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RES 2023-0285 - Agreement with NOC Development Group LLC for facade and structural improvements at 3819 North 24th Street - FY 2022 CDBG funds RESOLUTION NO.2C2512 5 City Clerk Office Use Only: Publication Date(if applicable): Agenda Date: 2013 Department: p ` ii i i/l Submitter: I k- CITY OF OMAHA LEGISLATIVE CHAMBER Omaha, Nebraska RESOLVED BY THE CITY COUNCIL OF THE CITY OF OMAHA: WHEREAS, the City annually receives Community Development Block Grant (CDBG) funds under Title I of the Housing and Community Development Act of 1974, as amended, for the purpose of benefiting low- and moderate-income residents, eliminating slums and blight, and for other urgent community development needs; and, WHEREAS, the Mayor recommended various projects in the 2022 Consolidated Submission for Community Planning and Development Programs (Consolidated Plan), approved on June 28, 2022 by Resolution No. 2022-0623 and as amended by the City Council on September 27, 2022 by Resolution No. 2022-0935, including $250,000.00 in CDBG funds for NOC Redevelopment Group, LLC, a Nebraska Limited Liability Company; and, WHEREAS, NOC Redevelopment, LLC has submitted an application that will provide façade and structural improvements necessary to cure significant deferred maintenance and ensure the security and safety of the building located at 3819 North 24th Street; and, WHEREAS, the proposed building façade and structural improvements are eligible uses of CDBG funds; and, WHEREAS, NOC Redevelopment, LLC has indicated the total estimated Project cost to be $335,000.00, consisting of $250,000.00 in FY 2022 CDBG Funds and $85,000.00 in private loans and equity; and, WHEREAS, the Consolidated Plan identified this Project as providing economic development which is determined to address slums and blighted conditions on a spot basis and, therefore, the Project is consistent with the Consolidated Plan; and, WHEREAS, it is in the best interest of the City of Omaha to enter into an agreement with NOC Redevelopment, LLC to provide façade and structural improvements to cure significant deferred maintenance and ensure the security and safety of the building located at 3819 North 24th Street. RESOLUTION NO.2.D2— ?l Page 2 NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF OMAHA: THAT, as recommended by the Mayor, the attached Agreement between the City of Omaha and NOC Redevelopment Group, LLC, a Nebraska Limited Liability Company, 6852 N. 24th Street, Omaha, NE 68111, in the amount of$250,000.00 in FY 2022 funds that will provide facade and structural improvements to cure significant deferred maintenance and ensure the security and safety of the building located at 3819 N. 24th Street is hereby approved. Funds shall be paid from the Community Development Block Grant CDBG Former Native Omaha Building Rehabilitation 2022, Award No. 100943, Project No. 6783. 3354 dlh APPROVED AS TO FORM: /2//16t5 A Sl C Y(AT ORNEY DATE Adopted: MAR 1 4 2023 Le—0 Attest: City CI 11 Approved: Mayor COMMUNITY DEVELOPMENT BLOCK GRANT ("CDBG") PROGRAM: BETWEEN THE CITY OF OMAHA AND NOC REDEVELOPMENT GROUP, LLC FOR FACADE AND STRUCTURAL IMPROVEMENTS TO THE BUILDING LOCATED AT 3819 NORTH 24T" STREET FY 2022 March 14, 2023 to December 31, 2023 1 TABLE OF CONTENTS SECTION 1 DEFINITIONS AND ABBREVIATIONS SECTION 2 RESPONSIBILITIES OF THE CONTRACTOR/OWNER 2.01 Overall Project Performance 2.02 Term of Agreement 2.03 Project Budget SECTION 3 CONDITIONS FOR RECEIPT OF CITY FINANCING 3.01 Documents Required by City 3.01.1 Property Insurance 3.01.2 Contractor's Insurance and Workers' Compensation 3.01.3 Eligibility 3.01.4 Section 504 3.01.5 Plans Submission 3.01.6 Minority Business and Women Business Enterprise Plan 3.01.7 Contracts 3.01.8 Performance and Labor Material Payment Bond and/or an Irrevocable Letter of Credit 3.01.9 Funding Compliance Deadline 3.01.10 Security for Non-Recourse Repayable Loan 3.01.11 Non-Recourse Repayable Loan SECTION 4 PROJECT RESPONSIBILITIES OF THE CONTRACTOR/OWNER 4.01 Eligible Use of Funds 4.02 Terms and Conditions 4.03 Breach of Agreement 4.04 Lien Waivers 4.05 Ineligible/Eligible Costs 4.06 Environmental Review Tier II Checklist/Review Form 4.07 Ongoing Property Restrictions 4.08 Davis-Bacon Labor Standards 4.09 Property Standards (24 CFR 92.251) 4.10 Maintenance of Property 4.11 National Environment Policy Act of 1969 SECTION 5 GENERAL ADMINISTRATIVE REQUIREMENTS OF CONTRACTOR/ OWNER 5.01 Financial Management 5.02 Documentation and Record-Keeping (24 CFR 92.508) 5.03 Progress Records and Reports 5.04 Financial Status Reports 5.05 Record Retention 5.06 Personnel and Participant Conditions 5.07 Change Orders 2 5.08 Permits and Codes 5.09 Match Funds SECTION 6 CONTRACTOR/OWNER'S COMPLIANCE WITH OTHER FEDERAL REGULATIONS 6.01 Environmental Review 6.02 Uniform Relocation Act 6.03 Federal Funding Accountability and Transparency Act 6.04 Drug Free Workplace SECTION 7 RESPONSIBILITIES OF THE CITY 7.01 Performance Monitoring 7.02 Allocated to Contractor/Owner 7.03 Payments 7.04 Progress Payments 7.05 Inspections 7.06 Technical Assistance SECTION 8 MUTUAL AGREEMENTS BETWEEN CITY AND CONTRACTOR/OWNER 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 SECTION 9. DEFAULT PROVISIONS 9.01 Remedies SCHEDULE OF EXHIBITS AND ATTACHMENTS 3 NOC REDEVELOPMENT GROUP, LLC COMMUNITY DEVELOPMENT BLOCK GRANT FUNDS THIS AGREEMENT is entered into by and between the City of Omaha and NOC Redevelopment Group, LLC, a Nebraska limited liability company, 6852 N. 24th Street, Omaha, Nebraska 68112 based on terms, conditions and provisions as set forth below. RECITALS: WHEREAS, the City of Omaha (hereinafter referred to as "City") is a municipal corporation located in Douglas County,Nebraska, and is organized and existing under the laws of the State of Nebraska and is authorized and empowered to exercise all powers conferred by the State constitution, laws, Home Rule Charter of the City of Omaha, 1956, as amended, and local ordinances, including but not limited to, the power to contract; and, WHEREAS, the City of Omaha has applied for and received Community Development Block Grant (hereinafter referred to as "CDBG") Funds under Title I of the Housing and Community Development Act of 1974, as amended, which authorizes the use of CDBG funds for the development of viable urban communities by providing decent housing, a suitable environment,and creating and expanding economic development opportunities,principally for the purpose of benefiting low and moderate income persons, and was included in the City's FY 2022 Consolidated Submission for Community Planning and Development Programs (hereinafter referred to as "Consolidated Plan"), outlining priorities, programs and funding allocations for the 2022-2023 program year, approved on June 28, 2022,by City Council Resolution No. 2022-0623, and as amended by the City Council on September 27, 2022 by Resolution No. 2022-0935; and, 4 WHEREAS,the City wishes to enter into an Agreement with NOC Redevelopment Group, LLC to complete façade and structural improvements on the building described as Lots Fifteen (15) and Sixteen (16), Block Five (5), Plainview, an Addition to the City of Omaha, as surveyed, platted and recorded, in Douglas County, Nebraska (Commonly known as 3819 N. 24th Street); and, WHEREAS, NOC Redevelopmet Group, LLC has indicated the total project cost to be $335,000.00 consisting of Two Hundred Fifty Thousand and No/100 ($250,000.00) in 2022 CDBG funds and Eighty-Five Thousand and No/100($85,000.00)in private loans and equity;and, WHEREAS, it is in the best interest of the City and the residents thereof that the City enter into an Agreement with NOC Redevelopment Group, LLC to complete this necessary project. 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 "Contractor/Owner"shall mean—NOC Redevelopment Group, LLC,a Nebraska limited liability company, 6852 N. 24th Street, Omaha, NE 68112 (see Exhibit «A„ 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 United States Department of Housing and Urban Development. 1.06 "CDBG funds" shall mean—that portion of the Community Development Block Grant Program funds ("CDBG"), awarded to the City, subject to and conditioned upon actual receipt of same by the City of Omaha, as may be available to grant during the FY 2022 program year for the use specified herein in an amount not to exceed $250,000.00 payable from the CDBG Former Native Omaha Building 5 Rehabilitation 2022, Award No. 100943, Project No. 6783 subject to the terms, conditions and requirements of said CDBG Fund Agreement. 1.06.1 "Non-recourse Repayable Loan" shall mean — Community Development Block Grant funds made subject to terms, conditions and provisions of this agreement NOC Redevelopment Group, LLC shall perform project responsibilities as outlined in this agreement during the term of this agreement. In the event there are unencumbered funds at the expiration of the term of the agreement, these funds shall be de-obligated by the City. In the event of default, gross negligence or other substantial non-compliance, the amount of the loan shall be due and payable immediately from NOC Redevelopment Group, LLC to the City, but the amount due shall be limited to the amount previously disbursed to NOC Redevelopment Group, LLC by the City. The principal sum of Two Hundred Fifty Thousand and 00/100 ($250,000.00), plus accrued zero percent interest shall be paid as follows: The principal loan amount of $250,000.00 shall depreciate 5%each year for a period of twenty(20) years. On December 31 of the 20th year, the principle balance plus zero (0) percent interest shall be determined as paid in full and all related incumbrances released. If during the twenty (20) year period as determined in Section 2.02.1, the property as referenced in Section 1.08, is sold, conveyed, granted, mortgaged or otherwise transferred, the undepreciated portion of the principle loan plus zero (0) percent interest shall be due and payable to the City of Omaha. 1.07 "Project" shall mean— Former Native Omaha Club Building located at 3819 N. 24th Street. This project includes façade and structural improvements to the buiding to cure significant deferred maintenance and ensure the security and safety of the building. 1.08 "Properties" shall mean — 3819 N. 24th Street (Legal Description: Lots Fifteen (15) and Sixteen (16), Block Five (5), Plainview, an Addition to the City of Omaha, as surveyed,platted and recorded, in Douglas County,Nebraska). 1.09 "Project Completion" shall mean — the point at which all CDGB funds are exhausted. 1.10 "Construction Completion" shall mean — the date the construction work for Authorized Projects has been certified by the City as meeting all state,federal and local law,ordinances,regulations and codes,including but not limited to,housing and zoning codes and accessibility requirements, where applicable. 1.11 "Construction Work" shall mean — the physical modification of properties and related costs, including but not limited to billings for rehabilitation costs to materials, labor, profit and overhead and operational costs directly associated with the Project as detailed in the "Scope of Work" (Exhibit"P"). 6 1.11.1 Profit and overhead shall not exceed 15% of construction hard costs. 1.12 "Project Close Out" shall mean—the dates all project CDBG funds have been disbursed and the City has completed HUD close out procedures (24 CFR 570.507 and 2 CFR Part 200, including 2 CFR 200.343 (Exhibit"D")). 1.13 "Program Income" shall mean—the gross income received by Contractor/Owner, directly generated from the use of CDBG funds (2 CFR Part 200.307 and 2 CFR Part 200.80 (Exhibit"D")). When such income is generated by an activity that is only partially assisted with CDBG, the income shall be prorated to reflect the percentage of CDBG used (see Exhibit "C" attached hereto and incorporated herein by this reference as though fully set forth). Any Program Income funds received during the term of this Agreement shall be returned to the City within thirty (30) days prior to any additional distribution of CDBG to be used by the City to further affordable housing in Omaha. SECTION 2. RESPONSIBILITIES OF THE CONTRACTOR/OWNER. 2.01 Overall Project Performance 2.01.1 NOC Redevelopment Group, LLC shall use the $250,000.00 in 2022 CDBG for façade improvements and structural improvements necessary to cure significant deferred maintenance and ensure the security and safety of the building located at 3819 N. 24th Street. A scope of work provided by NOC Redevelopment Group, LLC is included as Exhibit"P". 2.01.2 Project Work Process: For the project, the City of Omaha will inspect all work. NOC Redevelopment Group, LLC may not proceed with site preparation until an environmental review is conducted and clearance has been achieved, and an Order to Proceed is issued by the City. NOC Redevelopment Group, LLC must notify the City when façade and structural improvments are complete and all requirements have been met, so that an inspection by the City may be conducted. Unsatisfactory site completion must be remedied by NOC Redevelopment Group,LLC at no additional cost to the City,property owner, or tenant. 2.02 Term of Agreement 2.02.1 This Agreement shall commence March 14, 2023 and shall be in full force and effect and shall end on December 31, 2043. Services of the 7 Contractor/Owner will start effective the date of the proceed order issued by the City and Levels of Project Performance related to improvements stated in Section 2.01.1 herein shall be completed as of December 31, 2023. This date may be extended by the Planning Director. The Acknowledgement of Covenant Running With Land shall remain in effect as a covenant running with the land for a period of twenty (20) years after the date of Project Close Out. On December 31 of the twentieth (20) year, this document shall be released and all terms considered met. It shall be binding on the Property Owner, its administrators, executors, successors, heirs or assigns including any homeowners or business association and any other successors in interest (Exhibit"B"). 2.03 Project Budget 2.03.1 The Contractor 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. CDBG Non-Recourse Repayable Loan $ 250,000.00 Private Funding $ 85,000.00 Total $ 335,000.00 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 Contractor/Owner has submitted for and received the prior approval of the Director of all the documents listed below. 3.01.1 Property Insurance. Contractor/Owner shall procure and maintain, at a minimum, general liability insurance in an amount sufficient to protect the City's interest in the properties during the term of the Agreement(2 CFR, Part 200.310/200.447) (Exhibit"D"). 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. 3.01.2 Contractors' Insurance and Workers' Compensation. During the continuance of the work under this Agreement, the Contractor/Owner and all subcontractors (as applicable) shall: 8 3.01.2.01 Maintain, at a minimum, the applicable following classes of coverage which will provide, at a minimum, the following amount of coverage: Contractor's Personal Liability $1,000,000 Combined Bodily Injury and Prop. Damage $2,000,000 ($1,000,000 per occurrence) Product, Including Completed Operations $1,000,000 Workers' Compensation Insurance coverage for all employees involved in the performance of this Agreement. These coverages are required to protect the Contractor/ Owner from any liability or damage from injury to, or death of, any of their employees, other persons, or property wherever located, resulting from any action or operation under this Agreement, or in connection with the work including liability or damage which may arise by virtue of any statute or law in force or which may hereinafter be enacted. The Contractor/Owner agree to hold and save harmless the City of Omaha from any and all loss, cost, or damages of every kind,nature or description arising under this Contract. 3.01.3 Eligibility: The Contractor/Owner represents that he/she is not listed on the Disbarred and Suspended Contractor's List of the U.S. Department of Housing and Urban Development (HUD) or of the City, and further agrees not to hire or utilize as a subcontractor or supplier or any person or firm that is so listed. The Director shall approve all contractors and subcontractors prior to being hired by contractor. All contractors shall sign the Debarment and Suspension Certification (Exhibit"T")prior to the commencement of work. 3.01.4 Section 504. This Project does not consist of the construction of multi- family units; therefore, it is exempt from Section 504 requirements (Exhibit"E"). 3.01.5 Plans Submission. Contractor/Owner shall submit all plans, working drawings and/or specifications necessary or incidental to this Project to the Construction Manager for review and approval prior to the commencement of construction. The City shall not unreasonably deny approval of such plans. 9 3.01.6 Minority Business and Women Business Enterprise Plan. Contractor/ Owner must adopt the City's MBE/WBE Enterprise Plan(Exhibit"0") or submit a similar plan to the Director for his review and approval, which discusses economic development and employment opportunities. These plans shall ensure that the Contractor/Owner 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 Contracts. The Contractor/Owner shall submit duly executed contracts for all construction work to the Director for approval prior to the start of the construction. 3.01.8 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. 3.01.9 Funding Compliance Deadline. In the event that all conditions of funding are not met on or before June 1,2024,then this Agreement shall automatically become null and void and the City shall not be deemed to have assumed any obligation or liability hereunder. 3.01.10 Security for Non-Recourse Repayable Loan. Contractor/Owner 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 $250,000.00 secured by no less than a third lien position subordinate to amounts not to exceed the total assessed value of the property that must support the total lien amounts of both the superior and subordinate debt. Payment of the principal will be due and payable upon the sale or transfer of ownership as described in Section 1.06.1. No assignment or assumptions are allowed and loan subordination is limited and subject to the review of the City under its subordination and loan modification policy. All requests shall be reviewed on a case by case basis. 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 Exhibit "B" and incorporated herein by this reference as though fully set forth. 10 3.01.11 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 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. SECTION 4. PROJECT RESPONSIBILITIES OF THE CONTRACTOR/OWNER. 4.01 Eligible Use of Funds. Contractor/Owner does hereby certify, contract and agree that any and all funding obtained or made available hereunder shall be used solely and exclusively for the purposes described herein. 4.02 Terms and Conditions. Contractor/Owner shall abide by all terms and conditions of this Agreement and shall be responsible for the security and maintenance of the site described herein. 4.03 Breach of Agreement. If through breach of this Agreement Contractor/Owner fails to maintain the use restrictions as described herein, all CDBG previously provided to Contractor/Owner through fulfillment of this Agreement shall promptly be returned to the City. 4.04 Lien Waivers. Contractor/Owner agrees to obtain the appropriate lien waivers prior to each construction payment. 4.05 Ineligible Costs. Contractor/Owner shall be responsible for payment of any Project costs that exceed those specified in this Agreement. 4.05.1 Eligible Costs. Contractor/Owner shall not request disbursement of funds under this Agreement until the funds are needed for payment of eligible costs as described herein. 4.06 Environmental Review The City will complete Environmental Review prior to the start of Construction Work on each Property (Exhibit"Q"). 4.07 Ongoing Property Restrictions. During the construction period of the term of this Agreement and that part of any grant, deed of trust/mortgage, covenant documents,between the City and Contractor/Owner,the Contractor/Owner shall: 4.07.1 Maintain the properties 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. 11 4.07.3 Maintain insurance against loss or damage to the properties 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, Contractor/Owner 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 Contractor/Owner's obligation to the City under the terms of this Agreement. 4.08 Davis-Bacon Labor Standards. Contractors and subcontractors must pay laborers and mechanics employed directly upon the site of work at least the locally prevailing wages (including fringe benefits), listed in the Davis-Bacon wage determination in the contract, for the work performed. Davis-Bacon labor standards clauses must be included in covered contracts. The Davis-Bacon "prevailing wage" is the combination of the basic hourly rate and any fringe benefits listed in a Davis-Bacon wage determination. The contractor's obligation to pay at least the prevailing wage listed in the contract wage determination can be met by paying each laborer and mechanic the applicable prevailing wage entirely as cash wages or by a combination of cash wages and employer-provided bona fide fringe benefits. Prevailing wages, including fringe benefits, must be paid on all hours worked on the site of the work. Apprentices or trainees may be employed at less than the rates listed in the contract wage determination only when they are in an apprenticeship program registered with the Department of Labor or with a state apprenticeship agency recognized by the Department. Contractors and subcontractors are required to pay covered workers weekly and submit weekly certified payroll records to the contracting agency. They are also required to post the applicable Davis-Bacon wage determination with the Davis- Bacon poster (WH-1321) on the job site in a prominent and accessible place where they can be easily seen by the workers (Exhibit "H"—Davis Bacon Wage Decision). 4.09 Property Standards (24 CFR 92.251). During the construction period, Contractor/Owner shall ensure that all work performed and the Construction Work meets all state, federal and local laws, ordinances, regulations and codes. 4.10 Maintenance of Property. Contractor/Owner shall maintain the properties in a safe and sanitary condition to the extent possible during the construction phase and the extended period as indicated in terms of Exhibit"P". 4.11 National Environment Policy Act of 1969. Contractor/ Owner shall not begin any rehabilitation or construction work on 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 CFR Parts 50 and 58 have been met regarding the Property. 12 SECTION 5. GENERAL ADMINISTRATIVE REQUIREMENTS OF CONTRACTOR/ OWNER. 5.01 Financial Management. 5.01.1 Accounting Standards. Contractor/Owner agrees to comply with 2 CFR, Part 200 and agrees to adhere to the accounting principles and procedures required therein, utilize adequate internal controls, and maintain necessary source documentation for all costs incurred. (Exhibit "D"), attached hereto and incorporated herein as though fully set forth). 5.01.2 Cost Principles. Contractor/Owner shall comply with the requirements and the standards of 2 CFR, Part 200 Subpart E, "Cost Principles" (Exhibit"D"). 5.01.3 Audits. Contractor/Owner 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 "D", 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 Contractor/Owner within 30 days after receipt of audit by Contractor/Owner. Failure of Contractor/Owner 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 CFR 570.506). All Contractor/Owner's records with respect to any matters covered in this Agreement shall be made available to the City, its designees or the Federal Government, at any time during normal business hours, as often as the City deems necessary, to audit, examine, and make excerpts or transcripts of all relevant data. Any contract entered into by Contractor/Owner with any contractor or subcontractors shall include this Section to ensure said access. 13 5.03 Progress Records and Reports. Contractor/Owner shall submit to the City the following reports in accordance with 24 CFR 570.506 with the submission timelines as specified. 5.03.1 Construction Progress Reports. The Contractor/Owner 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. The progress reports are required until all Construction Work is completed and the City issues the final payment to Contractor/Owner. 5.04 Financial Status Reports. Contractor/Owner shall submit financial status reports (2 CFR,Part 200 Subpart C 215.52)(Exhibit"D")along with pay requests. These reports shall accompany pay requests. In the event pay requests are not submitted for ninety (90) days, financial status reports shall be due, at a minimum, 15 calendar days from the end of the calendar year quarter. Attached as Exhibit"J", and incorporated herein by this reference as though fully set forth, is a sample financial status report. 5.05 Record Retention. Contractor/Owner 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, shall have access to any books, documents, papers, records and accounts of Contractor/Owner 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 term of the Agreement, December 31, 2029, (2 CFR, Part 200.333) (Exhibit"D"). 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 (see Attachment 1). Contractor/Owner shall not discriminate against any employee or applicant for employment because of race, religion, color, sex, gender identity, sexual orientation, age, national origin, familial or handicap status. As used herein,the word"treated" shall mean and include, without limitation, the following: recruited, whether by advertising or by other means; compensated; selected for training, including apprenticeship; promoted; upgraded; demoted; downgraded; transferred; laid off; and terminated. Contractor/Owner agree to and shall post 14 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 Contractor/Owner 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, sex, age, gender identity, sexual orientation, national origin, familial or handicap status. 5.06.1.3 Contractor/Owner 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 Contractor/Owner shall furnish to the Human Rights and Relations Department all federal forms containing the information and reports required by the federal government for federal contracts under federal rules and regulations,including the information required by sections 10-192 to 10-194, inclusive, of the Omaha Municipal Code and shall permit reasonable access to his records. Records accessible to the Human 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 Contractor/Owner 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. 15 5.06.1.6 Contractor/Owner shall file and shall cause his subcontractors, if any,to file compliance reports with Contractor/Owner in the same form and to the extent as required by the federal government for federal contracts under federal rules and regulations. Such compliance reports shall be filed with the City's Human 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 Contractor/Owner and his subcontractors. 5.06.1.7 Contractor/Owner 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" (see Attachment 1), 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 Section 3 — Employment of Low-Income Persons (Section 3 of HUD Act of'68,as amended, 1 U.S.C. 1701u). Contractor/Owner 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 (Attachment 2). 5.06.2.1 The work to be performed under this Contract is on a project assisted under a program providing direct Federal financial assistance from the Department of Housing and Urban Development and 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 requires that to the greatest extent feasible, opportunities for training and employment be given lower income residents of the project area(s) and contracts for work in connection with the project be awarded to business concerns which are located in, or owned in substantial part by persons residing in the area of the project. 5.06.2.2 The parties to this contract will comply with the provisions of said Section 3 and the regulations issued pursuant thereto by the Secretary of Housing and Urban Development as set forth in 24 CFR, Part 75, and all applicable rules and orders of the Department issued thereunder prior to the execution of this Contract. The parties to this Contract certify and agree that 16 they are under no contractual or other disability which would prevent them from complying with these requirements. 5.06.2.3 The Contractor/Owner will send to each labor organization or representative of workers with which he/she has a collective bargaining agreement or other contract or understanding, if any, a notice advising the said labor organization or worker's representative of his/her commitments under this Section 3 clause and shall post copies of the notice in conspicuous places available to employees and applicants for employment and/or training. 5.06.2.4 The Contractor/Owner will include this Section 3 clause in every subcontract for work in connection with the project and will, at the direction of the applicant for, or recipient of, Federal financial assistance take appropriate action pursuant to the subcontract upon a finding that the subcontractor is in violation of regulations issued by the Secretary of Housing and Urban Development, 24 CFR, Part 75. The Contractor will not subcontract with any subcontractor where he/she has notice or knowledge that the latter has been found in violations of regulations under 24 CFR, Part 75, and will not let any subcontract unless the subcontractor has first provided him/her with a preliminary statement of ability to comply with the requirements of these regulations. 5.06.2.5 Compliance with the provisions of Section 3, the regulations set forth in 24 CFR,Part 75,and all applicable rules and orders of the Department issued thereunder prior to the execution of the Contract, shall be a condition of the Federal financial assistance provided to the project, binding upon the applicant or recipient for such assistance, its successors, and assigns. Failure to fulfill these requirements shall subject the applicant or recipient, his/her contractors and subcontractors, all successors, and assigns to those sanctions specified by the grant and/or loan agreement or contract through with Federal assistance is provided, and to such sanctions as are specified by 24 CFR, Part 75. 5.06.3 Conflict of Interest. Contractor/Owner agrees to abide by the provisions of 24 CFR 570.611 with respect to conflicts of interest, and covenants that it presently has financial interest and shall not acquire any financial interest,direct or indirect,which would conflict in any manner or degree with the performance of services required under this Agreement. Contractor/Owner further covenants that in the performance of this Agreement no person having such a financial interest shall be employed or retained by Contractor/Owner hereunder. These conflict of interest 17 provisions apply to any person who is an employee, agent, consultant, officer or elected official or appointed official of the City or any designated public agencies or subrecipients which are receiving funds under the CDBG program. 5.06.4 Attestation of Citizenship. To comply with Neb. Rev. Stat. 4-108 through 4-114, the Contractor/Owner agrees to comply with the requirements of 5.06.7.1 and 5.06.7.2 (Exhibit"K"). 5.06.4.1 Contractor/Owner shall include the following language in all contracts and subcontracts for the physical performance of services: "The Contractor/Owner 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/Owner is an individual or sole proprietorship, the following applies: a) The Contractor/Owner 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/Owner indicates on such attestation form that he or she is a qualified alien, the Contractor/Owner 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/Owner understands and agrees that lawful presence in the United States is required and the Contractor/Owner 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 Employee Classification Act. To comply with the Nebraska Employee Classification Act, all general contractors and 18 subcontractors who perform construction or delivery service pursuant to this contract shall submit to the City an Affidavit For Employee Classification Act (Exhibit "L") 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 is grounds for rescission of the contract by the City. 5.07 Change Orders: The Contractor/Owner agrees not to make any changes to the Schedule of Work or the Specifications, without a written change order executed by all parties prior to the commencement of the work. A written and executed change order is required even if the modification involves no change in the dollar amount of the Contract. 5.08 Permits and Codes: The Contractor/Owner will ensure that all contractors agree to secure and pay for all applicable and necessary permits and licenses required for the Contractor's performance of this Contract in compliance with applicable requirements, including local building and housing codes where applicable, whether or not covered by the specifications and drawings for the work, and further agrees to perform all work in conformance with the highest standard of all applicable codes and local property rehabilitation standards. 5.09 Match Funds: The Contractor/Owner 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 December 31 of the same year. SECTION 6. CONTRACTOR/OWNER'S COMPLIANCE WITH OTHER FEDERAL REGULATIONS. 19 6.01 Environmental Review. Contractor/Owner 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 CFR, Part 50, as amended. 6.01.4 National Environmental Policy Act of 1969. 6.01.5 HUD Environmental Review Procedures (24 CFR 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 CFR, 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. Contractor/Owner shall comply with the applicable regulations of the Uniform Relocation Act of 1970, as amended (URA) (42 U.S.C. 4601-4655), or Section 104 (d) of the Housing and Community Development Act of 1974, as amended (Section 104 (d)), which require relocation assistance be provided to resident owners, tenants, businesses and other occupants that are displaced as a result of a federally-assisted project. In the event that Contractor/Owner or its agent displaces any occupant of the property, it shall immediately notify the City in writing of the circumstances surrounding said displacement and comply with 24 CFR 92.353. 6.03 Federal Funding Accountability and Transparency Act. The Contractor/Owner shall comply with the applicable regulations of the Federal Funding Accountability and Transparency Act (FFATA) (75 Fed Reg 55663/September 26,2006 and to be codified at 2 CFR,Part 170). Contractor/Owner shall compute and provide to the City (Exhibit"S"). 20 6.04 Drug Free Workplace. Subrecipient 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 Contractor/Owner 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 Contractor/Owner within a reasonable period of time after being notified by the City, contract suspension or termination procedures may be initiated. 7.02 Allocated to Contractor/Owner. Funds allocated to the Contractor/Owner shall be in the form of a Non-Recourse Repayable Loan for the purposes set forth in this Agreement. The City will record a covenant filed against the Property with the Douglas County Register of Deeds restricting the use of the Property upon which the site stabilization and emergency repair work was completed. Payments will be contingent on Duties and Conditions specified herein. 7.03 Payments. It is expressly agreed and understood that the total amount to be paid by the City under this Agreement shall not exceed $250,000.00 in funding from the CDBG Program 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 Contractor/Owner as soon as reasonably possible and the Agreement will be terminated. 7.03.2 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, nor shall the City incur any liability hereunder, unless and until Contractor/Owner 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 deems to be: 7.03.2.1 Not in conformance with applicable state, federal and/or local laws; or, 7.03.2.2 Not in conformance with all plans, working drawings and/or specifications as approved. 7.03.2.3 Unacceptable or substandard; or, 21 7.03.2.4 Not in accordance with this Agreement or related contracts as approved for this Project. 7.04 Progress Payments. Progress payments and final payment, as may be authorized by the Contractor/Owner or his designated representative, are subject to: 7.04.1 Receipt, verification and approval of pay request by Contractor/Owner before being submitted to the Director or his designee for payment. All documents for a pay request submission must be forwarded directly to the Planning Department Construction Specialist assigned to the Project. A financial status report(Exhibit"J") and lien waivers shall be submitted with all requests for payment; and, 7.04.2 Receipt of requisite financial status reports shall be submitted in accordance with Section 5.04 herein. 7.05 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 CDBG proceeds. 7.06 Technical Assistance. The Director shall assist Contractor/Owner in the same manner the Director provides technical assistance to other contractors to ensure compliance with the terms of this Agreement. SECTION 8. MUTUAL AGREEMENTS BETWEEN CITY AND CONTRACTOR/ OWNER. 8.01 Release of Information Laws. Contractor/Owner 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 Contractor/Owner further agrees to indemnify and hold harmless the City of Omaha for any liability arising out of the improper use by Contractor/Owner 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 22 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. Contractor/Owner 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 Contractor/Owner is an Independent Contractor. 8.05 Project Roles. Contractor/Owner shall ensure that the Project meets the objectives stated herein. The City has selected Contractor/Owner to assist in the Project since it is consistent with the Consolidated Plan. With respect to this Project, the City is not acting as Contractor/Owner's architect or engineer. The City makes no warranties, express or implied, as to the Construction Work. The City owes no duty to Contractor/Owner 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. Contractor/Owner may not assign its rights or obligations under this Agreement. 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 upon written direction from authorized representatives of the parties. 8.11 Termination and Enforcement. 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 "N", attached hereto and incorporated herein by this reference as though fully set forth). Upon termination of this Agreement, all funds and interest in any account hereunder shall become the property of the City and shall be returned to the City. 23 8.12 Reversion of Assets. Upon the expiration of this Agreement, Contractor/Owner shall transfer to the City of Omaha any CDBG on hand at the time of expiration and any accounts receivable attributable to the use of CDBG 8.13 Indemnification. Contractor/Owner shall indemnify and hold the City harmless from and against: (1) any and all claims arising from contracts between Contractor/Owner 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. Contractor/Owner 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 Contractor/Owner,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 Contractor/Owner 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 subawards at all tiers, (including subcontracts, subgrants, and contracts under grants, loans, and cooperative agreements) and that all subrecipients shall certify and disclose accordingly. 8.16 Notices. The City and Contractor/Owner 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: 24 1) City: City of Omaha Planning Department 1819 Farnam Street, Room 1111 Omaha,NE 68183 2) Contractor/Owner: Katrina Adams & Kyle Keith, Partners NOC Redevelopment Group, LLC 6852 N. 24th Street Omaha,NE 68112 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, Contractor/Owner shall fail to fulfill in a timely and proper manner any obligations under this Agreement, or violate any of the covenants, representations or agreements hereof, the City may upon written notice terminate this Agreement or such parts thereof as to this Agreement, and may initiate foreclosure proceedings for any damages caused to the City by reasons of such default and termination. 25 IN WITNESS WHEREOF, the parties have executed this Agreement as of the date indicated below: WITNESS: NOC REDEVELOPMENT GROUP,LLC: v\n.a5- 7, h Vz- �V\Z--- By: 2 ) ) 2— 2-7 &b , 2r)22 Date Date GENERAL NOTARY-State of Nebraska 11 ERNEST J WHITE �.. My Comm.Exp.December 17,2024 26 ATTEST: CITY OF OMAHA: 4-4/Z63( HIA;t, -74/1,-/I zoz3 CITY CLERK DATE MAYOR DATE APPROVED AS TO FORM: /A)Z3 AS STANT C Y ATTORNEY DATE 27 SCHEDULE OF EXHIBITS Exhibit Agreement Location Description A 1.02 NOC Redevelopment Group, LLC Article of Incorporation, Bylaws, Corporate Resolution for Signature B 2.02.1, 3.01.10 Promissory Note and Acknowledgement of Covenant C 1.13 Definition-Program Income D 1.12, 1.13, 3.01.1, 5.01.1, 2 CFR, Part 200 5.01.2, 5.01.3, 5.04, 5.05 E 3.01.4 Section 504 Exemption H 4.08 Davis Bacon Wage Decision J 5.04, 7.04.1 Financial Status Reports K 5.06.4 U.S. Citizenship Attestation Form For Public Benefit L 5.06.5 Affidavit For Employee Classification Act N 8.11 Termination and Enforcement— Appendix II to 2 CFR, Part 200(B), 215.61 and 215.62 O 3.01.6 Minority Business and Women Business Enterprise Plan P 1.11, 2.01.1, 4.10 Scope of Work Q 4.06 Environmental Review Checklist/Form S 6.03 Federal Funding Accountability and Transparency Act Form T 3.01.3 Debarment and Suspension Certification U 6.04 Drug Free Workplace 28 ATTACHMENTS: 1 Equal Employment Opportunity Clause 2 Section 3 Clause 29 141.o JL.L.Vl otatl.-nVUL.IL I).L0/11'.11 Filing Document#:9000661551 Pages: 1 Corporation Name:NOC REDEVELOPMENT GROUP,LLC Filing Date and Time:04/10/2021 12:52 PM Exhibit A Certificate of Organization A Nebraska Limited Liability Company Article 1: Name of Company The name of the limited liability company is: NOC Redevelopment Group,LLC Article 2: Initial Designated Office The street address of the initial designated office is: 6852 N 24th Street, Omaha,NE 68112 Article 3: Initial Agent for Service of Process The name of the initial agent for service of process is: Katrina Adams at 6852 N 24t'Street, Omaha,NE 68112. Article 4: Members The Company has three Members: Katrina Adams,Angel Starks,and Kyle Keith. Article 5:Purpose The purpose for which the Company is organized is to engage in any and all lawful business for which a limited liability company may be organized under the laws of the State of Nebraska. Article 6: Management The Company shall be Member-managed. The name and address of the initial Members are as follows: • Katrina Adams 6852 N 24th Street Omaha,NE 68112 • Angel Starks 17117 Burt Street Omaha,NE 68118 • Kyle Keith 2210 Wirt Street Omaha,NE 68110 Article 7: Effective Date of Filing This Certificate or Organization shall be effective when filed. IN WITNESS WHEREOF, the undersigned Organizer has executed this Certificate of Organization on the date below. 'C"" 6--4 M.. March 28,2021 � Si ature of Org r) Date Katrina Adams Printed Name of Organizer 6 MINUTES OF THE DIRECTORS' MEETING MINUTES OF A EETING OF DIRECTORS of NOC Redevelopment Group, LLC(the "Corporation") held remotely using Zoom video conferencing software on this 10th day of July, 2022. 1. The following members were present, constituting the entire board: Katrina S.Adams and Kyle N. Keith 2. All the directors of the Corporation being present,formal notice calling the meeting was dispensed with, and the meeting declared to be regularly called. 3. UPON A MOTION DULY MADE,seconded and unanimously carried, Kyle N. Keith acted as Chairperson of the meeting and Katrina S.Adams as Secretary of the meeting. 4. The following memorandum was then read and ordered to be inserted in these minutes: "We,the directors of the Corporation,consent to this meeting being held on the above date and do waive notice and publication of this meeting,and consent to the transaction of such business,as may have come before it,as testified by our signatures below." -- Katrina S.Adams Kyle eith 7.C641161.... 5. Minutes of the last regular meeting were read and, upon motion duly made,seconded and carried,were adopted as read. 6. The Chairperson presented to the meeting and thereupon the following resolutions were offered, seconded and unanimously adopted. IT WAS RESOLVED THAT: 1. The following individuals are appointed and confirmed as signing officers for the Corporation for a term of one year or until replaced and are authorized to manage bank accounts that have been established for the benefit of the Corporation,sign and endorse checks,drafts,and other orders of payment for those bank accounts,and are authorized to sign bills of lading,and other documents,as needed and reasonable,for the normal conduct of the business of the Corporation: Katrina S.Adams Kyle N. Keith 2. Documents, including contracts and orders of payment,valued over$30,000.00 USD must bear the signatures of both officers to be valid, unless a specific exception resolution is adopted. 