the expenditure is incurred, or as oth-
erwise determined appropriate and ne-
gotiated with the Federal awarding
agency.
(5) 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 depreciation on
the equipment, or by amortizing the
amount to be written off over a period
of years negotiated with the Federal
cognizant agency for indirect cost.
(6) Cost of equipment disposal. If the
non-Federal entity is instructed by the
Federal awarding agency to otherwise
dispose of or transfer the equipment
the costs of such disposal or transfer
are allowable.
(7) Equipment and other capital ex-
penditures are unallowable as indirect
costs. See §200.436.
[78 FR 78608, Dec. 26, 2013, as amended at 79
FR 75886, Dec. 19, 2014; 85 FR 49568, Aug. 13,
2020]
§200.440 Exchange rates.
(a) Cost increases for fluctuations in
exchange rates are allowable costs sub-
ject to the availability of funding.
Prior approval of exchange rate fluc-
tuations is required only when the
change results in the need for addi-
tional Federal funding, or the in-
creased costs result in the need to sig-
nificantly reduce the scope of the
project. The Federal awarding agency
must however ensure that adequate
funds are available to cover currency
fluctuations in order to avoid a viola-
tion of the Anti-Deficiency Act.
(b) The non-Federal entity is re-
quired to make reviews of local cur-
rency gains to determine the need for
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2 CFR Ch. II (1–1–22 Edition) §200.441
additional federal funding before the
expiration date of the Federal award.
Subsequent adjustments for currency
increases may be allowable only when
the non-Federal entity provides the
Federal awarding agency with ade-
quate source documentation from a
commonly used source in effect at the
time the expense was made, and to the
extent that sufficient Federal funds are
available.
[78 FR 78608, Dec. 26, 2013, as amended at 79
FR 75886, Dec. 19, 2014]
§200.441 Fines, penalties, damages
and other settlements.
Costs resulting from non-Federal en-
tity violations of, alleged violations of,
or failure to comply with, Federal,
state, tribal, local or foreign laws and
regulations are unallowable, except
when incurred as a result of compli-
ance with specific provisions of the
Federal award, or with prior written
approval of the Federal awarding agen-
cy. See also §200.435.
[85 FR 49568, Aug. 13, 2020]
§200.442 Fund raising and investment
management costs.
(a) Costs of organized fund raising,
including financial campaigns, endow-
ment drives, solicitation of gifts and
bequests, and similar expenses incurred
to raise capital or obtain contributions
are unallowable. Fund raising costs for
the purposes of meeting the Federal
program objectives are allowable with
prior written approval from the Fed-
eral awarding agency. Proposal costs
are covered in §200.460.
(b) Costs of investment counsel and
staff and similar expenses incurred to
enhance income from investments are
unallowable except when associated
with investments covering pension,
self-insurance, or other funds which in-
clude Federal participation allowed by
this part.
(c) Costs related to the physical cus-
tody and control of monies and securi-
ties are allowable.
(d) Both allowable and unallowable
fund-raising and investment activities
must be allocated as an appropriate
share of indirect costs under the condi-
tions described in §200.413.
[85 FR 49568, Aug. 13, 2020]
§200.443 Gains and losses on disposi-
tion of depreciable assets.
(a) Gains and losses on the sale, re-
tirement, or other disposition of depre-
ciable property must be included in the
year in which they occur as credits or
charges to the asset cost grouping(s) in
which the property was included. The
amount of the gain or loss to be in-
cluded as a credit or charge to the ap-
propriate asset cost grouping(s) is the
difference between the amount realized
on the property and the undepreciated
basis of the property.
(b) Gains and losses from the disposi-
tion of depreciable property must not
be recognized as a separate credit or
charge under the following conditions:
(1) The gain or loss is processed
through a depreciation account and is
reflected in the depreciation allowable
under §§200.436 and 200.439.
(2) The property is given in exchange
as part of the purchase price of a simi-
lar item and the gain or loss is taken
into account in determining the depre-
ciation cost basis of the new item.
(3) A loss results from the failure to
maintain permissible insurance, except
as otherwise provided in §200.447.
(4) Compensation for the use of the
property was provided through use al-
lowances in lieu of depreciation.
(5) Gains and losses arising from
mass or extraordinary sales, retire-
ments, or other dispositions must be
considered on a case-by-case basis.
(c) Gains or losses of any nature aris-
ing from the sale or exchange of prop-
erty other than the property covered in
paragraph (a) of this section, e.g., land,
must be excluded in computing Federal
award costs.
(d) When assets acquired with Fed-
eral funds, in part or wholly, are dis-
posed of, the distribution of the pro-
ceeds must be made in accordance with
§§200.310 through 200.316 of this part.
[78 FR 78608, Dec. 26, 2013, as amended at 79
FR 75886, Dec. 19, 2014; 85 FR 49568, Aug. 13,
2020]
§200.444 General costs of government.
(a) For states, local governments,
and Indian Tribes, the general costs of
government are unallowable (except as
provided in §200.475). Unallowable costs
include:
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OMB Guidance §200.446
(1) Salaries and expenses of the Office
of the Governor of a state or the chief
executive of a local government or the
chief executive of an Indian tribe;
(2) Salaries and other expenses of a
state legislature, tribal council, or
similar local governmental body, such
as a county supervisor, city council,
school board, etc., whether incurred for
purposes of legislation or executive di-
rection;
(3) Costs of the judicial branch of a
government;
(4) Costs of prosecutorial activities
unless treated as a direct cost to a spe-
cific program if authorized by statute
or regulation (however, this does not
preclude the allowability of other legal
activities of the Attorney General as
described in §200.435); and
(5) Costs of other general types of
government services normally provided
to the general public, such as fire and
police, unless provided for as a direct
cost under a program statute or regula-
tion.
(b) For Indian tribes and Councils of
Governments (COGs) (see definition for
Local government in §200.1 of this part),
up to 50% of salaries and expenses di-
rectly attributable to managing and
operating Federal programs by the
chief executive and his or her staff can
be included in the indirect cost cal-
culation without documentation.
[78 FR 78608, Dec. 26, 2013, as amended at 79
FR 75886, Dec. 19, 2014; 85 FR 49568, Aug. 13,
2020]
§200.445 Goods or services for per-
sonal use.
(a) Costs of goods or services for per-
sonal use of the non-Federal entity’s
employees are unallowable regardless
of whether the cost is reported as tax-
able income to the employees.
(b) Costs of housing (e.g., deprecia-
tion, maintenance, utilities, fur-
nishings, rent), housing allowances and
personal living expenses are only al-
lowable as direct costs regardless of
whether reported as taxable income to
the employees. In addition, to be allow-
able direct costs must be approved in
advance by a Federal awarding agency.
§200.446 Idle facilities and idle capac-
ity.
(a) As used in this section the fol-
lowing terms have the meanings set
forth in this section:
(1) Facilities means land and build-
ings or any portion thereof, equipment
individually or collectively, or any
other tangible capital asset, wherever
located, and whether owned or leased
by the non-Federal entity.
(2) Idle facilities means completely
unused facilities that are excess to the
non-Federal entity’s current needs.
(3) Idle capacity means the unused
capacity of partially used facilities. It
is the difference between:
(i) 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 ma-
terials, and other normal delays and;
(ii) The extent to which the facility
was actually used to meet demands
during the accounting period. A multi-
shift basis should be used if it can be
shown that this amount of usage would
normally be expected for the type of fa-
cility involved.
(4) Cost of idle facilities or idle ca-
pacity means costs such as mainte-
nance, repair, housing, rent, and other
related costs, e.g., insurance, interest,
and depreciation. These costs could in-
clude the costs of idle public safety
emergency facilities, telecommuni-
cations, or information technology sys-
tem capacity that is built to withstand
major fluctuations in load, e.g., con-
solidated data centers.
(b) The costs of idle facilities are un-
allowable except to the extent that:
(1) They are necessary to meet work-
load requirements which may fluctuate
and are allocated appropriately to all
benefiting programs; or
(2) Although not necessary to meet
fluctuations in workload, they were
necessary when acquired and are now
idle because of changes in program re-
quirements, efforts to achieve more ec-
onomical operations, reorganization,
termination, or other causes which
could not have been reasonably fore-
seen. Under the exception stated in
this subsection, costs of idle facilities
are allowable for a reasonable period of
time, ordinarily not to exceed one
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2 CFR Ch. II (1–1–22 Edition) §200.447
year, depending on the initiative taken
to use, lease, or dispose of such facili-
ties.
(c) The costs of idle capacity are nor-
mal 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 that the capacity is reason-
ably anticipated to be necessary to
carry out the purpose of the Federal
award or was originally reasonable and
is not subject to reduction or elimi-
nation by use on other Federal awards,
subletting, renting, or sale, in accord-
ance with sound business, economic, or
security practices. Widespread idle ca-
pacity throughout an entire facility or
among a group of assets having sub-
stantially the same function may be
considered idle facilities.
§200.447 Insurance and indemnifica-
tion.
(a) Costs of insurance required or ap-
proved and maintained, pursuant to
the Federal award, are allowable.
(b) Costs of other insurance in con-
nection with the general conduct of ac-
tivities are allowable subject to the
following limitations:
(1) Types and extent and cost of cov-
erage are in accordance with the non-
Federal entity’s policy and sound busi-
ness practice.
(2) Costs of insurance or of contribu-
tions to any reserve covering the risk
of loss of, or damage to, Federal Gov-
ernment property are unallowable ex-
cept to the extent that the Federal
awarding agency has specifically re-
quired or approved such costs.
(3) Costs allowed for business inter-
ruption or other similar insurance
must exclude coverage of management
fees.
(4) Costs of insurance on the lives of
trustees, officers, or other employees
holding positions of similar respon-
sibilities are allowable only to the ex-
tent that the insurance represents ad-
ditional compensation (see §200.431).
The cost of such insurance when the
non-Federal entity is identified as the
beneficiary is unallowable.
(5) Insurance against defects. Costs of
insurance with respect to any costs in-
curred to correct defects in the non-
Federal entity’s materials or work-
manship are unallowable.
(6) Medical liability (malpractice) in-
surance. 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 partici-
pants in research techniques. Medical
liability insurance costs must be treat-
ed as a direct cost and must be as-
signed to individual projects based on
the manner in which the insurer allo-
cates the risk to the population cov-
ered by the insurance.
(c) Actual losses which could have
been covered by permissible insurance
(through a self-insurance program or
otherwise) are unallowable, unless ex-
pressly provided for in the Federal
award. However, costs incurred because
of losses not covered under nominal de-
ductible insurance coverage provided
in keeping with sound management
practice, and minor losses not covered
by insurance, such as spoilage, break-
age, and disappearance of small hand
tools, which occur in the ordinary
course of operations, are allowable.
(d) Contributions to a reserve for cer-
tain self-insurance programs including
workers’ compensation, unemployment
compensation, and severance pay are
allowable subject to the following pro-
visions:
(1) The type of coverage and the ex-
tent of coverage and the rates and pre-
miums would have been allowed had in-
surance (including reinsurance) been
purchased to cover the risks. However,
provision for known or reasonably esti-
mated self-insured liabilities, which do
not become payable for more than one
year after the provision is made, must
not exceed the discounted present
value of the liability. The rate used for
discounting the liability must be deter-
mined by giving consideration to such
factors as the non-Federal entity’s set-
tlement rate for those liabilities and
its investment rate of return.
(2) Earnings or investment income on
reserves must be credited to those re-
serves.
(3)(i) Contributions to reserves must
be based on sound actuarial principles
using historical experience and reason-
able assumptions. Reserve levels must
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OMB Guidance §200.448
be analyzed and updated at least bien-
nially for each major risk being in-
sured and take into account any rein-
surance, coinsurance, etc. Reserve lev-
els related to employee-related cov-
erages will normally be limited to the
value of claims:
(A) Submitted and adjudicated but
not paid;
(B) Submitted but not adjudicated;
and
(C) Incurred but not submitted.
(ii) Reserve levels in excess of the
amounts based on the above must be
identified and justified in the cost allo-
cation plan or indirect cost rate pro-
posal.
(4) Accounting records, actuarial
studies, and cost allocations (or bil-
lings) must recognize any significant
differences due to types of insured risk
and losses generated by the various in-
sured activities or agencies of the non-
Federal entity. If individual depart-
ments or agencies of the non-Federal
entity experience significantly dif-
ferent levels of claims for a particular
risk, those differences are to be recog-
nized by the use of separate allocations
or other techniques resulting in an eq-
uitable allocation.
(5) Whenever funds are transferred
from a self-insurance reserve to other
accounts (e.g., general fund or unre-
stricted account), refunds must be
made to the Federal Government for
its share of funds transferred, including
earned or imputed interest from the
date of transfer and debt interest, if ap-
plicable, chargeable in accordance with
applicable Federal cognizant agency
for indirect cost, claims collection reg-
ulations.
(e) Insurance refunds must be cred-
ited against insurance costs in the year
the refund is received.
(f) Indemnification includes securing
the non-Federal entity against liabil-
ities to third persons and other losses
not compensated by insurance or oth-
erwise. The Federal Government is ob-
ligated to indemnify the non-Federal
entity only to the extent expressly pro-
vided for in the Federal award, except
as provided in paragraph (c) of this sec-
tion.
[78 FR 78608, Dec. 26, 2013, as amended at 85
FR 49568, Aug. 13, 2020]
§200.448 Intellectual property.
(a) Patent costs. (1) The following
costs related to securing patents and
copyrights are allowable:
(i) Costs of preparing disclosures, re-
ports, and other documents required by
the Federal award, and of searching the
art to the extent necessary to make
such disclosures;
(ii) Costs of 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 con-
veyed to the Federal Government; and
(iii) General counseling services re-
lating to patent and copyright matters,
such as advice on patent and copyright
laws, regulations, clauses, and em-
ployee intellectual property agree-
ments (See also §200.459).
(2) The following costs related to se-
curing patents and copyrights are unal-
lowable:
(i) Costs of preparing disclosures, re-
ports, and other documents, and of
searching the art to make disclosures
not required by the Federal award;
(ii) Costs in connection with filing
and prosecuting any foreign patent ap-
plication, or any United States patent
application, where the Federal award
does not require conveying title or a
royalty-free license to the Federal
Government.
(b) Royalties and other costs for use of
patents and copyrights. (1) 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 Federal award are allowable un-
less:
(i) The Federal Government already
has a license or the right to free use of
the patent or copyright.
(ii) The patent or copyright has been
adjudicated to be invalid, or has been
administratively determined to be in-
valid.
(iii) The patent or copyright is con-
sidered to be unenforceable.
(iv) The patent or copyright is ex-
pired.
(2) Special care should be exercised in
determining reasonableness where the
royalties may have been arrived at as a
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2 CFR Ch. II (1–1–22 Edition) §200.449
result of less-than-arm’s-length bar-
gaining, such as:
(i) Royalties paid to persons, includ-
ing corporations, affiliated with the
non-Federal entity.
(ii) Royalties paid to unaffiliated
parties, including corporations, under
an agreement entered into in con-
templation that a Federal award would
be made.
(iii) Royalties paid under an agree-
ment entered into after a Federal
award is made to a non-Federal entity.
(3) In any case involving a patent or
copyright formerly owned by the non-
Federal entity, the amount of royalty
allowed must not exceed the cost which
would have been allowed had the non-
Federal entity retained title thereto.
[78 FR 78608, Dec. 26, 2013, as amended at 79
FR 75886, Dec. 19, 2014; 85 FR 49569, Aug. 13,
2020]
§200.449 Interest.
(a) General. Costs incurred for inter-
est on borrowed capital, temporary use
of endowment funds, or the use of the
non-Federal entity’s own funds, how-
ever represented, are unallowable. Fi-
nancing costs (including interest) to
acquire, construct, or replace capital
assets are allowable, subject to the
conditions in this section.
(b) Capital assets. (1) Capital assets is
defined as noted in §200.1 of this part.
An asset cost includes (as applicable)
acquisition costs, construction costs,
and other costs capitalized in accord-
ance with GAAP.
(2) For non-Federal entity fiscal
years beginning on or after January 1,
2016, intangible assets include patents
and computer software. For software
development projects, only interest at-
tributable to the portion of the project
costs capitalized in accordance with
GAAP is allowable.
(c) Conditions for all non-Federal enti-
ties. (1) The non-Federal entity uses the
capital assets in support of Federal
awards;
(2) The allowable asset costs to ac-
quire facilities and equipment are lim-
ited to a fair market value available to
the non-Federal entity from an unre-
lated (arm’s length) third party.
(3) The non-Federal entity obtains
the financing via an arm’s-length
transaction (that is, a transaction with
an unrelated third party); or claims re-
imbursement of actual interest cost at
a rate available via such a transaction.
(4) The non-Federal entity limits
claims for Federal reimbursement of
interest costs to the least expensive al-
ternative. For example, a lease con-
tract that transfers ownership by the
end of the contract may be determined
less costly than purchasing through
other types of debt financing, in which
case reimbursement must be limited to
the amount of interest determined if
leasing had been used.
(5) The non-Federal entity expenses
or capitalizes allowable interest cost in
accordance with GAAP.
(6) Earnings generated by the invest-
ment of borrowed funds pending their
disbursement for the asset costs are
used to offset the current period’s al-
lowable interest cost, whether that
cost is expensed or capitalized. Earn-
ings subject to being reported to the
Federal Internal Revenue Service
under arbitrage requirements are ex-
cludable.
(7) The following conditions must
apply to debt arrangements over $1
million to purchase or construct facili-
ties, unless the non-Federal entity
makes an initial equity contribution to
the purchase of 25 percent or more. For
this purpose, ‘‘initial equity contribu-
tion’’ means the amount or value of
contributions made by the non-Federal
entity for the acquisition of facilities
prior to occupancy.
(i) The non-Federal entity must re-
duce claims for reimbursement of in-
terest cost by an amount equal to im-
puted interest earnings on excess cash
flow attributable to the portion of the
facility used for Federal awards.
(ii) The non-Federal entity must im-
pute interest on excess cash flow as fol-
lows:
(A) Annually, the non-Federal entity
must prepare a cumulative (from the
inception of the project) report of
monthly cash inflows and outflows, re-
gardless of the funding source. For this
purpose, inflows consist of Federal re-
imbursement for depreciation, amorti-
zation of capitalized construction in-
terest, and annual interest cost. Out-
flows consist of initial equity contribu-
tions, debt principal payments (less the
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OMB Guidance §200.450
pro-rata share attributable to the cost
of land), and interest payments.
(B) To compute monthly cash inflows
and outflows, the non-Federal entity
must divide the annual amounts deter-
mined in step (i) by the number of
months in the year (usually 12) that
the building is in service.
(C) For any month in which cumu-
lative cash inflows exceed cumulative
outflows, interest must be calculated
on the excess inflows for that month
and be treated as a reduction to allow-
able interest cost. The rate of interest
to be used must be the three-month
Treasury bill closing rate as of the last
business day of that month.
(8) Interest attributable to a fully de-
preciated asset is unallowable.
(d) Additional conditions for states,
local governments and Indian tribes.
For costs to be allowable, the non-Fed-
eral entity must have incurred the in-
terest costs for buildings after October
1, 1980, or for land and equipment after
September 1, 1995.
(1) The requirement to offset interest
earned on borrowed funds against cur-
rent allowable interest cost (paragraph
(c)(5), above) also applies to earnings
on debt service reserve funds.
(2) The non-Federal entity will nego-
tiate the amount of allowable interest
cost related to the acquisition of facili-
ties with asset costs of $1 million or
more, as outlined in paragraph (c)(7) of
this section. For this purpose, a non-
Federal entity must consider only cash
inflows and outflows attributable to
that portion of the real property used
for Federal awards.
(e) Additional conditions for IHEs.
For costs to be allowable, the IHE
must have incurred the interest costs
after July 1, 1982, in connection with
acquisitions of capital assets that oc-
curred after that date.
(f) Additional condition for nonprofit
organizations. For costs to be allow-
able, the nonprofit organization in-
curred the interest costs after Sep-
tember 29, 1995, in connection with ac-
quisitions of capital assets that oc-
curred after that date.
(g) The interest allowability provi-
sions of this section do not apply to a
nonprofit organization subject to ‘‘full
coverage’’ under the Cost Accounting
Standards (CAS), as defined at 48 CFR
9903.201–2(a). The non-Federal entity’s
Federal awards are instead subject to
CAS 414 (48 CFR 9904.414), ‘‘Cost of
Money as an Element of the Cost of Fa-
cilities Capital’’, and CAS 417 (48 CFR
9904.417), ‘‘Cost of Money as an Element
of the Cost of Capital Assets Under
Construction’’.
[78 FR 78608, Dec. 26, 2013, as amended at 80
FR 54409, Sept. 10, 2015; 85 FR 49569, Aug. 13,
2020]
§200.450 Lobbying.
(a) The cost of certain influencing ac-
tivities associated with obtaining
grants, contracts, or cooperative agree-
ments, or loans is an unallowable cost.
Lobbying with respect to certain
grants, contracts, cooperative agree-
ments, and loans is governed by rel-
evant statutes, including among oth-
ers, the provisions of 31 U.S.C. 1352, as
well as the common rule, ‘‘New Re-
strictions on Lobbying’’ published on
February 26, 1990, including definitions,
and the Office of Management and
Budget ‘‘Governmentwide Guidance for
New Restrictions on Lobbying’’ and no-
tices published on December 20, 1989,
June 15, 1990, January 15, 1992, and Jan-
uary 19, 1996.
(b) Executive lobbying costs. Costs in-
curred in attempting to improperly in-
fluence either directly or indirectly, an
employee or officer of the executive
branch of the Federal Government to
give consideration or to act regarding a
Federal award or a regulatory matter
are unallowable. Improper influence
means any influence that induces or
tends to induce a Federal employee or
officer to give consideration or to act
regarding a Federal award or regu-
latory matter on any basis other than
the merits of the matter.
(c) In addition to the above, the fol-
lowing restrictions are applicable to
nonprofit organizations and IHEs:
(1) Costs associated with the fol-
lowing activities are unallowable:
(i) Attempts to influence the out-
comes of any Federal, state, or local
election, referendum, initiative, or
similar procedure, through in-kind or
cash contributions, endorsements, pub-
licity, or similar activity;
(ii) Establishing, administering, con-
tributing to, or paying the expenses of
a political party, campaign, political
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2 CFR Ch. II (1–1–22 Edition) §200.450
action committee, or other organiza-
tion established for the purpose of in-
fluencing the outcomes of elections in
the United States;
(iii) Any attempt to influence:
(A) The introduction of Federal or
state legislation;
(B) The enactment or modification of
any pending Federal or state legisla-
tion through communication with any
member or employee of the Congress or
state legislature (including efforts to
influence state or local officials to en-
gage in similar lobbying activity);
(C) The enactment or modification of
any pending Federal or state legisla-
tion 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 dem-
onstration, march, rally, fund raising
drive, lobbying campaign or letter
writing or telephone campaign; or
(D) Any government official or em-
ployee in connection with a decision to
sign or veto enrolled legislation;
(iv) Legislative liaison activities, in-
cluding attendance at legislative ses-
sions 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.
(2) The following activities are ex-
cepted from the coverage of paragraph
(c)(1) of this section:
(i) Technical and factual presen-
tations on topics 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 docu-
mented request (including a Congres-
sional Record notice requesting testi-
mony or statements for the record at a
regularly scheduled hearing) made by
the non-Federal entity’s member of
congress, legislative body or a subdivi-
sion, 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 unal-
lowable unless incurred to offer testi-
mony at a regularly scheduled Congres-
sional hearing pursuant to a written
request for such presentation made by
the Chairman or Ranking Minority
Member of the Committee or Sub-
committee conducting such hearings;
(ii) Any lobbying made unallowable
by paragraph (c)(1)(iii) of this section
to influence state legislation in order
to directly reduce the cost, or to avoid
material impairment of the non-Fed-
eral entity’s authority to perform the
grant, contract, or other agreement; or
(iii) Any activity specifically author-
ized by statute to be undertaken with
funds from the Federal award.
(iv) Any activity excepted from the
definitions of ‘‘lobbying’’ or ‘‘influ-
encing legislation’’ by the Internal
Revenue Code provisions that require
nonprofit organizations to limit their
participation in direct and ‘‘grass
roots’’ lobbying activities in order to
retain their charitable deduction sta-
tus and avoid punitive excise taxes,
I.R.C. §§501(c)(3), 501(h), 4911(a), includ-
ing:
(A) Nonpartisan analysis, study, or
research reports;
(B) Examinations and discussions of
broad social, economic, and similar
problems; and
(C) Information provided upon re-
quest by a legislator for technical ad-
vice and assistance, as defined by I.R.C.
§4911(d)(2) and 26 CFR 56.4911–2(c)(1)–
(c)(3).
(v) When a non-Federal entity seeks
reimbursement for indirect (F&A)
costs, total lobbying costs must be sep-
arately identified in the indirect (F&A)
cost rate proposal, and thereafter
treated as other unallowable activity
costs in accordance with the proce-
dures of §200.413.
(vi) The non-Federal entity must sub-
mit as part of its annual indirect
(F&A) cost rate proposal a certification
that the requirements and standards of
this section have been complied with.
(See also §200.415.)
(vii)(A) Time logs, calendars, or simi-
lar records are not required to be cre-
ated for purposes of complying with
the record keeping requirements in
§200.302 with respect to lobbying costs
during any particular calendar month
when:
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OMB Guidance §200.453
(1) The employee engages in lobbying
(as defined in paragraphs (c)(1) and
(c)(2) of this section) 25 percent or less
of the employee’s compensated hours of
employment during that calendar
month; and
(2) Within the preceding five-year pe-
riod, the non-Federal entity has not
materially misstated allowable or un-
allowable costs of any nature, includ-
ing legislative lobbying costs.
(B) When conditions in paragraph
(c)(2)(vii)(A)(1) and (2) of this section
are met, non-Federal entities are not
required to establish records to support
the allowability of claimed costs in ad-
dition to records already required or
maintained. Also, when conditions in
paragraphs (c)(2)(vii)(A)(1) and (2) of
this section are met, the absence of
time logs, calendars, or similar records
will not serve as a basis for disallowing
costs by contesting estimates of lob-
bying time spent by employees during
a calendar month.
(viii) The Federal awarding agency
must establish procedures for resolving
in advance, in consultation with OMB,
any significant questions or disagree-
ments concerning the interpretation or
application of this section. Any such
advance resolutions must be binding in
any subsequent settlements, audits, or
investigations with respect to that
grant or contract for purposes of inter-
pretation of this part, provided, how-
ever, that this must not be construed
to prevent a contractor or non-Federal
entity from contesting the lawfulness
of such a determination.
[78 FR 78608, Dec. 26, 2013, as amended at 85
FR 49569, Aug. 13, 2020]
§200.451 Losses on other awards or
contracts.
Any excess of costs over income
under any other award or contract of
any nature is unallowable. This in-
cludes, but is not limited to, the non-
Federal entity’s contributed portion by
reason of cost-sharing agreements or
any under-recoveries through negotia-
tion of flat amounts for indirect (F&A)
costs. Also, any excess of costs over au-
thorized funding levels transferred
from any award or contract to another
award or contract is unallowable. All
losses are not allowable indirect (F&A)
costs and are required to be included in
the appropriate indirect cost rate base
for allocation of indirect costs.
§200.452 Maintenance and repair
costs.
Costs incurred for utilities, insur-
ance, security, necessary maintenance,
janitorial services, repair, or upkeep of
buildings and equipment (including
Federal property unless otherwise pro-
vided for) which neither add to the per-
manent value of the property nor ap-
preciably prolong its intended life, but
keep it in an efficient operating condi-
tion, are allowable. Costs incurred for
improvements which add to the perma-
nent value of the buildings and equip-
ment or appreciably prolong their in-
tended life must be treated as capital
expenditures (see §200.439). These costs
are only allowable to the extent not
paid through rental or other agree-
ments.
[85 FR 49569, Aug. 13, 2020]
§200.453 Materials and supplies costs,
including costs of computing de-
vices.
(a) Costs incurred for materials, sup-
plies, and fabricated parts necessary to
carry out a Federal award are allow-
able.
(b) Purchased materials and supplies
must be charged at their actual prices,
net of applicable credits. Withdrawals
from general stores or stockrooms
must be charged at their actual net
cost under any recognized method of
pricing inventory withdrawals, consist-
ently applied. Incoming transportation
charges are a proper part of materials
and supplies costs.
(c) Materials and supplies used for
the performance of a Federal award
may be charged as direct costs. In the
specific case of computing devices,
charging as direct costs is allowable for
devices that are essential and allo-
cable, but not solely dedicated, to the
performance of a Federal award.
(d) Where federally-donated or fur-
nished materials are used in per-
forming the Federal award, such mate-
rials will be used without charge.
[78 FR 78608, Dec. 26, 2013, as amended at 79
FR 75887, Dec. 19, 2014]
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2 CFR Ch. II (1–1–22 Edition) §200.454
§200.454 Memberships, subscriptions,
and professional activity costs.
(a) Costs of the non-Federal entity’s
membership in business, technical, and
professional organizations are allow-
able.
(b) Costs of the non-Federal entity’s
subscriptions to business, professional,
and technical periodicals are allowable.
(c) Costs of membership in any civic
or community organization are allow-
able with prior approval by the Federal
awarding agency or pass-through enti-
ty.
(d) Costs of membership in any coun-
try club or social or dining club or or-
ganization are unallowable.
(e) Costs of membership in organiza-
tions whose primary purpose is lob-
bying are unallowable. See also
§200.450.
[78 FR 78608, Dec. 26, 2013, as amended at 85
FR 49569, Aug. 13, 2020]
§200.455 Organization costs.
Costs such as incorporation fees, bro-
kers’ fees, fees to promoters, organizers
or management consultants, attorneys,
accountants, or investment counselor,
whether or not employees of the non-
Federal entity in connection with es-
tablishment or reorganization of an or-
ganization, are unallowable except
with prior approval of the Federal
awarding agency.
§200.456 Participant support costs.
Participant support costs as defined
in §200.1 are allowable with the prior
approval of the Federal awarding agen-
cy.
[85 FR 49569, Aug. 13, 2020]
§200.457 Plant and security costs.
Necessary and reasonable expenses
incurred for protection and security of
facilities, personnel, and work products
are allowable. Such costs include, but
are not limited to, wages and uniforms
of personnel engaged in security activi-
ties; equipment; barriers; protective
(non-military) gear, devices, and equip-
ment; contractual security services;
and consultants. Capital expenditures
for plant security purposes are subject
to §200.439.
[85 FR 49569, Aug. 13, 2020]
§200.458 Pre-award costs.
Pre-award costs are those incurred
prior to the effective date of the Fed-
eral award or subaward directly pursu-
ant to the negotiation and in anticipa-
tion of the Federal award where such
costs are necessary for efficient and
timely performance of the scope of
work. Such costs are allowable only to
the extent that they would have been
allowable if incurred after the date of
the Federal award and only with the
written approval of the Federal award-
ing agency. If charged to the award,
these costs must be charged to the ini-
tial budget period of the award, unless
otherwise specified by the Federal
awarding agency or pass-through enti-
ty.
[85 FR 49569, Aug. 13, 2020]
§200.459 Professional service costs.
(a) Costs of professional and consult-
ant 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 non-
Federal entity, are allowable, subject
to paragraphs (b) and (c) of this section
when reasonable in relation to the
services rendered and when not contin-
gent upon recovery of the costs from
the Federal Government. In addition,
legal and related services are limited
under §200.435.
(b) In determining the allowability of
costs in a particular case, no single fac-
tor or any special combination of fac-
tors is necessarily determinative. How-
ever, the following factors are relevant:
(1) The nature and scope of the serv-
ice rendered in relation to the service
required.
(2) The necessity of contracting for
the service, considering the non-Fed-
eral entity’s capability in the par-
ticular area.
(3) The past pattern of such costs,
particularly in the years prior to Fed-
eral awards.
(4) The impact of Federal awards on
the non-Federal entity’s business (i.e.,
what new problems have arisen).
(5) Whether the proportion of Federal
work to the non-Federal entity’s total
business is such as to influence the
non-Federal entity in favor of incur-
ring the cost, particularly where the
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OMB Guidance §200.463
services rendered are not of a con-
tinuing nature and have little relation-
ship to work under Federal awards.
(6) Whether the service can be per-
formed more economically by direct
employment rather than contracting.
(7) The qualifications of the indi-
vidual or concern rendering the service
and the customary fees charged, espe-
cially on non-federally funded activi-
ties.
(8) Adequacy of the contractual
agreement for the service (e.g., descrip-
tion of the service, estimate of time re-
quired, rate of compensation, and ter-
mination provisions).
(c) In addition to the factors in para-
graph (b) of this section, to be allow-
able, retainer fees must be supported
by evidence of bona fide services avail-
able or rendered.
[78 FR 78608, Dec. 26, 2013, as amended at 85
FR 49569, Aug. 13, 2020]
§200.460 Proposal costs.
Proposal costs are the costs of pre-
paring bids, proposals, or applications
on potential Federal and non-Federal
awards or projects, including the devel-
opment of data necessary to support
the non-Federal entity’s bids or pro-
posals. Proposal costs of the current
accounting period of both successful
and unsuccessful bids and proposals
normally should be treated as indirect
(F&A) costs and allocated currently to
all activities of the non-Federal entity.
No proposal costs of past accounting
periods will be allocable to the current
period.
§200.461 Publication and printing
costs.
(a) Publication costs for electronic
and print media, including distribu-
tion, promotion, and general handling
are allowable. If these costs are not
identifiable with a particular cost ob-
jective, they should be allocated as in-
direct costs to all benefiting activities
of the non-Federal entity.
(b) Page charges for professional
journal publications are allowable
where:
(1) The publications report work sup-
ported by the Federal Government; and
(2) The charges are levied impartially
on all items published by the journal,
whether or not under a Federal award.
(3) The non-Federal entity may
charge the Federal award during close-
out for the costs of publication or shar-
ing of research results if the costs are
not incurred during the period of per-
formance of the Federal award. If
charged to the award, these costs must
be charged to the final budget period of
the award, unless otherwise specified
by the Federal awarding agency.
[78 FR 78608, Dec. 26, 2013, as amended at 85
FR 49569, Aug. 13, 2020]
§200.462 Rearrangement and recon-
version costs.
(a) Costs incurred for ordinary and
normal rearrangement and alteration
of facilities are allowable as indirect
costs. Special arrangements and alter-
ations costs incurred specifically for a
Federal award are allowable as a direct
cost with the prior approval of the Fed-
eral awarding agency or pass-through
entity.
(b) Costs incurred in the restoration
or rehabilitation of the non-Federal en-
tity’s facilities to approximately the
same condition existing immediately
prior to commencement of Federal
awards, less costs related to normal
wear and tear, are allowable.
§200.463 Recruiting costs.
(a) Subject to paragraphs (b) and (c)
of this section, and provided that the
size of the staff recruited and main-
tained is in keeping with workload re-
quirements, costs of ‘‘help wanted’’ ad-
vertising, operating costs of an em-
ployment office necessary to secure
and maintain an adequate staff, costs
of operating an aptitude and edu-
cational testing program, travel costs
of employees while engaged in recruit-
ing personnel, travel costs of appli-
cants for interviews for prospective
employment, and relocation costs in-
curred incident to recruitment of new
employees, are allowable to the extent
that such costs are incurred pursuant
to the non-Federal entity’s standard
recruitment program. Where the non-
Federal entity uses employment agen-
cies, costs not in excess of standard
commercial rates for such services are
allowable.
(b) Special emoluments, fringe bene-
fits, and salary allowances incurred to
attract professional personnel that do
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2 CFR Ch. II (1–1–22 Edition) §200.464
not meet the test of reasonableness or
do not conform with the established
practices of the non-Federal entity, are
unallowable.
(c) Where relocation costs incurred
incident to recruitment of a new em-
ployee have been funded in whole or in
part to a Federal award, and the newly
hired employee resigns for reasons
within the employee’s control within 12
months after hire, the non-Federal en-
tity will be required to refund or credit
the Federal share of such relocation
costs to the Federal Government. See
also §200.464.
(d) Short-term, travel visa costs (as
opposed to longer-term, immigration
visas) are generally allowable expenses
that may be proposed as a direct cost.
Since short-term visas are issued for a
specific period and purpose, they can be
clearly identified as directly connected
to work performed on a Federal award.
For these costs to be directly charged
to a Federal award, they must:
(1) Be critical and necessary for the
conduct of the project;
(2) Be allowable under the applicable
cost principles;
(3) Be consistent with the non-Fed-
eral entity’s cost accounting practices
and non-Federal entity policy; and
(4) Meet the definition of ‘‘direct
cost’’ as described in the applicable
cost principles.
[78 FR 78608, Dec. 26, 2013, as amended at 79
FR 75887, Dec. 19, 2014; 85 FR 49569, Aug. 13,
2020]
§200.464 Relocation costs of employ-
ees.
(a) Relocation costs are costs inci-
dent 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 limitations described in para-
graphs (b), (c), and (d) of this section,
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 ex-
ceed the employee’s actual (or reason-
ably 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 or her imme-
diate 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 transi-
tion period, up to maximum period of
30 calendar days.
(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 of the
employee’s former home.
(4) The continuing costs of ownership
(for up to six months) of the vacant
former home after the settlement or
lease date of the employee’s new per-
manent home, such as maintenance of
buildings and grounds (exclusive of fix-
ing-up expenses), utilities, taxes, and
property insurance.
(5) Other necessary and reasonable
expenses normally incident to reloca-
tion, such as the costs of canceling an
unexpired lease, transportation of per-
sonal property, and purchasing insur-
ance against loss of or damages to per-
sonal 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 de-
scribed in paragraphs (b)(1) and (2) of
this section. When relocation costs in-
curred incident to the recruitment of
new employees have been charged to a
Federal award and the employee re-
signs for reasons within the employee’s
control within 12 months after hire,
the non-Federal entity must refund or
credit the Federal Government for its
share of the cost. If dependents are not
permitted at the location for any rea-
son and the costs do not include costs
of transporting household goods, the
costs of travel to an overseas location
must be considered travel costs in ac-
cordance with §200.474 Travel costs,
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OMB Guidance §200.465
and not this relocations costs of em-
ployees (See also §200.464).
(d) The following costs related to re-
location 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.
[78 FR 78608, Dec. 26, 2013, as amended at 79
FR 75887, Dec. 19, 2014; 85 FR 49570, Aug. 13,
2020]
§200.465 Rental costs of real property
and equipment.
(a) Subject to the limitations de-
scribed in paragraphs (b) through (d) of
this section, rental costs are allowable
to the extent that the rates are reason-
able in light of such factors as: rental
costs of comparable property, if any;
market conditions in the area; alter-
natives available; and the type, life ex-
pectancy, condition, and value of the
property leased. Rental arrangements
should be reviewed periodically to de-
termine if circumstances have changed
and other options are available.
(b) Rental costs under ‘‘sale and lease
back’’ arrangements are allowable only
up to the amount that would be al-
lowed had the non-Federal entity con-
tinued to own the property. This
amount would include expenses such as
depreciation, maintenance, taxes, and
insurance.
(c) Rental costs under ‘‘less-than-
arm’s-length’’ leases are allowable only
up to the amount (as explained in para-
graph (b) of this section). For this pur-
pose, a less-than-arm’s-length lease is
one under which one party to the lease
agreement is able to control or sub-
stantially influence the actions of the
other. Such leases include, but are not
limited to those between:
(1) Divisions of the non-Federal enti-
ty;
(2) The non-Federal entity under
common control through common offi-
cers, directors, or members; and
(3) The non-Federal entity and a di-
rector, trustee, officer, or key em-
ployee of the non-Federal entity or an
immediate family member, either di-
rectly or through corporations, trusts,
or similar arrangements in which they
hold a controlling interest. For exam-
ple, the non-Federal entity may estab-
lish a separate corporation for the sole
purpose of owning property and leasing
it back to the non-Federal entity.
(4) Family members include one
party with any of the following rela-
tionships to another party:
(i) Spouse, and parents thereof;
(ii) Children, and spouses thereof;
(iii) Parents, and spouses thereof;
(iv) Siblings, and spouses thereof;
(v) Grandparents and grandchildren,
and spouses thereof;
(vi) Domestic partner and parents
thereof, including domestic partners of
any individual in 2 through 5 of this
definition; and
(vii) Any individual related by blood
or affinity whose close association with
the employee is the equivalent of a
family relationship.
(5) Rental costs under leases which
are required to be treated as capital
leases under GAAP are allowable only
up to the amount (as explained in para-
graph (b) of this section) that would be
allowed had the non-Federal entity
purchased the property on the date the
lease agreement was executed. The pro-
visions of GAAP must be used to deter-
mine whether a lease is a capital lease.
Interest costs related to capital leases
are allowable to the extent they meet
the criteria in §200.449 Interest. Unal-
lowable costs include amounts paid for
profit, management fees, and taxes
that would not have been incurred had
the non-Federal entity purchased the
property.
(6) The rental of any property owned
by any individuals or entities affiliated
with the non-Federal entity, to include
commercial or residential real estate,
for purposes such as the home office
workspace is unallowable.
(d) Rental costs under leases which
are required to be accounted for as a fi-
nanced purchase under GASB stand-
ards or a finance lease under FASB
standards under GAAP are allowable
only up to the amount (as explained in
paragraph (b) of this section) that
would be allowed had the non-Federal
entity purchased the property on the
date the lease agreement was executed.
Interest costs related to these leases
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2 CFR Ch. II (1–1–22 Edition) §200.466
are allowable to the extent they meet
the criteria in §200.449. Unallowable
costs include amounts paid for profit,
management fees, and taxes that would
not have been incurred had the non-
Federal entity purchased the property.
(e) Rental or lease payments are al-
lowable under lease contracts where
the non-Federal entity is required to
recognize an intangible right-to-use
lease asset (per GASB) or right of use
operating lease asset (per FASB) for
purposes of financial reporting in ac-
cordance with GAAP.
(f) The rental of any property owned
by any individuals or entities affiliated
with the non-Federal entity, to include
commercial or residential real estate,
for purposes such as the home office
workspace is unallowable.
[78 FR 78608, Dec. 26, 2013, as amended at 85
FR 49569, Aug. 13, 2020]
§200.466 Scholarships and student aid
costs.
(a) Costs of scholarships, fellowships,
and other programs of student aid at
IHEs are allowable only when the pur-
pose of the Federal award is to provide
training to selected participants and
the charge is approved by the Federal
awarding agency. However, tuition re-
mission and other forms of compensa-
tion paid as, or in lieu of, wages to stu-
dents performing necessary work are
allowable provided that:
(1) The individual is conducting ac-
tivities necessary to the Federal
award;
(2) Tuition remission and other sup-
port are provided in accordance with
established policy of the IHE and con-
sistently provided in a like manner to
students in return for similar activities
conducted under Federal awards as
well as other activities; and
(3) During the academic period, the
student is enrolled in an advanced de-
gree program at a non-Federal entity
or affiliated institution and the activi-
ties of the student in relation to the
Federal award are related to the degree
program;
(4) The tuition or other payments are
reasonable compensation for the work
performed and are conditioned explic-
itly upon the performance of necessary
work; and
(5) It is the IHE’s practice to simi-
larly compensate students under Fed-
eral awards as well as other activities.
(b) Charges for tuition remission and
other forms of compensation paid to
students as, or in lieu of, salaries and
wages must be subject to the reporting
requirements in §200.430, and must be
treated as direct or indirect cost in ac-
cordance with the actual work being
performed. Tuition remission may be
charged on an average rate basis. See
also §200.431.
[78 FR 78608, Dec. 26, 2013, as amended at 85
FR 49569, Aug. 13, 2020]
§200.467 Selling and marketing costs.
Costs of selling and marketing any
products or services of the non-Federal
entity (unless allowed under §200.421)
are unallowable, except as direct costs,
with prior approval by the Federal
awarding agency when necessary for
the performance of the Federal award.
[85 FR 49570, Aug. 13, 2020]
§200.468 Specialized service facilities.
(a) The costs of services provided by
highly complex or specialized facilities
operated by the non-Federal entity,
such as computing facilities, wind tun-
nels, and reactors are allowable, pro-
vided the charges for the services meet
the conditions of either paragraph (b)
or (c) of this section, and, in addition,
take into account any items of income
or Federal financing that qualify as ap-
plicable credits under §200.406.
(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 meth-
odology that:
(1) Does not discriminate between ac-
tivities under Federal awards and other
activities of the non-Federal entity, in-
cluding usage by the non-Federal enti-
ty for internal purposes, and
(2) Is designed to recover only the ag-
gregate costs of the services. The costs
of each service must consist normally
of both its direct costs and its allocable
share of all indirect (F&A) costs. Rates
must be adjusted at least biennially,
and must take into consideration over/
under-applied costs of the previous pe-
riod(s).
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OMB Guidance §200.471
(c) Where the costs incurred for a
service are not material, they may be
allocated as indirect (F&A) costs.
(d) Under some extraordinary cir-
cumstances, where it is in the best in-
terest of the Federal Government and
the non-Federal entity to establish al-
ternative costing arrangements, such
arrangements may be worked out with
the Federal cognizant agency for indi-
rect costs.
[78 FR 78608, Dec. 26, 2013, as amended at 85
FR 49569, Aug. 13, 2020]
§200.469 Student activity costs.
Costs incurred for intramural activi-
ties, student publications, student
clubs, and other student activities, are
unallowable, unless specifically pro-
vided for in the Federal award.
§200.470 Taxes (including Value
Added Tax).
(a) For states, local governments and
Indian tribes:
(1) Taxes that a governmental unit is
legally required to pay are allowable,
except for self-assessed taxes that dis-
proportionately affect Federal pro-
grams or changes in tax policies that
disproportionately affect Federal pro-
grams.
(2) Gasoline taxes, motor vehicle
fees, and other taxes that are in effect
user fees for benefits provided to the
Federal Government are allowable.
(3) This provision does not restrict
the authority of the Federal awarding
agency to identify taxes where Federal
participation is inappropriate. Where
the identification of the amount of un-
allowable taxes would require an inor-
dinate amount of effort, the cognizant
agency for indirect costs may accept a
reasonable approximation thereof.
(b) For nonprofit organizations and
IHEs:
(1) In general, taxes which the non-
Federal entity is required to pay and
which are paid or accrued in accord-
ance with GAAP, and payments made
to local governments in lieu of taxes
which are commensurate with the local
government services received are al-
lowable, except for:
(i) Taxes from which exemptions are
available to the non-Federal entity di-
rectly or which are available to the
non-Federal entity based on an exemp-
tion afforded the Federal Government
and, in the latter case, when the Fed-
eral awarding agency makes available
the necessary exemption certificates,
(ii) Special assessments on land
which represent capital improvements,
and
(iii) Federal income taxes.
(2) Any refund of taxes, and any pay-
ment to the non-Federal entity of in-
terest thereon, which were allowed as
Federal award costs, will be credited
either as a cost reduction or cash re-
fund, as appropriate, to the Federal
Government. However, any interest ac-
tually paid or credited to an non-Fed-
eral entity incident to a refund of tax,
interest, and penalty will be paid or
credited to the Federal Government
only to the extent that such interest
accrued over the period during which
the non-Federal entity has been reim-
bursed by the Federal Government for
the taxes, interest, and penalties.
(c) Value Added Tax (VAT) Foreign
taxes charged for the purchase of goods
or services that a non-Federal entity is
legally required to pay in country is an
allowable expense under Federal
awards. Foreign tax refunds or applica-
ble credits under Federal awards refer
to receipts, or reduction of expendi-
tures, which operate to offset or reduce
expense items that are allocable to
Federal awards as direct or indirect
costs. To the extent that such credits
accrued or received by the non-Federal
entity relate to allowable cost, these
costs must be credited to the Federal
awarding agency either as costs or cash
refunds. If the costs are credited back
to the Federal award, the non-Federal
entity may reduce the Federal share of
costs by the amount of the foreign tax
reimbursement, or where Federal
award has not expired, use the foreign
government tax refund for approved ac-
tivities under the Federal award with
prior approval of the Federal awarding
agency.
§200.471 Telecommunication costs and
video surveillance costs.
(a) Costs incurred for telecommuni-
cations and video surveillance services
or equipment such as phones, internet,
video surveillance, cloud servers are al-
lowable except for the following cir-
cumstances:
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2 CFR Ch. II (1–1–22 Edition) §200.472
(b) Obligating or expending covered
telecommunications and video surveil-
lance services or equipment or services
as described in §200.216 to:
(1) Procure or obtain, extend or
renew a contract to procure or obtain;
(2) Enter into a contract (or extend
or renew a contract) to procure; or
(3) Obtain the equipment, services, or
systems.
[85 FR 49570, Aug. 13, 2020]
§200.472 Termination costs.
Termination of a Federal award gen-
erally gives rise to the incurrence of
costs, or the need for special treatment
of costs, which would not have arisen
had the Federal award not been termi-
nated. Cost principles covering these
items are set forth in this section.
They are to be used in conjunction
with the other provisions of this part
in termination situations.
(a) The cost of items reasonably usa-
ble on the non-Federal entity’s other
work must not be allowable unless the
non-Federal entity submits evidence
that it would not retain such items at
cost without sustaining a loss. In de-
ciding whether such items are reason-
ably usable on other work of the non-
Federal entity, the Federal awarding
agency should consider the non-Federal
entity’s plans and orders for current
and scheduled activity. Contempora-
neous purchases of common items by
the non-Federal entity must be re-
garded as evidence that such items are
reasonably usable on the non-Federal
entity’s other work. Any acceptance of
common items as allocable to the ter-
minated portion of the Federal award
must 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 require-
ments of other work.
(b) If in a particular case, despite all
reasonable efforts by the non-Federal
entity, certain costs cannot be discon-
tinued immediately after the effective
date of termination, such costs are
generally allowable within the limita-
tions set forth in this part, except that
any such costs continuing after termi-
nation due to the negligent or willful
failure of the non-Federal entity to dis-
continue such costs must be unallow-
able.
(c) Loss of useful value of special
tooling, machinery, and equipment is
generally allowable if:
(1) Such special tooling, special ma-
chinery, or equipment is not reason-
ably capable of use in the other work of
the non-Federal entity,
(2) The interest of the Federal Gov-
ernment is protected by transfer of
title or by other means deemed appro-
priate by the Federal awarding agency
(see also §200.313 (d)), and
(3) The loss of useful value for any
one terminated Federal award is lim-
ited to that portion of the acquisition
cost which bears the same ratio to the
total acquisition cost as the termi-
nated portion of the Federal award
bears to the entire terminated Federal
award and other Federal awards for
which the special tooling, machinery,
or equipment was acquired.
(d) Rental costs under unexpired
leases are generally allowable where
clearly shown to have been reasonably
necessary for the performance of the
terminated Federal award less the re-
sidual value of such leases, if:
(1) The amount of such rental
claimed does not exceed the reasonable
use value of the property leased for the
period of the Federal award and such
further period as may be reasonable,
and
(2) The non-Federal entity 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 Federal award, and of reasonable
restoration required by the provisions
of the lease.
(e) Settlement expenses including the
following are generally allowable:
(1) Accounting, legal, clerical, and
similar costs reasonably necessary for:
(i) The preparation and presentation
to the Federal awarding agency of set-
tlement claims and supporting data
with respect to the terminated portion
of the Federal award, unless the termi-
nation is for cause (see subpart D, in-
cluding §§200.339–200.343); and
(ii) The termination and settlement
of subawards.
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OMB Guidance §200.475
(2) Reasonable costs for the storage,
transportation, protection, and disposi-
tion of property provided by the Fed-
eral Government or acquired or pro-
duced for the Federal award.
(f) Claims under subawards, including
the allocable portion of claims which
are common to the Federal award and
to other work of the non-Federal enti-
ty, are generally allowable. An appro-
priate share of the non-Federal entity’s
indirect costs may be allocated to the
amount of settlements with contrac-
tors and/or subrecipients, provided that
the amount allocated is otherwise con-
sistent with the basic guidelines con-
tained in §200.414. The indirect costs so
allocated must exclude the same and
similar costs claimed directly or indi-
rectly as settlement expenses.
[78 FR 78608, Dec. 26, 2013. Redesignated and
amended at 85 FR 49570, Aug. 13, 2020]
§200.473 Training and education costs.
The cost of training and education
provided for employee development is
allowable.
[78 FR 78608, Dec. 26, 2013. Redesignated at 85
FR 49570, Aug. 13, 2020]
§200.474 Transportation costs.
Costs incurred for freight, express,
cartage, postage, and other transpor-
tation services relating either to goods
purchased, in process, or delivered, are
allowable. When such costs can readily
be identified with the items involved,
they may be charged directly as trans-
portation costs or added to the cost of
such items. Where identification with
the materials received cannot readily
be made, inbound transportation cost
may be charged to the appropriate in-
direct (F&A) cost accounts if the non-
Federal entity follows a consistent, eq-
uitable procedure in this respect. Out-
bound freight, if reimbursable under
the terms and conditions of the Federal
award, should be treated as a direct
cost.
[78 FR 78608, Dec. 26, 2013. Redesignated at 85
FR 49570, Aug. 13, 2020]
§200.475 Travel costs.
(a) General. Travel costs are the ex-
penses for transportation, lodging, sub-
sistence, and related items incurred by
employees who are in travel status on
official business of the non-Federal en-
tity. Such costs may be charged on an
actual cost basis, on a per diem or
mileage basis in lieu of actual costs in-
curred, or on a combination of the two,
provided the method used is applied to
an entire trip and not to selected days
of the trip, and results in charges con-
sistent with those normally allowed in
like circumstances in the non-Federal
entity’s non-federally-funded activities
and in accordance with non-Federal en-
tity’s written travel reimbursement
policies. Notwithstanding the provi-
sions of §200.444, travel costs of offi-
cials covered by that section are allow-
able with the prior written approval of
the Federal awarding agency or pass-
through entity when they are specifi-
cally related to the Federal award.
(b) Lodging and subsistence. Costs in-
curred by employees and officers for
travel, including costs of lodging, other
subsistence, and incidental expenses,
must be considered reasonable and oth-
erwise allowable only to the extent
such costs do not exceed charges nor-
mally allowed by the non-Federal enti-
ty in its regular operations as the re-
sult of the non-Federal entity’s written
travel policy. In addition, if these costs
are charged directly to the Federal
award documentation must justify
that:
(1) Participation of the individual is
necessary to the Federal award; and
(2) The costs are reasonable and con-
sistent with non-Federal entity’s es-
tablished travel policy.
(c)(1) Temporary dependent care
costs (as dependent is defined in 26
U.S.C. 152) above and beyond regular
dependent care that directly results
from travel to conferences is allowable
provided that:
(i) The costs are a direct result of the
individual’s travel for the Federal
award;
(ii) The costs are consistent with the
non-Federal entity’s documented trav-
el policy for all entity travel; and
(iii) Are only temporary during the
travel period.
(2) Travel costs for dependents are
unallowable, except for travel of dura-
tion of six months or more with prior
approval of the Federal awarding agen-
cy. See also §200.432.
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2 CFR Ch. II (1–1–22 Edition) §200.476
(d) In the absence of an acceptable,
written non-Federal entity policy re-
garding travel costs, the rates and
amounts established under 5 U.S.C.
5701–11, (‘‘Travel and Subsistence Ex-
penses; Mileage Allowances’’), or by
the Administrator of General Services,
or by the President (or his or her des-
ignee) pursuant to any provisions of
such subchapter must apply to travel
under Federal awards (48 CFR 31.205–
46(a)).
(e) Commercial air travel. (1) Airfare
costs in excess of the basic least expen-
sive unrestricted accommodations
class offered by commercial airlines
are unallowable except when such ac-
commodations would:
(i) Require circuitous routing;
(ii) Require travel during unreason-
able hours;
(iii) Excessively prolong travel;
(iv) Result in additional costs that
would offset the transportation sav-
ings; or
(v) Offer accommodations not reason-
ably adequate for the traveler’s med-
ical needs. The non-Federal entity
must justify and document these condi-
tions on a case-by-case basis in order
for the use of first-class or business-
class airfare to be allowable in such
cases.
(2) Unless a pattern of avoidance is
detected, the Federal Government will
generally not question a non-Federal
entity’s determinations that cus-
tomary standard airfare or other dis-
count airfare is unavailable for specific
trips if the non-Federal entity can
demonstrate that such airfare was not
available in the specific case.
(f) Air travel by other than commercial
carrier. Costs of travel by non-Federal
entity-owned, -leased, or -chartered
aircraft include the cost of lease, char-
ter, operation (including personnel
costs), maintenance, depreciation, in-
surance, and other related costs. The
portion of such costs that exceeds the
cost of airfare as provided for in para-
graph (d) of this section, is unallow-
able.
[78 FR 78608, Dec. 26, 2013, as amended at 79
FR 75887, Dec. 19, 2014. Redesignated and
amended at 85 FR 49570, Aug. 13, 2020]
§200.476 Trustees.
Travel and subsistence costs of trust-
ees (or directors) at IHEs and nonprofit
organizations are allowable. See also
§200.475.
[85 FR 49571, Aug. 13, 2020]
Subpart F—Audit Requirements
GENERAL
§200.500 Purpose.
This part sets forth standards for ob-
taining consistency and uniformity
among Federal agencies for the audit
of non-Federal entities expending Fed-
eral awards.
AUDITS
§200.501 Audit requirements.
(a) Audit required. A non-Federal enti-
ty that expends $750,000 or more during
the non-Federal entity’s fiscal year in
Federal awards must have a single or
program-specific audit conducted for
that year in accordance with the provi-
sions of this part.
(b) Single audit. A non-Federal entity
that expends $750,000 or more during
the non-Federal entity’s fiscal year in
Federal awards must have a single
audit conducted in accordance with
§200.514 except when it elects to have a
program-specific audit conducted in ac-
cordance with paragraph (c) of this sec-
tion.
(c) Program-specific audit election.
When an auditee expends Federal
awards under only one Federal pro-
gram (excluding R&D) and the Federal
program’s statutes, regulations, or the
terms and conditions of the Federal
award do not require a financial state-
ment audit of the auditee, the auditee
may elect to have a program-specific
audit conducted in accordance with
§200.507. A program-specific audit may
not be elected for R&D unless all of the
Federal awards expended were received
from the same Federal agency, or the
same Federal agency and the same
pass-through entity, and that Federal
agency, or pass-through entity in the
case of a subrecipient, approves in ad-
vance a program-specific audit.
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OMB Guidance §200.502
(d) Exemption when Federal awards ex-
pended are less than $750,000. A non-Fed-
eral entity that expends less than
$750,000 during the non-Federal entity’s
fiscal year in Federal awards is exempt
from Federal audit requirements for
that year, except as noted in §200.503,
but records must be available for re-
view or audit by appropriate officials
of the Federal agency, pass-through en-
tity, and Government Accountability
Office (GAO).
(e) Federally Funded Research and De-
velopment Centers (FFRDC). Manage-
ment of an auditee that owns or oper-
ates a FFRDC may elect to treat the
FFRDC as a separate entity for pur-
poses of this part.
(f) Subrecipients and contractors. An
auditee may simultaneously be a re-
cipient, a subrecipient, and a con-
tractor. Federal awards expended as a
recipient or a subrecipient are subject
to audit under this part. The payments
received for goods or services provided
as a contractor are not Federal awards.
Section §200.331 sets forth the consider-
ations in determining whether pay-
ments constitute a Federal award or a
payment for goods or services provided
as a contractor.
(g) Compliance responsibility for con-
tractors. In most cases, the auditee’s
compliance responsibility for contrac-
tors is only to ensure that the procure-
ment, receipt, and payment for goods
and services comply with Federal stat-
utes, regulations, and the terms and
conditions of Federal awards. Federal
award compliance requirements nor-
mally do not pass through to contrac-
tors. However, the auditee is respon-
sible for ensuring compliance for pro-
curement transactions which are struc-
tured such that the contractor is re-
sponsible for program compliance or
the contractor’s records must be re-
viewed to determine program compli-
ance. Also, when these procurement
transactions relate to a major pro-
gram, the scope of the audit must in-
clude determining whether these trans-
actions are in compliance with Federal
statutes, regulations, and the terms
and conditions of Federal awards.
(h) For-profit subrecipient. Since this
part does not apply to for-profit sub-
recipients, the pass-through entity is
responsible for establishing require-
ments, as necessary, to ensure compli-
ance by for-profit subrecipients. The
agreement with the for-profit sub-
recipient must describe applicable
compliance requirements and the for-
profit subrecipient’s compliance re-
sponsibility. Methods to ensure compli-
ance for Federal awards made to for-
profit subrecipients may include pre-
award audits, monitoring during the
agreement, and post-award audits. See
also §200.332.
[78 FR 78608, Dec. 26, 2013, as amended at 79
FR 75887, Dec. 19, 2014; 85 FR 49571, Aug. 13,
2020]
§200.502 Basis for determining Fed-
eral awards expended.
(a) Determining Federal awards ex-
pended. The determination of when a
Federal award is expended must be
based on when the activity related to
the Federal award occurs. Generally,
the activity pertains to events that re-
quire the non-Federal entity to comply
with Federal statutes, regulations, and
the terms and conditions of Federal
awards, such as: expenditure/expense
transactions associated with awards in-
cluding grants, cost-reimbursement
contracts under the FAR, compacts
with Indian Tribes, cooperative agree-
ments, and direct appropriations; the
disbursement of funds to subrecipients;
the use of loan proceeds under loan and
loan guarantee programs; the receipt of
property; the receipt of surplus prop-
erty; the receipt or use of program in-
come; the distribution or use of food
commodities; the disbursement of
amounts entitling the non-Federal en-
tity to an interest subsidy; and the pe-
riod when insurance is in force.
(b) Loan and loan guarantees (loans).
Since the Federal Government is at
risk for loans until the debt is repaid,
the following guidelines must be used
to calculate the value of Federal
awards expended under loan programs,
except as noted in paragraphs (c) and
(d) of this section:
(1) Value of new loans made or re-
ceived during the audit period; plus
(2) Beginning of the audit period bal-
ance of loans from previous years for
which the Federal Government imposes
continuing compliance requirements;
plus
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2 CFR Ch. II (1–1–22 Edition) §200.503
(3) Any interest subsidy, cash, or ad-
ministrative cost allowance received.
(c) Loan and loan guarantees (loans) at
IHEs. When loans are made to students
of an IHE but the IHE does not make
the loans, then only the value of loans
made during the audit period must be
considered Federal awards expended in
that audit period. The balance of loans
for previous audit periods is not in-
cluded as Federal awards expended be-
cause the lender accounts for the prior
balances.
(d) Prior loan and loan guarantees
(loans). Loans, the proceeds of which
were received and expended in prior
years, are not considered Federal
awards expended under this part when
the Federal statutes, regulations, and
the terms and conditions of Federal
awards pertaining to such loans impose
no continuing compliance require-
ments other than to repay the loans.
(e) Endowment funds. The cumulative
balance of Federal awards for endow-
ment funds that are federally re-
stricted are considered Federal awards
expended in each audit period in which
the funds are still restricted.
(f) Free rent. Free rent received by
itself is not considered a Federal award
expended under this part. However, free
rent received as part of a Federal
award to carry out a Federal program
must be included in determining Fed-
eral awards expended and subject to
audit under this part.
(g) Valuing non-cash assistance. Fed-
eral non-cash assistance, such as free
rent, food commodities, donated prop-
erty, or donated surplus property, must
be valued at fair market value at the
time of receipt or the assessed value
provided by the Federal agency.
(h) Medicare. Medicare payments to a
non-Federal entity for providing pa-
tient care services to Medicare-eligible
individuals are not considered Federal
awards expended under this part.
(i) Medicaid. Medicaid payments to a
subrecipient for providing patient care
services to Medicaid-eligible individ-
uals are not considered Federal awards
expended under this part unless a state
requires the funds to be treated as Fed-
eral awards expended because reim-
bursement is on a cost-reimbursement
basis.
(j) Certain loans provided by the Na-
tional Credit Union Administration. For
purposes of this part, loans made from
the National Credit Union Share Insur-
ance Fund and the Central Liquidity
Facility that are funded by contribu-
tions from insured non-Federal entities
are not considered Federal awards ex-
pended.
[78 FR 78608, Dec. 26, 2013, as amended at 79
FR 75887, Dec. 19, 2014]
§200.503 Relation to other audit re-
quirements.
(a) An audit conducted in accordance
with this part must be in lieu of any fi-
nancial audit of Federal awards which
a non-Federal entity is required to un-
dergo under any other Federal statute
or regulation. To the extent that such
audit provides a Federal agency with
the information it requires to carry
out its responsibilities under Federal
statute or regulation, a Federal agency
must rely upon and use that informa-
tion.
(b) Notwithstanding subsection (a), a
Federal agency, Inspectors General, or
GAO may conduct or arrange for addi-
tional audits which are necessary to
carry out its responsibilities under
Federal statute or regulation. The pro-
visions of this part do not authorize
any non-Federal entity to constrain, in
any manner, such Federal agency from
carrying out or arranging for such ad-
ditional audits, except that the Federal
agency must plan such audits to not be
duplicative of other audits of Federal
awards. Prior to commencing such an
audit, the Federal agency or pass-
through entity must review the FAC
for recent audits submitted by the non-
Federal entity, and to the extent such
audits meet a Federal agency or pass-
through entity’s needs, the Federal
agency or pass-through entity must
rely upon and use such audits. Any ad-
ditional audits must be planned and
performed in such a way as to build
upon work performed, including the
audit documentation, sampling, and
testing already performed, by other
auditors.
(c) The provisions of this part do not
limit the authority of Federal agencies
to conduct, or arrange for the conduct
of, audits and evaluations of Federal
awards, nor limit the authority of any
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OMB Guidance §200.507
Federal agency Inspector General or
other Federal official. For example, re-
quirements that may be applicable
under the FAR or CAS and the terms
and conditions of a cost-reimbursement
contract may include additional appli-
cable audits to be conducted or ar-
ranged for by Federal agencies.
(d) Federal agency to pay for additional
audits. A Federal agency that conducts
or arranges for additional audits must,
consistent with other applicable Fed-
eral statutes and regulations, arrange
for funding the full cost of such addi-
tional audits.
(e) Request for a program to be audited
as a major program. A Federal awarding
agency may request that an auditee
have a particular Federal program au-
dited as a major program in lieu of the
Federal awarding agency conducting or
arranging for the additional audits. To
allow for planning, such requests
should be made at least 180 calendar
days prior to the end of the fiscal year
to be audited. The auditee, after con-
sultation with its auditor, should
promptly respond to such a request by
informing the Federal awarding agency
whether the program would otherwise
be audited as a major program using
the risk-based audit approach de-
scribed in §200.518 and, if not, the esti-
mated incremental cost. The Federal
awarding agency must then promptly
confirm to the auditee whether it
wants the program audited as a major
program. If the program is to be au-
dited as a major program based upon
this Federal awarding agency request,
and the Federal awarding agency
agrees to pay the full incremental
costs, then the auditee must have the
program audited as a major program. A
pass-through entity may use the provi-
sions of this paragraph for a sub-
recipient.
[78 FR 78608, Dec. 26, 2013, as amended at 85
FR 49570, Aug. 13, 2020]
§200.504 Frequency of audits.
Except for the provisions for biennial
audits provided in paragraphs (a) and
(b) of this section, audits required by
this part must be performed annually.
Any biennial audit must cover both
years within the biennial period.
(a) A state, local government, or In-
dian tribe that is required by constitu-
tion or statute, in effect on January 1,
1987, to undergo its audits less fre-
quently than annually, is permitted to
undergo its audits pursuant to this
part biennially. This requirement must
still be in effect for the biennial period.
(b) Any nonprofit organization that
had biennial audits for all biennial pe-
riods ending between July 1, 1992, and
January 1, 1995, is permitted to under-
go its audits pursuant to this part bi-
ennially.
§200.505 Sanctions.
In cases of continued inability or un-
willingness to have an audit conducted
in accordance with this part, Federal
agencies and pass-through entities
must take appropriate action as pro-
vided in §200.339.
[85 FR 49571, Aug. 13, 2020]
§200.506 Audit costs.
See §200.425.
[85 FR 49571, Aug. 13, 2020]
§200.507 Program-specific audits.
(a) Program-specific audit guide avail-
able. In some cases, a program-specific
audit guide will be available to provide
specific guidance to the auditor with
respect to internal controls, compli-
ance requirements, suggested audit
procedures, and audit reporting re-
quirements. A listing of current pro-
gram-specific audit guides can be found
in the compliance supplement, Part 8,
Appendix VI, Program-Specific Audit
Guides, which includes a website where
a copy of the guide can be obtained.
When a current program-specific audit
guide is available, the auditor must
follow GAGAS and the guide when per-
forming a program-specific audit.
(b) Program-specific audit guide not
available. (1) When a current program-
specific audit guide is not available,
the auditee and auditor must have ba-
sically the same responsibilities for the
Federal program as they would have
for an audit of a major program in a
single audit.
(2) The auditee must prepare the fi-
nancial statement(s) for the Federal
program that includes, at a minimum,
a schedule of expenditures of Federal
awards for the program and notes that
describe the significant accounting
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2 CFR Ch. II (1–1–22 Edition) §200.507
policies used in preparing the schedule,
a summary schedule of prior audit find-
ings consistent with the requirements
of §200.511(b), and a corrective action
plan consistent with the requirements
of §200.511(c).
(3) The auditor must:
(i) Perform an audit of the financial
statement(s) for the Federal program
in accordance with GAGAS;
(ii) Obtain an understanding of inter-
nal controls and perform tests of inter-
nal controls over the Federal program
consistent with the requirements of
§200.514(c) for a major program;
(iii) Perform procedures to determine
whether the auditee has complied with
Federal statutes, regulations, and the
terms and conditions of Federal awards
that could have a direct and material
effect on the Federal program con-
sistent with the requirements of
§200.514(d) for a major program;
(iv) Follow up on prior audit findings,
perform procedures to assess the rea-
sonableness of the summary schedule
of prior audit findings prepared by the
auditee in accordance with the require-
ments of §200.511, and report, as a cur-
rent year audit finding, when the audi-
tor concludes that the summary sched-
ule of prior audit findings materially
misrepresents the status of any prior
audit finding; and
(v) Report any audit findings con-
sistent with the requirements of
§200.516.
(4) The auditor’s report(s) may be in
the form of either combined or sepa-
rate reports and may be organized dif-
ferently from the manner presented in
this section. The auditor’s report(s)
must state that the audit was con-
ducted in accordance with this part
and include the following:
(i) An opinion (or disclaimer of opin-
ion) as to whether the financial state-
ment(s) of the Federal program is pre-
sented fairly in all material respects in
accordance with the stated accounting
policies;
(ii) A report on internal control re-
lated to the Federal program, which
must describe the scope of testing of
internal control and the results of the
tests;
(iii) A report on compliance which in-
cludes an opinion (or disclaimer of
opinion) as to whether the auditee
complied with laws, regulations, and
the terms and conditions of Federal
awards which could have a direct and
material effect on the Federal pro-
gram; and
(iv) A schedule of findings and ques-
tioned costs for the Federal program
that includes a summary of the audi-
tor’s results relative to the Federal
program in a format consistent with
§200.515(d)(1) and findings and ques-
tioned costs consistent with the re-
quirements of §200.515(d)(3).
(c) Report submission for program-spe-
cific audits. (1) The audit must be com-
pleted and the reporting required by
paragraph (c)(2) or (c)(3) of this section
submitted within the earlier of 30 cal-
endar days after receipt of the audi-
tor’s report(s), or nine months after
the end of the audit period, unless a
different period is specified in a pro-
gram-specific audit guide. Unless re-
stricted by Federal law or regulation,
the auditee must make report copies
available for public inspection.
Auditees and auditors must ensure
that their respective parts of the re-
porting package do not include pro-
tected personally identifiable informa-
tion.
(2) When a program-specific audit
guide is available, the auditee must
electronically submit to the FAC the
data collection form prepared in ac-
cordance with §200.512(b), as applicable
to a program-specific audit, and the re-
porting required by the program-spe-
cific audit guide.
(3) When a program-specific audit
guide is not available, the reporting
package for a program-specific audit
must consist of the financial state-
ment(s) of the Federal program, a sum-
mary schedule of prior audit findings,
and a corrective action plan as de-
scribed in paragraph (b)(2) of this sec-
tion, and the auditor’s report(s) de-
scribed in paragraph (b)(4) of this sec-
tion. The data collection form prepared
in accordance with §200.512(b), as appli-
cable to a program-specific audit, and
one copy of this reporting package
must be electronically submitted to
the FAC.
(d) Other sections of this part may
apply. Program-specific audits are sub-
ject to:
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OMB Guidance §200.510
(1) 200.500 Purpose through 200.503 Re-
lation to other audit requirements,
paragraph (d);
(2) 200.504 Frequency of audits
through 200.506 Audit costs;
(3) 200.508 Auditee responsibilities
through 200.509 Auditor selection;
(4) 200.511 Audit findings follow-up;
(5) 200.512 Report submission, para-
graphs (e) through (h);
(6) 200.513 Responsibilities;
(7) 200.516 Audit findings through
200.517 Audit documentation;
(8) 200.521 Management decision; and
(9) Other referenced provisions of this
part unless contrary to the provisions
of this section, a program-specific
audit guide, or program statutes and
regulations.
[78 FR 78608, Dec. 26, 2013, as amended at 79
FR 75887, Dec. 19, 2014; 85 FR 49571, Aug. 13,
2020]
AUDITEES
§200.508 Auditee responsibilities.
The auditee must:
(a) Procure or otherwise arrange for
the audit required by this part in ac-
cordance with §200.509, and ensure it is
properly performed and submitted
when due in accordance with §200.512.
(b) Prepare appropriate financial
statements, including the schedule of
expenditures of Federal awards in ac-
cordance with §200.510.
(c) Promptly follow up and take cor-
rective action on audit findings, in-
cluding preparation of a summary
schedule of prior audit findings and a
corrective action plan in accordance
with §200.511(b) and (c), respectively.
(d) Provide the auditor with access to
personnel, accounts, books, records,
supporting documentation, and other
information as needed for the auditor
to perform the audit required by this
part.
[78 FR 78608, Dec. 26, 2013, as amended at 85
FR 49572, Aug. 13, 2020]
§200.509 Auditor selection.
(a) Auditor procurement. In procuring
audit services, the auditee must follow
the procurement standards prescribed
by the Procurement Standards in
§§200.317 through 200.327 of subpart D of
this part or the FAR (48 CFR part 42),
as applicable. In requesting proposals
for audit services, the objectives and
scope of the audit must be made clear
and the non-Federal entity must re-
quest a copy of the audit organization’s
peer review report which the auditor is
required to provide under GAGAS. Fac-
tors to be considered in evaluating
each proposal for audit services include
the responsiveness to the request for
proposal, relevant experience, avail-
ability of staff with professional quali-
fications and technical abilities, the
results of peer and external quality
control reviews, and price. Whenever
possible, the auditee must make posi-
tive efforts to utilize small businesses,
minority-owned firms, and women’s
business enterprises, in procuring audit
services as stated in §200.321, or the
FAR (48 CFR part 42), as applicable.
(b) Restriction on auditor preparing in-
direct cost proposals. An auditor who
prepares the indirect cost proposal or
cost allocation plan may not also be se-
lected to perform the audit required by
this part when the indirect costs recov-
ered by the auditee during the prior
year exceeded $1 million. This restric-
tion applies to the base year used in
the preparation of the indirect cost
proposal or cost allocation plan and
any subsequent years in which the re-
sulting indirect cost agreement or cost
allocation plan is used to recover costs.
(c) Use of Federal auditors. Federal
auditors may perform all or part of the
work required under this part if they
comply fully with the requirements of
this part.
[78 FR 78608, Dec. 26, 2013, as amended at 85
FR 49572, Aug. 13, 2020; 86 FR 10440, Feb. 22,
2021]
§200.510 Financial statements.
(a) Financial statements. The auditee
must prepare financial statements that
reflect its financial position, results of
operations or changes in net assets,
and, where appropriate, cash flows for
the fiscal year audited. The financial
statements must be for the same orga-
nizational unit and fiscal year that is
chosen to meet the requirements of
this part. However, non-Federal entity-
wide financial statements may also in-
clude departments, agencies, and other
organizational units that have separate
audits in accordance with §200.514(a)
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2 CFR Ch. II (1–1–22 Edition) §200.511
and prepare separate financial state-
ments.
(b) Schedule of expenditures of Federal
awards. The auditee must also prepare
a schedule of expenditures of Federal
awards for the period covered by the
auditee’s financial statements which
must include the total Federal awards
expended as determined in accordance
with §200.502. While not required, the
auditee may choose to provide infor-
mation requested by Federal awarding
agencies and pass-through entities to
make the schedule easier to use. For
example, when a Federal program has
multiple Federal award years, the
auditee may list the amount of Federal
awards expended for each Federal
award year separately. At a minimum,
the schedule must:
(1) List individual Federal programs
by Federal agency. For a cluster of pro-
grams, provide the cluster name, list
individual Federal programs within the
cluster of programs, and provide the
applicable Federal agency name. For
R&D, total Federal awards expended
must be shown either by individual
Federal award or by Federal agency
and major subdivision within the Fed-
eral agency. For example, the National
Institutes of Health is a major subdivi-
sion in the Department of Health and
Human Services.
(2) For Federal awards received as a
subrecipient, the name of the pass-
through entity and identifying number
assigned by the pass-through entity
must be included.
(3) Provide total Federal awards ex-
pended for each individual Federal pro-
gram and the Assistance Listings Num-
ber or other identifying number when
the Assistance Listings information is
not available. For a cluster of pro-
grams also provide the total for the
cluster.
(4) Include the total amount provided
to subrecipients from each Federal pro-
gram.
(5) For loan or loan guarantee pro-
grams described in §200.502(b), identify
in the notes to the schedule the bal-
ances outstanding at the end of the
audit period. This is in addition to in-
cluding the total Federal awards ex-
pended for loan or loan guarantee pro-
grams in the schedule.
(6) Include notes that describe that
significant accounting policies used in
preparing the schedule, and note
whether or not the auditee elected to
use the 10% de minimis cost rate as
covered in §200.414.
[78 FR 78608, Dec. 26, 2013, as amended at 79
FR 75887, Dec. 19, 2014; 85 FR 49572, Aug. 13,
2020]
§200.511 Audit findings follow-up.
(a) General. The auditee is responsible
for follow-up and corrective action on
all audit findings. As part of this re-
sponsibility, the auditee must prepare
a summary schedule of prior audit find-
ings. The auditee must also prepare a
corrective action plan for current year
audit findings. The summary schedule
of prior audit findings and the correc-
tive action plan must include the ref-
erence numbers the auditor assigns to
audit findings under §200.516(c). Since
the summary schedule may include
audit findings from multiple years, it
must include the fiscal year in which
the finding initially occurred. The cor-
rective action plan and summary
schedule of prior audit findings must
include findings relating to the finan-
cial statements which are required to
be reported in accordance with
GAGAS.
(b) Summary schedule of prior audit
findings. The summary schedule of
prior audit findings must report the
status of all audit findings included in
the prior audit’s schedule of findings
and questioned costs. The summary
schedule must also include audit find-
ings reported in the prior audit’s sum-
mary schedule of prior audit findings
except audit findings listed as cor-
rected in accordance with paragraph
(b)(1) of this section, or no longer valid
or not warranting further action in ac-
cordance with paragraph (b)(3) of this
section.
(1) When audit findings were fully
corrected, the summary schedule need
only list the audit findings and state
that corrective action was taken.
(2) When audit findings were not cor-
rected or were only partially corrected,
the summary schedule must describe
the reasons for the finding’s recurrence
and planned corrective action, and any
partial corrective action taken. When
corrective action taken is significantly
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OMB Guidance §200.512
different from corrective action pre-
viously reported in a corrective action
plan or in the Federal agency’s or pass-
through entity’s management decision,
the summary schedule must provide an
explanation.
(3) When the auditee believes the
audit findings are no longer valid or do
not warrant further action, the reasons
for this position must be described in
the summary schedule. A valid reason
for considering an audit finding as not
warranting further action is that all of
the following have occurred:
(i) Two years have passed since the
audit report in which the finding oc-
curred was submitted to the FAC;
(ii) The Federal agency or pass-
through entity is not currently fol-
lowing up with the auditee on the audit
finding; and
(iii) A management decision was not
issued.
(c) Corrective action plan. At the com-
pletion of the audit, the auditee must
prepare, in a document separate from
the auditor’s findings described in
§200.516, a corrective action plan to ad-
dress each audit finding included in the
current year auditor’s reports. The cor-
rective action plan must provide the
name(s) of the contact person(s) re-
sponsible for corrective action, the cor-
rective action planned, and the antici-
pated completion date. If the auditee
does not agree with the audit findings
or believes corrective action is not re-
quired, then the corrective action plan
must include an explanation and spe-
cific reasons.
[78 FR 78608, Dec. 26, 2013, as amended at 85
FR 49572, Aug. 13, 2020]
§200.512 Report submission.
(a) General. (1) The audit must be
completed and the data collection form
described in paragraph (b) of this sec-
tion and reporting package described in
paragraph (c) of this section must be
submitted within the earlier of 30 cal-
endar days after receipt of the audi-
tor’s report(s), or nine months after
the end of the audit period. If the due
date falls on a Saturday, Sunday, or
Federal holiday, the reporting package
is due the next business day.
(2) Unless restricted by Federal stat-
utes or regulations, the auditee must
make copies available for public in-
spection. Auditees and auditors must
ensure that their respective parts of
the reporting package do not include
protected personally identifiable infor-
mation.
(b) Data collection. The FAC is the re-
pository of record for subpart F of this
part reporting packages and the data
collection form. All Federal agencies,
pass-through entities and others inter-
ested in a reporting package and data
collection form must obtain it by ac-
cessing the FAC.
(1) The auditee must submit required
data elements described in Appendix X
to Part 200, which state whether the
audit was completed in accordance
with this part and provides informa-
tion about the auditee, its Federal pro-
grams, and the results of the audit.
The data must include information
available from the audit required by
this part that is necessary for Federal
agencies to use the audit to ensure in-
tegrity for Federal programs. The data
elements and format must be approved
by OMB, available from the FAC, and
include collections of information from
the reporting package described in
paragraph (c) of this section. A senior
level representative of the auditee (e.g.,
state controller, director of finance,
chief executive officer, or chief finan-
cial officer) must sign a statement to
be included as part of the data collec-
tion that says that the auditee com-
plied with the requirements of this
part, the data were prepared in accord-
ance with this part (and the instruc-
tions accompanying the form), the re-
porting package does not include pro-
tected personally identifiable informa-
tion, the information included in its
entirety is accurate and complete, and
that the FAC is authorized to make the
reporting package and the form pub-
licly available on a website.
(2) Exception for Indian Tribes and
Tribal Organizations. An auditee that is
an Indian tribe or a tribal organization
(as defined in the Indian Self-Deter-
mination, Education and Assistance
Act (ISDEAA), 25 U.S.C. 450b(l)) may
opt not to authorize the FAC to make
the reporting package publicly avail-
able on a Web site, by excluding the au-
thorization for the FAC publication in
the statement described in paragraph
(b)(1) of this section. If this option is
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2 CFR Ch. II (1–1–22 Edition) §200.513
exercised, the auditee becomes respon-
sible for submitting the reporting
package directly to any pass-through
entities through which it has received
a Federal award and to pass-through
entities for which the summary sched-
ule of prior audit findings reported the
status of any findings related to Fed-
eral awards that the pass-through enti-
ty provided. Unless restricted by Fed-
eral statute or regulation, if the
auditee opts not to authorize publica-
tion, it must make copies of the report-
ing package available for public inspec-
tion.
(3) Using the information included in
the reporting package described in
paragraph (c) of this section, the audi-
tor must complete the applicable data
elements of the data collection form.
The auditor must sign a statement to
be included as part of the data collec-
tion form that indicates, at a min-
imum, the source of the information
included in the form, the auditor’s re-
sponsibility for the information, that
the form is not a substitute for the re-
porting package described in paragraph
(c) of this section, and that the content
of the form is limited to the collection
of information prescribed by OMB.
(c) Reporting package. The reporting
package must include the:
(1) Financial statements and sched-
ule of expenditures of Federal awards
discussed in §200.510(a) and (b), respec-
tively;
(2) Summary schedule of prior audit
findings discussed in §200.511(b);
(3) Auditor’s report(s) discussed in
§200.515; and
(4) Corrective action plan discussed
in §200.511(c).
(d) Submission to FAC. The auditee
must electronically submit to the FAC
the data collection form described in
paragraph (b) of this section and the
reporting package described in para-
graph (c) of this section.
(e) Requests for management letters
issued by the auditor. In response to re-
quests by a Federal agency or pass-
through entity, auditees must submit a
copy of any management letters issued
by the auditor.
(f) Report retention requirements.
Auditees must keep one copy of the
data collection form described in para-
graph (b) of this section and one copy
of the reporting package described in
paragraph (c) of this section on file for
three years from the date of submis-
sion to the FAC.
(g) FAC responsibilities. The FAC must
make available the reporting packages
received in accordance with paragraph
(c) of this section and §200.507(c) to the
public, except for Indian tribes exer-
cising the option in (b)(2) of this sec-
tion, and maintain a data base of com-
pleted audits, provide appropriate in-
formation to Federal agencies, and fol-
low up with known auditees that have
not submitted the required data collec-
tion forms and reporting packages.
(h) Electronic filing. Nothing in this
part must preclude electronic submis-
sions to the FAC in such manner as
may be approved by OMB.
[78 FR 78608, Dec. 26, 2013, as amended at 79
FR 75887, Dec. 19, 2014; 85 FR 49573, Aug. 13,
2020]
FEDERAL AGENCIES
§200.513 Responsibilities.
(a)(1) Cognizant agency for audit re-
sponsibilities. A non-Federal entity ex-
pending more than $50 million a year in
Federal awards must have a cognizant
agency for audit. The designated cog-
nizant agency for audit must be the
Federal awarding agency that provides
the predominant amount of funding di-
rectly (direct funding) (as listed on the
Schedule of expenditures of Federal
awards, see §200.510(b)) to a non-Fed-
eral entity unless OMB designates a
specific cognizant agency for audit.
When the direct funding represents less
than 25 percent of the total expendi-
tures (as direct and subawards) by the
non-Federal entity, then the Federal
agency with the predominant amount
of total funding is the designated cog-
nizant agency for audit.
(2) To provide for continuity of cog-
nizance, the determination of the pre-
dominant amount of direct funding
must be based upon direct Federal
awards expended in the non-Federal en-
tity’s fiscal years ending in 2019, and
every fifth year thereafter.
(3) Notwithstanding the manner in
which audit cognizance is determined,
a Federal awarding agency with cog-
nizance for an auditee may reassign
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OMB Guidance §200.513
cognizance to another Federal award-
ing agency that provides substantial
funding and agrees to be the cognizant
agency for audit. Within 30 calendar
days after any reassignment, both the
old and the new cognizant agency for
audit must provide notice of the
change to the FAC, the auditee, and, if
known, the auditor. The cognizant
agency for audit must:
(i) Provide technical audit advice and
liaison assistance to auditees and audi-
tors.
(ii) Obtain or conduct quality control
reviews on selected audits made by
non-Federal auditors, and provide the
results to other interested organiza-
tions. Cooperate and provide support to
the Federal agency designated by OMB
to lead a governmentwide project to
determine the quality of single audits
by providing a reliable estimate of the
extent that single audits conform to
applicable requirements, standards,
and procedures; and to make rec-
ommendations to address noted audit
quality issues, including recommenda-
tions for any changes to applicable re-
quirements, standards and procedures
indicated by the results of the project.
The governmentwide project can rely
on the current and on-going quality
control review work performed by the
agencies, State auditors, and profes-
sional audit associations. This govern-
mentwide audit quality project must
be performed once every 6 years (or at
such other interval as determined by
OMB), and the results must be public.
(iii) Promptly inform other affected
Federal agencies and appropriate Fed-
eral law enforcement officials of any
direct reporting by the auditee or its
auditor required by GAGAS or statutes
and regulations.
(iv) Advise the community of inde-
pendent auditors of any noteworthy or
important factual trends related to the
quality of audits stemming from qual-
ity control reviews. Significant prob-
lems or quality issues consistently
identified through quality control re-
views of audit reports must be referred
to appropriate state licensing agencies
and professional bodies.
(v) Advise the auditor, Federal
awarding agencies, and, where appro-
priate, the auditee of any deficiencies
found in the audits when the defi-
ciencies require corrective action by
the auditor. When advised of defi-
ciencies, the auditee must work with
the auditor to take corrective action.
If corrective action is not taken, the
cognizant agency for audit must notify
the auditor, the auditee, and applicable
Federal awarding agencies and pass-
through entities of the facts and make
recommendations for follow-up action.
Major inadequacies or repetitive sub-
standard performance by auditors must
be referred to appropriate state licens-
ing agencies and professional bodies for
disciplinary action.
(vi) Coordinate, to the extent prac-
tical, audits or reviews made by or for
Federal agencies that are in addition
to the audits made pursuant to this
part, so that the additional audits or
reviews build upon rather than dupli-
cate audits performed in accordance
with this part.
(vii) Coordinate a management deci-
sion for cross-cutting audit findings
(see in §200.1 of this part) that affect
the Federal programs of more than one
agency when requested by any Federal
awarding agency whose awards are in-
cluded in the audit finding of the
auditee.
(viii) Coordinate the audit work and
reporting responsibilities among audi-
tors to achieve the most cost-effective
audit.
(ix) Provide advice to auditees as to
how to handle changes in fiscal years.
(b) Oversight agency for audit respon-
sibilities. An auditee who does not have
a designated cognizant agency for
audit will be under the general over-
sight of the Federal agency determined
in accordance with §200.1 oversight
agency for audit. A Federal agency with
oversight for an auditee may reassign
oversight to another Federal agency
that agrees to be the oversight agency
for audit. Within 30 calendar days after
any reassignment, both the old and the
new oversight agency for audit must
provide notice of the change to the
FAC, the auditee, and, if known, the
auditor. The oversight agency for
audit:
(1) Must provide technical advice to
auditees and auditors as requested.
(2) May assume all or some of the re-
sponsibilities normally performed by a
cognizant agency for audit.
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2 CFR Ch. II (1–1–22 Edition) §200.514
(c) Federal awarding agency respon-
sibilities. The Federal awarding agency
must perform the following for the
Federal awards it makes (See also the
requirements of §200.211):
(1) Ensure that audits are completed
and reports are received in a timely
manner and in accordance with the re-
quirements of this part.
(2) Provide technical advice and
counsel to auditees and auditors as re-
quested.
(3) Follow-up on audit findings to en-
sure that the recipient takes appro-
priate and timely corrective action. As
part of audit follow-up, the Federal
awarding agency must:
(i) Issue a management decision as
prescribed in §200.521;
(ii) Monitor the recipient taking ap-
propriate and timely corrective action;
(iii) Use cooperative audit resolution
mechanisms (see the definition of coop-
erative audit resolution in §200.1 of this
part) to improve Federal program out-
comes through better audit resolution,
follow-up, and corrective action; and
(iv) Develop a baseline, metrics, and
targets to track, over time, the effec-
tiveness of the Federal agency’s proc-
ess to follow-up on audit findings and
on the effectiveness of Single Audits in
improving non-Federal entity account-
ability and their use by Federal award-
ing agencies in making award deci-
sions.
(4) Provide OMB annual updates to
the compliance supplement and work
with OMB to ensure that the compli-
ance supplement focuses the auditor to
test the compliance requirements most
likely to cause improper payments,
fraud, waste, abuse or generate audit
finding for which the Federal awarding
agency will take sanctions.
(5) Provide OMB with the name of a
single audit accountable official from
among the senior policy officials of the
Federal awarding agency who must be:
(i) Responsible for ensuring that the
agency fulfills all the requirements of
paragraph (c) of this section and effec-
tively uses the single audit process to
reduce improper payments and improve
Federal program outcomes.
(ii) Held accountable to improve the
effectiveness of the single audit process
based upon metrics as described in
paragraph (c)(3)(iv) of this section.
(iii) Responsible for designating the
Federal agency’s key management sin-
gle audit liaison.
(6) Provide OMB with the name of a
key management single audit liaison
who must:
(i) Serve as the Federal awarding
agency’s management point of contact
for the single audit process both within
and outside the Federal Government.
(ii) Promote interagency coordina-
tion, consistency, and sharing in areas
such as coordinating audit follow-up;
identifying higher-risk non-Federal en-
tities; providing input on single audit
and follow-up policy; enhancing the
utility of the FAC; and studying ways
to use single audit results to improve
Federal award accountability and best
practices.
(iii) Oversee training for the Federal
awarding agency’s program manage-
ment personnel related to the single
audit process.
(iv) Promote the Federal awarding
agency’s use of cooperative audit reso-
lution mechanisms.
(v) Coordinate the Federal awarding
agency’s activities to ensure appro-
priate and timely follow-up and correc-
tive action on audit findings.
(vi) Organize the Federal cognizant
agency for audit’s follow-up on cross-
cutting audit findings that affect the
Federal programs of more than one
Federal awarding agency.
(vii) Ensure the Federal awarding
agency provides annual updates of the
compliance supplement to OMB.
(viii) Support the Federal awarding
agency’s single audit accountable offi-
cial’s mission.
[78 FR 78608, Dec. 26, 2013, as amended at 79
FR 75887, Dec. 19, 2014; 85 FR 49573, Aug. 13,
2020]
AUDITORS
§200.514 Scope of audit.
(a) General. The audit must be con-
ducted in accordance with GAGAS. The
audit must cover the entire operations
of the auditee, or, at the option of the
auditee, such audit must include a se-
ries of audits that cover departments,
agencies, and other organizational
units that expended or otherwise ad-
ministered Federal awards during such
audit period, provided that each such
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OMB Guidance §200.514
audit must encompass the financial
statements and schedule of expendi-
tures of Federal awards for each such
department, agency, and other organi-
zational unit, which must be consid-
ered to be a non-Federal entity. The fi-
nancial statements and schedule of ex-
penditures of Federal awards must be
for the same audit period.
(b) Financial statements. The auditor
must determine whether the financial
statements of the auditee are presented
fairly in all material respects in ac-
cordance with generally accepted ac-
counting principles. The auditor must
also determine whether the schedule of
expenditures of Federal awards is stat-
ed fairly in all material respects in re-
lation to the auditee’s financial state-
ments as a whole.
(c) Internal control. (1) The compli-
ance supplement provides guidance on
internal controls over Federal pro-
grams based upon the guidance in
Standards for Internal Control in the
Federal Government issued by the
Comptroller General of the United
States and the Internal Control—Inte-
grated Framework, issued by the Com-
mittee of Sponsoring Organizations of
the Treadway Commission (COSO).
(2) In addition to the requirements of
GAGAS, the auditor must perform pro-
cedures to obtain an understanding of
internal control over Federal programs
sufficient to plan the audit to support
a low assessed level of control risk of
noncompliance for major programs.
(3) Except as provided in paragraph
(c)(4) of this section, the auditor must:
(i) Plan the testing of internal con-
trol over compliance for major pro-
grams to support a low assessed level
of control risk for the assertions rel-
evant to the compliance requirements
for each major program; and
(ii) Perform testing of internal con-
trol as planned in paragraph (c)(3)(i) of
this section.
(4) When internal control over some
or all of the compliance requirements
for a major program are likely to be in-
effective in preventing or detecting
noncompliance, the planning and per-
forming of testing described in para-
graph (c)(3) of this section are not re-
quired for those compliance require-
ments. However, the auditor must re-
port a significant deficiency or mate-
rial weakness in accordance with
§200.516, assess the related control risk
at the maximum, and consider whether
additional compliance tests are re-
quired because of ineffective internal
control.
(d) Compliance. (1) In addition to the
requirements of GAGAS, the auditor
must determine whether the auditee
has complied with Federal statutes,
regulations, and the terms and condi-
tions of Federal awards that may have
a direct and material effect on each of
its major programs.
(2) The principal compliance require-
ments applicable to most Federal pro-
grams and the compliance require-
ments of the largest Federal programs
are included in the compliance supple-
ment.
(3) For the compliance requirements
related to Federal programs contained
in the compliance supplement, an audit
of these compliance requirements will
meet the requirements of this part.
Where there have been changes to the
compliance requirements and the
changes are not reflected in the com-
pliance supplement, the auditor must
determine the current compliance re-
quirements and modify the audit proce-
dures accordingly. For those Federal
programs not covered in the compli-
ance supplement, the auditor must fol-
low the compliance supplement’s guid-
ance for programs not included in the
supplement.
(4) When internal control over some
or all of the compliance requirements
for a major program are likely to be in-
effective in preventing or detecting
noncompliance, the planning and per-
forming of testing described in para-
graph (c)(3) of this section are not re-
quired for those compliance require-
ments. However, the auditor must re-
port a significant deficiency or mate-
rial weakness in accordance with
§200.516, assess the related control risk
at the
(e) Audit follow-up. The auditor must
follow-up on prior audit findings, per-
form procedures to assess the reason-
ableness of the summary schedule of
prior audit findings prepared by the
auditee in accordance with §200.511(b),
and report, as a current year audit
finding, when the auditor concludes
that the summary schedule of prior
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2 CFR Ch. II (1–1–22 Edition) §200.515
audit findings materially misrepre-
sents the status of any prior audit find-
ing. The auditor must perform audit
follow-up procedures regardless of
whether a prior audit finding relates to
a major program in the current year.
(f) Data collection form. As required in
§200.512(b)(3), the auditor must com-
plete and sign specified sections of the
data collection form.
[78 FR 78608, Dec. 26, 2013, as amended at 79
FR 75887, Dec. 19, 2014; 85 FR 49574, Aug. 13,
2020; 86 FR 10440, Feb. 22, 2021]
§200.515 Audit reporting.
The auditor’s report(s) may be in the
form of either combined or separate re-
ports and may be organized differently
from the manner presented in this sec-
tion. The auditor’s report(s) must state
that the audit was conducted in ac-
cordance with this part and include the
following:
(a) Financial statements. The auditor
must determine and provide an opinion
(or disclaimer of opinion) whether the
financial statements of the auditee are
presented fairly in all materials re-
spects in accordance with generally ac-
cepted accounting principles (or a spe-
cial purpose framework such as cash,
modified cash, or regulatory as re-
quired by state law). The auditor must
also decide whether the schedule of ex-
penditures of Federal awards is stated
fairly in all material respects in rela-
tion to the auditee’s financial state-
ments as a whole.
(b) A report on internal control over
financial reporting and compliance
with provisions of laws, regulations,
contracts, and award agreements, non-
compliance with which could have a
material effect on the financial state-
ments. This report must describe the
scope of testing of internal control and
compliance and the results of the tests,
and, where applicable, it will refer to
the separate schedule of findings and
questioned costs described in para-
graph (d) of this section.
(c) A report on compliance for each
major program and a report on internal
control over compliance. This report
must describe the scope of testing of
internal control over compliance, in-
clude an opinion or disclaimer of opin-
ion as to whether the auditee complied
with Federal statutes, regulations, and
the terms and conditions of Federal
awards which could have a direct and
material effect on each major program
and refer to the separate schedule of
findings and questioned costs described
in paragraph (d) of this section.
(d) A schedule of findings and ques-
tioned costs which must include the
following three components:
(1) A summary of the auditor’s re-
sults, which must include:
(i) The type of report the auditor
issued on whether the financial state-
ments audited were prepared in accord-
ance with GAAP (i.e., unmodified opin-
ion, qualified opinion, adverse opinion,
or disclaimer of opinion);
(ii) Where applicable, a statement
about whether significant deficiencies
or material weaknesses in internal con-
trol were disclosed by the audit of the
financial statements;
(iii) A statement as to whether the
audit disclosed any noncompliance
that is material to the financial state-
ments of the auditee;
(iv) Where applicable, a statement
about whether significant deficiencies
or material weaknesses in internal con-
trol over major programs were dis-
closed by the audit;
(v) The type of report the auditor
issued on compliance for major pro-
grams (i.e., unmodified opinion, quali-
fied opinion, adverse opinion, or dis-
claimer of opinion);
(vi) A statement as to whether the
audit disclosed any audit findings that
the auditor is required to report under
§200.516(a);
(vii) An identification of major pro-
grams by listing each individual major
program; however, in the case of a clus-
ter of programs, only the cluster name
as shown on the Schedule of Expendi-
tures of Federal Awards is required;
(viii) The dollar threshold used to
distinguish between Type A and Type B
programs, as described in §200.518(b)(1)
or (3) when a recalculation of the Type
A threshold is required for large loan
or loan guarantees; and
(ix) A statement as to whether the
auditee qualified as a low-risk auditee
under §200.520.
(2) Findings relating to the financial
statements which are required to be re-
ported in accordance with GAGAS.
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OMB Guidance §200.516
(3) Findings and questioned costs for
Federal awards which must include
audit findings as defined in §200.516(a).
(i) Audit findings (e.g., internal con-
trol findings, compliance findings,
questioned costs, or fraud) that relate
to the same issue must be presented as
a single audit finding. Where practical,
audit findings should be organized by
Federal agency or pass-through entity.
(ii) Audit findings that relate to both
the financial statements and Federal
awards, as reported under paragraphs
(d)(2) and (d)(3) of this section, respec-
tively, must be reported in both sec-
tions of the schedule. However, the re-
porting in one section of the schedule
may be in summary form with a ref-
erence to a detailed reporting in the
other section of the schedule.
(e) Nothing in this part precludes
combining of the audit reporting re-
quired by this section with the report-
ing required by §200.512(b) when al-
lowed by GAGAS and appendix X to
this part.
[78 FR 78608, Dec. 26, 2013, as amended at 79
FR 75887, Dec. 19, 2014; 85 FR 49574, Aug. 13,
2020]
§200.516 Audit findings.
(a) Audit findings reported. The audi-
tor must report the following as audit
findings in a schedule of findings and
questioned costs:
(1) Significant deficiencies and mate-
rial weaknesses in internal control
over major programs and significant
instances of abuse relating to major
programs. The auditor’s determination
of whether a deficiency in internal con-
trol is a significant deficiency or a ma-
terial weakness for the purpose of re-
porting an audit finding is in relation
to a type of compliance requirement
for a major program identified in the
Compliance Supplement.
(2) Material noncompliance with the
provisions of Federal statutes, regula-
tions, or the terms and conditions of
Federal awards related to a major pro-
gram. The auditor’s determination of
whether a noncompliance with the pro-
visions of Federal statutes, regula-
tions, or the terms and conditions of
Federal awards is material for the pur-
pose of reporting an audit finding is in
relation to a type of compliance re-
quirement for a major program identi-
fied in the compliance supplement.
(3) Known questioned costs that are
greater than $25,000 for a type of com-
pliance requirement for a major pro-
gram. Known questioned costs are
those specifically identified by the
auditor. In evaluating the effect of
questioned costs on the opinion on
compliance, the auditor considers the
best estimate of total costs questioned
(likely questioned costs), not just the
questioned costs specifically identified
(known questioned costs). The auditor
must also report known questioned
costs when likely questioned costs are
greater than $25,000 for a type of com-
pliance requirement for a major pro-
gram. In reporting questioned costs,
the auditor must include information
to provide proper perspective for judg-
ing the prevalence and consequences of
the questioned costs.
(4) Known questioned costs that are
greater than $25,000 for a Federal pro-
gram which is not audited as a major
program. Except for audit follow-up,
the auditor is not required under this
part to perform audit procedures for
such a Federal program; therefore, the
auditor will normally not find ques-
tioned costs for a program that is not
audited as a major program. However,
if the auditor does become aware of
questioned costs for a Federal program
that is not audited as a major program
(e.g., as part of audit follow-up or other
audit procedures) and the known ques-
tioned costs are greater than $25,000,
then the auditor must report this as an
audit finding.
(5) The circumstances concerning
why the auditor’s report on compliance
for each major program is other than
an unmodified opinion, unless such cir-
cumstances are otherwise reported as
audit findings in the schedule of find-
ings and questioned costs for Federal
awards.
(6) Known or likely fraud affecting a
Federal award, unless such fraud is
otherwise reported as an audit finding
in the schedule of findings and ques-
tioned costs for Federal awards. This
paragraph does not require the auditor
to report publicly information which
could compromise investigative or
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2 CFR Ch. II (1–1–22 Edition) §200.517
legal proceedings or to make an addi-
tional reporting when the auditor con-
firms that the fraud was reported out-
side the auditor’s reports under the di-
rect reporting requirements of GAGAS.
(7) Instances where the results of
audit follow-up procedures disclosed
that the summary schedule of prior
audit findings prepared by the auditee
in accordance with §200.511(b) materi-
ally misrepresents the status of any
prior audit finding.
(b) Audit finding detail and clarity.
Audit findings must be presented in
sufficient detail and clarity for the
auditee to prepare a corrective action
plan and take corrective action, and
for Federal agencies and pass-through
entities to arrive at a management de-
cision. The following specific informa-
tion must be included, as applicable, in
audit findings:
(1) Federal program and specific Fed-
eral award identification including the
Assistance Listings title and number,
Federal award identification number
and year, name of Federal agency, and
name of the applicable pass-through
entity. When information, such as the
Assistance Listings title and number
or Federal award identification num-
ber, is not available, the auditor must
provide the best information available
to describe the Federal award.
(2) The criteria or specific require-
ment upon which the audit finding is
based, including the Federal statutes,
regulations, or the terms and condi-
tions of the Federal awards. Criteria
generally identify the required or de-
sired state or expectation with respect
to the program or operation. Criteria
provide a context for evaluating evi-
dence and understanding findings.
(3) The condition found, including
facts that support the deficiency iden-
tified in the audit finding.
(4) A statement of cause that identi-
fies the reason or explanation for the
condition or the factors responsible for
the difference between the situation
that exists (condition) and the required
or desired state (criteria), which may
also serve as a basis for recommenda-
tions for corrective action.