3. The following individuals are appointed and confirmed as officers of the Corporation for a term of one year or until replaced: Katrina S.Adams,Co-Chairperson Kyle N. Keith,Co-Chairperson 4. There being no further business to come before the meeting,the meeting was adjourned at 10:30AM CST. 5. Dated in the State of Nebraska on the 10th day of July,2022. do Secretary: .trin: S.Adams Exhibit B CDBG PROGRAM NON-RECOURSE REPAYABLE LOAN PROMISSORY NOTE PROJECT: Former Native Omaha Building PLACE: 3819 N. 24th Street Omaha NE 68111 DATE: March 14, 2023 LEGAL DESCRIPTIONS: Lots Fifteen (15) and Sixteen (16), Block Five (5), Plainview, an Addition to the City of Omaha, as surveyed, platted and recorded, in Douglas County, Nebraska, an Addition to the City of Omaha, as surveyed, platted and recorded in Douglas County, Nebraska(commonly known as 3819 N. 24th Street, Omaha,Nebraska 68111). Address CDBG Funds 3819 North 24th Street $250,000 TOTAL $250,000 Non-recourse Repayable Loan" shall mean — Community Development Block Grant funds made subject to terms, conditions and provisions of this agreement. NOC Redevelopment Group, LLC shall perform project responsibilities as outlined in this agreement during the term of this agreement. In the event there are unencumbered funds at the expiration of the term of the agreement, these funds shall be de-obligated by the City. In the event of default, gross negligence or other substantial non-compliance, the amount of the loan shall be due and payable immediately from NOC Redevelopment Group, LLC to the City, but the amount due shall be limited to the amount previously disbursed to NOC Redevelopment Group, LLC by the City. The principal sum of Two Hundred Fifty Thousand and 00/100 ($250,000.00), plus accrued zero percent interest shall be paid as follows: The principal loan amount of$250,000.00 shall depreciate 5% each year for a period of twenty (20) years. On December 31 of the 20th year, the principle balance plus zero (0) percent interest shall be determined as paid in full and all related incumbrances released. If during the twenty (20) year period as determined in Section 2.02.1 of the Agreement, the property as referenced in Section 1.08 in the Agreement, is sold, conveyed, granted, mortgaged or otherwise transferred, the undepreciated portion of the principle loan plus zero (0) percent interest shall be due and payable to the City of Omaha. 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. 1 Approved 4/5/2010 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 1st Deed of Trust lien, 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. 2 Approved 4/5/2010 IN WITNESS WHEREOF, this Note has been duly executed by the Undersigned, as of the day and year set forth below. BY: NOC REDEVELOPMENT GROUP, LLC BY: K BY: Katrina Adams, Partner APPROVED AS TO FORM: CITY ATTORNEY DATE 3 Approved 4/5/2010 ACKNOWLEDGEMENT OF COVENANT RUNNING WITH LAND WHEREAS, on March 14, 2023, by Resolution No. 2023- ,the City Council of the City of Omaha authorized the execution of a Construction 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 NOC Redevelopment Group, LLC, a Nebraska Limited Liability Company, wherein the City would provide a Non-Recourse Deferred Payment Loan in an amount of$250,000.00 to assist in the façade rehabilitation work of the property and improvements thereon, and legally described as: Lots Fifteen (15) and Sixteen (16), Block Five (5), Plainview, an Addition to the City of Omaha, as surveyed, platted and recorded, in Douglas County, Nebraska, an Addition to the City of Omaha, as surveyed, platted and recorded in Douglas County, Nebraska (commonly known as 3819 N. 24th Street, Omaha, Nebraska 68111). NOW, THEREFORE, NOC Redevelopment Group, LLC, (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 years (20) years after the date of Project Close Out of the project, the period specified or referred to in Section 2.02.1 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 a mixed-use building, 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. O OPPORTUNITY Page 1 of 2 Revised and approved 3/14/2016 COVENANT 3819 N. 24th Street PAGE 2 NOC Redevelopment Group, LLC By: Kyle Keith, Partner By: Katrina Adams, Partner STATE OF NEBRASKA ) ) § COUNTY OF DOUGLAS ) On this day of , 2020 before me, the undersigned, a Notary Public duly commissioned and qualified in and for said county, personally came Kyle Keith, Partner, and Katrina Adams, Partner, 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 EQUAL HOUSING OPPORTUNITY Page 2 of 2 Revised and approved 3/14/2016 EXHIBIT C 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. j (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 return d to the City within thirty(30)days. 0 bkR"i'8r3R Revised and approved 12/3/2009 AUTHENTICATED U.S.GOVERNMENT INFORMATION GPO Exhibit D 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] 79 PART 200-UNIFORM ADMINISTRA- Subpart D-Post Federal Award TIVE REQUIREMENTS, COST PRIN- Requirements CIPLES, AND AUDIT REQUIRE- 200.300 Statutory and national policy re- MENTS FOR FEDERAL AWARDS quirements. 200.301 Performance measurement. Subpart A-Acronyms and Definitions 200.302 Financial management. 200.303 Internal controls. ACRONYMS 200.304 Bonds. 200.305 Federal payment. Sec. 200.306 Cost sharing or matching. 200.0 Acronyms. 200.307 Program income. 200.1 Definitions. 200.308 Revision of budget and program plans. Subpart B-General Provisions 200.309 Modifications to period of perform- ance. 200.100 Purpose. 200.101 Applicability. PROPERTY STANDARDS 200.102 Exceptions. 200.310 Insurance coverage. 200.103 Authorities. 200.311 Real property. 200.104 Supersession. 200.312 Federally-owned and exempt prop- 200.105 Effect on other issuances. erty. 200.106 Agency implementation. 200.313 Equipment. 200.107 OMB responsibilities. 200.314 Supplies. 200.108 Inquiries. 200.315 Intangible property. 200.109 Review date. 200.316 Property trust relationship. 200.110 Effective/applicability date. 200.111 English language. PROCUREMENT STANDARDS 200.112 Conflict of interest. 200.317 Procurements by states. 200.113 Mandatory disclosures. 200.318 General procurement standards. Subpart C-Pre-Federal Award Require- 200.319 Competition. ments and Contents of Federal Awards 200.320 Methods of procurement to be fol- lowed. 200.200 Purpose. 200.321 Contracting with small and minority 200.201 Use of grant agreements (including businesses,women's business enterprises, fixed amount awards),cooperative agree- and labor surplus area firms. ments,and contracts. 200.322 Domestic preferences for procure- 200.202 Program planning and design. ments. 200.203 Requirement to provide public no- 200.323 Procurement of recovered materials. tice of Federal financial assistance pro- 200.324 Contract cost and price. grams. 200.325 Federal awarding agency or pass- 200.204 Notices of funding opportunities. through entity review. 200.326 Bonding requirements. 200.205 Federal awarding agency review of 200.327 Contract provisions. merit of proposals. 200.206 Federal awarding agency review Of PERFORMANCE AND FINANCIAL MONITORING risk posed by applicants. AND REPORTING 200.207 Standard application requirements. 200.328 Financial reporting. 200.208 Specific conditions. 200.329 Monitoring and reporting program 200.209 Certifications and representations. 200.210 Pre-award costs. performance. 200.211 Information contained in a Federal 200.330 Reporting on real property. award. SUBRECIPIENT MONITORING AND MANAGEMENT 200.212 Public access to Federal award infor- mation. 200.331 Subrecipient and contractor deter- 200.213 Reporting a determination that a minations. non-Federal entity is not qualified for a 200.332 Requirements for pass-through enti- Federal award. ties. 200.214 Suspension and debarment. 200.333 Fixed amount subawards. 200.215 Never contract with the enemy. RECORD RETENTION AND ACCESS 200.216 Prohibition on certain telecommuni- cations and video surveillance services or 200.334 Retention requirements for records. equipment. 200.335 Requests for transfer of records. 81 Pt. 200 2 CFR Ch. II (1-1-22 Edition) 200.336 Methods for collection, trans- 200.419 Cost accounting standards and dis- mission,and storage of information. closure statement. 200.337 Access to records. 200.338 Restrictions on public access to GENERAL PROVISIONS FOR SELECTED ITEMS OF records. COST 200.420 Considerations for selected items of REMEDIES FOR NONCOMPLIANCE cost. 200.339 Remedies for noncompliance. 200.421 Advertising and public relations. 200.340 Termination. 200.422 Advisory councils. 200.341 Notification of termination require- 200.423 Alcoholic beverages. ment. 200.424 Alumni/ae activities. 200.342 Opportunities to object, hearings, 200.425 Audit services. and appeals. 200.426 Bad debts. 200.343 Effects of suspension and termi- 200.427 Bonding costs. ' nation. 200.428 Collections of improper payments. 200.429 Commencement and convocation CLOSEOUT costs. 200.344 Closeout. 200.430 Compensation-personal services. 200.431 Compensation-fringe benefits. POST-CLOSEOUT ADJUSTMENTS AND 200.432 Conferences. CONTINUING RESPONSIBILITIES 200.433 Contingency provisions. 200.434 Contributions and donations. 200.345 Post-closeout adjustments and con- 200.435 Defense and prosecution of criminal tinuing responsibilities. and civil proceedings, claims, appeals COLLECTION OF AMOUNTS DUE and patent infringements. 200.436 Depreciation. 200.346 Collection of amounts due. 200.437 Employee health and welfare costs. 200.438 Entertainment costs. Subpart E-Cost Principles 200.439 Equipment and other capital expend- itures. -,i GENERAL PROVISIONS 200.440Exchange rates. 200.400 Policy guide. 200.441 Fines, penalties, damages and other 200.401 Application. settlements. 200.442 Fund raising and investment man- BASIC CONSIDERATIONS agement costs. 200.402 Composition of costs. 200.443 Gains and losses on disposition of de- 200.403 Factors affecting allowability of preciable assets. costs. 200.444 General costs of government. 200.404 Reasonable costs. 200.445 Goods or services for personal use. 200.405 Allocable costs. 200.446 Idle facilities and idle capacity. 200.406 Applicable credits. 200.447 Insurance and indemnification. 200.407 Prior written approval (prior op- 200.448 Intellectual property. proval). 200.449 Interest. 200.408 Limitation on allowance of costs. 200.450 Lobbying. 200.409 Special considerations. 200.451 Losses on other awards or contracts. 200.410 Collection of unallowable costs. 200.452 Maintenance and repair costs. 200.411 Adjustment of previously negotiated 200.453 Materials and supplies costs, includ- indirect (F&A) cost rates containing un- ing costs of computing devices. allowable costs. 200.454 Memberships,subscriptions,and pro- fessional activity costs. DIRECT AND INDIRECT(F&A)COSTS 200.455 Organization costs. 200.412 Classification of costs. 200.456 Participant support costs. 200.413 Direct costs. 200.457 Plant and security costs. 200.414 Indirect(F&A)costs. 200.458 Pre-award costs. 200.415 Required certifications. 200.459 Professional service costs. ,I. 200.460 Proposal costs. SPECIAL CONSIDERATIONS FOR STATES,LOCAL 200.461 Publication and printing costs. GOVERNMENTS AND INDIAN TRIBES 200.462 Rearrangement and reconversion costs. 200.416 Cost allocation plans and indirect 200.463 Recruiting costs. cost proposals. 200.464 Relocation costs of employees. 200.417 Interagency service. 200.465 Rental costs of real property and SPECIAL CONSIDERATIONS FOR INSTITUTIONS OF equipment. HIGHER EDUCATION 200.466 Scholarships.and student aid costs. 200.467 Selling and marketing costs. 200.418 Costs incurred by states and local 200.468 Specialized service facilities. governments. 200.469 Student activity costs. 82 OMB Guidance L §200.0 200.470 Taxes(including Value Added Tax). APPENDIX VII TO PART 220—STATES AND 200.471 Telecommunication costs and video LOCAL GOVERNMENT AND INDIAN TRIBE IN- surveillance costs. DIRECT COST PROPOSALS 200.472 Termination costs. APPENDIX VIII TO PART 200—NONPROFIT OR- 200.473 Training and education costs. GANIZATIONS EXEMPTED FROM SUBPART E 200.474 Transportation costs. OF PART 200 200.475 Travel costs. APPENDIX IX TO PART 200—HOSPITAL COST 200.476 Trustees. PRINCIPLES APPENDIX X TO PART 200—DATA COLLECTION Subpart F—Audit Requirements FORM(FORM SF-SAC) APPENDIX XI TO PART 200—COMPLIANCE SUP- GENERAL PLEMENT 200.500 Purpose. APPENDIX XII TO PART 200—AWARD TERM AND CONDITION FOR RECIPIENT INTEGRITY AND AUDITS PERFORMANCE MATTERS 200.501 Audit requirements. • AUTHORITY:31 U.S.C.503 200.502 Basis for determining Federal SOURCE: 78 FR 78608, Dec. 26, 2013, unless awards expended. otherwise noted. 200.503 Relation to other audit require- ments. Subpart A—Acronyms and 200.504 Frequency of audits. Definitions200.505 Sanctions. 200.506 Audit costs. 200.507 Program-specific audits. ACRONYMS AUDITEES §200.0 Acronyms. 200.508 Auditee responsibilities. ACRONYM TERM 200.509 Auditor selection. 200.510 Financial statements. CAS Cost Accounting Standards 200.511 Audit findings follow-up. CFR Code of Federal Regulations 200.512 Report submission. CMIA Cash Management Improve- FEDERAL AGENCIES ment Act 200.513 Responsibilities. COG Councils Of Governments COSO Committee of Sponsoring Orga- AUDITORS nizations of the Treadway Commis- 200.514 Scope of audit. Sion 200.515 Audit reporting. 200.516 Audit findings. 200.517 Audit documentation. EPA Environmental Protection Agen 200.518 Major program determination. cy 200.519 Criteria for Federal program risk. ERISA Employee Retirement Income 200.520 Criteria for a low-risk auditee. Security Act of 1974 (29 U.S.C. 1301- MANAGEMENT DECISIONS 1461) EUI Energy Usage Index 200.521 Management decision. F&A Facilities and Administration APPENDIX I TO PART 200—FULL TEXT OF NO- FAC Federal Audit Clearinghouse TICE OF FUNDING OPPORTUNITY FAIN Federal Award Identification APPENDIX II TO PART 200—CONTRACT PROVI- Number SIGNS FOR NON-FEDERAL ENTITY CON- FAPIIS Federal Awardee Perform- TRACTS UNDER FEDERAL AWARDS ante and Integrity Information Sys- APPENDIX III TO PART 200—INDIRECT (F&A) COSTS IDENTIFICATION AND ASSIGNMENT, tern AND RATE DETERMINATION FOR INSTITU- FAR Federal Acquisition Regulation TIONS OF HIGHER EDUCATION(IHES) FFATA Federal Funding Account- APPENDIX IV TO PART 200—INDIRECT (F&A) ability and Transparency Act of 2006 COSTS IDENTIFICATION AND ASSIGNMENT, or Transparency Act—Public Law AND RATE DETERMINATION FOR NONPROFIT 109-282, as amended by section 6202(a) ORGANIZATIONS of Public Law 110-252 (31 U.S.C. 6101) APPENDIX V TO PART 200—STATE/LOCAL GOV- FICA Federal Insurance Contribu- ERNMENTWIDE CENTRAL SERVICE COST AL- LOCATION PLANS tions Act APPENDIX VI TO PART 200—PUBLIC ASSIST- FOIA Freedom of Information Act ANCE COST ALLOCATION PLANS FR Federal Register 83 §200.1 2 CFR Ch. II (1-1-22 Edition) FTE Full-time equivalent iliary apparatus necessary to make it GAAP Generally Accepted Account- usable for the purpose for which it is ing Principles acquired. Acquisition costs for soft- GAGAS Generally Accepted Govern- ware includes those development costs ment Auditing Standards capitalized in accordance with gen- GAO Government Accountability Of- erally accepted accounting principles fice (GAAP). Ancillary charges, such as GOCO Government owned, contractor taxes, duty, protective in transit insur- operated ante, freight, and installation may be GSA General Services Administration included in or excluded from the acqui- IBS Institutional Base Salary sition cost in accordance with the non- IHE Institutions of Higher Education Federal entity's regular accounting IRC Internal Revenue Code practices. ISDEAA Indian Self-Determination Advance payment means a payment and Education and Assistance Act that a Federal awarding agency or MTC Modified Total Cost pass-through entity makes by any ap- MTDC Modified Total Direct Cost propriate payment mechanism, includ- NFE Non-Federal Entity ing a predetermined payment schedule, OMB Office of Management and Budg- before the non-Federal entity disburses et the funds for program purposes. PII Personally Identifiable Informa- Allocation means the process of as- tion signing a cost, or a group of costs, to PMS Payment Management System one or more cost objective(s), in rea- PRHP Post-retirement Health Plans sonable proportion to the benefit pro- PTE Pass-through Entity vided or other equitable relationship. REUI Relative Energy Usage Index The process may entail assigning a SAM System for Award Management cost(s)directly to a final cost objective SFA Student Financial Aid or through one or more intermediate SNAP Supplemental Nutrition Assist- cost objectives. ance Program Assistance listings refers to the pu b- SPOC Single Point of Contact licly available listing of Federal assist- TANF Temporary Assistance for ance programs managed and adminis- Needy Families tered by the General Services Adminis- TFM Treasury Financial Manual tration,formerly known as the Catalog U.S.C. United States Code of Federal Domestic Assistance VAT Value Added Tax (CFDA). [78 FR 78608, Dec. 26, 2013, as amended at 79 Assistance listing number means a FR 75880, Dec. 19, 2014; 80 FR 43308, July 22, unique number assigned to identify a 2015;85 FR 49529,Aug.13,2020] Federal Assistance Listings, formerly known as the CFDA Number. §200.1 Definitions. Assistance listing program title means These are the definitions for terms the title that corresponds to the Fed- used in this part. Different definitions eral Assistance Listings Number, for- may be found in Federal statutes or merly known as the CFDA program regulations that apply more specifi- title. cally to particular programs or activi- Audit finding means deficiencies ties. These definitions could be supple- which the auditor is required by mented by additional instructional in- §200.516(a) to report in the schedule of formation provided in governmentwide findings and questioned costs. standard information collections. For Auditee means any non-Federal enti- purposes of this part, the following ty that expends Federal awards which definitions apply: must be audited under subpart F of Acquisition cost means the cost of the this part. asset including the cost to ready the Auditor means an auditor who is a asset for its intended use. Acquisition public accountant or a Federal, State, cost for equipment, for example, means local government, or Indian tribe audit the net invoice price of the equipment, organization, which meets the general including the cost of any modifica- standards specified for external audi- tions,attachments,accessories, or aux- tors in generally accepted government 84 OMB Guidance §200.1 auditing standards (GAGAS). The term sets that materially increase their auditor does not include internal audi- value or useful life. tors of nonprofit organizations. Central service cost allocation plan Budget means the financial plan for means the documentation identifying, the Federal award that the Federal accumulating, and allocating or devel- awarding agency or pass-through enti- oping billing rates based on the allow- ty approves during the Federal award able costs of services provided by a process or in subsequent amendments State or local government or Indian to the Federal award. It may include tribe on a centralized basis to its de- the Federal and non-Federal share or partments and agencies. The costs of only the Federal share, as determined these services may be allocated or by the Federal awarding agency or billed to users. pass-through entity. Claim means, depending on the con- Budget period means the time inter- text, either: val from the start date of a funded por- tion of an award to the end date of that sertion A bywr oneten demand r written Fed- fundedad- portion during which recipients by kf the parties to a are authorized to expend the funds eral award seeking as a matter of right: awarded, including any funds carried forward or other revisions pursuant to (i) The payment of money in a sum certain; §200pit (ii) The adjustment or interpretation Capital assets means: of the terms and conditions of the Fed- (1) Tangible or intangible assets used eral award;or in operations having a useful life of more than one year which are capital- (iii) Other relief arising under or re- ized in accordance with GAAP. Capital lating to a Federal award. assets include: (2) A request for payment that is not (i) Land, buildings (facilities), equip- in dispute when submitted. ment, and intellectual property (in- Class of Federal awards means a group cluding software) whether acquired by of Federal awards either awarded under purchase, construction, manufacture, a specific program or group of pro- exchange, or through a lease accounted grams or to a specific type of non-Fed- for as financed purchase under Govern- eral entity or group of non-Federal en- ment Accounting Standards Board tities to which specific provisions or (GASB) standards or a finance lease exceptions may apply. under Financial Accounting Standards Closeout means the process by which Board(FASB)standards;and the Federal awarding agency or pass- (ii) Additions, improvements, modi- through entity determines that all ap- fications, replacements, rearrange- plicable administrative actions and all ments, reinstallations, renovations or required work of the Federal award alterations to capital assets that mate- have been completed and takes actions rially increase their value or useful life as described in§200.344. (not ordinary repairs and mainte- Cluster of programs means a grouping nance). of closely related programs that share (2) For purpose of this part, capital common compliance requirements. The assets do not include intangible right- types of clusters of programs are re- to-use assets (per GASB) and right-to- search and development(R&D),student use operating lease assets (per FASB). financial aid (SFA), and other clusters. For example, assets capitalized that "Other clusters" are as defined by OMB recognize a lessee's right to control the in the compliance supplement or as use of property and/or equipment for a designated by a State for Federal period of time under a lease contract. awards the State provides to its sub- See also§200.465. recipients that meet the definition of a Capital expenditures means expendi- cluster of programs. When designating tures to acquire capital assets or ex- an "other cluster," a State must iden- penditures to make additions, improve- tify the Federal awards included in the ments, modifications, replacements, cluster and advise the subrecipients of rearrangements, reinstallations, ren- compliance requirements applicable to ovations, or alterations to capital as- the cluster, consistent with §200.332(a). 85 §200.1 2 CFR Ch. II (1-1-22 Edition) A cluster of programs must be consid- Contract means, for the purpose of ered as one program for determining Federal financial assistance, a legal in- major programs, as described in strument by which a recipient or sub- §200.518, and, with the exception of recipient purchases property or serv- R&D as described in §200.501(c), wheth- ices needed to carry out the project or er a program-specific audit may be program under a Federal award. For elected. additional information on subrecipient Cognizant agency for audit means the and contractor determinations, see Federal agency designated to carry out §200.331. See also the definition of the responsibilities described in subaward in this section. §200.513(a). The cognizant agency for Contractor means an entity that re- audit is not necessarily the same as the ceives a contract as defined in this sec- cognizant agency for indirect costs. A tion. list of cognizant agencies for audit can Cooperative agreement means a legal be found on the Federal Audit Clear- instrument of financial assistance be- inghouse(FAC)website. tween a Federal awarding agency and a Cognizant agency for indirect costs recipient or a pass-through entity and means the Federal agency responsible a subrecipient that, consistent with 31 for reviewing, negotiating, and approv- U.S.C.6302-6305: ing cost allocation plans or indirect (1) Is used to enter into a relation- cost proposals developed under this ship the principal purpose of which is part on behalf of all Federal agencies. to transfer anything of value to carry The cognizant agency for indirect cost out a public purpose authorized by a is not necessarily the same as the cog- law of the United States (see 31 U.S.C. nizant agency for audit. For assign- 6101(3)); and not to acquire property or ments of cognizant agencies see the services for the Federal Government or following: pass-through entity's direct benefit or (1) For Institutions of Higher Edu- use; cation (IHEs): Appendix III to this (2) Is distinguished from a grant in part,paragraph C.11. that it provides for substantial involve- (2) ment of the Federal awarding agency For tno this part, parorganagraph phs: Ap- in carrying out the activity con- templated by the Federal award. (3) For State and local governments: (3)The term does not include: Appendix V to this part, paragraph F.1. (i) A cooperative research and devel- ,! (4) For Indian tribes: Appendix VII to opment agreement as defined in 15 this part, paragraph D.1. U.S.C. 3710a;or Compliance supplement means an an- nually updated authoritative source for (ii)An agreement that provides only: auditors that serves to identify exist- (A)Direct United States Government ing important compliance require- ments that the Federal Government (B)A subsidy; expects to be considered as part of an (C)A loan; audit. Auditors use it to understand (D)A loan guarantee; or the Federal program's objectives, pro- (E)Insurance. cedures, and compliance requirements, Cooperative audit resolution means the as well as audit objectives and sug- use of audit follow-up techniques which gested audit procedures for deter- promote prompt corrective action by mining compliance with the relevant improving communication, fostering Federal program. collaboration, promoting trust, and de- Computing devices means machines veloping an understanding between the used to acquire, store, analyze,process, Federal agency and the non-Federal en- and publish data and other information tity.This approach is based upon: electronically, including accessories (1) A strong commitment by Federal (or "peripherals") for printing, trans- agency and non-Federal entity leader- mitting and receiving, or storing elec- ship to program integrity; tronic information. See also the defini- (2) Federal agencies strengthening tions of supplies and information tech- partnerships and working coopera- nology systems in this section. tively with non-Federal entities and 86 OMB Guidance §200.1 their auditors; and non-Federal enti- Discretionary award means an award ties and their auditors working coop- in which the Federal awarding agency, eratively with Federal agencies; in keeping with specific statutory au- (3) A focus on current conditions and thority that enables the agency to ex- corrective action going forward; ercise judgment ("discretion"), selects (4) Federal agencies offering appro- the recipient and/or the amount of Fed- priate relief for past noncompliance eral funding awarded through a corn- when audits show prompt corrective petitive process or based on merit of action has occurred; and proposals. A discretionary award may (5) Federal agency leadership sending be selected on a non-competitive basis, a clear message that continued failure as appropriate. to correct conditions identified by au- Equipment means tangible personal dits which are likely to cause improper property (including information tech- payments, fraud, waste, or abuse is un- nology systems) having a useful life of ' acceptable and will result in sanctions. more than one year and a per-unit ac- Corrective action means action taken thethat: quisition cost which equals or exceeds by auditee Corrects identified deficiencies; the lesser of the capitalization level es- (2) Produces recommended improve-(1) tablished by the non-Federal entity for ments; or financial statement purposes, or$5,000. (3) Demonstrates that audit findings See also the definitions of capital as- are either invalid or do not warrant sets, computing devices, general purpose auditee action. equipment, information technology sys- Cost allocation plan means central tems, special purpose equipment, and sup- service cost allocation plan or public plies in this section. assistance cost allocation plan. Expenditures means charges made by Cost objective means a program, func- a non-Federal entity to a project or tion, activity, award, organizational program for which a Federal award was subdivision, contract, or work unit for received. which cost data are desired and for (1) The charges may be reported on a which provision is made to accumulate cash or accrual basis, as long as the and measure the cost of processes, methodology is disclosed and is con- products, jobs, capital projects, etc. A sistently applied. cost objective may be a major function (2) For reports prepared on a cash of the non-Federal entity, a particular basis,expenditures are the sum of: service or project, a Federal award, or (i) Cash disbursements for direct an indirect (Facilities & Administra- charges for property and services; tive (F&A)) cost activity, as described (ii) The amount of indirect expense in subpart E of this part. See also the charged; definitions of final cost objective and in- (iii) The value of third-party in-kind termediate cost objective in this section. contributions applied; and Cost sharing or matching means the pay- portion of project costs not paid by ments The amount nf cash advance sub- Federal funds or contributions (unless recipiand payments made to otherwise authorized by Federal stat- recipients. ute). See also§200.306. (3) For reports prepared on an ac- Cross-cutting audit finding means an crual basis, expenditures are the sum audit finding where the same under- of: lying condition or issue affects all Fed- (i) Cash disbursements for direct eral awards (including Federal awards charges for property and services; of more than one Federal awarding (ii) The amount of indirect expense agency or pass-through entity). incurred; Disallowed costs means those charges (iii) The value of third-party in-kind to a Federal award that the Federal contributions applied;and awarding agency or pass-through enti- (iv) The net increase or decrease in ty determines to be unallowable, in ac- the amounts owed by the non-Federal cordance with the applicable Federal entity for: statutes, regulations, or the terms and (A) Goods and other property re- conditions of the Federal award. ceived; 87 §200.1 2 CFR Ch. II (1-1-22 Edition) (B) Services performed by employees, (i)Grants; contractors, subrecipients, and other (ii)Cooperative agreements; payees;and (iii) Non-cash contributions or dona- (C) Programs for which no current tions of property (including donated services or performance are required surplus property); such as annuities, insurance claims, or (iv)Direct appropriations; other benefit payments. (v)Food commodities; and Federal agency means an "agency" as (vi) Other financial assistance (ex- defined at 5 U.S.C. 551(1) and further cept assistance listed in paragraph (2) clarified by 5 U.S.C.552(f). of this definition). Federal Audit Clearinghouse (FAC) (2) For §200.203 and subpart F of this means the clearinghouse designated by part, Federal financial assistance also in- OMB as the repository of record where eludes assistance that non-Federal en- non-Federal entities are required to tities receive or administer in the form transmit the information required by of: subpart F of this part. (i)Loans; Federal award has the meaning, de- (ii)Loan Guarantees; pending on the context, in either para- (iii)Interest subsidies;and graph(1)or(2)of this definition: (iv)Insurance. (1)(i)The Federal financial assistance (3) For §200.216, Federal financial as- that a recipient receives directly from sistance includes assistance that non- a Federal awarding agency or indi- Federal entities receive or administer rectly from a pass-through entity, as in the form of: described in§200.101; or (i)Grants; (ii) The cost-reimbursement contract (ii)Cooperative agreements; under the Federal Acquisition Regula- (iii)Loans; and tions that a non-Federal entity re- (iv)Loan Guarantees. ceives directly from a Federal award- (4) Federal financial assistance does ing agency or indirectly from a pass- not include amounts received as reim- through entity, as described in§200.101. bursement for services rendered to in- (2) The instrument setting forth the dividuals as described in§200.502(h) and terms and conditions. The instrument (i). is the grant agreement, cooperative Federal interest means, for purposes of agreement, other agreement for assist- §200.330 or when used in connection ance covered in paragraph (2) of the with the acquisition or improvement of definition of Federal financial assistance real property, equipment, or supplies in this section, or the cost-reimburse- under a Federal award, the dollar ment contract awarded under the Fed- amount that is the product of the: eral Acquisition Regulations. (1) The percentage of Federal partici- (3) Federal award does not include pation in the total cost of the real other contracts that a Federal agency property,equipment,or supplies; and uses to buy goods or.services from a (2) Current fair market value of the contractor or a contract to operate property, improvements, or both, to Federal Government owned, contractor the extent the costs of acquiring or im- operated facilities(GOCOs). proving the property were included as (4) See also definitions of Federal fi- project costs. nancial assistance, grant agreement, Federal program means: and cooperative agreement. (1) All Federal awards which are as- Federal award date means the date signed a single Assistance Listings when the Federal award is signed by Number. the authorized official of the Federal (2) When no Assistance Listings awarding agency. Number is assigned, all Federal awards Federal awarding agency means the from the same agency made for the Federal agency that provides a Federal same purpose must be combined and award directly to a non-Federal entity. considered one program. Federal financial assistance means (3) Notwithstanding paragraphs (1) (1) Assistance that non-Federal enti- and (2) of this definition, a cluster of ties receive or administer in the form programs. The types of clusters of pro- of: grams are: 88 • OMB Guidance §200.1 (i) Research and development (R&D); granting institution of education, pri- (ii) Student financial aid(SFA);and vate foundation, hospital, organization (iii) "Other clusters," as described in engaged exclusively in research or sci- the definition of cluster of programs in entific activities, church, synagogue, this section. mosque or other similar entities orga- Federal share means the portion of nized primarily for religious purposes; the Federal award costs that are paid or using Federal funds. (4)An organization located in a coun- Final cost objective means a cost ob- try other than the United States not jective which has allocated to it both recognized as a foreign public entity. direct and indirect costs and, in the Foreign public entity means: non-Federal entity's accumulation sys- (1) A foreign government or foreign tem, is one of the final accumulation governmental entity; points, such as a particular award, in- (2) A public international organiza- ternal project, or other direct activity tion, which is an organization entitled of a non-Federal entity. See also the to enjoy privileges, exemptions, and definitions of cost objective and inter- immunities as an international organi- mediate cost objective in this section. zation under the International Organi- Financial obligations, when ref- zations Immunities Act (22 U.S.C. 288— erencing a recipient's or subrecipient's 288f); use of funds under a Federal award, (3) An entity owned (in whole or in means orders placed for property and part) or controlled by a foreign govern- services, contracts and subawards ment; or made, and similar transactions that re- (4) Any other entity consisting whol- quire payment. ly or partially of one or more foreign Fixed amount awards means a type of governments or foreign governmental grant or cooperative agreement under entities. which the Federal awarding agency or General purpose equipment means pass-through entity provides a specific equipment which is not limited to re- level of support without regard to ac- search, medical, scientific or other tual costs incurred under the Federal technical activities. Examples include award. This type of Federal award re- office equipment and furnishings, mod- duces some of the administrative bur- ular offices, telephone networks, infor- den and record-keeping requirements mation technology equipment and sys- for both the non-Federal entity and tems, air conditioning equipment, re- Federal awarding agency or pass- production and printing equipment, through entity.Accountability is based and motor vehicles. See also the defini- primarily on performance and results. tions of equipment and special purpose See§§200.102(c),200.201(b),and 200.333. equipment in this section. Foreign organization means an entity Generally accepted accounting prin- that is: ciples(GAAP) has the meaning specified (1) A public or private organization in accounting standards issued by the located in a country other than the GASB and the FASB. United States and its territories that is Generally accepted government auditing subject to the laws of the country in standards (GAGAS), also known as the which it is located, irrespective of the Yellow Book, means generally accepted citizenship of project staff or place of government auditing standards issued performance; by the Comptroller General of the (2) A private nongovernmental orga- United States, which are applicable to nization located in a country other financial audits. than the United States that solicits Grant agreement means a legal instru- and receives cash contributions from ment of financial assistance between a the general public; Federal awarding agency or pass- (3) A charitable organization located through entity and a non-Federal enti- in a country other than the United ty that, consistent with 31 U.S.C. 6302, States that is nonprofit and tax ex- 6304: empt under the laws of its country of (1) Is used to enter into a relation- domicile and operation, and is not a ship the principal purpose of which is university, college, accredited degree- to transfer anything of value to carry 89 §200.1 2 CFR Ch. II (1-1-22 Edition) out a public purpose authorized by a (ii) When an agency's review is un- law of the United States (see 31 U.S.C. able to discern whether a payment was 6101(3)); and not to acquire property or proper as a result of insufficient or services for the Federal awarding agen- lack of documentation, this payment cy or pass-through entity's direct ben- should also be considered an improper efit or use; payment. When establishing docu- (2) Is distinguished from a coopera- mentation requirements for payments, tive agreement in that it does not pro- agencies should ensure that all docu- vide for substantial involvement of the mentation requirements are necessary Federal awarding agency in carrying and should refrain from imposing addi- out the activity contemplated by the tonal burdensome documentation re- Federal award. quirements. (3) Does not include an agreement (iii) Interest or other fees that may that provides only: result from an underpayment by an (i) Direct United States Government agency are not considered an improper cash assistance to an individual; payment if the interest was paid cor- (ii)A subsidy; rectly. These payments are generally (iii)A loan; separate transactions and may be nec- (vi)A loan guarantee; or essary under certain statutory, con- 1 (v)Insurance. tractual, administrative, or other le- Highest level owner means the entity gally applicable requirements. that owns or controls an immediate (iv) A "questioned cost" (as defined owner of the offeror, or that owns or in this section) should not be consid- controls one or more entities that con- ered an improper payment until the trol an immediate owner of the offeror. transaction has been completely re- No entity owns or exercises control of viewed and is confirmed to be im- the highest-level owner as defined in proper. the Federal Acquisition Regulations (v) The term "payment" in this defi- (FAR)(48 CFR 52.204-17). nition means any disbursement or Hospital means a facility licensed as transfer of Federal funds (including a a hospital under the law of any state or commitment for future payment, such a facility operated as a hospital by the as cash, securities, loans, loan guaran- United States, a state, or a subdivision tees, and insurance subsidies) to any of a state. non-Federal person, non-Federal enti- Improper payment means: ty, or Federal employee, that is made 1 Any payment that should not by a Federal agency, a Federal con- have been made or that was made in an tractor,a Federal grantee, or a govern- incorrect amount under statutory, con- mental or other organization admin- tractual, administrative, or other le- istering a Federal program or activity. gaily applicable requirements. (vi) The term "payment" includes (i) Incorrect amounts are overpay- disbursements made pursuant to prime '.I ments or underpayments that are made contracts awarded under the Federal to eligible recipients (including inap- Acquisition Regulation and Federal propriate denials of payment or serv- awards subject to this part that are ex- ice, any payment that does not account pended by recipients. for credit for applicable discounts, pay- (2) See definition of improper pay- ments that are for an incorrect ment in OMB Circular A-123 appendix amount, and duplicate payments). An C, part I A (1) "What is an improper improper payment also includes any payment?" Questioned costs, including payment that was made to an ineli- those identified in audits, are not an gible recipient or for an ineligible good improper payment until reviewed and or service, or payments for goods or confirmed to be improper as defined in services not received (except for such OMB Circular A-123 appendix C. payments authorized by law). Indian tribe means any Indian tribe, Note 1 to paragraph(1)(i) of this defini- band, nation, or other organized group tion. Applicable discounts are only or community, including any Alaska those discounts where it is both advan- Native village or regional or village tageous and within the agency's con- corporation as defined in or established trol to claim them. pursuant to the Alaska Native Claims 90 OMB Guidance §200.1 Settlement Act (43 U.S.C. Chapter 33), Internal controls for non-Federal enti- which is recognized as eligible for the ties means: special programs and services provided (1) Processes designed and imple- by the United States to Indians be- mented by non-Federal entities to pro- cause of their status as Indians (25 vide reasonable assurance regarding U.S.C. 450b(e)). See annually published the achievement of objectives in the Bureau of Indian Affairs list of Indian following categories: Entities Recognized and Eligible to Re- (i) Effectiveness and efficiency of op- ceive Services. erations; Institutions of Higher Education (IHEs) (ii) Reliability of reporting for inter- is defined at 20 U.S.C. 1001. nal and external use; and Indirect (facilities & administrative (iii) Compliance with applicable laws (F&A))costs means those costs incurred and regulations. for a common or joint purpose benefit- (2) Federal awarding agencies are re- ting more than one cost objective, and quired to follow internal control corn- not readily assignable to the cost ob- pliance requirements in OMB Circular jectives specifically benefitted, with- No. A-123, Management's Responsi- out effort disproportionate to the re- bility for Enterprise Risk Management sults achieved. To facilitate equitable and Internal Control. distribution of indirect expenses to the Loan means a Federal loan or loan cost objectives served, it may be nec- guarantee received or administered by essary to establish a number of pools of a non-Federal entity, except as used in indirect (F&A) costs. Indirect (F&A) the definition of program income in this cost pools must be distributed to bene- section. fitted cost objectives on bases that will (1) The term "direct loan" means a produce an equitable result in consider- disbursement of funds by the Federal ation of relative benefits derived. Government to a non-Federal borrower Indirect cost rate proposal means the under a contract that requires the re- documentation prepared by a non-Fed- payment of such funds with or without eral entity to substantiate its request interest. The term includes the pur- for the establishment of an indirect chase of, or participation in, a loan cost rate as described in appendices III made by another lender and financing through VII and appendix IX to this arrangements that defer payment for part. more than 90 days, including the sale of Information technology systems means a Federal Government asset on credit computing devices, ancillary equip- terms. The term does not include the ment, software, firmware, and similar acquisition of a federally guaranteed procedures, services (including support loan in satisfaction of default claims or services), and related resources. See the price support loans of the Com- also the definitions of computing devices modity Credit Corporation. and equipment in this section. (2) The term "direct loan obligation" Intangible property means property means a binding agreement by a Fed- having no physical existence, such as eral awarding agency to make a direct trademarks, copyrights, patents and loan when specified conditions are ful- patent applications and property, such filled by the borrower. as loans, notes and other debt instru- (3)The term "loan guarantee" means ments, lease agreements, stock and any Federal Government guarantee, in- other instruments of property owner- surance, or other pledge with respect ship (whether the property is tangible to the payment of all or a part of the or intangible). principal or interest on any debt