(5) The possible asserted effect to
provide sufficient information to the
auditee and Federal agency, or pass-
through entity in the case of a sub-
recipient, to permit them to determine
the cause and effect to facilitate
prompt and proper corrective action. A
statement of the effect or potential ef-
fect should provide a clear, logical link
to establish the impact or potential
impact of the difference between the
condition and the criteria.
(6) Identification of questioned costs
and how they were computed. Known
questioned costs must be identified by
applicable Assistance Listings num-
ber(s) and applicable Federal award
identification number(s).
(7) Information to provide proper per-
spective for judging the prevalence and
consequences of the audit findings,
such as whether the audit findings rep-
resent an isolated instance or a sys-
temic problem. Where appropriate, in-
stances identified must be related to
the universe and the number of cases
examined and be quantified in terms of
dollar value. The auditor should report
whether the sampling was a statis-
tically valid sample.
(8) Identification of whether the
audit finding was a repeat of a finding
in the immediately prior audit and if
so any applicable prior year audit find-
ing numbers.
(9) Recommendations to prevent fu-
ture occurrences of the deficiency iden-
tified in the audit finding.
(10) Views of responsible officials of
the auditee.
(c) Reference numbers. Each audit
finding in the schedule of findings and
questioned costs must include a ref-
erence number in the format meeting
the requirements of the data collection
form submission required by §200.512(b)
to allow for easy referencing of the
audit findings during follow-up.
[78 FR 78608, Dec. 26, 2013, as amended at 85
FR 49574, Aug. 13, 2020]
§200.517 Audit documentation.
(a) Retention of audit documentation.
The auditor must retain audit docu-
mentation and reports for a minimum
of three years after the date of
issuance of the auditor’s report(s) to
the auditee, unless the auditor is noti-
fied in writing by the cognizant agency
for audit, oversight agency for audit,
cognizant agency for indirect costs, or
pass-through entity to extend the re-
tention period. When the auditor is
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OMB Guidance §200.518
aware that the Federal agency, pass-
through entity, or auditee is con-
testing an audit finding, the auditor
must contact the parties contesting
the audit finding for guidance prior to
destruction of the audit documentation
and reports.
(b) Access to audit documentation.
Audit documentation must be made
available upon request to the cognizant
or oversight agency for audit or its des-
ignee, cognizant agency for indirect
cost, a Federal agency, or GAO at the
completion of the audit, as part of a
quality review, to resolve audit find-
ings, or to carry out oversight respon-
sibilities consistent with the purposes
of this part. Access to audit docu-
mentation includes the right of Federal
agencies to obtain copies of audit docu-
mentation, as is reasonable and nec-
essary.
§200.518 Major program determina-
tion.
(a) General. The auditor must use a
risk-based approach to determine
which Federal programs are major pro-
grams. This risk-based approach must
include consideration of: current and
prior audit experience, oversight by
Federal agencies and pass-through en-
tities, and the inherent risk of the Fed-
eral program. The process in para-
graphs (b) through (h) of this section
must be followed.
(b) Step one. (1) The auditor must
identify the larger Federal programs,
which must be labeled Type A pro-
grams. Type A programs are defined as
Federal programs with Federal awards
expended during the audit period ex-
ceeding the levels outlined in the table
in this paragraph (b)(1):
Total Federal awards ex-
pended Type A/B threshold
Equal to or exceed $750,000
but less than or equal to
$25 million.
$750,000.
Exceed $25 million but less
than or equal to $100 mil-
lion.
Total Federal awards ex-
pended times .03.
Exceed $100 million but less
than or equal to $1 billion.
$3 million.
Exceed $1 billion but less
than or equal to $10 billion.
Total Federal awards ex-
pended times .003.
Exceed $10 billion but less
than or equal to $20 billion.
$30 million.
Exceed $20 billion ................. Total Federal awards ex-
pended times .0015.
(2) Federal programs not labeled
Type A under paragraph (b)(1) of this
section must be labeled Type B pro-
grams.
(3) The inclusion of large loan and
loan guarantees (loans) must not result
in the exclusion of other programs as
Type A programs. When a Federal pro-
gram providing loans exceeds four
times the largest non-loan program it
is considered a large loan program, and
the auditor must consider this Federal
program as a Type A program and ex-
clude its values in determining other
Type A programs. This recalculation of
the Type A program is performed after
removing the total of all large loan
programs. For the purposes of this
paragraph a program is only considered
to be a Federal program providing
loans if the value of Federal awards ex-
pended for loans within the program
comprises fifty percent or more of the
total Federal awards expended for the
program. A cluster of programs is
treated as one program and the value
of Federal awards expended under a
loan program is determined as de-
scribed in §200.502.
(4) For biennial audits permitted
under §200.504, the determination of
Type A and Type B programs must be
based upon the Federal awards ex-
pended during the two-year period.
(c) Step two. (1) The auditor must
identify Type A programs which are
low-risk. In making this determina-
tion, the auditor must consider wheth-
er the requirements in §200.519(c), the
results of audit follow-up, or any
changes in personnel or systems affect-
ing the program indicate significantly
increased risk and preclude the pro-
gram from being low risk. For a Type
A program to be considered low-risk, it
must have been audited as a major pro-
gram in at least one of the two most
recent audit periods (in the most re-
cent audit period in the case of a bien-
nial audit), and, in the most recent
audit period, the program must have
not had:
(i) Internal control deficiencies
which were identified as material
weaknesses in the auditor’s report on
internal control for major programs as
required under §200.515(c);
(ii) A modified opinion on the pro-
gram in the auditor’s report on major
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2 CFR Ch. II (1–1–22 Edition) §200.519
programs as required under §200.515(c);
or
(iii) Known or likely questioned costs
that exceed five percent of the total
Federal awards expended for the pro-
gram.
(2) Notwithstanding paragraph (c)(1)
of this section, OMB may approve a
Federal awarding agency’s request that
a Type A program may not be consid-
ered low risk for a certain recipient.
For example, it may be necessary for a
large Type A program to be audited as
a major program each year at a par-
ticular recipient to allow the Federal
awarding agency to comply with 31
U.S.C. 3515. The Federal awarding
agency must notify the recipient and,
if known, the auditor of OMB’s ap-
proval at least 180 calendar days prior
to the end of the fiscal year to be au-
dited.
(d) Step three. (1) The auditor must
identify Type B programs which are
high-risk using professional judgment
and the criteria in §200.519. However,
the auditor is not required to identify
more high-risk Type B programs than
at least one fourth the number of low-
risk Type A programs identified as low-
risk under Step 2 (paragraph (c) of this
section). Except for known material
weakness in internal control or compli-
ance problems as discussed in
§200.519(b)(1) and (2) and (c)(1), a single
criterion in risk would seldom cause a
Type B program to be considered high-
risk. When identifying which Type B
programs to risk assess, the auditor is
encouraged to use an approach which
provides an opportunity for different
high-risk Type B programs to be au-
dited as major over a period of time.
(2) The auditor is not expected to per-
form risk assessments on relatively
small Federal programs. Therefore, the
auditor is only required to perform risk
assessments on Type B programs that
exceed twenty-five percent (0.25) of the
Type A threshold determined in Step 1
(paragraph (b) of this section).
(e) Step four. At a minimum, the
auditor must audit all of the following
as major programs:
(1) All Type A programs not identi-
fied as low risk under step two (para-
graph (c)(1) of this section).
(2) All Type B programs identified as
high-risk under step three (paragraph
(d) of this section).
(3) Such additional programs as may
be necessary to comply with the per-
centage of coverage rule discussed in
paragraph (f) of this section. This may
require the auditor to audit more pro-
grams as major programs than the
number of Type A programs.
(f) Percentage of coverage rule. If the
auditee meets the criteria in §200.520,
the auditor need only audit the major
programs identified in Step 4 (para-
graphs (e)(1) and (2) of this section) and
such additional Federal programs with
Federal awards expended that, in ag-
gregate, all major programs encompass
at least 20 percent (0.20) of total Fed-
eral awards expended. Otherwise, the
auditor must audit the major programs
identified in Step 4 (paragraphs (e)(1)
and (2) of this section) and such addi-
tional Federal programs with Federal
awards expended that, in aggregate, all
major programs encompass at least 40
percent (0.40) of total Federal awards
expended.
(g) Documentation of risk. The auditor
must include in the audit documenta-
tion the risk analysis process used in
determining major programs.
(h) Auditor’s judgment. When the
major program determination was per-
formed and documented in accordance
with this Subpart, the auditor’s judg-
ment in applying the risk-based ap-
proach to determine major programs
must be presumed correct. Challenges
by Federal agencies and pass-through
entities must only be for clearly im-
proper use of the requirements in this
part. However, Federal agencies and
pass-through entities may provide
auditors guidance about the risk of a
particular Federal program and the
auditor must consider this guidance in
determining major programs in audits
not yet completed.
[78 FR 78608, Dec. 26, 2013, as amended at 79
FR 75887, Dec. 19, 2014; 85 FR 49574, Aug. 13,
2020]
§200.519 Criteria for Federal program
risk.
(a) General. The auditor’s determina-
tion should be based on an overall eval-
uation of the risk of noncompliance oc-
curring that could be material to the
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OMB Guidance §200.520
Federal program. The auditor must
consider criteria, such as described in
paragraphs (b), (c), and (d) of this sec-
tion, to identify risk in Federal pro-
grams. Also, as part of the risk anal-
ysis, the auditor may wish to discuss a
particular Federal program with
auditee management and the Federal
agency or pass-through entity.
(b) Current and prior audit experience.
(1) Weaknesses in internal control over
Federal programs would indicate high-
er risk. Consideration should be given
to the control environment over Fed-
eral programs and such factors as the
expectation of management’s adher-
ence to Federal statutes, regulations,
and the terms and conditions of Fed-
eral awards and the competence and
experience of personnel who administer
the Federal programs.
(i) A Federal program administered
under multiple internal control struc-
tures may have higher risk. When as-
sessing risk in a large single audit, the
auditor must consider whether weak-
nesses are isolated in a single oper-
ating unit (e.g., one college campus) or
pervasive throughout the entity.
(ii) When significant parts of a Fed-
eral program are passed through to
subrecipients, a weak system for moni-
toring subrecipients would indicate
higher risk.
(2) Prior audit findings would indi-
cate higher risk, particularly when the
situations identified in the audit find-
ings could have a significant impact on
a Federal program or have not been
corrected.
(3) Federal programs not recently au-
dited as major programs may be of
higher risk than Federal programs re-
cently audited as major programs with-
out audit findings.
(c) Oversight exercised by Federal agen-
cies and pass-through entities. (1) Over-
sight exercised by Federal agencies or
pass-through entities could be used to
assess risk. For example, recent moni-
toring or other reviews performed by
an oversight entity that disclosed no
significant problems would indicate
lower risk, whereas monitoring that
disclosed significant problems would
indicate higher risk.
(2) Federal agencies, with the concur-
rence of OMB, may identify Federal
programs that are higher risk. OMB
will provide this identification in the
compliance supplement.
(d) Inherent risk of the Federal pro-
gram. (1) The nature of a Federal pro-
gram may indicate risk. Consideration
should be given to the complexity of
the program and the extent to which
the Federal program contracts for
goods and services. For example, Fed-
eral programs that disburse funds
through third-party contracts or have
eligibility criteria may be of higher
risk. Federal programs primarily in-
volving staff payroll costs may have
high risk for noncompliance with re-
quirements of §200.430, but otherwise
be at low risk.
(2) The phase of a Federal program in
its life cycle at the Federal agency
may indicate risk. For example, a new
Federal program with new or interim
regulations may have higher risk than
an established program with time-test-
ed regulations. Also, significant
changes in Federal programs, statutes,
regulations, or the terms and condi-
tions of Federal awards may increase
risk.
(3) The phase of a Federal program in
its life cycle at the auditee may indi-
cate risk. For example, during the first
and last years that an auditee partici-
pates in a Federal program, the risk
may be higher due to start-up or close-
out of program activities and staff.
(4) Type B programs with larger Fed-
eral awards expended would be of high-
er risk than programs with substan-
tially smaller Federal awards ex-
pended.
[78 FR 78608, Dec. 26, 2013, as amended at 85
FR 49575, Aug. 13, 2020]
§200.520 Criteria for a low-risk
auditee.
An auditee that meets all of the fol-
lowing conditions for each of the pre-
ceding two audit periods must qualify
as a low-risk auditee and be eligible for
reduced audit coverage in accordance
with §200.518.
(a) Single audits were performed on
an annual basis in accordance with the
provisions of this Subpart, including
submitting the data collection form
and the reporting package to the FAC
within the timeframe specified in
§200.512. A non-Federal entity that has
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2 CFR Ch. II (1–1–22 Edition) §200.521
biennial audits does not qualify as a
low-risk auditee.
(b) The auditor’s opinion on whether
the financial statements were prepared
in accordance with GAAP, or a basis of
accounting required by state law, and
the auditor’s in relation to opinion on
the schedule of expenditures of Federal
awards were unmodified.
(c) There were no deficiencies in in-
ternal control which were identified as
material weaknesses under the require-
ments of GAGAS.
(d) The auditor did not report a sub-
stantial doubt about the auditee’s abil-
ity to continue as a going concern.
(e) None of the Federal programs had
audit findings from any of the fol-
lowing in either of the preceding two
audit periods in which they were classi-
fied as Type A programs:
(1) Internal control deficiencies that
were identified as material weaknesses
in the auditor’s report on internal con-
trol for major programs as required
under §200.515(c);
(2) A modified opinion on a major
program in the auditor’s report on
major programs as required under
§200.515(c); or
(3) Known or likely questioned costs
that exceeded five percent of the total
Federal awards expended for a Type A
program during the audit period.
[78 FR 78608, Dec. 26, 2013, as amended at 85
FR 49575, Aug. 13, 2020]
MANAGEMENT DECISIONS
§200.521 Management decision.
(a) General. The management deci-
sion must clearly state whether or not
the audit finding is sustained, the rea-
sons for the decision, and the expected
auditee action to repay disallowed
costs, make financial adjustments, or
take other action. If the auditee has
not completed corrective action, a
timetable for follow-up should be
given. Prior to issuing the manage-
ment decision, the Federal agency or
pass-through entity may request addi-
tional information or documentation
from the auditee, including a request
for auditor assurance related to the
documentation, as a way of mitigating
disallowed costs. The management de-
cision should describe any appeal proc-
ess available to the auditee. While not
required, the Federal agency or pass-
through entity may also issue a man-
agement decision on findings relating
to the financial statements which are
required to be reported in accordance
with GAGAS.
(b) Federal agency. As provided in
§200.513(a)(3)(vii), the cognizant agency
for audit must be responsible for co-
ordinating a management decision for
audit findings that affect the programs
of more than one Federal agency. As
provided in §200.513(c)(3)(i), a Federal
awarding agency is responsible for
issuing a management decision for
findings that relate to Federal awards
it makes to non-Federal entities.
(c) Pass-through entity. As provided in
§200.332(d), the pass-through entity
must be responsible for issuing a man-
agement decision for audit findings
that relate to Federal awards it makes
to subrecipients.
(d) Time requirements. The Federal
awarding agency or pass-through enti-
ty responsible for issuing a manage-
ment decision must do so within six
months of acceptance of the audit re-
port by the FAC. The auditee must ini-
tiate and proceed with corrective ac-
tion as rapidly as possible and correc-
tive action should begin no later than
upon receipt of the audit report.
(e) Reference numbers. Management
decisions must include the reference
numbers the auditor assigned to each
audit finding in accordance with
§200.516(c).
[78 FR 78608, Dec. 26, 2013, as amended at 85
FR 49575, Aug. 13, 2020]
APPENDIX I TO PART 200—FULL TEXT OF
NOTICE OF FUNDING OPPORTUNITY
The full text of the notice of funding op-
portunity is organized in sections. The re-
quired format outlined in this appendix indi-
cates immediately following the title of each
section whether that section is required in
every announcement or is a Federal award-
ing agency option. The format is designed so
that similar types of information will appear
in the same sections in announcements of
different Federal funding opportunities. To-
ward that end, there is text in each of the
following sections to describe the types of in-
formation that a Federal awarding agency
would include in that section of an actual
announcement.
A Federal awarding agency that wishes to
include information that the format does not
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OMB Guidance Pt. 200, App. I
specifically discuss may address that subject
in whatever section(s) is most appropriate.
For example, if a Federal awarding agency
chooses to address performance goals in the
announcement, it might do so in the funding
opportunity description, the application con-
tent, or the reporting requirements.
Similarly, when this format calls for a
type of information to be in a particular sec-
tion, a Federal awarding agency wishing to
address that subject in other sections may
elect to repeat the information in those sec-
tions or use cross references between the sec-
tions (there should be hyperlinks for cross-
references in any electronic versions of the
announcement). For example, a Federal
awarding agency may want to include Sec-
tion A information about the types of non-
Federal entities who are eligible to apply.
The format specifies a standard location for
that information in Section C.1 but does not
preclude repeating the information in Sec-
tion A or creating a cross reference between
Section A and C.1, as long as a potential ap-
plicant can find the information quickly and
easily from the standard location.
The sections of the full text of the an-
nouncement are described in the following
paragraphs.
A. PROGRAM DESCRIPTION—REQUIRED
This section contains the full program de-
scription of the funding opportunity. It may
be as long as needed to adequately commu-
nicate to potential applicants the areas in
which funding may be provided. It describes
the Federal awarding agency’s funding prior-
ities or the technical or focus areas in which
the Federal awarding agency intends to pro-
vide assistance. As appropriate, it may in-
clude any program history (e.g., whether this
is a new program or a new or changed area of
program emphasis). This section must in-
clude program goals and objectives, a ref-
erence to the relevant Assistance Listings, a
description of how the award will contribute
to the achievement of the program’s goals
and objectives, and the expected perform-
ance goals, indicators, targets, baseline data,
data collection, and other outcomes such
Federal awarding agency expects to achieve,
and may include examples of successful
projects that have been funded previously.
This section also may include other informa-
tion the Federal awarding agency deems nec-
essary, and must at a minimum include cita-
tions for authorizing statutes and regula-
tions for the funding opportunity.
B. FEDERAL AWARD INFORMATION—REQUIRED
This section provides sufficient informa-
tion to help an applicant make an informed
decision about whether to submit a proposal.
Relevant information could include the total
amount of funding that the Federal awarding
agency expects to award through the an-
nouncement; the expected performance indi-
cators, targets, baseline data, and data col-
lection; the anticipated number of Federal
awards; the expected amounts of individual
Federal awards (which may be a range); the
amount of funding per Federal award, on av-
erage, experienced in previous years; and the
anticipated start dates and periods of per-
formance for new Federal awards. This sec-
tion also should address whether applica-
tions for renewal or supplementation of ex-
isting projects are eligible to compete with
applications for new Federal awards.
This section also must indicate the type(s)
of assistance instrument (e.g., grant, cooper-
ative agreement) that may be awarded if ap-
plications are successful. If cooperative
agreements may be awarded, this section ei-
ther should describe the ‘‘substantial in-
volvement’’ that the Federal awarding agen-
cy expects to have or should reference where
the potential applicant can find that infor-
mation (e.g., in the funding opportunity de-
scription in Section A. or Federal award ad-
ministration information in Section D. If
procurement contracts also may be awarded,
this must be stated.
C. ELIGIBILITY INFORMATION
This section addresses the considerations
or factors that determine applicant or appli-
cation eligibility. This includes the eligi-
bility of particular types of applicant organi-
zations, any factors affecting the eligibility
of the principal investigator or project direc-
tor, and any criteria that make particular
projects ineligible. Federal agencies should
make clear whether an applicant’s failure to
meet an eligibility criterion by the time of
an application deadline will result in the
Federal awarding agency returning the ap-
plication without review or, even though an
application may be reviewed, will preclude
the Federal awarding agency from making a
Federal award. Key elements to be addressed
are:
1. Eligible Applicants—Required. Announce-
ments must clearly identify the types of en-
tities that are eligible to apply. If there are
no restrictions on eligibility, this section
may simply indicate that all potential appli-
cants are eligible. If there are restrictions on
eligibility, it is important to be clear about
the specific types of entities that are eligi-
ble, not just the types that are ineligible.
For example, if the program is limited to
nonprofit organizations subject to 26 U.S.C.
501(c)(3) of the tax code (26 U.S.C. 501(c)(3)),
the announcement should say so. Similarly,
it is better to state explicitly that Native
American tribal organizations are eligible
than to assume that they can unambiguously
infer that from a statement that nonprofit
organizations may apply. Eligibility also can
be expressed by exception, (e.g., open to all
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types of domestic applicants other than indi-
viduals). This section should refer to any
portion of Section D specifying documenta-
tion that must be submitted to support an
eligibility determination (e.g., proof of
501(c)(3) status as determined by the Internal
Revenue Service or an authorizing tribal res-
olution). To the extent that any funding re-
striction in Section D.6 could affect the eli-
gibility of an applicant or project, the an-
nouncement must either restate that restric-
tion in this section or provide a cross-ref-
erence to its description in Section D.6.
2. Cost Sharing or Matching—Required. An-
nouncements must state whether there is re-
quired cost sharing, matching, or cost par-
ticipation without which an application
would be ineligible (if cost sharing is not re-
quired, the announcement must explicitly
say so). Required cost sharing may be a cer-
tain percentage or amount, or may be in the
form of contributions of specified items or
activities (e.g., provision of equipment). It is
important that the announcement be clear
about any restrictions on the types of cost
(e.g., in-kind contributions) that are accept-
able as cost sharing. Cost sharing as an eligi-
bility criterion includes requirements based
in statute or regulation, as described in
§200.306 of this Part. This section should
refer to the appropriate portion(s) of section
D. stating any pre-award requirements for
submission of letters or other documentation
to verify commitments to meet cost-sharing
requirements if a Federal award is made.
3. Other—Required, if applicable. If there are
other eligibility criteria (i.e., criteria that
have the effect of making an application or
project ineligible for Federal awards, wheth-
er referred to as ‘‘responsiveness’’ criteria,
‘‘go-no go’’ criteria, ‘‘threshold’’ criteria, or
in other ways), must be clearly stated and
must include a reference to the regulation of
requirement that describes the restriction,
as applicable. For example, if entities that
have been found to be in violation of a par-
ticular Federal statute are ineligible, it is
important to say so. This section must also
state any limit on the number of applica-
tions an applicant may submit under the an-
nouncement and make clear whether the
limitation is on the submitting organization,
individual investigator/program director, or
both. This section should also address any
eligibility criteria for beneficiaries or for
program participants other than Federal
award recipients.
D. APPLICATION AND SUBMISSION INFORMATION
1. Address to Request Application Package—
Required. Potential applicants must be told
how to get application forms, kits, or other
materials needed to apply (if this announce-
ment contains everything needed, this sec-
tion need only say so). An Internet address
where the materials can be accessed is ac-
ceptable. However, since high-speed Internet
access is not yet universally available for
downloading documents, and applicants may
have additional accessibility requirements,
there also should be a way for potential ap-
plicants to request paper copies of materials,
such as a U.S. Postal Service mailing ad-
dress, telephone or FAX number, Telephone
Device for the Deaf (TDD), Text Telephone
(TTY) number, and/or Federal Information
Relay Service (FIRS) number.
2. Content and Form of Application Submis-
sion—Required. This section must identify
the required content of an application and
the forms or formats that an applicant must
use to submit it. If any requirements are
stated elsewhere because they are general re-
quirements that apply to multiple programs
or funding opportunities, this section should
refer to where those requirements may be
found. This section also should include re-
quired forms or formats as part of the an-
nouncement or state where the applicant
may obtain them.
This section should specifically address
content and form or format requirements
for:
i. Pre-applications, letters of intent, or
white papers required or encouraged (see
Section D.4), including any limitations on
the number of pages or other formatting re-
quirements similar to those for full applica-
tions.
ii. The application as a whole. For all sub-
missions, this would include any limitations
on the number of pages, font size and type-
face, margins, paper size, number of copies,
and sequence or assembly requirements. If
electronic submission is permitted or re-
quired, this could include special require-
ments for formatting or signatures.
iii. Component pieces of the application
(e.g., if all copies of the application must
bear original signatures on the face page or
the program narrative may not exceed 10
pages). This includes any pieces that may be
submitted separately by third parties (e.g.,
references or letters confirming commit-
ments from third parties that will be con-
tributing a portion of any required cost shar-
ing).
iv. Information that successful applicants
must submit after notification of intent to
make a Federal award, but prior to a Federal
award. This could include evidence of com-
pliance with requirements relating to human
subjects or information needed to comply
with the National Environmental Policy Act
(NEPA) (42 U.S.C. 4321–4370h).
3. Unique entity identifier and System for
Award Management (SAM)—Required. This
paragraph must state clearly that each ap-
plicant (unless the applicant is an individual
or Federal awarding agency that is excepted
from those requirements under 2 CFR
25.110(b) or (c), or has an exception approved
by the Federal awarding agency under 2 CFR
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1 With respect to electronic methods for
providing information about funding oppor-
tunities or accepting applicants’ submissions
of information, each Federal awarding agen-
cy is responsible for compliance with Section
508 of the Rehabilitation Act of 1973 (29
U.S.C. 794d).
25.110(d)) is required to: (i) Be registered in
SAM before submitting its application; (ii)
Provide a valid unique entity identifier in its
application; and (iii) Continue to maintain
an active SAM registration with current in-
formation at all times during which it has an
active Federal award or an application or
plan under consideration by a Federal award-
ing agency. It also must state that the Fed-
eral awarding agency may not make a Fed-
eral award to an applicant until the appli-
cant has complied with all applicable unique
entity identifier and SAM requirements and,
if an applicant has not fully complied with
the requirements by the time the Federal
awarding agency is ready to make a Federal
award, the Federal awarding agency may de-
termine that the applicant is not qualified to
receive a Federal award and use that deter-
mination as a basis for making a Federal
award to another applicant.
4. Submission Dates and Times—Required.
Announcements must identify due dates and
times for all submissions. This includes not
only the full applications but also any pre-
liminary submissions (e.g., letters of intent,
white papers, or pre-applications). It also in-
cludes any other submissions of information
before Federal award that are separate from
the full application. If the funding oppor-
tunity is a general announcement that is
open for a period of time with no specific due
dates for applications, this section should
say so. Note that the information on dates
that is included in this section also must ap-
pear with other overview information in a lo-
cation preceding the full text of the an-
nouncement (see §200.204 of this part).
5. Intergovernmental Review—Required, if ap-
plicable. If the funding opportunity is subject
to Executive Order 12372, ‘‘Intergovern-
mental Review of Federal Programs,’’ the
notice must say so and applicants must con-
tact their state’s Single Point of Contact
(SPOC) to find out about and comply with
the state’s process under Executive Order
12372, it may be useful to inform potential
applicants that the names and addresses of
the SPOCs are listed in the Office of Manage-
ment and Budget’s website.
6. Funding Restrictions—Required. Notices
must include information on funding restric-
tions in order to allow an applicant to de-
velop an application and budget consistent
with program requirements. Examples are
whether construction is an allowable activ-
ity, if there are any limitations on direct
costs such as foreign travel or equipment
purchases, and if there are any limits on in-
direct costs (or facilities and administrative
costs). Applicants must be advised if Federal
awards will not allow reimbursement of pre-
Federal award costs.
7. Other Submission Requirements— Required.
This section must address any other submis-
sion requirements not included in the other
paragraphs of this section. This might in-
clude the format of submission, i.e., paper or
electronic, for each type of required submis-
sion. Applicants should not be required to
submit in more than one format and this sec-
tion should indicate whether they may
choose whether to submit applications in
hard copy or electronically, may submit only
in hard copy, or may submit only electroni-
cally.
This section also must indicate where ap-
plications (and any pre-applications) must be
submitted if sent by postal mail, electronic
means, or hand-delivery. For postal mail
submission, this must include the name of an
office, official, individual or function (e.g.,
application receipt center) and a complete
mailing address. For electronic submission,
this must include the URL or email address;
whether a password(s) is required; whether
particular software or other electronic capa-
bilities are required; what to do in the event
of system problems and a point of contact
who will be available in the event the appli-
cant experiences technical difficulties.1
E. APPLICATION REVIEW INFORMATION
1. Criteria—Required. This section must ad-
dress the criteria that the Federal awarding
agency will use to evaluate applications.
This includes the merit and other review cri-
teria that evaluators will use to judge appli-
cations, including any statutory, regulatory,
or other preferences (e.g., minority status or
Native American tribal preferences) that
will be applied in the review process. These
criteria are distinct from eligibility criteria
that are addressed before an application is
accepted for review and any program policy
or other factors that are applied during the
selection process, after the review process is
completed. The intent is to make the appli-
cation process transparent so applicants can
make informed decisions when preparing
their applications to maximize fairness of
the process. The announcement should clear-
ly describe all criteria, including any sub-
criteria. If criteria vary in importance, the
announcement should specify the relative
percentages, weights, or other means used to
distinguish among them. For statutory, reg-
ulatory, or other preferences, the announce-
ment should provide a detailed explanation
of those preferences with an explicit indica-
tion of their effect (e.g., whether they result
in additional points being assigned).
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If an applicant’s proposed cost sharing will
be considered in the review process (as op-
posed to being an eligibility criterion de-
scribed in Section C.2), the announcement
must specifically address how it will be con-
sidered (e.g., to assign a certain number of
additional points to applicants who offer
cost sharing, or to break ties among applica-
tions with equivalent scores after evaluation
against all other factors). If cost sharing will
not be considered in the evaluation, the an-
nouncement should say so, so that there is
no ambiguity for potential applicants. Vague
statements that cost sharing is encouraged,
without clarification as to what that means,
are unhelpful to applicants. It also is impor-
tant that the announcement be clear about
any restrictions on the types of cost (e.g., in-
kind contributions) that are acceptable as
cost sharing.
2. Review and Selection Process—Required.
This section may vary in the level of detail
provided. The announcement must list any
program policy or other factors or elements,
other than merit criteria, that the selecting
official may use in selecting applications for
Federal award (e.g., geographical dispersion,
program balance, or diversity). The Federal
awarding agency may also include other ap-
propriate details. For example, this section
may indicate who is responsible for evalua-
tion against the merit criteria (e.g., peers ex-
ternal to the Federal awarding agency or
Federal awarding agency personnel) and/or
who makes the final selections for Federal
awards. If there is a multi-phase review proc-
ess (e.g., an external panel advising internal
Federal awarding agency personnel who
make final recommendations to the deciding
official), the announcement may describe the
phases. It also may include: the number of
people on an evaluation panel and how it op-
erates, the way reviewers are selected, re-
viewer qualifications, and the way that con-
flicts of interest are avoided. With respect to
electronic methods for providing informa-
tion about funding opportunities or accept-
ing applicants’ submissions of information,
each Federal awarding agency is responsible
for compliance with Section 508 of the Reha-
bilitation Act of 1973 (29 U.S.C. 794d).
In addition, if the Federal awarding agency
permits applicants to nominate suggested re-
viewers of their applications or suggest those
they feel may be inappropriate due to a con-
flict of interest, that information should be
included in this section.
3. For any Federal award under a notice of
funding opportunity, if the Federal awarding
agency anticipates that the total Federal
share will be greater than the simplified ac-
quisition threshold on any Federal award
under a notice of funding opportunity may
include, over the period of performance, this
section must also inform applicants:
i. That the Federal awarding agency, prior
to making a Federal award with a total
amount of Federal share greater than the
simplified acquisition threshold, is required
to review and consider any information
about the applicant that is in the designated
integrity and performance system accessible
through SAM (currently FAPIIS) (see 41
U.S.C. 2313);
ii. That an applicant, at its option, may re-
view information in the designated integrity
and performance systems accessible through
SAM and comment on any information about
itself that a Federal awarding agency pre-
viously entered and is currently in the des-
ignated integrity and performance system
accessible through SAM;
iii. That the Federal awarding agency will
consider any comments by the applicant, in
addition to the other information in the des-
ignated integrity and performance system,
in making a judgment about the applicant’s
integrity, business ethics, and record of per-
formance under Federal awards when com-
pleting the review of risk posed by appli-
cants as described in §200.206.
4. Anticipated Announcement and Federal
Award Dates—Optional. This section is in-
tended to provide applicants with informa-
tion they can use for planning purposes. If
there is a single application deadline fol-
lowed by the simultaneous review of all ap-
plications, the Federal awarding agency can
include in this section information about the
anticipated dates for announcing or noti-
fying successful and unsuccessful applicants
and for having Federal awards in place. If ap-
plications are received and evaluated on a
‘‘rolling’’ basis at different times during an
extended period, it may be appropriate to
give applicants an estimate of the time need-
ed to process an application and notify the
applicant of the Federal awarding agency’s
decision.
F. FEDERAL AWARD ADMINISTRATION
INFORMATION
1. Federal Award Notices—Required. This
section must address what a successful appli-
cant can expect to receive following selec-
tion. If the Federal awarding agency’s prac-
tice is to provide a separate notice stating
that an application has been selected before
it actually makes the Federal award, this
section would be the place to indicate that
the letter is not an authorization to begin
performance (to the extent that it allows
charging to Federal awards of pre-award
costs at the non-Federal entity’s own risk).
This section should indicate that the notice
of Federal award signed by the grants officer
(or equivalent) is the authorizing document,
and whether it is provided through postal
mail or by electronic means and to whom. It
also may address the timing, form, and con-
tent of notifications to unsuccessful appli-
cants. See also §200.211.
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2. Administrative and National Policy Re-
quirements—Required. This section must iden-
tify the usual administrative and national
policy requirements the Federal awarding
agency’s Federal awards may include. Pro-
viding this information lets a potential ap-
plicant identify any requirements with
which it would have difficulty complying if
its application is successful. In those cases,
early notification about the requirements al-
lows the potential applicant to decide not to
apply or to take needed actions before re-
ceiving the Federal award. The announce-
ment need not include all of the terms and
conditions of the Federal award, but may
refer to a document (with information about
how to obtain it) or Internet site where ap-
plicants can see the terms and conditions. If
this funding opportunity will lead to Federal
awards with some special terms and condi-
tions that differ from the Federal awarding
agency’s usual (sometimes called ‘‘general’’)
terms and conditions, this section should
highlight those special terms and conditions.
Doing so will alert applicants that have re-
ceived Federal awards from the Federal
awarding agency previously and might not
otherwise expect different terms and condi-
tions. For the same reason, the announce-
ment should inform potential applicants
about special requirements that could apply
to particular Federal awards after the review
of applications and other information, based
on the particular circumstances of the effort
to be supported (e.g., if human subjects were
to be involved or if some situations may jus-
tify special terms on intellectual property,
data sharing or security requirements).
3. Reporting—Required. This section must
include general information about the type
(e.g., financial or performance), frequency,
and means of submission (paper or elec-
tronic) of post-Federal award reporting re-
quirements. Highlight any special reporting
requirements for Federal awards under this
funding opportunity that differ (e.g., by re-
port type, frequency, form/format, or cir-
cumstances for use) from what the Federal
awarding agency’s Federal awards usually
require. Federal awarding agencies must also
describe in this section all relevant require-
ments such as those at 2 CFR 180.335 and
180.350.
If the Federal share of any Federal award
may include more than $500,000 over the pe-
riod of performance, this section must in-
form potential applicants about the post
award reporting requirements reflected in
appendix XII to this part.
G. FEDERAL AWARDING AGENCY CONTACT(S)—
REQUIRED
The announcement must give potential ap-
plicants a point(s) of contact for answering
questions or helping with problems while the
funding opportunity is open. The intent of
this requirement is to be as helpful as pos-
sible to potential applicants, so the Federal
awarding agency should consider approaches
such as giving:
i. Points of contact who may be reached in
multiple ways (e.g., by telephone, FAX, and/
or email, as well as regular mail).
ii. A fax or email address that multiple
people access, so that someone will respond
even if others are unexpectedly absent dur-
ing critical periods.
iii. Different contacts for distinct kinds of
help (e.g., one for questions of programmatic
content and a second for administrative
questions).
H. OTHER INFORMATION—OPTIONAL
This section may include any additional
information that will assist a potential ap-
plicant. For example, the section might:
i. Indicate whether this is a new program
or a one-time initiative.
ii. Mention related programs or other up-
coming or ongoing Federal awarding agency
funding opportunities for similar activities.
iii. Include current Internet addresses for
Federal awarding agency Web sites that may
be useful to an applicant in understanding
the program.
iv. Alert applicants to the need to identify
proprietary information and inform them
about the way the Federal awarding agency
will handle it.
v. Include certain routine notices to appli-
cants (e.g., that the Federal Government is
not obligated to make any Federal award as
a result of the announcement or that only
grants officers can bind the Federal Govern-
ment to the expenditure of funds).
[78 FR 78608, Dec. 26, 2013, as amended at 80
FR 43310, July 22, 2015; 85 FR 49575, Aug. 13,
2020]
APPENDIX II TO PART 200—CONTRACT
PROVISIONS FOR NON-FEDERAL ENTI-
TY CONTRACTS UNDER FEDERAL
AWARDS
In addition to other provisions required by
the Federal agency or non-Federal entity, all
contracts made by the non-Federal entity
under the Federal award must contain provi-
sions covering the following, as applicable.
(A) Contracts for more than the simplified
acquisition threshold, which is the inflation
adjusted amount determined by the Civilian
Agency Acquisition Council and the Defense
Acquisition Regulations Council (Councils)
as authorized by 41 U.S.C. 1908, must address
administrative, contractual, or legal rem-
edies in instances where contractors violate
or breach contract terms, and provide for
such sanctions and penalties as appropriate.
(B) All contracts in excess of $10,000 must
address termination for cause and for con-
venience by the non-Federal entity including
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the manner by which it will be effected and
the basis for settlement.
(C) Equal Employment Opportunity. Ex-
cept as otherwise provided under 41 CFR
Part 60, all contracts that meet the defini-
tion of ‘‘federally assisted construction con-
tract’’ in 41 CFR Part 60–1.3 must include the
equal opportunity clause provided under 41
CFR 60–1.4(b), in accordance with Executive
Order 11246, ‘‘Equal Employment Oppor-
tunity’’ (30 FR 12319, 12935, 3 CFR Part, 1964–
1965 Comp., p. 339), as amended by Executive
Order 11375, ‘‘Amending Executive Order
11246 Relating to Equal Employment Oppor-
tunity,’’ and implementing regulations at 41
CFR part 60, ‘‘Office of Federal Contract
Compliance Programs, Equal Employment
Opportunity, Department of Labor.’’
(D) Davis-Bacon Act, as amended (40 U.S.C.
3141–3148). When required by Federal program
legislation, all prime construction contracts
in excess of $2,000 awarded by non-Federal
entities must include a provision for compli-
ance with the Davis-Bacon Act (40 U.S.C.
3141–3144, and 3146–3148) as supplemented by
Department of Labor regulations (29 CFR
Part 5, ‘‘Labor Standards Provisions Appli-
cable to Contracts Covering Federally Fi-
nanced and Assisted Construction’’). In ac-
cordance with the statute, contractors must
be required to pay wages to laborers and me-
chanics at a rate not less than the prevailing
wages specified in a wage determination
made by the Secretary of Labor. In addition,
contractors must be required to pay wages
not less than once a week. The non-Federal
entity must place a copy of the current pre-
vailing wage determination issued by the De-
partment of Labor in each solicitation. The
decision to award a contract or subcontract
must be conditioned upon the acceptance of
the wage determination. The non-Federal en-
tity must report all suspected or reported
violations to the Federal awarding agency.
The contracts must also include a provision
for compliance with the Copeland ‘‘Anti-
Kickback’’ Act (40 U.S.C. 3145), as supple-
mented by Department of Labor regulations
(29 CFR Part 3, ‘‘Contractors and Sub-
contractors 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 sub-
recipient must 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 compensa-
tion to which he or she is otherwise entitled.
The non-Federal entity must report all sus-
pected or reported violations to the Federal
awarding agency.
(E) Contract Work Hours and Safety
Standards Act (40 U.S.C. 3701–3708). Where
applicable, all contracts awarded by the non-
Federal entity in excess of $100,000 that in-
volve the employment of mechanics or labor-
ers must include a provision for compliance
with 40 U.S.C. 3702 and 3704, as supplemented
by Department of Labor regulations (29 CFR
Part 5). Under 40 U.S.C. 3702 of the Act, each
contractor must 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 com-
pensated at a rate of not less than one and a
half times the basic rate of pay for all hours
worked in excess of 40 hours in the work
week. The requirements of 40 U.S.C. 3704 are
applicable to construction work and provide
that no laborer or mechanic must be re-
quired 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 transpor-
tation or transmission of intelligence.
(F) Rights to Inventions Made Under a
Contract or Agreement. If the Federal award
meets the definition of ‘‘funding agreement’’
under 37 CFR §401.2 (a) and the recipient or
subrecipient wishes to enter into a contract
with a small business firm or nonprofit orga-
nization regarding the substitution of par-
ties, assignment or performance of experi-
mental, developmental, or research work
under that ‘‘funding agreement,’’ the recipi-
ent or subrecipient must comply with the re-
quirements of 37 CFR Part 401, ‘‘Rights to In-
ventions Made by Nonprofit Organizations
and Small Business Firms Under Govern-
ment Grants, Contracts and Cooperative
Agreements,’’ and any implementing regula-
tions issued by the awarding agency.
(G) Clean Air Act (42 U.S.C. 7401–7671q.) and
the Federal Water Pollution Control Act (33
U.S.C. 1251–1387), as amended—Contracts and
subgrants of amounts in excess of $150,000
must contain a provision that requires the
non-Federal award to agree to comply with
all applicable standards, orders or regula-
tions issued pursuant to the Clean Air Act
(42 U.S.C. 7401–7671q) and the Federal Water
Pollution Control Act as amended (33 U.S.C.
1251–1387). Violations must be reported to the
Federal awarding agency and the Regional
Office of the Environmental Protection
Agency (EPA).
(H) Debarment and Suspension (Executive
Orders 12549 and 12689)—A contract award
(see 2 CFR 180.220) must not be made to par-
ties listed on the governmentwide exclusions
in the System for Award Management
(SAM), in accordance with the OMB guide-
lines at 2 CFR 180 that implement Executive
Orders 12549 (3 CFR part 1986 Comp., p. 189)
and 12689 (3 CFR part 1989 Comp., p. 235),
‘‘Debarment and Suspension.’’ SAM Exclu-
sions contains the names of parties debarred,
suspended, or otherwise excluded by agen-
cies, as well as parties declared ineligible
under statutory or regulatory authority
other than Executive Order 12549.
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(I) Byrd Anti-Lobbying Amendment (31
U.S.C. 1352)—Contractors that apply or bid
for an award exceeding $100,000 must 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 at-
tempting 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 ob-
taining any Federal contract, grant or any
other award covered by 31 U.S.C. 1352. Each
tier must also disclose any lobbying with
non-Federal funds that takes place in con-
nection with obtaining any Federal award.
Such disclosures are forwarded from tier to
tier up to the non-Federal award.
(J) See §200.323.
(K) See §200.216.
(L) See §200.322.
[78 FR 78608, Dec. 26, 2013, as amended at 79
FR 75888, Dec. 19, 2014; 85 FR 49577, Aug. 13,
2020]
APPENDIX III TO PART 200—INDIRECT
(F&A) COSTS IDENTIFICATION AND
ASSIGNMENT, AND RATE DETERMINA-
TION FOR INSTITUTIONS OF HIGHER
EDUCATION (IHES)
A. GENERAL
This appendix provides criteria for identi-
fying and computing indirect (or indirect
(F&A)) rates at IHEs (institutions). Indirect
(F&A) costs are those that are incurred for
common or joint objectives and therefore
cannot be identified readily and specifically
with a particular sponsored project, an in-
structional activity, or any other institu-
tional activity. See subsection B.1 for a dis-
cussion of the components of indirect (F&A)
costs.
1. Major Functions of an Institution
Refers to instruction, organized research,
other sponsored activities and other institu-
tional activities as defined in this section:
a. Instruction means the teaching and
training activities of an institution. Except
for research training as provided in sub-
section b, this term includes all teaching and
training activities, whether they are offered
for credits toward a degree or certificate or
on a non-credit basis, and whether they are
offered through regular academic depart-
ments or separate divisions, such as a sum-
mer school division or an extension division.
Also considered part of this major function
are departmental research, and, where
agreed to, university research.
(1) Sponsored instruction and training means
specific instructional or training activity es-
tablished by grant, contract, or cooperative
agreement. For purposes of the cost prin-
ciples, this activity may be considered a
major function even though an institution’s
accounting treatment may include it in the
instruction function.
(2) Departmental research means research,
development and scholarly activities that
are not organized research and, con-
sequently, are not separately budgeted and
accounted for. Departmental research, for
purposes of this document, is not considered
as a major function, but as a part of the in-
struction function of the institution.
(3) Only mandatory cost sharing or cost
sharing specifically committed in the project
budget must be included in the organized re-
search base for computing the indirect (F&A)
cost rate or reflected in any allocation of in-
direct costs. Salary costs above statutory
limits are not considered cost sharing.
b. Organized research means all research
and development activities of an institution
that are separately budgeted and accounted
for. It includes:
(1) Sponsored research means all research
and development activities that are spon-
sored by Federal and non-Federal agencies
and organizations. This term includes activi-
ties involving the training of individuals in
research techniques (commonly called re-
search training) where such activities utilize
the same facilities as other research and de-
velopment activities and where such activi-
ties are not included in the instruction func-
tion.
(2) University research means all research
and development activities that are sepa-
rately budgeted and accounted for by the in-
stitution under an internal application of in-
stitutional funds. University research, for
purposes of this document, must be com-
bined with sponsored research under the
function of organized research.
c. Other sponsored activities means programs
and projects financed by Federal and non-
Federal agencies and organizations which in-
volve the performance of work other than in-
struction and organized research. Examples
of such programs and projects are health
service projects and community service pro-
grams. However, when any of these activities
are undertaken by the institution without
outside support, they may be classified as
other institutional activities.
d. Other institutional activities means all ac-
tivities of an institution except for instruc-
tion, departmental research, organized re-
search, and other sponsored activities, as de-
fined in this section; indirect (F&A) cost ac-
tivities identified in this Appendix para-
graph B, Identification and assignment of in-
direct (F&A) costs; and specialized services
facilities described in §200.468 of this part.
2. Criteria for Distribution
a. Base period. A base period for distribu-
tion of indirect (F&A) costs is the period
during which the costs are incurred. The
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base period normally should coincide with
the fiscal year established by the institution,
but in any event the base period should be so
selected as to avoid inequities in the dis-
tribution of costs.
b. Need for cost groupings. The overall ob-
jective of the indirect (F&A) cost allocation
process is to distribute the indirect (F&A)
costs described in Section B, Identification
and assignment of indirect (F&A) costs, to
the major functions of the institution in pro-
portions reasonably consistent with the na-
ture and extent of their use of the institu-
tion’s resources. In order to achieve this ob-
jective, it may be necessary to provide for
selective distribution by establishing sepa-
rate groupings of cost within one or more of
the indirect (F&A) cost categories referred
to in subsection B.1. In general, the cost
groupings established within a category
should constitute, in each case, a pool of
those items of expense that are considered to
be of like nature in terms of their relative
contribution to (or degree of remoteness
from) the particular cost objectives to which
distribution is appropriate. Cost groupings
should be established considering the general
guides provided in subsection c of this sec-
tion. Each such pool or cost grouping should
then be distributed individually to the re-
lated cost objectives, using the distribution
base or method most appropriate in light of
the guidelines set forth in subsection d of
this section.
c. General considerations on cost groupings.
The extent to which separate cost groupings
and selective distribution would be appro-
priate at an institution is a matter of judg-
ment to be determined on a case-by-case
basis. Typical situations which may warrant
the establishment of two or more separate
cost groupings (based on account classifica-
tion or analysis) within an indirect (F&A)
cost category include but are not limited to
the following:
(1) If certain items or categories of expense
relate solely to one of the major functions of
the institution or to less than all functions,
such expenses should be set aside as a sepa-
rate cost grouping for direct assignment or
selective allocation in accordance with the
guides provided in subsections b and d.
(2) If any types of expense ordinarily treat-
ed as general administration or depart-
mental administration are charged to Fed-
eral awards as direct costs, expenses applica-
ble to other activities of the institution
when incurred for the same purposes in like
circumstances must, through separate cost
groupings, be excluded from the indirect
(F&A) costs allocable to those Federal
awards and included in the direct cost of
other activities for cost allocation purposes.
(3) If it is determined that certain expenses
are for the support of a service unit or facil-
ity whose output is susceptible of measure-
ment on a workload or other quantitative
basis, such expenses should be set aside as a
separate cost grouping for distribution on
such basis to organized research, instruc-
tional, and other activities at the institution
or within the department.
(4) If activities provide their own pur-
chasing, personnel administration, building
maintenance or similar service, the distribu-
tion of general administration and general
expenses, or operation and maintenance ex-
penses to such activities should be accom-
plished through cost groupings which include
only that portion of central indirect (F&A)
costs (such as for overall management)
which are properly allocable to such activi-
ties.
(5) If the institution elects to treat fringe
benefits as indirect (F&A) charges, such
costs should be set aside as a separate cost
grouping for selective distribution to related
cost objectives.
(6) The number of separate cost groupings
within a category should be held within
practical limits, after taking into consider-
ation the materiality of the amounts in-
volved and the degree of precision attainable
through less selective methods of distribu-
tion.
d. Selection of distribution method.
(1) Actual conditions must be taken into
account in selecting the method or base to
be used in distributing individual cost
groupings. The essential consideration in se-
lecting a base is that it be the one best suit-
ed for assigning the pool of costs to cost ob-
jectives in accordance with benefits derived;
with a traceable cause-and-effect relation-
ship; or with logic and reason, where neither
benefit nor a cause-and-effect relationship is
determinable.
(2) If a cost grouping can be identified di-
rectly with the cost objective benefitted, it
should be assigned to that cost objective.
(3) If the expenses in a cost grouping are
more general in nature, the distribution may
be based on a cost analysis study which re-
sults in an equitable distribution of the
costs. Such cost analysis studies may take
into consideration weighting factors, popu-
lation, or space occupied if appropriate. Cost
analysis studies, however, must (a) be appro-
priately documented in sufficient detail for
subsequent review by the cognizant agency
for indirect costs, (b) distribute the costs to
the related cost objectives in accordance
with the relative benefits derived, (c) be sta-
tistically sound, (d) be performed specifically
at the institution at which the results are to
be used, and (e) be reviewed periodically, but
not less frequently than rate negotiations,
updated if necessary, and used consistently.
Any assumptions made in the study must be
stated and explained. The use of cost anal-
ysis studies and periodic changes in the
method of cost distribution must be fully
justified.
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(4) If a cost analysis study is not per-
formed, or if the study does not result in an
equitable distribution of the costs, the dis-
tribution must be made in accordance with
the appropriate base cited in Section B, un-
less one of the following conditions is met:
(a) It can be demonstrated that the use of
a different base would result in a more equi-
table allocation of the costs, or that a more
readily available base would not increase the
costs charged to Federal awards, or
(b) The institution qualifies for, and elects
to use, the simplified method for computing
indirect (F&A) cost rates described in Sec-
tion D.
(5) Notwithstanding subsection (3), effec-
tive July 1, 1998, a cost analysis or base other
than that in Section B must not be used to
distribute utility or student services costs.
Instead, subsection B.4.c, may be used in the
recovery of utility costs.
e. Order of distribution.
(1) Indirect (F&A) costs are the broad cat-
egories of costs discussed in Section B.1.
(2) Depreciation, interest expenses, oper-
ation and maintenance expenses, and general
administrative and general expenses should
be allocated in that order to the remaining
indirect (F&A) cost categories as well as to
the major functions and specialized service
facilities of the institution. Other cost cat-
egories may be allocated in the order deter-
mined to be most appropriate by the institu-
tions. When cross allocation of costs is made
as provided in subsection (3), this order of al-
location does not apply.
(3) Normally an indirect (F&A) cost cat-
egory will be considered closed once it has
been allocated to other cost objectives, and
costs may not be subsequently allocated to
it. However, a cross allocation of costs be-
tween two or more indirect (F&A) cost cat-
egories may be used if such allocation will
result in a more equitable allocation of
costs. If a cross allocation is used, an appro-
priate modification to the composition of
the indirect (F&A) cost categories described
in Section B is required.
B. IDENTIFICATION AND ASSIGNMENT OF
INDIRECT (F&A) COSTS
1. Definition of Facilities and Administration
See §200.414 which provides the basis for
these indirect cost requirements.
2. Depreciation
a. The expenses under this heading are the
portion of the costs of the institution’s
buildings, capital improvements to land and
buildings, and equipment which are com-
puted in accordance with §200.436.
b. In the absence of the alternatives pro-
vided for in Section A.2.d, the expenses in-
cluded in this category must be allocated in
the following manner:
(1) Depreciation on buildings used exclu-
sively in the conduct of a single function,
and on capital improvements and equipment
used in such buildings, must be assigned to
that function.
(2) Depreciation on buildings used for more
than one function, and on capital improve-
ments and equipment used in such buildings,
must be allocated to the individual functions
performed in each building on the basis of
usable square feet of space, excluding com-
mon areas such as hallways, stairwells, and
rest rooms.
(3) Depreciation on buildings, capital im-
provements and equipment related to space
(e.g., individual rooms, laboratories) used
jointly by more than one function (as deter-
mined by the users of the space) must be
treated as follows. The cost of each jointly
used unit of space must be allocated to bene-
fitting functions on the basis of:
(a) The employee full-time equivalents
(FTEs) or salaries and wages of those indi-
vidual functions benefitting from the use of
that space; or
(b) Institution-wide employee FTEs or sal-
aries and wages applicable to the benefitting
major functions (see Section A.1) of the in-
stitution.
(4) Depreciation on certain capital im-
provements to land, such as paved parking
areas, fences, sidewalks, and the like, not in-
cluded in the cost of buildings, must be allo-
cated to user categories of students and em-
ployees on a full-time equivalent basis. The
amount allocated to the student category
must be assigned to the instruction function
of the institution. The amount allocated to
the employee category must be further allo-
cated to the major functions of the institu-
tion in proportion to the salaries and wages
of all employees applicable to those func-
tions.
3. Interest
Interest on debt associated with certain
buildings, equipment and capital improve-
ments, as defined in §200.449, must be classi-
fied as an expenditure under the category
Facilities. These costs must be allocated in
the same manner as the depreciation on the
buildings, equipment and capital improve-
ments to which the interest relates.
4. Operation and Maintenance Expenses
a. The expenses under this heading are
those that have been incurred for the admin-
istration, supervision, operation, mainte-
nance, preservation, and protection of the in-
stitution’s physical plant. They include ex-
penses 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
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and disaster preparedness; environmental
safety; hazardous waste disposal; property,
liability and all other insurance relating to
property; space and capital leasing; facility
planning and management; and central re-
ceiving. The operation and maintenance ex-
pense category should also include its allo-
cable share of fringe benefit costs, deprecia-
tion, and interest costs.
b. In the absence of the alternatives pro-
vided for in Section A.2.d, the expenses in-
cluded in this category must be allocated in
the same manner as described in subsection
2.b for depreciation.
c. A utility cost adjustment of up to 1.3
percentage points may be included in the ne-
gotiated indirect cost rate of the IHE for or-
ganized research, per the computation alter-
natives in paragraphs (c)(1) and (2) of this
section:
(1) Where space is devoted to a single func-
tion and metering allows unambiguous meas-
urement of usage related to that space, costs
must be assigned to the function located in
that space.
(2) Where space is allocated to different
functions and metering does not allow unam-
biguous measurement of usage by function,
costs must be allocated as follows:
(i) Utilities costs should be apportioned to
functions in the same manner as deprecia-
tion, based on the calculated difference be-
tween the site or building actual square foot-
age for monitored research laboratory space
(site, building, floor, or room), and a sepa-
rate calculation prepared by the IHE using
the ‘‘effective square footage’’ described in
subsection (c)(2)(ii) of this section.
(ii) ‘‘Effective square footage’’ allocated to
research laboratory space must be calculated
as the actual square footage times the rel-
ative energy utilization index (REUI) posted
on the OMB Web site at the time of a rate
determination.
A. This index is the ratio of a laboratory
energy use index (lab EUI) to the cor-
responding index for overall average college
or university space (college EUI).
B. In July 2012, values for these two indices
(taken respectively from the Lawrence
Berkeley Laboratory ‘‘Labs for the 21st Cen-
tury’’ benchmarking tool and the US Depart-
ment of Energy ‘‘Buildings Energy
Databook’’ and were 310 kBtu/sq ft-yr. and
155 kBtu/sq ft-yr., so that the adjustment
ratio is 2.0 by this methodology. To retain
currency, OMB will adjust the EUI numbers
from time to time (no more often than annu-
ally nor less often than every 5 years), using
reliable and publicly disclosed data. Current
values of both the EUIs and the REUI will be
posted on the OMB website.
5. General Administration and General Expenses
a. The expenses under this heading are
those that have been incurred for the general
executive and administrative offices of edu-
cational institutions and other expenses of a
general character which do not relate solely
to any major function of the institution; i.e.,
solely to (1) instruction, (2) organized re-
search, (3) other sponsored activities, or (4)
other institutional activities. The general
administration and general expense category
should also include its allocable share of
fringe benefit costs, operation and mainte-
nance expense, depreciation, and interest
costs. Examples of general administration
and general expenses include: Those expenses
incurred by administrative offices that serve
the entire university system of which the in-
stitution is a part; central offices of the in-
stitution such as the President’s or
Chancellor’s office, the offices for institu-
tion-wide financial management, business
services, budget and planning, personnel
management, and safety and risk manage-
ment; the office of the General Counsel; and
the operations of the central administrative
management information systems. General
administration and general expenses must
not include expenses incurred within non-
university-wide deans’ offices, academic de-
partments, organized research units, or simi-
lar organizational units. (See subsection 6.)
b. In the absence of the alternatives pro-
vided for in Section A.2.d, the expenses in-
cluded in this category must be grouped first
according to common major functions of the
institution to which they render services or
provide benefits. The aggregate expenses of
each group must then be allocated to serv-
iced or benefitted functions on the modified
total cost basis. Modified total costs consist
of the same elements as those in Section C.2.
When an activity included in this indirect
(F&A) cost category provides a service or
product to another institution or organiza-
tion, an appropriate adjustment must be
made to either the expenses or the basis of
allocation or both, to assure a proper alloca-
tion of costs.
6. Departmental Administration Expenses
a. The expenses under this heading are
those that have been incurred for adminis-
trative and supporting services that benefit
common or joint departmental activities or
objectives in academic deans’ offices, aca-
demic departments and divisions, and orga-
nized research units. Organized research
units include such units as institutes, study
centers, and research centers. Departmental
administration expenses are subject to the
following limitations.
(1) Academic deans’ offices. Salaries and
operating expenses are limited to those at-
tributable to administrative functions.
(2) Academic departments:
(a) Salaries and fringe benefits attrib-
utable to the administrative work (including
bid and proposal preparation) of faculty (in-
cluding department heads) and other profes-
sional personnel conducting research and/or
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instruction, must be allowed at a rate of 3.6
percent of modified total direct costs. This
category does not include professional busi-
ness or professional administrative officers.
This allowance must be added to the com-
putation of the indirect (F&A) cost rate for
major functions in Section C; the expenses
covered by the allowance must be excluded
from the departmental administration cost
pool. No documentation is required to sup-
port this allowance.
(b) Other administrative and supporting
expenses incurred within academic depart-
ments are allowable provided they are treat-
ed consistently in like circumstances. This
would include expenses such as the salaries
of secretarial and clerical staffs, the salaries
of administrative officers and assistants,
travel, office supplies, stockrooms, and the
like.
(3) Other fringe benefit costs applicable to
the salaries and wages included in sub-
sections (1) and (2) are allowable, as well as
an appropriate share of general administra-
tion and general expenses, operation and
maintenance expenses, and depreciation.
(4) Federal agencies may authorize reim-
bursement of additional costs for department
heads and faculty only in exceptional cases
where an institution can demonstrate undue
hardship or detriment to project perform-
ance.
b. The following guidelines apply to the de-
termination of departmental administrative
costs as direct or indirect (F&A) costs.
(1) In developing the departmental admin-
istration cost pool, special care should be ex-
ercised to ensure that costs incurred for the
same purpose in like circumstances are
treated consistently as either direct or indi-
rect (F&A) costs. For example, salaries of
technical staff, laboratory supplies (e.g.,
chemicals), telephone toll charges, animals,
animal care costs, computer costs, travel
costs, and specialized shop costs must be
treated as direct costs wherever identifiable
to a particular cost objective. Direct charg-
ing of these costs may be accomplished
through specific identification of individual
costs to benefitting cost objectives, or
through recharge centers or specialized serv-
ice facilities, as appropriate under the cir-
cumstances. See §§200.413(c) and 200.468.
(2) Items such as office supplies, postage,
local telephone costs, and memberships must
normally be treated as indirect (F&A) costs.
c. In the absence of the alternatives pro-
vided for in Section A.2.d, the expenses in-
cluded in this category must be allocated as
follows:
(1) The administrative expenses of the
dean’s office of each college and school must
be allocated to the academic departments
within that college or school on the modified
total cost basis.
(2) The administrative expenses of each
academic department, and the department’s
share of the expenses allocated in subsection
(1) must be allocated to the appropriate func-
tions of the department on the modified
total cost basis.
7. Sponsored Projects Administration
a. The expenses under this heading are lim-
ited to those incurred by a separate organi-
zation(s) established primarily to administer
sponsored projects, including such functions
as grant and contract administration (Fed-
eral and non-Federal), special security, pur-
chasing, personnel, administration, and edit-
ing and publishing of research and other re-
ports. They include the salaries and expenses
of the head of such organization, assistants,
and immediate staff, together with the sala-
ries and expenses of personnel engaged in
supporting activities maintained by the or-
ganization, such as stock rooms, print shops,
and the like. This category also includes an
allocable share of fringe benefit costs, gen-
eral administration and general expenses,
operation and maintenance expenses, and de-
preciation. Appropriate adjustments will be
made for services provided to other functions
or organizations.
b. In the absence of the alternatives pro-
vided for in Section A.2.d, the expenses in-
cluded in this category must be allocated to
the major functions of the institution under
which the sponsored projects are conducted
on the basis of the modified total cost of
sponsored projects.
c. An appropriate adjustment must be
made to eliminate any duplicate charges to
Federal awards when this category includes
similar or identical activities as those in-
cluded in the general administration and
general expense category or other indirect
(F&A) cost items, such as accounting, pro-
curement, or personnel administration.
8. Library Expenses
a. The expenses under this heading are
those that have been incurred for the oper-
ation of the library, including the cost of
books and library materials purchased for
the library, less any items of library income
that qualify as applicable credits under
§200.406. The library expense category should
also include the fringe benefits applicable to
the salaries and wages included therein, an
appropriate share of general administration
and general expense, operation and mainte-
nance expense, and depreciation. Costs in-
curred in the purchases of rare books (mu-
seum-type books) with no value to Federal
awards should not be allocated to them.
b. In the absence of the alternatives pro-
vided for in Section A.2.d, the expenses in-
cluded in this category must be allocated
first on the basis of primary categories of
users, including students, professional em-
ployees, and other users.
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(1) The student category must consist of
full-time equivalent students enrolled at the
institution, regardless of whether they earn
credits toward a degree or certificate.
(2) The professional employee category
must consist of all faculty members and
other professional employees of the institu-
tion, on a full-time equivalent basis. This
category may also include post-doctorate
fellows and graduate students.
(3) The other users category must consist
of a reasonable factor as determined by insti-
tutional records to account for all other
users of library facilities.
c. Amount allocated in paragraph b of this
section must be assigned further as follows:
(1) The amount in the student category
must be assigned to the instruction function
of the institution.
(2) The amount in the professional em-
ployee category must be assigned to the
major functions of the institution in propor-
tion to the salaries and wages of all faculty
members and other professional employees
applicable to those functions.
(3) The amount in the other users category
must be assigned to the other institutional
activities function of the institution.
9. Student Administration and Services
a. The expenses under this heading are
those that have been incurred for the admin-
istration of student affairs and for services
to students, including expenses of such ac-
tivities as deans of students, admissions, reg-
istrar, counseling and placement services,
student advisers, student health and infir-
mary services, catalogs, and commence-
ments and convocations. The salaries of
members of the academic staff whose respon-
sibilities to the institution require adminis-
trative work that benefits sponsored projects
may also be included to the extent that the
portion charged to student administration is
determined in accordance with subpart E of
this Part. This expense category also in-
cludes the fringe benefit costs applicable to
the salaries and wages included therein, an
appropriate share of general administration
and general expenses, operation and mainte-
nance, interest expense, and depreciation.
b. In the absence of the alternatives pro-
vided for in Section A.2.d, the expenses in
this category must be allocated to the in-
struction function, and subsequently to Fed-
eral awards in that function.
10. Offset for Indirect (F&A) Expenses Other-
wise Provided for by the Federal Govern-
ment
a. The items to be accumulated under this
heading are the reimbursements and other
payments from the Federal Government
which are made to the institution to support
solely, specifically, and directly, in whole or
in part, any of the administrative or service
activities described in subsections 2 through
9.
b. The items in this group must be treated
as a credit to the affected individual indirect
(F&A) cost category before that category is
allocated to benefitting functions.
C. DETERMINATION AND APPLICATION OF
INDIRECT (F&A) COST RATE OR RATES
1. Indirect (F&A) Cost Pools
a. (1) Subject to subsection b, the separate
categories of indirect (F&A) costs allocated
to each major function of the institution as
prescribed in Section B, must be aggregated
and treated as a common pool for that func-
tion. The amount in each pool must be di-
vided by the distribution base described in
subsection 2 to arrive at a single indirect
(F&A) cost rate for each function.
(2) The rate for each function is used to
distribute indirect (F&A) costs to individual
Federal awards of that function. Since a
common pool is established for each major
function of the institution, a separate indi-
rect (F&A) cost rate would be established for
each of the major functions described in Sec-
tion A.1 under which Federal awards are car-
ried out.
(3) Each institution’s indirect (F&A) cost
rate process must be appropriately designed
to ensure that Federal sponsors do not in
any way subsidize the indirect (F&A) costs of
other sponsors, specifically activities spon-
sored by industry and foreign governments.
Accordingly, each allocation method used to
identify and allocate the indirect (F&A) cost
pools, as described in Sections A.2 and B.2
through B.9, must contain the full amount of
the institution’s modified total costs or
other appropriate units of measurement used
to make the computations. In addition, the
final rate distribution base (as defined in
subsection 2) for each major function (orga-
nized research, instruction, etc., as described
in Section A.1 functions of an institution)
must contain all the programs or activities
which utilize the indirect (F&A) costs allo-
cated to that major function. At the time an
indirect (F&A) cost proposal is submitted to
a cognizant agency for indirect costs, each
institution must describe the process it uses
to ensure that Federal funds are not used to
subsidize industry and foreign government
funded programs.
2. The Distribution Basis
Indirect (F&A) costs must be distributed to
applicable Federal awards and other benefit-
ting activities within each major function
(see section A.1) on the basis of modified
total direct costs (MTDC), consisting of all
salaries and wages, fringe benefits, materials
and supplies, services, travel, and up to the
first $25,000 of each subaward (regardless of
the period covered by the subaward). MTDC
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is defined in §200.1. For this purpose, an indi-
rect (F&A) cost rate should be determined
for each of the separate indirect (F&A) cost
pools developed pursuant to subsection 1.
The rate in each case should be stated as the
percentage which the amount of the par-
ticular indirect (F&A) cost pool is of the
modified total direct costs identified with
such pool.
3. Negotiated Lump Sum for Indirect (F&A)
Costs
A negotiated fixed amount in lieu of indi-
rect (F&A) costs may be appropriate for self-
contained, off-campus, or primarily subcon-
tracted activities where the benefits derived
from an institution’s indirect (F&A) services
cannot be readily determined. Such nego-
tiated indirect (F&A) costs will be treated as
an offset before allocation to instruction, or-
ganized research, other sponsored activities,
and other institutional activities. The base
on which such remaining expenses are allo-
cated should be appropriately adjusted.
4. Predetermined Rates for Indirect (F&A) Costs
Public Law 87–638 (76 Stat. 437) as amended
(41 U.S.C. 4708) authorizes the use of pre-
determined rates in determining the ‘‘indi-
rect costs’’ (indirect (F&A) costs) applicable
under research agreements with educational
institutions. The stated objectives of the law
are to simplify the administration of cost-
type research and development contracts (in-
cluding grants) with educational institu-
tions, to facilitate the preparation of their
budgets, and to permit more expeditious
closeout of such contracts when the work is
completed. In view of the potential advan-
tages offered by this procedure, negotiation
of predetermined rates for indirect (F&A)
costs for a period of two to four years should
be the norm in those situations where the
cost experience and other pertinent facts
available are deemed sufficient to enable the
parties involved to reach an informed judg-
ment as to the probable level of indirect
(F&A) costs during the ensuing accounting
periods.
5. Negotiated Fixed Rates and Carry-Forward
Provisions
When a fixed rate is negotiated in advance
for a fiscal year (or other time period), the
over- or under-recovery for that year may be
included as an adjustment to the indirect
(F&A) cost for the next rate negotiation.
When the rate is negotiated before the carry-
forward adjustment is determined, the carry-
forward amount may be applied to the next
subsequent rate negotiation. When such ad-
justments are to be made, each fixed rate ne-
gotiated in advance for a given period will be
computed by applying the expected indirect
(F&A) costs allocable to Federal awards for
the forecast period plus or minus the carry-
forward adjustment (over- or under-recovery)
from the prior period, to the forecast dis-
tribution base. Unrecovered amounts under
lump-sum agreements or cost-sharing provi-
sions of prior years must not be carried for-
ward for consideration in the new rate nego-
tiation. There must, however, be an advance
understanding in each case between the in-
stitution and the cognizant agency for indi-
rect costs as to whether these differences
will be considered in the rate negotiation
rather than making the determination after
the differences are known. Further, institu-
tions electing to use this carry-forward pro-
vision may not subsequently change without
prior approval of the cognizant agency for
indirect costs. In the event that an institu-
tion returns to a post-determined rate, any
over- or under-recovery during the period in
which negotiated fixed rates and carry-for-
ward provisions were followed will be in-
cluded in the subsequent post-determined
rates. Where multiple rates are used, the
same procedure will be applicable for deter-
mining each rate.
6. Provisional and Final Rates for Indirect
(F&A) Costs
Where the cognizant agency for indirect
costs determines that cost experience and
other pertinent facts do not justify the use
of predetermined rates, or a fixed rate with
a carry-forward, or if the parties cannot
agree on an equitable rate, a provisional rate
must be established. To prevent substantial
overpayment or underpayment, the provi-
sional rate may be adjusted by the cognizant
agency for indirect costs during the institu-
tion’s fiscal year. Predetermined or fixed
rates may replace provisional rates at any
time prior to the close of the institution’s
fiscal year. If a provisional rate is not re-
placed by a predetermined or fixed rate prior
to the end of the institution’s fiscal year, a
final rate will be established and upward or
downward adjustments will be made based on
the actual allowable costs incurred for the
period involved.
7. Fixed Rates for the Life of the Sponsored
Agreement
a. Except as provided in paragraph (c)(1) of
§200.414, Federal agencies must use the nego-
tiated rates in effect at the time of the ini-
tial award throughout the life of the Federal
award. Award levels for Federal awards may
not be adjusted in future years as a result of
changes in negotiated rates. ‘‘Negotiated
rates’’ per the rate agreement include final,
fixed, and predetermined rates and exclude
provisional rates. ‘‘Life’’ for the purpose of
this subsection means each competitive seg-
ment of a project. A competitive segment is
a period of years approved by the Federal
awarding agency at the time of the Federal
award. If negotiated rate agreements do not
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extend through the life of the Federal award
at the time of the initial award, then the ne-
gotiated rate for the last year of the Federal
award must be extended through the end of
the life of the Federal award.
b. Except as provided in §200.414, when an
educational institution does not have a nego-
tiated rate with the Federal Government at
the time of an award (because the edu-
cational institution is a new recipient or the
parties cannot reach agreement on a rate),
the provisional rate used at the time of the
award must be adjusted once a rate is nego-
tiated and approved by the cognizant agency
for indirect costs.
8. Limitation on Reimbursement of
Administrative Costs
a. Notwithstanding the provisions of sub-
section C.1.a, the administrative costs
charged to Federal awards awarded or
amended (including continuation and re-
newal awards) with effective dates beginning
on or after the start of the institution’s first
fiscal year which begins on or after October
1, 1991, must be limited to 26% of modified
total direct costs (as defined in subsection 2)
for the total of General Administration and
General Expenses, Departmental Adminis-
tration, Sponsored Projects Administration,
and Student Administration and Services
(including their allocable share of deprecia-
tion, interest costs, operation and mainte-
nance expenses, and fringe benefits costs, as
provided by Section B, and all other types of
expenditures not listed specifically under
one of the subcategories of facilities in Sec-
tion B.
b. Institutions should not change their ac-
counting or cost allocation methods if the ef-
fect is to change the charging of a particular
type of cost from F&A to direct, or to reclas-
sify costs, or increase allocations from the
administrative pools identified in paragraph
B.1 of this Appendix to the other F&A cost
pools or fringe benefits. Cognizant agencies
for indirect cost are authorized to allow
changes where an institution’s charging
practices are at variance with acceptable
practices followed by a substantial majority
of other institutions.
9. Alternative Method for Administrative Costs
a. Notwithstanding the provisions of sub-
section C.1.a, an institution may elect to
claim a fixed allowance for the ‘‘Adminis-
tration’’ portion of indirect (F&A) costs. The
allowance could be either 24% of modified
total direct costs or a percentage equal to
95% of the most recently negotiated fixed or
predetermined rate for the cost pools in-
cluded under ‘‘Administration’’ as defined in
Section B.1, whichever is less. Under this al-
ternative, no cost proposal need be prepared
for the ‘‘Administration’’ portion of the indi-
rect (F&A) cost rate nor is further identifica-
tion or documentation of these costs re-
quired (see subsection c). Where a negotiated
indirect (F&A) cost agreement includes this
alternative, an institution must make no
further charges for the expenditure cat-
egories described in Section B.5, Section B.6,
Section B.7, and Section B.9.
b. In negotiations of rates for subsequent
periods, an institution that has elected the
option of subsection a may continue to exer-
cise it at the same rate without further iden-
tification or documentation of costs.
c. If an institution elects to accept a
threshold rate as defined in subsection a of
this section, it is not required to perform a
detailed analysis of its administrative costs.
However, in order to compute the facilities
components of its indirect (F&A) cost rate,
the institution must reconcile its indirect
(F&A) cost proposal to its financial state-
ments and make appropriate adjustments
and reclassifications to identify the costs of
each major function as defined in Section
A.1, as well as to identify and allocate the fa-
cilities components. Administrative costs
that are not identified as such by the insti-
tution’s accounting system (such as those in-
curred in academic departments) will be
classified as instructional costs for purposes
of reconciling indirect (F&A) cost proposals
to financial statements and allocating facili-
ties costs.
10. Individual Rate Components
In order to provide mutually agreed-upon
information for management purposes, each
indirect (F&A) cost rate negotiation or de-
termination must include development of a
rate for each indirect (F&A) cost pool as well
as the overall indirect (F&A) cost rate.
11. Negotiation and Approval of Indirect (F&A)
Rate
a. Cognizant agency for indirect costs is
defined in Subpart A.
(1) Cost negotiation cognizance is assigned
to the Department of Health and Human
Services (HHS) or the Department of De-
fense’s Office of Naval Research (DOD), nor-
mally depending on which of the two agen-
cies (HHS or DOD) provides more funds di-
rectly to the educational institution for the
most recent three years. Information on
funding must be derived from relevant data
gathered by the National Science Founda-
tion. In cases where neither HHS nor DOD
provides Federal funding directly to an edu-
cational institution, the cognizant agency
for indirect costs assignment must default to
HHS. Notwithstanding the method for cog-
nizance determination described in this sec-
tion, other arrangements for cognizance of a
particular educational institution may also
be based in part on the types of research per-
formed at the educational institution and
must be decided based on mutual agreement
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between HHS and DOD. Where a non-Federal
entity only receives funds as a subrecipient,
see §200.332.
(2) After cognizance is established, it must
continue for a five-year period.
b. Acceptance of rates. See §200.414.
c. Correcting deficiencies. The cognizant
agency for indirect costs must negotiate
changes needed to correct systems defi-
ciencies relating to accountability for Fed-
eral awards. Cognizant agencies for indirect
costs must address the concerns of other af-
fected agencies, as appropriate, and must ne-
gotiate special rates for Federal agencies
that are required to limit recovery of indi-
rect costs by statute.
d. Resolving questioned costs. The cog-
nizant agency for indirect costs must con-
duct any necessary negotiations with an edu-
cational institution regarding amounts ques-
tioned by audit that are due the Federal
Government related to costs covered by a ne-
gotiated agreement.
e. Reimbursement. Reimbursement to cog-
nizant agencies for indirect costs for work
performed under this Part may be made by
reimbursement billing under the Economy
Act, 31 U.S.C. 1535.
f. Procedure for establishing facilities and
administrative rates must be established by
one of the following methods:
(1) Formal negotiation. The cognizant
agency for indirect costs is responsible for
negotiating and approving rates for an edu-
cational institution on behalf of all Federal
agencies. Federal awarding agencies that do
not have cognizance for indirect costs must
notify the cognizant agency for indirect
costs of specific concerns (i.e., a need to es-
tablish special cost rates) which could affect
the negotiation process. The cognizant agen-
cy for indirect costs must address the con-
cerns of all interested agencies, as appro-
priate. A pre-negotiation conference may be
scheduled among all interested agencies, if
necessary. The cognizant agency for indirect
costs must then arrange a negotiation con-
ference with the educational institution.
(2) Other than formal negotiation. The cog-
nizant agency for indirect costs and edu-
cational institution may reach an agreement
on rates without a formal negotiation con-
ference; for example, through correspond-
ence or use of the simplified method de-
scribed in this section D of this Appendix.
g. Formalizing determinations and agree-
ments. The cognizant agency for indirect
costs must formalize all determinations or
agreements reached with an educational in-
stitution and provide copies to other agen-
cies having an interest. Determinations
should include a description of any adjust-
ments, the actual amount, both dollar and
percentage adjusted, and the reason for mak-
ing adjustments.
h. Disputes and disagreements. Where the
cognizant agency for indirect costs is unable
to reach agreement with an educational in-
stitution with regard to rates or audit reso-
lution, the appeal system of the cognizant
agency for indirect costs must be followed
for resolution of the disagreement.
12. Standard Format for Submission
For facilities and administrative (indirect
(F&A)) rate proposals, educational institu-
tions must use the standard format, shown
in section E of this appendix, to submit their
indirect (F&A) rate proposal to the cog-
nizant agency for indirect costs. The cog-
nizant agency for indirect costs may, on an
institution-by-institution basis, grant excep-
tions from all or portions of Part II of the
standard format requirement. This require-
ment does not apply to educational institu-
tions that use the simplified method for cal-
culating indirect (F&A) rates, as described in
Section D of this Appendix.
As provided in section C.10 of this appen-
dix, each F&A cost rate negotiation or deter-
mination must include development of a rate
for each F&A cost pool as well as the overall
F&A rate.
D. SIMPLIFIED METHOD FOR SMALL
INSTITUTIONS
1. General
a. Where the total direct cost of work cov-
ered by this Part at an institution does not
exceed $10 million in a fiscal year, the sim-
plified procedure described in subsections 2
or 3 may be used in determining allowable
indirect (F&A) costs. Under this simplified
procedure, the institution’s most recent an-
nual financial report and immediately avail-
able supporting information must be utilized
as a basis for determining the indirect (F&A)
cost rate applicable to all Federal awards.
The institution may use either the salaries
and wages (see subsection 2) or modified
total direct costs (see subsection 3) as the
distribution basis.
b. The simplified procedure should not be
used where it produces results which appear
inequitable to the Federal Government or
the institution. In any such case, indirect
(F&A) costs should be determined through
use of the regular procedure.
2. Simplified Procedure—Salaries and Wages
Base
a. Establish the total amount of salaries
and wages paid to all employees of the insti-
tution.
b. Establish an indirect (F&A) cost pool
consisting of the expenditures (exclusive of
capital items and other costs specifically
identified as unallowable) which customarily
are classified under the following titles or
their equivalents:
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(1) General administration and general ex-
penses (exclusive of costs of student adminis-
tration and services, student activities, stu-
dent aid, and scholarships).
(2) Operation and maintenance of physical
plant and depreciation (after appropriate ad-
justment for costs applicable to other insti-
tutional activities).
(3) Library.
(4) Department administration expenses,
which will be computed as 20 percent of the
salaries and expenses of deans and heads of
departments.
In those cases where expenditures classi-
fied under subsection (1) have previously
been allocated to other institutional activi-
ties, they may be included in the indirect
(F&A) cost pool. The total amount of sala-
ries and wages included in the indirect (F&A)
cost pool must be separately identified.
c. Establish a salary and wage distribution
base, determined by deducting from the total
of salaries and wages as established in sub-
section a from the amount of salaries and
wages included under subsection b.
d. Establish the indirect (F&A) cost rate,
determined by dividing the amount in the in-
direct (F&A) cost pool, subsection b, by the
amount of the distribution base, subsection
c.
e. Apply the indirect (F&A) cost rate to di-
rect salaries and wages for individual agree-
ments to determine the amount of indirect
(F&A) costs allocable to such agreements.
3. Simplified Procedure—Modified Total Direct
Cost Base
a. Establish the total costs incurred by the
institution for the base period.
b. Establish an indirect (F&A) cost pool
consisting of the expenditures (exclusive of
capital items and other costs specifically
identified as unallowable) which customarily
are classified under the following titles or
their equivalents:
(1) General administration and general ex-
penses (exclusive of costs of student adminis-
tration and services, student activities, stu-
dent aid, and scholarships).
(2) Operation and maintenance of physical
plant and depreciation (after appropriate ad-
justment for costs applicable to other insti-
tutional activities).
(3) Library.
(4) Department administration expenses,
which will be computed as 20 percent of the
salaries and expenses of deans and heads of
departments. In those cases where expendi-
tures classified under subsection (1) have
previously been allocated to other institu-
tional activities, they may be included in the
indirect (F&A) cost pool. The modified total
direct costs amount included in the indirect
(F&A) cost pool must be separately identi-
fied.
c. Establish a modified total direct cost
distribution base, as defined in Section C.2,
The distribution basis, that consists of all
institution’s direct functions.
d. Establish the indirect (F&A) cost rate,
determined by dividing the amount in the in-
direct (F&A) cost pool, subsection b, by the
amount of the distribution base, subsection
c.
e. Apply the indirect (F&A) cost rate to
the modified total direct costs for individual
agreements to determine the amount of indi-
rect (F&A) costs allocable to such agree-
ments.
E. DOCUMENTATION REQUIREMENTS
The standard format for documentation re-
quirements for indirect (indirect (F&A)) rate
proposals for claiming costs under the reg-
ular method is available on the OMB
website.
F. CERTIFICATION
1. Certification of Charges
To assure that expenditures for Federal
awards are proper and in accordance with
the agreement documents and approved
project budgets, the annual and/or final fis-
cal reports or vouchers requesting payment
under the agreements will include a certifi-
cation, signed by an authorized official of
the university, which reads ‘‘By signing this
report, I certify to the best of my knowledge
and belief that the report is true, complete,
and accurate, and the expenditures, disburse-
ments and cash receipts are for the purposes
and intent set forth in the award documents.
I am aware that any false, fictitious, or
fraudulent information, or the omission of
any material fact, may subject me to crimi-
nal, civil or administrative penalties for
fraud, false statements, false claims or oth-
erwise. (U.S. Code, Title 18, Section 1001 and
Title 31, Sections 3729–3733 and 3801–3812)’’.
2. Certification of Indirect (F&A) Costs
a. Policy. Cognizant agencies must not ac-
cept a proposed indirect cost rate unless
such costs have been certified by the edu-
cational institution using the Certificate of
indirect (F&A) Costs set forth in subsection
F.2.c
b. The certificate must be signed on behalf
of the institution by the chief financial offi-
cer or an individual designated by an indi-
vidual at a level no lower than vice president
or chief financial officer.
An indirect (F&A) cost rate is not binding
upon the Federal Government if the most re-
cent required proposal from the institution
has not been certified. Where it is necessary
to establish indirect (F&A) cost rates, and
the institution has not submitted a certified
proposal for establishing such rates in ac-
cordance with the requirements of this sec-
tion, the Federal Government must unilater-
ally establish such rates. Such rates may be
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OMB Guidance Pt. 200, App. IV
based upon audited historical data or such
other data that have been furnished to the
cognizant agency for indirect costs and for
which it can be demonstrated that all unal-
lowable costs have been excluded. When indi-
rect (F&A) cost rates are unilaterally estab-
lished by the Federal Government because of
failure of the institution to submit a cer-
tified proposal for establishing such rates in
accordance with this section, the rates es-
tablished will be set at a level low enough to
ensure that potentially unallowable costs
will not be reimbursed.
c. Certificate. The certificate required by
this section must be in the following form:
Certificate of Indirect (F&A) Costs
This is to certify that to the best of my
knowledge and belief:
(1) I have reviewed the indirect (F&A) cost
proposal submitted herewith;
(2) All costs included in this proposal [iden-
tify date] to establish billing or final indi-
rect (F&A) costs rate for [identify period
covered by rate] are allowable in accordance
with the requirements of the Federal agree-
ment(s) to which they apply and with the
cost principles applicable to those agree-
ments.
(3) This proposal does not include any costs
which are unallowable under subpart E of
this part such as (without limitation): Public
relations costs, contributions and donations,
entertainment costs, fines and penalties, lob-
bying costs, and defense of fraud pro-
ceedings; and
(4) All costs included in this proposal are
properly allocable to Federal agreements on
the basis of a beneficial or causal relation-
ship between the expenses incurred and the
agreements to which they are allocated in
accordance with applicable requirements.
I declare that the foregoing is true and cor-
rect.
Institution of Higher Education:
Signature: llllllllllllllllll
Name of Official: llllllllllllll
Title: llllllllllllllllllll
Date of Execution: lllllllllllll
[78 FR 78608, Dec. 26, 2013, as amended at 79
FR 75888, Dec. 19, 2014; 80 FR 54409, Sept. 10,
2015; 85 FR 49577, Aug. 13, 2020]
APPENDIX IV TO PART 200—INDIRECT
(F&A) COSTS IDENTIFICATION AND
ASSIGNMENT, AND RATE DETERMINA-
TION FOR NONPROFIT ORGANIZA-
TIONS
A. GENERAL
1. Indirect costs are those that have been
incurred for common or joint objectives and
cannot be readily identified with a par-
ticular final cost objective. Direct cost of
minor amounts may be treated as indirect
costs under the conditions described in
§200.413(d). After direct costs have been de-
termined and assigned directly to awards or
other work as appropriate, indirect costs are
those remaining to be allocated to benefit-
ting cost objectives. A cost may not be allo-
cated to a Federal award as an indirect cost
if any other cost incurred for the same pur-
pose, in like circumstances, has been as-
signed to a Federal award as a direct cost.
2. ‘‘Major nonprofit organizations’’ are de-
fined in paragraph (a) of §200.414. See indi-
rect cost rate reporting requirements in sec-
tions B.2.e and B.3.g of this Appendix.
B. ALLOCATION OF INDIRECT COSTS AND
DETERMINATION OF INDIRECT COST RATES
1. General
a. If a nonprofit organization has only one
major function, or where all its major func-
tions benefit from its indirect costs to ap-
proximately 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 section B.2 of this Appendix.
b. If an organization has several major
functions which benefit from its indirect
costs in varying degrees, allocation of indi-
rect costs may require the accumulation of
such costs into separate cost groupings
which then are allocated individually to ben-
efitting 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 Federal
awards and other activities included in that
function by means of an indirect cost rate(s).
c. The determination of what constitutes
an organization’s major functions will de-
pend on its purpose in being; the types of
services it renders to the public, its clients,
and its members; and the amount of effort it
devotes to such activities as fundraising,
public information and membership activi-
ties.
d. Specific methods for allocating indirect
costs and computing indirect cost rates
along with the conditions under which each
method should be used are described in sec-
tion B.2 through B.5 of this Appendix.
e. The base period for the allocation of in-
direct costs is the period in which such costs
are incurred and accumulated for allocation
to work performed in that period. The base
period normally should coincide with the or-
ganization’s fiscal year but, in any event,
must 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 approxi-
mately the same degree, the allocation of in-
direct costs may be accomplished by (i) sepa-
rating the organization’s total costs for the
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base period as either direct or indirect, and
(ii) dividing the total allowable indirect
costs (net of applicable credits) by an equi-
table distribution base. The result of this
process is an indirect cost rate which is used
to distribute indirect costs to individual
Federal awards. The rate should be expressed
as the percentage which the total amount of
allowable indirect costs bears to the base se-
lected. This method should also be used
where an organization has only one major
function encompassing a number of indi-
vidual 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 must exclude capital expenditures and
unallowable costs. However, unallowable
costs which represent activities must be in-
cluded in the direct costs under the condi-
tions described in §200.413(e).
c. The distribution base may be total di-
rect costs (excluding capital expenditures
and other distorting items, such as sub-
awards for $25,000 or more), direct salaries
and wages, or other base which results in an
equitable distribution. The distribution base
must exclude participant support costs as de-
fined in §200.1.
d. Except where a special rate(s) is re-
quired in accordance with section B.5 of this
Appendix, the indirect cost rate developed
under the above principles is applicable to
all Federal awards of the organization. If a
special rate(s) is required, appropriate modi-
fications must be made in order to develop
the special rate(s).
e. For an organization that receives more
than $10 million in direct Federal funding in
a fiscal year, a breakout of the indirect cost
component into two broad categories, Facili-
ties and Administration as defined in para-
graph (a) of §200.414, is required. The rate in
each case must be stated as the percentage
which the amount of the particular indirect
cost category (i.e., Facilities or Administra-
tion) is of the distribution base identified
with that category.
3. Multiple Allocation Base Method
a. General. Where an organization’s indi-
rect costs benefit its major functions in
varying degrees, indirect costs must be accu-
mulated into separate cost groupings, as de-
scribed in subparagraph b. Each grouping
must then be allocated individually to bene-
fitting functions by means of a base which
best measures the relative benefits. The de-
fault allocation bases by cost pool are de-
scribed in section B.3.c of this Appendix.
b. Identification of indirect costs. Cost
groupings must be established so as to per-
mit the allocation of each grouping on the
basis of benefits provided to the major func-
tions. Each grouping must 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 func-
tion. The groupings are classified within the
two broad categories: ‘‘Facilities’’ and ‘‘Ad-
ministration,’’ as described in section A.3 of
this Appendix. The indirect cost pools are de-
fined as follows:
(1) Depreciation. The expenses under this
heading are the portion of the costs of the
organization’s buildings, capital improve-
ments to land and buildings, and equipment
which are computed in accordance with
§200.436.
(2) Interest. Interest on debt associated
with certain buildings, equipment and cap-
ital improvements are computed in accord-
ance with §200.449.
(3) Operation and maintenance expenses.
The expenses under this heading are those
that have been incurred for the administra-
tion, operation, maintenance, preservation,
and protection of the organization’s physical
plant. They include expenses normally in-
curred for such items as: janitorial and util-
ity services; repairs and ordinary or normal
alterations of buildings, furniture and equip-
ment; care of grounds; maintenance and op-
eration of buildings and other plant facili-
ties; security; earthquake and disaster pre-
paredness; environmental safety; hazardous
waste disposal; property, liability and other
insurance relating to property; space and
capital leasing; facility planning and man-
agement; and central receiving. The oper-
ation and maintenance expenses category
must also include its allocable share of
fringe benefit costs, depreciation, and inter-
est costs.
(4) General administration and general ex-
penses. 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 must also include its allocable
share of fringe benefit costs, operation and
maintenance expense, depreciation, and in-
terest costs. Examples of this category in-
clude central offices, such as the director’s
office, the office of finance, business serv-
ices, budget and planning, personnel, safety
and risk management, general counsel, man-
agement information systems, and library
costs.
In developing this cost pool, special care
should be exercised to ensure that costs in-
curred for the same purpose in like cir-
cumstances are treated consistently as ei-
ther direct or indirect costs. For example,
salaries of technical staff, project supplies,
project publication, telephone toll charges,
computer costs, travel costs, and specialized
services costs must be treated as direct costs
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wherever identifiable to a particular pro-
gram. The salaries and wages of administra-
tive and pooled clerical staff should nor-
mally be treated as indirect costs. Direct
charging of these costs may be appropriate
as described in §200.413. Items such as office
supplies, postage, local telephone costs, peri-
odicals and memberships should normally be
treated as indirect costs.
c. Allocation bases. Actual conditions
must 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 trace-
able 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 assign-
ment of a cost grouping directly to the func-
tion benefitted, the allocation must be made
in that manner. When the expenses in a cost
grouping are more general in nature, the al-
location must 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 must
be made in accordance with the bases de-
scribed herein unless it can be demonstrated
that the use of a different base would result
in a more equitable allocation of the costs,
or that a more readily available base would
not increase the costs charged to Federal
awards. The results of special cost studies
(such as an engineering utility study) must
not be used to determine and allocate the in-
direct costs to Federal awards.
(1) Depreciation. Depreciation expenses
must be allocated in the following manner:
(a) Depreciation on buildings used exclu-
sively in the conduct of a single function,
and on capital improvements and equipment
used in such buildings, must be assigned to
that function.
(b) Depreciation on buildings used for more
than one function, and on capital improve-
ments and equipment used in such buildings,
must be allocated to the individual functions
performed in each building on the basis of
usable square feet of space, excluding com-
mon areas, such as hallways, stairwells, and
restrooms.
(c) Depreciation on buildings, capital im-
provements 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) must
be treated as follows. The cost of each joint-
ly used unit of space must 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 benefit-
ting from the use of that space; or
(ii) organization-wide employee FTEs or
salaries and wages applicable to the benefit-
ting functions of the organization.
(d) Depreciation on certain capital im-
provements to land, such as paved parking
areas, fences, sidewalks, and the like, not in-
cluded in the cost of buildings, must be allo-
cated 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 must be allo-
cated in the same manner as the deprecia-
tion on the buildings, equipment and capital
equipment to which the interest relates.
(3) Operation and maintenance expenses.
Operation and maintenance expenses must
be allocated in the same manner as the de-
preciation.
(4) General administration and general ex-
penses. General administration and general
expenses must be allocated to benefitting
functions based on modified total costs
(MTC). The MTC is the modified total direct
costs (MTDC), as described in §200.1, plus the
allocated indirect cost proportion. The ex-
penses included in this category could be
grouped first according to major functions of
the organization to which they render serv-
ices or provide benefits. The aggregate ex-
penses of each group must then be allocated
to benefitting functions based on MTC.
d. Order of distribution.
(1) Indirect cost categories consisting of
depreciation, interest, operation and mainte-
nance, and general administration and gen-
eral expenses must be allocated in that order
to the remaining indirect cost categories as
well as to the major functions of the organi-
zation. Other cost categories should be allo-
cated in the order determined to be most ap-
propriate by the organization. This order of
allocation does not apply if cross allocation
of costs is made as provided in section B.3.d.2
of this Appendix.
(2) Normally, an indirect cost category will
be considered closed once it has been allo-
cated to other cost objectives, and costs
must not be subsequently allocated to it.
However, a cross allocation of costs between
two or more indirect costs categories could
be used if such allocation will result in a
more equitable allocation of costs. If a cross
allocation is used, an appropriate modifica-
tion to the composition of the indirect cost
categories is required.
e. Application of indirect cost rate or
rates. Except where a special indirect cost
rate(s) is required in accordance with section
B.5 of this Appendix, the separate groupings
of indirect costs allocated to each major
function must be aggregated and treated as a
common pool for that function. The costs in
the common pool must then be distributed to
individual Federal awards included in that
function by use of a single indirect cost rate.
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f. Distribution basis. Indirect costs must
be distributed to applicable Federal awards
and other benefitting activities within each
major function on the basis of MTDC (see
definition in §200.1).
g. Individual Rate Components. An indi-
rect cost rate must be determined for each
separate indirect cost pool developed. The
rate in each case must be stated as the per-
centage 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
must include development of the rate for
each indirect cost pool as well as the overall
indirect cost rate. The indirect cost pools
must be classified within two broad cat-
egories: ‘‘Facilities’’ and ‘‘Administration,’’
as described in §200.414(a).
4. Direct Allocation Method
a. Some nonprofit organizations treat all
costs as direct costs except general adminis-
tration and general expenses. These organi-
zations generally separate their costs into
three basic categories: (i) General adminis-
tration and general expenses, (ii) fund-
raising, and (iii) other direct functions (in-
cluding projects performed under Federal
awards). Joint costs, such as depreciation,
rental costs, operation and maintenance of
facilities, telephone expenses, and the like
are prorated individually as direct costs to
each category and to each Federal 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 ac-
curately measures the benefits provided to
each Federal award or other activity. The
bases must be established in accordance with
reasonable criteria and be supported by cur-
rent 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 Or-
ganizations, and the United Way of America.
c. Under this method, indirect costs con-
sist exclusively of general administration
and general expenses. In all other respects,
the organization’s indirect cost rates must
be computed in the same manner as that de-
scribed in section B.2 of this Appendix.
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 sin-
gle Federal award or it may consist of work
under a group of Federal awards performed
in a common environment. These factors
may include the physical location of the
work, the level of administrative support re-
quired, the nature of the facilities or other
resources employed, the scientific disciplines
or technical skills involved, the organiza-
tional arrangements used, or any combina-
tion 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 appli-
cable 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 de-
termined that (i) the rate differs signifi-
cantly from that which would have been ob-
tained under sections B.2, B.3, and B.4 of this
Appendix, and (ii) the volume of work to
which the rate would apply is material.
C. NEGOTIATION AND APPROVAL OF INDIRECT
COST RATES
1. Definitions
As used in this section, the following terms
have the meanings set forth in this section:
a. Cognizant agency for indirect costs means
the Federal agency responsible for negoti-
ating and approving indirect cost rates for a
nonprofit organization on behalf of all Fed-
eral agencies.
b. Predetermined rate means an indirect cost
rate, applicable to a specified current or fu-
ture period, usually the organization’s fiscal
year. The rate is based on an estimate of the
costs to be incurred during the period. A pre-
determined rate is not subject to adjust-
ment.
c. Fixed rate means an indirect cost rate
which has the same characteristics as a pre-
determined rate, except that the difference
between the estimated costs and the actual
costs of the period covered by the rate is car-
ried 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, in-
terim reimbursement, and reporting indirect
costs on Federal awards pending the estab-
lishment of a final rate for the period.
f. Indirect cost proposal means the docu-
mentation 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 in-
direct cost rate.
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OMB Guidance Pt. 200, App. IV
g. Cost objective means a function, organiza-
tional subdivision, contract, Federal award,
or other work unit for which cost data are
desired and for which provision is made to
accumulate and measure the cost of proc-
esses, projects, jobs and capitalized projects.
2. Negotiation and Approval of Rates
a. Unless different arrangements are
agreed to by the Federal agencies concerned,
the Federal agency with the largest dollar
value of Federal awards directly funded to an
organization will be designated as the cog-
nizant agency for indirect costs for the nego-
tiation 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 nonprofit organization, the
assignment will not be changed unless there
is a shift in the dollar volume of the Federal
awards directly funded to the organization
for at least three years. All concerned Fed-
eral agencies must 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 Fed-
eral awards necessitate special indirect cost
rates in accordance with section B.5 of this
Appendix, it will, prior to the time the rates
are negotiated, notify the cognizant agency
for indirect costs. (See also §200.414.) If the
nonprofit does not receive any funding from
any Federal agency, the pass-through entity
is responsible for the negotiation of the indi-
rect cost rates in accordance with
§200.332(a)(4).
b. Except as otherwise provided in
§200.414(f), a nonprofit organization which
has not previously established an indirect
cost rate with a Federal agency must submit
its initial indirect cost proposal immediately
after the organization is advised that a Fed-
eral award will be made and, in no event,
later than three months after the effective
date of the Federal award.
c. Unless approved by the cognizant agency
for indirect costs in accordance with
§200.414(g), organizations that have pre-
viously established indirect cost rates must
submit a new indirect cost proposal to the
cognizant agency for indirect costs within
six months after the close of each fiscal year.
d. A predetermined rate may be negotiated
for use on Federal awards where there is rea-
sonable 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 ap-
propriate. A fixed rate, however, must not be
negotiated if (i) all or a substantial portion
of the organization’s Federal awards are ex-
pected to expire before the carry-forward ad-
justment can be made; (ii) the mix of Federal
and non-Federal work at the organization is
too erratic to permit an equitable carry-for-
ward adjustment; or (iii) the organization’s
operations fluctuate significantly from year
to year.
f. Provisional and final rates must be nego-
tiated where neither predetermined nor fixed
rates are appropriate. Predetermined or
fixed rates may replace provisional rates at
any time prior to the close of the organiza-
tion’s fiscal year. If that event does not
occur, a final rate will be established and up-
ward or downward adjustments will be made
based on the actual allowable costs incurred
for the period involved.
g. The results of each negotiation must be
formalized in a written agreement between
the cognizant agency for indirect costs and
the nonprofit organization. The cognizant
agency for indirect costs must make avail-
able 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 for indirect costs and the nonprofit
organization, the dispute must be resolved in
accordance with the appeals procedures of
the cognizant agency for indirect costs.
i. To the extent that problems are encoun-
tered among the Federal agencies in connec-
tion with the negotiation and approval proc-
ess, OMB will lend assistance as required to
resolve such problems in a timely manner.
D. Certification of Indirect (F&A) Costs
(1) Required Certification. No proposal to
establish indirect (F&A) cost rates must be
acceptable unless such costs have been cer-
tified by the nonprofit organization using
the Certificate of Indirect (F&A) Costs set
forth in section j. of this appendix. The cer-
tificate must be signed on behalf of the orga-
nization by an individual at a level no lower
than vice president or chief financial officer
for the organization.
(2) Each indirect cost rate proposal must
be accompanied by a certification in the fol-
lowing form:
Certificate of Indirect (F&A) Costs
This is to certify that to the best of my
knowledge and belief:
(1) I have reviewed the indirect (F&A) cost
proposal submitted herewith;
(2) All costs included in this proposal [iden-
tify date] to establish billing or final indi-
rect (F&A) costs rate for [identify period
covered by rate] are allowable in accordance
with the requirements of the Federal awards
to which they apply and with subpart E of
this part.
(3) This proposal does not include any costs
which are unallowable under subpart E of
this part such as (without limitation): Public
relations costs, contributions and donations,
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entertainment costs, fines and penalties, lob-
bying costs, and defense of fraud pro-
ceedings; and
(4) All costs included in this proposal are
properly allocable to Federal awards on the
basis of a beneficial or causal relationship
between the expenses incurred and the Fed-
eral awards to which they are allocated in
accordance with applicable requirements.
I declare that the foregoing is true and cor-
rect.
Nonprofit Organization: lllllllllll
Signature: llllllllllllllllll
Name of Official: llllllllllllll
Title: llllllllllllllllllll
Date of Execution: lllllllllllll
[78 FR 78608, Dec. 26, 2013, as amended at 80
FR 54410, Sept. 10, 2015; 85 FR 49579, Aug. 13,
2020]
APPENDIX V TO PART 200—STATE/LOCAL
GOVERNMENTWIDE CENTRAL SERVICE
COST ALLOCATION PLANS
A. GENERAL
1. Most governmental units provide certain
services, such as motor pools, computer cen-
ters, purchasing, accounting, etc., to oper-
ating agencies on a centralized basis. Since
federally-supported awards are performed
within the individual operating agencies,
there needs to be a process whereby these
central service costs can be identified and
assigned to benefitted activities on a reason-
able and consistent basis. The central service
cost allocation plan provides that process.
All costs and other data used to distribute
the costs included in the plan should be sup-
ported by formal accounting and other
records that will support the propriety of the
costs assigned to Federal awards.
2. Guidelines and illustrations of central
service cost allocation plans are provided in
a brochure published by the Department of
Health and Human Services entitled ‘‘A
Guide for State, Local and Indian Tribal Gov-
ernments: Cost Principles and Procedures for
Developing Cost Allocation Plans and Indirect
Cost Rates for Agreements with the Federal
Government.’’ A copy of this brochure may be
obtained from the HHS Cost Allocation Serv-
ices or at their website.
B. DEFINITIONS
1. Agency or operating agency means an or-
ganizational unit or sub-division within a
governmental unit that is responsible for the
performance or administration of Federal
awards or activities of the governmental
unit.
2. Allocated central services means central
services that benefit operating agencies but
are not billed to the agencies on a fee-for-
service or similar basis. These costs are allo-
cated to benefitted agencies on some reason-
able basis. Examples of such services might
include general accounting, personnel ad-
ministration, purchasing, etc.
3. Billed central services means central serv-
ices that are billed to benefitted agencies or
programs on an individual fee-for-service or
similar basis. Typical examples of billed cen-
tral services include computer services,
transportation services, insurance, and
fringe benefits.
4. Cognizant agency for indirect costs is de-
fined in §200.1. The determination of cog-
nizant agency for indirect costs for states
and local governments is described in section
F.1.
5. Major local government means local gov-
ernment that receives more than $100 million
in direct Federal awards subject to this Part.
C. SCOPE OF THE CENTRAL SERVICE COST
ALLOCATION PLANS
The central service cost allocation plan
will include all central service costs that
will be claimed (either as a billed or an allo-
cated cost) under Federal awards and will be
documented as described in section E. omit-
ted from the plan will not be reimbursed.