obli- Intermediate cost objective means a gation of a non-Federal borrower to a cost objective that is used to accumu- non-Federal lender, but does not in- late indirect costs or service center clude the insurance of deposits, shares, costs that are subsequently allocated or other withdrawable accounts in fi- to one or more indirect cost pools or nancial institutions. final cost objectives. See also the defi- (4) The term "loan guarantee corn- nitions of cost objective and final cost ob- mitment" means a binding agreement jective in this section. by a Federal awarding agency to make 91 §200.1 2 CFR Ch. II (1-1-22 Edition) a loan guarantee when specified condi- and approved by the cognizant agency tions are fulfilled by the borrower, the for indirect costs. lender, or any other party to the guar- Modified Total Direct Cost (MTDC) antee agreement. means all direct salaries and wages, ap- Local government means any unit of plicable fringe benefits, materials and government within a state, including a: supplies, services, travel, and up to the (1)County; first $25,000 of each subaward (regard- (2)Borough; less of the period of performance of the (3)Municipality; subawards under the award). MTDC ex- (4)City; eludes equipment, capital expendi- (5)Town; tures, charges for patient care, rental (6)Township; costs, tuition remission, scholarships (7)Parish; and fellowships, participant support costs and the portion of each subaward (8) Local public authority, including in excess of $25,000. Other items may any public housing agency under the only be excluded when necessary to United States Housing Act of 1937; avoid a serious inequity in the dis- (9) Special district; tribution of indirect costs, and with (10) School district; the approval of the cognizant agency (11)Intrastate district; for indirect costs. (12) Council of governments, whether Non-discretionary award means an or not incorporated as a nonprofit cor- award made by the Federal awarding poration under State law; and agency to specific recipients in accord- (13) Any other agency or instrumen- ance with statutory, eligibility and tality of a multi-, regional, or intra- compliance requirements, such that in State or local government. keeping with specific statutory author- Major program means a Federal pro- ity the agency has no ability to exer- gram determined by the auditor to be a cise judgement ("discretion"). A non- major program in accordance with discretionary award amount could be §200.518 or a program identified as a determined specifically or by formula. major program by a Federal awarding Non-Federal entity (NFE) means a agency or pass-through entity in ac- State, local government, Indian tribe, cordance with§200.503(e). Institution of Higher Education (IHE), Management decision means the Fed- or nonprofit organization that carries eral awarding agency's or pass-through out a Federal award as a recipient or entity's written determination, pro- subrecipient. vided to the auditee,of the adequacy of Nonprofit organization means any cor- the auditee's proposed corrective ac- poration, trust, association, coopera- tions to address the findings, based on tive, or other organization, not includ- its evaluation of the audit findings and ing IHEs,that: proposed corrective actions. (1) Is operated primarily for sci- Micro-purchase means a purchase of entific, educational, service, chari- supplies or services, the aggregate table, or similar purposes in the public amount of which does not exceed the interest; micro-purchase threshold. Micro-pur- (2) Is not organized primarily for chases comprise a subset of a non-Fed- profit;and eral entity's small purchases as defined (3) Uses net proceeds to maintain, in§200.320. improve, or expand the operations of Micro-purchase threshold means the the organization. dollar amount at or below which a non- Notice of funding opportunity means a Federal entity may purchase property formal announcement of the avail- or services using micro-purchase proce- ability of Federal funding through a fi- dures (see §200.320). Generally, the nancial assistance program from a Fed- micro-purchase threshold for procure- eral awarding agency. The notice of ment activities administered under funding opportunity provides informa- Federal awards is not to exceed the tion on the award, who is eligible to amount set by the FAR at 48 CFR part apply, the evaluation criteria for selec- 2, subpart 2.1, unless a higher threshold tion of an awardee, required compo- is requested by the non-Federal entity nents of an application, and how to 92 OMB Guidance §200.1 submit the application. The notice of Period of performance means the total funding opportunity is any paper or estimated time interval between the electronic issuance that an agency uses start of an initial Federal award and to announce a funding opportunity, the planned end date, which may in- whether it is called a "program an- elude one or more funded portions, or nouncement," "notice of funding avail- budget periods. Identification of the ability," "broad agency announce- period of performance in the Federal ment," "research announcement," award per §200.211(b)(5) does not corn- "solicitation," or some other term. mit the awarding agency to fund the Office of Management and Budget award beyond the currently approved (OMB) means the Executive Office of budget period. the President, Office of Management Personal property means property and Budget. other than real property. It may be Oversight agency for audit means the tangible, having physical existence, or Federal awarding agency that provides intangible. the predominant amount of funding di- Personally Identifiable Information rectly (direct funding) (as listed on the (PII) means information that can be schedule of expenditures of Federal used to distinguish or trace an individ- awards, see §200.510(b)) to a non-Fed- ual's identity, either alone or when eral entity unless OMB designates a combined with other personal or iden- specific cognizant agency for audit. tifying information that is linked or When the direct funding represents less linkable to a specific individual. Some than 25 percent of the total Federal ex- information that is considered to be penditures (as direct and sub-awards) PII is available in public sources such by the non-Federal entity, then the as telephone books, public websites, Federal agency with the predominant and university listings.This type of in- amount of total funding is the des- formation is considered to be Public ignated oversight agency for audit. PII and includes, for example, first and When there is no direct funding, the last name, address, work telephone Federal awarding agency which is the number,email address,home telephone predominant source of pass-through number, and general educational ere- dentfunding must assume the oversight re- ancho ls. The definition of PII is not sponsibilities. The duties of the over- anchored to any single category of in- sight agency for audit and the process formation or technology. Rather, it re- for any reassignments are described in quires a case-by-case assessment of the §200.513(b). specific risk that an individual can be Participant support costs means direct identified. Non-PII can become PII s costs for items such as stipends or sub- whenever publicly additional informationn e- sistence allowances, travel allowances, made publicly available, in any when registration fees paid to or on be- ciem and from any source, that, when combined with other available infor- half of participants or trainees(but not mation,could be used to identify an in- employees) in connection with con- dividual. ferences, or training projects. Program income means gross income Pass-through entity (PTE) means a earned by the non-Federal entity that non-Federal entity that provides a is directly generated by a supported ac- subaward to a subrecipient to carry out tivity or earned as a result of the Fed- part of a Federal program. eral award during the period of per- Performance goal means a target level formance except as provided in of performance expressed as a tangible, §200.307(f). (See the definition of period measurable objective, against which of performance in this section.)Program actual achievement can be compared, income includes but is not limited to including a goal expressed as a quan- income from fees for services per- titative standard, value, or rate. In formed, the use or rental or real or per- some instances (e.g., discretionary re- sonal property acquired under Federal search awards), this may be limited to awards, the sale of commodities or the requirement to submit technical items fabricated under a Federal performance reports(to be evaluated in award, license fees and royalties on accordance with agency policy). patents and copyrights, and principal 93 §200.1 2 CFR Ch. II (1-1-22 Edition) and interest on loans made with Fed- Real'property means land, including eral award funds. Interest earned on land improvements, structures and ap- advances of Federal funds is not pro- purtenances thereto, but excludes gram income. Except as otherwise pro- moveable machinery and equipment. vided in Federal statutes, regulations, Recipient means an entity, usually or the terms and conditions of the Fed- but not limited to non-Federal entities eral award, program income does not that receives a Federal award directly include rebates, credits, discounts, and from a Federal awarding agency. The interest earned on any of them. See term recipient does not include sub- also §200.407. See also 35 U.S.C. 200-212 recipients or individuals that are bene- "Disposition of Rights in Educational ficiaries of the award. Awards" applies to inventions made Renewal award means an award made under Federal awards. subsequent to an expiring Federal Project cost means total allowable award for which the start date is con- costs incurred under a Federal award tiguous with, or closely follows, the and all required cost sharing and vol- end of the expiring Federal award. A untary committed cost sharing,includ- renewal award's start date will begin a ing third-party contributions. distinct period of performance. Property means real property or per- Research and Development (R&D) sonal property. See also the definitions means all research activities, both of real property and personal property in basic and applied, and all development this section. activities that are performed by non Protected Personally Identifiable Infor- Federal entities. The term research mation(Protected PII) means an individ also includes activities involving the ual's first name or first initial and last training of individuals in research name in combination with any one or techniques where such activities utilize more of types of information, c - the same facilities as other research ing, but not limited to, social security and development activities and where number, passport number, credit card numbers, clearances, bank numbers, such activities are not included in the biometrics, date and place of birth, instruction function. "Research" is de- mother's maiden name, criminal, med fined as a systematic study directed to- ical and financial records, educational ward fuller scientific knowledge or un- transcripts. This does not include PII derstanding of the subject studied. that is required by law to be disclosed. "Development" is the systematic use See also the definition of Personally of knowledge and understanding gained Identifiable Information(PII)in this sec- from research directed toward the pro- tion. duction of useful materials, devices, Questioned cost means a cost that is systems, or methods, including design questioned by the auditor because of an and development of prototypes and audit finding: processes. (1)Which resulted from a violation or Simplified acquisition threshold means possible violation of a statute, regula- the dollar amount below which a non- tion, or the terms and conditions of a Federal entity may purchase property Federal award, including for funds used or services using small purchase meth- to match Federal funds; ods (see §200.320). Non-Federal entities (2) Where the costs, at the time of adopt small purchase procedures in the audit, are not supported by ade- order to expedite the purchase of items quate documentation; or at or below the simplified acquisition (3) Where the costs incurred appear threshold. The simplified acquisition unreasonable and do not reflect the ac- threshold for procurement activities tions a prudent person would take in administered under Federal awards is the circumstances. set by the FAR at 48 CFR part 2, sub- (4) Questioned costs are not an im- part 2.1. The non-Federal entity is re- proper payment until reviewed and sponsible for determining an appro- confirmed to be improper as defined in priate simplified acquisition threshold OMB Circular A-123 appendix C. (See based on internal controls, an evalua- also the definition of Improper payment tion of risk, and its documented pro- in this section). curement procedures. However, in no 94 OMB Guidance §200.1 circumstances can this threshold ex- Subsidiary means an entity in which ceed the dollar value established in the more than 50 percent of the entity is FAR(48 CFR part 2, subpart 2.1)for the owned or controlled directly by a par- simplified acquisition threshold. Re- ent corporation or through another cipients should determine if local gov- subsidiary of a parent corporation. ernment laws on purchasing apply. Supplies means all tangible personal Special purpose equipment means property other than those described in equipment which is used only for re- the definition of equipment in this sec- search, medical, scientific, or other tion. A computing device is a supply if technical activities. Examples of spe- the acquisition cost is less than the cial purpose equipment include micro- lesser of the capitalization level estab- scopes,x-ray machines, surgical instru- lished by the non-Federal entity for fi- ments, and spectrometers. See also the nancial statement purposes or $5,000, definitions of equipment and general regardless of the length of its useful purpose equipment in this section. life. See also the definitions of corn- State means any state of the United puting devices and equipment in this sec- States, the District of Columbia, the tion. Commonwealth of Puerto Rico, U.S. Telecommunications cost means the Virgin Islands, Guam, American cost of using communication and te- Samoa, the Commonwealth of the lephony technologies such as mobile Northern Mariana Islands, and any phones,land lines,and Internet. agency or instrumentality thereof ex- Termination means the ending of a elusive of local governments. Federal award, in whole or in part at Student Financial Aid (SFA) means any time prior to the planned end of Federal awards under those programs period of performance. A lack of avail- of general student assistance, such as able funds is not a termination. those authorized by Title IV of the Third-party in-kind contributions means the value of non-cash contribu- Higher Education Act of 1965, as (20 U.S.C. 1070-1099d), which tions(i.e., property or services))that— amended,are administered by the U.S. Depart- (1) Benefit a federally-assisted Project or program;and ment of Education, and similar pro- grams provided by other Federal agen- (2) Are contributed by non-Federalo cies. It does not include Federal awards third parties, without charge, to a under programs that provide fellow- Federallentity under a Federal award. Unliquidated financial obligations ships or similar Federal awards to stu- means, for financial reports prepared dents on a competitive basis, or for on a cash basis, financial obligations specified studies or research. incurred by the non-Federal entity Subaward means an award provided that have not been paid (liquidated). by a pass-through entity to a sub- For reports prepared on an accrual ex- recipient for the subrecipient to carry penditure basis, these are financial ob- out part of a Federal award received by ligations incurred by the non-Federal the pass-through entity. It does not in- entity for which an expenditure has clude payments to a contractor or pay- not been recorded. ments to an individual that is a bene- Unobligated balance means the ficiary of a Federal program. A amount of funds under a Federal award subaward may be provided through any that the non-Federal entity has not ob- form of legal agreement, including an ligated. The amount is computed by agreement that the pass-through enti- subtracting the cumulative amount of ty considers a contract. the non-Federal entity's unliquidated Subrecipient means an entity, usually financial obligations and expenditures but not limited to non-Federal entities, of funds under the Federal award from that receives a subaward from a pass- the cumulative amount of the funds through entity to carry out part of a that the Federal awarding agency or Federal award; but does not include an pass-through entity authorized the individual that is a beneficiary of such non-Federal entity to obligate. award.A subrecipient may also be a re- Voluntary committed cost sharing cipient of other Federal awards di- means cost sharing specifically pledged rectly from a Federal awarding agency. on a voluntary basis in the proposal's 95 §200.100 2 CFR Ch. II (1-1-22 Edition) budget on the part of the non-Federal principles are designed to provide that entity and that becomes a binding re- Federal awards bear their fair share of quirement of Federal award. See also cost recognized under these principles §200.306. except where restricted or prohibited [85 FR 49529, Aug. 13, 2020, as amended at 86 by statute. FR 10439,Feb.22,2021] (d) Single Audit Requirements and Audit Follow-up. Subpart F of this part Subpart B—General Provisions is issued pursuant to the Single Audit Act Amendments of 1996, (31 U.S.C. §200.100 Purpose. 7501-7507). It sets forth standards for obtaining consistency and uniformity (a) Purpose. (1) This part establishes among Federal agencies for the audit uniform administrative requirements, of non-Federal entities expending Fed- cost principles, and audit requirements eral awards. These provisions also pro- for Federal awards to non-Federal enti- vide the policies and procedures for ties, as described in §200.101. Federal Federal awarding agencies and pass- awarding agencies must not impose ad- through entities when using the results ditional or inconsistent requirements, of these audits. except as provided in §§200.102 and (e) Guidance on challenges and prizes. 200.211, or unless specifically required to Federal awarding OMB guidance by Federal statute, regulation, or Ex- agencies on challenges and prizes, ecutive order. please see memo M-10-11 Guidance on (2) This part provides the basis for a the Use of Challenges and Prizes to systematic and periodic collection and Promote Open Government, issued uniform submission by Federal agen- March 8,2010,or its successor. cies of information on all Federal fi- nancial assistance programs to the Of- [78 FR 78608, Dec. 26, 2013, as amended at 85 fice of Management and Budget (OMB). FR 49536,Aug.13,2020] It also establishes Federal policies re- §200.101 Applicability. lated to the delivery of this informa- tion to the public, including through (a) General applicability to Federal the use of electronic media. It pre- agencies. (1) The requirements estab- scribes the manner in which General lished in this part apply to Federal Services Administration (GSA), OMB, agencies that make Federal awards to and Federal agencies that administer non-Federal entities. These require- Federal financial assistance programs ments are applicable to all costs re- are to carry out their statutory respon- lated to Federal awards. sibilities under the Federal Pro ram (2) Federal awarding agencies may g apply subparts A through E of this part Information Act(31 U.S.C.6101-6106 . PPY P g (b) Administrative requirements. Sub- to F deral agencies, for-profit entities, parts B through D of this part set forth foreign public entities, or foreign orga- the uniform administrative require- nizations, except where the Federal ments for grant and cooperative agree- awarding agency determines that the ments, including the requirements for application of these subparts would be Federal awarding agency management inconsistent with the international re- of Federal grant programs before the sponsibilities of the United States or Federal award has been made, and the the statutes or regulations of a foreign requirements Federal awarding agen- government. cies may impose on non-Federal enti- (b) Applicability to different types of ties in the Federal award. Federal awards. (1) Throughout this (c) Cost principles. Subpart E of this part when the word "must" is used it part establishes principles for deter- indicates a requirement. Whereas, use mining the allowable costs incurred by of the word "should" or "may" indi- non-Federal entities under Federal cates a best practice or recommended awards. The principles are for the pur- approach rather than a requirement pose of cost determination and are not and permits discretion. intended to identify the circumstances (2)The following table describes what or dictate the extent of Federal Gov- portions of this part apply to which ernment participation in the financing types of Federal awards. The terms and of a particular program or project. The conditions of Federal awards(including 96 OMB Guidance §200.101 this part) flow down to subawards to eral award. Pass-through entities must subrecipients unless a particular sec- comply with the requirements de- tion of this part or the terms and con- scribed in subpart D of this part, ditions of the Federal award specifi- §§200.331 through 200.333, but not any cally indicate otherwise. This means requirements in this part directed to- that non-Federal entities must comply wards Federal awarding agencies un- with requirements in this part regard- less the requirements of this part or less of whether the non-Federal entity the terms and conditions of the Federal is a recipient or subrecipient of a Fed- award indicate otherwise. TABLE 1 TO PARAGRAPH (b) Are applicable to the following types of Federal Awards and Fixed-Price Con- Are NOT applicable to the following The following portions of this Part tracts and Subcontracts(except as types of Federal Awards and Fixed-Price noted in paragraphs(d)and(e)of this Contracts and Subcontracts: section): Subpart A—Acronyms and Definitions —All. Subpart B—General Provisions, except —All. for §§200.111 English Language, 200.112 Conflict of Interest, 200.113 Mandatory Disclosures. §§200.111 English Language, 200.112 —Grant Agreements and cooperative —Agreements for loans, loan guaran- Conflict of Interest,200.113 Mandatory agreements. tees,interest subsidies and insurance. Disclosures. -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- —Grant Agreements and cooperative —Agreements for loans, loan guaran- quirement to provide public notice of agreements. tees,interest subsidies and insurance. Federal financial assistance programs, —Procurement contracts awarded by 200.303 Internal controls,200.331-333 Federal Agencies under the Federal Subrecipient Monitoring and Manage- Acquisition Regulation and sub- ment. contracts under those contracts. • §200.203 Requirement to provide public —Grant Agreements and cooperative —Procurement contracts awarded by notice of Federal financial assistance agreements. Federal Agencies under the Federal programs. —Agreements for loans, loan guaran- Acquisition Regulation and sub- teen,interest subsidies and insurance. contracts under those contracts. §§200.303 Internal controls,200.331-333 —All. • Subrecipient Monitoring and Manage- ment. Subpart E—Cost Principles —Grant Agreements and cooperative —Grant agreements and cooperative agreements, except those providing agreements providing foods commod- food commodities. ities. —All procurement contracts under the —Fixed amount awards. Federal Acquisition Regulations ex- —Agreements for loans, loans guaran- - cept those that are not negotiated. tees,interest subsidies and insurance. —Federal awards to hospitals(see Ap- pendix IX Hospital Cost Principles). • Subpart F—Audit Requirements —Grant Agreements and cooperative —Fixed-price contracts and subcontracts agreements. awarded under the Federal Acquisition —Contracts and subcontracts,except for Regulation. 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. (c)Federal award of cost-reimbursement the contract, but the requirements of contract under the FAR to a-non-Federal subparts D,E, and F are supplementary entity. When a non-Federal entity is to the FAR and the contract. When the awarded a cost-reimbursement con- Cost Accounting Standards (CAS) are tract, only subpart D, §§200.331 through applicable to the contract, they take 200.333, and subparts E and F of this precedence over the requirements of part are incorporated by reference into this part, including subpart F of this 97 §200.101 2 CFR Ch. II (1-1-22 Edition) part, which are supplementary to the guidance in subpart C of this part does CAS requirements. In addition, costs not apply to the following programs: that are made unallowable under 10 (1) Entitlement Federal awards to U.S.C. 2324(e) and 41 U.S.C. 4304(a) as carry out the following programs of the described in the FAR 48 CFR part 31, Social Security Act: subpart 31.2, and 48 CFR 31.603 are al- (i) Temporary Assistance for Needy ways unallowable. For requirements Families(title IV-A of the Social Secu- other than those covered in subpart D, rity Act,42 U.S.C. 601-619); §§200.331 through 200.333, and subparts (ii) Child Support Enforcement and E and F of this part, the terms of the Establishment of Paternity (title IV-D contract and the FAR apply. Note that of the Social Security Act, 42 U.S.C. when a non-Federal entity is awarded a 651-669b); FAR contract, the FAR applies, and (iii) Foster Care and Adoption Assist- the terms and conditions of the con- ance (title IV-E of the Act, 42 U.S.C. tract shall prevail over the require- 670-679c); ments of this part. (iv) Aid to the Aged, Blind, and Dis- (d) Governing provisions. With the ex- abled (titles I, X, XIV, and XVI-AABD ception of subpart F of this part,which of the Act,as amended); is required by the Single Audit Act, in (v) Medical Assistance (Medicaid) any circumstances where the provi- (title XIX of the Act, 42 U.S.C. 1396- sions of Federal statutes or regulations 1396w-5) not including the State Med- differ from the provisions of this part, icaid Fraud Control program author- the provision of the Federal statutes or ized by section 1903(a)(6)(B) of the So- regulations govern. This includes, for cial Security Act (42 U.S.C. agreements with Indian tribes, the pro- 1396b(a)(6)(B)); and visions of the Indian Self-Determina- (vi) Children's Health Insurance Pro- tion and Education and Assistance Act gram (title XXI of the Act, 42 U.S.C. (ISDEAA), as amended, 25 U.S.0 450- 1397aa-1397mm). 458ddd-2. (2) A Federal award for an experi- (e) Program applicability. Except for mental, pilot, or demonstration project §§200.203, 200.216, and 200.331 through that is also supported by a Federal 200.333, the requirements in subparts C, award listed in paragraph (f)(1) of this D, and E of this part do not apply to section. the following programs: (3) Federal awards under subsection (1) The block grant awards author- 412(e) of the Immigration and Nation- ized by the Omnibus Budget Reconcili- ality Act and subsection 501(a) of the ation Act of 1981(including Community Refugee Education Assistance Act of 1980 (Pub. L. 96-422, 94 Stat. 1809), for Services), except to the extent that cash assistance, medical assistance, subpart E of this part apply to sub and supplemental security income ben- recipients of Community Services efits to refugees and entrants and the Block Grant funds pursuant to 42 administrative costs of providing the U.S.C.9916(a)(1)(B); assistance and benefits (8 U.S.C. (2) Federal awards to local education 1522(e)). agencies under 20 U.S.C. 7702-7703b, (4) Entitlement awards under the fol- (portions of the Impact Aid program); lowing programs of The National (3) Payments under the Department School Lunch Act: of Veterans Affairs' State Home Per (i) National School Lunch Program Diem Program (38 U.S.C. 1741);and (section 4 of the Act,42 U.S.C. 1753); (4) Federal awards authorized under (ii) Commodity Assistance (section 6 the Child Care and Development Block of the Act,42 U.S.C. 1755); Grant Act of 1990, as amended: (iii) Special Meal Assistance (section (i)Child Care and Development Block 11 of the Act,42 U.S.C. 1759a); • Grant(42 U.S.C.9858). (iv) Summer Food Service Program (ii)Child Care Mandatory and Match- for Children (section 13 of the Act, 42 ing Funds of the Child Care and Devel- U.S.C. 1761); and opment Fund(42 U.S.C. 9858). (v) Child and Adult Care Food Pro- (f) Additional program applicability. gram (section 17 of the Act, 42 U.S.C. Except for §§200.203 and 200.216, the 1766). 98 OMB Guidance §200.104 (5) Entitlement awards under the fol- quirements imposed by statute or in lowing programs of The Child Nutri- subpart F of this part. tion Act of 1966: (d) Federal awarding agencies may (i)Special Milk Program(section 3 of request exceptions in support of inno- the Act,42 U.S.C. 1772); vative program designs that apply a (ii) School Breakfast Program (sec- risk-based, data-driven framework to tion 4 of the Act, 42 U.S.C. 1773); and alleviate select compliance require- (iii) State Administrative Expenses ments and hold recipients accountable (section 7 of the Act,42 U.S.C.1776). for good performance. See also§200.206. (6) Entitlement awards for State Ad- ministrative Expenses under The Food [85 FR 49538, Aug. 13, 2020, as amended at 86 and Nutrition Act of 2008 (section 16 of FR 10439,Feb.22,2021] the Act,7 U.S.C.2025). (7) Non-discretionary Federal awards §200.103 Authorities. under the following non-entitlement This part is issued under the fol- programs: lowing authorities. (i) Special Supplemental Nutrition (a) Subparts B through D of this part Program for Women, Infants and Chil- are authorized under 31 U.S.C. 503 (the dren (section 17 of the Child Nutrition Chief Financial Officers Act, Functions Act of 1966)42 U.S.C. 1786; of the Deputy Director for Manage- (ii) The Emergency Food Assistance ment), 41 U.S.C. 1101-1131 (the Office of Programs (Emergency Food Assistance Federal Procurement Policy Act), Re- Act of 1983)7 U.S.C.7501 note;and organization Plan No. 2 of 1970, and Ex- (iii) Commodity Supplemental Food ecutive Order 11541 ("Prescribing the Program (section 5 of the Agriculture Duties of the Office of Management and Consumer Protection Act of 1973) 7 and Budget and the Domestic Policy U.S.C.612c note. Council in the Executive Office of the [85 FR 49536, Aug. 13, 2020, as amended at 86 President"), the Single Audit Act FR 10439,Feb.22,2021] Amendments of 1996, (31 U.S.C. 7501- 7507), as well as The Federal Program §200.102 Exceptions. Information Act (Pub. L. 95-220 and (a)With the exception of subpart F of Pub. L. 98-169, as amended, codified at this part, OMB may allow exceptions 31 U.S.C.6101-6106). for classes of Federal awards or non- (b) Subpart E of this part is author- Federal entities subject to the require- ized under the Budget and Accounting ments of this part when exceptions are Act of 1921, as amended; the Budget not prohibited by statute. In the inter- and Accounting Procedures Act of 1950, est of maximum uniformity,exceptions as amended (31 U.S.C. 1101-1125); the from the requirements of this part will Chief Financial Officers Act of 1990 (31 be permitted as described in this sec- U.S.C. 503-504); Reorganization Plan tion. No.2 of 1970; and Executive Order 11541, (b)Exceptions on a case-by-case basis "Prescribing the Duties of the Office of for individual non-Federal entities may Management and Budget and the Do- be authorized by the Federal awarding mestic Policy Council in the Executive agency or cognizant agency for indirect Office of the President." costs, except where otherwise required (c) Subpart F of this part is author- by law or where OMB or other approval ized under the Single Audit Act is expressly required by this part. Amendments of 1996, (31 U.S.C. 7501- (c)The Federal awarding agency may 7507). adjust requirements to a class of Fed- eral awards or non-Federal entities [85 FR 49538,Aug.13,2020] when approved by OMB, or when re- quired by Federal statutes or regula- §200.104 Supersession. tions, except for the requirements in As described in §200.110, this part su- subpart F of this part. A Federal persedes the following OMB guidance awarding agency may apply less re- documents and regulations under title strictive requirements when making 2 of the Code of Federal Regulations: fixed amount awards as defined in sub- (a) A-21, "Cost Principles for Edu- part A of this part, except for those re- cational Institutions" (2 CFR part 220); 99 §200.105 2 CFR Ch. II (1-1-22 Edition) (b) A-87, "Cost Principles for State, parts C through F of this part in codi- Local and Indian Tribal Governments" fied regulations unless different provi- (2 CFR part 225) and also FEDERAL REG- sions are required by Federal statute ISTER notice 51 FR 552(January 6, 1986); or are approved by OMB. (c) A-89, "Federal Domestic Assist [85 FR 49538,Aug.13,2020] ance Program Information"; (d)A-102, "Grant Awards and Cooper- §200.107 OMB responsibilities. ative Agreements with State and Local Governments"; OMB will review Federal agency reg- (e) A-110, "Uniform Administrative ulations and implementation of this Requirements for Awards and Other part, and will provide interpretations Agreements with Institutions of Higher of policy requirements and assistance Education, Hospitals, and Other Non- to ensure effective and efficient imple- profit Organizations" (codified at 2 mentation. Any exceptions will be sub- CFR 215); ject to approval by OMB. Exceptions (f) A-122, "Cost Principles for Non- will only be made in particular cases Profit Organizations" (2 CFR part 230); where adequate justification is pre- (g) A-133, "Audits of States, Local sented. Governments and Non-Profit Organiza- tions";and §200.108 Inquiries. (h) Those sections of A-50 related to Inquiries concerning this part may be audits performed under subpart F of directed to the Office of Federal Finan- this part. cial Management Office of Manage- [78 FR 78608, Dec. 26, 2013, as amended at 79 ment and Budget, in Washington, DC. FR 75882, Dec. 19, 2014; 85 FR 49538, Aug. 13, Non-Federal entities' inquiries should 2020] be addressed to the Federal awarding §200.105 Effect on other issuances. agency, cognizant agency for indirect costs, cognizant or oversight agency (a) Superseding inconsistent require- for audit, or pass-through entity as ap- ments. For Federal awards subject to propriate. this part, all administrative require- ments, program manuals, handbooks §200.109 Review date. and other non-regulatory materials that are inconsistent with the require OMB will review this part at least ments of this part must be superseded every five years after December 26, upon implementation of this part by 2013. the Federal agency, except to the ex- tent they are required by statute or au- §200.110 Effective/applicability date. thorized in accordance with the provi- (a) The standards set forth in this sions in§200.102. part that affect the administration of (b)Imposition of requirements on recipi- Federal awards issued by Federal ents. Agencies may impose legally awarding agencies become effective, binding requirements on recipients once implemented by Federal awarding only through the notice and public agencies or when any future amend- comment process through an approved ment to this part becomes final. agency process, including as authorized (b) Existing negotiated indirect cost by this part, other statutes or regula- rates (as of the publication date of the tions, or as incorporated into the terms revisions to the guidance) will remain of a Federal award. in place until they expire. The effective [85 FR 49538,Aug.13,2020] date of changes to indirect cost rates must be based upon the date that a §200.106 Agency implementation. newly re-negotiated rate goes into ef- The specific requirements and re- fect for a specific non-Federal entity's sponsibilities of Federal agencies and fiscal year. Therefore, for indirect cost non-Federal entities are set forth in rates and cost allocation plans, the re- this part. Federal agencies making vised Uniform Guidance (as of the pub- Federal awards to non-Federal entities lication date for revisions to the guid- must implement the language in sub- ance) become effective in generating 100 OMB Guidance §200.201 proposals and negotiating a new rate ceedings to SAM (currently FAPIIS). (when the rate is re-negotiated). Failure to make required disclosures [85 FR 49538,Aug.13,2020] can result in any of the remedies de- scribed in§200.339. (See also 2 CFR part §200.111 English language. 180,31 U.S.C.3321,and 41 U.S.C.2313.) (a) All Federal financial assistance [85 FR 49539,Aug.13,2020] announcements and Federal award in- formation must be in the English lan- Subpart C—Pre-Federal Award guage. Applications must be submitted Requirements and Contents of in the English language and must be in Federal Awards the terms of U.S. dollars. If the Federal awarding agency receives applications SOURCE: 85 FR 49539, Aug. 13, 2020, unless in another currency, the Federal otherwise noted. awarding agency will evaluate the ap- plication by converting the foreign cur- §200.200 Purpose. rency to United States currency using Sections 200.201 through 200.216 pre the date specified for receipt of the ap scribe instructions and other pre-award plication. (b) Non-Federal entities may trans- matters to be used by Federal awarding late the Federal award and other docu- ments into another language. In the nouncement, application and award event of inconsistency between any processes. terms and conditions of the Federal §200.201 Use of grant agreements (in- award and any translation into another eluding fixed amount awards), co- language, the English language mean- operative agreements, and con- ing will control. Where a significant tracts. portion of the non-Federal entity's em- (a)Federal award instrument.The Fed- ployees who are working on the Fed- eral awarding agency or pass-through eral award are not fluent in English, entity must decide on the appropriate the non-Federal entity must provide instrument for the Federal award (i.e., the Federal award in English and the grant agreement, cooperative agree- language(s) with which employees are ment, or contract) in accordance with more familiar. the Federal Grant and Cooperative §200.112 Conflict of interest. Agreement Act(31 U.S.C. 6301-08). (b) Fixed amount awards. In addition The Federal awarding agency must to the options described in paragraph establish conflict of interest policies (a) of this section, Federal awarding for Federal awards. The non-Federal agencies, or pass-through entities as entity must disclose in writing any po- permitted in §200.333, may use fixed tential conflict of interest to the Fed- amount awards (see Fixed amount eral awarding agency or pass-through awards in§200.1) to which the following entity in accordance with applicable conditions apply: Federal awarding agency policy. (1) The Federal award amount is§200.113 Mandatory disclosures. ne- gotiated using the cost principles (or other pricing information) as a guide. The non-Federal entity or applicant The Federal awarding agency or pass- for a Federal award must disclose, in a through entity may use fixed amount timely manner, in writing to the Fed- awards if the project scope has measur- eral awarding agency or pass-through able goals and objectives and if ade- entity all violations of Federal crimi- quate cost, historical, or unit pricing nal law involving fraud, bribery, or data is available to establish a fixed gratuity violations potentially affect- amount award based on a reasonable ing the Federal award. Non-Federal en- estimate of actual cost. Payments are tities that have received a Federal based on meeting specific requirements award including the term and condi- of the Federal award.Accountability is tion outlined in appendix XII to this based on performance and results. Ex- part are required to report certain cept in the case of termination before civil, criminal, or administrative pro- completion of the Federal award, there 101 I I §200.202 2 CFR Ch. II (1-1-22 Edition) is no governmental review of the ac- agency's performance plan and should tual costs incurred by the non-Federal support the Federal awarding agency's entity in performance of the award. performance measurement, manage- Some of the ways in which the Federal ment, and reporting as required by award may be paid include, but are not Part 6 of OMB Circular A-11 (Prepara- limited to: tion, Submission, and Execution of the (i) In several partial payments, the Budget). The program must also be de- amount of each agreed upon in ad- signed to align with the Program Man- vance, and the "milestone" or event agement Improvement Accountability triggering the payment also agreed Act(Pub. L. 114-264). upon in advance, and set forth in the ri Federal award; §200.203 Requirement to provide pub- (ii) On a unit price basis, for a de- lic notice of Federal financial as- fined unit or units, at a defined price or sistance programs. prices, agreed to in advance of perform- ance of the Federal award and set forth (a) The Federal awarding agency in the Federal award;or, must notify the public of Federal pro- ' (iii)In one payment at Federal award grams in the Federal Assistance List completion. ings maintained by the General Serv- (2) A fixed amount award cannot be ices Administration(GSA). used in programs which require manda- (1)The Federal Assistance Listings is tory cost sharing or match. the single, authoritative, government- (3) The non-Federal entity must cer- wide comprehensive source of Federal tify in writing to the Federal awarding financial assistance program informa- agency or pass-through entity at the tion produced by the executive branch end of the Federal award that the of the Federal Government. project or activity was completed or (2) The information that the Federal the level of effort was expended. If the awarding agency must submit to GSA required level of activity or effort was for approval by OMB is listed in para- not carried out, the amount of the Fed- graph (b) of this section. GSA must eral award must be adjusted. prescribe the format for the submission (4) Periodic reports may be estab- in coordination with OMB. lished for each Federal award. (3)The Federal awarding agency may (5) Changes in principal investigator, not award Federal financial assistance project leader,project partner, or scope without assigning it to a program that of effort must receive the prior written has been included in the Federal As- approval of the Federal awarding agen- sistance Listings as required in this cy or pass-through entity. section unless there are exigent cir- §200.202 Program planning and de- cumstances requiring otherwise, such sign. as timing requirements imposed by The Federal awarding agency must statute. design a program and create an Assist- (b) For each program that awards ance Listing before announcing the No- discretionary Federal awards, non-dis- tice of Funding Opportunity. The pro- cretionary Federal awards, loans, in- gram must be designed with clear goals surance, or any other type of Federal and objectives that facilitate the deliv- financial assistance, the Federal ery of meaningful results consistent awarding agency must, to the extent with the Federal authorizing legisla- practicable, create, update, and man- tion of the program. Program perform- age Assistance Listings entries based ance shall be measured based on the on the authorizing statute for the pro- goals and objectives developed during gram and comply with additional guid- program planning and design. See ance provided by GSA in consultation §200.301 for more information on per- with OMB to ensure consistent, accu- formance measurement. Performance rate information is available to pro- measures may differ depending on the spective applicants. Accordingly, Fed- type of program. The program must eral awarding agencies must submit align with the strategic goals and ob- jectives within the Federal awarding the following information to GSA: 102 OMB Guidance §200.204 (1) Program Description, Purpose, cial assistance, in a location preceding Goals, and Measurement. A brief sum- the full text of the announcement: mary of the statutory or regulatory re- (1)Federal Awarding Agency Name; quirements of the program and its in- (2)Funding Opportunity Title; tended outcome. Where appropriate, (3) Announcement Type (whether the the Program Description, Purpose, funding opportunity is the initial an- Goals, and Measurement should align nouncement of this funding oppor- with the strategic goals and objectives tunity or a modification of a pre- within the Federal awarding agency's viously announced opportunity); performance plan and should support (4) Funding Opportunity Number (re- the Federal awarding agency's per- quired, if applicable). If the Federal formance measurement, management, awarding agency has assigned or will and reporting as required by Part 6 of assign a number to the funding oppor- OMB Circular A-11; tunity announcement, this number (2) Identification. Identification of must be provided; whether the program makes Federal (5)Assistance Listings Number(s); awards on a discretionary basis or the (6) Key Dates. Key dates include due Federal awards are prescribed by Fed- dates for applications or Executive eral statute, such as in the case of for- Order 12372 submissions, as well as for mula grants. any letters of intent or pre-applica- (3) Projected total amount of funds tions. For any announcement issued available for the program. Estimates before a program's application mate- based on previous year funding are ac- rials are available, key dates also in- ceptable if current appropriations are dude the date on which those mate- not available at the time of the sub- rials will be released; and any other ad- mission; ditional information, as deemed appli- (4) Anticipated source of available cable by the relevant Federal awarding funds. The statutory authority for agency. funding the program and, to the extent (b) Availability period. The Federal possible, agency, sub-agency, or, if awarding agency must generally make known, the specific program unit that all funding opportunities available for will issue the Federal awards, and asso- application for at least 60 calendar dated funding identifier(e.g., Treasury days. The Federal awarding agency Account Symbol(s)); may make a determination to have a (5) General eligibility requirements. The less than 60 calendar day availability statutory, regulatory or other eligi- period but no funding opportunity bility factors or considerations that de- should be available for less than 30 cal- termine the applicant's qualification endar days unless exigent cir- for Federal awards under the program cumstances require as determined by (e.g., type of non-Federal entity); and the Federal awarding agency head or (6) Applicability of Single Audit Re- delegate. quirements. Applicability of Single (c) Full text of funding opportunities. Audit Requirements as required by The Federal awarding agency must in- subpart F of this part. dude the following information in the full text of each funding opportunity. §200.204 Notices of funding opportune- For specific instructions on the con- ties. tent required in this section, refer to For discretionary grants and cooper- appendix I to this part. ative agreements that are competed, (1) Full programmatic description of the Federal awarding agency must an- the funding opportunity. nounce specific funding opportunities (2) Federal award information, in- by providing the following information cluding sufficient information to help in a public notice: an applicant make an informed deci- (a) Summary information in notices of sion about whether to submit an appli- funding opportunities. The Federal cation. (See also§200.414(c)(4)). awarding agency must display the fol- (3) Specific eligibility information, lowing information posted on the OMB- including any factors or priorities that designated governmentwide website for affect an applicant's or its applica- funding and applying for Federal finan- tion's eligibility for selection. 