D. SUBMISSION REQUIREMENTS
1. Each state will submit a plan to the De-
partment of Health and Human Services for
each year in which it claims central service
costs under Federal awards. The plan should
include (a) a projection of the next year’s al-
located central service cost (based either on
actual costs for the most recently completed
year or the budget projection for the coming
year), and (b) a reconciliation of actual allo-
cated central service costs to the estimated
costs used for either the most recently com-
pleted year or the year immediately pre-
ceding the most recently completed year.
2. Each major local government is also re-
quired to submit a plan to its cognizant
agency for indirect costs annually.
3. All other local governments claiming
central service costs must develop a plan in
accordance with the requirements described
in this Part and maintain the plan and re-
lated supporting documentation for audit.
These local governments are not required to
submit their plans for Federal approval un-
less they are specifically requested to do so
by the cognizant agency for indirect costs.
Where a local government only receives
funds as a subrecipient, the pass-through en-
tity will be responsible for monitoring the
subrecipient’s plan.
4. All central service cost allocation plans
will be prepared and, when required, sub-
mitted within six months prior to the begin-
ning of each of the governmental unit’s fis-
cal years in which it proposes to claim cen-
tral service costs. Extensions may be grant-
ed by the cognizant agency for indirect costs
on a case-by-case basis.
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OMB Guidance Pt. 200, App. V
E. DOCUMENTATION REQUIREMENTS FOR
SUBMITTED PLANS
The documentation requirements described
in this section may be modified, expanded, or
reduced by the cognizant agency for indirect
costs on a case-by-case basis. For example,
the requirements may be reduced for those
central services which have little or no im-
pact on Federal awards. Conversely, if a re-
view of a plan indicates that certain addi-
tional information is needed, and will likely
be needed in future years, it may be rou-
tinely requested in future plan submissions.
Items marked with an asterisk (*) should be
submitted only once; subsequent plans
should merely indicate any changes since the
last plan.
1. General
All proposed plans must be accompanied by
the following: an organization chart suffi-
ciently detailed to show operations including
the central service activities of the state/
local government whether or not they are
shown as benefitting from central service
functions; a copy of the Comprehensive An-
nual Financial Report (or a copy of the Exec-
utive Budget if budgeted costs are being pro-
posed) to support the allowable costs of each
central service activity included in the plan;
and, a certification (see subsection 4.) that
the plan was prepared in accordance with
this Part, contains only allowable costs, and
was prepared in a manner that treated simi-
lar costs consistently among the various
Federal awards and between Federal and
non-Federal awards/activities.
2. Allocated Central Services
For each allocated central service*, the
plan must also include the following: a brief
description of the service, an identification
of the unit rendering the service and the op-
erating agencies receiving the service, the
items of expense included in the cost of the
service, the method used to distribute the
cost of the service to benefitted agencies,
and a summary schedule showing the alloca-
tion of each service to the specific benefitted
agencies. If any self-insurance funds or
fringe benefits costs are treated as allocated
(rather than billed) central services, docu-
mentation discussed in subsections 3.b. and
c. must also be included.
3. Billed Services
a.General. The information described in
this section must be provided for all billed
central services, including internal service
funds, self-insurance funds, and fringe ben-
efit funds.
b. Internal service funds.
(1) For each internal service fund or simi-
lar activity with an operating budget of $5
million or more, the plan must include: A
brief description of each service; a balance
sheet for each fund based on individual ac-
counts contained in the governmental unit’s
accounting system; a revenue/expenses state-
ment, with revenues broken out by source,
e.g., regular billings, interest earned, etc.; a
listing of all non-operating transfers (as de-
fined by GAAP) into and out of the fund; a
description of the procedures (methodology)
used to charge the costs of each service to
users, including how billing rates are deter-
mined; a schedule of current rates; and, a
schedule comparing total revenues (includ-
ing imputed revenues) generated by the serv-
ice to the allowable costs of the service, as
determined under this part, with an expla-
nation of how variances will be handled.
(2) Revenues must consist of all revenues
generated by the service, including unbilled
and uncollected revenues. If some users were
not billed for the services (or were not billed
at the full rate for that class of users), a
schedule showing the full imputed revenues
associated with these users must be pro-
vided. Expenses must be broken out by ob-
ject cost categories (e.g., salaries, supplies,
etc.).
c.Self-insurance funds. For each self-insur-
ance fund, the plan must include: the fund
balance sheet; a statement of revenue and
expenses including a summary of billings
and claims paid by agency; a listing of all
non-operating transfers into and out of the
fund; the type(s) of risk(s) covered by the
fund (e.g., automobile liability, workers’
compensation, etc.); an explanation of how
the level of fund contributions are deter-
mined, including a copy of the current actu-
arial report (with the actuarial assumptions
used) if the contributions are determined on
an actuarial basis; and, a description of the
procedures used to charge or allocate fund
contributions to benefitted activities. Re-
serve levels in excess of claims (1) submitted
and adjudicated but not paid, (2) submitted
but not adjudicated, and (3) incurred but not
submitted must be identified and explained.
d.Fringe benefits. For fringe benefit costs,
the plan must include: a listing of fringe ben-
efits provided to covered employees, and the
overall annual cost of each type of benefit;
current fringe benefit policies; and proce-
dures used to charge or allocate the costs of
the benefits to benefitted activities. In addi-
tion, for pension and post-retirement health
insurance plans, the following information
must be provided: the governmental unit’s
funding policies, e.g., legislative bills, trust
agreements, or state-mandated contribution
rules, if different from actuarially deter-
mined rates; the pension plan’s costs accrued
for the year; the amount funded, and date(s)
of funding; a copy of the current actuarial
report (including the actuarial assumptions);
the plan trustee’s report; and, a schedule
from the activity showing the value of the
interest cost associated with late funding.
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4. Required Certification
Each central service cost allocation plan
will be accompanied by a certification in the
following form:
CERTIFICATE OF COST ALLOCATION
PLAN
This is to certify that I have reviewed the
cost allocation plan submitted herewith and
to the best of my knowledge and belief:
(1) All costs included in this proposal [iden-
tify date] to establish cost allocations or bil-
lings for [identify period covered by plan] are
allowable in accordance with the require-
ments of this Part and the Federal award(s)
to which they apply. Unallowable costs have
been adjusted for in allocating costs as indi-
cated in the cost allocation plan.
(2) All costs included in this proposal are
properly allocable to Federal awards on the
basis of a beneficial or causal relationship
between the expenses incurred and the Fed-
eral awards to which they are allocated in
accordance with applicable requirements.
Further, the same costs that have been
treated as indirect costs have not been
claimed as direct costs. Similar types of
costs have been accounted for consistently.
I declare that the foregoing is true and cor-
rect.
Governmental Unit: lllllllllllll
Signature: llllllllllllllllll
Name of Official: llllllllllllll
Title: llllllllllllllllllll
Date of Execution: lllllllllllll
F. NEGOTIATION AND APPROVAL OF CENTRAL
SERVICE PLANS
1. Federal Cognizant Agency for Indirect Costs
Assignments for Cost Negotiation
In general, unless different arrangements
are agreed to by the concerned Federal agen-
cies, for central service cost allocation
plans, the cognizant agency responsible for
review and approval is the Federal agency
with the largest dollar value of total Federal
awards with a governmental unit. For indi-
rect cost rates and departmental indirect
cost allocation plans, the cognizant agency
is the Federal agency with the largest dollar
value of direct Federal awards with a govern-
mental unit or component, as appropriate.
Once designated as the cognizant agency for
indirect costs, the Federal agency must re-
main so for a period of five years. In addi-
tion, the following Federal agencies continue
to be responsible for the indicated govern-
mental entities:
Department of Health and Human Services—
Public assistance and state-wide cost alloca-
tion plans for all states (including the Dis-
trict of Columbia and Puerto Rico), state
and local hospitals, libraries and health dis-
tricts.
Department of the Interior—Indian tribal
governments, territorial governments, and
state and local park and recreational dis-
tricts.
Department of Labor—State and local labor
departments.
Department of Education—School districts
and state and local education agencies.
Department of Agriculture—State and local
agriculture departments.
Department of Transportation—State and
local airport and port authorities and transit
districts.
Department of Commerce—State and local
economic development districts.
Department of Housing and Urban Develop-
ment—State and local housing and develop-
ment districts.
Environmental Protection Agency—State and
local water and sewer districts.
2. Review
All proposed central service cost allocation
plans that are required to be submitted will
be reviewed, negotiated, and approved by the
cognizant agency for indirect costs on a
timely basis. The cognizant agency for indi-
rect costs will review the proposal within six
months of receipt of the proposal and either
negotiate/approve the proposal or advise the
governmental unit of the additional docu-
mentation needed to support/evaluate the
proposed plan or the changes required to
make the proposal acceptable. Once an
agreement with the governmental unit has
been reached, the agreement will be accepted
and used by all Federal agencies, unless pro-
hibited or limited by statute. Where a Fed-
eral awarding agency has reason to believe
that special operating factors affecting its
Federal awards necessitate special consider-
ation, the funding agency will, prior to the
time the plans are negotiated, notify the
cognizant agency for indirect costs.
3. Agreement
The results of each negotiation must be
formalized in a written agreement between
the cognizant agency for indirect costs and
the governmental unit. This agreement will
be subject to re-opening if the agreement is
subsequently found to violate a statute or
the information upon which the plan was ne-
gotiated is later found to be materially in-
complete or inaccurate. The results of the
negotiation must be made available to all
Federal agencies for their use.
4. Adjustments
Negotiated cost allocation plans based on a
proposal later found to have included costs
that: (a) are unallowable (i) as specified by
law or regulation, (ii) as identified in subpart
F, General Provisions for selected Items of
Cost of this Part, or (iii) by the terms and
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conditions of Federal awards, or (b) are unal-
lowable because they are clearly not allo-
cable to Federal awards, must be adjusted, or
a refund must be made at the option of the
cognizant agency for indirect costs, includ-
ing earned or imputed interest from the date
of transfer and debt interest, if applicable,
chargeable in accordance with applicable
Federal cognizant agency for indirect costs
regulations. Adjustments or cash refunds
may include, at the option of the cognizant
agency for indirect costs, earned or imputed
interest from the date of expenditure and de-
linquent debt interest, if applicable, charge-
able in accordance with applicable cognizant
agency claims collection regulations. These
adjustments or refunds are designed to cor-
rect the plans and do not constitute a re-
opening of the negotiation.
G. OTHER POLICIES
1. Billed Central Service Activities
Each billed central service activity must
separately account for all revenues (includ-
ing imputed revenues) generated by the serv-
ice, expenses incurred to furnish the service,
and profit/loss.
2. Working Capital Reserves
Internal service funds are dependent upon
a reasonable level of working capital reserve
to operate from one billing cycle to the next.
Charges by an internal service activity to
provide for the establishment and mainte-
nance of a reasonable level of working cap-
ital reserve, in addition to the full recovery
of costs, are allowable. A working capital re-
serve as part of retained earnings of up to 60
calendar days cash expenses for normal oper-
ating purposes is considered reasonable. A
working capital reserve exceeding 60 cal-
endar days may be approved by the cog-
nizant agency for indirect costs in excep-
tional cases.
3. Carry-Forward Adjustments of Allocated
Central Service Costs
Allocated central service costs are usually
negotiated and approved for a future fiscal
year on a ‘‘fixed with carry-forward’’ basis.
Under this procedure, the fixed amounts for
the future year covered by agreement are
not subject to adjustment for that year.
However, when the actual costs of the year
involved become known, the differences be-
tween the fixed amounts previously approved
and the actual costs will be carried forward
and used as an adjustment to the fixed
amounts established for a later year. This
‘‘carry-forward’’ procedure applies to all cen-
tral services whose costs were fixed in the
approved plan. However, a carry-forward ad-
justment is not permitted, for a central serv-
ice activity that was not included in the ap-
proved plan, or for unallowable costs that
must be reimbursed immediately.
4. Adjustments of Billed Central Services
Billing rates used to charge Federal awards
must be based on the estimated costs of pro-
viding the services, including an estimate of
the allocable central service costs. A com-
parison of the revenue generated by each
billed service (including total revenues
whether or not billed or collected) to the ac-
tual allowable costs of the service will be
made at least annually, and an adjustment
will be made for the difference between the
revenue and the allowable costs. These ad-
justments will be made through one of the
following adjustment methods: (a) a cash re-
fund including earned or imputed interest
from the date of transfer and debt interest, if
applicable, chargeable in accordance with
applicable Federal cognizant agency for indi-
rect costs regulations to the Federal Govern-
ment for the Federal share of the adjust-
ment, (b) credits to the amounts charged to
the individual programs, (c) adjustments to
future billing rates, or (d) adjustments to al-
located central service costs. Adjustments to
allocated central services will not be per-
mitted where the total amount of the adjust-
ment for a particular service (Federal share
and non-Federal) share exceeds $500,000. Ad-
justment methods may include, at the option
of the cognizant agency, earned or imputed
interest from the date of expenditure and de-
linquent debt interest, if applicable, charge-
able in accordance with applicable cognizant
agency claims collection regulations.
5. Records Retention
All central service cost allocation plans
and related documentation used as a basis
for claiming costs under Federal awards
must be retained for audit in accordance
with the records retention requirements con-
tained in subpart D of this part.
6. Appeals
If a dispute arises in the negotiation of a
plan between the cognizant agency for indi-
rect costs and the governmental unit, the
dispute must be resolved in accordance with
the appeals procedures of the cognizant
agency for indirect costs.
7. OMB Assistance
To the extent that problems are encoun-
tered among the Federal agencies or govern-
mental units in connection with the negotia-
tion and approval process, OMB will lend as-
sistance, as required, to resolve such prob-
lems in a timely manner.
[78 FR 78608, Dec. 26, 2013, as amended at 80
FR 54410, Sept. 10, 2015; 85 FR 49581, Aug. 13,
2020]
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2 CFR Ch. II (1–1–22 Edition) Pt. 200, App. VI
APPENDIX VI TO PART 200—PUBLIC
ASSISTANCE COST ALLOCATION PLANS
A. GENERAL
Federally-financed programs administered
by state public assistance agencies are fund-
ed predominately by the Department of
Health and Human Services (HHS). In sup-
port of its stewardship requirements, HHS
has published requirements for the develop-
ment, documentation, submission, negotia-
tion, and approval of public assistance cost
allocation plans in Subpart E of 45 CFR Part
95. All administrative costs (direct and indi-
rect) are normally charged to Federal awards
by implementing the public assistance cost
allocation plan. This Appendix extends these
requirements to all Federal awarding agen-
cies whose programs are administered by a
state public assistance agency. Major feder-
ally-financed programs typically adminis-
tered by state public assistance agencies in-
clude: Temporary Aid to Needy Families
(TANF), Medicaid, Food Stamps, Child Sup-
port Enforcement, Adoption Assistance and
Foster Care, and Social Services Block
Grant.
B. DEFINITIONS
1. State public assistance agency means a
state agency administering or supervising
the administration of one or more public as-
sistance programs operated by the state as
identified in Subpart E of 45 CFR Part 95.
For the purpose of this Appendix, these pro-
grams include all programs administered by
the state public assistance agency.
2. State public assistance agency costs means
all costs incurred by, or allocable to, the
state public assistance agency, except ex-
penditures for financial assistance, medical
contractor payments, food stamps, and pay-
ments for services and goods provided di-
rectly to program recipients.
C. POLICY
State public assistance agencies will de-
velop, document and implement, and the
Federal Government will review, negotiate,
and approve, public assistance cost alloca-
tion plans in accordance with Subpart E of 45
CFR Part 95. The plan will include all pro-
grams administered by the state public as-
sistance agency. Where a letter of approval
or disapproval is transmitted to a state pub-
lic assistance agency in accordance with
Subpart E, the letter will apply to all Fed-
eral agencies and programs. The remaining
sections of this Appendix (except for the re-
quirement for certification) summarize the
provisions of Subpart E of 45 CFR Part 95.
D. SUBMISSION, DOCUMENTATION, AND AP-
PROVAL OF PUBLIC ASSISTANCE COST ALLO-
CATION PLANS
1. State public assistance agencies are re-
quired to promptly submit amendments to
the cost allocation plan to HHS for review
and approval.
2. Under the coordination process outlined
in section E, affected Federal agencies will
review all new plans and plan amendments
and provide comments, as appropriate, to
HHS. The effective date of the plan or plan
amendment will be the first day of the cal-
endar quarter following the event that re-
quired the amendment, unless another date
is specifically approved by HHS. HHS, as the
cognizant agency for indirect costs acting on
behalf of all affected Federal agencies, will,
as necessary, conduct negotiations with the
state public assistance agency and will in-
form the state agency of the action taken on
the plan or plan amendment.
E. REVIEW OF IMPLEMENTATION OF APPROVED
PLANS
1. Since public assistance cost allocation
plans are of a narrative nature, the review
during the plan approval process consists of
evaluating the appropriateness of the pro-
posed groupings of costs (cost centers) and
the related allocation bases. As such, the
Federal Government needs some assurance
that the cost allocation plan has been imple-
mented as approved. This is accomplished by
reviews by the Federal awarding agencies,
single audits, or audits conducted by the
cognizant agency for indirect costs.
2. Where inappropriate charges affecting
more than one Federal awarding agency are
identified, the cognizant HHS cost negotia-
tion office will be advised and will take the
lead in resolving the issue(s) as provided for
in Subpart E of 45 CFR Part 95.
3. If a dispute arises in the negotiation of
a plan or from a disallowance involving two
or more Federal awarding agencies, the dis-
pute must be resolved in accordance with the
appeals procedures set out in 45 CFR Part 16.
Disputes involving only one Federal award-
ing agency will be resolved in accordance
with the Federal awarding agency’s appeal
process.
4. To the extent that problems are encoun-
tered among the Federal awarding agencies
or governmental units in connection with
the negotiation and approval process, the Of-
fice of Management and Budget will lend as-
sistance, as required, to resolve such prob-
lems in a timely manner.
F. UNALLOWABLE COSTS
Claims developed under approved cost allo-
cation plans will be based on allowable costs
as identified in this Part. Where unallowable
costs have been claimed and reimbursed,
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they will be refunded to the program that re-
imbursed the unallowable cost using one of
the following methods: (a) a cash refund, (b)
offset to a subsequent claim, or (c) credits to
the amounts charged to individual Federal
awards. Cash refunds, offsets, and credits
may include at the option of the cognizant
agency for indirect cost, earned or imputed
interest from the date of expenditure and de-
linquent debt interest, if applicable, charge-
able in accordance with applicable cognizant
agency for indirect cost claims collection
regulations.
[78 FR 78608, Dec. 26, 2013, as amended at 85
FR 49581, Aug. 13, 2020]
APPENDIX VII TO PART 200—STATES AND
LOCAL GOVERNMENT AND INDIAN
TRIBE INDIRECT COST PROPOSALS
A. GENERAL
1. Indirect costs are those that have been
incurred for common or joint purposes.
These costs benefit more than one cost ob-
jective and cannot be readily identified with
a particular final cost objective without ef-
fort disproportionate to the results achieved.
After direct costs have been determined and
assigned directly to Federal awards and
other activities as appropriate, indirect costs
are those remaining to be allocated to bene-
fitted cost objectives. A cost may not be al-
located to a Federal award as an indirect
cost if any other cost incurred for the same
purpose, in like circumstances, has been as-
signed to a Federal award as a direct cost.
2. Indirect costs include (a) the indirect
costs originating in each department or
agency of the governmental unit carrying
out Federal awards and (b) the costs of cen-
tral governmental services distributed
through the central service cost allocation
plan (as described in Appendix V to this part)
and not otherwise treated as direct costs.
3. Indirect costs are normally charged to
Federal awards by the use of an indirect cost
rate. A separate indirect cost rate(s) is usu-
ally necessary for each department or agen-
cy of the governmental unit claiming indi-
rect costs under Federal awards. Guidelines
and illustrations of indirect cost proposals
are provided in a brochure published by the
Department of Health and Human Services
entitled ‘‘A Guide for States and Local Govern-
ment Agencies: Cost Principles and Procedures
for Establishing Cost Allocation Plans and Indi-
rect Cost Rates for Grants and Contracts with
the Federal Government.’’ A copy of this bro-
chure may be obtained from HHS Cost Allo-
cation Services or at their website.
4. Because of the diverse characteristics
and accounting practices of governmental
units, the types of costs which may be classi-
fied as indirect costs cannot be specified in
all situations. However, typical examples of
indirect costs may include certain state/
local-wide central service costs, general ad-
ministration of the non-Federal entity ac-
counting and personnel services performed
within the non-Federal entity, depreciation
on buildings and equipment, the costs of op-
erating and maintaining facilities.
5. This Appendix does not apply to state
public assistance agencies. These agencies
should refer instead to Appendix VI to this
part.
B. DEFINITIONS
1. Base means the accumulated direct costs
(normally either total direct salaries and
wages or total direct costs exclusive of any
extraordinary or distorting expenditures)
used to distribute indirect costs to indi-
vidual Federal awards. The direct cost base
selected should result in each Federal award
bearing a fair share of the indirect costs in
reasonable relation to the benefits received
from the costs.
2. Base period for the allocation of indirect
costs is the period in which such costs are in-
curred and accumulated for allocation to ac-
tivities performed in that period. The base
period normally should coincide with the
governmental unit’s fiscal year, but in any
event, must be so selected as to avoid inequi-
ties in the allocation of costs.
3. Cognizant agency for indirect costs means
the Federal agency responsible for reviewing
and approving the governmental unit’s indi-
rect cost rate(s) on the behalf of the Federal
Government. The cognizant agency for indi-
rect costs assignment is described in Appen-
dix V, section F.
4. Final rate means an indirect cost rate ap-
plicable to a specified past period which is
based on the actual allowable costs of the pe-
riod. A final audited rate is not subject to
adjustment.
5. Fixed rate means an indirect cost rate
which has the same characteristics as a pre-
determined rate, except that the difference
between the estimated costs and the actual,
allowable costs of the period covered by the
rate is carried forward as an adjustment to
the rate computation of a subsequent period.
6. Indirect cost pool is the accumulated
costs that jointly benefit two or more pro-
grams or other cost objectives.
7. Indirect cost rate is a device for deter-
mining in a reasonable manner the propor-
tion of indirect costs each program should
bear. It is the ratio (expressed as a percent-
age) of the indirect costs to a direct cost
base.
8. Indirect cost rate proposal means the doc-
umentation prepared by a governmental unit
or subdivision thereof to substantiate its re-
quest for the establishment of an indirect
cost rate.
9. Predetermined rate means an indirect cost
rate, applicable to a specified current or fu-
ture period, usually the governmental unit’s
fiscal year. This rate is based on an estimate
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of the costs to be incurred during the period.
Except under very unusual circumstances, a
predetermined rate is not subject to adjust-
ment. (Because of legal constraints, pre-
determined rates are not permitted for Fed-
eral contracts; they may, however, be used
for grants or cooperative agreements.) Pre-
determined rates may not be used by govern-
mental units that have not submitted and
negotiated the rate with the cognizant agen-
cy for indirect costs. In view of the potential
advantages offered by this procedure, nego-
tiation of predetermined rates for indirect
costs for a period of two to four years should
be the norm in those situations where the
cost experience and other pertinent facts
available are deemed sufficient to enable the
parties involved to reach an informed judg-
ment as to the probable level of indirect
costs during the ensuing accounting periods.
10. Provisional rate means a temporary indi-
rect cost rate applicable to a specified period
which is used for funding, interim reimburse-
ment, and reporting indirect costs on Fed-
eral awards pending the establishment of a
‘‘final’’ rate for that period.
C. ALLOCATION OF INDIRECT COSTS AND
DETERMINATION OF INDIRECT COST RATES
1. General
a. Where a governmental unit’s depart-
ment or agency has only one major function,
or where all its major functions benefit from
the 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 alloca-
tion procedures as described in subsection 2.
b. Where a governmental unit’s depart-
ment or agency has several major functions
which benefit from its indirect costs in vary-
ing degrees, the allocation of indirect costs
may require the accumulation of such costs
into separate cost groupings which then are
allocated individually to benefitted func-
tions by means of a base which best meas-
ures the relative degree of benefit. The indi-
rect costs allocated to each function are
then distributed to individual Federal
awards and other activities included in that
function by means of an indirect cost rate(s).
c. Specific methods for allocating indirect
costs and computing indirect cost rates
along with the conditions under which each
method should be used are described in sub-
sections 2, 3 and 4.
2. Simplified Method
a. Where a non-Federal entity’s major
functions benefit from its indirect costs to
approximately the same degree, the alloca-
tion of indirect costs may be accomplished
by (1) classifying the non-Federal entity’s
total costs for the base period as either di-
rect or indirect, and (2) dividing the total al-
lowable 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 Federal 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 a governmental
unit’s department or agency has only one
major function encompassing a number of in-
dividual projects or activities, and may be
used where the level of Federal awards to
that department or agency is relatively
small.
b. Both the direct costs and the indirect
costs must exclude capital expenditures and
unallowable costs. However, unallowable
costs must be included in the direct costs if
they represent activities to which indirect
costs are properly allocable.
c. The distribution base may be (1) total di-
rect costs (excluding capital expenditures
and other distorting items, such as pass-
through funds, subcontracts in excess of
$25,000, participant support costs, etc.), (2)
direct salaries and wages, or (3) another base
which results in an equitable distribution.
3. Multiple Allocation Base Method
a. Where a non-Federal entity’s indirect
costs benefit its major functions in varying
degrees, such costs must be accumulated
into separate cost groupings. Each grouping
must then be allocated individually to bene-
fitted functions by means of a base which
best measures the relative benefits.
b. The cost groupings should be established
so as to permit the allocation of each group-
ing on the basis of benefits provided to the
major functions. Each grouping should con-
stitute a pool of expenses that are of like
character in terms of the functions they ben-
efit and in terms of the allocation base
which best measures the relative benefits
provided to each function. The number of
separate groupings should be held within
practical limits, taking into consideration
the materiality of the amounts involved and
the degree of precision needed.
c. Actual conditions must be taken into ac-
count in selecting the base to be used in allo-
cating the expenses in each grouping to ben-
efitted functions. When an allocation can be
made by assignment of a cost grouping di-
rectly to the function benefitted, the alloca-
tion must be made in that manner. When the
expenses in a grouping are more general in
nature, the allocation should be made
through the use of a selected base which pro-
duces results that are equitable to both the
Federal Government and the governmental
unit. In general, any cost element or related
factor associated with the governmental
unit’s activities is potentially adaptable for
use as an allocation base provided that: (1) it
can readily be expressed in terms of dollars
or other quantitative measures (total direct
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OMB Guidance Pt. 200, App. VII
costs, direct salaries and wages, staff hours
applied, square feet used, hours of usage,
number of documents processed, population
served, and the like), and (2) it is common to
the benefitted functions during the base pe-
riod.
d. Except where a special indirect cost
rate(s) is required in accordance with para-
graph (C)(4) of this Appendix, the separate
groupings of indirect costs allocated to each
major function must be aggregated and
treated as a common pool for that function.
The costs in the common pool must then be
distributed to individual Federal awards in-
cluded in that function by use of a single in-
direct cost rate.
e. The distribution base used in computing
the indirect cost rate for each function may
be (1) total direct costs (excluding capital ex-
penditures and other distorting items such
as pass-through funds, subawards in excess of
$25,000, participant support costs, etc.), (2)
direct salaries and wages, or (3) another base
which results in an equitable distribution.
An indirect cost rate should be developed for
each separate indirect cost pool developed.
The rate in each case should be stated as the
percentage relationship between the par-
ticular indirect cost pool and the distribu-
tion base identified with that pool.
4. Special Indirect Cost Rates
a. In some instances, a single indirect cost
rate for all activities of a non-Federal entity
or for each major function of the agency may
not be appropriate. It may not take into ac-
count those different factors which may sub-
stantially affect the indirect costs applicable
to a particular program or group of pro-
grams. The factors may include the physical
location of the work, the level of administra-
tive support required, the nature of the fa-
cilities or other resources employed, the or-
ganizational arrangements used, or any com-
bination thereof. When a particular Federal
award is carried out 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 that Federal award. The
separate indirect cost pool should be devel-
oped during the course of the regular alloca-
tion process, and the separate indirect cost
rate resulting therefrom should be used, pro-
vided that: (1) The rate differs significantly
from the rate which would have been devel-
oped under paragraphs (C)(2) and (C)(3) of
this Appendix, and (2) the Federal award to
which the rate would apply is material in
amount.
b. Where Federal statutes restrict the re-
imbursement of certain indirect costs, it
may be necessary to develop a special rate
for the affected Federal award. Where a ‘‘re-
stricted rate’’ is required, the same proce-
dure for developing a non-restricted rate will
be used except for the additional step of the
elimination from the indirect cost pool those
costs for which the law prohibits reimburse-
ment.
D. SUBMISSION AND DOCUMENTATION OF
PROPOSALS
1. Submission of Indirect Cost Rate Proposals
a. All departments or agencies of the gov-
ernmental unit desiring to claim indirect
costs under Federal awards must prepare an
indirect cost rate proposal and related docu-
mentation to support those costs. The pro-
posal and related documentation must be re-
tained for audit in accordance with the
records retention requirements contained in
§200.334.
b. A governmental department or agency
unit that receives more than $35 million in
direct Federal funding must submit its indi-
rect cost rate proposal to its cognizant agen-
cy for indirect costs. Other governmental de-
partment or agency must develop an indirect
cost proposal in accordance with the require-
ments of this Part and maintain the proposal
and related supporting documentation for
audit. These governmental departments or
agencies are not required to submit their
proposals unless they are specifically re-
quested to do so by the cognizant agency for
indirect costs. Where a non-Federal entity
only receives funds as a subrecipient, the
pass-through entity will be responsible for
negotiating and/or monitoring the subrecipi-
ent’s indirect costs.
c. Each Indian tribal government desiring
reimbursement of indirect costs must submit
its indirect cost proposal to the Department
of the Interior (its cognizant agency for indi-
rect costs).
d. Indirect cost proposals must be devel-
oped (and, when required, submitted) within
six months after the close of the govern-
mental unit’s fiscal year, unless an exception
is approved by the cognizant agency for indi-
rect costs. If the proposed central service
cost allocation plan for the same period has
not been approved by that time, the indirect
cost proposal may be prepared including an
amount for central services that is based on
the latest federally-approved central service
cost allocation plan. The difference between
these central service amounts and the
amounts ultimately approved will be com-
pensated for by an adjustment in a subse-
quent period.
2. Documentation of Proposals
The following must be included with each
indirect cost proposal:
a. The rates proposed, including subsidiary
work sheets and other relevant data, cross
referenced and reconciled to the financial
data noted in subsection b. Allocated central
service costs will be supported by the sum-
mary table included in the approved central
service cost allocation plan. This summary
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2 CFR Ch. II (1–1–22 Edition) Pt. 200, App. VII
table is not required to be submitted with
the indirect cost proposal if the central serv-
ice cost allocation plan for the same fiscal
year has been approved by the cognizant
agency for indirect costs and is available to
the funding agency.
b. A copy of the financial data (financial
statements, comprehensive annual financial
report, executive budgets, accounting re-
ports, etc.) upon which the rate is based. Ad-
justments resulting from the use of
unaudited data will be recognized, where ap-
propriate, by the Federal cognizant agency
for indirect costs in a subsequent proposal.
c. The approximate amount of direct base
costs incurred under Federal awards. These
costs should be broken out between salaries
and wages and other direct costs.
d. A chart showing the organizational
structure of the agency during the period for
which the proposal applies, along with a
functional statement(s) noting the duties
and/or responsibilities of all units that com-
prise the agency. (Once this is submitted,
only revisions need be submitted with subse-
quent proposals.)
3. Required certification.
Each indirect cost rate proposal must be
accompanied by a certification in the fol-
lowing form:
CERTIFICATE OF INDIRECT COSTS
This is to certify that I have reviewed the
indirect cost rate proposal submitted here-
with and to the best of my knowledge and
belief:
(1) All costs included in this proposal [iden-
tify date] to establish billing or final indi-
rect costs rates for [identify period covered
by rate] are allowable in accordance with the
requirements of the Federal award(s) to
which they apply and the provisions of this
Part. Unallowable costs have been adjusted
for in allocating costs as indicated in the in-
direct cost proposal
(2) All costs included in this proposal are
properly allocable to Federal awards on the
basis of a beneficial or causal relationship
between the expenses incurred and the agree-
ments to which they are allocated in accord-
ance with applicable requirements. Further,
the same costs that have been treated as in-
direct costs have not been claimed as direct
costs. Similar types of costs have been ac-
counted for consistently and the Federal
Government will be notified of any account-
ing changes that would affect the predeter-
mined rate.
I declare that the foregoing is true and cor-
rect.
Governmental Unit: lllllllllllll
Signature: llllllllllllllllll
Name of Official: llllllllllllll
Title: llllllllllllllllllll
Date of Execution: lllllllllllll
E. NEGOTIATION AND APPROVAL OF RATES
1. Indirect cost rates will be reviewed, ne-
gotiated, and approved by the cognizant
agency on a timely basis. Once a rate has
been agreed upon, it will be accepted and
used by all Federal agencies unless prohib-
ited or limited by statute. Where a Federal
awarding agency has reason to believe that
special operating factors affecting its Fed-
eral awards necessitate special indirect cost
rates, the funding agency will, prior to the
time the rates are negotiated, notify the cog-
nizant agency for indirect costs.
2. The use of predetermined rates, if al-
lowed, is encouraged where the cognizant
agency for indirect costs has reasonable as-
surance based on past experience and reli-
able projection of the non-Federal entity’s
costs, that the rate is not likely to exceed a
rate based on actual costs. Long-term agree-
ments utilizing predetermined rates extend-
ing over two or more years are encouraged,
where appropriate.
3. The results of each negotiation must be
formalized in a written agreement between
the cognizant agency for indirect costs and
the governmental unit. This agreement will
be subject to re-opening if the agreement is
subsequently found to violate a statute, or
the information upon which the plan was ne-
gotiated is later found to be materially in-
complete or inaccurate. The agreed upon
rates must be made available to all Federal
agencies for their use.
4. Refunds must be made if proposals are
later found to have included costs that (a)
are unallowable (i) as specified by law or reg-
ulation, (ii) as identified in §200.420, or (iii)
by the terms and conditions of Federal
awards, or (b) are unallowable because they
are clearly not allocable to Federal awards.
These adjustments or refunds will be made
regardless of the type of rate negotiated
(predetermined, final, fixed, or provisional).
F. OTHER POLICIES
1. Fringe Benefit Rates
If overall fringe benefit rates are not ap-
proved for the governmental unit as part of
the central service cost allocation plan,
these rates will be reviewed, negotiated and
approved for individual recipient agencies
during the indirect cost negotiation process.
In these cases, a proposed fringe benefit rate
computation should accompany the indirect
cost proposal. If fringe benefit rates are not
used at the recipient agency level (i.e., the
agency specifically identifies fringe benefit
costs to individual employees), the govern-
mental unit should so advise the cognizant
agency for indirect costs.
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OMB Guidance Pt. 200, App. VIII
2. Billed Services Provided by the Recipient
Agency
In some cases, governmental departments
or agencies (components of the govern-
mental unit) provide and bill for services
similar to those covered by central service
cost allocation plans (e.g., computer cen-
ters). Where this occurs, the governmental
departments or agencies (components of the
governmental unit)should be guided by the
requirements in Appendix V relating to the
development of billing rates and documenta-
tion requirements, and should advise the
cognizant agency for indirect costs of any
billed services. Reviews of these types of
services (including reviews of costing/billing
methodology, profits or losses, etc.) will be
made on a case-by-case basis as warranted by
the circumstances involved.
3. Indirect Cost Allocations Not Using Rates
In certain situations, governmental de-
partments or agencies (components of the
governmental unit), because of the nature of
their Federal awards, may be required to de-
velop a cost allocation plan that distributes
indirect (and, in some cases, direct) costs to
the specific funding sources. In these cases, a
narrative cost allocation methodology
should be developed, documented, main-
tained for audit, or submitted, as appro-
priate, to the cognizant agency for indirect
costs for review, negotiation, and approval.
4. Appeals
If a dispute arises in a negotiation of an in-
direct cost rate (or other rate) between the
cognizant agency for indirect costs and the
governmental unit, the dispute must be re-
solved in accordance with the appeals proce-
dures of the cognizant agency for indirect
costs.
5. Collection of Unallowable Costs and
Erroneous Payments
Costs specifically identified as unallowable
and charged to Federal awards either di-
rectly or indirectly will be refunded (includ-
ing interest chargeable in accordance with
applicable Federal cognizant agency for indi-
rect costs regulations).
6. OMB Assistance
To the extent that problems are encoun-
tered among the Federal agencies or govern-
mental units in connection with the negotia-
tion and approval process, OMB will lend as-
sistance, as required, to resolve such prob-
lems in a timely manner.
[78 FR 78608, Dec. 26, 2013, as amended at 79
FR 75889, Dec. 19, 2014; 85 FR 49581, Aug. 13,
2020]
APPENDIX VIII TO PART 200—NONPROFIT
ORGANIZATIONS EXEMPTED FROM
SUBPART E OF PART 200
1. Advance Technology Institute (ATI),
Charleston, South Carolina
2. Aerospace Corporation, El Segundo, Cali-
fornia
3. American Institutes of Research (AIR),
Washington, DC
4. Argonne National Laboratory, Chicago, Il-
linois
5. Atomic Casualty Commission, Wash-
ington, DC
6. Battelle Memorial Institute,
Headquartered in Columbus, Ohio
7. Brookhaven National Laboratory, Upton,
New York
8. Charles Stark Draper Laboratory, Incor-
porated, Cambridge, Massachusetts
9. CNA Corporation (CNAC), Alexandria, Vir-
ginia
10. Environmental Institute of Michigan,
Ann Arbor, Michigan
11. Georgia Institute of Technology/Georgia
Tech Applied Research Corporation/Geor-
gia Tech Research Institute, Atlanta,
Georgia
12. Hanford Environmental Health Founda-
tion, Richland, Washington
13. IIT Research Institute, Chicago, Illinois
14. Institute of Gas Technology, Chicago, Il-
linois
15. Institute for Defense Analysis, Alexan-
dria, Virginia
16. LMI, McLean, Virginia
17. Mitre Corporation, Bedford, Massachu-
setts
18. Noblis, Inc., Falls Church, Virginia
19. National Radiological Astronomy Observ-
atory, Green Bank, West Virginia
20. National Renewable Energy Laboratory,
Golden, Colorado
21. Oak Ridge Associated Universities, Oak
Ridge, Tennessee
22. Rand Corporation, Santa Monica, Cali-
fornia
23. Research Triangle Institute, Research
Triangle Park, North Carolina
24. Riverside Research Institute, New York,
New York
25. South Carolina Research Authority
(SCRA), Charleston, South Carolina
26. Southern Research Institute, Bir-
mingham, Alabama
27. Southwest Research Institute, San Anto-
nio, Texas
28. SRI International, Menlo Park, California
29. Syracuse Research Corporation, Syra-
cuse, New York
30. Universities Research Association, Incor-
porated (National Acceleration Lab), Ar-
gonne, Illinois
31. Urban Institute, Washington DC
32. Nonprofit insurance companies, such as
Blue Cross and Blue Shield Organizations
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Exhibit F
H
CITY OF OMAHA
AFFIRMATIVE MARKETING POLICY
AND MONITORING PROCEDURES
Effective: October 1, 1999
Revised: August 1, 2021
To further the commitment to nondiscrimination and equal opportunity in housing, and in accordance with the
regulations of the HOME Investments Partnerships Program (HOME) of the United States Department of
Housing and Urban Development, the Community Development Division of the City of Omaha’s Urban Planning
Department has established procedures to affirmatively market housing assisted with federal, state, and city
funding. All recipients of City funding must comply with the City’s affirmative marketing requirements, either
by crafting an individual plan (as in the case of projects with 5+ HOME units), or contributing towards the City’s
affirmative marketing plan.
Affirmative marketing consists of efforts to inform persons that are “least likely to apply” or under-represented
groups in a neighborhood or community about opportunities for housing. The affirmative marketing efforts target
individuals who –due to their race, color, national origin, sex, gender identity, sexual orientation, religion, familial
status, disability, and/or limited English proficiency- may not know about housing opportunities or feel welcome
to apply for housing. To encourage opportunities for all community members participate in housing-related
services and rent or purchase affordable housing units, Affirmative Marketing Plans identify community members
for targeted marketing strategies and special outreach through social service organizations. Additionally,
Affirmative Marketing Plans include training and professional development opportunities to increase awareness
and knowledge of fair housing and affirmative marketing strategies for potential tenants, staff, community
partners, and others. Plans also detail how entities carrying out affirmative marketing assess their efforts for
ongoing improvement.
The following policy fulfills the requirement established by the HOME final rule (24 CFR 92.351(a)) to develop
written affirmative marketing procedures and requirements for all HOME-funded programs (homeowner
rehabilitation and homebuyer assistance). There are five elements for the City of Omaha’s affirmative marketing
procedure:
1.Description of the City’s plans to inform the public, subrecipients, owners, and potential applicants and
tenants about Federal, State, and Local fair housing and civil rights laws and the City’s Affirmative
Marketing Plan and policy.
2.Requirements and practices that each subrecipient and owner of City-funded housing must adhere to in
order to carry out the City’s affirmative marketing procedures and requirements.
3.Procedures used by subrecipients and owners to inform and solicit applications from persons in the
housing market area who are least likely to apply for the housing without special outreach.
4. List of records the City and owners must keep to document and assess efforts made to affirmative market
units.
5.Description of how the City will assess success of affirmative marketing actions and what corrective
actions will be taken when requirements are not met.
Exhibit I
1. Description of the City’s plans to inform the public, subrecipients, owners, and potential applicants and
tenants about Federal, State, and Local fair housing and civil rights laws and the City’s Affirmative
Marketing Plan and policy.
The Community Development Division of the City of Omaha’s Planning Department will:
Include the Equal Housing Opportunity logo and/or slogan, and a logo and/or slogan indicating
accessibility to persons with disabilities, in all press releases, solicitations, and program information
materials.
Work in partnership with the Mayor’s Office of Human Rights and Relations and fund
community partners (e.g. Family Housing Advisory Services) to provide the public with
information, referral, case investigation services and counseling regarding fair housing laws and
policies.
Post the Affirmative Marketing Policy and Affirmative Marketing Plan on the Department’s website:
https://planninghcd.cityofomaha.org/ and include Fair Housing information on a scrolling digital
display in the Department’s reception area.
Provide and require all funded agencies to provide homeowners, tenants, and rental property owners
copies of Fair Housing brochures.
Provide ongoing trainings to subrecipients about Fair Housing laws and affirmative marketing
requirements.
Make housing and program information available in multiple languages and work with community
partners to provide oral and written translation services, as needed.
Partner with groups to provide written translations and oral and signed interpretations for individuals
with visual and/or auditory impairments.
Place public notices in the major distribution news media, such as Omaha World Herald, and in
media serving individuals and groups that are least likely to apply for housing opportunities.
Additionally, the City will provide a list of these diverse media outlets to subrecipients.
Meet with property owners and assist them in preparing program applications as requested and
necessary.
2. Requirements and practices that each subrecipient and owner of City-funded housing must adhere to
in order to carry out the City’s affirmative marketing procedures and requirements.
Inform and solicit applications from persons in the housing market area who are least likely to
apply for housing without special outreach.
Project owners with 5 or more HOME-funded units must submit an Affirmative Marketing Plan to
the City of Omaha for review 120 days prior to initiating sales or rental marketing activities and
revise the plan at least every five years throughout the affordability period. Alternatively, project
owners can elect to further the City of Omaha’s Affirmative Marketing Plan. Under either option,
the owner will provide annual reports on affirmative marketing efforts to the City.
Use the Equal Housing Opportunity logo and/or slogan on all correspondence and advertising (signs,
advertisements, brochures, direct mail solicitations, press releases, websites, etc.) relating to the sale
or rental of units or in promoting housing programs.
Prominently display the HUD-approved Fair Housing poster and Equal Housing Opportunity logo
in all project sites and offices in which housing-related transactions (Exhibit 1).
Advertise housing opportunities in a local citywide newspaper of general circulation, such as the
Omaha World Herald, and in minority and non-English language newspapers. Submit to the City
copies of such advertisements annually.
Circulate flyers and advertisements (at least six weeks prior to the opening of any waiting lists) to
the City of Omaha Community partners list.
All advertising depicting persons shall depict persons of majority and minority groups, including a
diversity of race, gender, sexual orientation, age, religion, family status or any other protected class.
Submit and retain records documenting efforts to affirmatively market and assess the results of these
efforts, including copies of all letters notifying the outreach agencies of vacancies. Outreach
agencies may include, but are not limited to, the agencies in the Community Contacts list (Exhibit
2). The owner will submit a Demographics Form for Applicants (Exhibit 3), which includes the
name, racial/ethnic characteristics, income and family size for each person responding to the
advertisement.
Maintain a nondiscriminatory hiring policy for staff engaged in the sale or rental of properties or
provision of housing-related services.
Owners must comply with affirmative marketing requirements and take corrective actions when the
City determines the results of such actions do not satisfactorily achieve Fair Housing goals.
Adopt antidiscrimination tenant selection policies and maintain waitlist protocols that encourage
participation for individuals least likely to apply.
Owners selected for a rehabilitation program shall notify in-place tenants in writing of their
involvement in the program and provide them with the following options in accordance with
provisions of the Uniform Relocation Act, including options to: remain in the present unit during
rehabilitation; move temporarily to another unit within the project while his/her unit is being
rehabilitated; or permanently relocate or voluntarily abandon the unit during the rehabilitation. Each
in-place tenant in the project will receive a copy of the City of Omaha’s written Tenant Assistance
Policy (TAP) and shall advise said tenant(s) of the impact of the project on him or her. The Owner
shall provide the TAP to the tenant immediately after submission of the Owner’s application for
participation in the City’s program.
3. Procedures used by subrecipients and owners to inform and solicit applications from persons in the
housing market area who are least likely to apply for the housing without special outreach.
Identify populations least likely to apply based on census-tract level demographic data compared to
demographic information of current residents, applicants, and/or participants.
Develop an outreach strategy and advertising materials that include pertinent information to the
individual or group (e.g. accessibility features of the unit) in an effective tactic (e.g. non-English
language flyers)
Outreach to Omaha Housing Authority and at least three community contacts that work with the
identified population about housing opportunities. See Community Contact List.
Document advertisements and outreach activities and place in the project’s Affirmative Marketing
file.
Record the demographics of those responding to outreach efforts using the City’s Demographics Form
for Applicants.
Annually assess the current population served in the housing program or project relative to
surrounding demographics to determine changes in target populations.
Submit annual assessment, copies of marketing materials, and demographic information to the City of
Omaha for review.
4. List of records the City and owners must keep to document and assess efforts made to affirmative market
units.
The City will retain the following records regarding efforts made to affirmatively market HOME-Assisted
Units for five years following the affordability period:
Copies of Affirmative Marketing Plans and Policies written by the City and subrecipients
Copies of advertisements and program materials promoting housing-related programs and services,
including those produced by the City and subrecipients.
Trainings and technical assistance provided to staff, subrecipients, and the public related Federal,
State, and local civil rights laws and fair housing laws.
Assessments of affirmative marketing efforts for City activities and housing-related services provided
by subrecipients.
Correspondence related to corrective actions taken to resolve affirmative marketing issues and
evidence used to verify compliance.
Owners will retain the following records in an “Affirmative Fair Marketing” file to document efforts
furthering affirmative marketing for five years following the period of affordability:
Advertisements for vacant units and housing-related services
Contact dates and correspondence with outreach agencies and Omaha Housing Authority
Annual assessments of affirmative marketing efforts
Race and other demographic data of occupants and persons inquiring about availability of units
through the City’s Demographic Form for Applicants
Dates and types of trainings provided to project management/staff on Federal, State, and local civil
rights laws and fair housing laws
Written records of how all applicants and tenants can file complaints regarding fair marketing and/or
allege discriminatory practices, evidence of investigating all applicant or tenant complaints and
corrective actions taken, and correspondence notifying the City of complaints.
Examples of documents that should be maintained include:
Copies of newspaper advertisements and flyers or other printed material used
Copies of mailing lists to organizations hat were sent flyers and other materials
Photographs of site signs
Racial, ethnic, and gender characteristics of tenants
List the names and addresses of groups or organization identified as serving least likely to apply
populations and those serving special populations who may be served by the project, including
those with disabilities.
5. Description of how the City will assess success of affirmative marketing actions and what corrective
actions will be taken when requirements are not met.
Assessment responsibilities of the City:
Annually review Owners’ affirmative marketing records for compliance and progress towards
soliciting applications and participants from individuals who normally might not apply and/or who
represent target demographics.
Annually review demographic data of housing-related programs and services administered by the
City to identify underrepresented populations in both applications and participation.
Update the City’s Affirmative Marketing Plan every five years, publish updated Plans, and provide
Plans to Owners utilizing the City’s Plan in housing-related services, sales, and/or rental
transactions.
Evaluate effectiveness of affirmative marketing and fair housing trainings.
Assess the affirmative marketing procedures to determine whether the Owner has affirmatively
marketed the vacant units by monitoring the Owner’s performance in carrying out the Duties and
Responsibilities of the Owner as outlined in Section 2.
The City shall assess the affirmative marketing efforts of the Owner to determine whether a
sufficient number of racial and ethnic families have applied for vacant units. This determination
will be made by reviewing the information provided on the Demographics Form for Applicant and
Tenant Survey Forms to compare the proportions of protected class participation (e.g. disability,
family status, English language proficiency, race and/or ethnicity) versus overall participation.
Assessment responsibilities of owners:
Review affirmative marketing plans at least every five years and update as needed to ensure
compliance.
Annually assess the success of affirmative marketing actions for each project. If the demographic
data of the applicants and resident vary significantly from the jurisdiction’s population data for the
target income group, advertising efforts and outreach should be targeted to underrepresented
groups in an attempt to balance the applicants and residents with the demographics of the
jurisdiction.
The City shall take the following corrective action if it is found that the Owner is not carrying out
established procedures of affirmatively marketing units:
Notify the Owner in writing of any violations of the Owner’s Duties and Responsibilities.
The Owner will be given thirty (30) days upon receipt of written notification to provide evidence
of compliance. Upon the Owner’s request, the City will provide technical assistance.
If the Owner fails to comply with the Affirmative Marketing Policy and Monitoring Procedures,
the City may declare the loan/grant in default.
This non-exhaustive list represents just a sampling of organizations that may be included in your property’s Affirmative Marketing Plan. Organizations
not listed here may also be included, where appropriate. If you have questions about including an unlisted organization in your Affirmative Marketing
Plan, please contact Marcus Chaffee (marcus.chaffee@cityofomaha.org or 402-444-5150 ext. 2012).
Organization Name Address Zip Code Contact Number Target Population(s)
AARP 1941 S 42nd St #220 68105 (866) 389-5651 Seniors
East African Development Association of Nebraska 4735 NW Radial HWY 68104 402-708-4106 Black, African Americans, Immigrant and Refugee
Eastern Nebraska Office on Aging 4780 S 131st St 68137 402-444-6558 Disabled, Seniors
League of Human Dignity 5513 Center St 68106 402-595-1256 Disabled
Nebraska Chinese Association 8206 Blondo St 68134 Asian
Heartland Family Services 2101 South 42nd Street 68105 402-553-3000 Youth, Families
The Empowerment Network 2401 Lake Street, Suite 110 68111 402-502-5153 Black, African Americans
Latino Center of the Midlands 4821 S 24th St 68107 402-733-2720 Hispanic and Latino
Catholic Charities of Omaha 3300 N 60th St.98121 402-551-0520 Families, Domestic Violence
Community Alliance 4001 Leavenworth St 68105 402-341-5128 Disabled (Mental Health)
Urban League of Nebraska 3022 N 24th St 68111 402-453-9730 Black, African Americans
Intercultural Senior Center 5545 Center Street 68106 402-444-6529 Hispanic and Latino, African Americans, Asian, Seniors
Refugee Empowerment Center 3610 Dodget St. 68131 402-551-0759 Immigrant and Refugees
Nebraska Urban Indian Health Coalition 2240 Landon Ct 68102 402-346-0902 Native American
Karen Society of Nebraska 816 N 44th St #3 68131 402-505-3482 Asian
Sheltering Tree P.O. Box 4490 68104 420-973-0229 Disabled (Developmental)
Omaha Association for the Deaf 4050 Hillsdale Ave 68107 402-206-2401 Disabled
Omaha Association of the Blind 1024 S 32nd St 68105 402-341-3017 Disabled
Black and Pink, Inc 2406 Fowler Ave Suite 316 68111 531-466-3346 LGBTQ+, Youth, Formerly Incarcerated
Paralyzed Veterans of America 7612 Maple Street 68134 402-733-4328 Disabled
Restoring Dignity 402-370-9777 Immigrant and Refugee
Eastern Nebraska Community Action Partnership 2406 Fowler Ave 68111 402-453-5656 Youth, Families, Seniors
Women's Center for Advancement 3801 Harney St 68131 402-345-6555 Women, Domestic Violence
Native American Advisory Board Native American
LGBTQ+ Advisory Board LGBTQ+
Affirmative Marketing Community Contact List
CITY OF OMAHA
DEMOGRAPHICS FORM FOR APPLICANTS
The Fair Housing Act prohibits discrimination in housing because of race, color, national origin, religion, sex, familial status (children in the home),
disability (physical or mental), sexual orientation, and gender identity. To help ensure that all applicants receive fair treatment, the City of Omaha
requires community partners to request demographic data for everyone who inquires about renting or purchasing a unit. However, applicant
participation is voluntary; applicants will not receive different treatment for choosing not to provide this information.