103 §200.205 2 CFR Ch. II (1-1-22 Edition) (4) Application Preparation and Sub- formance and Integrity Information mission Information, including the ap- System (FAPIIS)) prior to making a plicable submission dates and time. Federal award where the Federal share (5) Application Review Information is expected to exceed the simplified ac- including the criteria and process to be quisition threshold, defined in 41 U.S.C. used to evaluate applications. See also 134, over the period of performance. As §§200.205 and 200.206. required by Public Law 112-239, Na- (6) Federal Award Administration In- tional Defense Authorization Act for formation. See also§200.211. Fiscal Year 2013, prior to making a (7) Applicable terms and conditions Federal award, the Federal awarding for resulting awards, including any ex- agency must consider all of the infor- ceptions from these standard terms. mation available through FAPIIS with II §200.205 Federal awardingregard to the applicant and any imme- agency Y re- diate highest level owner, predecessor view of merit of proposals. (i.e.; a non-Federal entity that is re- For discretionary Federal awards, placed by a successor), or subsidiary, unless prohibited by Federal statute, identified for that applicant in FAPIIS, the Federal awarding agency must de- if applicable. At a minimum, the infor- sign and execute a merit review process mation in the system for a prior Fed- for applications, with the objective of eral award recipient must demonstrate selecting recipients most likely to be a satisfactory record of executing pro- successful in delivering results based grams or activities under Federal on the program objectives outlined in grants, cooperative agreements,or pro- section §200.202. A merit review is an curement awards; and integrity and objective process of evaluating Federal business ethics. The Federal awarding award applications in accordance with agency may make a Federal award to a written standards set forth by the Fed- recipient who does not fully meet these eral awarding agency. This process standards, if it is determined that the must be described or incorporated by information is not relevant to the cur- reference in the applicable funding op- rent Federal award under consideration portunity(see appendix I to this part.). or there are specific conditions that See also§200.204. The Federal awarding can appropriately mitigate the effects agency must also periodically review of the non-Federal entity's risk in ac- its merit review process. cordance with§200.208. (b) Risk evaluation. (1) The Federal §200.206 Federal awarding agency re- awarding agency must have in place a view of risk posed by applicants. framework for evaluating the risks (a) Review of OMB-designated reposi- posed by applicants before they receive tories of governmentwide data. (1) Prior Federal awards. This evaluation may to making a Federal award, the Fed- incorporate results of the evaluation of eral awarding agency is required by the the applicant's eligibility or the qual- Payment Integrity Information Act of ity of its application. If the Federal 2019, 31 U.S.C. 3301 note, and 41 U.S.C. awarding agency determines that a 2313 to review information available Federal award will be made, special through any OMB-designated reposi- conditions that correspond to the de- tories of governmentwide eligibility gree of risk assessed may be applied to qualification or financial integrity in- the Federal award. Criteria to be evalu- formation as appropriate. See also sus- ated must be' described in the an- pension and debarment requirements nouncement of funding opportunity de- at 2 CFR part 180 as well as individual scribed in§200.204. Federal agency suspension and debar- (2)In evaluating risks posed by appli- ment regulations in title 2 of the Code cants, the Federal awarding agency of Federal Regulations. may use a risk-based approach and (2) In accordance 41 U.S.C. 2313, the may consider any items such as the fol- Federal awarding agency is required to lowing: review the non-public segment of the (i) Financial stability. Financial sta- OMB-designated integrity and perform- bility; ance system accessible through SAM (ii) Management systems and stand- (currently the Federal Awardee Per- ards. Quality of management systems 104 OMB Guidance §200.208 and ability to meet the management (b) Information collection. If applica- standards prescribed in this part; ble, the Federal awarding agency may (iii)History of performance. The appli- inform applicants and recipients that cant's record in managing Federal they do not need to provide certain in- awards, if it is a prior recipient of Fed- formation otherwise required by the eral awards, including timeliness of relevant information collection. compliance with applicable reporting §200.208 Specific conditions. requirements, conformance to the p terms and conditions of previous Fed- (a) Federal awarding agencies are re- eral awards, and if applicable, the ex- sponsible for ensuring that specific tent to which any previously awarded Federal award conditions are con- amounts will be expended prior to fu- sistent with the program design re- ture awards; fleeted in §200.202 and include clear (iv) Audit reports and findings. Re- performance expectations of recipients ports and findings from audits per- as required in§200.301. formed under subpart F of this part or (b) The Federal awarding agency or the reports and findings of any other pass-through entity may adjust spe- available audits;and cific Federal award conditions as need- (v) Ability to effectively implement re- ed, in accordance with this section, quirements. The applicant's ability to based on an analysis of the following effectively implement statutory, regu- factors: latory, or other requirements imposed (1) Based on the criteria set forth in on non-Federal entities. §200.206; (c) Risk-based requirements adjustment. (2) The applicant or recipient's his- The Federal awarding agency may ad- tory of compliance with the general or just requirements when a risk-evalua- specific terms and conditions of a Fed- tion indicates that it may be merited eral award; either pre-award or post-award. (3) The applicant or recipient's abil- (d) Suspension and debarment compli- ity to meet expected performance goals ance. (1) The Federal awarding agency as described in§200.211; or must comply with the guidelines on (4) A responsibility determination of governmentwide suspension and debar- an applicant or recipient. ment in 2 CFR part 180, and must re (c) Additional Federal award condi- quire non-Federal entities to comply tions may include items such as the with these provisions. These provisions following: restrict Federal awards, subawards and (1)Requiring payments as reimburse- contracts with certain parties that are ments rather than advance payments; debarred, suspended or otherwise ex- (2) Withholding authority to proceed eluded from or ineligible for participa to the next phase until receipt of evi- tion in Federal programs or activities. deuce of acceptable performance within a given performance period; [85 FR 49539, Aug. 13, 2020, as amended at 86 (3) Requiring additional, more de- FR 10439,Feb.22,2021] tailed financial reports; (4)Requiring additional project mon- §200.207 Standard application re- itoring; quirements. (5) Requiring the non-Federal entity (a) Paperwork clearances. The Federal to obtain technical or management as- awarding agency may only use applica- sistance; or tion information collections approved (6) Establishing additional prior ap- by OMB under the Paperwork Reduc- provals. tion Act of 1995 and OMB's imple- (d)If the Federal awarding agency or menting regulations in 5 CFR part 1320 pass-through entity is imposing addi- and in alignment with OMB-approved, tional requirements, they must notify governmentwide data elements avail- the applicant or non-Federal entity as able from the OMB-designated stand- to: ards lead. Consistent with these re- (1) The nature of the additional re- quirements, OMB will authorize addi- quirements; tional information collections only on (2) The reason why the additional re- a limited basis. quirements are being imposed; 105 §200.209 2 CFR Ch. II (1-1-22 Edition) (3)The nature of the action needed to (2) Recipient's unique entity identi- remove the additional requirement, if fier; applicable; (3) Unique Federal Award Identifica- (4) The time allowed for completing tion Number(FAIN); the actions if applicable; and (4) Federal Award Date (see Federal II (5) The method for requesting recon- award date in§200.201); sideration of the additional require- (5) Period of Performance Start and ments imposed. End Date; (e)Any additional requirements must (6) Budget Period Start and End be promptly removed once the condi- Date; tions that prompted them have been (7) Amount of Federal Funds Obli- satisfied. gated by this action; (8) Total Amount of Federal Funds §200.209 Certifications and represen- Obligated; tations. (9) Total Approved Cost Sharing or Unless prohibited by the U.S. Con- Matching,where applicable; stitution, Federal statutes or regula- (10) Total Amount of the Federal tions, each Federal awarding agency or Award including approved Cost Sharing pass-through entity is authorized to re- or Matching; quire the non-Federal entity to submit (11) Budget Approved by the Federal certifications and representations re- Awarding Agency; quired by Federal statutes, or regula- (11) Federal award description, (to tions on an annual basis. Submission comply with statutory requirements may be required more frequently if the (e.g., FFATA)); non-Federal entity fails to meet a re- (12) Name of Federal awarding agen- quirement of a Federal award. cy and contact information for award- ing official, §200.210 Pre-award costs. (13) Assistance Listings Number and For requirements on costs incurred Title; by the applicant prior to the start date (14) Identification of whether the of the period of performance of the award is R&D;and Federal award, see§200.458. (15) Indirect cost rate for the Federal award(including if the de minimis rate §200.211 Information contained in a is charged per§200.414). Federal award. (c) General terms and conditions. (1) 'i A Federal award must include the Federal awarding agencies must incor- following information: porate the following general terms and (a) Federal award performance goals. conditions either in the Federal award Performance goals, indicators, targets, or by reference,as applicable: and baseline data must be included in (i)Administrative requirements. Admin- the Federal award, where applicable. istrative requirements implemented by The Federal awarding agency must the Federal awarding agency as speci- also specify how performance will be fied in this part. assessed in the terms and conditions of (ii)National policy requirements. These the Federal award, including the tim- include statutory, executive order, ing and scope of expected performance. other Presidential directive, or regu- See§§200.202 and 200.301 for more infor- latory requirements that apply by spe- mation on Federal award performance cific reference and are not program- goals. specific. See §200.300 Statutory and na- (b) General Federal award information. tional policy requirements. The Federal awarding agency must in- (iii) Recipient integrity and perform- chicle the following general Federal ance matters. If the total Federal share award information in each Federal of the Federal award may include more award: than $500,000 over the period of per- (1) Recipient name (which must formance, the Federal awarding agency match the name associated with its must include the term and condition unique entity identifier as defined at 2 available in appendix XII of this part. CFR 25.315); See also§200.113. 106 OMB Guidance §200.213 (iv) Future budget periods. If it is an- in this section, for applicable Federal ticipated that the period of perform- awards the Federal awarding agency ance will include multiple budget peri- must announce all Federal awards pub- ods, the Federal awarding agency must licly and publish the required informa- indicate that subsequent budget peri- tion on a publicly available OMB-des- ods are subject to the availability of ignated governmentwide website. funds, program authority, satisfactory (b)All information posted in the des- performance, and compliance with the ignated integrity and performance sys- terms and conditions of the Federal tern accessible through SAM (currently award. FAPIIS) on or after April 15, 2011 will (v) Termination provisions. Federal be publicly available after a waiting awarding agencies must make recipi- period of 14 calendar days,except for: ents aware, in a clear and unambiguous (1)Past performance reviews required manner, of the termination provisions by Federal Government contractors in in §200.340, including the applicable accordance with the Federal Acquisi- termination provisions in the Federal tion Regulation (FAR) 48 CFR part 42, awarding agency's regulations or in subpart 42.15; each Federal award. (2) The Federal award must incor- (2) Information that was entered prior to April 15,2011; or porate, by reference, all general terms and conditions of the award, which (3) Information that is withdrawn must be maintained on the agency's during the 14-calendar day waiting pe website. riod by the Federal Government offi- (3) If a non-Federal entity requests a cial. copy of the full text of the general (c) Nothing in this section may be terms and conditions, the Federal construed as requiring the publication awarding agency must provide it. of information otherwise exempt under (4) Wherever the general terms and the Freedom of Information Act (5 conditions are publicly available, the U.S.0 552), or controlled unclassified Federal awarding agency must main- information pursuant to Executive tain an archive of previous versions of Order 13556. the general terms and conditions, with effective dates, for use by the non-Fed- §200.213 Reporting a determination eral entity,auditors,or others. that a non-Federal entity is not (d) Federal awarding agency, program, qualified for a Federal award. or Federal award specific terms and con- (a)If a Federal awarding agency does ditions. The Federal awarding agency not make a Federal award to a non- must include with each Federal award Federal entity because the official de- any terms and conditions necessary to termines that the non-Federal entity communicate requirements that are in does not meet either or both of the addition to the requirements outlined minimum qualification standards as in the Federal awarding agency's gen- described in §200.206(a)(2), the Federal eral terms and conditions, See also awarding agency must report that de- §200.208. Whenever practicable, these termination to the designated integ- specific terms and conditions also rity and performance system accessible should be shared on the agency's through SAM (currently FAPIIS), only website and in notices of funding op- if all of the following apply: portunities (as outlined in §200.204) in (1) The only basis for the determina- addition to being included in a Federal tion described in this paragraph (a) is award. See also§200.207. the non-Federal entity's prior record of (e) Federal awarding agency require- executing programs or activities under ments. Any other information required Federal awards or its record of integ- by the Federal awarding agency. rity and business ethics, as described in §200.206(a)(2) (i.e., the entity was deter- §200.212 Public access to Federal mined to be qualified based on all fac- award information. tors other than those two standards); (a) In accordance with statutory re- and quirements for Federal spending trans- (2) The total Federal share of the parency (e.g., FFATA), except as noted Federal award that otherwise would be 107 li §200.214 2 CFR Ch. II (1-1-22 Edition) made to the non-Federal entity is ex- mination that a non-Federal entity is pected to exceed the simplified acquisi- not qualified for a Federal award and tion threshold over the period of per- subsequently: formance. (1) Learns that any of that informa- (b) The Federal awarding agency is tion is erroneous, the Federal awarding not required to report a determination agency must correct the information in that a non-Federal entity is not quali- the system within three business days; fied for a Federal award if they make and the Federal award to the non-Federal (2) Obtains an update to that infor- entity and include specific award terms mation that could be helpful to other and conditions, as described in§200.208. Federal awarding agencies, the Federal (c) If a Federal awarding agency re- awarding agency is strongly encour- ports a determination that a non-Fed- aged to amend the information in the eral entity is not qualified for a Fed- system to incorporate the update in a eral award, as described in paragraph timely way. (a) of this section, the Federal award- (e) Federal awarding agencies must ing agency also must notify the non- not post any information that will be Federal entity that— made publicly available in the non- (1) The determination was made and public segment of designated integrity reported to the designated integrity and performance system that is cov- and performance system accessible ered by a disclosure exemption under through SAM, and include with the no- the Freedom of Information Act. If the tification an explanation of the basis recipient asserts within seven calendar for the determination; days to the Federal awarding agency (2) The information will be kept in that posted the information that some the system for a period of five years or all of the information made publicly from the date of the determination, as available is covered by a disclosure ex- required by section 872 of Public Law emption under the Freedom of Infor- 110-417, as amended (41 U.S.C. 2313), mation Act, the Federal awarding then archived; agency that posted the information (3) Each Federal awarding agency must remove the posting within seven that considers making a Federal award calendar days of receiving the asser- to the non-Federal entity during that tion. Prior to reposting the releasable five year period must consider that in- information, the Federal awarding formation in judging whether the non- agency must resolve the issue in ac- Federal entity is qualified to receive cordance with the agency's Freedom of the Federal award when the total Fed- Information Act procedures. eral share of the Federal award is ex- pected to include an amount of Federal §200.214 Suspension and debarment. funding in excess of the simplified ac- Non-Federal entities are subject to quisition threshold over the period of the non-procurement debarment and performance; suspension regulations implementing (4) The non-Federal entity may go to Executive Orders 12549 and 12689, 2 CFR the awardee integrity and performance part 180. The regulations in 2 CFR part portal accessible through SAM (cur- 180 restrict awards, subawards, and rently the Contractor Performance As- contracts with certain parties that are sessment Reporting System (CPARS)) debarred, suspended, or otherwise ex- and comment on any information the cluded from or ineligible for participa- system contains about the non-Federal tion in Federal assistance programs or entity itself; and activities. (5) Federal awarding agencies will consider that non-Federal entity's §200.215 Never contract with the comments in determining whether the enemy. non-Federal entity is qualified for a fu- Federal awarding agencies and re- ture Federal award. cipients are subject to the regulations (d) If a Federal awarding agency en- implementing Never Contract with the ters information into the designated Enemy in 2 CFR part 183. The regula- integrity and performance system ac- tions in 2 CFR part 183 affect covered cessible through SAM about a deter- contracts, grants and cooperative 108 OMB Guidance §200.300 agreements that are expected to exceed executive agencies administering loan, $50,000 within the period of perform- grant, or subsidy programs shall ance, are performed outside the United prioritize available funding and tech- States and its territories, and are in nical support to assist affected busi- support of a contingency operation in nesses, institutions and organizations which members of the Armed Forces as is reasonably necessary for those af- are actively engaged in hostilities. fected entities to transition from cov- §200.216 Prohibition on certain tele- ered communications equipment and communications and video surveil- services, to procure replacement equip- lance services or equipment. ment and services, and to ensure that (a) Recipients and subrecipients are communications service to users and prohibited from obligating or expend- customers is sustained. ing loan or grant funds to: (c)See Public Law 115-232, section 889 (1)Procure or obtain; for additional information. (2)Extend or renew a contract to pro- (d)See also§200.471. cure or obtain; or (3) Enter into a contract (or extend Subpart D—Post Federal Award or renew a contract) to procure or ob- Requirements tain equipment, services, or systems that uses covered,telecommunications SOURCE: 85 FR 49543, Aug. 13, 2020, unless equipment or services as a substantial otherwise noted. or essential component of any system, or as critical technology as part of any §200.300 Statutory and national policy system. As described in Public Law requirements. 115-232, section 889, covered tele- communications equipment is tele- (a) The Federal awarding agency communications equipment produced must manage and administer the Fed- by Huawei Technologies Company or eral award in a manner so as to ensure ZTE Corporation (or any subsidiary or that Federal funding is expended and affiliate of such entities). associated programs are implemented (i) For the purpose of public safety, in full accordance with the U.S. Con- security of government facilities,phys- stitution, Federal Law, and public pol- ical security surveillance of critical in- icy requirements: Including, but not frastructure, and other national secu- limited to, those protecting free rity purposes, video surveillance and speech, religious liberty, public wel- telecommunications equipment pro- fare, the environment, and prohibiting duced by Hytera Communications Cor- discrimination. The Federal awarding poration, Hangzhou Hikvision Digital agency must communicate to the non- Technology Company, or Dahua Tech- Federal entity all relevant public pol- nology Company (or any subsidiary or icy requirements, including those in affiliate of such entities). general appropriations (ii)Telecommunications or video sur- tothe provisions,dircly and by veillance services provided by such en- incorporate reference in them either nd con or ns tities or using such equipment. of the terms and conditions (iii) Telecommunications or video the Federal award. surveillance equipment or services pro- (b) The non-Federal entity is respon- duced or provided by an entity that the sible for complying with all require- Secretary of Defense, in consultation menu of the Federal award. For all with the Director of the National Intel- Federal awards, this includes the provi- ligence or the Director of the Federal sions of FFATA, which includes re- Bureau of Investigation,reasonably be- quirements on executive compensation, lieves to be an entity owned or con- and also requirements implementing trolled by, or otherwise connected to, the Act for the non-Federal entity at 2 the government of a covered foreign CFR parts 25 and 170. See also statu- country. tory requirements for whistleblower (b) In implementing the prohibition protections at 10 U.S.C. 2409, 41 U.S.C. under Public Law 115-232, section 889, 4712, and 10 U.S.C. 2324, 41 U.S.C. 4304 subsection (f), paragraph (1), heads of and 4310. 109 §200.301 2 CFR Ch. II (1-1-22 Edition) §200.301 Performance measurement. which emphasizes collaboration and co- (a) The Federal awarding agency ordination to advance data and evi must measure the recipient's perform- dence-building functions in the Federal ance to show achievement of program government). The Federal awarding agency should also specify any require- goals and objectives, share lessons ments of award recipients' participa- le learned, improve program outcomes, and foster adoption of promising prac- tion in a federally funded evaluation, tices. Program goals and objectives and any evaluation activities required should be derived from program plan to be conducted by the Federal award. ning and design. See §200.202 for more information. Where appropriate, the §200.302 Financial management. Federal award may include specific (a) Each state must expend and ac- program goals, indicators, targets, count for the Federal award in accord- baseline data, data collection, or ex- ance with state laws and procedures for pected outcomes (such as outputs, or expending and accounting for the services performance or public impacts state's own funds. In addition, the of any of these) with an expected state's and the other non-Federal enti- timeline for accomplishment. Where ty's financial management systems, in- applicable, this should also include any cluding records documenting compli- performance measures or independent ance with Federal statutes, regula- sources of data that may be used to tions, and the terms and conditions of measure progress. The Federal award- the Federal award, must be sufficient ing agency will determine how per- to permit the preparation of reports re- formance progress is measured, which quired by general and program-specific may differ by program. Performance terms and conditions; and the tracing measurement progress must be both of funds to a level of expenditures ade- measured and reported. See§200.329 for quate to establish that such funds have more information on monitoring pro- been used according to the Federal gram performance. The Federal award- statutes, regulations, and the terms ing agency may include program-spe- and conditions of the Federal award. cific requirements, as applicable. These See also§200.450. requirements must be aligned, to the (b) The financial management sys- extent permitted by law, with the Fed- tern of each non-Federal entity must eral awarding agency strategic goals, provide for the following (see also strategic objectives or performance §§200.334, 200.335, 200.336,and 200.337): goals that are relevant to the program. (1) Identification, in its accounts, of See also OMB Circular A-11, Prepara- all Federal awards received and ex- tion, Submission, and Execution of the pended and the Federal programs under Budget Part 6. which they were received. Federal pro- (b) The Federal awarding agency gram and Federal award identification should provide recipients with clear must include, as applicable, the Assist- performance goals, indicators, targets, ance Listings title and number, Fed- and baseline data as described in eral award identification number and §200.211. Performance reporting fre- year, name of the Federal agency, and quency and content should be estab- name of the pass-through entity, if lished to not only allow the Federal any. awarding agency to understand the re- (2) Accurate, current, and complete cipient progress but also to facilitate disclosure of the financial results of identification of promising practices each Federal award or program in ac- among recipients and build the evi- cordance with the reporting require- dence upon which the Federal awarding ments set forth in §§200.328 and 200.329. agency's program and performance de- If a Federal awarding agency requires cisions are made. See §200.328 for more reporting on an accrual basis from a re- information on reporting program per- cipient that maintains its records on formance. other than an accrual basis, the recipi- (c)This provision is designed to oper- ent must not be required to establish ate in tandem with evidence-related an accrual accounting system. This re- statutes(e.g.;The Foundations for Evi- cipient may develop accrual data for dence-Based Policymaking Act of 2018, its reports on the basis of an analysis 110 OMB Guidance §200.305 of the documentation on hand. Simi- utes, regulations and the terms and larly, a pass-through entity must not conditions of Federal awards. require a subrecipient to establish an (d) Take prompt action when in- accrual accounting system and must stances of noncompliance are identified allow the subrecipient to develop ac- including noncompliance identified in crual data for its reports on the basis audit findings. of an analysis of the documentation on (e)Take reasonable measures to safe- hand. guard protected personally identifiable (3) Records that identify adequately information and other information the the source and application of funds for Federal awarding agency or pass- federally-funded activities. These through entity designates as sensitive records must contain information per- or the non-Federal entity considers taining to Federal awards, authoriza- sensitive consistent with applicable tions, financial obligations, unobli- Federal, State, local, and tribal laws gated balances, assets, expenditures, regarding privacy and responsibility income and interest and be supported over confidentiality. by source documentation. (4) Effective control over, and ac- §200.304 Bonds. countability for, all funds, property, The Federal awarding agency may in- and other assets. The non-Federal enti- clude a provision on bonding, insur- ty must adequately safeguard all assets ance, or both in the following cir- and assure that they are used solely for cumstances: authorized purposes. See§200.303. (a) Where the Federal Government (5) Comparison of expenditures with guarantees or insures the repayment of budget amounts for each Federal money borrowed by the recipient, the award. Federal awarding agency, at its discre- (6) Written procedures to implement tion, may require adequate bonding the requirements of§200.305. and insurance if the bonding and insur- (7) Written procedures for deter- ance requirements of the non-Federal mining the allowability of costs in ac- entity are not deemed adequate to pro- cordance with subpart E of this part tect the interest of the Federal Govern- and the terms and conditions of the ment. Federal award. (b)The Federal awarding agency may require adequate fidelity bond coverage §200.303 Internal controls. where the non-Federal entity lacks suf- The non-Federal entity must: ficient coverage to protect the Federal (a) Establish and maintain effective Government's interest. internal control over the Federal (c) Where bonds are required in the award that provides reasonable assur- situations described above, the bonds ance that the non-Federal entity is must be obtained from companies hold- managing the Federal award in compli- ing certificates of authority as accept- ance with Federal statutes, regula- able sureties, as prescribed in 31 CFR tions, and the terms and conditions of part 223. the Federal award. These internal con- trols should be in compliance with §200.305 Federal payment. guidance in "Standards for Internal (a) For states, payments are gov- Control in the Federal Government" erned by Treasury-State Cash Manage- issued by the Comptroller General of ment Improvement Act (CMIA) agree- the United States or the "Internal Con- ments and default procedures codified trol Integrated Framework", issued by at 31 CFR part 205 and Treasury Finan- the Committee of Sponsoring Organiza- cial Manual (TFM) 4A-2000, "Overall tions of the Treadway Commission Disbursing Rules for All Federal Agen- (COSO). cies". (b) Comply with the U.S. Constitu- (b) For non-Federal entities other tion, Federal statutes, regulations, and than states, payments methods must the terms and conditions of the Federal minimize the time elapsing between awards. the transfer of funds from the United (c) Evaluate and monitor the non- States Treasury or the pass-through Federal entity's compliance with stat- entity and the disbursement by the 111 §200.305 2 CFR Ch. II (1-1-22 Edition) non-Federal entity whether the pay- Federal awarding agency sets a specific ment is made by electronic funds condition per§200.208, or when the non- transfer, or issuance or redemption of Federal entity requests payment by re- checks, warrants, or payment by other imbursement. This method may be means. See also §200.302(b)(6). Except used on any Federal award for con- as noted elsewhere in this part,Federal struction,or if the major portion of the agencies must require recipients to use construction project is accomplished only OMB-approved, governmentwide through private market financing or information collection requests to re- Federal loans, and the Federal award quest payment. constitutes a minor portion of the • (1) The non-Federal entity must be project. When the reimbursement paid in advance, provided it maintains method is used, the Federal awarding or demonstrates the willingness to agency or pass-through entity must maintain both written procedures that make payment within 30 calendar days minimize the time elapsing between after receipt of the billing, unless the the transfer of funds and disbursement Federal awarding agency or pass- by the non-Federal entity, and finan- through entity reasonably believes the cial management systems that meet request to be improper. the standards for fund control and ac- countability as established in this part. If the non-Federal entity cannot meet the criteriaafor or advance payments Advance payments to a non-Federal en- and the Federal awarding agency or tity must be limited to the minimum • amounts needed and be timed to be in pass-through entity has determined 1 accordance with the actual, immediate that reimbursement is not feasible be- cash requirements of the non-Federal cause the non-Federal entity lacks suf- j ficient working capital, the Federal entity in carrying out the purpose of the approved program or project. The awarding agency or pass-through enti timing and amount of advance pay- ty may provide cash on a working cap- ments must be as close as is adminis- ital advance basis. Under this proce- tratively feasible to the actual dis- dure, the Federal awarding agency or bursements by the non-Federal entity pass-through entity must advance cash for direct program or project costs and payments to the non Federal entity to the proportionate share of any allow- cover its estimated disbursement needs able indirect costs. The non-Federal for an initial period generally geared entity must make timely payment to to the non-Federal entity's disbursing contractors in accordance with the cycle. Thereafter, the Federal award- '„ contract provisions. ing agency or pass-through entity must (2) Whenever possible, advance pay- reimburse the non-Federal entity for ments must be consolidated to cover its actual cash disbursements. Use of anticipated cash needs for all Federal the working capital advance method of awards made by the Federal awarding payment requires that the pass- agency to the recipient. through entity provide timely advance (i) Advance payment mechanisms in- payments to any subrecipients in order elude, but are not limited to, Treasury to meet the subrecipient's actual cash check and electronic funds transfer and disbursements. The working capital ad- must comply with applicable guidance vance method of payment must not be in 31 CFR part 208. used by the pass-through entity if the (ii) Non-Federal entities must be au- reason for using this method is the un- thorized to submit requests for advance willingness or inability of the pass- payments and reimbursements at least through entity to provide timely ad- monthly when electronic fund transfers vance payments to the subrecipient to are not used, and as often as they like meet the subrecipient's actual cash dis- when electronic transfers are used, in bursements. accordance with the provisions of the (5) To the extent available, the non- Electronic Fund Transfer Act (15 Federal entity must disburse funds U.S.C.1693-1693r). available from program income (in- (3) Reimbursement is the preferred eluding repayments to a revolving method when the requirements in this fund), rebates, refunds, contract settle- paragraph (b) cannot be met, when the ments, audit recoveries, and interest 112 OMB Guidance §200.305 earned on such funds before requesting for funds received, obligated, and ex- additional cash payments. pended. (6) Unless otherwise required by Fed- (ii) Advance payments of Federal eral statutes, payments for allowable funds must be deposited and main- costs by non-Federal entities must not tained in insured accounts whenever be withheld at any time during the pe- possible. riod of performance unless the condi- (8) The non-Federal entity must tions of§200.208, subpart D of this part, maintain advance payments of Federal including §200.339, or one or more of awards in interest-bearing accounts, the following applies: unless the following apply: (i) The non-Federal entity has failed (i) The non-Federal entity receives to comply with the project objectives, less than$250,000 in Federal awards per Federal statutes, regulations, or the year. terms and conditions of the Federal (ii) The best reasonably available in- award. terest-bearing account would not be ex- (ii) The non-Federal entity is delin- pected to earn interest in excess of$500 quent in a debt to the United States as per year on Federal cash balances. defined in OMB Circular A-129, "Poli- (iii) The depository would require an cies for Federal Credit Programs and average or minimum balance so high Non-Tax Receivables."Under such con- that it would not be feasible within the ditions, the Federal awarding agency expected Federal and non-Federal cash or pass-through entity may, upon rea- resources. sonable notice, inform the non-Federal g entity that payments must not be (iv)A foreign sgo or precludesut mbae est- system prohibits interest- made for financial obligations incurred bearing accounts. after a specified date until the condi- (9)Interest earned amounts up to$500 tions are corrected or the indebtedness (9)Interest earned amounts up to$500 the Federal Government is liq- per year may be retained by the non- to to thd. Federal entity for administrative ex- uida (iii) A payment withheld for failure pense. Any additional interest earned to comply with Federal award condi- on Federal advance payments deposited tions, but without suspension of the in interest-bearing accounts must be Federal award, must be released to the remitted annually to the Department Pay- non-Federal entity upon subsequent of Health and Human Services compliance. When a Federal award is ment through an electronictrni System (PMS) ei- suspended, payment adjustments will enAutomated Clearing medium using(ACH)made in accordance with§200.343. they House (ACH) (iv) A payment must not be made to networkor a Fedwire Funds Service a non-Federal entity for amounts that paa yment. are withheld by the non-Federal entity (i) For returning interest on Federal from payment to contractors to assure awards paid through PMS, the refund satisfactory completion of work. A should: payment must be made when the non- (A) Provide an explanation stating Federal entity actually disburses the that the refund is for interest; withheld funds to the contractors or to (B) List the PMS Payee Account escrow accounts established to assure Number(s)(PANs); satisfactory completion of work. (C) List the Federal award number(s) (7) Standards governing the use of for which the interest was earned; and banks and other institutions as deposi- (D) Make returns payable to: Depart- tories of advance payments under Fed- ment of Health and Human Services. eral awards are as follows. (ii) For returning interest on Federal (i) The Federal awarding agency and awards not paid through PMS, the re- pass-through entity must not require fund should: separate depository accounts for funds (A) Provide an explanation stating provided to a non-Federal entity or es- that the refund is for interest; tablish any eligibility requirements for (B) Include the name of the awarding depositories for funds provided to the agency; non-Federal entity. However, the non- (C) List the Federal award number(s) Federal entity must be able to account for which the interest was earned; and 113 §200.306 2 CFR Ch. II (1-1-22 Edition) (D) Make returns payable to: Depart- Department of Health and Human ment of Health and Human Services. Services." (10) Funds, principal, and excess cash Mail Check to Treasury approved returns must be directed to the origi- lockbox: nal Federal agency payment system. HHS Program Support Center, P.O. The non-Federal entity should review Box 530231,Atlanta, GA 30353-0231 instructions from the original Federal 2 please allow 4-6 weeks for proc- agency payment system. Returns essing of a payment by check to be ap- should include the following informa- plied to the appropriate PMS account. tion: (i) Payee Account Number (PAN), if (v) Questions can be directed to PMS the payment originated from PMS, or at 877-614-5533 or Agency information to indicate whom PMSSupport@psc.hhs.gov. to credit the funding if the payment originated from ASAP, NSF, or an- §200.306 Cost sharing or matching. other Federal agency payment system. (a)Under Federal research proposals, (ii) PMS document number and sub- voluntary committed cost sharing is account(s), if the payment originated not expected. It cannot be used as a from PMS, or relevant account num- factor during the merit review of appli- bers if the payment originated from an- cations or proposals, but may be con- other Federal agency payment system. sidered if it is both in accordance with (iii) The reason for the return (e.g., Federal awarding agency regulations excess cash, funds not spent, interest, and specified in a notice of funding op- part interest part other, etc.) portunity. Criteria for considering vol- (11) When returning funds or interest untary committed cost sharing and to PMS you must include the following any other program policy factors that as applicable: may be used to determine who may re- (i)For ACH Returns: ceive a Federal award must be explic- itly described in the notice of funding Routing Number:30300036 opportunity. See also §§200.414 and Account number: 051 200.204 and appendix I to this part. Bank Name and Location: Credit Gate- way—ACH Receiver St.Paul, MN (b) For all Federal awards, any shared costs or matching funds and all (ii)For Fedwire Returns 1: contributions, including cash and Routing Number:021030004 third-party in-kind contributions, Account number:75010501 must be accepted as part of the non- Bank Name and Location: Federal Re- Federal entity's cost sharing or match- serve Bank Treas NYC/Funds Trans- ing when such contributions meet all fer Division New York,NY of the following criteria: 'Please note that the organization (1) Are verifiable from the non-Fed initiating payment is,likely to incur a eral entity's records; contributions charge from their Financial Institution (2) Are not included a s for this type of payment. for any other Federal award; (iii)For International ACH Returns: (3) Are necessary and reasonable for Beneficiary Account: Federal Reserve accomplishment of project or program Bank of New York/ITS (FRBNY/ITS) objves; Bank: Citibank N.A. (New York) (4) A Are allowable