Name: Phone: Email:
Date Contacted: How did you hear about the vacancy?
Race: o AI / AN o Asian o B / AA o NH or PI o W o O Ethnicity: o H or L o Not-H or L
Family Size: Monthly Income: o 65+ o Disabled o LGBTQ+ o LEP o Female
Date Applied: o Accepted o Waitlisted o Denied for:
Name: Phone: Email:
Date Contacted: How did you hear about the vacancy?
Race: o AI / AN o Asian o B / AA o NH or PI o W o O Ethnicity: o H or L o Not-H or L
Family Size: Monthly Income: o 65+ o Disabled o LGBTQ+ o LEP o Female
Date Applied: o Accepted o Waitlisted o Denied for:
Name: Phone: Email:
Date Contacted: How did you hear about the vacancy?
Race: o AI / AN o Asian o B / AA o NH or PI o W o O Ethnicity: o H or L o Not-H or L
Family Size: Monthly Income: o 65+ o Disabled o LGBTQ+ o LEP o Female
Date Applied: o Accepted o Waitlisted o Denied for:
Property Address: Number of Vacancies:
Name: Phone: Email:
Date Contacted: How did you hear about the vacancy?
Race: o AI / AN o Asian o B / AA o NH or PI o W o O Ethnicity: o H or L o Not-H or L
Family Size: Monthly Income: o 65+ o Disabled o LGBTQ+ o LEP o Female
Date Applied: o Accepted o Waitlisted o Denied for:
Name: Phone: Email:
Date Contacted: How did you hear about the vacancy?
Race: o AI / AN o Asian o B / AA o NH or PI o W o O Ethnicity: o H or L o Not-H or L
Family Size: Monthly Income: o 65+ o Disabled o LGBTQ+ o LEP o Female
Date Applied: o Accepted o Waitlisted o Denied for:
Name: Phone: Email:
Date Contacted: How did you hear about the vacancy?
Race: o AI / AN o Asian o B / AA o NH or PI o W o O Ethnicity: o H or L o Not-H or L
Family Size: Monthly Income: o 65+ o Disabled o LGBTQ+ o LEP o Female
Date Applied: o Accepted o Waitlisted o Denied for:
Name: Phone: Email:
Date Contacted: How did you hear about the vacancy?
Race: o AI / AN o Asian o B / AA o NH or PI o W o O Ethnicity: o H or L o Not-H or L
Family Size: Monthly Income: o 65+ o Disabled o LGBTQ+ o LEP o Female
Date Applied: o Accepted o Waitlisted o Denied for:
AFFIRMATIVE MARKETING POLICY PLAN
The Undersigned does/do hereby agree to comply with all terms and conditions of and adopt the City of Omaha’s
Affirmative Marketing Policy (attached hereto and incorporated herein by this reference as though fully set forth)
for the Project located at _____ as approved by the City of Omaha on October 1, 1999 and revised
on August 1, 2021.
Date:
Name of Business or Corporation:
(if applicable)
By:
Signature
Printed Name:
Q:Library/HCD Forms/Tenant Survey Form 8/1/2016
Page 1 of 2
PLEASE COMPLETE THE ENTIRE FORM.
Choose Funding Program: (Circle all applicable) CDBG HOME ESG NAHTF SHP Other
CITY OF OMAHA - TENANT SURVEY FORM
20
A. GENERAL INFORMATION
Tenant Name(s) Telephone
Address Apt. No.
Initial Date of Lease Recertification Lease Date
DEMOGRAPHICS & ANTICIPATED INCOME OF ALL HOUSEHOLD MEMBERS
Head of Household is: Male Female Elderly
Number of Occupants: Total No. Adults No. Children Under 18
Please enter ethnicity and race for each household member in accordance with the attached definitions.
Ethnicity – Choose either H or NH. Enter H for Hispanic or Latino. Enter NH for Not Hispanic or Latino.
Race Categories – Choose all that apply for each household member. Enter one or more of the following
abbreviations: W, B, A, AI, PI, O.
White (W); Black or African American (B); Asian (A); American Indian or Alaska Native (AI);
Native Hawaiian or Other Pacific Islander (PI)
Other (O) (Please specify)
Name of Household Member
Age
(H or NH)
Ethnicity
(See Above)
Race Handicap
Anticipated
Monthly
Income
Anticipated
Annual
Income
$ $
$ $
$ $
$ $
$ $
$ $
TOTAL $ $
100% MEDIAN FAMILY INCOME (MFI) FOR HH SIZE $
% OF MFI FOR HH SIZE %
B. HOUSING CHARACTERISTICS
Housing Costs HUD Rent Limits
Monthly Housing Cost:
Actual Contract Rent $
Average Monthly Utility Cost $
Total Monthly Housing Cost $ $
Subsidized Rent Assistance Received (Please list source and amount): Section 8: $
Other Assistance: Source Amount $ No Assistance
Unit Type: Efficiency 1BR 2 BR 3 BR 4 BR Other
Handicap Accessible Unit: Yes No Check one: 50% Unit 60% Unit 80% Unit 120% Unit
C. TENANTS IN-PLACE AT TIME OF LOAN CLOSING - Non-disclosure Form Required
Tenant Signature Date
Owner or Authorized Representative Phone Date
Exhibit K
Q:Library/HCD Forms/Tenant Survey Form 8/1/2016
Page 2 of 2
DEFINITIONS:
1. American Indian or Alaska Native. A person having origins in any of the original peoples of North and
South America (including Central America), and who maintains tribal affiliation or community attachment.
2. Asian. A person having origins in any of the original peoples of the Far East, Southeast Asia, or the Indian
subcontinent including, for example, Cambodia, China, India, Japan, Korea, Malaysia, Pakistan, the
Philippine Islands, Thailand and Vietnam.
3. Black or African American. A person having origins in any of the black racial groups of Africa. Terms
such as “Haitian” or “Negro” can be used in addition to “Black” or “African American”.
4. Native Hawaiian or Other Pacific Islander. A person having origins in any of the original peoples of
Hawaii, Guam, Samoa or other Pacific Islands.
5. White. A person having origins in any of the original peoples of Europe, the Middle East or North Africa.
Allowances for City of Omaha Planning Department
Tenant-Paid Utilities Housing and Community Development Department
Single Family Mid Housing (2 to 4)
Effective 1/1/2022-12/31/2022
Circle bedroom size and all utilities that are to be paid by the tenant.
0 BR 1 BR 2 BR 3 BR 4 BR 5 BR
Heating Natural Gas $27 $32 $39 $43 $48 $52
Electric Resistance $28 $33 $44 $54 $64 $74
Electric Heat Pump $20 $24 $29 $33 $36 $41
Cooking Natural Gas $3 $3 $4 $6 $6 $8
Electric $4 $5 $7 $9 $11 $13
Water Heating Natural Gas $6 $8 $11 $16 $20 $24
Electric $13 $16 $20 $27 $31 $36
Other Electric $20 $23 $33 $44 $53 $63
Air Conditioning $7 $9 $11 $14 $17 $19
Water $26 $27 $39 $52 $64 $81
Sewer $28 $29 $43 $60 $81 $99
Trash Collection
Tenant provided range $4 $4 $5 $5 $6 $6
Tenant provided refrigerator $4 $4 $4 $5 $5 $7
Total
Project Address:
Total Allowance: $
Prepared by:
Spreadsheet (ver13) based on form HUD-52667 (12/97).
ref. Handbook 7420.8
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Q:Library/HCD Forms/Race and Ethnic Data Reporting Form 7/7/2010
1
Race and Ethnic Data
Reporting Form
U.S. Department of Housing
and Urban Development
Office of Housing
OMB Approval No. 2502-0204
(exp. 03/31/2011)
Name of Property Project No. Address of Property
Name of Owner/Managing Agent Type of Assistance or Program Title
Name of Head of Household Name of Household Member
Date (mm/dd/yyyy):
Ethnic Categories
Select
One
Hispanic or Latino
Not-Hispanic or Latino
Racial Categories*
Select
all that Apply
American Indian or Alaska Native
Asian
Black or African American
Native Hawaiian or Other Pacific Islander
White
Other
*Definitions of these categories may be found on the reverse side.
There is no penalty for persons who do not complete the form.
Signature Date
Public reporting burden for this collection is estimated to average 10 minutes per response, including the time for reviewing instructions,
searching existing data sources, gathering and maintaining the data needed, and completing and reviewing the collection of information. This
information is required to obtain benefits and voluntary. HUD may not collect this information, and you are not required to complete this form,
unless it displays a currently valid OMB control number.
This information is authorized by the U.S. Housing Act of 1937, as amended, the Housing and Urban Rural Recovery Act of 1983 and Housing
and Community Development Technical Amendments of 1984. This information is needed to be in compliance with OMB-mandated changes to
Ethnicity and Race categories for recording the 50059 Data Requirements to HUD. Owners/agents must offer the opportunity to the head and co-
head of each household to “self certify” during the application interview or lease signing. In-place tenants must complete the format as part of
their next interim or annual re-certification. This process will allow the owner/agent to collect the needed information on all members of the
household. Completed documents should be stapled together for each household and placed in the household’s file. Parents or guardians are to
complete the self-certification for children under the age of 18. Once system development funds are provided and the appropriate system
upgrades have been implemented, owners/agents will be required to report the race and ethnicity data electronically to the TRACS (Tenant Rental
Assistance Certification System). This information is considered non-sensitive and does not require any special protection.
Q:Library/HCD Forms/Race and Ethnic Data Reporting Form 7/7/2010
2
Instructions for the Race and Ethnic Data Reporting (Form HUD-27061-H)
A. General Instructions:
This form is to be completed by the head of household for those wishing to be served
(applicants) and those that are currently served (tenants/owner-occupants) in housing
assisted by the Department of Housing and Urban Development.
If the assisted property is a rental unit, the owner or agent is required to offer the
applicant/tenant the option to complete the form. The form is to be completed at initial
application or at lease signing. In -place tenants must also be offered the opportunity to
complete the form as part of the next interim or annual recertification. Once the form is
completed, it need not be completed again unless the head of household changes. There is
no penalty for persons who do not complete the form. However, the owner or agent may
place a note in the tenant file stating the applicant/tenant refused to complete the form.
Completed documents should be placed in the household’s file.
The Office of Housing has been given permission to use this form for gathering race and
ethnic data in assisted housing programs.
1. The two ethnic categories you should from are defined below. You should check one of
the two categories.
A. Hispanic or Latino. A person of Cuban, Mexican, Puerto Rican, South or Central
American or other Spanish culture or origin, regardless of race. The term of “Spanish
origin” can be used in addition to “Hispanic” or “Latino”.
B. Not Hispanic or Latino. A person not of Cuban, Mexican, Puerto Rican, South or
Central American, or other Spanish culture or origin, regardless of race.
2. The five racial categories to choose from are defined below: You should check as many as
apply to you.
A. American Indian or Alaska Native. A person having origins in any of the original
peoples of North and South America (including Central America), and who maintains
tribal affiliation or community attachment.
B. Asian. A person having origins in any of the original peoples of the Far East,
Southeast Asia, or the Indian subcontinent including, for example, Cambodia, China,
India, Japan, Korea, Malaysia, Pakistan, the Philippine Islands, Thailand and
Vietnam.
C. Black or African American. A person having origins in any of the black racial
groups of Africa. Terms such as “Hatian” or “Negro” can be used in addition to
“Black” or “African American”.
D. Native Hawaiian or Other Pacific Islander. A person having origins in any of the
original peoples of Hawaii, Guam, Samoa, or other Pacific Islands.
E. White. A person having origins in any of the original peoples of Europe, the Middle
East or North Africa.
Q:Library/HCD Forms/Affidavit Applicant – Definition of Income 1/4/2012
DECLARATION
Applicant – Income
State of Nebraska )
) §
County of Douglas )
TO: Whom It May Concern:
I, Affiant/s herein, certify that I have
reported all of my income to the City of Omaha in accordance with the following Definition of
Income:
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;
income from other self-employment sources;
3. Farm self-employment income;
4. Interest, dividends, net rental income, or income from estates or trusts, or regular recurring gifts;
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 certificates, money market funds and other investment 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 re-
certification.
10. Actual income from assets if total assets are $5,000 or less.
Annual Income Does Not Include the Following Assets:
1. necessary personal property, except as noted in 9 (i).
2. interest in Indian trust lands.
3. assets that are a part of an active business or farming 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.
4. assets not accessible to the family and which provide no income for the family.
5. vehicles especially equipped for the handicapped.
6. equity in owner-occupied cooperatives and manufactured homes in which the family lives
7. equity in principle residence (home equity).
I further certify that I am aware of the following: PENALTY FOR FALSE OR
FRAUDULENT STATEMENT, U.S.C. Title 18, Section 1001, provides: “Whoever, in any matter
within jurisdiction of any department or agency of the United States knowingly and willfully
falsifies…or makes false, fictitious or fraudulent statements or representations…(or makes or uses
any false writing or document knowing the same to contain any false, fictitious, or fraudulent
statement or entry,) shall be fined not more than $10,000.00 or imprisoned not more than five (5)
years, or both”.
______________________________________________
Signature
______________________________________________
Signature
Q:Library/HCD Forms/Affidavit Applicant – No Income 1/10/2012
DECLARATION
Applicant – No Income
State of Nebraska )
) §
County of Douglas )
TO: Whom It May Concern:
I, Affiant/s herein, certify that I have
reported all of my income to the City of Omaha in accordance with the following Definition of
Income:
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;
income from other self-employment sources (including income from sources such as Avon, Mary
Kay, Shaklee, Amway, etc.);
3. Farm self-employment income;
4. Interest, dividends, net rental income, or income from estates or trusts, or regular recurring gifts;
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 certificates, money market funds and other investment 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 re-
certification.
Annual Income Does Not Include the Following Assets:
1. necessary personal property, except as noted in 9 (i).
2. interest in Indian trust lands.
3. assets that are a part of an active business or farming 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.
4. assets not accessible to the family and which provide no income for the family.
5. vehicles especially equipped for the handicapped.
6. equity in owner-occupied cooperatives and manufactured homes in which the family lives
7. equity in principle residence (home equity).
Additional Information
1. How do you pay the rent/mortgage and utilities?
2. How do you pay for food and clothes?
3. How do you pay for medical expenses?
4. How do you pay for your transportation expenses/car payments?
I further certify that I am aware of the following: PENALTY FOR FALSE OR
FRAUDULENT STATEMENT, U.S.C. Title 18, Section 1001, provides: “Whoever, in any matter
within jurisdiction of any department or agency of the United States knowingly and willfully
falsifies…or makes false, fictitious or fraudulent statements or representations…(or makes or uses
any false writing or document knowing the same to contain any false, fictitious, or fraudulent
statement or entry,) shall be fined not more than $10,000.00 or imprisoned not more than five (5)
years, or both”.
______________________________________________
Signature
______________________________________________
Signature
10/1/14 (Rental) 1
Attachment
City of Omaha
Housing and Community Development Division
Tenant and Participant Protections
A. Lease. The lease between a tenant and an owner of rental housing assisted with
HOME and or NAHTF funds must be for not less than one year, unless by
mutually agreed consent between the City, the tenant and the owner.
B. Prohibited Lease Terms. The lease may not contain any of the following
provisions:
1. Agreement to be sued. Agreement by the tenant to be sued, to admit guilt,
or to a judgment in favor of the owner in a lawsuit brought in connection
with the lease;
2. Treatment of property. Agreement by the tenant that the owner may take,
hold, or sell personal property of household members without notice to the
tenant and a court decision on the rights of the parties. This prohibition,
however, does not apply to an agreement by the tenant concerning
disposition of personal property remaining in the housing unit after the
tenant has moved out of the unit. The owner may dispose of this personal
property in accordance with State law;
3. Excusing owner from responsibility. Agreement by the tenant not to hold
the owner or the owner’s agents legally responsible for any action or
failure to act, whether intentional or negligent;
4. Waiver of notice. Agreement by the tenant that the owner may institute a
lawsuit without notice to the tenant;
5. Waiver of legal proceedings. Agreement by the tenant that the owner may
evict the tenant or household members without instituting a civil court
proceeding in which the tenant has the opportunity to present a defense, or
before a court decision on the rights of the parties;
6. Waiver of a jury trial. Agreement by the tenant to waive any right to a
trial by jury;
7. Waiver of right to appeal court decision. Agreement by the tenant to
waive the tenant’s right to appeal, or to otherwise challenge in court, a
court decision in connection with the lease; and
10/1/14 (Rental) 2
8. Tenant chargeable with cost of legal actions regardless of outcome.
Agreement by the tenant to pay attorney’s fees or other legal costs even if
the tenant wins in a court proceeding by the owner against the tenant. The
tenant, however, may be obligated to pay costs if the tenant loses.
C. Termination of tenancy. An owner may not terminate the tenancy or refuse to
renew the lease of a tenant of rental housing assisted with HOME and/or NAHTF
funds except for serious or repeated violation of the terms and conditions of the
lease; for violations of applicable Federal, State, or local law; for completion of
the tenancy period for transitional housing; or for other good cause. To terminate
or refuse to renew tenancy, the owner must serve written notice upon the tenant
specifying the grounds for the action at least 30 days before the termination of
tenancy.
D. Tenant selection. An owner of rental housing assisted with HOME and/or
NAHTF funds must adopt written tenant selection policies and criteria that:
1. Are consistent with the purpose of providing housing for very low-income
and low-income families;
2. Are reasonably related to program eligibility and the applicant’s ability to
perform the obligations of the lease;
3. Give reasonable consideration to the housing needs of families that would
have a Federal preference under section 6(c)(4)(A) of the 1937 Act (see §
92.209(c)(2));
4. Provide for the selection of tenants from a written waiting list in the
chronological order of their application, insofar as is practicable; and
5. Give prompt written notification to any rejected applicant of the grounds
for any rejection.
Reference 24 C.F.R. 253
Exhibit L
Approved 6/1/10
AFFIDAVIT FOR EMPLOYEE CLASSIFICATION ACT
STATE OF )
) §
COUNTY OF )
I, , being first duly sworn under oath, state and
depose as follows:
1.I am competent to testify to, and have personal knowledge of, the matters stated in this affidavit.
2.I am (a contractor) (the authorized agent of the contractor ).
I attest to the following: (a) each individual performing services for such contractor is properly classified under the
Nebraska Employee Classification Act, 2010 LB 563 (“the Act”), (b) such contractor has completed a federal I-9
immigration form and has such form on file for each employee performing services, (c) such contractor has
complied with Neb. Rev. Stat. section 4-114 (federal immigration verification system), (d) such contractor has no
reasonable basis to believe that any individual performing services for such contractor is an undocumented worker,
and (e) as of the time of the contract, such contractor is not barred from contracting with the state or any political
subdivision pursuant to the Act.
FURTHER AFFIANT SAYETH NAUGHT.
______________________________________
Affiant
SUBSCRIBED AND SWORN TO before me this day of , 20 .
Notary Public
Exhibit M
SOIL WORK POLICY
For Housing Development Programs
(May 2021)
The City of Omaha operates several federally funded housing development programs. These programs may
involve the removal of structures, installation of public infrastructure, and site preparation work prior to the
construction of new residential structures.
The United States Environmental Protection Agency (“EPA”) has identified a prominent lead hazard in Omaha:
soil contamination attributed to emissions from the former ASARCO plant which was located in the former
Union Pacific Railroad yards along the Missouri River. The Omaha Lead Superfund Site is generally bound by
Florence to the north, the Missouri River to the east, the Douglas-Sarpy County line to the south, and 50th Street
to the west. Only residential use properties are included in the Omaha Lead Superfund Site.
Policy:
The objectives of the soil work policy are to ensure site soils are safe for the property’s intended use and to
remove project sites from the Omaha Lead Superfund Site before they are conveyed to another party. The
following steps are the preferred means of achieving these objectives while the City of Omaha is conducting
soil clean-up in Omaha (City of Omaha took over soil remediation operations in 2016):
1.The City will first determine the soil clean up status of the project site.
a.If the City has not tested the project site, then the City will test soil prior to any soil work at
the project site. The City will facilitate and/or expedite the sampling process when possible.
2.If the soil has been tested by the City and does not require clean up, then site work may proceed.
3.If the soil has been tested by the City and requires clean up, then:
a.Site work involving soil may not occur until soil clean-up is completed. The City will facilitate
and/or expedite the clean-up process when possible.
Other options are permissible, as necessary, as long as the process is documented.
Regardless of the method of addressing potential soil contamination, the City is required to test site soil at the
end of a project before the property is sold or otherwise conveyed to another party. If the lead concentration
exceeds 400 parts per million then further mitigation work and follow up testing is required.
The Environmental Review for each project site will describe the steps taken to address lead contamination in
soil.
Exhibit N
Rev. 09/30/19
2 CFR Part 200.338-340 Exhibit O
TERMINATION AND ENFORCEMENT
(a) Remedies for non-compliance. If a grantee or sub-grantee 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,
(1) Temporarily withhold cash payments pending correction of the deficiency by the grantee or
sub-grantee 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 sub-grantee’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
sub-grantee an opportunity for such hearing, appeal or other administrative proceeding to which the
grantee or sub-grantee is entitles under any statute or regulation applicable to the action involved.
(c) Effects of suspension and termination. Costs of grantee or sub-grantee resulting from obligations
incurred by the grantee or sub-grantee 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 sub-grantee 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 sub-
grantee before the effective date of suspension or termination, are not in anticipation of it,
and, in the case of a termination, are non-cancelable, 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 sub-grantee from being subject to
“Debarment and Suspension” under EO 12549 (2 CFR Part 200.213).
TERMINATION FOR CONVENIENCE
Except as provided in Appendix 11, 2 CFR, Part 200.338-340 awards may be terminated in whole or in
part only as follows:
(a) By the awarding agency with the consent of the grantee or sub-grantee 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 sub-grantee 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 2 CFR Part 200.339 or
Paragraph (a) of this section.
as appropriate in the circumstances:
1 Reviewed and approved 6/24/2021
MINORITY BUSINESS & WOMEN BUSINESS
ENTERPRISE PLAN
June 2021
PLANNING DEPARTMENT
CITY OF OMAHA
Jean Stothert,
Mayor
City of Omaha
David K. Fanslau
City of Omaha
Planning Department
Omaha/Douglas
Civic Center
Exhibit P
2 Reviewed and approved 6/24/2021
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,
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.
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 adopt the City’s MBE/WBE
Enterprise Plan. The Minority Business/Women Business Enterprise and Fair Housing plan must
be filled out by contractors, developers, corporations, partnerships and/or sole proprietors.
2. Ensure that Requests for Proposals have the MBE/WBE Enterprise Plan.
3. Ensure that the programs of the Planning Department are advertised in the appropriate new media
whose markets are targeted toward MBE/WBE.
3 Reviewed and approved 6/24/2021
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
Rights & Relations Department. In addition, require these entities to complete CC-1 (Human
Relations Department).
The following information has been developed to assist you in complying with the MBE/WBE requirements
in the agreement with the City of Omaha. If you have any questions, please contact Edward Dantzler at
(402) 444-5150 Ext. 2009.
4 Reviewed and approved 6/24/2021
MBE/WBE FOR GOODS AND SERVICES
Your company must make vendors aware of 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.
City of Omaha
Housing and Community Development Division
1819 Farnam Street Room 1111
Omaha, NE 68183
Edward Dantzler, Construction Manager
hcdbidcompliance@cityofomaha.org
(402) 444-5150 Ext. 2009 Fax: (402) 444-5201
City of Omaha
Human Rights & Relations
1819 Farnam Street Room 502
Omaha, NE 68183
Christian Espinosa Torres, City of Omaha SEB Program Administrator
christian.espinosa@cityofomaha.org
(402) 444-5052 Fax: (402) 444-5058
REACH
Greater Omaha Chamber of Commerce
808 ConAgra Drive Suite 400
Omaha, NE 68102
Winsley Durand, Executive Director
wdurand@selectgreateromaha.com
(402) 346-5000 Fax: (402) 346-7050
5 Reviewed and approved 6/24/2021
MBE/WBE FOR GOODS AND SERVICES
Urban League of Nebraska, Inc.
3040 Lake Street
Omaha, NE 68110
Wayne Brown, Interim President/CEO
wayne.brown@urbanleagueneb.org
(402) 453-9730
U.S. Small Business Administration
10675 Bedford Avenue Suite 100
Omaha, NE 68134
Melissa (Lisa) Tedesco, Deputy District Director
Melissa.tedesco@sba.gov
(402) 221-7229
College of Business Administration
Mammel Hall Suite 200
67th and Pine Streets
Omaha, NE 68182
Veronica Doga, Director, Procurement Technical Assistance Program
vdoga@unomaha.edu
(402) 554-6253
Goodwill Industries, Inc.
4805 North 72nd Street
Omaha, NE 68134
Sarah Alba, Employment Solutions Coordinator
salba@goodwillomaha.org
(402) 951-2919
Paralyzed Veterans of America
Great Plains Chapter
7612 Maple Street
Omaha, NE 68134
Amanda Vazquez, Government Relations Director
vazquez@greatplainspva.org
(402) 398-1422
6 Reviewed and approved 6/24/2021
CITY OF OMAHA
CONTRACTOR INFORMATION FORM
Date:
Project Address:
Owner Information
Name:
Address:
City, St., Zip:
Phone:
General Contractor Information
Name:
Address:
City, St., Zip:
Phone:
Federal Tax ID or SSN
Contract Amount $
Woman Owned Business Yes No
BRE (Business Owned Race/Ethnic) Code:
(BRE Code: 1 White American; 2 Black American; 3 Native American; 4 Hispanic American 5 Asian/Pacific American; 6 Hasidic Jews
Subcontractor Information (Complete for each subcontractor for the project)
Name/Address Fed Tax
ID/SSN
Contract
Amt.
Woman Own BRE
Code
Name: $ Yes No
Address:
City, St., Zip:
Phone:
Name: $ Yes No
Address:
City, St., Zip:
Phone:
Name: $ Yes No
Address:
City, St., Zip:
Phone:
Name: $ Yes No
Address:
City, St., Zip:
Phone:
Name: $ Yes No
Address:
City, St., Zip:
Phone:
Name: $ Yes No
Address:
City, St., Zip:
Phone:
Name: $ Yes No
Address:
City, St., Zip:
Phone:
7 Reviewed and approved 6/24/2021
Date:
Project Address:
Owner Information
Name:
General Contractor Information
Name:
(BRE Code: 1 White American; 2 Black American; 3 Native American; 4 Hispanic American 5 Asian/Pacific American; 6 Hasidic Jews
Name/Address Fed Tax
ID/SSN
Contract
Amt.
Woman Own BRE
Name: $ Yes No
Address:
City, St., Zip:
Phone:
Name: $ Yes No
Address:
City, St., Zip:
Phone:
Name: $ Yes No
Address:
City, St., Zip:
Phone:
Name: $ Yes No
Address:
City, St., Zip:
Phone:
Name: $ Yes No
Address:
City, St., Zip:
Phone:
Name: $ Yes No
Address:
City, St., Zip:
Phone:
Name: $ Yes No
Address:
City, St., Zip:
Phone:
Name: $ Yes No
Address:
City, St., Zip:
Phone:
Name: $ Yes No
Address:
City, St., Zip:
Phone:
8 Reviewed and approved 06/24/2021
DEFINITIONS:
1. American Indian or Alaska Native. A person having origins in any of the original peoples of North
and South America (including Central America), and who maintains tribal affiliation or community
attachment.
2. Asian. A person having origins in any of the original peoples of the Far East, Southeast Asia, or the
Indian subcontinent including, for example, Cambodia, China, India, Japan, Korea, Malaysia, Pakistan,
the Philippine Islands, Thailand and Vietnam.
3. Black or African American. A person having origins in any of the black racial groups of Africa.
Terms such as “Haitian” or “Negro” can be used in addition to “Black” or “African American”.
4. Native Hawaiian or Other Pacific Islander. A person having origins in any of the original peoples
of Hawaii, Guam, Samoa or other Pacific Islands.
5. White. A person having origins in any of the original peoples of Europe, the Middle East or North
Africa.
9 Reviewed and approved 06/24/2021
MINORITY BUSINESS/WOMEN BUSINESS ENTERPRISE
AND FAIR HOUSING PLAN
As Owner(s), , I/we agree that my/our contractors
and subcontractors will make our best efforts to ensure the construction services, contracts and
employment opportunities are affirmatively marketed to women and members of minority groups
as outlined in the City of Omaha’s Policy for Minority Business/Women Business Enterprise and
to further Fair Housing, where applicable, in the following manner.
1. Provide employment opportunities without regard to race, color, sex, age, religion,
national origin, familial or handicap status;
2. Encourage, increase and promote business and procurement opportunities for women-
owned businesses;
3. Award contracts to eligible minority-owned and women-owned firms;
4. Monitor contractor and vendor equal opportunity performance.
As Owner(s), , I/we agree that our contractors and
subcontractors will not discriminate against any employee or applicant for employment because
of race, color, sex, age, religion, national origin, familial or handicap status.
As Owner(s), , I/we agree that my/our contractors
and subcontractors shall in all solicitations or advertisements for employment give all qualified
applicants consideration for employment without regard to race, color, sex, age, religion, national
origin, familial or handicap status.
As Owner(s), , I/we certify that I/we support the
furtherance of fair housing choice and that I/we will not discriminate on the basis of race, color,
religion, sex, national origin, familial status, marital or handicap status in the rental or sale of the
assisted property nor in any activities related to the sale, rental, and operation of the assisted
property in accordance with the applicable laws and regulations.
Dated this _____ day of _____________, 20 .
Business or Corporation (if applicable)
By:
Signature of Owner/Authorized Representative Name
Print Owner/Authorized Representative Name
10 Reviewed and approved 06/24/2021
Invitation to Bid to MBE/WBE Sub-contractors and Suppliers
The attached sample notice for “Invitation to Bid to Sub-contractors and Suppliers” must be used to
advertise opportunity for minority, disabled and women-owned businesses to provide goods and
services for the project being bid. Proof of this effort is shown by contractor emailing a copy of the
notice to the service resources in this document and all others being advertised to for this project shall
be included in the bid submitted.
NOTE: Email a copy of notice to the following:
hcdbidcompliance@cityofomaha.org
christian.espinosa@cityofomaha.org
wdurand@selectgreateromaha.com
wayne.brown@urbanleagueneb.org
melissa.tedesco@sba.gov
vdoga@unomaha.edu
salba@goodwillomaha.org
vazquez@greatplainspva.org
11 Reviewed and approved 06/24/2021
NOTE: Contractor must submit a copy of this notice with bid submitted.
SAMPLE NOTICE
PROJECT: (project name)
(COMPANY NAME)
General Contractor
(Address)
(Phone)
(Email)
INVITATION TO BID FOR SUB-CONTRACTORS AND SUPPLIERS:
(COMPANY NAME) WILL BE BIDDING AS A GENERAL CONTRACTOR ON:
(PROJECT NAME)
(PROJECT ADDRESS)
PROJECT BIDS AT (BID TIME, BID DAY, BID DATE)
(DESCRIPTION)
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 Housing 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 75,
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 75 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 75, and 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 75. 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 75.
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
75 require employment opportunities to be directed were not filled to circumvent the
contractor’s obligations under 24 CFR Part 75.
F. Noncompliance with HUD’s regulations in 24 CFR Part 75 may result in sanctions,
termination of this contract for default, and debarment or suspension from future HUD-
assisted contracts.
Exhibit Q
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 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-
income 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 opportunities
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 formation of Section 3 joint ventures, financial support for affiliating with
franchise development, use of labor only contracts for building trades, purchase of
supplies and 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 be 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.
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.Farm 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 certificates, money market funds and other investment 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 re-
certification.
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:
1.necessary personal property, except as noted in 9 (i).
2. interest in Indian trust lands.
3.assets that are a part of an active business or farming 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.
4.assets not accessible to the family and which provide no income for the family.
5.vehicles especially equipped for the handicapped.
6. equity in owner-occupied cooperatives and manufactured homes in which the family lives
7. equity in principle residence (home equity).
Revised 10/8/99
Exhibit R
Revised and approved 5/23/2012
EQUAL EMPLOYMENT OPPORTUNITY CLAUSE
During the performance of this Contract, the Contractor agrees as follows:
(1) The Contractor and its subcontractors shall not discriminate against any employee
or applicant for employment because of race, religion, color, sex, age, sexual
orientation, gender identity, national origin, disability or familial status. As used
herein, the work “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 agrees 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.
(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 receive consideration for employment without regard to race,
religion, color, sexual orientation, gender identity, sex, national origin, age,
disability or familial status.
(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 worker’s 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.
(4) The Contractor and its subcontractors shall furnish to the City’s Human Rights
and Relations Contract Compliance Officer 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 Omaha
Municipal Code Sections 10-192 to 10-194, inclusive, and shall permit reasonable
access to his records. Records accessible to the Human Rights and Relations
Contract Compliance Officer shall be those which are related to Paragraphs (1)
through (7) of this Exhibit and only after reasonable notice is given to the
Contractor. The purpose for this provision is to provide for investigation to
ascertain compliance with the program provided for herein.
(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 (1) through (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
Exhibit S
Revised and approved 5/23/2012
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.
(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 same extent as
required by the federal government for federal contracts under federal rules and
regulations. Such compliance reports shall be filed with the Human Rights and
Relations Contract Compliance Officer. Compliance reports filed at such times as
directed shall contain information as to the employment practices, policies,
programs and statistics of the Contractor and his subcontractors.
(7) The Contractor shall include the provisions of Paragraphs (1) through (7) of this
Section, “Equal Employment Opportunity Clause”, and Omaha Municipal Code
Section 10-193 in every contract, subcontract or purchase order so that such
provisions will be binding upon each subcontractor or vendor. (Code 1980,
Section 10-192; Ordinance No. 35344, Sections 1, 9-26-00)
Federal Sub-award Reporting System (FSRS)
9 Digit DUNS Number:
Organization Name:
Address:
Question 1: During your organization’s preceding completed fiscal year, did the legal entity to which the
DUNS number belongs receive (1) 80 percent or more of its annual gross revenues in U.S. federal
contracts, subcontracts, loans, grants, subgrants, and/or cooperative agreements; and (2) $25,000,000
or more in annual gross revenues from U.S. federal contracts, subcontracts, loans, grants, subgrants,
and/or cooperative agreements?
YES NO
If YES please answer Question 2
Question 2: Does the public have access to information about the compensation of the executives in
your organization (the legal entity to which the DUNS number provided belongs) through periodic
reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a),
78o(d)) or section 6104 of the Internal Revenue Code of 1986?
YES NO
If NO please answer Question 3
Question 3: What are the Names and Total Compensation for the top 5 employees in your organization?
Name Compensation
Exhibit T
1
HOME INVESTMENT PARTNERSHIPS PROGRAM (HOME)
NEW CONSTRUCTION OF RENTAL PROPERTY
BETWEEN THE CITY OF OMAHA
AND
Mercy Housing Mountain Plains, a Colorado non-profit corporation,
MHMP 18 Timbercreek Apartments, LP Nebraska Limited Partnership
FOR
The rehabilitation of one hundred eighty (180) multi-family senior housing units for tenant
households located at 6816 South 137 Plaza, Omaha, Nebraska. Eight (8) units will be
HOME assisted and are to be rented as their principal place of residence to qualified
tenant households; six (6) of these will be available to eligible households who have incomes
at or below 80% of the Median Family Income (MFI) and two (2) units will be available for
households at or below 50% of the MFI.
$700,000.00 in FY 2021 HOME Funds
2
TABLE OF CONTENTS
SECTION 1 DEFINITIONS AND ABBREVIATIONS
SECTION 2 RESPONSIBILITIES OF THE DEVELOPER
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 Property Insurance
3.01.2 Contracts
3.01.3 Bonding/Letter of Credit
3.01.4 Contractor’s Insurance and Workers’ Compensation
3.01.5 Plans Submission
3.01.6 Minority/Women Owned Business Enterprise Plan
3.01.7 Eligible Contractors
3.01.8 Funding Compliance Deadline
3.01.9 Section 504
3.01.10 Security for Non-Recourse Repayable Loan
3.01.11 Employment Insurance and Bonding
3.01.12 Evidence of Leveraged/Matching Funds
SECTION 4 PROJECT RESPONSIBILITIES OF THE DEVELOPER
4.01 Eligible Use of Funds
4.02 Terms and Conditions
4.03 Breach of Agreement
4.04 Lien Waivers
4.05 Eligible/Ineligible Costs
4.06 Lead-Based Paint Prohibition
4.07 Ongoing Property Restrictions
4.08 Davis-Bacon Requirements
4.09 Property Standards
4.10 Affirmative Marketing Policy
4.11 Maintenance of Property
4.12 Pre-Construction Meeting
4.13 National Environment Policy Act of 1969
4.14 Economic Equity and Inclusion Plan
SECTION 5 GENERAL ADMINISTRATION REQUIREMENTS OF DEVELOPER
5.01 Financial Management
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5.02 Documentation and Record-Keeping
5.03 Records
5.04 Financial Status Report
5.05 Record Retention
5.06 Personnel and Participant Conditions
5.07 Match Funds
5.08 Limited English Proficiency
SECTION 6 DEVELOPER’S COMPLIANCE WITH OTHER FEDERAL
REGULATIONS
6.01 Environmental Review
6.02 Uniform Relocation Act
6.03 Soil Work Policy
6.04 Federal Funding Accountability and Transparency Act
6.05 Drug Free Workplace
SECTION 7 RESPONSIBILITIES OF THE CITY
7.01 Performance Monitoring
7.02 Payments
7.03 Progress Payments
7.04 Inspections
7.05 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 Project Roles
8.06 Captions
8.07 Merger
8.08 Modification
8.09 Assignment
8.10 Strict Compliance
8.11 Termination and Enforcement
8.12 Reversion of Assets
8.13 Indemnification
8.14 Unenforceable Provisions
8.15 Disclosure of Lobbying
8.16 Notices
8.17 Applicability
4
SECTION 9.DEFAULT PROVISIONS
9.01 Remedies
9.02 Non-Recourse Repayable Loan
5
HOME PROGRAM LOAN AGREEMENT
THIS AGREEMENT is entered into by and between the City of Omaha (hereinafter
referred to as the “City”) and Mercy Housing Mountain Plains, a Colorado non-profit
corporation, MHMP 18 Timbercreek Apartments, LP Nebraska Limited Partnership, owner of
Timbercreek Apartments (hereinafter referred to as the “LP”), 6816 S 137th Plaza, Omaha, NE
68137.
RECITALS:
WHEREAS, 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 HOME Investment
Partnerships Program (hereinafter referred to as “HOME”) funds for the purpose of providing
affordable rental housing benefiting low- and moderate-income households and families; and,
WHEREAS, the City’s FY 2021 Consolidated Submission for Community Planning and
Development Programs, outlining priorities, programs and funding allocations for the 2021-2023
program year, was approved on May 18, 2021 by Resolution No. 2021-0524 (hereinafter referred
to collectively as the “Consolidated Plan”); and,
WHEREAS, Mercy Housing Mountain Plains will rehabilitate one hundred eighty (180)
multi-family housing units for tenant households located at 6816 South 137 Plaza, Omaha,
Nebraska. Eight (8) “floating” HOME assisted units are to be rented as their principal place of
residence to qualified tenant households; six (6) of these will be available to eligible households
who have incomes at or below 80% of the Median Family Income (MFI) and two (2) units will
be available for households at or below 50% of the MFI.. The above-described construction is
hereinafter referred to as the “Project”; and,
WHEREAS, the Consolidated Plan identified that this Project provides or improves
housing which is determined to benefit low- and moderate-income households and families;
therefore, the Project is consistent with the Consolidated Plan and is eligible for funding; and,
WHEREAS, the Timbercreek Apartments housing project was included in the FY 2021
HOME Program Consolidated Plan, as amended, and $700,000.00 was allocated to the Project;
and,
WHEREAS, Mercy Housing Mountain Plains has indicated the total cost of the Project is
estimated at $35,806,917.00. In addition to the $700,000.00 in HOME program funds, the
Project funding will include approximately $35,106,917.00 in other funding sources; and,
6
WHEREAS, it is in the best interest of the City and the residents thereof that the City
enter into this Agreement with Mercy Housing Midwest to complete this worthwhile housing
rental Project in Southwest Omaha.
NOW, THEREFORE, IN CONSIDERATION OF THESE MUTAL 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 “Developer” shall mean – Mercy Housing Mountain Plains, a Colorado non-profit
corporation, MHMP 18 Timbercreek Apartments, LP Nebraska Limited
Partnership (sometimes referred to as the “LP”), with a principal place of business
at 1600 Broadway, Suite 2000, Denver CO, 80202.
1.03 “Director” shall mean – the Planning Director of the City of Omaha.
1.04 “Recipient” shall mean – the City of Omaha.
1.05 “HUD” shall mean – the U.S. Department of Housing and Urban Development.
1.06 “HOME Funds” shall mean – that portion of the HOME Investment Partnerships
(HOME) 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 loan during
the FY 2021 program year for the use specified herein in an amount not to exceed
$700,000.00. The HOME funds shall be payable from the FY 2021 HOME
Program, Timbercreek Rehabilitation 2021 Fund No. 12179, Organization No.
128071, Award No. 100865 subject to the terms, conditions and requirements of
said HOME Fund Agreement.
1.07 “HOME Program Non-recourse Repayable Loan” or “Loan” shall mean – a
HOME Program Repayable Loan in an original principal amount of $700,000.00,
which principal amount shall not bear interest, shall be allocated to the Project as
described in Section 1.13 herein, evidenced by and made subject to the terms,
conditions and provisions of this Agreement under which said loan is made.
Simple interest shall accrue at the annual rate of zero percent (0%) and payments
of the principal shall be deferred for twenty (20) years known as the
“Affordability Period.”
The Principal loan amount of $700,000.00 shall be due and payable on the first
day following the end of the Affordability Period (the “Maturity Date”).
Excepting a transfer of the interest of or any interest in a limited partner of
7
Developer in the event the Developer sells, conveys, grants, mortgages or
otherwise transfers any portion of the interest in the property, without prior
written notice to the City, during the Affordability Period (twenty years) and prior
to the Maturity Date, the HOME Program Non-Recourse Repayable Loan shall
become due and payable. The loan may only be used for the purpose described
herein (see Loan Forgiveness Policy – Exhibit “W”).
1.08 “Construction Financing” shall mean, but is not limited to – billings for
construction, closing costs, contractor’s profit and overhead, developer’s
fee/overhead, predevelopment and public improvement costs, financing, legal,
accounting, architectural or construction supervision costs, costs for materials,
labor, utility hookups and site preparation associated with the construction of the
Project.
1.08.01 Profit and overhead of the Developer’s general contractor shall not
exceed 15% of the hard construction cost.
1.09 “Construction Completion” shall mean – the date the Project has been certified by
the City as complying with all appropriate state, federal and local laws,
ordinances, regulations and codes, including but not limited to, Universal Physical
Condition Standards (UPCS) as established by HUD, accessibility requirements,
where applicable.
1.10 “Project Completion” shall mean –Construction Completion has been certified
and approved by the City, all HOME funds have been disbursed to the Developer,
and all 180 units of which 8 units are assisted with HOME Funds have been
initially rented to eligible low and moderate households or families.
1.11 Project Close Out” shall mean – the dates all project HOME funds have been
disbursed and the City has completed HUD and State close out procedures (24
C.F.R. 92.507 and 2 CFR, Part 200(D), 200.343 (Exhibit “E”). The distinction
between Project Close Out and Project Completion is that tenant occupancy
requirements are required to be satisfied for Project Completion. The City shall
provide the Developer with written notice of the Project Close out date.
1.12 “Affordability Period” (24 C.F.R. 92.252(e)) shall mean – that time period,
twenty (20) years after the Project Close Out date in which Developer shall keep
the eight (8) assisted units in the Project affordable. During the Affordability
Period, the Developer must ensure that the HOME-assisted rental units continue
to meet rent restrictions, occupancy requirements and property standards as
described in Section 4.09 herein. For this Agreement, the Affordability Period
shall commence on the Project Close Out date and continue for twenty (20) years.
In the event the term of the Agreement would be extended, the Affordability
Period would be extended for the additional time. Alternately, in the event
Project Close Out would be accelerated, the term of the Agreement and
Affordability Period shall be moved correspondingly.
8
1.13 “Property” or “Project” shall mean – the rehabilitation of one hundred eighty
(180) multi-family senior apartment residential units including eight (8) “floating”
HOME fund assisted units comprised of one (1) garden level 1-bedroom, one (1)
first/second floor 1-bedroom, two (2) garden level 2-bedroom, two (2)
first/second floor 2-bedroom, one (1) garden level 3-bedroom and one (1)
first/second floor 3-bedroom units to be occupied by low income households and
families. The legal description is: Lot Two (2), Timber Creek Replat Four, an
Addition in Douglas County, Nebraska, EXCEPT that part condemned by the
City of Omaha in Report of Appraisers recorded October 12, 2004 as Inst. No.
2004133443; records of Douglas County, Nebraska.
1.14 “Low Income Household or Family” shall mean – a household whose gross
annual household income does not exceed 80% percent of median income by
Family Size for the Omaha NE-IA Metropolitan Statistical Area as determined
annually by HUD (Exhibit “C”).
“Very Low Income Household or Family” shall mean - a household whose gross
annual household income, as defined in Exhibit “R”, does not exceed 50% percent
of median income by Family Size for the Omaha NE-IA Metropolitan Statistical
Area as determined annually by HUD (Exhibit “C”).
1.14.1 “HOME Program Rents” (24 C.F.R. 92.252) shall mean – the
maximum rents (including utility allowance) for the Omaha, NE-IA
Metropolitan Statistical Area as established by HUD as of the
effective date of the lease. The rents for six (6) of the HOME
funded units shall be the lower of fair market rents of the High
HOME rents as established by HUD (“Exhibit C”) and two (2)
HOME units shall be the lower of fair market rents o the LOW
HOME rents as established by HUD (“Exhibit C”).
If the unit receives Federal or State project-based rental subsidy and
the very low-income family pays a contribution toward rent not
more than 30 percent of the family’s adjusted income, the maximum
rent (i.e. tenant contribution plus project-based rental subsidy) is the
rent allowable under the Federal or State project-based subsidy
program (24 C.F.R. 92.252(b)(2). 235)
1.15 “HOME” shall mean – that portion of HOME Investment Partnership 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 loan during the FY 2021 program
year for the use specified herein in an amount not to exceed $700,000.00 subject
to the terms, conditions and requirements of said Loan Agreement.
1.16 “Client” shall mean – a qualified participant making application to the Developer
to occupy a unit in this Project.
9
1.17 Program Income” shall mean – payments of principal and interest on loans made
using HOME funds. For this Project, the Developer is not acting as a
Subrecipient.
1.18 “HOME Floating Units” shall mean – eight (8) units consisting of one, two and
three bedrooms (six (6) units at 80% MFI or less household income and two (2)
units at 50% or less MFI household income) as defined by HUD according to
household size. The units will be located on the Property, within the legal
description provided in Section 1.13 herein. The units shall consist of the
following unit count and types:
1 – 1 bedroom, garden level, 1 bathroom
1 – 1 bedroom, first or second floor, 1 bathroom
1 – 2 bedroom, garden level, 1 bathroom
1 – 2 bedroom, first or second floor, 1 bathroom
1 – 2 bedroom, garden level, 2 bathroom
1 – 2 bedroom, first or second floor, 2 bathroom
1 – 3 bedroom, garden level, 2 bathroom
1 – 3 bedroom, first or second floor, 2 bathroom
SECTION 2. RESPONSIBILITIES OF THE DEVELOPER.
2.01 Overall Project Performance
2.1.1 The Developer shall use the $700,000.00 in HOME funds for partial
financing for the rehabilitation of the one hundred eighty (180) one, two
and three bedroom apartment units. Eight (8) of the units will be
directly assisted with HOME funds and will be floating units as
provided in Section 1.18 herein. A minimum of nine (9) units in the
Project shall be made accessible for persons with disabilities. An
additional two (2) units in the Project shall be made accessible for
persons with hearing or vision impairments. Six (6) of the HOME-
assisted units shall be occupied as their principal place of residence by a
qualified household whose annual household income is at or below 80%
of the MFI and two (2) at 50% of the MFI throughout the Affordability
Period. Contract rents, regardless of source of payment, including the
utility allowance for tenant paid utilities (Exhibit “K”), for the HOME-
assisted units must not exceed the high or low HOME rent limits in
effect on the date of the lease agreement for that eligible household
(Exhibit “C”). If the lease converts to a month to month lease after the
initial 12-month lease, the HOME rent limits and utility allowance in
effect for each separate month apply.
10
2.01.2 Total Total Total Total
HOME HOME Low-Moderate
Project Units Assisted Units Floating Units Income Units
180 8 8 180
2.01.3 Number of 50% Number of 80% Maximum Percent of Area
AMI Households AMI Households Median Income Permitted
2 6 80% (HOME)
2.01.4 Construction
Completion Date
June 30, 2023
2.02 Project Budget
2.02.1 The Developer asserts that the permanent funding sources and
amounts listed below are committed as of this date or will be
committed to the Project prior to loan closing with the City.
Cedar Rapids Bank & Trust $ 8,320,000.00
Low Income Housing Tax Credits Funds 11,663,992.00
Home Investment Partnership Program Fund 700,000.00
Omaha Housing Authority Loan 3,881,598.00
Seller Financing 7,412,280.00
Mercy Gap Funds 1,750,000.00
Other Capital 862,600.00
Deferred Developer Fee 1,216,347.00
GP Equity 100.00
Estimated Project Cost $ 35,806,917.00
2.03 Term of the Agreement
2.03.1 This Agreement shall be in full force and effect and shall end the first
day following the end of the twenty (20) year Affordability Period.
Construction Work as well as the other obligations of the Developer will
start effective the date of the proceed order issued by the City and
funding funds as stated in Section 2.01 have been evidenced. Initial
occupancy of the eight (8) HOME assisted units shall occur within six
(6) months of Project Completion. If occupancy does not occur with the
six (6) month period, a written explanation must be submitted and
approved by the City. Upon approval, occupancy must occur within
eighteen months of the Project Completion date. The Agreement date
may be extended by the Planning Director. In the event the Project
Completion and Project Close-out would be accelerated, the Term of the
Agreement and Affordability Period shall be moved correspondingly.
11
SECTION 3. CONDITIONS FOR RECEIPT OF CITY FINANCING.
3.01 Documents Required by City. 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 Developer has submitted for and
received the prior approval of the Director of all the documents listed below.
3.01.1 Property Insurance. Developer shall procure and maintain, at a
minimum, fire and extended coverage insurance in an amount sufficient
to protect the City’s interest in the Property during the Term of the
Agreement and financing security documents (2 CFR, Part 200, 310
200.447) (Exhibit “E”). The insurance policy shall include the City of
Omaha as an additional insured. Written evidence of such insurance
shall be submitted to the City for approval. In the event of damage of
the property, any insurance proceeds are to be applied, at the discretion
of the Planning Director, to the reconstruction of the property or
repayment, in full, of the HOME funding.
3.01.2 Contracts. The Developer shall submit duly executed contracts for all
Construction Work to the Director for approval prior to the start of
construction.
3.01.3 Performance and Labor Material Payment Bond and/or an Irrevocable
Letter of Credit. Developer or General Contractor responsible for
Project Construction Work shall acquire and maintain a performance and
labor material payment bond and/or a letter of credit in force for one
year following the completion of the Construction Work from the
Developer/General Contractor and all subcontractors in an aggregate
amount of the contract bid. The Bonds and/or Letters of Credit shall be
in favor of the City and shall be submitted to the Director for review and
approval. The Director reserves the right to reject the Letters of Credit
and Choice of Surety of the Bonds.
3.01.4 Contractors’ Insurance and Workers’ Compensation. The Developer or
its contractors and subcontractors shall submit Certificates of Insurance
in favor of the City for review and approval by the Director. The
insurance coverage shall include pollutant liability for lead reduction
work, if applicable, Workers’ Compensation, and, at a minimum, the
following amount of coverage:
Contractor’s Personal Liability $1,000,000.00
Combined Bodily Injury and Property
Damage ($1,000,000.00 each occurrence)$2,000,000.00
Product, Including Completed Operations $1,000,000.00
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3.01.5 Plans Submission. Developer shall submit all plans, working drawings
and/or specifications necessary or incidental to this Project to the
Director for review and approval.