under subpart E of Swift Code:CITIUS33 (5this part; Gov- Account Number: 36838868 n Are not paidn byh the FederalFederal award, ernment under another award, Bank Address: 388 Greenwich Street, except where the Federal statute au- New York,NY 10013 USA thorizing a program specifically pro- Payment Details (Line 70): Agency Lo- vides that Federal funds made avail- cator Code(ALC):75010501 able for such program can be applied to Name (abbreviated when possible) and matching or cost sharing requirements ALC Agency POC of other Federal programs; (iv) For recipients that do not have (6) Are provided for in the approved electronic remittance capability, budget when required by the Federal please make check2 payable to: "The awarding agency;and 114 OMB Guidance §200.306 (7) Conform to other provisions of (f) When a third-party organization this part,as applicable. furnishes the services of an employee, (c) Unrecovered indirect costs, in- these services must be valued at the eluding indirect costs on cost sharing employee's regular rate of pay plus an or matching may be included as part of amount of fringe benefits that is rea- cost sharing or matching only with the sonable, necessary, allocable, and oth- prior approval of the Federal awarding erwise allowable, and indirect costs at agency. Unrecovered indirect cost either the third-party organization's means the difference between the approved federally-negotiated indirect amount charged to the Federal award cost rate or, a rate in accordance with and the amount which could have been §200.414(d) provided these services em- charged to the Federal award under the ploy the same skill(s) for which the non-Federal entity's approved nego- employee is normally paid. Where do- tiated indirect cost rate. nated services are treated as indirect (d) Values for non-Federal entity costs, indirect cost rates will separate contributions of services and property the value of the donated services so must be established in accordance with that reimbursement for the donated the cost principles in subpart E of this services will not be made. part. If a Federal awarding agency au- (g) Donated property from third thorizes the non-Federal entity to par- natedo- buildings or land for construction/ ties may include such items as equip- facilities acquisition projects or long- ment, office supplies, laboratory sup- term use, the value of the donated plies, or workshop and classroom sup- property for cost sharing or matching plies. Value assessed to donated prop- must be the lesser of paragraph (d)(1) erty included in the cost sharing or or(2)of this section. matching share must not exceed the (1) The value of the remaining life of fair market value of the property at the property recorded in the non-Fed- the time of the donation. eral entity's accounting records at the (h) The method used for determining time of donation. cost sharing or matching for third- (2) The current fair market value. party-donated equipment, buildings However, when there is sufficient jus- and land for which title passes to the tification, the Federal awarding agen- non-Federal entity may differ accord- cy may approve the use of the current ing to the purpose of the Federal fair market value of the donated prop- award, if paragraph (h)(1) or (2) of this erty, even if it exceeds the value de- section applies. scribed in paragraph (d)(1) of this sec- (1) If the purpose of the Federal tion at the time of donation. a If the put the of red Federal nti- (e) Volunteer services furnished by taward is the assist the non-Federal equipment, third-party professional and technical buildingsy in acquisition gf equipment, personnel, consultants, and other or land, the aggregate value skilled and unskilled labor may be of the donated property may be counted as cost sharing or matching if claimed as cost sharing or matching. the service is an integral and necessary (2) If the purpose of the Federal part of an approved project or program. award is to support activities that re- Rates for third party volunteer sery quire the use of equipment, buildings ices must be consistent with those paid or land, normally only depreciation for similar work by the non-Federal en- charges for equipment and buildings tity. In those instances in which the may be made.However, the fair market required skills are not found in the value of equipment or other capital as- non-Federal entity, rates must be con- sets and fair rental charges for land sistent with those paid for similar may be allowed, provided that the Fed- work in the labor market in which the eral awarding agency has approved the non-Federal entity competes for the charges. See also§200.420. kind of services involved. In either (i) The value of donated property case, paid fringe benefits that are rea- must be determined in accordance with sonable, necessary, allocable, and oth- the usual accounting policies of the erwise allowable may be included in non-Federal entity, with the following the valuation. qualifications: 115 §200.307 2 CFR Ch. II (1-1-22 Edition) (1) The value of donated land and identified in the Federal award or Fed- buildings must not exceed its fair mar- eral awarding agency regulations as ket value at the time of donation to program income. the non-Federal entity as established (d) Property. Proceeds from the sale by an independent appraiser (e.g., cer- of real property, equipment, or supplies tified real property appraiser or Gen- are not program income; such proceeds eral Services Administration rep- will be handled in accordance with the resentative) and certified by a respon- requirements of the Property Stand- sible official of the non-Federal entity ards §§200.311, 200.313, and 200.314, or as as required by the Uniform Relocation specifically identified in Federal stat- , Assistance and Real Property Acquisi- utes,regulations, or the terms and con- tion Policies Act of 1970, as amended, ditions of the Federal award. (42 U.S.C. 4601-4655) (Uniform Act) ex- '! cept as provided in the implementing (e) Use of program income. If the Fed regulations at 49 CFR part 24, "Uni- eral awarding agency does not specify form Relocation Assistance And Real in its regulations or the terms and con- Property Acquisition For Federal And ditions of the Federal award, or give Federally-Assisted Programs". prior approval for how program income (2) The value of donated equipment is to be used, paragraph (e)(1) of this must not exceed the fair market value section must apply.For Federal awards of equipment of the same age and con- made to IHEs and nonprofit research dition at the time of donation. institutions, if the Federal awarding (3) The value of donated space must agency does not specify in its regula- not exceed the fair rental value of corn- tions or the terms and conditions of parable space as established by an inde- the Federal award how program income pendent appraisal of comparable space is to be used, paragraph (e)(2) of this and facilities in a privately-owned section must apply.In specifying alter- building in the same locality. natives to paragraphs (e)(1) and (2) of (4) The value of loaned equipment this section, the Federal awarding must not exceed its fair rental value. agency may distinguish between in- (j) For third-party in-kind contribu- come earned by the recipient and in- tions, the fair market value of goods come earned by subrecipients and be- and services must be documented and tween the sources, kinds, or amounts to the extent feasible supported by the of income. When the Federal awarding same methods used internally by the non-Federal entity. agency authorizes the approaches in (k) For IHEs, see also OMB memo- paragraphs(e)(2)and (3) of this section, randum M-01-06, dated January 5, 2001, program income in excess of any Clarification of OMB A-21 Treatment amounts specified must also be de- of Voluntary Uncommitted Cost Shar- ducted from expenditures. ing and Tuition Remission Costs. (1) Deduction. Ordinarily program in- come must be deducted from total al- §200.307 Program income. lowable costs to determine the net al- (a) General. Non-Federal entities are lowable costs. Program income must be encouraged to earn income to defray used for current costs unless the Fed- program costs where appropriate. eral awarding agency authorizes other- (b) Cost of generating program income. wise. Program income that the non- If authorized by Federal regulations or Federal entity did not anticipate at the the Federal award, costs incidental to time of the Federal award must be used the generation of program income may to reduce the Federal award and non- be deducted from gross income to de- Federal entity contributions rather termine program income, provided than to increase the funds committed these costs have not been charged to to the project. the Federal award. (2) Addition. With prior approval of (c) Governmental revenues. Taxes, spe- the Federal awarding agency (except cial assessments, levies, fines, and for IHEs and nonprofit research insti- other such revenues raised by a non- Federal entity are not program income tutions, as described in this paragraph unless the revenues are specifically (e)) program income may be added to 116 OMB Guidance §200.308 the Federal award by the Federal agen- budget and program plan revisions, in cy and the non-Federal entity.The pro- accordance with this section. gram income must be used for the pur- (c) For non-construction Federal poses and under the conditions of the awards, recipients must request prior Federal award. approvals from Federal awarding agen- (3) Cost sharing or matching. With cies for the following program or budg- prior approval of the Federal awarding et-related reasons: agency, program income may be used (1) Change in the scope or the objec- to meet the cost sharing or matching tive of the project or program (even if requirement of the Federal award. The there is no associated budget revision amount of the Federal award remains requiring prior written approval). the same. (2) Change in a key person specified (f) Income after the period of perform- in the application or the Federal ance. There are no Federal require- award. ments governing the disposition of in- (3) The disengagement from the come earned after the end of the period project for more than three months, or of performance for the Federal award, a 25 percent reduction in time devoted unless the Federal awarding agency to the project, by the approved project regulations or the terms and condi- director or principal investigator. tions of the Federal award provide oth- (4) The inclusion, unless waived by erwise. The Federal awarding agency the Federal awarding agency, of costs may negotiate agreements with recipi- that require prior approval in accord- ents regarding appropriate uses of in- ance with subpart E of this part as ap- come earned after the period of per- plicable. formance as part of the grant closeout (5) The transfer of funds budgeted for process. See also§200.344. participant support costs to other cat- (g) License fees and royalties. Unless egories of expense. the Federal statute, regulations, or (6) Unless described in the applica- terms and conditions for the Federal tion and funded in the approved Fed- award provide otherwise, the non-Fed- eral awards, the subawarding, transfer- eral entity is not accountable to the ring or contracting out of any work Federal awarding agency with respect under a Federal award, including fixed to program income earned from license amount subawards as described in fees and royalties for copyrighted ma- §200.333. This provision does not apply terial, patents, patent applications, to the acquisition of supplies, material, trademarks, and inventions made equipment or general support services. under a Federal award to which 37 CFR (7) Changes in the approved cost- part 401 is applicable. sharing or matching provided by the non-Federal entity. §200.308 Revision of budget and pro- (8) The need arises for additional gram plans. Federal funds to complete the project. (a) The approved budget for the Fed- (d) No other prior approval require- eral award summarizes the financial ments for specific items may be im- aspects of the project or program as ap- posed unless an exception has been ap- proved during the Federal award proc- proved by OMB. See also §§200.102 and ess. It may include either the Federal 200.407. and non-Federal share (see definition (e) Except for requirements listed in for Federal share in §200.1) or only the paragraphs (c)(1) through (8) of this Federal share, depending upon Federal section,the Federal awarding agency is awarding agency requirements. The authorized, at its option, to waive budget and program plans include con- other cost-related and administrative siderations for performance and pro- prior written approvals contained in gram evaluation purposes whenever re- subparts D and E of this part. Such quired in accordance with the terms waivers may include authorizing re- and conditions of the award. cipients to do any one or more of the (b) Recipients are required to report following: deviations from budget or project scope (1) Incur project costs 90 calendar or objective, and request prior approv- days before the Federal awarding agen- als from Federal awarding agencies for cy makes the Federal award. Expenses 117 §200.308 2 CFR Ch. II (1-1-22 Edition) more than 90 calendar days pre-award proved by the Federal awarding agen- require prior approval of the Federal cy. The Federal awarding agency can- awarding agency. All costs incurred be- not permit a transfer that would cause fore the Federal awarding agency any Federal appropriation to be used makes the Federal award are at the re- for purposes other than those con- cipient's risk (i.e., the Federal award- sistent with the appropriation. ing agency is not required to reimburse (g) All other changes to non-con- such costs if for any reason the recipi- struction budgets, except for the ent does not receive a Federal award or changes described in paragraph (c) of if the Federal award is less than antici- this section, do not require prior ap- pated and inadequate to cover such proval(see also§200.407). costs). See also§200.458. (h) For construction Federal awards, 'I (2) Initiate a one-time extension of the recipient must request prior writ- the period of performance by up to 12 ten approval promptly from the Fed- months unless one or more of the con- eral awarding agency for budget revi- ditions outlined in paragraphs (e)(2)(i) sions whenever paragraph (h)(1), (2), or through (iii) of this section apply. For (3)of this section applies: one-time extensions, the recipient (1) The revision results from changes must notify the Federal awarding in the scope or the objective of the agency in writing with the supporting project or program. reasons and revised period of perform- ance at least 10 calendar days before (2) The need arises for additional the end of the period of performance Federal funds to complete the project. specified in the Federal award. This (3) A revision is desired which in- one-time extension must not be exer- volves specific costs for which prior cised merely for the purpose of using written approval requirements may be unobligated balances. Extensions re- imposed consistent with applicable quire explicit prior Federal awarding OMB cost principles listed in subpart agency approval when: E. (i) The terms and conditions of the (4) No other prior approval require- Federal award prohibit the extension. ments for budget revisions may be im- (ii) The extension requires additional posed unless an exception has been ap- Federal funds. proved by OMB. (iii) The extension involves any (5) When a Federal awarding agency change in the approved objectives or makes a Federal award that provides scope of the project. support for construction and non-con- (3) Carry forward unobligated bal- struction work, the Federal awarding ances to subsequent budget periods. agency may require the recipient to ob- (4) For Federal awards that support tain prior approval from the Federal research, unless the Federal awarding awarding agency before making any agency provides otherwise in the Fed- fund or budget transfers between the eral award or in the Federal awarding two types of work supported. agency's regulations, the prior ap- (i) When requesting approval for proval requirements described in this budget revisions, the recipient must paragraph(e)are automatically waived use the same format for budget infor- (i.e., recipients need not obtain such mation that was used in the applica- prior approvals) unless one of the con- tion, unless the Federal awarding agen- of request suffices. cyindicates a letter agen- ditions included in paragraph e 2 ofq dit o s p g p O( ) this section applies. (j) Within 30 calendar days from the (f) The Federal awarding agency date of receipt of the request for budg- may, at its option,restrict the transfer et revisions, the Federal awarding of funds among direct cost categories agency must review the request and or programs, functions and activities notify the recipient whether the budget for Federal awards in which the Fed- revisions have been approved. If the re- eral share of the project exceeds the vision is still under consideration at simplified acquisition threshold and the end of 30 calendar days, the Federal the cumulative amount of such trans- awarding agency must inform the re- fers exceeds or is expected to exceed 10 cipient in writing of the date when the percent of the total budget as last ap- recipient may expect the decision. 118 OMB Guidance §200.312 §200.309 Modifications to Period of ations where the non-Federal entity is Performance. disposing of real property acquired or If a Federal awarding agency or pass- improved with a Federal award and ac- through entity approves an extension, quiring replacement real property or if a recipient extends under under the same Federal award, the net §200.308(e)(2), the Period of Perform- proceeds from the disposition may be ance will be amended to end at the used as an offset to the cost of the re- completion of the extension. If a termi- placement property. nation occurs, the Period of Perform- (2) Sell the property and compensate ance will be amended to end upon the the Federal awarding agency. The effective date of termination. If a re- amount due to the Federal awarding newal award is issued, a distinct Period agency will be calculated by applying of Performance will begin. the Federal awarding agency's percent- age of participation in the cost of the PROPERTY STANDARDS original purchase (and cost of any im- provements) to the proceeds of the sale after deduction of any actual and rea- The non-Federal entity must, at a sonable selling and fixing-up expenses. minimum, provide the equivalent in- If the Federal award has not been surance coverage for real property and closed out, the net proceeds from sale equipment acquired or improved with may be offset against the original cost Federal funds as provided to property of the property. When the non-Federal owned by the non-Federal entity. Fed- entity is directed to sell property,sales erally-owned property need not be in- procedures must be followed that pro- sured unless required by the terms and vide for competition to the extent conditions of the Federal award. practicable and result in the highest Possible return. §200.311 Real property. (3) Transfer title to the Federal (a) Title. Subject to the requirements awarding agency or to a third party and conditions set forth in this section, designated/approved by the Federal title to real property acquired or im- awarding agency. The non-Federal en- proved under a Federal award will vest tity is entitled to be paid an amount upon acquisition in the non-Federal en- calculated by applying the non-Federal tity. entity's percentage of participation in (b) Use. Except as otherwise provided the purchase of the real property (and by Federal statutes or by the Federal cost of any improvements) to the cur- awarding agency, real property will be rent fair market value of the property. used for the originally authorized pur- pose as long as needed for that purpose, §200.312 Federally-owned and exempt during which time the non-Federal en- property. tity must not dispose of or encumber (a) Title to federally-owned property its title or other interests. remains vested in the Federal Govern- (c) Disposition. When real property is ment. The non-Federal entity must no longer needed for the originally au- submit annually an inventory listing of thorized purpose, the non-Federal enti- federally-owned property in its custody ty must obtain disposition instructions to the Federal awarding agency. Upon from the Federal awarding agency or completion of the Federal award or pass-through entity. The instructions when the property is no longer needed, must provide for one of the following the non-Federal entity must report the alternatives: property to the Federal awarding agen- (1) Retain title after compensating cy for further Federal agency utiliza- the Federal awarding agency. The tion. amount paid to the Federal awarding (b) If the Federal awarding agency agency will be computed by applying has no further need for the property, it the Federal awarding agency's percent- must declare the property excess and age of participation in the cost of the report it for disposal to the appropriate original purchase (and costs of any im- Federal disposal authority, unless the provements) to the fair market value Federal awarding agency has statutory of the property.However, in those situ- authority to dispose of the property by 119 §200.313 2 CFR Ch. II (1-1-22 Edition) alternative methods (e.g., the author- dures. Other non-Federal entities must ity provided by the Federal Technology follow paragraphs (c) through (e) of Transfer Act (15 U.S.C. 3710 (i)) to do- this section. nate research equipment to edu- (c) Use. (1) Equipment must be used cational and nonprofit organizations in by the non-Federal entity in the pro- accordance with Executive Order 12999, gram or project for which it was ac- "Educational Technology: Ensuring quired as long as needed, whether or Opportunity for All Children in the PP Y not the project or program continues Next Century."). The Federal awarding to be supported by the Federal award, agency must issue appropriate instruc- tions to the non-Federal entity. and the non-Federal entity must not (0) Exempt property means property encumber the property without prior acquired under a Federal award where approval of the Federal awarding agen- the Federal awarding agency has cho- sen to vest title to the property to the require the submission of the applica- non-Federal entity without further re- ble common form for equipment. When sponsibility to the Federal Govern- no longer needed for the original pro- ment, based upon the explicit terms gram or project, the equipment may be and conditions of the Federal award. used in other activities supported by The Federal awarding agency may ex- the Federal awarding agency, in the ercise this option when statutory au- following order of priority: thority exists. Absent statutory au- (i) Activities under a Federal award thority and specific terms and condi- from the Federal awarding agency tions of the Federal award, title to ex- which funded the original program or empt property acquired under the Fed- project, then eral award remains with the Federal (ii) Activities under Federal awards Government. from other Federal awarding agencies. §200.313 Equipment. This includes consolidated equipment for information technology systems. See also§200.439. (2)During the time that equipment is (a) Title. Subject to the requirements used on the project or program for and conditions set forth in this section, which it was acquired, the non-Federal acquired under a title to equipment a q entity equipment must also make e ui ment Federal award will vest upon acquisi- P available for use on other projects or tion in the non-Federal entity. Unless a statute specifically authorizes the programs currently or previously sup Federal agency to vest title in the non- ported by the Federal Government, Federal entity without further respon- provided that such use will not inter- sibility to the Federal Government, fere with the work on the projects or and the Federal agency elects to do so, program for which it was originally ac- the title must be a conditional title. quired. First preference for other use Title must vest in the non-Federal en- must be given to other programs or tity subject to the following condi- projects supported by Federal awarding tions: agency that financed the equipment (1)Use the equipment for the author- and second preference must be given to ized purposes of the project during the programs or projects under Federal period of performance, or until the awards from other Federal awarding property is no longer needed for the agencies. Use for non-federally-funded purposes of the project. programs or projects is also permis- (2) Not encumber the property with- sible. User fees should be considered if out approval of the Federal awarding appropriate. agency or pass-through entity. (3) Notwithstanding the encourage- (3)Use and dispose of the property in ment in §200.307 to earn program in- accordance with paragraphs (b), (c), come, the non-Federal entity must not and(e)of this section. use equipment acquired with the Fed- (b)General. A state must use, manage eral award to provide services for a fee and dispose of equipment acquired companies under a Federal award by the state in that is less than private accordance with state laws and proce- charge for equivalent services unless 120 OMB Guidance §200.314 specifically authorized by Federal stat- from the Federal awarding agency if ute for as long as the Federal Govern- required by the terms and conditions of ment retains an interest in the equip- the Federal award. Disposition of the ment. equipment will be made as follows, in (4) When acquiring replacement accordance with Federal awarding equipment, the non-Federal entity may agency disposition instructions: use the equipment to be replaced as a (1)Items of equipment with a current trade-in or sell the property and use per unit fair market value of$5,000 or the proceeds to offset the cost of the less may be retained, sold or otherwise replacement property. disposed of with no further responsi- (d) Management requirements. Proce- bility to the Federal awarding agency. dures for managing equipment (includ- (2) Except as provided in §200.312(b), ing replacement equipment), whether or if the Federal awarding agency fails acquired in whole or in part under a to provide requested disposition in- Federal award, until disposition takes structions within 120 days, items of place will, as a minimum, meet the fol- equipment with a current per-unit fair lowing requirements: market value in excess of$5,000 may be (1) Property records must be main- retained by the non-Federal entity or tained that include a description of the sold. The Federal awarding agency is property, a serial number or other entitled to an amount calculated by identification number, the source of multiplying the current market value funding for the property (including the or proceeds from sale by the Federal FAIN), who holds title, the acquisition awarding agency's percentage of par- date, and cost of the property, percent- ticipation in the cost of the original age of Federal participation in the purchase. If the equipment is sold, the project costs for the Federal award Federal awarding agency may permit under which the property was acquired, the non-Federal entity to deduct and the location, use and condition of the retain from the Federal share $500 or property, and any ultimate disposition ten percent of the proceeds, whichever data including the date of disposal and is less, for its selling and handling ex- sale price of the property. penses. (2) A physical inventory of the prop- (3) The non-Federal entity may erty must be taken and the results rec- transfer title to the property to the onciled with the property records at Federal Government or to an eligible least once every two years. third party provided that, in such (3) A control system must be devel- cases, the non-Federal entity must be oped to ensure adequate safeguards to entitled to compensation for its attrib- prevent loss, damage, or theft of the utable percentage of the current fair property. Any loss, damage, or theft market value of the property. must be investigated. (4)In cases where a non-Federal enti- (4) Adequate maintenance procedures ty fails to take appropriate disposition must be developed to keep the property actions, the Federal awarding agency in good condition. may direct the non-Federal entity to (5) If the non-Federal entity is au- take disposition actions. thorized or required to sell the prop- erty, proper sales procedures must be §200.314 Supplies. established to ensure the highest pos- See also§200.453. sible return. (a) Title to supplies will vest in the (e) Disposition. When original or re- non-Federal entity upon acquisition. If placement equipment acquired under a there is a residual inventory of unused Federal award is no longer needed for supplies exceeding$5,000 in total aggre- the original project or program or for gate value upon termination or com- other activities currently or previously pletion of the project or program and supported by a Federal awarding agen- the supplies are not needed for any cy, except as otherwise provided in other Federal award, the non-Federal Federal statutes, regulations, or Fed- entity must retain the supplies for use eral awarding agency disposition in- on other activities or sell them, but structions, the non-Federal entity must, in either case, compensate the must request disposition instructions Federal Government for its share. The 121 §200.315 2 CFR Ch. II (1-1-22 Edition) amount of compensation must be corn- search data relating to published re- puted in the same manner as for equip- search findings produced under a Fed- ment. See§200.313(e)(2)for the calcula- eral award that were used by the Fed tion methodology. eral Government in developing an (b) As long as the Federal Govern- agency action that has the force and ment retains an interest in the sup- effect of law, the Federal awarding plies, the non-Federal entity must not agency must request, and the non-Fed- use supplies acquired under a Federal eral entity must provide, within a rea- award to provide services to other or- sonable time, the research data so that ganizations for a fee that is less than they can be made available to the pub- private companies charge for equiva- lie through the procedures established lent services, unless specifically au- under the FOIA. If the Federal award- thorized by Federal statute. ing agency obtains the research data solely in response to a FOIA request, §200.315 Intangible property. the Federal awarding agency may (a) Title to intangible property (see charge the requester a reasonable fee definition for Intangible property in equaling the full incremental cost of §200.1) acquired under a Federal award obtaining the research data. This fee vests upon acquisition in the non-Fed- should reflect costs incurred by the eral entity. The non-Federal entity Federal agency and the non-Federal en- must use that property for the origi- tity. This fee is in addition to any fees nally-authorized purpose, and must not the Federal awarding agency may as- encumber the property without ap- sess under the FOIA (5 U.S.C. proval of the Federal awarding agency. 552(a)(4)(A)). When no longer needed for the origi- (2)Published research findings means nally authorized purpose, disposition of when: the intangible property must occur in (i) Research findings are published in accordance with the provisions in a peer-reviewed scientific or technical §200.313(e). journal; or (b)The non-Federal entity may copy- (ii) A Federal agency publicly and of- right any work that is subject to copy- ficially cites the research findings in right and was developed, or for which support of an agency action that has ownership was acquired, under a Fed- the force and effect of law. "Used by eral award.The Federal awarding agen- the Federal Government in developing cy reserves a royalty-free, nonexclu- an agency action that has the force and sive and irrevocable right to reproduce, effect of law" is defined as when an publish, or otherwise use the work for agency publicly and officially cites the Federal purposes, and to authorize oth- research findings in support of an agen- ers to do so. cy action that has the force and effect (c) The non-Federal entity is subject of law. to applicable regulations governing (3)Research data means the recorded patents and inventions, including gov- factual material commonly accepted in ernmentwide regulations issued by the the scientific community as necessary Department of Commerce at 37 CFR to validate research findings, but not part 401, "Rights to Inventions Made any of the following: Preliminary anal- by Nonprofit Organizations and Small yses, drafts of scientific papers, plans Business Firms Under Government for future research, peer reviews, or Awards, Contracts and Cooperative communications with colleagues. This Agreements." "recorded" material excludes physical laboratorysamples). Re- the objects (e.g., d The Federal Government has Re- right to: search data also do not include: (1) Obtain,reproduce, publish, or oth- (i) Trade secrets, commercial infor- erwise use the data produced under a mation, materials necessary to be held Federal award; and confidential by a researcher until they (2)Authorize others to receive,repro- are published, or similar information duce, publish, or otherwise use such which is protected under law;and data for Federal purposes. (ii) Personnel and medical informa- (e)(1) In response to a Freedom of In- tion and similar information the dis- formation Act (FOIA) request for re- closure of which would constitute a 122 OMB Guidance §200.318 clearly unwarranted invasion of per- covering conflicts of interest and gov- sonal privacy, such as information that erning the actions of its employees en- could be used to identify a particular gaged in the selection, award and ad- person in a research study. ministration of contracts. No em- ployee,200.316 Property trust relationship. officer, or agent may partici- pate in the selection, award, or admin- Real property, equipment, and intan- istration of a contract supported by a gible property, that are acquired or im- Federal award if he or she has a real or proved with a Federal award must be apparent conflict of interest. Such a held in trust by the non-Federal entity conflict of interest would arise when as trustee for the beneficiaries of the the employee, officer, or agent, any project or program under which the member of his or her immediate fam- property was acquired or improved. ily, his or her partner, or an organiza- The Federal awarding agency may re- tion which employs or is about to em- quire the non-Federal entity to record ploy any of the parties indicated here- liens or other appropriate notices of in, has a financial or other interest in record to indicate that personal or real or a tangible personal benefit from a property has been acquired or improved firm considered for a contract. The of- with a Federal award and that use and ficers, employees, and agents of the disposition conditions apply to the non-Federal entity may neither solicit property. nor accept gratuities, favors, or any- PROCUREMENT STANDARDS thing of monetary value from contrac- tors or parties to subcontracts. How- §200.317 Procurements by states. ever, non-Federal entities may set When procuring property and serv- standards for situations in which the ices under a Federal award, a State financial interest is not substantial or must follow the same policies and pro- the gift is an unsolicited item of nomi- cedures it uses for procurements from nal value. The standards of conduct its non-Federal funds. The State will must provide for disciplinary actions comply with §§200.321, 200.322, and to be applied for violations of such 200.323 and ensure that every purchase standards by officers, employees, or order or other contract includes any agents of the non-Federal entity. clauses required by §200.327. All other (2) If the non-Federal entity has a non-Federal entities, including sub- parent, affiliate, or subsidiary organi- recipients of a State, must follow the zation that is not a State,local govern- procurement standards in §§200.318 ment, or Indian tribe, the non-Federal through 200.327. entity must also maintain written standards of conduct covering organi- §200.318 General procurement stand- zational conflicts of interest. Organiza- ards. tional conflicts of interest means that (a)The non-Federal entity must have because of relationships with a parent and use documented procurement pro- company, affiliate, or subsidiary orga- cedures, consistent with State, local, nization, the non-Federal entity is un- and tribal laws and regulations and the able or appears to be unable to be im- standards of this section,for the acqui- partial in conducting a procurement sition of property or services required action involving a related organiza- under a Federal award or subaward. tion. The non-Federal entity's documented (d) The non-Federal entity's proce- •procurement procedures must conform dures must avoid acquisition of unnec- to the procurement standards identi- essary or duplicative items. Consider- fied in§§200.317 through 200.327. ation should be given to consolidating (b) Non-Federal entities must main- or breaking out procurements to ob- tain oversight to ensure that contrac- tain a more economical purchase. tors perform in accordance with the Where appropriate, an analysis will be terms, conditions, and specifications of made of lease versus purchase alter- their contracts or purchase orders. natives, and any other appropriate (c)(1) The non-Federal entity must analysis to determine the most eco- maintain written standards of conduct nomical approach. 123 §200.319 2 CFR Ch. II (1-1-22 Edition) (e) To foster greater economy and ef- (i) The actual cost of materials; and ficiency, and in accordance with efforts (ii) Direct labor hours charged at to promote cost-effective use of shared fixed hourly rates that reflect wages, services across the Federal Govern- general and administrative expenses, ment,the non-Federal entity is encour- and profit. aged to enter into state and local inter- (2) Since this formula generates an governmental agreements or inter-en- open-ended contract price, a time-and- tity agreements where appropriate for materials contract provides no positive procurement or use of common or profit incentive to the contractor for shared goods and services. Competition cost control or labor efficiency. There- requirements will be met with docu- fore, each contract must set a ceiling mented procurement actions using price that the contractor exceeds at its strategic sourcing, shared services, and own risk. Further, the non-Federal en- other similar procurement arrange- tity awarding such a contract must as- ments. sert a high degree of oversight in order (f) The non-Federal entity is encour- to obtain reasonable assurance that aged to use Federal excess and surplus the contractor is using efficient meth- property in lieu of purchasing new ods and effective cost controls. equipment and property whenever such (k) The non-Federal entity alone use is feasible and reduces project must be responsible, in accordance costs. with good administrative practice and (g) The non-Federal entity is encour- sound business judgment, for the set- aged to use value engineering clauses tlement of all contractual and adminis- in contracts for construction projects trative issues arising out of procure- of sufficient size to offer reasonable op- ments. These issues include, but are portunities for cost reductions. Value not limited to, source evaluation, pro- engineering is a systematic and ere- tests, disputes, and claims. These ative analysis of each contract item or standards do not relieve the non-Fed- 'i task to ensure that its essential func - tion is provided at the overall lower sibilities under its contracts. The Fed- cost. eral awarding agency will not sub- (h) The non-Federal entity must stitute its judgment for that of the award contracts only to responsible non-Federal entity unless the matter is contractors possessing the ability to primarily a Federal concern. Viola perform successfully under the terms tions of law will be referred to the and conditions of a proposed procure- local, state, or Federal authority hav- ment. Consideration will be given to ing proper jurisdiction. such matters as contractor integrity, [85 FR 49543, Aug. 13, 2020, as amended at 86 compliance with public policy, record FR 10440,Feb.22,2021] of past performance, and financial and technical resources. See also§200.214. §200.319 Competition. (i) The non-Federal entity must (a) All procurement transactions for maintain records sufficient to detail the acquisition of property or services the history of procurement. These required under a Federal award must records will include, but are not nee- be conducted in a manner providing essarily limited to, the following: Ra- full and open competition consistent tionale for the method of procurement, with the standards of this section and selection of contract type, contractor §200.320. selection or rejection, and the basis for (b) In order to ensure objective con- the contract price. tractor performance and eliminate un- (j)(1)The non-Federal entity may use fair competitive advantage, contrac- a time-and-materials type contract tors that develop or draft specifica- only after a determination that no tions, requirements, statements of other contract is suitable and if the work, or invitations for bids or re- contract includes a ceiling price that quests for proposals must be excluded the contractor exceeds at its own risk. from competing for such procurements. Time-and-materials type contract Some of the situations considered to be means a contract whose cost to a non- restrictive of competition include but Federal entity is the sum of: are not limited to: 124 OMB Guidance §200.320 (1) Placing unreasonable require- technical requirements, a "brand name ments on firms in order for them to or equivalent" description may be used qualify to do business; as a means to define the performance (2) Requiring unnecessary experience or other salient requirements of pro- and excessive bonding; curement. The specific features of the (3) Noncompetitive pricing practices named brand which must be met by of- between firms or between affiliated fers must be clearly stated;and companies; (2) Identify all requirements which (4) Noncompetitive contracts to con- the offerors must fulfill and all other sultants that are on retainer contracts; factors to be used in evaluating bids or (5) Organizational conflicts of inter- proposals. est; (e) The non-Federal entity must en- (6) Specifying only a "brand name" sure that all prequalified lists of per- product instead of allowing "an equal" sons, firms, or products which are used product to be offered and describing in acquiring goods and services are cur- the performance or other relevant re- rent and include enough quirements of the procurement;and g qualifieda (7) Any arbitrary action in the sourceseeopt ensure maximum the non-Federal open and pro- free competition. Also, the non-Federal curement process. entity must not preclude potential bid- (c) The non-Federal entity must con- ders from qualifying during the solici- duct procurements in a manner that tation period. prohibits the use of statutorily or ad- ministratively imposed state, local, or (f) Noncompetitivewadeinprocurementsaodancewithh tribal geographical preferences in the only be awarded accordance evaluation of bids or proposals, except §200.320(c). in those cases where applicable Federal §200.320 Methods of procurement to statutes expressly mandate or encour- be followed. age geographic preference. Nothing in The non-Federal entity must have this section preempts state licensing and use documented procurement must laws. When contracting for architec- P pro- tural and engineering (A/E) services, cedures, consistent with the standards geographic location may be a selection of this section and §§200.317, 200.318, criterion provided its application and 200.319 for any of the following leaves an appropriate number of quali- methods of procurement used for the fied firms, given the nature and size of acquisition of property or services re- the project, to compete for the con- quired under a Federal award or sub- tract. award. (d)The non-Federal entity must have (a) Informal procurement methods. written procedures for procurement When the value of the procurement for transactions. These procedures must property or services under a Federal ensure that all solicitations: award does not exceed the simplified ac- (1) Incorporate a clear and accurate quisition threshold (SAT), as defined in description of the technical require- §200.1, or a lower threshold established ments for the material, product, or by a non-Federal entity, formal pro- service to be procured. Such descrip- curement methods are not required. tion must not, in competitive procure- The non-Federal entity may use infor- ments, contain features which unduly mal procurement methods to expedite restrict competition. The description the completion of its transactions and may include a statement of the quali- minimize the associated administra- tative nature of the material, product tive burden and cost. The informal or service to be procured and, when methods used for procurement of prop- necessary, must set forth those min- erty or services at or below the SAT in- imum essential characteristics and elude: standards to which it must conform if (1) Micro-purchases—(i) Distribution. it is to satisfy its intended use. De- The acquisition of supplies or services, tailed product specifications should be the aggregate dollar amount of which avoided if at all possible. When it is does not exceed the micro-purchase impractical or uneconomical to make a threshold (See the definition of micro- clear and accurate description of the purchase in §200.1). To the maximum 125 it §200.320 2 CFR Ch. II (1-1-22 Edition) extent practicable, the non-Federal en- non-federal entity must submit a re- tity should distribute micro-purchases quest with the requirements included equitably among qualified suppliers. in paragraph (a)(1)(iv) of this section. (ii) Micro-purchase awards. Micro-pur- The increased threshold is valid until chases may be awarded without solic- there is a change in status in which the iting competitive price or rate justification was approved. quotations if the non-Federal entity (2) Small purchases—(i) Small purchase considers the price to be reasonable procedures. The acquisition of property based on research,experience,purchase or services, the aggregate dollar history or other information and docu- amount of which is higher than the ments it files accordingly. Purchase micro-purchase threshold but does not cards can be used for micro-purchases exceed the simplified acquisition if procedures are documented and ap- threshold. If small purchase procedures proved by the non-Federal entity. are used, price or rate quotations must (iii) Micro-purchase thresholds. The be obtained from an adequate number non-Federal entity is responsible for of qualified sources as determined ap- determining and documenting an ap- propriate by the non-Federal entity. propriate micro-purchase threshold (ii) Simplified acquisition thresholds. based on internal controls, an evalua- The non-Federal entity is responsible tion of risk, and its documented pro for determining an appropriate sim- curement procedures. The micro-pur- plified acquisition threshold based on chase threshold used by the non-Fed- internald conrl , threshold based eral entity must be authorized or not documented an evaluation p risk prohibited under State, local, or tribal duand its do ich musts procurement proce- prohibited e- laws or regulations. Non-Federal enti- thresholdres which h not exceedth the ties may establish a threshold higher established in the FAR. than the Federal threshold established When applicable, a lower simplified ac- quisition threshold used by the non- in the Federal Acquisition Regulations Federal entity must be authorized or (FAR) in accordance with paragraphs not prohibited under State, local, or (a)(1)(iv)and(v)of this section. tribal laws or regulations. (iv) Non-Federal entity increase to the micro-purchase threshold up to $50,000. (b) Formal procurement methods. When Non-Federal entities may establish a the value of the procurement for prop- threshold higher than the micro-pur- erty or services under a Federal finan- chase threshold identified in the FAR cial assistance award exceeds the SAT, in accordance with the requirements of or a lower threshold established by a this section. The non-Federal entity non-Federal entity, formal procure may self-certify a threshold up to ment methods are required. Formal $50,000 on an annual basis and must procurement methods require following maintain documentation to be made documented procedures. Formal pro- available t'o the Federal awarding curement methods also require public agency and auditors in accordance with advertising unless a non-competitive §200.334. The self-certification must in- procurement can be used in accordance elude a justification, clear identifica- with §200.319 or paragraph (c) of this tion of the threshold, and supporting section. The following formal methods documentation of any of the following: of procurement are used for procure- (A) A qualification as a low-risk ment of property or services above the auditee,in accordance with the criteria simplified acquisition threshold or a in§200.520 for the most recent audit; value below the simplified acquisition (B) An annual internal institutional threshold the non-Federal entity deter- risk assessment to identify, mitigate, mines to be appropriate: and manage financial risks; or, (1)Sealed bids.A procurement method (C) For public institutions, a higher in which bids are publicly solicited and threshold consistent with State law. a firm fixed-price contract (lump sum (v) Non-Federal entity increase to the or unit price) is awarded to the respon- micro-purchase threshold over $50,000. sible bidder whose bid, conforming with Micro-purchase thresholds higher than all the material terms and conditions $50,000 must be approved by the cog- of the invitation for bids, is the lowest nizant agency for indirect costs. The in price. The sealed bids method is the 126 OMB Guidance §200.320 preferred method for procuring con- Proposals must be solicited from an struction,if the conditions. adequate number of qualified offerors. (i) In order for sealed bidding to be Any response to publicized requests for feasible, the following conditions proposals must be considered to the should be present: maximum extent practical; (A) A complete, adequate, and real- (ii) The non-Federal entity must istic specification or purchase descrip- have a written method for conducting tion is available; technical evaluations of the (B) Two or more responsible bidders proposals received and making selections; are willing and able to compete effec tively for the business; and (iii) Contracts must be awarded to (C) The procurement lends itself to a the responsible offeror whose proposal firm fixed price contract and the selec- is most advantageous to the non-Fed- tion of the successful bidder can be eral entity, with price and other fac- made principally on the basis of price. tors considered; and (ii) If sealed bids are used, the fol- (iv) The non-Federal entity may use lowing requirements apply: competitive proposal procedures for (A) Bids must be solicited from an qualifications-based procurement of ar- adequate number of qualified sources, chitectural/engineering (A/E) profes- providing them sufficient response sional services whereby offeror's quali- time prior to the date set for opening fications are evaluated and the most the bids, for local, and tribal govern- qualified offeror is selected, subject to ments, the invitation for bids must be negotiation of fair and reasonable corn- publicly advertised; pensation. The method, where price is (B) The invitation for bids, which not used as a selection factor, can only will include any specifications and per- be used in procurement of A/E profes- tinent attachments, must define the sional services. It cannot be used to items or services in order for the bidder purchase other types of services though to properly respond; A/E firms that are a potential source to (C) All bids will be opened at the perform the proposed effort. time and place prescribed in the invita- tion for bids, and for local and tribal (c) Noncompetitive procurement. There governments, the bids must be opened are specific circumstances in which publicly; noncompetitive procurement can be (D)A firm fixed price contract award used. Noncompetitive procurement can will be made in writing to the lowest only be awarded if one or more of the responsive and responsible bidder. following circumstances apply: Where specified in bidding documents, (1) The acquisition of property or factors such as discounts, transpor- services, the aggregate dollar amount tation cost, and life cycle costs must of which does not exceed the micro- be considered in determining which bid purchase threshold (see paragraph is lowest. Payment discounts will only (a)(1)of this section); be used to determine the low bid when (2) The item is available only from a prior experience indicates that such single source; discounts are usually taken advantage (3) The public exigency or emergency of;and for the requirement will not permit a (E)Any or all bids may be rejected if delay resulting from publicizing a com- there is a sound documented reason. (2) Proposals. A procurement method petitiveThesolicitation; in which either a fixed price or cost-re- imbursement type contract is awarded. pass through entity expressly author- Proposals are generally used when con- izes a noncompetitive procurement in ditions are not appropriate for the use response to a written request from the of sealed bids. They are awarded in ac- non-Federal entity;or cordance with the following require- (5) After solicitation of a number of ments: sources, competition is determined in- (i) Requests for proposals must be adequate. publicized and identify all evaluation factors and their relative importance. 127 §200.321 2 CFR Ch. II (1-1-22 Edition) §200.321 Contracting with small and initial melting stage through the appli- minority businesses, women's busi- cation of coatings, occurred in the ness enterprises, and labor surplus United States. area firms. (2) "Manufactured products" means (a)The non-Federal entity must take items and construction materials com- all necessary affirmative steps to as- posed in whole or in part of non-ferrous sure that minority businesses,women's metals such as aluminum; plastics and business enterprises, and labor surplus polymer-based products such as poly- area firms are used when possible. vinyl chloride pipe; aggregates such as (b)Affirmative steps must include: concrete; glass, including optical fiber; (1) Placing qualified small and mi- and lumber. nority businesses and women's business enterprises on solicitation lists; §200.323 Procurement of recovered (2) Assuring that small and minority materials. businesses, and women's business en- A non-Federal entity that is a state terprises are solicited whenever they agency or agency of a political subdivi- are potential sources; sion of a state and its contractors must (3)Dividing total requirements,when comply with section 6002 of the Solid economically feasible, into smaller Waste Disposal Act, as amended by the tasks or quantities to permit max- Resource Conservation and Recovery imum participation by small and mi- Act. The requirements of Section 6002 II nority businesses, and women's busi- include procuring only items des- ness enterprises; ignated in guidelines of the Environ- (4) Establishing delivery schedules, mental Protection Agency (EPA) at 40 where the requirement permits, which CFR part 247 that contain the highest encourage participation by small and percentage of recovered materials prac- minority businesses, and women's busi- ticable, consistent with maintaining a ness enterprises; satisfactory level of competition, (5) Using the services and assistance, where the purchase price of the item as appropriate, of such organizations as exceeds $10,000 or the value of the the Small Business Administration and quantity acquired during the preceding the Minority Business Development fiscal year exceeded $10,000; procuring Agency of the Department of Com- solid waste management services in a merce;and manner that maximizes energy and re- (6)Requiring the prime contractor, if source recovery;and establishing an af- subcontracts are to be let, to take the firmative procurement program for affirmative steps listed in paragraphs procurement of recovered materials (b)(1)through(5)of this section. identified in the EPA guidelines. §200.322 Domestic preferences for pro- §200.324 Contract cost and price. curements. (a) The non-Federal entity must per- (a) As appropriate and to the extent form a cost or price analysis in connec- consistent with law, the non-Federal tion with every procurement action in entity should, to the greatest extent excess of the Simplified Acquisition practicable under a Federal award, pro- Threshold including contract modifica- vide a preference for the purchase, ac- tions. The method and degree of anal- quisition, or use of goods, products, or ysis is dependent on the facts sur- materials produced in the United rounding the particular procurement States (including but not limited to situation, but as a starting point, the ij iron, aluminum, steel, cement, and non-Federal entity must make inde- other manufactured products). The re- pendent estimates before receiving bids quirements of this section must be in- or proposals. eluded in all subawards including all (b) The non-Federal entity must ne- contracts and purchase orders for work gotiate profit as a separate element of or products under this award. the price for each contract in which (b)For purposes of this section: there is no price competition and in all (1) "Produced in the United States" cases where cost analysis is performed. means,for iron and steel products, that To establish a fair and reasonable prof- all manufacturing processes, from the it, consideration must be given to the 128 OMB Guidance §200.326 complexity of the work to be per- (2) The procurement is expected to formed, the risk borne by the con- exceed the Simplified Acquisition tractor, the contractor's investment, Threshold and is to be awarded without the amount of subcontracting, the competition or only one bid or offer is quality of its record of past perform- received in response to a solicitation; ance, and industry profit rates in the (3) The procurement, which is ex- surrounding geographical area for pected to exceed the Simplified Acqui- similar work. sition Threshold, specifies a "brand (c) Costs or prices based on estimated name" product; costs for contracts under the Federal (4) The proposed contract is more award are allowable only to the extent than the Simplified Acquisition that costs incurred or cost estimates Threshold and is to be awarded to included in negotiated prices would be other than the apparent low bidder allowable for the non-Federal entity under a sealed bid procurement;or under subpart E of this part. The non- (5) A proposed contract modification Federal entity may reference its own changes the scope of a contract or in- cost principles that comply with the creases the contract amount by more Federal cost principles. than the Simplified Acquisition (d)The cost plus a percentage of cost Threshold. and percentage of construction cost (c) The non-Federal entity is exempt methods of contracting must not be from the pre procurement review in used. paragraph(b) of this section if the Fed- eral awarding agency or pass-through §200.325 Federal awarding agency or entity determines that its procurement pass-through entity review. systems comply with the standards of this part. (a) The non-Federal entity must re- make available, upon request of the (1)s The non-Federal entity may Federal awarding agency or pass- quested its theprecurement systemawa be reviewed by Federal awarding through entity, technical specifica- agency or pass-through entity to deter- tions on proposed procurements where mine whether its system meets these the Federal awarding agency or pass- standards in order for its system to be through entity believes such review is certified. Generally, these reviews needed to ensure that the item or serv- must occur where there is continuous ice specified is the one being proposed high-dollar funding, and third-party for acquisition. This review generally contracts are awarded on a regular will take place prior to the time the basis; specification is incorporated into a so- (2) The non-Federal entity may self- licitation document. However, if the certify its procurement system. Such non-Federal entity desires to have the self-certification must not limit the review accomplished after a solicita- Federal awarding agency's right to sur- tion has been developed, the Federal vey the system. Under a self-certifi- awarding agency or pass-through enti- cation procedure, the Federal awarding ty may still review the specifications, agency may rely on written assurances with such review usually limited to the from the non-Federal entity that it is technical aspects of the proposed pur- complying with these standards. The chase. non-Federal entity must cite specific (b) The non-Federal entity must policies, procedures, regulations, or make available upon request, for the standards as being in compliance with Federal awarding agency or pass- these requirements and have its system through entity pre-procurement re- available for review. view, procurement documents, such as requests for proposals or invitations §200.326 Bonding requirements. for bids, or independent cost estimates, For construction or facility improve- when: ment contracts or subcontracts exceed- (1) The non-Federal entity's procure- ing the Simplified Acquisition Thresh- ment procedures or operation fails to old, the Federal awarding agency or comply with the procurement stand- pass-through entity may accept the ards in this part; bonding policy and requirements of the 129 §200.327 2 CFR Ch. II (1-1-22 Edition) non-Federal entity provided that the effective monitoring of the Federal Federal awarding agency or pass- award or could significantly affect pro- through entity has made a determina- gram outcomes, and preferably in co- tion that the Federal interest is ade- ordination with performance reporting. quately protected. If such a determina- The Federal awarding agency must use tion has not been made, the minimum OMB-approved common information requirements must be as follows: collections, as applicable, when pro- (a) A bid guarantee from each bidder viding financial and performance re- equivalent to five percent of the bid porting information. price. The "bid guarantee" must con- sist of a firm commitment such as a §200.329 Monitoring and reporting bid bond, certified check, or other ne- program performance. gotiable instrument accompanying a (a) Monitoring by the non-Federal enti- bid as assurance that the bidder will, ty. The non-Federal entity is respon- upon acceptance of the bid, execute sible for oversight of the operations of such contractual documents as may be the Federal award supported activities. required within the time specified. The non-Federal entity must monitor (b)A performance bond on the part of its activities under Federal awards to the contractor for 100 percent of the assure compliance with applicable Fed- contract price. A "performance bond" eral requirements and performance ex- is one executed in connection with a pectations are being achieved. Moni- contract to secure fulfillment of all the toring by the non-Federal entity must contractor's requirements under such cover each program, function or activ- contract. ity. See also§200.332. (c)A payment bond on the part of the contractor for 100 percent of the con- (b) Reporting program performance. tract price. A "payment bond" is one The Federal awarding agency must use OMB-approved common information executed in connection with a contract collections, as applicable, when pro- to assure payment as required by law of all persons supplying labor and ma- viding financial and performance re terial in the execution of the work pro- Porting information. As appropriate vided for in the contract. and in accordance with above men- tioned information collections, the §200.327 Contract provisions. Federal awarding agency must require The non-Federal entity's contracts the recipient to relate financial data • must contain the applicable provisions and accomplishments to performance described in appendix II to this part. goals and objectives of the Federal award. Also, in accordance with above PERFORMANCE AND FINANCIAL mentioned common information collec- MONITORING AND REPORTING tions, and when required by the terms and conditions of the Federal award, §200.328 Financial reporting. recipients must provide cost informa- Unless otherwise approved by OMB, tion to demonstrate cost effective the Federal awarding agency must so- practices (e.g., through unit cost data). licit only the OMB-approved govern- In some instances (e.g., discretionary mentwide data elements for collection research awards), this will be limited of financial information (at time of to the requirement to submit technical publication the Federal Financial Re- performance reports(to be evaluated in port or such future, OMB-approved, accordance with Federal awarding governmentwide data elements avail- agency policy). Reporting require- able from the OMB-designated stand- ments must be clearly articulated such ards lead. This information must be that, where appropriate, performance collected with the frequency required during the execution of the Federal by the terms and conditions of the Fed- award has a standard against which eral award, but no less frequently than non-Federal entity performance can be annually nor more frequently than measured. quarterly except in unusual cir- (c) Non-construction performance re- cumstances, for example where more ports. The Federal awarding agency frequent reporting is necessary for the must use standard, governmentwide 130 OMB Guidance §200.330 OMB-approved data elements for col- will be useful. Where performance lection of performance information in- trend data and analysis would be in- cluding performance progress reports, formative to the Federal awarding Research Performance Progress Re- agency program, the Federal awarding ports. agency should include this as a per- (1) The non-Federal entity must sub- formance reporting requirement. mit performance reports at the inter- (ii) The reasons why established val required by the Federal awarding goals were not met,if appropriate. agency or pass-through entity to best (iii)Additional pertinent information inform improvements in program out- including, when appropriate, analysis comes and productivity. Intervals must and explanation of cost overruns or be no less frequent than annually nor high unit costs. more frequent than quarterly except in (d) Construction performance reports. unusual circumstances, for example For the most part, onsite technical in- where more frequent reporting is nec- spections and certified percentage of essary for the effective monitoring of completion data are relied on heavily the Federal award or could signifi- by Federal awarding agencies and pass- cantly affect program outcomes. Re- through entities to monitor progress ports submitted annually by the non- under Federal awards and subawards Federal entity and/or pass-through en- for construction. The Federal awarding tity must be due no later than 90 cal- agency may require additional per- endar days after the reporting period. formance reports only when considered Reports submitted quarterly or semi- necessary. annually must be due no later than 30 (e) Significant developments. Events calendar days after the reporting pe- may occur between the scheduled per- riod. Alternatively, the Federal award- formance reporting dates that have sig- ing agency or pass-through entity may nificant impact upon the supported ac- require annual reports before the anni- versary dates of multiple year Federal tivity.ity. In such cases, thenon-Federal tity must inform the Federaeraaward- awards. award- awards. The final performance report ing agency or pass-through entity as submitted by the non-Federal entity soon as the following types of condi- and/or pass-through entity must be due tions become known: no later than 120 calendar days after con- the period of performance end date. A ti Problems, delays, tor adverse impair subrecipient must submit to the pass- ditions which will materially e through entity, no later than 90 cal- the ral award.o meet the objective must the in- endar days after the period of perform- Federal This disclosure taken, ance end date, all final performance re- elude a statement andof the action tance ports as required by the terms and con- ore contemplated,t to resolve, any assistance ditions of the Federal award. See also needed resolve the situation. §200.344. If a justified request is sub- (2)Favorable developments which en- mitted by a non-Federal entity, the able meeting time schedules and objec Federal agency may extend the due tives sooner or at less cost than - date for any performance report. pated or producing more or different (2)As appropriate in accordance with beneficial results than originally above mentioned performance report- planned. ing, these reports will contain,for each (f) Site visits. The Federal awarding Federal award, brief information on agency may make site visits as war the following unless other data ele- by program needs. ments are approved by OMB in the (g) Performance report requirement agency information collection request: waiver. The Federal awarding agency (i) A comparison of actual accom- may waive any performance report re- plishments to the objectives of the quired by this part if not needed. Federal award established for the pe- riod. Where the accomplishments of §200.330 Reporting on real property. the Federal award can be quantified, a The Federal awarding agency or pass- computation of the cost (for example, through entity must require a non-Fed- related to units of accomplishment) eral entity to submit reports at least may be required if that information annually on the status of real property 131 III §200.331 2 CFR Ch. II (1-1-22 Edition) in which the Federal Government re- (4)Is responsible for adherence to ap- tains an interest,unless the Federal in- plicable Federal program requirements terest in the real property extends 15 specified in the Federal award;and years or longer. In those instances (5) In accordance with its agreement, where the Federal interest attached is uses the Federal funds to carry out a for a period of 15 years or more, the program for a public purpose specified Federal awarding agency or pass- in authorizing statute, as opposed to through entity, at its option, may re- providing goods or services for the ben- quire the non-Federal entity to report efit of the pass-through entity. at various multi- ear fre e. (b) Contractors. A contract is for the uencies (Y q g, every two years or every three years, Purpose of obtaining goods and services not to exceed a five-year reporting pe for the non-Federal entity's own use riod; or a Federal awarding agency or and creates a procurement relationship pass-through entity may require an- with the contractor. See the definition nual reporting for the first three years of contract in §200.1 of this part. Char- d acteristics indicative of a procurement of a Federal award and thereafter re- relationship between the non-Federal quire reporting every five years). entity and a contractor are when the SUBRECIPIENT MONITORING AND contractor: MANAGEMENT (1) Provides the goods and services within normal business operations; §200.331 Subrecipient and contractor (2) Provides similar goods or services determinations. to many different purchasers; The non-Federal entity may concur- (3) Normally operates in a competi- tiverently receive Federal awards as a re- environment; setvi that cipient, a subrecipient, and a con- (4) Provides goods or are ancillary to the operationes of the tractor, depending on the substance of Federal program;and its agreements with Federal awarding (5) Is not subject to compliance re- agencies and pass-through entities. quirements of the Federal program as a Therefore, a pass-through entity must result of the agreement, though similar make case-by-case determinations requirements may apply for other rea- whether each agreement it makes for sons. the disbursement of Federal program (c) Use of judgment in making deter- funds casts the party receiving the mination. In determining whether an funds in the role of a subrecipient or a agreement between a pass-through en- contractor. The Federal awarding tity and another non-Federal entity agency may supply and require recipi- casts the latter as a subrecipient or a ents to comply with additional guid- contractor, the substance of the rela- ance to support these determinations tionship is more important than the provided such guidance does not con- form of the agreement. All of the char- flict with this section. acteristics listed above may not be (a) Subrecipients. A subaward is for present in all cases, and the pass- the purpose of carrying out a portion of through entity must use judgment in a Federal award and creates a Federal classifying each agreement as a assistance relationship with the sub- subaward or a procurement contract. sub- recipient. See definition for Subaward §200.332 Requirements for pass- in §200.1 of this part. Characteristics through entities. which support the classification of the All pass through entities must: non-Federal entity as a subrecipient (a) Ensure that every subaward is include when the non-Federal entity: clearly identified to the subrecipient as (1) Determines who is eligible to re- a subaward and includes the following ceive what Federal assistance; information at the time of the (2) Has its performance measured in subaward and if any of these data ele- relation to whether objectives of a Fed- ments change, include the changes in eral program were met; subsequent subaward modification. (3) Has responsibility for pro- When some of this information is not grammatic decision-making; available, the pass-through entity 132 OMB Guidance §200.332 must provide the best information sibility to the Federal awarding agency available to describe the Federal award including identification of any required and subaward. Required information financial and performance reports; includes: (4)(i) An approved federally recog- (1)Federal award identification. nized indirect cost rate negotiated be- (i) Subrecipient name (which must tween the subrecipient and the Federal match the name associated with its Government.If no approved rate exists, unique entity identifier); the pass-through entity must deter- (ii) Subrecipient's unique entity mine the appropriate rate in collabora- identifier; tion with the subrecipient, which is ei- (iii) • Federal Award Identification ther: Number(FAIN); (iv)Federal Award Date(see the defi- (A) The negotiatedindirect cost rate between the pass-through entity and nition of Federal award date in §200.1 of the subrecipient;which can be based on this part) of award to the recipient by a prior negotiated rate between a dif- the Federal agency; ferent PTE and the same subrecipient. (v) Subaward Period of Performance If basing the rate on a previously nego- Start and End Date; tiated rate, the pass-through entity is • (vi) Subaward Budget Period Start not required to collect information jus- and End Date; tifying this rate, but may elect to do (vii) Amount of Federal Funds Obli- so; gated by this action by the pass- through entity to the subrecipient; (B) The de minimis indirect cost (viii)Total Amount of Federal Funds rate. Obligated to the subrecipient by the (ii)The pass-through entity must not pass-through entity including the cur- require use of a de minimis indirect rent financial obligation; cost rate if the subrecipient has a Fed- (ix) Total Amount of the Federal erally approved rate. Subrecipients can Award committed to the subrecipient elect to use the cost allocation method by the pass-through entity; to account for indirect costs in accord- (x)Federal award project description, ance with§200.405(d).. as required to be responsive to the Fed (5) A requirement that the sub eral Funding Accountability and recipient permit the pass-through enti- Transparency Act(FFATA); ty and auditors to have access to the (xi) Name of Federal awarding agen- subrecipient's records and financial cy, pass-through entity, and contact statements as necessary for the pass- information for awarding official of the through entity to meet the require- Pass-through entity; ments of this part; and (xii) Assistance Listings number and (6) Appropriate terms and conditions Title; the pass-through entity must concerning closeout of the subaward. identify the dollar amount made avail- (b) Evaluate each subrecipient's risk able under each Federal award and the of noncompliance with Federal stat- Assistance Listings Number at time of utes, regulations, and the terms and disbursement; conditions of the subaward for purposes (xiii) Identification of whether the of determining the appropriate sub- award is R&D; and recipient monitoring described in para- (xiv) Indirect cost rate for the Fed- graphs(d)and(e)of this section, which eral award (including if the de minimis may include consideration of such fac- rate is charged)per§200.414. tors as: (2) All requirements imposed by the (1) The subrecipient's prior experi- pass-through entity on the sub- ence with the same or similar sub- recipient so that the Federal award is awards; used in accordance with Federal stat- (2) The results of previous audits in- utes, regulations and the terms and eluding whether or not the sub- conditions of the Federal award; recipient receives a Single Audit in ac- (3) Any additional requirements that cordance with Subpart F of this part, the pass-through entity imposes on the and the extent to which the same or subrecipient in order for the pass- similar subaward has been audited as a through entity to meet its own respon- major program; 133 §200.333 2 CFR Ch. II (1-1-22 Edition) (3) Whether the subrecipient has new not eliminate the responsibility of the personnel or new or substantially pass-through entity to issue subawards changed systems;and that conform to agency and award-spe- (4) The extent and results of Federal cific requirements, to manage risk awarding agency monitoring (e.g., if through ongoing subaward monitoring, the subrecipient also receives Federal and to monitor the status of the find- awards directly from a Federal award- ings that are specifically related to the ing agency). subaward. (c) Consider imposing specific (e) Depending upon the pass-through subaward conditions upon a sub- entity's assessment of risk posed by recipient if appropriate as described in §200.208. the subrecipient (as described in para- ' (d) Monitor the activities of the sub- graph (b) of this section), the following recipient as necessary to ensure that monitoring tools may be useful for the the subaward is used for authorized pass-through entity to ensure proper purposes, in compliance with Federal accountability and compliance with statutes, regulations, and the terms program requirements and achieve- and conditions of the subaward; and ment of performance goals: that subaward performance goals are (1) Providing subrecipients with achieved. Pass-through entity moni- training and technical assistance on toring of the subrecipient must in- program-related matters; and clude: (2) Performing on-site reviews of the (1) Reviewing financial and perform- subrecipient's program operations; ance reports required by the pass- (3) Arranging for agreed-upon-proce- through entity. dures engagements as described in (2) Following-up and ensuring that §200.425. the subrecipient takes timely and ap- (f) Verify that every subrecipient is propriate action on all deficiencies per- audited as required by Subpart F of taining to the Federal award provided this part when it is expected that the to the subrecipient from the pass- through entity detected through au- subrecipient's Federal awards expended dits, on-site reviews, and written con- during the respective fiscal year firmation from the subrecipient, high equaled or exceeded the threshold set lighting the status of actions planned forth in§200.501. or taken to address Single Audit find- (g) Consider whether the results of ings related to the particular the subrecipient's audits, on-site re- subaward. views, or other monitoring indicate (3)Issuing a management decision for conditions that necessitate adjust- applicable audit findings pertaining ments to the pass-through entity's own only to the Federal award provided to records. the subrecipient from the pass-through (h) Consider taking enforcement ac- entity as required by§200.521. tion against noncompliant subrecipi- (4)The pass-through entity is respon- ents as described in§200.339 of this part sible for resolving audit findings spe- and in program regulations. cifically related to the subaward and not responsible for resolving cross- [85 FR 49543, Aug. 13, 2020, as amended at 86 cutting findings. If a subrecipient has a FR 10440,Feb.22,2021] current Single Audit report posted in the Federal Audit Clearinghouse and §200.333 Fixed amount subawards. has not otherwise been excluded from With prior written approval from the receipt of Federal funding (e.g., has Federal awarding agency, a pass- been debarred or suspended), the pass- through entity may provide subawards through entity may rely on the sub- based on fixed amounts up to the Sim- recipient's cognizant audit agency or plified Acquisition Threshold, provided cognizant oversight agency to perform that the subawards meet the require- audit follow-up and make management ments for fixed amount awards in decisions related to cross-cutting find- §200.201. ings in accordance with section §200.513(a)(3)(vii). Such reliance does 134 OMB Guidance §200.336 RECORD RETENTION AND ACCESS ments and their supporting records: In- direct cost rate computations or pro- §200.334 Retention requirements for records. posals, cost allocation plans, and any similar accounting computations of Financial records, supporting docu- the rate at which a particular group of ments, statistical records, and all costs is chargeable (such as computer other non-Federal entity records perti- usage chargeback rates or composite nent to a Federal award must be re- fringe benefit rates). tained for a period of three years from (1) If submitted for negotiation. If the the date of submission of the final ex- proposal, plan, or other computation is penditure report or, for Federal awards required to be submitted to the Federal that are renewed quarterly or annu- Government (or to the pass-through ally, from the date of the submission of entity) to form the basis for negotia- the quarterly or annual financial re- tion of the rate, then the 3-year reten- port, respectively, as reported to the tion period for its supporting records Federal awarding agency or pass- starts from the date of such submis- through entity in the case of a sub- sion. recipient. Federal awarding agencies (2) If not submitted for negotiation. If and pass-through entities must not im- the proposal, plan, or other computa- pose any other record retention re- tion is not required to be submitted to quirements upon non-Federal entities. the Federal Government (or to the The only exceptions are the following: pass-through entity) for negotiation (a) If any litigation, claim, or audit purposes, then the 3-year retention pe- is started before the expiration of the riod for the proposal, plan, or computa- 3-year period, the records must be re- tion and its supporting records starts tained until all litigation, claims, or from the end of the fiscal year (or audit findings involving the records other accounting period) covered by have been resolved and final action the proposal, plan, or other computa- taken. tion. (b) When the non-Federal entity is notified in writing by the Federal §200.335 Requests for transfer of awarding agency, cognizant agency for records. audit, oversight agency for audit, cog- The Federal awarding agency must nizant agency for indirect costs, or request transfer of certain records to pass-through entity to extend the re- its custody from the non-Federal enti- tention period. ty when it determines that the records (c) Records for real property and possess long-term retention value. equipment acquired with Federal funds However, in order to avoid duplicate must be retained for 3 years after final recordkeeping, the Federal awarding disposition. agency may make arrangements for (d)When records are transferred to or the non-Federal entity to retain any maintained by the Federal awarding records that are continuously needed agency or pass-through entity, the 3- for joint use. year retention requirement is not ap- plicable to the non-Federal entity. §200.336 Methods for collection,trans- (e) Records for program income mission,and storage of information. transactions after the period of per- The Federal awarding agency and the formance. In some cases recipients non-Federal entity should, whenever must report program income after the practicable, collect, transmit, and period of performance. Where there is store Federal award-related informa- such a requirement, the retention pe- tion in open and machine-readable for- riod for the records pertaining to the mats rather than in closed formats or earning of the program income starts on paper in accordance with applicable from the end of the non-Federal enti- legislative requirements. A machine- ty's fiscal year in which the program readable format is a format in a stand- income is earned. and computer language (not English (f) Indirect cost rate proposals and text)that can be read automatically by cost allocations plans. This paragraph a web browser or computer system. The applies to the following types of docu- Federal awarding agency or pass- 135 §200.337 2 CFR Ch. II (1-1-22 Edition) through entity must always provide or retained. Federal awarding agencies accept paper versions of Federal award- and pass-through entities must not im- related information to and from the pose any other access requirements non-Federal entity upon request. If upon non-Federal entities. paper copies are submitted, the Federal awarding agency or pass-through enti- §200.338 Restrictions on public access ty must not require more than an to records. original and two copies. When original No Federal awarding agency may records are electronic and cannot be al- place restrictions on the non-Federal { tered,there is no need to create and re- entity that limit public access to the tain paper copies. When original records of the non-Federal entity perti- records are paper, electronic versions nent to a Federal award, except for may be substituted through the use of protected personally identifiable infor- duplication or other forms of elec- mation (PII) or when the Federal tronic media provided that they are awarding agency can demonstrate that subject to periodic quality control re- such records will be kept confidential views, provide reasonable safeguards and would have been exempted from against alteration, and remain read- disclosure pursuant to the Freedom of able. Information Act (5 U.S.C. 552) or con- §200.337 Access to records. trolled unclassified information pursu- ant to Executive Order 13556 if the (a)Records of non-Federal entities. The records had belonged to the Federal Federal awarding agency, Inspectors awarding agency. The Freedom of In- General, the Comptroller General of formation Act (5 U.S.C. 552) (FOIA) the United States, and the pass- does not apply to those records that re- through entity, or any of their author- main under a non-Federal entity's con- ized representatives, must have the trol except as required under §200.315. right of access to any documents, pa- Unless required by Federal, state, pers, or other records of the non-Fed- local, and tribal statute, non-Federal eral entity which are pertinent to the entities are not required to permit pub- Federal award, in order to make au- lic access to their records. The non- dits, examinations, excerpts,and tran- scripts. The right also includes timely Federal entity's records provided to a and reasonable access to the non-Fed- Federal agency generally will be sub eral entity's personnel for the purpose ject to FOIA and applicable exemp- of interview and discussion related to tions. such documents. REMEDIES FOR NONCOMPLIANCE (b) Extraordinary and rare cir- cumstances. Only under extraordinary §200.339 Remedies for noncompliance. and rare circumstances would such ac- cess include review of the true name of If a non-Federal entity fails to corn- victims of a crime.Routine monitoring ply with the U.S. Constitution, Federal cannot be considered extraordinary and statutes, regulations or the terms and rare circumstances that would neces- conditions of a Federal award, the Fed- sitate access to this information. When eral awarding agency or pass-through access to the true name of victims of a entity may impose additional condi- crime is necessary,appropriate steps to tions, as described in §200.208. If the protect this sensitive information must Federal awarding agency or pass- be taken by both the non-Federal enti- through entity determines that non- ty and the Federal awarding agency. compliance cannot be remedied by im- Any such access, other than under a posing additional conditions, the Fed- court order or subpoena pursuant to a eral awarding agency or pass-through bona fide confidential investigation, entity may take one or more of the fol- must be approved by the head of the lowing actions, as appropriate in the Federal awarding agency or delegate. circumstances: (c) Expiration of right of access. The (a) Temporarily withhold cash pay- rights of access in this section are not ments pending correction of the defi- limited to the required retention pe- ciency by the non-Federal entity or riod but last as long as the records are more severe enforcement action by the 136 OMB Guidance §200.340 Federal awarding agency or pass- (5) By the Federal awarding agency through entity. or pass-through entity pursuant to ter- (b)Disallow(that is, deny both use of mination provisions included in the funds and any applicable matching Federal award. credit for) all or part of the cost of the (b)A Federal awarding agency should activity or action not in compliance. clearly and unambiguously specify ter- (c) Wholly or partly suspend or ter- mination provisions applicable to each minate the Federal award. Federal award, in applicable regula- (d) Initiate suspension or debarment tions or in the award, consistent with proceedings as authorized under 2 CFR this section. part 180 and Federal awarding agency (c) When a Federal awarding agency regulations (or in the case of a pass- terminates a Federal award prior to through entity, recommend such a pro- the end of