3.01.6 Minority/Women-Owned Business Enterprise Plan. Developer 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 Developer 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.
3.01.7 Eligible Contractors. Developer 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 2 CFR, Part 200.213. Each contractor and subcontractor shall
register with sam.gov prior to being placed on the job as evidenced by a
copy of the registration screen print out. The Planning Director shall
approve all contractors and subcontractors prior to being hired by the
Developer.
3.01.8 Funding Compliance Deadline. In the event that all conditions of
funding are not met on or before December 31, 2023, then this
Agreement shall automatically become null and void and the City shall
not be deemed to have assumed any obligation or liability hereunder.
Upon the sole discretion of the Director, this date may be extended.
3.01.9 Section 504. Developer shall design and construct the new multi-family
apartment units to be readily accessible to and usable by individuals with
handicaps per the Uniform Federal Accessibility Standards (UFAS). A
minimum of five percent of the total dwelling units or at least nine
(9) units shall be made accessible for persons with disabilities. An
additional two percent of the units or at least two (2) units shall be
made accessible for persons with hearing or vision impairments
(Exhibit “F”).
3.01.10 Security for Non-Recourse Repayable Loan. Developer shall execute
for the benefit of the City a Deed of Trust, a Non-recourse Repayable
Loan Promissory Note and an Acknowledgement of Covenant Running
With Land in an amount not to exceed $700,000.00 secured by no less
than a fifth lien position subordinate to amounts not to exceed the total
financing of $35,806,917.00 during construction. A copy of the Non-
recourse Repayable Loan Promissory Note and an Acknowledgement of
Covenant Running With Land in substantial form are attached hereto as
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Exhibit “B” and incorporated herein by this reference as thought fully
set forth.
3.01.11 Employment Insurance and Bonding. The Developer shall purchase a
blanket fidelity bond covering all employees, at a minimum, in an
amount equal to cash advances from the City. The Developer shall
comply with bonding and insurance requirements of 2 CFR, Part
200.310, 200.447, 200-325.
3.01.12 Evidence of Leveraged/Matching Funds. The Developer shall provide
written evidence that funds detailed in the Project Budget described in
Section 2.02 herein have been committed or secured for the Project.
SECTION 4.PROJECT RESPONSIBILITIES OF THE DEVELOPER
4.01 Eligible Use of Funds. The Developer 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 in Section 1.8 of this Agreement.
4.02 Terms and Conditions. The Developer shall abide by all terms and conditions of
this Agreement and shall be responsible for the security and maintenance of the
sites described in Section 1.13 herein.
4.03 Breach of Agreement. If through breach of this Agreement the Developer fails to
maintain the occupancy, affordability and use restrictions as described herein, and
such failure is not cured within sixty (60) days of receiving written notice of such
failure from the City, or if such failure cannot be cured within such sixty (60) day
period, Developer fails to use commercially reasonable efforts in pursuing a cure,
all HOME funds previously provided to the Developer through fulfillment of this
Agreement shall promptly be returned to the City. Any investor member of the
Developer shall have the right but not the obligation to cure any default, failure,
or violation of any term of this Agreement by the Developer during the applicable
cure period, and the city agrees to accept such cure tendered by any such investor
member.
4.04 Lien Waivers. Developer agrees to obtain the appropriate lien waivers prior to
each construction payment.
4.05 Eligible Costs. The Developer shall request disbursement of funds under this
Agreement only are needed for payment of eligible costs of Construction
Financing as described in Section 1.8 herein.
4.05.1 Ineligible Costs. The Developer shall be responsible for payment of any
Project costs that exceed those specified in Exhibit B.
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4.05.1.1 Luxury Items. Property amenities shall be those
amenities reasonably anticipated in comparable
properties. Any items determined by the City as luxury
items shall not be considered an eligible cost for
construction.
4.06 Lead-Based Paint Prohibition. Developer shall not use lead-based paint in the
performance of this Agreement, including the performance of any subcontractor
(42 USC 4821 et seq., 24 C.F.R. 92.355 and 24 C.F.R. Part 35). “Lead-based
Paint” means any paint containing more than six one-hundredths of one (1) per
centum of lead by weight (calculated as lead metal) in the total nonvolatile
content of the paint, or the equivalent measure of lead in the dried film of paint
already applied. The Developer further agrees to abide by applicable Federal
requirements regarding lead-based paint poison prevention.
4.07 Ongoing Property Restrictions. During the period of this Agreement that
Construction Work is being performed, and that part of any grant, deed of
trust/mortgage, covenant documents, the Developer shall:
4.07.1 Maintain the Property in a safe and sanitary condition at all times.
4.07.2 Ensure that all real estate taxes and special assessments are paid and
kept current.
4.07.3 Maintain insurance against loss or damage to the Property in an
aggregate amount sufficient to protect the City’s interest in the Property.
Such property insurance policy must be properly endorsed showing the
City as an additional insured. In the event of loss or damage, the
Developer shall provide immediate written notification to the City of
any loss. Proceeds from any claim under this policy may, at the
discretion of the Director, be either applied to restore or replace the
improvements damaged or be paid to the City to satisfy the Developer’s
obligation to the City under the terms of this Agreement. Insurance
proceeds remaining after payment of such indebtedness to the City shall
be made available to as applicable, holders of subordinate lien interests
and the Developer.
4.08 Davis-Bacon Wage Determination and HUD 4010 Labor Standards. This Project
is exempt from Davis-Bacon Prevailing Wage Rage Provisions because it is a
residential rehabilitation contract, including construction and non-construction
costs, is funded with HOME funds and contains less than 12 assisted units.
(Exhibit “H”).
4.09 Property Standards (24 C.F.R. 92.251). The Developer shall ensure that the
Construction Work meets all applicable state, federal and local laws, ordinances,
regulations and codes, including but not limited to, Universal Physical Condition
15
Standards (UPCS) as established by HUD, and accessibility requirements as
applicable, in accordance with Section 504 of the Rehabilitation Act, the
American with Disabilities Act and the Fair Housing Act.
4.09.1 Inspections. The City may perform periodic inspections at any
reasonable time to ensure compliance with this Agreement. The City
shall perform a final inspection to certify Project Completion prior to
final disbursement of HOME Program proceeds (24 CFR 5.705).
4.10 Affirmative Marketing Policy (24 C.F.R. 92.351). The Developer agrees to
comply with the Affirmative Fair Housing Marketing Plan- Multifamily Housing
of the U.S. Department of Housing and Urban Development, attached hereto as
Exhibit “I” and incorporated herein by this reference as though fully set forth.
These affirmative marketing procedures must be employed in the advertising and
marketing of this Project throughout the Affordability Period. In marketing, the
Developer shall also conform to the nondiscrimination provisions hereinafter set
forth in Section 5.06.1.2.
4.11 Maintenance of Property. The Developer shall maintain the Property in a safe and
sanitary condition to the extent possible during the construction phase of the
Project.
4.12 Pre-Construction Meeting. The Developer and its subcontractors shall attend a
preconstruction meeting with the City Construction Specialist assigned to the
Project prior to the start of any Construction Work.
4.13 National Environmental Policy Act of 1969. The Developer shall not begin any
rehabilitation or construction of a Property until it receives approval by the City
that all provisions of the National Environmental Policy Act of 1969 (NEPA) and
related authorities listed in HUD’s implementing regulations at 24 C.F.R. Parts 50
and 58 have been met regarding the Property.
4.14 Economic Equity and Inclusion Plan. The Developer shall comply with all
specific actions and reporting documents as required within certain time periods
for the one (1) year as determined by the start and termination date of the plan. If
the developer should default, corrective action will be taken. Applicable
documents shall be submitted by the Developer within 30 days of written
notification or default. Payment will be withheld until an approved corrective
action plan is submitted to the City Human Relations Department (Exhibit “V”).
SECTION 5.GENERAL ADMINISTRATIVE REQUIREMENTS OF DEVELOPER.
5.01 Financial Management.
5.01.1 Accounting Standards. The Developer agrees to comply with 2 CFR,
Part 200 and agrees to adhere to the accounting principles and
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procedures required therein, utilize adequate internal controls, and
maintain necessary source documentation for all costs incurred. (Exhibit
“E”, attached hereto and incorporated herein as though fully set forth).
5.01.2 Cost Principles. The Developer shall comply with the requirements and
the standards of 2 CFR, Part 200 Subpart E (Exhibit “E”).
5.01.3 Audits. The Developer shall comply with all provisions and regulations
of the Program and have an annual audit completed in compliance with
2 CFR, Part 200 Subpart F, attached hereto as Exhibit “E”, and
incorporated herein as though fully set forth. A copy of the audit shall
be provided to the Director. The auditor shall determine the appropriate
type of audit to be conducted; i.e., limited scope or full compliance. A
single audit is not an allowable expense unless the Subrecipient expends
total federal funds over $750,000.00 in each fiscal year. A limited-scope
audit may be allowable provided the auditor conducts the audit in
accordance with generally accepted auditing standards and the recipient
expends less than $750,000.00 in each fiscal year.
5.01.3.1 Any deficiencies noted in audit reports must be fully
cleared by the Developer within 30 days after receipt of
audit by the Developer. Failure of the Developer 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 (24 C.F.R. 92.508). All Developer 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, upon prior written notice, 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 Developer with any contractor or subcontractors shall include
this Section to ensure said access.
5.03 Records. The Developer shall submit to the City the following reports in
accordance with the submission timelines as specified.
5.03.01 Construction Progress Reports. The Developer shall provide reports to
the Director (AIA G702 Form or comparable document) describing the
progress of the Construction Work, and any significant problems and/or
delays in construction on this Project. Reports will be submitted at the
time of each pay request, or by the 15th day of each month if no pay
request is made before the 15th day of the month (or upon written
request from the Director, but no more frequently than monthly). The
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progress reports are required until such time as all Construction Work is
completed and the City issues the final payment of construction to the
Developer.
5.3.2 Occupancy Report. For each HOME-assisted unit, the Developer
shall provide to the Director an initial tenant survey, asset/income
computation form and notarized City of Omaha Definition of
Income Form, copy of the executed lease, utility allowance table
effective on the date of the lease, citizenship attestation form for
public benefit, race and ethnicity of household members, and source
documentation of all income and asset sources (minimum two month
pay stubs, consecutive bank statements, subsidy letters, fixed income
statements, etc.) Attached as Exhibit “K”, and incorporated herein
by this reference as though fully set forth, are copies of the requisite
forms. These forms are due at the time of initial lease execution and
annually thereafter for each tenant household occupying a HOME-
assisted unit during the Affordability Period. All documentation
can be no more than six (6) months old. The Developer annually
must also submit evidence of affirmative marketing efforts
undertaken during each calendar year in the Affordability Period.
Annual reports required by this Agreement shall be due March 15
and shall include all information for up to and including the end of
the previous calendar year. The City will determine the reporting
format throughout the Affordability Period.
For each household or individual occupying a HOME-assisted unit in
the Property, the Developer shall retain the following records for five (5)
years after the required Affordability Period as specified in Section 1.14
of this Agreement. In the event the Term of the Agreement would be
extended, the timeframe for record retention would be extended
correspondingly.
5.03.2.1 name(s) of tenant(s)
5.03.2.2 address of property, unit number
5.03.2.3 household income as a percent of Median Family Income
(MFI) as determined by HUD (Exhibit “C”), income
verification forms used in determining MFI including the
City’s Computing Annual Income Form (Exhibit “K”)
5.03.2.4 household size
5.03.2.5 gender of head of household member
5.03.2.6 name and age of each household member
5.03.2.7 race and ethnicity of each household member
5.03.2.8 disability status of any household member
5.3.2.9 copy of annual lease agreement and utility allowance
table used
5.3.2.10 evidence of affirmative marketing efforts
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5.3.2.11 citizenship attestation
5.3.2.12 source documentation for all income and asset sources
5.04 Financial Status Reports. Developer shall submit financial status reports (2 CFR,
Part 200 Subpart C, 215.52) (Exhibit “E”). These reports shall accompany pay
requests. In the event pay requests are not submitted for ninety (90) days,
financial status report shall be due, at a minimum, 15 calendar days from the end
of the calendar year quarter. Attached as (Exhibit “L”), and incorporated herein
by this reference as though fully set forth, is a sample financial status report.
5.05 Record Retention. The Developer, its contractors and 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, upon written prior notice shall have access to any
books, documents, papers, records and accounts of the Developer, Contractor, or
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 2 CFR, Part
200.333 and Subpart C 215.53 (Exhibit “E”).
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. (Exhibit “S”) The
Developer and its contractor shall not discriminate against
any employee or applicant for employment because of race,
religion, color, sex, age, sexual orientation, gender identity,
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
Developer and its contractor 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 Developer and its contractors shall, in all solicitations
or advertisements for employees placed by or on behalf of
the contractor, state that all qualified applicants will receive
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consideration for employment without regard to race,
religion, color, sex, age, sexual orientation, gender identity,
national origin, familial or handicap status.
5.06.1.3 The Developer and its contractors 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 Developer and its contractors shall furnish to the
Human Rights and Relations Department all applicable
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 Rights and Relations Department 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 Developer and its contractors 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 Developer and its contractors shall file and shall cause
his subcontractors, if any, to file compliance reports with
the Developer’s contractor in the same form and to the
extent as required by the federal government for federal
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contracts under federal rules and regulations. Such
compliance reports shall be filed with the City’s Human
Rights and Relations Department. Compliance reports filed
at such times as directed shall contain information as to the
employment practices, policies, programs and statistics of
the Developer, contractor and his subcontractors.
5.06.1.7 The Developer and its contractors or its subcontractors
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 1980, Section
10-192; Ord. No. 35344, Sections 1, 9-26-00)
5.06.2 Workers’ Compensation. The Developer shall provide Workers’
Compensation Insurance coverage for all employees involved in the
performance in this Agreement.
5.06.3 Section 3 – Employment of Low-Income Persons (Section 3 of HUD
Act of 68, as amended, 1 U.S.C. 1701u). The Developer 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 (Exhibit “Q”).
5.06.4 Conflict of Interest. Owners and Developers. (1) No owner, developer or
sponsor of a project assisted with HOME funds (or officer, employee,
agent, elected or appointed official or consultant of the owner, developer
or sponsor) whether private, for-profit or non-profit (including a
community housing development organization (CHDO) when acting as an
owner, developer or sponsor) may occupy a HOME-assisted affordable
housing unit in a project.. Conflicts prohibited. No persons described in
this section who exercise or have exercised any functions or
responsibilities with respect to activities assisted with HOME funds or
who are in a position to participate in a decision making process or gain
inside information with regard to these activities, may obtain a financial
interest or benefit from a HOME-assisted activity, or have an interest in
any contract, subcontract or agreement with respect thereto, or the
proceeds thereunder, either for themselves or those with whom they have
family or business ties, during their tenure or for one year thereafter.
The conflict of interest provisions of this section apply any person who is
an employee, agent, consultant, officer, or elected official or appointed
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official of the participating jurisdiction, State recipient, or subrecipient
which are receiving HOME funds.
5.06.5 Attestation of Citizenship. To comply with Neb. Rev. Stat. 4-108
through 4-114, the Developer agrees to comply with the requirements of
5.06.5.1 and 5.06.5.2.
5.06.5.1 The Developer shall include the following language in all
contracts and subcontracts for the physical performance of
services: “The Contractor is required and hereby agrees to
use a federal immigration verification system to determine
the work eligibility status of new employees physically
performing services within the State of Nebraska. A federal
immigration verification system means the electronic
verification of the work authorization program authorized by
the illegal Immigration Reform and Immigrant Responsibility
Act of 1996, 8 U.S.C. 1324a, known as the E-Verify
Program, or an equivalent federal program designated by the
United States Department of Homeland Security or other
federal agency authorized to verify the work eligibility status
of a newly hired employee. If the Contractor is an individual
or sole proprietorship, the following applies:
a)The Contractor must complete the United States
Citizenship Attestation Form available on the Department
of Administrative Services website at
www.das.state.ne.us.
b)If the Contractor indicates on such attestation form that
he or she is a qualified alien, the Contractor agrees to
provide the U.S. Citizenship and Immigration Services
documentation required to verify the Contractor’s lawful
presence in the United States using the Systematic Alien
Verification for Entitlements (SAVE) Program.
c)The Contractor understands and agrees that lawful
presence in the United States is required and the
Contractor may be disqualified or the contract terminated
if such lawful presence cannot be verified as required by
Neb. Rev. Stat. 4-108.”
5.06.5.2 The Developer shall have each person signing the application
for a benefit under this agreement execute a United States
Citizenship Attestation Form For Public Benefit (Exhibit
“K”) verifying eligibility status for the purposes of receiving
a public benefit. The Developer shall maintain aggregate
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records for the duration of the contract showing: (a) the
number of applicants for public benefits under this
agreement; and (b) the number of applicants rejected
pursuant to the lawful presence requirement set forth in the
above-referenced Nebraska statutes. Further the Developer
shall provide a summary report to the City no later than
March 15th each calendar year reflecting this applicant data
for the prior calendar year.
5.06.8 Employee Classification Act. To comply with the Nebraska Employee
Classification Act, all general and subcontractors who perform
construction or delivery service pursuant to this Agreement shall submit
to the City an Affidavit For Employee Classification Act (Exhibit “M”)
attesting that (1) each individual performing services for such contractor
is properly classified under the Nebraska Employee Classification Act,
2010 LB 563 (“the Act”), (2) such contractor has completed a federal I-9
immigration form and has such form on file for each employee
performing services, (3) such contractor has complied with Neb. Rev.
Stat. section 4-114 (federal immigration verification system), (4) such
contractor has no reasonable basis to believe that any individual
performing services for such contractor is an undocumented worker, and
(5) as of the time of the contract, such contractor is not barred from
contracting with the state or any political subdivision pursuant to the
Act. The contractor shall follow the provisions of the Act. A violation
of the Act by a contractor that is not cured within ten (10) days of
written notice of such violation is grounds for rescission of the
Agreement by the City in accordance with the terms of the agreement.
5.07 Match Funds. The Contractor will provide documentation to the City showing all
non-federal funds in the Project. This documentation should include the
following:
a.source of funds (additional documentation as needed)
b.amount of funds
c.date funds provided
d.designation (name) of funds
e.purpose of funds.
The documentation shall be submitted to the City annually no later than January
31st of the following year.
5.08 Limited English Proficiency (LEP). It is the policy of the City to take reasonable
steps to provide meaningful access to its programs and activities for person with
Limited English Proficiency (LEP) in accord with Executive Order 13166 titled,
“Improving Access to Services by Persons with Limited English Proficiency”.
The City’s policy is to ensure that staff and subrecipients will communicate
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effectively with LEP individuals, and LEP individuals will have access to
programs and information. The City is committed to complying with Federal and
State requirements in providing access to this program and in activities for LEP
persons.
SECTION 6.DEVELOPER’S COMPLIANCE WITH OTHER FEDERAL REGULATIONS
6.01 Environmental Review. The Developer 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 terms of the Agreement as it may apply to
provisions of this Agreement.
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
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 45 years
old or older or that are included on a Federal, State or local historic
property list.
6.02 Uniform Relocation Act. The Developer 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)) (Attachment 4 Tenant
Relocation), 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 Developer or its agent displaces
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any tenant-occupant of the Property, it shall immediately notify the City in
writing of the circumstances surrounding said displacement and comply with 24
C.F.R. 92.353. A temporary tenant relocation plan must be submitted to and
approved by the City prior to any relocation occurring.
6.03 Soil Work Policy. The Developer and its contractors and subcontractors shall
comply with the Soil Work Policy, if applicable, see Exhibit “N”, which is
incorporated herein by this reference as though fully set forth.
6.04 Federal Funding Accountability and Transparency Act. The Developer shall
comply with the applicable regulations of the Federal Funding Accountability and
Transparency Act (FAFTA) (75 Fed RgSS6) (September 14, 2010) (to be codified
at 2 CFR, Part 170). Developer shall complete and provide to the City (Exhibit
“T”).
6.05 Drug Free Workplace. Developer shall continue to provide a drug-free workplace
in accordance with 41 U.S.C. 702 and shall submit a Certification of the Drug
Free Workplace to the City prior to disbursement of funds. See Exhibit “U”,
attached hereto and incorporated herein as though fully set forth.
SECTION 7.RESPONSIBILITIES OF THE CITY.
7.01 Performance Monitoring. The City will monitor the performance standards of the
Developer 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 Developer within thirty (30) days
after written notice by the City, contract suspension or termination procedures
may be initiated. Any investor member of the Developer shall have the right but
not the obligation to cure any default, failure, or violation of any term of this
Agreement by the Developer during the applicable cure period, and the City
agrees to accept such cure tendered by any such investor member.
7.02 Payments. It is expressly agreed and understood that the total mount to be paid by
the City under this Agreement shall not exceed $700,000.00 in HOME 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 Developer as soon as reasonably possible and the Agreement
will be terminated.
7.02.1 Funds Allocated to the Developer. Funds allocated to the Developer
shall be in the form of a deferred payment loan for the purposes set forth
in this Agreement. Payments will be contingent on Duties and
Conditions specified herein. Drawdowns for the payment of eligible
expenses shall be based upon the value of the construction,
administration, or professional services work completed at the time the
payment request is made.
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7.02.2 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 and its Exhibits,
including, but not limited to, Exhibit B nor shall the City incur any
liability hereunder, unless and until the Developer has timely and fully
complied with its duties and obligations hereunder. No payments shall
be made for any work, labor, material or expenses incurred the Director
reasonably deems to be:
7.02.2.1 not in conformance with applicable state, federal and/or
local laws, including but not limited to, the building,
plumbing and/or electrical codes; or,
7.02.2.2 not in conformance with all plans, working drawings and/or
specifications as approved.
7.02.2.3 work, labor, or material that is unacceptable or substandard;
or,
7.02.2.4 not in accordance with this Agreement or related contracts
as approved for this Project.
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, verification and approval of an AIA Document G702
“Application and Certificate for Payment” or comparable document,
such document being prepared by the Developer’s architect or
authorized person and approved by the Developer and the City
Construction Specialist before being submitted to the Planning
Department for payment. All documents for each pay request
submission must be forwarded directly to the Planning Department
Construction Specialist assigned to the Project. This shall include all
Application and Certificate for Payment (AIA Document G702 or
comparable document) for the entire Project. This also includes pay
requests that do not require City funds.
7.03.2 Receipt of requisite financial status reports.
7.03.3 A 10% retainage of HOME funds, will be held by the City until all
Construction Work including punch list items has been completed and
inspected for compliance by the Construction Specialist assigned to the
Project; the submission of required tenant data and all funds expended
26
for the Project and Project Completion as described in Section 1.10 has
been satisfied.
7.04 Inspections. The City may perform periodic inspections at any reasonable time to
ensure compliance with this Agreement. The City shall perform final inspection
to certify Project Completion prior to final disbursement of HOME proceeds. In
addition, the City shall perform annual on-site inspections of the Property from
Project Completion through the twenty (20) year Affordability Period to ensure
compliance with property standards (24 C.F.R. 92.504 (d)(1)).
7.05 Technical Assistance. The Director shall assist the Developer in the same manner
the Director provides technical assistance to other developers during the
construction phase to ensure compliance with such housing quality standards,
Universal Physical Condition Standards (UPCS) and accessibility requirements as
applicable.
SECTION 8.MUTUAL AGREEMENTS BETWEEN CITY AND DEVELOPER
8.01 Release of Information Laws. The Developer 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 Developer further agrees to indemnify and hold harmless
the City of Omaha for any liability arising out of the improper use by the
Developer 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 Developer 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 Workers’
Compensation Insurance as the Developer is an Independent Contractor.
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8.05 Project Roles. The Developer shall ensure that the Project meets the objectives
stated herein. The City has selected the Developer to assist in the Project since it
is consistent with the Consolidated Plan. With respect to this Project, the City is
not acting as the Developer’s architect or engineer. The City makes no warranties,
express or implied, as to the Construction Work. The City owes no duty to the
Developer or any other persons that shall arise because of any inspection of the
premises by the City’s agents or employees.
8.06 Captions. Captions used in this Agreement are for convenience and are not used
in the construction of this Agreement.
8.07 Merger. This Agreement shall not be merged into any other oral or written
agreement, lease or deed of any type.
8.08 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.
8.09 Assignment. Neither the Developer nor the City may assign its rights or
obligations under this Agreement without the express prior written consent of the
other party which consent shall not be unreasonable withheld. Assignments are
limited to a one-time occurrence. Assumptions are not permitted.
8.10 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 except upon written direction from
authorized representatives of the parties.
8.11 Termination and Enforcement. If an event of default, failure or violation under
this Agreement occurs and is continuing for a period of thirty (30) days after the
City provides written notice to the Developer of such default, failure, or violation,
this Agreement may be suspended or terminated in accordance with Appendix II
to 2 CFR, Part 200 (B) 215.61 and 215.62, Termination for Convenience (Exhibit
“O”, attached hereto and incorporated herein by this reference as though fully set
forth). Upon termination of this Agreement, the principal amount of the loan and
all accrued interest if any shall be repaid by the Developer to the City within
thirty (30) days of such termination. Any limited partner of the Developer shall
have the right but not the obligation to cure any default, failure, or violation of
any term of this Agreement by the Developer during the applicable cure period,
and the city agrees to accept such cure tendered by any such investor member.
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8.12 Reversion of Assets. Upon the expiration of this Agreement, the Developer shall
transfer to the City of Omaha any HOME funds on hand at the time of expiration.
8.13 Indemnification. The Developer shall indemnify and hold the City harmless from
and against: (1) any and all claims arising from contracts between the Developer
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.
8.14 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.
8.15 Disclosure of Lobbying. The Developer shall certify and disclose, to the best of
its knowledge and belief, that:
8.15.1 No federal appropriated funds have been paid or will be paid, by or on
behalf of the Developer, 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
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.
8.15.2 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 Developer shall complete and submit standard Form-
LLL, “Disclosure Form to Report Lobbying”, in accordance with its
instructions.
8.15.3 The language of this certification shall be included in the award
documents for all sub-awards at all tiers, (including subcontracts, sub-
grants, and contracts under grants, loans, and cooperative agreements)
and that all subrecipients shall certify and disclose accordingly.
8.16 Notices. The City and the Developer 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:
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City of Omaha
Planning Department
1819 Farnam Street, Room 1111
Omaha, NE 68183
2)Developer:
Mercy Housing Mountain Plains
MHMP 18 Timbercreek LP
Shelly Marquez, VP of Mercy Housing Mountain Plains
1600 Broadway Suite 2000
Denver, CO 80202
with a copy to:
Mercy Housing Management Group
1600 Broadway Suite 2000
Denver, CO 80202
Attention: Amanda Petersen
National Affordable Housing Trust
2245 North Bank Drive, Suite 200
Columbus, OH 43220
Attention: Lori Little
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.
8.17 Applicability. This Agreement shall be binding upon the parties hereto and shall
run with the Property.
SECTION 9. DEFAULT PROVISIONS.
9.01 Remedies. If, through any cause, the Developer 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, and such failure or violation
continues for thirty (30) days after written notice to the Developer from the City,
the City may terminate this Agreement or such parts thereof as to this Agreement,
and may initiate foreclosure proceedings for any damages caused to the City by
reasons of such default and termination. Any limited partner of the Developer
shall have the right but not the obligation to cure any default, failure, or violation
of any term of this Agreement by the Developer during the applicable cure period,
and the City agrees to accept such cure tendered by any such investor member.
9.02 Non-Recourse Repayable Loan. The Repayable Loan is a non-recourse loan;
therefore, in the event of a default, the City shall rely solely upon the Property
which is secured by the deed of trust which is the security for the non-recourse
30
promissory note and will not initiate or participate in any claim or proceedings
against the maker of the non-recourse promissory note or its members or partners
(or officers, directors, or shareholders of any partner) for payment of any sum due
under the non-recourse promissory note or any other sum due under the deed of
trust.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date
indicated below:
ATTEST:CITY OF OMAHA:
CITY CLERK OF THE CITY OF OMAHA MAYOR OF THE CITY OF OMAHA
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BY: Mercy Housing Mountain Plains,
a Colorado non-profit corporation
BY:MHMP 18 Timbercreek Apartments, LP
a Nebraska Limited Partnership,
its single member
WITNESS:
By:
Date Shelly Marquez Date
Print Name: Title: SVP Mercy Housing Mountain Plains
Title:
APPROVED AS TO FORM:
ASSISTANT CITY ATTORNEY Date
32
SCHEDULE OF EXHIBITS
Exhibit Agreement Location Description
A 1.02 MHMP 18 Timbercreek Apartments, LP
Articles of Organization and Operating
Agreement; Bylaws and Corporate Resolution
B 1.07, 3.01.10 Non-Recourse Repayable Loan Promissory
Note and Acknowledgement of Covenant
C 1.15 and 2.01.1 Median Family Income Chart, HOME Rents,
and Utility Allowances
D 1.17 Definition – Program Income
E 1.11, 3.01.11, 5.01.1,2 CFR, Part 200
5.01.2, 5.01.3, 5.04, 5.05
F 3.01.9 Section 504
H 4.08 Davis-Bacon Exemption Checklist
I 4.10 Affirmative Marketing Policy
K 5.03.2 Occupancy Report (Tenant Survey, Utility
Allowance, Computing Annual Income form,
Citizenship Attestations, Race/Ethnicity forms,
Affidavit-Applicant Income and Asset Forms)
L 5.04 Financial Status Reports
M 5.06.8 Affidavit for Employee Classification Act
N 6.03 Soil Work Policy
O 8.11 Termination and Enforcement
P 3.01.6 Minority and Women Business Plan
Q 5.06.3 Section 3 Clause
R 1.14 City of Omaha Definition of Income
S 5.06.1.1 Equal Employment Opportunity Clause
T 6.04 Federal Funding Accountability and
Transparency Act
U 6.05 Certification for Drug Free Workplace
V 4.14 Economic Equity and Inclusion Plan
W 1.07 Loan Forgiveness Policy
Attachments:
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1.Multi-family Monitoring Guidelines
2.Project Scope and Budget
3.Cost Certification
4.Tenant Relocation
5.Subsidy Layering Policy
6.Subordination Policy
Exhibit U
Exhibit V
An Economic Equity and Inclusion Plan has been submitted to
the Human Rights and Relations Department for:
MHMP 18 Timbercreek Apartments, LP
By Parent Entity:
Mercy Housing Colorado
Multifamily Repayable Loan Forgiveness Policy
City of Omaha, Community Development Division
(Rev 01/09/2023)
The City of Omaha offers loan forgiveness to holders of repayable CDBG, HOME and NAHTF loans. In
exchange for extending the period of affordability, the City incrementally depreciates principal loan
amounts, eliminates interest charges, and waives monthly repayments. To be eligible for the loan
forgiveness policy, borrowers must be in good standing with the City of Omaha.
For loans that exceed $400,000, the principal loan amount will depreciate 5% over twenty years beyond
the original affordability period. For loans less than $400,000, the principal loan amount will depreciate
10% for 10 years beyond the original affordability period. “Original affordability period” refers to the
terms set forth in the Written Agreement. The Written Agreement also defines compliance for “decent,
safe, and sanitary” property standards (24 CFR § 700.55), tenant income eligibility (24 CFR 92.203), rent
affordability (24 CFR 92.252(a) and (b)), and accessibility requirements (24 CFR § 92.2).
Compliance under the loan forgiveness policy requires property inspections every two years beyond the
original affordability date and verifications of tenant eligibility and rent affordability every three years
beyond the original affordability date. If the City determines the property to be noncompliant, the City
will place the loan forgiveness on hold until the loan holder corrects the issue. Depending on the
severity of the issue, the City may decline future funding and/or require repayment of the remaining
loan balance. Should the loan holder sell or otherwise transfer rights to the property, the remaining
principal balance becomes due.
Once loan holders accept the terms of the loan forgiveness policy, the City retroactively adjusts loan
interest rates to 0% and waives monthly repayments. Loan forgiveness is not automatic but is applied in
the sole discretion of the City. Acceptance of the terms requires a written letter, signed and dated by
the loan holder and/or an authorized representative. The retroactive effect of the debt forgiveness
policy applies to prior payments and extensions of the original affordability period. If the loan holder
has paid prior installments, the City credits payments towards the principal loan balance. If retroactive
loan forgiveness results in a principal balance of $0, an exit inspection consisting of a property
inspection and verification of tenant income eligibility and rent affordability occurs. In the event the
property fails to pass the exit inspection, the loan holder submits a written plan detailing actions to
bring the property into compliance.
Exhibit W
1
HOME, CDBG & NAHTF Program
Reporting Requirements
(December 2021)
The United States Department of Housing and Urban Development (HUD) requires the City of
Omaha Planning Department, Community Development Division (CDD) to monitor compliance
for all programs with federally funded investments. CDD monitors all housing programs using
the HOME Investment Partnerships (HOME) Program requirements. All housing programs
include projects funded through the HOME Program, Community Development Block Grant
(CDBG) Program, and the Nebraska Affordable Housing Trust Fund (NAHTF). CDD policies
comply with HUD Exhibit 7-30 “Guide for Review of Rental Project Compliance and/or Policies
and Procedures” to ensure property owners meet HOME Program requirements throughout the
Affordability Period. CDD enforces HOME Program Requirements through documents of lien,
restrictive covenants and Written Agreements, which remain enforceable regardless of loan
repayment or transfer of ownership.
The following resource clarifies CDD reporting requirements throughout the Affordability Period.
Nothing within this resource supplants any terms or conditions specified in the Written Agreement
between property owners and the City of Omaha. Property owners may use their own forms, as
long as the information collected aligns with the information contained in CDD sample forms.
Document sections enumerated below contain information by rental housing program area. Text
boxes in each section summarize reporting requirements for property owners. Appendices provide
sample forms and HUD Exhibit 7-30 for additional information.
1.Tenant Selection: Affirmative Marketing (pg. 2) and Tenant Selection Plan (pg. 3)
2.Income and Asset Eligibility: Annual Determination and Asset Recertification (pgs. 3-4)
3.Lease Compliance (pg. 4)
4. Rent Compliance (pgs. 5-6)
5.Ongoing Occupancy Requirements (pg. 5)
6. Ongoing Property Standards (pg. 6)
7.Ongoing Financial Oversight (for housing projects with ten or more units, pg. 7)
8. Recordkeeping Requirements (pgs. 7-11)
9.Loan Forgiveness Policy (pgs. 7-8)
10. Annual Reporting Checklists (pgs. 10-12)
11. Appendices (pg.13)
For technical assistance, please contact Marcus Chaffee at marcus.chaffee@cityofomaha.org or
402-444-5150 ext. 2012.
Attachment 1
2
1. Tenant Selection
Affirmative Marketing Plan: Individuals of similar economic levels in the same housing market
area should have available to them a like range of housing choices regardless of their race, color,
religion, sex, sexual orientation, gender identity, national origin, familial status, disability, or other
protected class status. Affirmative Fair Housing Marketing Plans (AFHMP) should demonstrate
meaningful efforts to identify and attract underserved populations in the housing market area. The
2018 Regional Assessment of Fair Housing in Omaha identified housing access barriers for
individuals and households belonging to the elderly, disability, and Limited English-Proficiency
(LEP) communities. AFHMPs help individuals and households otherwise unlikely to apply for
housing:
• Know about vacancies
• Feel welcome to apply
• Have the opportunity to rent units.
HOME-funded projects with five or more HOME-assisted units must design and employ an
AFMHP (Appendix A). Property owners should use diverse marketing tactics to improve
accessibility. Methods of advertising include, but are not limited to, brochures, signs, television
and radio programs, newspapers, websites, and social media. All advertisements must include
either the equal housing opportunity logo, slogan, or statement. Property owners should also
conduct marketing throughout the City of Omaha, not only to individuals who currently reside in
the immediate, surrounding area. To reach persons who are least likely to apply, property owners
should develop relationships with community-based organizations that provide support for persons
with disabilities and/or Limited English Proficiency. The City of Omaha provides an Affirmative
Marketing Community Contact List to assist in reaching diverse populations (Appendix A).
Affirmative Marketing Plans must include:
• Methods property owners will use to inform potential tenants about fair housing laws;
• Description of what property owners will do to affirmatively market housing;
• Description of what property owners will do to inform persons not likely to apply without
special outreach;
• Description of how property owners will assess efforts and what corrective actions
property owners will take when requirements are not met.
Property owners must submit an Affirmative Marketing Plan to the City of Omaha every
year. CDD requires documentation of marketing materials (e.g. flyers, emails, signs,
social media posts, etc.), any special outreach performed, assessment of marketing
efforts, and corrective actions taken. CDD will review beneficiary data submitted in
Tenant Survey Forms to assess affirmative marketing actions. See Appendix A for the
required Affirmative Fair Housing Poster, HUD Affirmative Fair Housing Marketing
Plan, and CDD’s Community Contact List. 24 CFR 92.351(a)
3
Tenant Selection Plan: Owners must develop and make public written tenant selection policies and
procedures that include descriptions of the eligibility requirements and income limits for
admission. Tenant Selection policies and procedures must address the “required topics”
enumerated in Figure 4-2 “Written Tenant Selection Plan” from Chapter 4 of the HUD Occupancy
Handbook (Appendix A). These policies include: any priority selection criteria designating
housing for a particular population (e.g. housing for older persons, housing for persons with
disabilities, etc.); procedures for managing waitlists; protocols for notifying rejections and reason
for rejection; compliance with the Violence Against Women Act; non-discrimination clauses; and
grievance procedures. Property owners cannot discriminate against applicants participating in
Housing Choice Voucher Program Section 8.
Property owners must have a written Tenant Selection Plan available for review upon
request. 24 CFR 92.253(d)
2. Income and Asset Determination
Property owners must verify income eligibility of applicants and households living in
HOME/CDBG/NAHTF-assisted units prior to leasing a new tenant and throughout the
Affordability Period. HOME & NAHTF define a low-income household as a household with an
annual gross income at or below 80 percent of the area median income (AMI), as determined by
HUD and adjusted for household size. A very low income household has an annual gross income
at or below 50 percent of the AMI, as determined by HUD and adjusted for household size. For
the CDBG Program: a very-low income household has an income that is up to and including 30%
AMI; a low-income has an income that between 31% and 50% of AMI; and a moderate income
household has an income that is 51% to 80% AMI.
Initial Income Eligibility Determination: No more than six months prior to leasing, property
owners must use the Part 5 Annual Income Calculation method to determine the household as low-
or very low-income. Property owners must collect at least two months of source documentation
to determine anticipated annual income and assets for all members 18 years and older in the
household. The tenant(s) must sign a Declaration to report all income under the City of Omaha’s
“Declaration of Income / No Income” (Appendix C). The calculated income must be at or below
the required income limit specified in the Agreement. HUD income limits from 2019-2020 can be
found in Appendix B.
CDD requires documentation of the initial income eligibility determination, including
source income and asset documents and calculation worksheets, to verify Part 5 Annual
Income Calculation (Appendix C). 24 CFR 92.203
4
Annual Income & Asset Recertification: Property owners must annually recertify household
income and assets throughout the Affordability Period. Documentation must have a date no earlier
than six months prior to the lease’s start date. Property owners may recertify in one of two ways:
1. Collecting a signed and dated Tenant Survey (Appendix D) from the family that includes
the household annual income and family size; a signed Declaration of Income / No
Income certifying that income information is complete and accurate and the household is
willing to provide documentation as requested (Appendix C).
2. Written statement from another income-restricted government program that contains the
family’s size and annual income or lists the dollar limit for the program’s eligibility
requirement and state that the tenant’s annual income does not exceed the limit.
Every 6th year after the initial income determination, property owners must use at least 2
consecutive months of source documentation to recertify the annual income and assets of the
household.
CDD collects recertification documents annually, due by January 31. See Appendices
B, C, and D for examples of recertification forms used to collect the required project-
level and tenant-level income information. 24 CFR 92.508(a)(3)(v)
3. Lease Compliance
HUD requires property owners to maintain tenant protections by regulating required terms and
conditions in rental agreements or leases. Property owners must execute an initial lease with a
household for at least one year. After the initial year, the leases may extend “month-to-month”, if
specified in the lease terms. If in subsequent years, the tenant negotiates a shorter lease, property
owners must document the reason. For projects completed after December 16, 2016, the lease
must include an addendum with provisions for the Violence Against Women Act, and the
HOME/CDBG/NAHTF Rental Projects Addendum (Appendix E, 24 CFR 92.253(a)). Property
owners cannot terminate or fail to renew leases except for serious or repeated violations of the
lease terms and conditions. Leases cannot include lease terms prohibited by HUD, including:
• Agreement to be sued, or to admit guilt or judgement in favor of landlord in a lawsuit over
the lease
• Treatment of property (ability to take, hold, or sell property of household without notice
to tenant or court decision, unless tenant has moved out and state law allows)
• Excusing owner from responsibility for any action
• Waiver of notice of lawsuit
• Waiver of legal proceedings relating to eviction
• Waiver of jury trial
• Waiver of right to appeal court decision
• Tenant chargeable with cost of legal action regardless of outcome
• Mandatory supportive services other than a tenant in transitional housing
5
Prior to leasing, property owners must have tenants sign and complete a set of forms required by
CDD: Tenant Survey Form; Lead Receipt, verifying that property owner has provided pamphlets
informing the tenant of the dangers of lead exposure; Citizenship Attestation Form for Public
Benefit, required by the State of Nebraska to prevent public funds from assisting undocumented
residents; the HUD Race and Ethnicity Reporting Form; and a Release of Information, allowing
property owners to share tenant information with CDD for reporting purposes (Appendix E).
Property owners must have an enforceable lease for every tenant that includes the
VAWA Addendum, the HOME/CDBG/NAHTF Rental Projects Addendum, and does
not include any of the listed prohibited terms. Property owners must also have tenants
sign a Tenant Survey Form, Lead Receipt, Citizenship Attestation Form for Public
Benefit, the HUD Race and Ethnicity Reporting Form, and a Release of Information.
Refer to Appendix E for samples of each form. 24 CFR 92.253(a)
4. Rent Compliance
Property owners must ensure maximum rents do not exceed maximum “high HOME rents” or
“low HOME rents” minus the monthly allowances for utilities and services throughout the
Affordability Period. HUD sets the HOME rent limits each year based on market research. High
HOME rent units must be occupied by low-income households; low HOME rent units must be
occupied by very low-income households. As HUD adjusts HOME rent limits, property owners
may only adjust rents after lease expiration. Subsequent rents must also be approved by CDD prior
to notification to tenants.
Utility Allowances: The amount the tenant pays in utilities must be deducted from the HOME rent
limit. Each year, CDD provides property owners with a Utility Schedule updated based upon local
cost trends. If funds for the property were committed prior to August 23, 2013, property owners
may use the local public housing utilities allowance. Property owners must ensure that the total
amount paid by the tenant for rent and utilities do not exceed the HOME rent limit for the unit. To
calculate the appropriate utility allowance, refer to CDD Utility Schedules (2020-2021) in
Appendix B.
Rent & Utilities Allowance Example: It is May 2021 and you want to lease a two-bedroom, “low
HOME rent” apartment. The unit is in an apartment complex with nine units and you plan to pay
for water, sewer and gas. Your low income-qualified tenant will pay for the electric bill, which
includes an electric oven and stovetop for cooking. You will use the most current Home Program
Rent table in effect to find the maximum you can charge for a two-bedroom apartment. Looking
at the “2 BR” column and the “low HOME rent” row, you find that the rent limit is $946. However,
since the tenant will pay for the electric bill, you use the most current Utilities Schedule to see how
much rent you can charge the tenant without going over the rent limit. Looking at the “2 BR”
column you see $7/month for “cooking” and $20/month for “other electric.” The total deduction
for tenant-paid utilities is $27. You make the calculation that the maximum rent you can charge
6
for a two-bedroom “low HOME rent” is $919, the rent limit ($946) minus the utility deduction
($27).
Each year, property owners must submit a HOME Rental Project Compliance Report (Appendix
A). The Report compiles data for each HOME/CDBG/NAHTF-assisted rent in a project,
including: number of bedrooms, HOME rent unit type, household size, income, date of last source
income verification, the low or high HOME rent amount, and utility allowance.
Each year, property owners must submit a HOME Rental Project Compliance Report
(Appendix A). CDD uses the Report to ensure property owner charges the correct
HOME rent and deducts the correct utility allowance amount. Refer to Appendix B for
the most current HOME Program Rent Limits and Utilities Schedules. 24 CFR 92.252(a)
and (b)
5. Ongoing Occupancy Requirements
As tenants vacate HOME/CDBG/NAHTF-assisted units property owners must ensure new tenants
meet the same income limits as the original HOME rent limit designation throughout the
Affordability Period. For fixed units, when a tenant’s income increases, Property owners must
adjust rent to at most 30 percent of the adjusted income, except for tenants with low-income
housing tax credits, who must pay rent amounts governed by LIHTC. For floating units, if a
tenant’s income increases above the income limit, property owners must adjust rent to at least 30
percent of adjusted income or follow LIHTC rules. However the next available, comparable unit
must be leased to a HOME/CDBG/NAHTF-eligible tenant to maintain the affordability designated
in the Written Agreement. Appendix B contains a “Summary of Steps: Managing Rental Unit Mix
Under HOME,” which explains the process owners must take when a household’s reported income
level changes for floating and fixed units.
CDD reviews ongoing occupancy requirements through the HOME Rental Project
Compliance Report described in Section 4 (Appendix B). 24 CFR 92.252(f)(2)
6. Ongoing Property Standards
Property owners must maintain HOME/CDBG/NAHTF-assisted units in compliance with local,
Nebraska Economic Development Rehabilitation Standards, and HUD-specified property
standards throughout the Affordability Period. CDD monitors property standard compliance by
sending building inspectors to ensure properties are “decent, safe, and sanitary and in good repair”
24 CFR § 5.703. Building inspectors use the Uniform Physical Condition Standards Checklist to
review compliance (Appendix F). The frequency of inspections and number of units inspected
depends on the amount of HOME/CDBG/NAHTF-funded units on the property and types of
7
deficiencies identified. Additionally, property owners must register with the Landlord Registry,
managed by the City of Omaha Permits and Inspections Division.
Onsite monitoring of property standards occurs every year for properties with ten or more units,
every other year for properties with five to nine units, and every third year for properties with four
units or less. Property owners will receive a notification of the onsite visit, schedule the inspection,
receive a report of deficiencies, take corrective actions if required, and receive a letter of
compliance when all deficiencies have been resolved. If the total number of units exceeds five
units, a minimum of 5 units will be inspected or 15-20% of the total units, whichever is larger. If
units are in multiple buildings, then a minimum of one unit per building will be inspected. Units
will be randomly selected.
Property owners must submit an Affidavit of Property Compliance annually (Appendix
F) and onsite monitoring occurs periodically throughout the affordability period. 24
CFR 92.504(d)(1)(ii)(A)
7. Ongoing Financial Oversight
CDD requires HOME/CDBG/NAHTF-assisted property owners to provide documentation of the
current financial position and plans for ongoing financial viability. Documentation must show
sufficient financial means to replace major systems and equipment once depreciated. Throughout
the Affordability Period, HOME/CDBG/NAHTF-assisted properties with ten or more units must
complete an assessment of financial viability annually. For properties with less than ten units, the
assessment will occur at the same frequency as onsite monitoring for property standards.
Owners of HOME/CDBG/NAHTF-assisted properties with 10+ units must submit an
audited financial statement showing continued financial viability. Owners should have
a reserve account to replace depreciated equipment and assets. 24 CFR 92.504(d)(2)
8. Recordkeeping Requirements:
Property owners must maintain documentation of compliance with HOME/CDBG/NAHTF
program requirements throughout the Affordability Period, and for five years after the end of the
Affordability Period. Tenant documents must be signed and dated. The documentation required
by CDD includes:
For Projects:
• Affirmative Marketing Plan and Fair Housing Poster (Appendix A)
• HOME Rental Project Compliance Report (Appendix B)
• Written Tenant Selection Policies and Procedures
8
• Financial Condition Report: Cash Flow Statements, Reserve Account Balances (for
apartment complexes with 10 or more units)
For Initial and/or New Tenants:
• Declaration of Income Affidavit / Declaration of No-Income Affidavit (Appendix C)
• Computing Part 5 Annual Income (Appendix C)
• Source Income and Asset Documentation- initial and every 6th year
• Tenant Survey Form (Appendix D)
• Lease or Rental Agreement with VAWA and HOME/CDBG/NAHTF Rental Program
Addendums (Appendix E)
• Citizenship Attestation Form for Public Benefit (Appendix E)
• HUD Race and Ethnicity Reporting Form (Appendix E)
• Release of Information (Appendix E)
• Receipt of Lead Notices (Appendix E)
For Recertification of Existing Tenants:
• Declaration of Income Affidavit / No Income (Appendix C)
• Computing Part 5 Annual Income (Appendix C)
• Tenant Survey Form (Appendix D)
• Lease of Rental Agreement with VAWA and HOME/CDBG Rental Program Addendums
(Appendix E)
• Authorization and Consent to Release Information (Appendix E)
For Property Standards:
• Affidavit of Property Compliance (Appendix F)
During onsite monitoring, a random sampling of tenant files will be examined and must contain
all of the tenant documents listed above. Onsite monitoring occurs every year for properties with
ten or more units, every other year for properties with five to nine units, and every third year for
properties with four units or less. For properties with five or less HOME/CDBG/NAHTF-assisted
units, all tenant files will undergo inspection. For properties with more than five
HOME/CDBG/NAHTF-assisted units, 15% of all tenant files and one unit from every building
with HOME/CDBG/NAHTF-assisted units will undergo inspection. Property owners will receive
a notification of the onsite visit, schedule the inspection, receive a report of deficiencies, take
corrective actions if required, and receive a letter of compliance when all deficiencies have been
resolved.
9. Loan Forgiveness:
The City of Omaha offers loan forgiveness to holders of repayable CDBG, HOME and NAHTF
loans. In exchange for extending the period of affordability, the City incrementally depreciates
principal loan amounts, eliminates interest charges, and waives monthly repayments. To be
9
eligible for the loan forgiveness policy, borrowers must be in good standing with the City of
Omaha.
For loans that exceed $400,000, the principal loan amount will depreciate 5% over twenty years
beyond the original affordability period. For loans less than $400,000, the principal loan amount
will depreciate 10% for 10 years beyond the original affordability period. “Original affordability
period” refers to the terms set forth in the Written Agreement. The Written Agreement also defines
compliance for “decent, safe, and sanitary” property standards (24 CFR § 700.55), tenant income
eligibility (24 CFR 92.203), rent affordability (24 CFR 92.252(a) and (b)), and accessibility
requirements (24 CFR § 92.2).
Once loan holders accept the terms of the loan forgiveness policy, the City retroactively adjusts
loan interest rates to 0% and waives monthly repayments. Acceptance of the terms requires a
written letter, signed and dated by the loan holder and/or an authorized representative. The
retroactive effect of the debt forgiveness policy applies to prior payments and extensions of the
original affordability period. If the loan holder has paid prior installments, the City credits
payments towards the principal loan balance. If retroactive loan forgiveness results in a principal
balance of $0, an exit inspection consisting of a property inspection and verification of tenant
income eligibility and rent affordability occurs. In the event the property fails to pass the exit
inspection, the loan holder submits a written plan detailing actions to bring the property into
compliance.
Compliance under the loan forgiveness policy requires property inspections every two years
beyond the original affordability date and verifications of tenant eligibility and rent affordability
every three years beyond the original affordability date. If the City determines the property to be
noncompliant, the City will place the loan forgiveness on hold until the loan holder corrects the
issue. Depending on the severity of the issue, the City may decline future funding and/or require
repayment of the remaining loan balance. Should the loan holder sell or otherwise transfer rights
to the property, the remaining principal balance becomes due.
Property owners interested in the loan forgiveness program should contact Marcus Chaffee and
marcus.chaffee@cityofomaha.org or 402-444-5150 ext. 2012.
10
Multifamily Affordable Housing
Annual Project Forms
The following documents must be submitted annually by January 31 throughout the
Affordability Period for each Multifamily Affordable Housing Project. Be sure to
fill out each form completely and accurately.
□Affirmative Marketing Plan
□Copies of Affirmative Marketing Materials
□HOME Rental Project Compliance Report
□Tenant Surveys for City-funded units or equivalent (e.g. TIC for LIHTC)
□Affidavit of Property Compliance (signed by owner, notarized)
□Audited Financial Statement (for properties with 10+ total units)
Submissions may be sent by email to cd.monitoring.compliance@cityofomaha.org
or by mail to the City of Omaha Planning Department: 1819 Farnam St., Suite 1100
c/o Marcus Chaffee.
11
Multifamily Affordable Housing
New Tenant Certification Forms
Properties owners must retain copies of the following documents when leasing to a
new tenant. Please be sure that all forms and supporting documentation are current,
complete, and accurate. If you have questions about how to determine eligibility for
a new tenant, please reach out for assistance.