the period of performance ceeding be initiated by a Federal due to the non-Federal entity's mate- awarding agency). rial failure to comply with the Federal (e) Withhold further Federal awards award terms and conditions, the Fed for the project or program. eral awarding agency must report the (f) Take other remedies that may be termination to the OMB-designated in- legally available. tegrity and performance system acces- sible through SAM (currently FAPIIS). §200.340 Termination. (1) The information required under award may be termi- paragraph (c) of this section is not to (a) The Federal nated in whole or in part as follows: be reported to designated integrity and performance system until the non-Fed- (1) By the Federal awarding agency eral entity either— or pass-through entity, if a non-Fed- (i)Has exhausted its opportunities to eral entity fails to comply with the object or challenge the decision, see terms and conditions of a Federal §200.342;or award; (ii) Has not, within 30 calendar days (2) By the Federal awarding agency after being notified of the termination, or pass-through entity, to the greatest informed the Federal awarding agency extent authorized by law, if an award that it intends to appeal the Federal no longer effectuates the program awarding agency's decision to termi- goals or agency priorities; nate. (3) By the Federal awarding agency (2) If a Federal awarding agency, or pass-through entity with the con- after entering information into the sent of the non-Federal entity, in designated integrity and performance which case the two parties must agree system about a termination, subse- upon the termination conditions, in- quently: cluding the effective date and, in the (i) Learns that any of that informa- case of partial termination, the portion tion is erroneous, the Federal awarding to be terminated; agency must correct the information in (4) By the non-Federal entity upon the system within three business days; sending to the Federal awarding agen- (ii) Obtains an update to that infor- cy or pass-through entity written noti- mation that could be helpful to other fication setting forth the reasons for Federal awarding agencies, the Federal such termination, the effective date, awarding agency is strongly encour- and, in the case of partial termination, aged to amend the information in the the portion to be terminated. However, system to incorporate the update in a if the Federal awarding agency or pass- timely way. through entity determines in the case (3) Federal awarding agencies, must of partial termination that the reduced not post any information that will be or modified portion of the Federal made publicly available in the non- award or subaward will not accomplish public segment of designated integrity the purposes for which the Federal and performance system that is cov- award was made, the Federal awarding ered by a disclosure exemption under agency or pass-through entity may ter- the Freedom of Information Act. If the minate the Federal award in its en- non-Federal entity asserts within tirety; or seven calendar days to the Federal 137 §200.341 2 CFR Ch. II (1-1-22 Edition) awarding agency who posted the infor- eral awarding agencies. The non-Fed- mation, that some of the information eral entity may submit comments to li made publicly available is covered by a the awardee integrity and performance disclosure exemption under the Free- portal accessible through SAM (cur- dom of Information Act, the Federal rently(CPARS). awarding agency who posted the infor- (5) Federal awarding agencies will mation must remove the posting with- consider non-Federal entity comments in seven calendar days of receiving the when determining whether the non- assertion.Prior to reposting the releas- Federal entity is qualified for a future able information, the Federal agency Federal award. must resolve the issue in accordance (c) Upon termination of a Federal with the agency's Freedom of Informa- award, the Federal awarding agency tion Act procedures. must provide the information required (d) When a Federal award is termi- under FFATA to the Federal website nated or partially terminated,both the established to fulfill the requirements Federal awarding agency or pass- of FFATA, and update or notify any through entity and the non-Federal en- other relevant governmentwide sys- tity remain responsible for compliance tems or entities of any indications of with the requirements in §§200.344 and poor performance as required by 41 200.345. U.S.C. 417b and 31 U.S.C. 3321 and im- plementing 200.341 Notification of termination Plementing guidance at 2 CFR part 77 requirement. (forthcoming at time of publication). See also the requirements for Suspen- (a) The Federal agency or pass- sion and Debarment at 2 CFR part 180. through entity must provide to the non-Federal entity a notice of termi- §200.342 Opportunities to object,hear- nation. ings,and appeals. (b)If the Federal award is terminated Upon taking any remedy for non- for the non-Federal entity's material failure to comply with the U.S. Con- compliance, the Federal awarding stitution, Federal statutes, regula- tions, or terms and conditions of the entity an opportunity to object and Federal award, the notification must provide information and documenta- state that— tion challenging the suspension or ter- (1) mination action, in accordance with po The tot the OMB-ation es gndecisateon will g-be written processes and procedures pub- reported the OMB-designated integ- rity and performance system accessible lished by the Federal awarding agency. through SAM(currently FAPIIS); The Federal awarding agency or pass- (2) The information will be available through entity must comply with any in the OMB-designated integrity and requirements for hearings, appeals or performance system for a period of five other administrative proceedings to years from the date of the termination, which the non-Federal entity is enti- then archived; tled under any statute or regulation (3) Federal awarding agencies that applicable to the action involved. consider making a Federal award to the non-Federal entity during that five §200.343 Effects of suspension and ter- year period must consider that infor- mination. mation in judging whether the non- Costs to the non-Federal entity re- Federal entity is qualified to receive sulting from financial obligations in- the Federal award, when the Federal curred by the non-Federal entity dur- share of the Federal award is expected ing a suspension or after termination to exceed the simplified acquisition of a Federal award or subaward are not threshold over the period of perform- allowable unless the Federal awarding ance; agency or pass-through entity ex- (4) The non-Federal entity may corn- pressly authorizes them in the notice ment on any information the OMB-des- of suspension or termination or subse- ignated integrity and performance sys- quently. However, costs during suspen- tem contains about the non-Federal en- sion or after termination are allowable tity for future consideration by Fed- if: 138 OMB Guidance §200.344 (a) The costs result from financial as specified in the terms and conditions obligations which were properly in- of the Federal award. curred by the non-Federal entity before (c) The Federal awarding agency or the effective date of suspension or ter- pass-through entity must make prompt mination, are not in anticipation of it; payments to the non-Federal entity for and costs meeting the requirements in Sub- (b) The costs would be allowable if part E of this part under the Federal the Federal award was not suspended award being closed out. or expired normally at the end of the (d) The non-Federal entity must period of performance in which the ter- promptly refund any balances of unob- mination takes effect. ligated cash that the Federal awarding agency or pass-through entity paid in CLOSEOUT advance or paid and that are not au- thorized to be retained by the non-Fed- §200.344 Closeout. eral entity for use in other projects. The Federal awarding agency or pass- See OMB Circular A-129 and see through entity will close out the Fed- §200.346, for requirements regarding eral award when it determines that all unreturned amounts that become de- applicable administrative actions and linquent debts. all required work of the Federal award (e) Consistent with the terms and have been completed by the non-Fed- conditions of the Federal award, the eral entity. If the non-Federal entity Federal awarding agency or pass- fails to complete the requirements, the through entity must make a settle- Federal awarding agency or pass ment for any upward or downward ad- through entity will proceed to close justments to the Federal share of costs out the Federal award with the infor- after closeout reports are received. mation available. This section specifies ( The non-Federal entity must ac the actions the non-Federal entity and count for any real and personal prop Federal awarding agency or pass- erty acquired with Federal funds or re- through entity must take to complete ceived from the Federal Government in accordance with §§200.310 through this process at the end of the period of performance. 200.316 and 200.330. (a) The recipient must submit, no (g) When a recipient or subrecipient later than 120 calendar days after the completes all closeout requirements, the Federal awarding agency or pass- end date of the period of performance, through entity must promptly corn- all financial, performance, and other plete all closeout actions for Federal reports as required by the terms and awards. The Federal awarding agency conditions of the Federal award. A sub- must make every effort to complete recipient must submit to the pass- closeout actions no later than one year through entity, no later than 90 cal- after the end of the period of perform- endar days (or an earlier date as agreed ance unless otherwise directed by au- upon by the pass-through entity and thorizing statutes. Closeout actions in- subrecipient) after the end date of the clude Federal awarding agency actions period of performance, all financial, in the grants management and pay- performance, and other reports as re- ment systems. quired by the terms and conditions of (h) If the non-Federal entity does not the Federal award. The Federal award- submit all reports in accordance with ing agency or pass-through entity may this section and the terms and condi- approve extensions when requested and tions of the Federal Award, the Federal justified by the non-Federal entity, as awarding agency must proceed to close applicable. out with the information available (b)Unless the Federal awarding agen- within one year of the period of per- cy or pass-through entity authorizes an formance end date. extension, a non-Federal entity must (i) If the non-Federal entity does not liquidate all financial obligations in- submit all reports in accordance with curred under the Federal award no this section within one year of the pe- later than 120 calendar days after the riod of performance end date, the Fed- end date of the period of performance eral awarding agency must report the 139 §200.345 2 CFR Ch. II (1-1-22 Edition) non-Federal entity's material failure COLLECTION OF AMOUNTS DUE to comply with the terms and condi- tions of the award with the OMB-des- §200.346 Collection of amounts due. ignated integrity and performance sys- (a)Any funds paid to the non-Federal tem (currently FAPIIS). Federal entity in excess of the amount to awarding agencies may also pursue which the non-Federal entity is finally other enforcement actions per §200.339. determined to be entitled under the terms of the Federal award constitute POST-CLOSEOUT ADJUSTMENTS AND a debt to the Federal Government. If CONTINUING RESPONSIBILITIES not paid within 90 calendar days after demand, the Federal awarding agency §200.345 Post-closeout adjustments may reduce the debt by: and continuing responsibilities. (1) Making an administrative offset (a) The closeout of a Federal award against other requests for reimburse- does not affect any of the following: ments; (1) The right of the Federal awarding (2) Withholding advance payments agency or pass-through entity to dis- otherwise due to the non-Federal enti- allow costs and recover funds on the ty; or basis of a later audit or other review. (3)Other action permitted by Federal The Federal awarding agency or pass- statute. through entity must make any cost (b) Except where otherwise provided disallowance determination and notify by statutes or regulations, the Federal the non-Federal entity within the awarding agency will charge interest on an overdue debt in accordance with record retention period. (2) The requirement for the non-Fed- the Federal Claims Collection Stand eral entity to return any funds due as ards(31 CFR parts 900 through 999).The date from which interest is computed a result of later refunds,corrections,or is not extended by litigation or the fil- other transactions including final indi- ing of any form of appeal. rect cost rate adjustments. (3) The ability of the Federal award- Subpart E-Cost Principles ing agency to make financial adjust- ments to a previously closed award GENERAL PROVISIONS such as resolving indirect cost pay- ments and making final payments. §200.400 Policy guide. (4) Audit requirements in subpart F The application of these cost prin- of this part. ciples is based on the fundamental (5) Property management and dis- premises that: position requirements in §§200.310 (a) The non-Federal entity is respon- through 200.316 of this subpart. sible for the efficient and effective ad- (6) Records retention as required in ministration of the Federal award §§200.334 through 200.337 of this sub- through the application of sound man- part. agement practices. (b) After closeout of the Federal (b) The non-Federal entity assumes award, a relationship created under the responsibility for administering Fed- Federal award may be modified or eral funds in a manner consistent with ended in whole or in part with the con- underlying agreements, program objec- sent of the Federal awarding agency or tives, and the terms and conditions of pass-through entity and the non-Fed- the Federal award. eral entity, provided the responsibil- (c) The non-Federal entity, in rec- ities of the non-Federal entity referred ognition of its own unique combination to in paragraph (a) of this section, in- of staff, facilities, and experience, has cluding those for property management the primary responsibility for employ- as applicable, are considered and provi- ing whatever form of sound organiza sions made for continuing responsibil tion and management techniques may responsibil- ities of the non Federal entity, as ap- be necessary in order to assure proper and efficient administration of the propriate. Federal award. 140 OMB Guidance §200.401 (d)The application of these cost prin- scholarships, fellowships, traineeships, ciples should require no significant or other fixed amounts based on such changes in the internal accounting items as education allowance or pub- policies and practices of the non-Fed- lished tuition rates and fees. eral entity. However, the accounting (2) For IHEs, capitation awards, practices of the non-Federal entity which are awards based on case counts must be consistent with these cost or number of beneficiaries according to principles and support the accumula- the terms and conditions of the Federal tion of costs as required by the prin- award. ciples, and must provide for adequate documentation to support costs (3) Fixedamount awards. See also charged to the Federal award. §200.1 Definitions and 200.201. (e) In reviewing, negotiating and ap- (4) Federal awards to hospitals (see proving cost allocation plans or indi- appendix IX to this part). rect cost proposals, the cognizant agen- (5) Other awards under which the cy for indirect costs should generally non-Federal entity is not required to assure that the non-Federal entity is account to the Federal Government for applying these cost accounting prin- actual costs incurred. ciples on a consistent basis during (b) Federal contract. Where a Federal their review and negotiation of indirect contract awarded to a non-Federal en- cost proposals. Where wide variations tity is subject to the Cost Accounting exist in the treatment of a given cost Standards (CAS), it incorporates the item by the non-Federal entity, the applicable CAS clauses, Standards, and reasonableness and equity of such CAS administration requirements per treatments should be fully considered. the 48 CFR Chapter 99 and 48 CFR part See the definition of indirect(facilities& 30 (FAR Part 30). CAS applies directly administrative (F&A)) costs in §200.1 of to the CAS-covered contract and the this part. Cost Accounting Standards at 48 CFR (f) For non-Federal entities that edu- parts 9904 or 9905 takes precedence over cate and engage students in research, the cost principles in this subpart E the dual role of students as both train- with respect to the allocation of costs. ees and employees (including pre- and When a contract with a non-Federal post-doctoral staff) contributing to the entity is subject to full CAS coverage, completion of Federal awards for re- the allowability of certain costs under search must be recognized in the appli- the cost principles will be affected by cation of these principles. the allocation provisions of the Cost (g) The non-Federal entity may not Accounting Standards (e.g., CAS 414— earn or keep any profit resulting from 48 CFR 9904.414, Cost of Money as an Federal financial assistance, unless ex- Element of the Cost of Facilities Cap- plicitly authorized by the terms and ital, and CAS 417-48 CFR 9904.417, Cost conditions of the Federal award. See of Money as an Element of the Cost of also§200.307. Capital Assets Under Construction), [78 FR 78608, Dec. 26, 2013, as amended at 79 apply rather the allowability provi- FR 75885, Dec. 19, 2014; 85 FR 49561, Aug. 13, sions of §200.449. In complying with 2020] those requirements, the non-Federal entity's application of cost accounting §200.401 Application. practices for estimating, accumu- (a) General. These principles must be lating, and reporting costs for other used in determining the allowable costs Federal awards and other cost objec- of work performed by the non-Federal tives under the CAS-covered contract entity under Federal awards. These still must be consistent with its cost principles also must be used by the accounting practices for the CAS-cov- non-Federal entity as a guide in the ered contracts. In all cases, only one pricing of fixed-price contracts and set of accounting records needs to be subcontracts where costs are used in maintained for the allocation of costs determining the appropriate price. The by the non-Federal entity. principles do not apply to: (c) Exemptions. Some nonprofit orga- (1) Arrangements under which Fed- nizations, because of their size and na- eral financing is in the form of loans, ture of operations, can be considered to 141 §200.402 2 CFR Ch. II (1-1-22 Edition) be similar to for-profit entities for pur- (g) Be adequately documented. See pose of applicability of cost principles. also §§200.300 through 200.309 of this Such nonprofit organizations must op- part. erate under Federal cost principles ap- (h) Cost must be incurred during the plicable to for-profit entities located at approved budget period. The Federal 48 CFR 31.2. A listing of these organiza- awarding agency is authorized, at its tions is contained in appendix VIII to discretion, to waive prior written ap this part. Other organizations, as ap- provals to carry forward unobligated proved by the cognizant agency for in- balances to subsequent budget periods direct costs, may be added from time pursuant to§200.308(e)(3). to time. [78 FR 78608, Dec. 26, 2013, as amended at 85 [78 FR 78608, Dec. 26, 2013, as amended at 85 FR 49562,Aug.13,2020] FR 49562,Aug.13,2020] BASIC CONSIDERATIONS §200.404 Reasonable costs. A cost is reasonable if, in its nature §200.402 Composition of costs. and amount, it does not exceed that Total cost. The total cost of a Federal which would be incurred by a prudent award is the sum of the allowable di- person under the circumstances pre- rect and allocable indirect costs less vailing at the time the decision was any applicable credits. made to incur the cost. The.question of reasonableness is particularly impor- §200.403 Factors affecting allowability tant when the non-Federal entity is of costs. predominantly federally-funded. In de- Except where otherwise authorized termining reasonableness of a given by statute, costs must meet the fol- cost,consideration must be given to: lowing general criteria in order to be (a)Whether the cost is of a type gen- allowable under Federal awards: erally recognized as ordinary and nec- (a) Be necessary and reasonable for essary for the operation of the non- the performance of the Federal award Federal entity or the proper and effi- and be allocable thereto under these cient performance of the Federal principles. award. (b) Conform to any limitations or ex- (b) The restraints or requirements clusions set forth in these principles or imposed by such factors as: sound busi- in the Federal award as to types or ness practices; arm's-length bar- amount of cost items. gaining; Federal, state, local, tribal, (c) Be consistent with policies and ' and other laws and regulations; and procedures that apply uniformly to terms and conditions of the Federal both federally-financed and other ac- award. tivities of the non-Federal entity. (c) Market prices for comparable (d)Be accorded consistent treatment. goods or services for the geographic A cost may not be assigned to a Fed- area. eral award as a direct cost if any other (d) Whether the individuals con- cost incurred for the same purpose in cerned acted with prudence in the cir- • like circumstances has been allocated cumstances considering their respon- to the Federal award as an indirect sibilities to the non-Federal entity, its cost. employees, where applicable its stu- (e) Be determined in accordance with dents or membership, the public at generally accepted accounting prin- large,and the Federal Government. ciples (GAAP), except, for state and (e) Whether the non-Federal entity local governments and Indian tribes significantly deviates from its estab- only, as otherwise provided for in this lished practices and policies regarding part. the incurrence of costs, which may (f) Not be included as a cost or used unjustifiably increase the Federal to meet cost sharing or matching re award's cost. quirements of any other federally-fi- nanced program in either the current [78 FR 78608, Dec. 26, 2013, as amended at 79 or a prior period. See also§200.306(b). FR 75885,Dec.19,2014] 142 OMB Guidance §200.407 §200.405 Allocable costs. award, the costs are assignable to the (a) A cost is allocable to a particular Federal award regardless of the use Federal award or other cost objective if that may be made of the equipment or the goods or services involved are other capital asset involved when no chargeable or assignable to that Fed- longer needed for the purpose for which eral award or cost objective in accord it was originally required. See also ance with relative benefits received. §§200.310 through 200.316 and 200.439. This standard is met if the cost: (e) If the contract is subject to CAS, (1) Is incurred specifically for the costs must be allocated to the contract Federal award; pursuant to the Cost Accounting (2) Benefits both the Federal award Standards. To the extent that CAS is and other work of the non-Federal en- applicable, the allocation of costs in tity and can be distributed in propor- accordance with CAS takes precedence tions that may be approximated using over the allocation provisions in this reasonable methods;and part. (3) Is necessary to the overall oper- [78 FR 78608, Dec. 26, 2013, as amended at 79 ation of the non-Federal entity and is FR 75885, Dec. 19, 2014; 85 FR 49562, Aug. 13, assignable in part to the Federal award 2020] in accordance with the principles in §200.406 Applicable credits. this subpart. (b) All activities which benefit from (a) Applicable credits refer to those the non-Federal entity's indirect(F&A) receipts or reduction-of-expenditure- cost, including unallowable activities type transactions that offset or reduce and donated services by the non-Fed- expense items allocable to the Federal eral entity or third parties,will receive award as direct or indirect(F&A)costs. an appropriate allocation of indirect Examples of such transactions are:pur- costs. chase discounts, rebates or allowances, (c) Any cost allocable to a particular recoveries or indemnities on losses, in- Federal award under the principles pro- surance refunds or rebates, and adjust- vided for in this part may not be ments of overpayments or erroneous charged to other Federal awards to charges. To the extent that such cred- overcome fund deficiencies, to avoid re- its accruing to or received by the non- strictions imposed by Federal statutes, Federal entity relate to allowable regulations, or terms and conditions of costs, they must be credited to the the Federal awards, or for other rea- Federal award either as a cost reduc- sons. However, this prohibition would tion or cash refund,as appropriate. not preclude the non-Federal entity (b) In some instances, the amounts from shifting costs that are allowable received from the Federal Government under two or more Federal awards in to finance activities or service oper- accordance with existing Federal stat- ations of the non-Federal entity should utes,regulations, or the terms and con- be treated as applicable credits. Spe- ditions of the Federal awards. cifically, the concept of netting such (d) Direct cost allocation principles: credit items (including any amounts If a cost benefits two or more projects used to meet cost sharing or matching or activities in proportions that can be requirements) must be recognized in determined without undue effort or determining the rates or amounts to be cost, the cost must be allocated to the charged to the Federal award. (See projects based on the proportional ben- §§200.436 and 200.468, for areas of poten- efit. If a cost benefits two or more tial application in the matter of Fed- projects or activities in proportions eral financing of activities.) that cannot be determined because of [98 FR 78608, Dec. 26, 2013, as amended at 79 the interrelationship of the work in- FR 75885, Dec. 19, 2014; 85 FR 49562, Aug. 13, volved, then, notwithstanding para- 2020] graph (c) of this section, the costs may be allocated or transferred to bene- §200.407 Prior written approval (prior fitted projects on any reasonable docu- approval). mented basis. Where the purchase of Under any given Federal award, the equipment or other capital asset is spe- reasonableness and allocability of ter- cifically authorized under a Federal taro items of costs may be difficult to 143 §200.408 2 CFR Ch. II (1-1-22 Edition) determine. In order to avoid subse- (y)§200.475 Travel costs. quent disallowance or dispute based on unreasonableness or nonallocability, [78 FR 78608, Dec. 26, 2013, as amended at 79 the non-Federal entity may seek the FR 75885, Dec. 19, 2014; 85 FR 49562, Aug. 13, 2020] prior written approval of the cognizant agency for indirect costs or the Federal §200.408 Limitation on allowance of awarding agency in advance of the in- costs. currence of special or unusual costs. The Federal award may be subject to Prior written approval should include the timeframe or scope of the agree- statutory requirements that limit the ment. The absence of prior written ap- allowability of costs. When the max- proval on any element of cost will not, imum amount allowable under a limi- tation is less than the total amount de- allocability of that element, unless termined in accordance with the prin- prior approval is specifically required ciples in this part, the amount not re- for allowability as described under cer- coverable under the Federal award may tain circumstances in the following not be charged to the Federal award. sections of this part: (a) §200.201 Use of grant agreements §200.409 Special considerations. (including fixed amount awards), coop- In addition to the basic consider- erative agreements, and contracts, ations regarding the allowability of paragraph(b)(5); costs highlighted in this subtitle, other (b)§200.306 Cost sharing or matching; subtitles in this part describe special (c)§200.307 Program income; considerations and requirements appli- (d) §200.308 Revision of budget and cable to states, local governments, In- program plans; dian tribes, and IHEs. In addition, cer- (e)§200.311 Real property; tain provisions among the items of cost (f)§200.313 Equipment; in this subpart are only applicable to (g) §200.333 Fixed amount subawards; certain types of non-Federal entities, (h) §200.413 Direct costs, paragraph as specified in the following sections: (c); (a) Direct and Indirect (F&A) Costs (i) §200.430 Compensation-personal (§§200.412-200.415) of this subpart; services,paragraph(h); (j)§200.431 Compensation-fringe ben- (b) Governmentspecial eand Inns for States, efits; Local and Indian Tribes (k)§200.438 Entertainment costs; (§§200.416 and 200.417) of this subpart; (1) §200.439 Equipment and other cap- and ital expenditures; (c) Special Considerations for Insti- (m)§200.440 Exchange rates; tutions of Higher Education (§§200.418 (n) §200.441 Fines, penalties, damages and 200.419)of this subpart. and other settlements; [85 FR 49562,Aug.13,2020] (o) §200.442 Fund raising and invest- ment management costs; §200.410 Collection of unallowable (p) §200.445 Goods or services for per- costs. sonal use; Payments made for costs determined (q) §200.447 Insurance and indem- to be unallowable by either the Federal nification; awarding agency, cognizant agency for (r) §200.454 Memberships, subscrip- indirect costs, or pass-through entity, tions, and professional activity costs, either as direct or indirect costs, must paragraph(c); be refunded (including interest) to the (s)§200.455 Organization costs; Federal Government in accordance (t) §200.456 Participant support costs; with instructions from the Federal (u)§200.458 Pre-award costs; agency that determined the costs are (v) §200.462 Rearrangement and re- unallowable unless Federal statute or conversion costs; regulation directs otherwise. See also 200.467 Sellingand marketing) § §§200.300 through 200.309 in subpart D of costs; this part. (x) §200.470 Taxes (including Value Added Tax);and [85 FR 49562,Aug.13,2020] 144 OMB Guidance §200.413 §200.411 Adjustment of previously ne- DIRECT AND INDIRECT(F&A)COSTS gotiated indirect (F&A) cost rates containing unallowable costs. §200.412 Classification of costs. (a) Negotiated indirect (F&A) cost There is no universal rule for rates based on a proposal later found to classifying certain costs as either di- have included costs that: rect or indirect (F&A) under every ac- (1) Are unallowable as specified by counting system. A cost may be direct Federal statutes, regulations or the with respect to some specific service or to terms and conditions of a Federal the Federal butlindirect withe respect cost the Federal award or other final cost award;or objective. Therefore, it is essential (2) Are unallowable because they are that each item of cost incurred for the not allocable to the Federal award(s), same purpose be treated consistently must be adjusted, or a refund must be in like circumstances either as a direct made, in accordance with the require- or an indirect (F&A) cost in order to ments of this section. These adjust- avoid possible double-charging of Fed- ments or refunds are designed to cor- eral awards. Guidelines for determining rect the proposals used to establish the direct and indirect(F&A)costs charged rates and do not constitute a reopening to Federal awards are provided in this of the rate negotiation. The adjust- subpart. ments or refunds will be made regard- less of the type of rate negotiated (pre- §200.413 Direct costs. determined, final, fixed, or provi- (a) General. Direct costs are those sional). costs that can be identified specifically (b) For rates covering a future fiscal with a particular final cost objective, year of the non-Federal entity, the un- such as a Federal award, or other inter- allowable costs will be removed from nally or externally funded activity, or the indirect (F&A) cost pools and the that can be directly assigned to such rates appropriately adjusted. activities relatively easily with a high (c) For rates covering a past period, degree of accuracy. Costs incurred for the Federal share of the unallowable the same purpose in like circumstances costs will be computed for each year must be treated consistently as either involved and a cash refund (including direct or indirect(F&A) costs. See also interest chargeable in accordance with §200.405. applicable regulations) will be made to (b) Application to Federal awards. the Federal Government. If cash re- Identification with the Federal award funds are made for past periods covered rather than the nature of the goods and by provisional or fixed rates, appro services involved is the determining priate adjustments will be made when factor in distinguishing direct from in- the rates are finalized to avoid dupli- direct (F&A) costs of Federal awards. cate recovery of the unallowable costs Typical costs charged directly to a by the Federal Government. Federal award are the compensation of (d) For rates covering the current pe- employees who work on that award, riod, either a rate adjustment or a re- costsr ofre materialsated fringebenefit costs, the fund, as described in paragraphs(b)and costs of and other items of expense incurred for the Federal award. (c) of this section, must be required by If directly related to a specific award, the cognizant agency for indirect costs. certain costs that otherwise would be The choice of method must be at the treated as indirect costs may also be discretion of the cognizant agency for considered direct costs. Examples in- indirect costs, based on its judgment as clude extraordinary utility consump- to which method would be most prac- tion, the cost of materials supplied tical. from stock or services rendered by spe- (e)The amount or proportion of unal- cialized facilities, program evaluation lowable costs included in each year's costs, or other institutional service op- rate will be assumed to be the same as erations. the amount or proportion of unallow- (c)The salaries of administrative and able costs included in the base year clerical staff should normally be treat- proposal used to establish the rate. ed as indirect (F&A) costs. Direct 145 §200.414 2 CFR Ch. II (1-1-22 Edition) charging of these costs may be appro- (4) Conferences except those held to priate only if all of the following condi- conduct the general administration of tions are met: the non-Federal entity. See also (1) Administrative or clerical serv- §200.432. ices are integral to a project or activ- (5) Maintenance, protection, and in- ity; vestment of special funds not used in (2) Individuals involved can be spe- operation of the non-Federal entity. cifically identified with the project or See also§200.442. activity; (6) Administration of group benefits (3) Such costs are explicitly included on behalf of members or clients, in- in the budget or have the prior written eluding life and hospital insurance, an- approval of the Federal awarding agen nuity or retirement plans, and finan cy;and cial aid. See also§200.431. (4) The costs are not also recovered [78 FR 78608, Dec. 26, 2013, as amended at 79 as indirect costs. FR 75885, Dec. 19, 2014; 85 FR 49562, Aug. 13, (d) Minor items. Any direct cost of 2020] minor amount may be treated as an in- §200.414 Indirect(F&A) costs. direct (F&A) cost for reasons of practi- cality where such accounting treat- (a) Facilities and administration classi- ment for that item of cost is consist- fication. For major Institutions of ently applied to all Federal and non- Higher Education (IHE)and major non- Federal cost objectives. profit organizations, indirect (F&A) (e) The costs of certain activities are costs must be classified within twobroad categories: "Facilities" and not allowable as charges to Federal awards. However, even though these "Administration." "Facilities" is de fined as depreciation on buildings, costs are unallowable for purposes of equipment and capital improvement, computing charges to Federal awards, interest on debt associated with cer- 'j they nonetheless must be treated as di- tain buildings, equipment and capital rect costs for purposes of determining improvements, and operations and indirect (F&A) cost rates and be allo- maintenance expenses. "Administra- cated their equitable share of the non tion" is defined as general administra- Federal entity's indirect costs if they tion and general expenses such as the represent resent activities which: director's office, accounting, personnel (1)Include the salaries of personnel, and all other types of expenditures not (2)Occupy space,and listed specifically under one of the sub-' (3)Benefit from the non-Federal enti- categories of "Facilities" (including ty's indirect(F&A)costs. cross allocations from other pools, (f) For nonprofit organizations, the where applicable). For nonprofit orga- costs of activities performed by the nizations, library expenses are included non-Federal entity primarily as a serv- in the "Administration" category; for ice to members, clients, or the general IHEs, they are included in the "Facili- public when significant and necessary ties" category. Major IHEs are defined to the non-Federal entity's mission as those required to use the Standard must be treated as direct costs whether Format for Submission as noted in ap- or not allowable, and be allocated an pendix III to this part, and Rate Deter- equitable share of indirect(F&A)costs. mination for Institutions of Higher Some examples of these types of activi- Education paragraph C. 11. Major non- ties include: profit organizations are those which re- (1) Maintenance of membership rolls, ceive more than $10 million dollars in subscriptions, publications, and related direct Federal funding. functions. See also§200.454. (b)Diversity of nonprofit organizations. (2) Providing services and informa- Because of the diverse characteristics tion to members, legislative or admin- and accounting practices of nonprofit istrative bodies, or the public. See also organizations, it is not possible to §§200.454 and 200.450. specify the types of cost which may be (3) Promotion, lobbying, and other classified as indirect (F&A) cost in all forms of public relations. See also situations. Identification with a Fed- §§200.421 and 200.450. eral award rather than the nature of 146 OMB Guidance §200.414 the goods and services involved is the (1) Appendix III to Part 200—Indirect determining factor in distinguishing (F&A) Costs Identification and Assign- direct from indirect (F&A) costs of ment, and Rate Determination for In- Federal awards. However, typical ex- stitutions of Higher Education(IHEs); amples of indirect(F&A)cost for many (2) Appendix IV to Part 200—Indirect nonprofit organizations may include (F&A) Costs Identification and Assign- depreciation on buildings and equip- ment, and Rate Determination for Non- ment, the costs of operating and main- profit Organizations; taining facilities, and general adminis- (3) Appendix V to Part 200—State/ tration and general expenses, such as Local Governmentwide Central Service the salaries and expenses of executive Cost Allocation Plans; officers, personnel administration, and (4) Appendix VI to Part 200—Public accounting. Assistance Cost Allocation Plans; (c) Federal Agency Acceptance of Nego- (5) Appendix VII to Part 200—States tiated Indirect Cost Rates. (See also and Local Government and Indian §200.306.) Tribe Indirect Cost Proposals;and (1) The negotiated rates must be ac- (6) Appendix IX to Part 200—Hospital cepted by all Federal awarding agen- Cost Principles. cies. A Federal awarding agency may (f) In addition to the procedures out- use a rate different from the negotiated lined in the appendices in paragraph(e) rate for a class of Federal awards or a of this section, any non-Federal entity single Federal award only when re- that does not have a current nego- quired by Federal statute or regula- tiated (including provisional) rate, ex- tion, or when approved by a Federal cept for those non-Federal entities de- awarding agency head or delegate scribed in appendix VII to this part, based on documented justification as describedparagraph D.1.b, may elect to charge a in paragraph (c)(3) of this de minimis rate of 10% of modified section. total direct costs (MTDC) which may (2)The Federal awarding agency head be used indefinitely. No documentation or delegate must notify OMB of any ap- is required to justify the 10% de mini- proved deviations. mis indirect cost rate. As described in (3) The Federal awarding agency §200.403, costs must be consistently must implement, and make publicly charged as either indirect or direct available, the policies, procedures and costs, but may not be double charged general decision-making criteria that or inconsistently charged as both. If their programs will follow to seek and chosen, this methodology once elected justify deviations from negotiated must be used consistently for all Fed- rates. eral awards until such time as a non- (4) As required under §200.204, the Federal entity chooses to negotiate for Federal awarding agency must include a rate, which the non-Federal entity in the notice of funding opportunity may apply to do at any time. the policies relating to indirect cost (g)Any non-Federal entity that has a rate reimbursement, matching, or cost current federally-negotiated indirect share as approved under paragraph cost rate may apply for a one-time ex- (e)(1) of this section. As appropriate, tension of the rates in that agreement the Federal agency should incorporate for a period of up,to four years. This discussion of these policies into Fed- extension will be subject to the review eral awarding agency outreach activi- and approval of the cognizant agency ties with non-Federal entities prior to for indirect costs. If an extension is the posting of a notice of funding op- granted the non-Federal entity may portunity. not request a rate review until the ex- (d) Pass-through entities are subject tension period ends. At the end of the to the requirements in§200.332(a)(4). 4-year extension, the non-Federal enti- (e) Requirements for development ty must re-apply to negotiate a rate. and submission of indirect (F&A) cost Subsequent one-time extensions (up to rate proposals and cost allocation four years) are permitted if a renegoti- plans are contained in Appendices III- ation is completed between each exten- VII and Appendix IX as follows: sion request. 