□Tenant Survey Form or equivalent (signed by both tenant and owner)
□Race & Ethnic Data Reporting Form (signed by tenant)
□U.S. Citizenship Attestation Form for Public Benefit (signed by tenant)
□Authorization and Consent to Release Information (signed by tenant)
□Declaration of Income / No income (signed by tenant)
□Lead Receipt if property constructed prior to 1978 (signed by tenant)
□Computing Annual Income Form (signed by tenant and reviewer)
o Two months of source income and asset documentation
□Copy of lease (signed by tenant and owner) with
o Violence Against Women Act Addendum
o HOME/NAHTF/CDBG Program Lease Addendum
□Utility Schedule
□HOME Program Income Limits Table
□HOME Program Rent Limits Table
Submissions may be sent by email to cd.monitoring.compliance@cityofomaha.org
or by mail to the City of Omaha Planning Department: 1819 Farnam St., Suite 1100
c/o Marcus Chaffee. For technical assistance please contact Marcus Chaffee at 402-
444-5150 ext. 2012. For income eligibility training please contact Michele McKizia
at 402-444-5150 ext. 2034 or Michele.McKizia@cityofomaha.org.
12
Multifamily Affordable Housing
Recertification Forms
The following documents must be submitted annually throughout the Affordability
Period. Every 6th year, source documentation on income and assets is required. Be
sure to fill out each form completely and accurately to avoid compliance issues.
□Tenant Survey Form or equivalent (signed by both tenant and owner)
□Copy of lease (signed by tenant and owner) with
o Violence Against Women Act Addendum
o HOME/NAHTF/CDBG Program Lease Addendum
□Authorization and Consent to Release Information (signed by tenant)
□Declaration of Income (signed by tenant)
□Computing Annual Income Form (signed by tenant and reviewer)
□Utility Schedule
□HOME Program Rent Limits
□HOME Program Income Limits
Submissions may be sent by email to cd.monitoring.compliance@cityofomaha.org
or by mail to the City of Omaha Planning Department: 1819 Farnam St., Suite 1100
c/o Marcus Chaffee. For technical assistance please contact Marcus Chaffee at 402-
444-5150 ext. 2012. For income eligibility training please contact Michele McKizia
at 402-444-5150 ext. 2034 or Michele.McKizia@cityofomaha.org.
Appendix Document Title Page
Affirmative Fair Housing Marketing Plan 15
Affirmative Fair Housing Poster 27
Community Contact List 28
Tenant Selection Plan Guidance 30
HOME Rental Project Compliance Report 36
Summary of Steps: Managing Rental Unit Mix Under HOME 37
HUD Rent Limits (2019-2021) 39
HUD Income Limits (2019-2021)40
CDD Utilities Schedule: Multifamily (2020-2022)41
CDD Utilities Schedule: Duplex (2020-2022)44
Declaration of Income Affidavit 48
Declaration of No-Income Affidavit 50
Part 5 Income Calculations Worksheet 52
Computing Annual Income 53
D Tenant Survey Form
55
VAWA Lease Addendum 58
HOME/NAHTF/CDBG Lease Addendums 62
Citizenship Attestation for Public Benefit 64
Race and Ethnic Data Reporting Form 65
Authorization and Consent to Release Information 67
Receipt of Lead Notices 68
Affidavit of Property Compliance 70
Uniform Physical Condition Standards 71
G HUD Exhibit 7-30: "Guide for Review of Rental Project
Compliance and/or Policies and Procedures"79
F
B
A
C
E
HOME / CDBG / NAHTF Reporting Requirements
Table of Contents
13
14
15
16
17
18
19
20
21
22
23
24
25
26
27
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29
Section 2
Marketing
HUD Occupancy Handbook 4-3 6/07
Chapter 4: Waiting List and Tenant Selection
4350.3 REV-1
2.24 CFR 236.715 Determination of Eligibility
3.24 CFR 880.612a, 881.601, 883.701, 884.223a, 886.329a (Preference for
occupancy by elderly families)
D.Required Criminal and Drug Screening Standards
1.24 CFR part 5, subpart I – Preventing Crime in Federally Assisted
Housing – Denying Admission and Terminating Tenancy for Criminal
Activity and Alcohol Abuse
2.24 CFR part 5, subpart J – Access to Criminal Records and Information
E.Screening for Suitability
•24 CFR 5.655 Owner Preferences in Selection for a Project or Unit
F.Rejecting Applicants and Denial of Rental Assistance
•24 CFR 880.603, 881.601, 883.701, 884.214, 886.121 and 132, 886.321
and 329, 891.410, 891.610, 891.750 (Tenant selection and admission)
G.Denial of Assistance to Noncitizens and DHS Appeal Process
•24 CFR part 5, subpart E – Restrictions on Assistance to Noncitizens
4-4 Tenant Selection Plan
A.Key Requirements
Owners must develop and make public written tenant selection policies and
procedures that include descriptions of the eligibility requirements and income
limits for admission. Figure 4-2 provides a sample outline of a tenant selection
plan. The Tenant Selection Plan must include whether or not there is an elderly
restriction or preference in the admission of tenants. The restriction or
preference must cite the supporting documentation to ensure nondiscrimination
in the selection of tenants. The contents of the plan also must be consistent with
the purpose of improving housing opportunities and be reasonably related to
program eligibility and an applicant’s ability to perform the obligations of the
lease.
B.HUD Review of the Tenant Selection Plan
HUD does not approve tenant selection plans (except when owners wish to adopt
local or residency preferences). However, if HUD staff become aware that a plan
fails to comply with applicable requirements, the owner must modify the plan
accordingly.
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Figure 4-2: Written Tenant Selection Plan - Topics
A. Required Topics
1.Project eligibility requirements:
•Project-specific requirements (see Chapter 3, Section 2);
•Citizenship requirements (see Chapter 3, Section 1); and
•Social security number requirements (see Chapter 3, Section 1).
2.Income limits (including economic mix requirements for Section 8 properties) (see
Chapter 3, Section 1).
3.Procedures for accepting applications and selecting from the waiting list:
•Procedures for accepting applications and pre-applications (see Chapter 4, Section
3);
•Procedures for applying preferences (including income-targeting in Section 8
properties) (see Chapter 4, Sections 1 and 4);
•Applicant screening criteria (see Chapter 4, Sections 1 and 4);
-Required drug-related or criminal activity criteria;
-Other allowable screening criteria; and
•Procedures for rejecting ineligible applicants (see Chapter 4, Section 1).
4.Occupancy standards (see Chapter 3, Section 2).
5.Unit transfer policies, including selection of in-place residents versus applicants from the
waiting list when vacancies occur (see Chapter 7, Section 3).
6.Policies to comply with Section 504 of the Rehabilitation Act of 1973 and the Fair
Housing Act and other relevant civil rights laws and statutes (see Chapter 2, Section 3).
7.Policy for opening and closing the waiting list for the property (see Chapter 4, Section 3).
8.*Eligibility of students (see Chapter 3, Sections 1 and 3)*
B. Recommended Topics
1.Applicant notification and opportunity to supplement information already provided (see
Chapter 4, Sections 1 and 4).
2.Procedures for identifying applicant needs for the features of accessible units or
reasonable accommodations (see Chapter 2, Section 3).
3. Updating the waiting list (see Chapter 4, Section 3).
4.Policy for notifying applicants and potential applicants of changes in the tenant selection
plan (see Chapter 4, Section 1).
5.Procedures for assigning units with originally constructed design features for persons
with physical disabilities (see Chapter 2, Section 3).
6. Charges for facilities and services (see Chapter 6, Section 3).
7. Security deposit requirements (see Chapter 6, Section 2).
8.Unit inspections (see Chapter 6, Section 4).
9.Annual recertification requirements (see Chapter 7, Section 1).
10.Interim recertification reporting policies (see Chapter 7, Section 2).
11. Implementation of house rule changes (see Chapter 6, Section 1).
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C.Required Contents of the Tenant Selection Plan
The tenant selection plan helps to ensure that tenants are selected for occupancy
in accordance with HUD requirements and established management policies.
HUD requires that the plan specify a number of procedures and policies,
including the following items:
1.Project eligibility requirements.
a. Project specific requirements. If the property is designated for a
special population, such as elderly or disabled, the owner must
define population served.
b.Citizenship/immigration status requirements. The owner must
describe how citizenship/immigration requirements are
implemented, including policies regarding verification of
citizenship (if any). **
c.Social security number (SSN) requirements. Requirements for
providing SSNs, allowing extended time to provide proof of SSNs
and procedures used when an individual has no SSN, must be
described.
2. Income limits (including economic mix for Section 8 properties). The
income limit schedule used for the property must be identified (i.e., very
low- or low-income. The specific maximum annual income amounts need
not be included).
3. Procedures for taking applications and selecting from the waiting list.
a. Taking applications. The plan must include policies for taking pre-
applications (if applicable) and applications.
b. Preferences. The plan must define each preference adopted for
use in the property and any rating, ranking, or combining of the
preferences the owner has established that will affect the order in
which applicants are selected from the waiting list. The plan
should also describe the acceptable sources of information to
verify the qualification for preferences.
REMINDER: Owners implementing state, local, or residency
preferences must have prior HUD approval.
c.Income-targeting. For Section 8 properties only, the plan must
describe the procedures used by the owner to meet the income-
targeting requirements, if applicable. This description must
explain how and when applicants will be “skipped over” in favor of
housing an extremely low-income household and how their
applications will be treated when they are skipped.
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d. Applicant screening criteria. The plan must describe the
property’s standards used to screen for information on drug-
related or criminal activity (including registration as a sex
offender), as well as the other screening activities implemented by
the owner (e.g., rental history).
e. Procedures for rejecting ineligible applicants. The plan must
describe the circumstances under which the owner may reject an
applicant for occupancy or assistance. If the owner establishes a
policy to consider extenuating circumstances in cases when
applicants would normally be rejected but have circumstances that
indicate the family might be an acceptable future tenant, such a
policy must also be described in the plan.
4. Occupancy standards. Standards used by the owner to determine
appropriate unit size, and procedures to place families on the lists for
more than one unit size, must be included in the plan.
5. Unit transfer policies, including procedures for selecting between
applicants on the waiting list and current tenants who need:
a. A unit transfer because of family size;
b.A new unit because of changes in family composition;
c.A deeper subsidy (Rent Supplement, RAP, or Section 8
assistance);
d.A unit transfer for a medical reason certified by a doctor; or
e.A unit transfer based on the need for an accessible unit.
6.Policies to Comply with Section 504 of the Rehabilitation Act of 1973,
The Fair Housing Act Amendments of 1988 **and Title VI of the Civil
Rights Act of 1964.**
a.Section 504 of the Rehabilitation Act of 1973 prohibits
discrimination on the basis of disability in any program or activity
receiving federal financial assistance from HUD.
b.The Fair Housing Act prohibits discrimination in housing and
housing related transactions based on race, color, religion, sex,
national origin, disability and familial status. It applies to housing,
regardless of the presence of federal financial assistance.
c.Title VI of the Civil Rights Act of 1964 prohibits discrimination on
the basis of race, color or national origin in any program or activity
receiving federal financial assistance from HUD.
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7. Policy for opening and closing the waiting list. The methods of advertising
used to announce opening and closing of the waiting list should be
described.
8.*Eligibility of students.* The plan must include the requirements for
determining eligibility of students enrolled at an institution of higher
education.
D.Additional Owner Policies and Practices
1.General. In addition to the required content, owners are encouraged to
incorporate their own policies and practices regarding the selection of
tenants into the tenant selection plan. See Figure 4-2 for a list of
recommended topics. By incorporating all policies and procedures in one
plan, owners, applicants, and tenants will have one point of reference.
Further, owners will have a single document to which they can direct
applicants and tenants when questioned about policies and fairness of
treatment.
2.Notification of modification to the tenant selection plan. It is also good
practice for owners to include a description of the process used to provide
notification to applicants on the waiting list and other interested persons
(potential applicants) of the implementation of any new or revised tenant
selection plan or policies that may affect an application or tenancy.
E.Modification of the Tenant Selection Plan
Owners should review tenant selection plans at least annually to ensure that they
reflect current operating practices, program priorities, and HUD requirements.
F.Availability of the Tenant Selection Plan
When requested, the owner must make the tenant selection plan available to the
public.
4-5 Income-Targeting – Applicable Only to the Section 8 Project-Based
Program Except Where Otherwise Noted
A.Key Requirements
For each project assisted under a contract for project-based Section 8
assistance, the owner must lease not less than 40% of the dwelling units
(assisted under the contract) that become available for occupancy in any project
fiscal year to extremely low-income families. The methodology for income-
targeting must be described in the tenant selection plan. (For information and
guidance about income limit exceptions, see paragraph 3-7.)
NOTE: Compliance with income targeting requires owners to count both move-
ins and initial admissions to the Section 8 project based assistance program. For
34
35
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38
Program Year Effective Date Rent Level Max AMI Efficiency 1 BR 2 BR 3 BR 4 BR 5 BR 6 BR
6/1/2021 Low Rent 50%$695 $798 $987 $1,141 $1,273 $1,405 $1,536
6/1/2021 High Rent 80%$695 $798 $987 $1,325 $1,478 $1,700 $1,891
7/1/2020 Low Rent 50%
$650 $762 $946 $1,131 $1,262 $1,392 $1,522
7/1/2020 High Rent 80%
$650 $762 $946 $1,272 $1,419 $1,632 $1,845
6/28/2019 Low Rent 50%$623 $744 $927 $1,118 $1,247 $1,376 $1,505
6/28/2019 High Rent 80%$623 $744 $927 $1,250 $1,383 $1,590 $1,798
2019-2021 HOME/NAHTF/CDBG RENT LIMITS
Program Type Unit Type
2021
2020
2019
39
Program Year Effective Date Housing Program Income Level Max AMI 1 2 3 4 5 6 7 8
6/1/2021 HOME/NAHTF Very Low 50%$30,750 $35,150 $39,550 $43,900 $47,450 $50,950 $54,450 $57,950
6/1/2021 HOME/NAHTF 60% $36,900 $42,180 $47,460 $52,680 $56,940 $61,140 $65,340 $69,540
6/1/2021 HOME/NAHTF Low 80% $48,750 $55,700 $62,650 $69,600 $75,200 $80,750 $86,350 $91,900
6/1/2021 CDBG Very Low 30% $18,450 $21,100 $23,750 $26,350 $28,500 $30,600 $32,700 $34,800
6/1/2021 CDBG Low 50% $30,450 $34,800 $39,150 $43,500 $47,000 $50,500 $53,950 $57,450
6/1/2021 CDBG Moderate 80% $48,750 $55,700 $62,650 $69,600 $75,200 $80,750 $86,350 $91,900
7/1/2020 HOME/NAHTF Very Low 50% $30,450 $34,800 $39,150 $43,500 $47,000 $50,500 $53,950 $57,450
7/1/2020 HOME/NAHTF 60% $36,540 $41,760 $46,980 $52,200 $56,400 $60,600 $64,740 $68,940
7/1/2020 HOME/NAHTF Low 80% $48,750 $55,700 $62,650 $69,600 $75,200 $80,750 $86,350 $91,900
7/1/2020 CDBG Very Low 30% $18,300 $20,900 $23,500 $26,100 $28,200 $30,300 $32,400 $34,500
7/1/2020 CDBG Low 50% $30,450 $34,800 $39,150 $43,500 $47,000 $50,500 $53,950 $57,450
7/1/2020 CDBG Moderate 80% $48,750 $55,700 $62,650 $69,600 $75,200 $80,750 $86,350 $91,900
6/28/2019 HOME/NAHTF Very Low 50% $30,100 $34,400 $38,700 $43,000 $46,450 $49,900 $53,350 $56,800
6/28/2019 HOME/NAHTF 60% $36,120 $41,280 $46,440 $51,600 $55,740 $59,880 $64,020 $68,160
6/28/2019 HOME/NAHTF Low 80% $48,200 $55,050 $61,950 $68,800 $74,350 $79,850 $85,350 $90,850
6/28/2019 CDBG Very Low 30% $18,100 $20,650 $23,250 $25,800 $27,900 $29,950 $32,000 $34,100
6/28/2019 CDBG Low 50% $30,100 $34,400 $38,700 $43,000 $46,450 $49,900 $53,350 $56,800
6/28/2019 CDBG Moderate 80% $48,200 $55,050 $61,950 $68,800 $74,350 $79,850 $85,350 $90,850
Household Size
2021
2020
2019
2019-2021 HOME/NAHTF & CDBG INCOME LIMITS
Housing Program
40
Allowances for City of Omaha Planning Department
Tenant-Paid Utilities Housing and Community Development Department
MultiFamily (5+ units)
Effective 1/1/2022-12/31/2022
Circle bedroom size and all utilities that are to be paid by the tenant.
0 BR 1 BR 2 BR 3 BR 4 BR 5 BR
Heating Natural Gas $22 $26 $30 $34 $39 $43
Electric Resistance $19 $23 $32 $40 $48 $56
Electric Heat Pump $17 $21 $24 $28 $31 $34
Cooking Natural Gas $3 $3 $4 $6 $7 $8
Electric $4 $5 $7 $10 $12 $14
Water Heating Natural Gas $6 $7 $11 $14 $17 $20
Electric $11 $13 $18 $23 $26 $30
Other Electric $16 $19 $28 $36 $43 $50
Air Conditioning $7 $9 $11 $14 $17 $19
Water $27 $28 $36 $50 $62 $74
Sewer $27 $28 $39 $58 $74 $94
Trash Collection $13 $13 $13 $13 $13 $13
Tenant provided range $4 $4 $5 $5 $6 $6
Tenant provided refrigerator $4 $4 $4 $5 $5 $7
Total
Project Address:
Total Allowance: $
Prepared by:
Spreadsheet (ver13) based on form HUD-52667 (12/97).
ref. Handbook 7420.8
41
Allowances for City of Omaha Planning Department
Tenant-Paid Utilities Housing and Community Development Department
MultiFamily (5+ units)
Effective 5/1/2021-12/31/2021
Circle bedroom size and all utilities that are to be paid by the tenant.
0 BR 1 BR 2 BR 3 BR 4 BR 5 BR
Heating Natural Gas $22 $26 $30 $34 $39 $43
Electric Resistance $19 $23 $31 $39 $47 $55
Electric Heat Pump $17 $21 $24 $27 $30 $33
Cooking Natural Gas $3 $3 $4 $6 $7 $8
Electric $4 $5 $7 $10 $12 $14
Water Heating Natural Gas $6 $7 $11 $14 $17 $20
Electric $11 $13 $18 $23 $25 $29
Other Electric $16 $19 $27 $35 $42 $49
Air Conditioning $7 $9 $11 $14 $17 $19
Water $26 $27 $35 $48 $60 $72
Sewer $26 $27 $39 $56 $72 $90
Trash Collection $13 $13 $13 $13 $13 $13
Tenant provided range $4 $4 $5 $5 $6 $6
Tenant provided refrigerator $4 $4 $4 $5 $5 $7
Total
Project Address:
Total Allowance: $
Prepared by:
Spreadsheet (ver13) based on form HUD-52667 (12/97).
ref. Handbook 7420.8
42
Allowances for City of Omaha Planning Department
Tenant-Paid Utilities Housing and Community Development Department
MultiFamily (5+ units)
Effective 1/1/2020-4/30/2021
Circle bedroom size and all utilities that are to be paid by the tenant.
0 BR 1 BR 2 BR 3 BR 4 BR 5 BR
Heating Natural Gas $23 $27 $31 $35 $40 $45
Electric Resistance $19 $22 $30 $38 $46 $54
Electric Heat Pump $17 $20 $23 $26 $29 $32
Cooking Natural Gas $3 $3 $4 $6 $7 $8
Electric $4 $5 $7 $10 $12 $14
Water Heating Natural Gas $6 $7 $11 $14 $17 $20
Electric $11 $13 $17 $21 $24 $28
Other Electric $16 $19 $26 $34 $41 $49
Air Conditioning
Water $25 $26 $34 $47 $58 $70
Sewer $25 $26 $38 $54 $70 $87
Trash Collection
Tenant provided range
Tenant provided refrigerator
Total
Project Address:
Total Allowance: $
Prepared by:
Spreadsheet (ver13) based on form HUD-52667 (12/97).
ref. Handbook 7420.8
43
Allowances for City of Omaha Planning Department
Tenant-Paid Utilities Housing and Community Development Department
Single Family Mid Housing (2 to 4)
Effective 1/1/2022-12/31/2022
Circle bedroom size and all utilities that are to be paid by the tenant.
0 BR 1 BR 2 BR 3 BR 4 BR 5 BR
Heating Natural Gas $27 $32 $39 $43 $48 $52
Electric Resistance $28 $33 $44 $54 $64 $74
Electric Heat Pump $20 $24 $29 $33 $36 $41
Cooking Natural Gas $3 $3 $4 $6 $6 $8
Electric $4 $5 $7 $9 $11 $13
Water Heating Natural Gas $6 $8 $11 $16 $20 $24
Electric $13 $16 $20 $27 $31 $36
Other Electric $20 $23 $33 $44 $53 $63
Air Conditioning $7 $9 $11 $14 $17 $19
Water $26 $27 $39 $52 $64 $81
Sewer $28 $29 $43 $60 $81 $99
Trash Collection
Tenant provided range $4 $4 $5 $5 $6 $6
Tenant provided refrigerator $4 $4 $4 $5 $5 $7
Total
Project Address:
Total Allowance: $
Prepared by:
Spreadsheet (ver13) based on form HUD-52667 (12/97).
ref. Handbook 7420.8
44
Allowances for City of Omaha Planning Department
Tenant-Paid Utilities Housing and Community Development Department
Single Family Mid Housing (2 to 4)
Effective 5/1/2021-12/31/2021
Circle bedroom size and all utilities that are to be paid by the tenant.
0 BR 1 BR 2 BR 3 BR 4 BR 5 BR
Heating Natural Gas $27 $32 $39 $43 $48 $52
Electric Resistance $27 $32 $43 $53 $63 $73
Electric Heat Pump $20 $24 $28 $32 $35 $40
Cooking Natural Gas $3 $3 $4 $6 $6 $8
Electric $4 $5 $7 $9 $11 $13
Water Heating Natural Gas $6 $8 $11 $16 $20 $24
Electric $13 $16 $20 $26 $30 $35
Other Electric $20 $23 $33 $44 $53 $63
Air Conditioning $7 $9 $11 $14 $17 $19
Water $25 $26 $38 $50 $62 $78
Sewer $27 $28 $42 $58 $78 $96
Trash Collection $13 $13 $13 $13 $13 $13
Tenant provided range $4 $4 $5 $5 $6 $6
Tenant provided refrigerator $4 $4 $4 $5 $5 $7
Total
Project Address:
Total Allowance: $
Prepared by:
Spreadsheet (ver13) based on form HUD-52667 (12/97).
ref. Handbook 7420.8
45
Allowances for City of Omaha Planning Department
Tenant-Paid Utilities Housing and Community Development Department
Single Family Duplex (2 to 4)
Effective 1/1/2020-4/30/2021
Circle bedroom size and all utilities that are to be paid by the tenant.
0 BR 1 BR 2 BR 3 BR 4 BR 5 BR
Heating Natural Gas $28 $34 $41 $45 $51 $55
Electric Resistance $27 $32 $43 $53 $63 $72
Electric Heat Pump $20 $24 $28 $32 $35 $40
Cooking Natural Gas $3 $3 $4 $6 $6 $8
Electric $4 $5 $7 $9 $11 $13
Water Heating Natural Gas $6 $8 $12 $17 $21 $25
Electric $13 $16 $20 $26 $30 $35
Other Electric $20 $23 $33 $44 $53 $63
Air Conditioning
Water $25 $26 $37 $49 $61 $76
Sewer $27 $28 $41 $57 $76 $94
Trash Collection
Tenant provided range
Tenant provided refrigerator
Total
Project Address:
Total Allowance: $
Prepared by:
Spreadsheet (ver13) based on form HUD-52667 (12/97).
ref. Handbook 7420.8
46
47
Q:Library/HCD Forms/Affidavit Applicant – Definition of Income 1/4/2012
DECLARATION
Applicant – Income
State of Nebraska )
) §
County of Douglas )
TO: Whom It May Concern:
I, Affiant/s herein, certify that I have
reported all of my income to the City of Omaha in accordance with the following Definition of
Income:
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;
income from other self-employment sources;
3. Farm self-employment income;
4. Interest, dividends, net rental income, or income from estates or trusts, or regular recurring gifts;
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 certificates, money market funds and other investment 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 re-
certification.
10. Actual income from assets if total assets are $5,000 or less.
48
Annual Income Does Not Include the Following Assets:
1. necessary personal property, except as noted in 9 (i).
2. interest in Indian trust lands.
3. assets that are a part of an active business or farming 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.
4. assets not accessible to the family and which provide no income for the family.
5. vehicles especially equipped for the handicapped.
6. equity in owner-occupied cooperatives and manufactured homes in which the family lives
7. equity in principle residence (home equity).
I further certify that I am aware of the following: PENALTY FOR FALSE OR
FRAUDULENT STATEMENT, U.S.C. Title 18, Section 1001, provides: “Whoever, in any matter
within jurisdiction of any department or agency of the United States knowingly and willfully
falsifies…or makes false, fictitious or fraudulent statements or representations…(or makes or uses
any false writing or document knowing the same to contain any false, fictitious, or fraudulent
statement or entry,) shall be fined not more than $10,000.00 or imprisoned not more than five (5)
years, or both”.
______________________________________________
Signature
______________________________________________
Signature
49
Q:Library/HCD Forms/Affidavit Applicant – No Income 1/10/2012
DECLARATION
Applicant – No Income
State of Nebraska )
) §
County of Douglas )
TO: Whom It May Concern:
I, Affiant/s herein, certify that I have
reported all of my income to the City of Omaha in accordance with the following Definition of
Income:
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;
income from other self-employment sources (including income from sources such as Avon, Mary
Kay, Shaklee, Amway, etc.);
3. Farm self-employment income;
4. Interest, dividends, net rental income, or income from estates or trusts, or regular recurring gifts;
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 certificates, money market funds and other investment 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 re-
certification.
50
Annual Income Does Not Include the Following Assets:
1. necessary personal property, except as noted in 9 (i).
2. interest in Indian trust lands.
3. assets that are a part of an active business or farming 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.
4. assets not accessible to the family and which provide no income for the family.
5. vehicles especially equipped for the handicapped.
6. equity in owner-occupied cooperatives and manufactured homes in which the family lives
7. equity in principle residence (home equity).
Additional Information
1. How do you pay the rent/mortgage and utilities?
2. How do you pay for food and clothes?
3. How do you pay for medical expenses?
4. How do you pay for your transportation expenses/car payments?
I further certify that I am aware of the following: PENALTY FOR FALSE OR
FRAUDULENT STATEMENT, U.S.C. Title 18, Section 1001, provides: “Whoever, in any matter
within jurisdiction of any department or agency of the United States knowingly and willfully
falsifies…or makes false, fictitious or fraudulent statements or representations…(or makes or uses
any false writing or document knowing the same to contain any fals e, fictitious, or fraudulent
statement or entry,) shall be fined not more than $10,000.00 or imprisoned not more than five (5)
years, or both”.
______________________________________________
Signature
______________________________________________
Signature
51
CITY OF OMAHA PLANNING DEPARTMENT
COMPUTING ANNUAL INCOME
Borrower Name Address
Tenant’s Name Address
Name of Family Member and Age Asset Description Current Cash
Value of Assets
Actual Income
from Assets
Net Cash Value of Assets
(A) Total Actual Income from Assets
(B)If Net Cash Value of Assets is greater than $5,000, multiply by .06% (Passbook Rate) and enter results here; otherwise leave blank
ANTICIPATED ANNUAL INCOME
Name of Family Members Wages Benefits/Pensions Public Assistance Other Income Asset Income
Enter greater of A or B
Totals
Grand Total
Based on the grand total income, the applicant is: Income Eligible () Not Eligible ()
Date of Initial Income Eligibility Established:
Date of Annual Recertification Completed: SIGNATURE customer Date
SIGNATURE Staff Date
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66
Q:Library/HCD Forms/Authorization and Consent to Release Information 8/1/2016
AUTHORIZATION AND CONSENT TO RELEASE INFORMATION
Effective August 1, 2021
I, the undersigned, hereby authorize the City of Omaha Planning Department to
release/discuss information that may have been obtained in connection with my application for
and regarding the property located at with . I release the City of Omaha
Planning Department from any and all liability that may result or could result from the release of
this information.
I understand that I can revoke this authorization at any time by notifying the City of
Omaha Planning Department in writing.
This consent shall expire immediately upon written notice of revocation by the
undersigned.
DATED this day of , 20 .
APPLICANT
PRINT NAME
Privacy Act Policy of City Planning Department, Housing and Community Development Division . The City
will not permit the release of any records or information concerning any applicant or borrower that would constitute
a “clearly unwarranted invasion of personal privacy” within the meaning of 5 U.S.C. 552(b)(6) unless required
under State law. In applying this standard, the City may release the name of borrower or applicant, the address of
the property and the proposed or actual amount of the City’s loan.
67
Q:Library/Forms/Lead Receipt 9/30/2015
After carefully reading the attached pamphlets,
please return this receipt to your local housing
authority, landlord, management office or
community development office.
RECEIPT
I have received a copy of the notices entitled:
PROTECT YOUR FAMILY FROM LEAD IN
YOUR HOME
EPA-747-K-12-001
March 2021
RENOVATE RIGHT
Important Lead Hazard Information for
Families, Child Care Providers and Schools
EPA-740-K-10-001
Revised September 2011
HELP YOURSELF TO A HEALTHY HOME
(For Lead Program only)
Name:
Name:
Property Address
Date
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Sources and Uses Summary
Project Name: Timbercreek Apartments
Limited Partner Equity
Tax Credit Generated Amount Amount/Unit % Total Dev Cost
Federal Low-Income Housing Tax Credit 11,663,992 64,800 32.57%
Federal Historic Tax Credit 0 0 0.00%
State Historic Tax Credit 0 0 0.00%
State Low-Income Housing Tax Credit 0 0 0.00%
Other Credit 0 0 0.00%
11,663,992 64,800 32.57%
Permanent Sources
Lender Name Interest Rate Term Amortization Amount Amount/Unit % Total Dev Cost
Priv Plcmt 6.12%17 40 8,320,000 46,222 23.24%
Assumed OHA Loan 1.00%28 28 3,881,598 21,564 10.84%
Seller Note 2.00%40 40 7,412,280 41,179 20.70%
Omaha HOME 0.00%20 20 700,000 3,889 1.95%
Sponsor Loan - Pres Funds 0.00%40 40 362,600 2,014 1.01%
Mecy Gap Funds 2.25%30 30 1,750,000 9,722 4.89%
Sponsor Loan - Front Porch 0.00%40 40 500,000 2,778 1.40%
Mercy DDF 0.00%15 15 1,216,347 6,757 3.40%
0 0.00%
24,142,824 134,127 67.43%
Other Sources Amount Amount/Unit % Total Dev Cost
100 1 0.00%
0 0 0.00%
0 0.00%
0 0.00%
0 0.00%
0 0.00%
0 0.00%
0 0.00%
100 1 0.00%
35,806,916 198,927
Uses Amount Amount/Unit % Total Dev Cost
ACQUISITION COSTS 14,700,000 81,667 41.05%
CONSTRUCTION / REHABILITATION COSTS 13,181,030 73,228 36.81%
PROFESSIONAL FEES & OTHER SOFT COSTS 3,807,871 21,155 10.63%
FINANCING COSTS 2,104,450 11,691 5.88%
TAX CREDIT & SYNDICATION COSTS 541,491 3,008 1.51%
START-UP COSTS, RESERVES & ESCROWS 1,472,075 8,178 4.11%
35,806,917 198,927 100.00%
(0)(0)
Financing Source
LIMITED PARTNER EQUITY
TOTAL DEBT
TOTAL OTHER SOURCES
FUNDING SURPLUS/<GAP>
General Partner Equity
Construction Period Income
TOTAL SOURCES OF FUNDS:
TOTAL USES OF FUNDS:
Fund Uses - Project Development Budget
Project Name: Timbercreek Apartments Sources-Uses Surplus/(Gap):
Residential Commercial
Cost Item Total Cost Per Unit % of
Total Depreciable Non
Depreciable Amortized Expensed Acq.Rehab / New
Constr.Acq.Rehab / New
Constr.
Historic
Eligible %=0.00%
Commercial %=0.00%Commercial %=0.00%
A.ACQUISITION COSTS
Purchase Price: Land Total Cost
Land/Build 14,700,000 % Land = 9.8%1,440,000 8,000 4.0%1,440,000
Purchase Price: Buildings 0 13,260,000 73,667 37.0%13,260,000 $13,260,000 $0
Title Insurance, Recording, Closing Costs 0 0 0 $0 $0
Acquisition Legal Fees 0 0 0 $0 $0
Demolition: Razing of Buildings 0 0 0 $0 $0
Holding Costs 0 0 0 $0 $0
Other Acq. (Specify:)0 0 $0 $0
TOTAL ACQUISITION COSTS 14,700,000 81,667 41.1%13,260,000 1,440,000 0 0 13,260,000 0
B.CONSTRUCTION / REHABILITATION COSTS Date of current 2328: 9/26/2022
Site Work: Off-Site/Non-Depreciable 0 0
Site Work: On-Site Improvements-15 Year Property 0 0 0 0
Demolition: Interior 0 0 0 0 - -
New Construction: Residential 0 0 0
New Construction: Commercial Per unit 0 0 0
Rehabilitation: Residential Total Hard Costs: $10,151,606 $56,398 10,151,606 56,398 28.4%9,865,606 286,000 9,865,606 -
Rehabilitation: Commercial Total Contract Costs: $11,960,027 $66,445 0 0 0 -
General Requirements 650,921 3,616 1.8%650,921 650,921 0 - -
Contractor Overhead 432,101 2,401 1.2%432,101 432,101 0 - -
Contractor Profit 216,048 1,200 0.6%216,048 216,048 0 - -
Payment & Performance Bond 90,750 504 0.3%90,750 90,750 0 - -
Appliances % Comm = 0 0 0 0
Furniture, Fixtures and Equipment % Comm = 25,000 139 0.1%25,000 25,000 0
Other Constr. (specify):% Comm = 418,601 2,326 1.2%418,601 418,601 0 - -
Other Constr. (specify):% Comm = 0 0 0 0 - -
Contractors Contingency 0 0 0 0 - -
Construction Contingency 9.98%1,196,003 6,644 3.3%1,196,003 1,196,003 0 - -
TOTAL CONSTRUCTION COSTS 13,181,030 73,228 36.8%12,895,030 286,000 0 0 12,895,030 0 0 0 0
C.PROFESSIONAL FEES & OTHER SOFT COSTS
Architect Design % of Construction $: 0.5%68,100 378 0.2%68,100 68,100 0 - -
Architect Supervision % of Construction $: 0.6%75,286 418 0.2%75,286 75,286 0 - -
Engineering 0 0 0 0 - -
Geotechnical/Soils Engineering 10,000 56 0.0%10,000 10,000 0 - -
Environmental Site Assessment 10,000 56 0.0%10,000 10,000 0 - -
Survey (Boundary/Topo/As-Built)12,800 71 0.0%12,800 12,800 0 - -
Building Permits 44,777 249 0.1%44,777 44,777 0 - -
Utility Tap Fees 0 0 0 0 - -
Impact Fees 0 0 0 0 - -
Hazard & Liability Insurance (Construction Period)60,000 333 0.2%60,000 60,000 0 - -
Closing Costs/Title Insurance 25,000 139 0.1%25,000 25,000 0 - -
Real Estate Taxes/ Fees 0 0 0 0 - -
Market Study 10,000 56 0.0%10,000 10,000 0 - -
Appraisal 10,000 56 0.0%10,000 10,000 0 - -
Accounting/Audit 10,000 56 0.0%10,000 10,000 0 - -
Cost Certification 15,000 83 0.0%15,000 15,000 0 - -
Legal Fees: Real Estate (Developer)250,000 1,389 0.7%250,000 250,000 0 - -
Development Consultant Fees 263,295 1,463 0.7%263,295 263,295 0 - -
Construction Management Fees 250,000 1,389 0.7%250,000 250,000 0 - -
Developer Fees 7.64%2,541,113 14,117 7.1%2,541,113 663,000 1,878,113 0 - -
Developer Overhead 0.00%0 0 0 0 - -
Soft Cost Contingency 100,000 556 0.3%100,000 100,000 0 - -
Other Soft Cost (specify):6,000 33 0.0%6,000 6,000 0 - -
Other Soft Cost (specify):0 0 0 0 - -
Other Soft Cost (specify):0 0 0 0 - -
Investor 3rd Party Reports and Construction Monitoring 46,500 258 0.1%15,500 15,500 15,500 15,500 0 - -
TOTAL PROFESSIONAL FEES & OTHER SOFT COSTS 3,807,871 21,155 10.6%3,776,871 0 15,500 15,500 663,000 3,113,871 0 0 0 0
D.FINANCING COSTS
Construction Loan Only
Loan Points/Fees 106,800 593 0.3%106,800 106,800 0 - -
Loan Inspections 5,900 33 0.0%5,900 5,900 0 - -
Loan Title & Recording 18,000 100 0.1%18,000 18,000 0 - -
O
K
?
Notes & Other Information
Historic Credit Basis
Commercial
Allocation of Depreciable Basis
Residential O
K
?
% of total less dev fee:
% of total less dev fee:
% of Construction:
Tax Treatment of Assets
($0)
GC Contingency
% Commercial =
O
K
?
PCNA
Fund Uses - Project Development Budget
Project Name: Timbercreek Apartments Sources-Uses Surplus/(Gap):
Residential Commercial
Cost Item Total Cost Per Unit % of
Total Depreciable Non
Depreciable Amortized Expensed Acq.Rehab / New
Constr.Acq.Rehab / New
Constr.
Historic
Eligible %=0.00%
Commercial %=0.00%Commercial %=0.00%
O
K
?
Notes & Other Information
Historic Credit Basis
Commercial
Allocation of Depreciable Basis
Residential O
K
?
Tax Treatment of Assets
($0)
O
K
?
Loan Legal (Bank)40,000 222 0.1%40,000 40,000 0 - -
Loan Interest % Depreciable = 55%1,750,000 9,722 4.9%970,000 780,000 970,000 0 - -
Other Loan Cost:25,000 139 0.1%25,000 25,000 0 - -
Bridge/Interim Loan Costs 0 0 0 0 - -
Permanent Only or Construction/Perm % Depreciable
Loan Points/Fees 0%10,000 56 0 0 10,000 0 0 - -
Loan Inspections 0%0 0 0 0 0 - -
Loan Mortgage Insurance (MIP)0%0 0 0 0 0 - -
Loan Title & Recording 0%0 0 0 0 0 - -
Loan Legal (Bank)0%45,000 250 0 0 45,000 0 0 - -
Loan Interest 0%0 0 0 0 0 - -
Loan Legal (Developer)0%0 0 0 0 0 - -
Cost of Issuance (Bonds)0%23,750 132 0 0 23,750 0 0 - -
FHA Fees 0%0 0 0 0 0 - -
Ginnie Mae Fees 0%0 0 0 0 0 - -
Letter of Credit Fees 0%0 0 0 0 0 - -
Credit Report 0%0 0 0 0 0 - -
Negative Arbitrage 0 0 0 - -
Other Loan Cost:0%70,000 389 0 0 70,000 0 0 - -
Other Loan Cost:0%10,000 56 0 0 10,000 0 0 - -
0 0
TOTAL FINANCING COSTS 2,104,450 11,691 5.9%1,165,700 0 158,750 780,000 1,165,700 0 0 0 0
E.TAX CREDIT & SYNDICATION COSTS
Tax Credit Application and Allocation Fees 74,048 411 0 74,048 0 0 - -
Tax Credit Monitoring Fees 437,443 2,430 0 437,443 0 0 - -
Legal/Organizational Fees (Developer)% Amortized = 15,000 83 0 10,000 0 5,000 0 0 - -
Legal Fees (Investor) % Amortized=>% Amortized = 50%15,000 83 0 7,500 7,500 0 0 - -
Tax Credit Consultant % Amortized = 0 0 0 0 0 - -
Other Syndication Costs:% Amortized = 0 0 0 0 0 - -
TOTAL TAX CREDIT & SYNDICATION COSTS 541,491 3,008 1.5%0 17,500 518,991 5,000 0 0 0 0 0
F.START-UP COSTS, RESERVES & ESCROWS
Leasing/Marketing Expenses 50,000 278 0.1%50,000 0 0 - -
Tenant Relocation (Basis Eligible)601,200 3,340 1.7%601,200 601,200 0 - -
Tenant Relocation (Non Basis Eligible)31,875 177 0.1%31,875 0 0 0 - -
Escrows & Prepaids 0 0 0 0 - -
Lease Up Reserve 0 0 0 0 - -
Operating Reserves (Capitalized)4.0 609,000 3,383 1.7%609,000 0 0 - -
Replacement Reserve (Capitalized)180,000 1,000 0.5%180,000 0 0 - -
Other Reserve:0 0 0 0 - -
Other Reserve:0 0 0 0 - -
TOTAL START UP COSTS, RESERVES & ESCROWS 1,472,075 8,178 4.1%601,200 820,875 50,000 0 601,200 0 0 0 0
TOTAL USES OF FUNDS 35,806,917 198,927 100.0%31,698,801 2,564,375 743,241 800,500 13,923,000 17,775,801 0 0 0 0
No. Months OpExp, RR, Must Pay DS:
Bond & Issuer Counsel
Bond Carryforward
% Amortized =
Lender Due Diligence
Attachment 3
Attachment 4
Revised and approved 12/4/2009
CITY OF OMAHA
SUBSIDY LAYERING STANDARDS FOR THE HOME/CDBG/NAHTF PROGRAM
Standard: Before committing funds to a project, the City of Omaha will evaluate the project in
accordance with the following guidelines and will not invest any more HOME/NSP/NAHTF funds, in
combination with other, private and/or governmental assistance, than is necessary to provide affordable
housing. This standard is established in accordance with Cranston Gonzalez National Affordable
Housing Act, Section 212(F) as amended and 24 CFR Part 91.
Layering Guidelines: Generally, there will be multiple levels of review of the assistance received on a
project. The City of Omaha will rely on the determinations of the Nebraska Investment Finance
Authority, the City’s Tax Increment Financing Authority and the Nebraska Equity Fund, as appropriate,
in evaluating such assistance.
City of Omaha Community Development staff will review the project pro-forma in assessing whether or
not the proposed HOME/NSP/NAHTF fund allocation is necessary to ensure feasibility of the project.
All sources and uses of funds will be detailed in applications and reviewed to determine that funding
sources are committed, an evaluation of all costs associated with the development will be conducted and
the reasonableness and appropriateness of the development costs will be assessed. All costs will be
compared to industry standards as to their reasonableness and certified by the Construction Specialist.
The City shall ensure that costs being funded by HOME/NSP/NAHTF are eligible and that per unit
assistance does not exceed the maximum.
Developers will be required to provide a project pro forma to the City of Omaha. The aggregate amount
of assistance from the US Department of Housing and Urban Development and all other sources will be
considered to ensure the viability of the project. Factors relevant to the feasibility of the project will
include, among other things, rates of returns to owners and investors relative to current interest rates,
long-term needs of the project and the usual and customary fees charged to the project. The target
population and the needs of tenants will also be considered when reviewing a project.
The City’s policy is that projects serving extremely low-income persons will generally require a higher
subsidy than projects serving low-income persons, and that projects serving low-income persons will
require a higher subsidy than projects serving moderate-income persons, and so forth. Other factors may
include whether or not the project serves primarily persons with physical or mental disability, elderly
persons, or others with special needs. Additionally, non-profit organizations will generally require a
higher subsidy than for-profit businesses.
Project cash flow and rate of return will also be evaluated. The City of Omaha normally will not allow an
excessive gain or profit to be derived from a project. The specific standard governing rate of return is the
return on investment shall not exceed twenty percent (20%); except in the case of a Single-Family Rental
Rehabilitation Program project with no first mortgage, the project costs have been certified by the
Planning Department, rents are affordable, and operating expenses are reasonable, the maximum return on
investment shall not exceed forty percent (40%).
Certification:
The project has been evaluated in accordance with the above Subsidy Layering Standards for the
HOME/CDBG/NAHTF Program guidelines, as approved by the Planning Director and the Housing and
Community Development Manager.
Contract Administration Date
and Compliance Manager
Attachment 5
SUBORDINATION POLICY
(revised January 1, 2021)
Background
City clients frequently request the City to subordinate its interest in their property to a new loan
mortgage/deed of trust for the purposes of refinancing an existing first mortgage, for obtaining a
new line of credit, for home improvement, or debt consolidation. The following debt
subordination policy is intended to protect the City’s financial interest in the client’s property
without unduly restricting the client’s access to the equity in their property.
The language of the documents (grants, mortgages, deeds of trust) filed as liens against a
property to secure the City’s interest prohibit the transfer of title, or portion thereof, without prior
consent by the City. Executing an additional lien, subsequent to the execution of the City’s
security instruments, constitutes a transfer of title that would make the City’s loan/grant
immediately due and payable.
Consent to Place Subordinate Lien
The City will generally consent to the placement of a subordinate lien upon written request from
the owner or attorney. The owner and or the attorney signature on the attached Request Form
will constitute the required written request. There is no fee associated with the Consent to Place
a Subordinate Lien application, however, upon approval a $50.00 fee will be charged to cover
processing and filing costs.
Refinancing Existing Superior Liens
The City will generally agree to subordinate its interest in a rehabilitated or newly constructed,
owner-occupied residential property or a multi-family or public service project assisted under
programs administered by the City’s Housing and Community Development Division if the
proposed new loan is in an amount that does not exceed the initial balance of existing superior
lien(s) including reasonable closing costs or the current balance of existing first lien plus
reasonable closing costs, not to exceed the initial balance of the first lien when entered into
initial agreement. This policy applies to both repayable and deferred payment loans. Requests
for a waiver of this policy due to hardship will be considered on a case-by-case basis.
POLICY:
A. The purpose of the City’s loan shall always accomplish a public benefit purpose and in no
way shall subordinate to cash out in order to pay off consumer credit debt not related to
affordable housing costs.
Subordination of the City of Omaha’s loan in favor of a new loan in the amount that
does not exceed the initial balance of existing superior lien(s) including reasonable
closing costs or the current balance of existing first lien plus reasonable closing costs,
not to exceed the initial balance of the first lien when entered into initial agreement; is
acceptable as long as:
1. appraisals accepted by the City indicate the loan to value ratio standards are not
exceeded, and
2.The purpose of the refinance is to lessen the borrower’s monthly financial obligations for
housing related costs.
Attachment 6
B. no subordination will be approved which provides:
•Cash or equity being taken from the property (unless the cash is being used to remediate
code violations at the property, or other extenuating circumstances as determined by the
Home Improvement Loan.
•Fees for refinancing costs increases the loan amount to the extent that the “cost” for
refinancing do not meet the standard test to “break even” or pay off refinancing costs
with savings from the reduced mortgage within 24 months after the new mortgage is
recorded.
•Subordination to junior loans behind the City lien
C. All recorded indebtedness cannot exceed 80% of the appraised value of the home.
D. The City of Omaha’s loan must be recorded in no less second position unless exception is
granted by the Assistant Planning Director.
E. City staff will review the proposed payment terms, appraisal, estimated buyer’s settlement
charges and title report to verify compliance with these criteria prior to execution of a
subordination document by City (all documents submitted at application time of
subordination request).
CITY APPROVAL AUTHOIRTY FOR HANDLING SUBORDINATION REQUESTS:
When City Loan clients request the City to subordinate to their new mortgage with a private
lender:
1.The City/Agency shall be provided with a minimum of 15 working days from the date of
City receipt of Borrower’s request to approve and execute a Subordination Agreement
(Cover Letter, Subordination Request Form, Buyer’s Estimated Settlement Charges, Title,
Payment Terms and Appraisal).
2.Every Request for Subordination shall be submitted by the City Borrower or Attorney only,
and may not be submitted by a realtor, mortgage broker, lender, Title or Escrow Officer nor
anyone else on behalf of the Borrower except for the individual(s)(Attorney exception) who
signed the previous loan with the City and is party to the transaction for which the
Subordination request is being made, or has Power of Attorney granted by the Court to act in
behalf of the Borrower. The Lender, Title or Escrow Officer may provide the supporting
documentation to the City on behalf of the Borrower.
Every request shall be standard and must include the following four items prior to City
executing a Subordination Agreement:.
1.A cover letter with a written request from borrower indicating reason for refinancing and
the structure of the refinancing transaction.
2.A check in the amount of $50.00 payable to the City of Omaha. (Check or money order
will be returned if application does not receive approval).
3. The form provided by City containing the following information and attachments:
•Current mortgage balance(s)
•Current appraised value
•Amount of new loan and terms
•Monthly payment and estimated reduction in housing costs
•Balance of City (review promissory note)
•Estimated loan to value after refinancing
•Estimated settlement fees for new loan (provided by the Title Company prior to loan
closing) (Good Faith Estimate)
•A copy of the payoff statements for those debts being refinancing must accompany
the application.
•A copy of the title report.
•A copy of the appraisal or determination of value documents
Please provide a signed Borrower’s Release of Information
All subordination requests shall be mailed to the City containing original signatures of the
Borrowers at the address listed below:
City of Omaha Planning Department
Attention: CDBG/HOME Administrator
1819 Farnam Street Room 1111
Omaha, NE 68183
Questions regarding subordination requests should be directed to Housing staff at (402) 444-
5150
Title Company or Lender for first mortgage may provide a subordination document for City to
sign.
For multi-family and public service activities, the subordination document should be
provided by the Attorney.
CITY OF OMAHA PLANNING DEPARTMENT
REQUEST FOR SUBORDINATION FORM
1.Borrower(s) Name:
2. Address: __________________________________________________________________________
3.Day Time Phone #: _________________________
4. Current estimated value of property at time of refinancing: $____________________
A1. Name of current First Mortgage holder: A4. My current loan is for _______ years at
_______% interest rate
A2. How much did I borrow? A5. My monthly payment is $___________ each
month.
A3. How much do I owe now?
B1. Name of Second Mortgage holder: B4. My second loan is for ___________ years at
_______% interest rate.
B2. How much did I borrow? B5. My monthly payment is $____________ each
month.
B3. How much do I owe now?
My Loan with the City
C1. How much did I borrow?
C3. My current loan is for _______ years at
_______% interest rate
C2. How much do I owe now as of
_____________________, 20_____
$ ____________________________
C4. My monthly payment is $____________ each
month.
D. Total Existing Mortgages: $ ______________
E1. Name of New First Mortgage: E3. My new loan will have a term of ________
years at ___________% interest and is (check one)
______ Fixed or ______ Adjusted
E2. How much am I borrowing in my new loan? E4. My new monthly payment will be
$__________ each month.
E5. Total savings on Housing Cost is
$___________ per month
(Enter E5+A3+B3-E4)
F1. Note to Borrower: Indicate if there is cash out. _____ Yes or _____ No
If cash out is requested, cover letter much address proposed use of funds.
We, the undersigned, declare the information shown is true and correct under penalty of perjury, dated this
__________ day of _______________________, 20_____.
__________________________________________________ ________________________________
To be Completed by the City
Loan to Value Before Refinance % _______________ Loan to Value After Refinance % ___________
INSTRUCTIONS FOR COMPLETING REQUEST FOR SUBORDINATION
1. Show name(s) of borrower(s) as recorded on City Loan.
2. Identify property address for which City loan was made.
3. Provide daytime phone numbers of where you can be contacted.
4. Current estimated value of property at time of refinancing.
A1. Provide name of first mortgage holder – list recorded loans only.
A2. Original loan amount.
A3. Current monthly balance.
A4. Number of year term for current loan and % interest rate.
A5. Your current monthly payment.
B1-B5. Complete the same instructions for A-1-A5 but only if you have a second mortgage with
another lender.
C1-C4. Complete for City Loan by same instructions for A1-A5.
D. Total the amount of your first and second plus your loan with the City to determine the
total of all records recorded against your property.
E1. List name of new first mortgage lender.
E2. Show the total “new” loan amount you will have after refinancing.
E3. Show terms of new loans - # of years and interest rate and check whether new loan has a
fixed or adjustable interest rate.
E4. Show the amount of your new monthly payment after refinancing.
E5. Calculate total monthly savings on housing costs. Enter E5 = A3 + B3 – E4.
DISPOSITION OF SUBORDINATION REQUEST
(completed by the City)
Dear Borrower:
_____ (1) The City will approve your Request for Subordination based on the fact that you are not
taking cash out of the property. Provide a copy of this Form to your Lender as evidence
of our intent to Subordinate. Title Company must provide City with a copy of Buyers
Estimated Settlement fees and may submit an original Subordination document for our
execution.
______ (2) The Loan Committee reviewed your Request for Subordination and voted to deny your
request for the following reasons:
1. _________________________________________________________________
2. _________________________________________________________________
NOTES: ______________________________________________________________________
______________________________________________________________________
______________________________________________________________________
_______________________________________________ ___________________________
Signature Date