147 §200.415 2 CFR Ch. II (1-1-22 Edition) (h) The federally negotiated indirect the non-Federal entity that submits rate, distribution base, and rate type the proposal. for a non-Federal entity(except for the (2) Unless the non-Federal entity has Indian tribes or tribal organizations, as elected the option under§200.414(f), the defined in the Indian Self Determina- Federal Government may either dis- tion, Education and Assistance Act, 25 allow all indirect (F&A) costs or uni- U.S.C. 450b(1)) must be available pub- laterally establish such a plan or rate licly on an OMB-designated Federal when the non-Federal entity fails to website. submit a certified proposal for estab- [78 FR 78608, Dec. 26, 2013, as amended at 79 lishing such a plan or rate in accord- FR 75886, Dec. 19, 2014; 85 FR 49563, Aug. 13, ance with the requirements. Such a 2020] plan or rate may be based upon audited historical data or such other data that §200.415 Required certifications. have been furnished to the cognizant Required certifications include: agency for indirect costs and for which (a) To assure that expenditures are it can be demonstrated that all unal- proper and in accordance with the lowable costs have been excluded. terms and conditions of the Federal When a cost allocation plan or indirect award and approved project budgets, cost rate is unilaterally established by the annual and final fiscal reports or the Federal Government because the vouchers requesting payment under the non-Federal entity failed to submit a agreements must include a certifi- certified proposal, the plan or rate es- cation, signed by an official who is au- tablished will be set to ensure that po- thorized to legally bind the non-Fed- tentially unallowable costs will not be eral entity,which reads as follows: "By reimbursed. signing this report,I certify to the best (c) Certifications by nonprofit orga- of my knowledge and belief that the re- nizations as appropriate that they did port is true, complete, and accurate, not meet the definition of a major non- and the expenditures, disbursements profit organization as defined in and cash receipts are for the purposes §200.414(a). li and objectives set forth in the terms (d) See also §200.450 for another re- and conditions of the Federal award. I quired certification. am aware that any false, fictitious, or [78 FR 78608, Dec. 26, 2013, as amended at 79 fraudulent information, or the omis- FR 75886, Dec. 19, 2014; 85 FR 49563, Aug. 13, sion of any material fact, may subject 2020] me to criminal, civil or administrative penalties for fraud, false statements, SPECIAL CONSIDERATIONS FOR STATES, false claims or otherwise. (U.S. Code LOCAL GOVERNMENTS AND INDIAN Title 18, Section 1001 and Title 31, Sec- TRIBES tions 3729-3730 and 3801-3812)." (b) Certification of cost allocation §200.416 Cost allocation plans and in- plan or indirect (F&A) cost rate pro- direct cost proposals. posal. Each cost allocation plan or in- (a) For states, local governments and direct (F&A) cost rate proposal must Indian tribes, certain services, such as comply with the following: motor pools, computer centers, pur- (1)A proposal to establish a cost allo- chasing, accounting, etc., are provided cation plan or an indirect (F&A) cost to operating agencies on a centralized rate, whether submitted to a Federal basis. Since Federal awards are per- cognizant agency for indirect costs or formed within the individual operating maintained on file by the non-Federal agencies, there needs. to be a process entity, must be certified by the non- whereby these central service costs can Federal entity using the Certificate of be identified and assigned to benefitted Cost Allocation Plan or Certificate of activities on a reasonable and con- Indirect Costs as set forth in appen- sistent basis. The central service cost dices III through VII, and IX of this allocation plan provides that process. part. The certificate must be signed on (b) Individual operating agencies behalf of the non-Federal entity by an (governmental department or agency), individual at a level no lower than vice normally charge Federal awards for in- president or chief financial officer of direct costs through an indirect cost 148 OMB Guidance §200.419 rate. A separate indirect cost rate(s) cordance with applicable Federal cost proposal for each operating agency is accounting principles in this part; and usually necessary to claim indirect (c) The costs are not otherwise borne costs under Federal awards. Indirect directly or indirectly by the Federal costs include: Government. (1) The indirect costs originating in [78 FR 78608, Dec. 26, 2013, as amended at 85 each department or agency of the gov- FR 49564,Aug.13,2020] ernmental unit carrying out Federal awards and §200.419 Cost accounting standards (2) The costs of central governmental and disclosure statement. services distributed through the cen- (a)An IHE that receive an aggregate tral service cost allocation plan and (a)An IHE that receive an agg total $50 million or more in egate Federal not otherwise treated as direct costs. awards and instruments subject to this (c)The requirements for development subpart (as specified in §200.101) in its and submission of cost allocation plans (for central service costs and public as most recently completed fiscal year sistance programs) and indirect cost must comply with the Cost Accounting Standards Board's cost accounting rate proposals are contained in appen- standards located at 48 CFR 9905.501, dices V,VI and VII to this part. 9905.502, 9905.505, and 9905.506. CAS-cov- [78 FR 78608, Dec. 26, 2013, as amended at 86 ered contracts and subcontracts award- FR 10440,Feb.22,2021] ed to the IHEs are subject to the broad- er range of CAS requirements at 48 §200.417 Interagency service. CFR 9900 through 9999 and 48 CFR part The cost of services provided by one 30(FAR Part 30). agency to another within the govern- (b) Disclosure statement. An IHE that mental unit may include allowable di- receives an aggregate total $50 million rect costs of the service plus a pro- or more in Federal awards and instru- rated share of indirect costs. A stand- ments subject to this subpart(as speci- ard indirect cost allowance equal to fied in §200.101) during its most re- ten percent of the direct salary and cently completed fiscal year must dis- wage cost of providing the service (ex- close their cost accounting practices eluding overtime, shift premiums, and by filing a Disclosure Statement (DS- fringe benefits) may be used in lieu of 2), which is reproduced in Appendix III determining the actual indirect costs to Part 200. With the approval of the of the service. These services do not in- cognizant agency for indirect costs, an elude centralized services included in IHE may meet the DS-2 submission by central service cost allocation plans as submitting the DS-2 for each business described in Appendix V to Part 200. unit that received $50 million or more [85 FR 49564,Aug.13,2020] in Federal awards and instruments. • (1) The DS-2 must be submitted to SPECIAL CONSIDERATIONS FOR the cognizant agency for indirect costs INSTITUTIONS OF HIGHER EDUCATION with a copy to the IHE's cognizant agency for audit. The initial DS-2 and §200.418 Costs incurred by states and revisions to the DS-2 must be sub- local governments. mitted in coordination with the IHE's Costs incurred or paid by a state or indirect (F&A) rate proposal, unless an local government on behalf of its IHEs earlier submission is requested by the for fringe benefit programs, such as cognizant agency for indirect costs. pension costs and FICA and any other IHEs with CAS-covered contracts or costs specifically incurred on behalf of, subcontracts meeting the dollar and in direct benefit to, the IHEs, are threshold in 48 CFR 9903.202-1(f) must allowable costs of such IHEs whether submit their initial DS-2 or revisions or not these costs are recorded in the no later than prior to the award of a accounting records of the institutions, CAS-covered contract or subcontract. subject to the following: (2) An IHE must maintain an accu- (a) The costs meet the requirements rate DS-2 and comply with disclosed of§200.402-411 of this subpart; cost accounting practices. An IHE (b) The costs are properly supported must file amendments to the DS-2 to by approved cost allocation plans in ac- the cognizant agency for indirect costs 149 §200.420 2 CFR Ch. II (1-1-22 Edition) in advance of a disclosed practice being the change has a material effect on changed to comply with a new or modi- Federal awards and the changes are fied standard, or when a practice is deemed appropriate by the cognizant changed for other reasons.An IHE may agency for indirect costs. proceed with implementing the change (6) Responsibilities. The cognizant after it has notified the Federal cog- agency for indirect cost must: nizant agency for indirect costs. If the (i) Determine cost adjustments for change represents a variation from 2 all Federal awards in the aggregate on CFR part 200, the change may require behalf of the Federal Government. Ac- approval by the Federal cognizant tions of the cognizant agency for indi- agency for indirect costs,in accordance rect cost in making cost adjustment Ili with §200.102(b). Amendments of a DS- determinations must be coordinated 2 may be submitted at any time. Re- with all affected Federal awarding submission of a complete, updated DS- agencies to the extent necessary. 2 is discouraged except when there are (ii) Prescribe guidelines and establish extensive changes to disclosed prac- internal procedures to promptly deter- tices. mine on behalf of the Federal Govern- (3) Cost and funding adjustments. Cost ment that a DS-2 adequately discloses adjustments must be made by the cog- the IHE's cost accounting practices nizant agency for indirect costs if an and that the disclosed practices are IHE fails to comply with the cost poli- compliant with applicable CAS and the cies in this part or fails to consistently requirements of this part. follow its established or disclosed cost (iii) Distribute to all affected Federal accounting practices when estimating, awarding agencies any DS-2 determina- accumulating or reporting the costs of tion of adequacy or noncompliance. Federal awards, and the aggregate cost impact on Federal awards is material. [78 FR 78608, Dec. 26, 2013, as amended at 79 The cost adjustment must normally be FR 0]75886, Dec. 19, 2014; 85 FR 49564, Aug. 13, made on an aggregate basis for all af- fected Federal awards through an ad- GENERAL PROVISIONS FOR SELECTED justment of the IHE's future F&A costs ITEMS OF COST rates or other means considered appro- priate by the cognizant agency for indi- §200.420 Considerations for selected rect costs.Under the terms of CAS cov- items of cost. ered contracts, adjustments in the amount of funding provided may also This section provides principles to be be required when the estimated pro applied in establishing the allowability of certain items involved in deter- posal costs were not determined in ac- with established cost ac- mining cost, in addition to the require- cordancepractices. ments of Subtitle II of this subpart. counting Ii Oerpayments. Excess amounts These principles apply whether or not a (4) paid in the aggregate by the Federal particular item of cost is properly Government under Federal awards due treated as direct cost or indirect(F&A) to a noncompliant cost accounting cost. Failure to mention a particular itempractice used to estimate, accumulate, that it is cost is not intended allowable or unallow- or to imply costs must be credited or re- either report able; rather,determination as to allow- funded, as deemed appropriate by the ability in each case should be based on cognizant agency for indirect costs. In- the treatment provided for similar or terest applicable to the excess amounts paid in the aggregate during the period related items of cost, and based on the of noncompliance must also be deter- principles described in §§200.402 mined and collected in accordance with through 200.411. In case of a discrep- mined Federal agency regulations. ancy between the provisions of a spe- (5) Compliant cost accounting practice cific Federal award and the provisions changes. Changes from one compliant below, the Federal award governs. Cri- teriacost accounting practice to another plid outlined in §200.403 must be ap compliant practice that are approved plied in determining allowability. See by the cognizant agency for indirect also§200.102. costs may require cost adjustments if [85 FR 49564,Aug.13,2020] 150 OMB Guidance §200.425 §200.421 Advertising and public rela- (1) All advertising and public rela- tions. tions costs other than as specified in (a) The term advertising costs means paragraphs(b) and(d)of this section; the costs of advertising media and cor- (2) Costs of meetings, conventions, ollary administrative costs. Adver- convocations, or other events related tising media include magazines, news to other activities of the entity (see papers, radio and television, direct also§200.432), including: mail, exhibits, electronic or computer (i) Costs of displays, demonstrations, transmittals,and the like. and exhibits; (b) The only allowable advertising (ii) Costs of meeting rooms, hospi- costs are those which are solely for: tality suites, and other special facili- (1) The recruitment of personnel re- quired by the non-Federal entity for and other special events;and performance of a Federal award (See (iii) Salaries and wages of employees also§200.463); engaged in setting up and displaying (2) The procurement of goods and exhibits, making demonstrations, and services for the performance of a Fed- providing briefings; eral award; (3) Costs of promotional items and (3) The disposal of scrap or surplus memorabilia, including models, gifts, materials acquired in the performance and souvenirs; of a Federal award except when non- (4) Costs of advertising and public re- Federal entities are reimbursed for dis- lations designed solely to promote the posal costs at a predetermined amount; non-Federal entity. or [78 FR 76808, Dec. 26, 2013, as amended at 85 (4) Program outreach and other spe- FR 49564,Aug.13,2020] cific purposes necessary to meet the re- quirements of the Federal award. §200.422 Advisory councils. (c) The term "public relations" in- Costs incurred by advisory councils cludes community relations and means or committees are unallowable unless those activities dedicated to maintain- authorized by statute, the Federal ing the image of the non-Federal entity awarding agency or as an indirect cost or maintaining or promoting under- where allocable to Federal awards. See standing and favorable relations with §200.444,applicable to States,local gov- the community or public at large or ernments,and Indian tribes. any segment of the public. (d) The only allowable public rela- [85 FR 49564,Aug.13,2020] tions costs are: §200.423 Alcoholic beverages. (1) Costs specifically required by the Federal award; Costs of alcoholic beverages are unal- (2) Costs of communicating with the lowable. public and press pertaining to specific §200.424 Alumni/ae activities. activities or accomplishments which result from performance of the Federal Costs incurred by IHEs for, or in sup- award (these costs are considered nec- port of, alumni/ae activities are unal- essary as part of the outreach effort for lowable. the Federal award); or (3) Costs of conducting general liai- §200.425 Audit services. son with news media and government (a) A reasonably proportionate share public relations officers, to the extent of the costs of audits required by, and that such activities are limited to com- performed in accordance with, the Sin- munication and liaison necessary to gle Audit Act Amendments of 1996 (31 keep the public informed on matters of U.S.C. 7501-7507), as implemented by re- public concern, such as notices of fund- quirements of this part, are allowable. ing opportunities, financial matters, However, the following audit costs are etc. unallowable: (e) Unallowable advertising and pub- (1)Any costs when audits required by lic relations costs include the fol- the Single Audit Act and subpart F of lowing: this part have not been conducted or 151 §200.426 2 CFR Ch. II (1-1-22 Edition) have been conducted but not in accord- eral entity requires similar assurance, ance therewith;and including: bonds as bid, performance, (2) Any costs of auditing a non-Fed- payment, advance payment, infringe- eral entity that is exempted from hav- ment, and fidelity bonds for employees ing an audit conducted under the Sin- and officials. gle Audit Act and subpart F of this (b) Costs of bonding required pursu- part because its expenditures under ant to the terms and conditions of the Federal awards are less than $750,000 Federal award are allowable. during the non-Federal entity's fiscal (c) Costs of bonding required by the year. non-Federal entity in the general con- (b)The costs of a financial statement duct of its operations are allowable as audit of a non-Federal entity that does an indirect cost to the extent that such not currently have a Federal award bonding is in accordance with sound may be included in the indirect cost business practice and the rates and pre- pool for a cost allocation plan or indi- miums are reasonable under the cir- rect cost proposal. cumstances. (c) Pass-through entities may charge Federal awards for the cost of agreed- §200.428 Collections of improper pay- upon-procedures engagements to mon- ments. itor subrecipients (in accordance with The costs incurred by a non-Federal subpart D, §§200.331-333) who are ex- entity to recover improper payments empted from the requirements of the are allowable as either direct or indi- Single Audit Act and subpart F of this rect costs, as appropriate. Amounts part. This cost is allowable only if the collected may be used by the non-Fed- agreed-upon-procedures engagements eral entity in accordance with cash are: management standards set forth in (1) Conducted in accordance with §200.305. GAGAS attestation standards; (2)Paid for and arranged by the pass- [85 FR 49565,Aug.13,2020] through entity;and §200.429 Commencement and convoca- (3)Limited in scope to one or more of tion costs. the following types of compliance re- quirements: activities allowed or For IHEs, costs incurred for tom- unallowed; allowable costs/cost prin- mencements and convocations are un ciples; eligibility;and reporting. allowable, except as provided for in (B)(9) Student Administration and [78 FR 78608, Dec. 26, 2013, as amended at 85 Services, in appendix III to this part, FR 49564,Aug.13,2020] as activity costs. §200.426 Bad debts. [85 FR 49565,Aug.13,2020] Bad debts (debts which have been de- §200.430 Compensation—personal termined to be uncollectable), includ- services. ing losses (whether actual or esti- mated) arising from uncollectable ac- (a) General. Compensation for remunera- countsper- and other claims, are unallow- able. services includes all able. Related collection costs, and re- tion, paid currently or accrued, for lated legal costs, arising from such services of employees rendered during debts after they have been determined the period of performance under the Federal award, including but not nec- to be uncollectable are also unallow- essarily limited to wages and salaries. able. See also§200.428. Compensation for personal services [85 FR 49565,Aug.13,2020] may also include fringe benefits which §200.427 Bonding costs. are addressed in §200.431. Costs of corn- pensation are allowable to the extent (a)Bonding costs arise when the Fed- that they satisfy the specific require- eral awarding agency requires assur- ments of this part, and that the total ance against financial loss to itself or compensation for individual employ- others by reason of the act or default ees: of the non-Federal entity. They arise (1) Is reasonable for the services ren- also in instances where the non-Fed- dered and conforms to the established 152 OMB Guidance §200.430 written policy of the non-Federal enti- that they constitute personnel corn- ty consistently applied to both Federal pensation. and non-Federal activities; (2) The allowable compensation for (2) Follows an appointment made in certain employees is subject to a ceil- accordance with a non-Federal entity's ing in accordance with statute. For the laws and/or rules or written policies amount of the ceiling for cost-reim- and meets the requirements of Federal bursement contracts, the covered corn- statute,where applicable;and pensation subject to the ceiling, the (3) Is determined and supported as covered employees, and other relevant provided in paragraph (i) of this sec- provisions, see 10 U.S.C. 2324(e)(1)(P), tion,when applicable. and 41 U.S.C. 1127 and 4304(a)(16). For (b) Reasonableness. Compensation for other types of Federal awards, other employees engaged in work on Federal statutory ceilings may apply. awards will be considered reasonable to (e) Special considerations. Special con- the extent that it is consistent with siderations in determining allowability that paid for similar work in other ac- of compensation will be given to any tivities of the non-Federal entity. In change in a non-Federal entity's com- cases where the kinds of employees re- pensation policy resulting in a substan- quired for Federal awards are not found pensation policy its ml s evel of f in the other activities of the non-Fed- co increase in employees' level e eral entity, compensation will be con- compensation (particularlyn when the sidered reasonable to the extent that it change was concurrent with an ito is comparable to that paid for similar creasether in the ratio of any Federal changeaw in to work in the labor market in which the other activities) or in the non-Federal entity competes for the treatment of allowability of specific kind of employees involved. types of compensation due to changes (c) Professional activities outside the in Federal policy. non-Federal entity. Unless an arrange- ( Incentive compensation. Incentive ment is specifically authorized by a compensation to employees based on Federal awarding agency, a non-Fed- cost reduction, or efficient perform- eral entity must follow its written non- ance,suggestion awards, safety awards, Federal entity wide policies and prat- etc., is allowable to the extent that the tices concerning the permissible extent overall compensation is determined to of professional services that can be pro- be reasonable and such costs are paid vided outside the non-Federal entity or accrued pursuant to an agreement for non-organizational compensation. entered into in good faith between the Where such non-Federal entity wide non-Federal entity and the employees written policies do not exist or do not before the services were rendered, or adequately define the permissible ex- pursuant to an established plan fol- tent of consulting or other non-organi- lowed by the non-Federal entity so zational activities undertaken for consistently as to imply, in effect, an extra outside pay, the Federal Govern- agreement to make such payment. ment may require that the effort of (g) Nonprofit organizations. For com- professional staff working on Federal pensation to members of nonprofit or- awards be allocated between: ganizations, trustees, directors, associ- (1) Non-Federal entity activities, and ates, officers, or the immediate fami- (2) Non-organizational professional lies thereof, determination must be activities. If the Federal awarding made that such compensation is rea- agency considers the extent of non-or- sonable for the actual personal services ganizational professional effort exces- rendered rather than a distribution of sive or inconsistent with the conflicts- earnings in excess of costs. This may of-interest terms and conditions of the include director's and executive corn- Federal award, appropriate arrange- mittee member's fees, incentive ments governing compensation will be awards, allowances for off-site pay, in- negotiated on a case-by-case basis. centive pay, location allowances, hard- (d) Unallowable costs. (1) Costs which ship pay, and cost-of-living differen- are unallowable under other sections of tials. these principles must not be allowable (h) Institutions of Higher Education under this section solely on the basis (IHEs). (1) Certain conditions require 153 §200.430 2 CFR Ch. II (1-1-22 Edition) special consideration and possible limi- (3) Intra-Institution of Higher Edu- tations in determining allowable per- cation (IHE) consulting. Intra-IHE con- sonnel compensation costs under Fed- sulting by faculty should be under- eral awards. Among such conditions taken as an IHE responsibility requir- are the following: ing no compensation in addition to (i) Allowable activities. Charges to IBS. However, in unusual cases where Federal awards may include reasonable consultation is across departmental amounts for activities contributing lines or involves a separate or remote and directly related to work under an operation, and the work performed by agreement, such as delivering special the faculty member is in addition to lectures about specific aspects of the his or her regular responsibilities, any ongoing activity, writing reports and charges for such work representing ad- articles, developing and maintaining ditional compensation above IBS are protocols (human, animals, etc.), man- allowable provided that such con- aging substances/chemicals, managing sulting arrangements are specifically II and securing project-specific data, co- provided for in the Federal award or ordinating research subjects, partici- approved in writing by the Federal pating in appropriate seminars, con- awarding agency. sulting with colleagues and graduate (4) Extra Service Pay normally rep- students, and attending meetings and resents overload compensation, subject conferences. to institutional compensation policies (ii) Incidental activities. Incidental for services above and beyond IBS. activities for which supplemental com- Where extra service pay is a result of pensation is allowable under written Intra-IHE consulting, it is subject to institutional policy (at a rate not to the same requirements of paragraph(b) exceed institutional base salary) need above. It is allowable if all of the fol- not be included in the records described lowing conditions are met: in paragraph (i) of this section to di- (i) The non-Federal entity estab- rectly charge payments of incidental lishes consistent written policies which activities, such activities must either apply uniformly to all faculty mem- be specifically provided for in the Fed- bers,not just those working on Federal eral award budget or receive prior writ- awards. ten approval by the Federal awarding (ii) The non-Federal entity estab- agency. lishes a consistent written definition of (2) Salary basis. Charges for work per- work covered by IBS which is specific formed on Federal awards by faculty enough to determine conclusively when members during the academic year are work beyond that level has occurred. allowable at the IBS rate. Except as This may be described in appointment noted in paragraph (h)(1)(ii) of this sec- letters or other documentations. tion, in no event will charges to Fed- (iii) The supplementation amount eral awards, irrespective of the basis of paid is commensurate with the IBS computation, exceed the proportionate rate of pay and the amount of addi- share of the IBS for that period. This tional work performed. See paragraph principle applies to all members of fac- (h)(2)of this section. ulty at an institution. IBS is defined as (iv) The salaries, as supplemented, the annual compensation paid by an fall within the salary structure and IHE for an individual's appointment, pay ranges established by and docu- whether that individual's time is spent mented in writing or otherwise applica- on research, instruction, administra- ble to the non-Federal entity. tion, or other activities. IBS excludes (v)The total salaries charged to Fed- any income that an individual earns eral awards including extra service pay outside of duties performed for the are subject to the Standards of Docu- IHE. Unless there is prior approval by mentation as described in paragraph (i) the Federal awarding agency, charges of this section. of a faculty member's salary to a Fed- (5) Periods outside the academic year. eral award must not exceed the propor- (i) Except as specified for teaching ac- tionate share of the IBS for the period tivity in paragraph(h)(5)(ii) of this sec- during which the faculty member tion, charges for work performed by worked on the award. faculty members on Federal awards 154 OMB Guidance §200.430 during periods not included in the base pensated by the non-Federal entity, salary period will be at a rate not in not exceeding 100% of compensated ac- excess of the IBS. tivities(for IHE, this per the IHE's def- (ii) Charges for teaching activities inition of IBS); performed by faculty members on Fed- (iv) Encompass federally-assisted and eral awards during periods not included all other activities compensated by the in IBS period will be based on the nor- non-Federal entity on an integrated mal written policy of the IHE gov- basis, but may include the use of sub- erning compensation to faculty mem- sidiary records as defined in the non- bers for teaching assignments during Federal entity's written policy; such periods. (v) Comply with the established ac- (6)Part-time faculty. Charges for work counting policies and practices of the performed on Federal awards by fac- non-Federal entity (See paragraph ulty members having only part-time (h)(1)(ii) above for treatment of inci- appointments will be determined at a dental work for IHEs.);and rate not in excess of that regularly (vi) [Reserved] paid for part-time assignments. (vii) Support the distribution of the (7) Sabbatical leave costs. Rules for employee's salary or wages among spe- sabbatical leave are as follow: cific activities or cost objectives if the (i) Costs of leaves of absence by em- employee works on more than one Fed- ployees for performance of graduate eral award; a Federal award and non- work or sabbatical study, travel, or re- Federal award; an indirect cost activ- search are allowable provided the IHE ity and a direct cost activity;two or has a uniform written policy on sab- more indirect activities which are allo- batical leave for persons engaged in in- cated using different allocation bases; struction and persons engaged in re- or an unallowable activity and a direct search. Such costs will be allocated on or indirect cost activity. an equitable basis among all related (viii) Budget estimates (i.e., esti- activities of the IHE. mates determined before the services (ii) Where sabbatical leave is in- are performed) alone do not qualify as eluded in fringe benefits for which a support for charges to Federal awards, cost is determined for assessment as a but may be used for interim accounting direct charge, the aggregate amount of purposes,provided that: such assessments applicable to all (A) The system for establishing the work of the institution during the base estimates produces reasonable approxi- period must be reasonable in relation mations of the activity actually per- to the IHE's actual experience under formed; its sabbatical leave policy. (B) Significant changes in the cor- (8) Salary rates for non-faculty mem- responding work activity(as defined by bers. Non-faculty full-time professional the non-Federal entity's written poli- personnel may also earn "extra service cies)are identified and entered into the pay" in accordance with the non-Fed- records in a timely manner. Short term eral entity's written policy and con- (such as one or two months) fluctua- sistent with paragraph (h)(1)(i) of this tion between workload categories need section. not be considered as long as the dis- (i)Standards for Documentation of Per- tribution of salaries and wages is rea- sonnel Expenses (1) Charges to Federal sonable over the longer term; and awards for salaries and wages must be (C) The non-Federal entity's system based on records that accurately re- of internal controls includes processes fleet the work performed. These to review after-the-fact interim records must: charges made to a Federal award based (i)Be supported by a system of inter- on budget estimates. All necessary ad- nal control which provides reasonable justment must be made such that the assurance that the charges are accu- final amount charged to the Federal rate, allowable, and properly allocated; award is accurate, allowable, and prop- (ii) Be incorporated into the official erly allocated. records of the non-Federal entity; (ix) Because practices vary as to the (iii) Reasonably reflect the total ac- activity constituting a full workload tivity for which the employee is corn- (for IHEs, IBS), records may reflect 155 §200.430 2 CFR Ch. II (1-1-22 Edition) categories of activities expressed as a vided in paragraph (i)(5)(iii) of this sec- percentage distribution of total activi- tion; ties. (B) The entire time period involved (x) It is recognized that teaching, re- must be covered by the sample; and search,service, and administration are (C) The results must be statistically often inextricably intermingled in an valid and applied to the period being academic setting. When recording sala- sampled. ries and wages charged to Federal (ii) Allocating charges for the sam- awards for IHEs, a precise assessment pled employees' supervisors, clerical of factors that contribute to costs is and support staffs,based on the results therefore not always feasible, nor is it of the sampled employees, will be ac- expected. (2)For records which meet the stand- ceptable• ards required in paragraph (i)(1) of this (iii) Less than full compliance with section, the non-Federal entity will not the statistical sampling standards be required to provide additional sup- noted in subsection (5)(i) may be ac- port or documentation for the work cepted by the cognizant agency for in- performed, other than that referenced direct costs if it concludes that the in paragraph(i)(3) of this section. amounts to be allocated to Federal (3) In accordance with Department of awards will be minimal, or if it con- Labor regulations implementing the eludes that the system proposed by the Fair Labor Standards Act (FLSA) (29 non-Federal entity will result in lower CFR part 516), charges for the salaries costs to Federal awards than a system and wages of nonexempt employees, in which complies with the standards. addition to the supporting documenta- (6) Cognizant agencies for indirect tion described in this section, must costs are encouraged to approve alter- also be supported by records indicating native proposals based on outcomes the total number of hours worked each and milestones for program perform- day. ance where these are clearly docu- (4) Salaries and wages of employees mented.Where approved by the Federal used in meeting cost sharing or match- cognizant agency for indirect costs, ing requirements on Federal awards these plans are acceptable as an alter- must be supported in the same manner native to the requirements of para- Ij as salaries and wages claimed for reim- bursement from Federal awards. graph(i)(1)of this section. (5) For states, local governments and (7) For Federal awards of similar pur- Indian tribes, substitute processes or pose activity or instances of approved systems for allocating salaries and blended funding, a non-Federal entity wages to Federal awards may be used may submit performance plans that in- in place of or in addition to the records corporate funds from multiple Federal described in paragraph (1) if approved awards and account for their combined by the cognizant agency for indirect use based on performance-oriented cost. Such systems may include, but metrics, provided that such plans are are not limited to, random moment approved in advance by all involved sampling, "rolling" time studies, case Federal awarding agencies. In these in- counts, or other quantifiable measures stances, the non-Federal entity must of work performed. submit a request for waiver of the re- (i) Substitute systems which use sampling methods (primarily for Tern- that e describesri bathe e documentation charging that the method of charging porary Assistance for Needy Families costs, relates the charging of costs to (TANF), the Supplemental Nutrition the specific activity that is applicable Assistance Program (SNAP), Medicaid, to all fund sources, and is based on and other public assistance programs) quantifiable measures of the activity must meet acceptable statistical sam- in relation to time charged. pling standards including: (A) The sampling universe must in- (8) For a non-Federal entity where elude all of the employees whose sala- the records do not meet the standards ries and wages are to be allocated described in this section, the Federal based on sample results except as pro- 156 OMB Guidance §200.431 Government may require personnel ac- accounting, allowable leave costs are tivity reports,including prescribed cer- the lesser of the amount accrued or tifications, or equivalent documenta- funded. tion that support the records as re- (c) Fringe benefits. The cost of fringe quired in this section. benefits in the form of employer con- [78 FR 78608, Dec. 26, 2013, as amended at 79 tributions or expenses for social secu- FR 75886, Dec. 19, 2014; 85 FR 49565, Aug. 13, rity; employee life, health, unemploy- 2020] ment, and worker's compensation in- surance (except as indicated in §200.431 Compensation—fringe bene- fits. §200.447); pension plan costs (see para- graph (i) of this section); and other (a)General. Fringe benefits are allow- similar benefits are allowable, provided ances and services provided by employ- such benefits are granted under estab- ers to their employees as compensation lished written policies. Such benefits, in addition to regular salaries and must be allocated to Federal awards wages. Fringe benefits include, but are and all other activities in a manner not limited to, the costs of leave (vaca- consistent with the pattern of benefits tion, family-related, sick or military), attributable to the individuals or employee insurance, pensions, and un- group(s) of employees whose salaries employment benefit plans. Except as and wages are chargeable to such Fed- provided elsewhere in these principles, eral awards and other activities, and the costs of fringe benefits are allow- charged as direct or indirect costs in able provided that the benefits are rea- accordance with the non-Federal enti- sonable and are required by law, non- ty's accounting practices. Federal entity-employee agreement, or (d) Cost objectives. Fringe benefits an established policy of the non-Fed- may be assigned to cost objectives by eral entity. identifying specific benefits to specific (b) Leave. The cost of fringe benefits individual employees or by allocating in the form of regular compensation paid to employees during periods of au- the basis ofentity-widethe salaries and wages of the employees receiving t thorized absences from the job, such as benefits. When the allocation method for annual leave, family-related leave, is used, separate allocations must be sick leave, holidays, court leave, mili- made to selective groupings of employ- tary leave, administrative leave, and ees, unless the non-Federal entity dem- other similar benefits, are allowable if onstrates that costs in relationship to all of the following criteria are met: salaries and wages do not differ signifi- (1) They are provided under estab cantly for different employ- lished written leave policies; groups of (2) The costs are equitably allocated ees. to all related activities, including Fed- (e) Insurance. See also §200.447(d)(1) eral awards;and, and(2). (3) The accounting basis (cash or ac- (1) Provisions for a reserve under a crual) selected for costing each type of self-insurance program for unemploy- leave is consistently followed by the ment compensation or workers' com- non-Federal entity or specified group- pensation are allowable to the extent ing of employees. that the provisions represent reason- (i) When a non-Federal entity uses able estimates of the liabilities for the cash basis of accounting, the cost such compensation, and the types of of leave is recognized in the period that coverage, extent of coverage, and rates the leave is taken and paid for. Pay- and premiums would have been allow- ments for unused leave when an em- able had insurance been purchased to ployee retires or terminates employ- cover the risks. However, provisions for ment are allowable in the year of pay- self-insured liabilities which do not be- ment. come payable for more than one year (ii) The accrual basis may be only after the provision is made must not used for those types of leave for which exceed the present value of the liabil- a liability as defined by GAAP exists ity. when the leave is earned. When a non- (2) Costs of insurance on the lives of Federal entity uses the accrual basis of trustees, officers, or other employees 157 §200.431 2 CFR Ch. II (1-1-22 Edition) holding positions of similar responsi- ciencies and other penalties imposed bility are allowable only to the extent under ERISA are unallowable. that the insurance represents addi- (6) Pension plan costs may be corn- tional compensation. The costs of such puted using a pay-as-you-go method or insurance when the non-Federal entity an acceptable actuarial cost method in is named as beneficiary are unallow- accordance with established written able. policies of the non-Federal entity. (3) Actual claims paid to or on behalf (i) For pension plans financed on a of employees or former employees for pay-as-you-go method, allowable costs workers' compensation, unemployment will be limited to those representing compensation, severance pay, and simi- actual payments to retirees or their lar employee benefits (e.g., post-retire- beneficiaries. ment health benefits), are allowable in (ii) Pension costs calculated using an the year of payment provided that the actuarial cost-based method recognized non-Federal entity follows a consistent by GAAP are allowable for a given fis- costing policy. cal year if they are funded for that (f) Automobiles. That portion of auto- year within six months after the end of mobile costs furnished by the non-Fed- that year. Costs funded after the six- eral entity that relates to personal use month period (or a later period agreed by employees(including transportation to by the cognizant agency for indirect to and from work) is unallowable as costs)are allowable in the year funded. fringe benefit or indirect (F&A) costs The cognizant agency for indirect costs regardless of whether the cost is re- may agree to an extension of the six- regardless period if an appropriate adjust- ported as taxable income to the em- ment is made to compensate for the { ployees. timing of the charges to the Federal (g) Pension plan costs. Pension plan Government and related Federal reim- costs which are incurred in accordance bursement and the non Federal enti- with the established policies of the ty's contribution to the pension fund. non-Federal entity are allowable, pro- Adjustments may be made by cash re- vided that: fund or other equitable procedures to (1) Such policies meet the test of rea- compensate the Federal Government sonableness. for the time value of Federal reim- (2)The methods of cost allocation are bursements in excess of contributions not discriminatory. to the pension fund. (3) Except for State and Local Gov- (iii) Amounts funded by the non-Fed- ernments, the cost assigned to each fis- eral entity in excess of the actuarially cal year should be determined in ac- determined amount for a fiscal year cordance with GAAP. may be used as the non-Federal enti- (4) The costs assigned to a given fis- ty's contribution in future periods. cal year are funded for all plan partici- (iv) When a non-Federal entity con- pants within six months after the end verts to an acceptable actuarial cost of that year.However,increases to nor- method, as defined by GAAP, and funds mal and past service pension costs pension costs in accordance with this caused by a delay in funding the actu- method, the unfunded liability at the axial liability beyond 30 calendar days time of conversion is allowable if am- after each quarter of the year to which ortized over a period of years in accord- such costs are assignable are unallow- ance with GAAP. able. Non-Federal entity may elect to (v)The Federal Government must re- follow the "Cost Accounting Standard ceive an equitable share of any pre- for Composition and Measurement of viously allowed pension costs (includ- Pension Costs" (48 CFR 9904.412). ing earnings thereon) which revert or (5) Pension plan termination insur- inure to the non-Federal entity in the ance premiums paid pursuant to the form of a refund, withdrawal, or other Employee Retirement Income Security credit. Act(ERISA)of 1974 (29 U.S.C. 1301-1461) (h) Post-retirement health. Post-retire- are allowable. Late payment charges ment health plans (PRHP) refers to on such premiums are unallowable. Ex- costs of health insurance or health cise taxes on accumulated funding defi- services not included in a pension plan 158 OMB Guidance §200.431 covered by paragraph(g)of this section pose of providing post-retirement bene- for retirees and their spouses, depend- fits to retirees and other beneficiaries. ents, and survivors. PRHP costs may (6)The Federal Government must re- be computed using a pay-as-you-go ceive an equitable share of any method or an acceptable actuarial cost amounts of previously allowed post-re- method in accordance with established tirement benefit costs (including earn- written policies of the non-Federal en- ings thereon) which revert or inure to tity. the non-Federal entity in theredit of a (1) For PRHP financed on a pay-as- refund,withdrawal,or other credit. you-go method, allowable costs will be (i) Severance pay. (1) Severance pay, limited to those representing actual also commonly referred to as dismissal payments to retirees or their bene- wages, is a payment in addition to reg- ficiaries. ular salaries and wages, by non-Federal (2) PRHP costs calculated using an entities to workers whose employment actuarial cost method recognized by is being terminated. Costs of severance GAAP are allowable if they are funded pay are allowable only to the extent for that year within six months after that in each case,it is required by the end of that year. Costs funded after (i)Law; the six-month period (or a later period agreed to by the cognizant agency) are (ii)Employer-employee agreement; allowable in the year funded. The Fed- (iii) Established policy that con- eral cognizant agency for indirect costs stitutes, in effect, an implied agree- may agree to an extension of the six- ment on the non-Federal entity's part; month period if an appropriate adjust- or ment is made to compensate for the (iv) Circumstances of the particular timing of the charges to the Federal employment. Government and related Federal reim- (2) Costs of severance payments are bursements and the non-Federal enti- divided into two categories as follows: ty's contributions to the PRHP fund. (i) Actual normal turnover severance Adjustments may be made by cash re- payments must be allocated to,all ac- fund, reduction in current year's PRHP tivities; or, where the non-Federal en- costs, or other equitable procedures to tity provides for a reserve for normal compensate the Federal Government severances, such method will be ac- for the time value of Federal reim- ceptable if the charge to current oper- bursements in excess of contributions ations is reasonable in light of pay- to the PRHP fund. ments actually made for normal (3) Amounts funded in excess of the severances over a representative past actuarially determined amount for a period, and if amounts charged are al- fiscal year may be used as the non-Fed- located to all activities of the non-Fed- eral entity contribution in a future pe- eral entity. riod. (ii) Measurement of costs of abnor- (4) When a non-Federal entity con- mal or mass severance pay by means of verts to an acceptable actuarial cost an accrual will not achieve equity to method and funds PRHP costs in ac- both parties. Thus, accruals for this cordance with this method, the initial purpose are not allowable. However, unfunded liability attributable to prior the Federal Government recognizes its years is allowable if amortized over a responsibility to participate, to the ex- period of years in accordance with tent of its fair share, in any specific GAAP, or, if no such GAAP period ex- payment. Prior approval by the Fed- ists, over a period negotiated with the eral awarding agency or cognizant cognizant agency for indirect costs. agency for indirect cost, as appro- (5) To be allowable in the current priate,is required. year, the PRHP costs must be paid ei- (3) Costs incurred in certain sever- ther to: ance pay packages which are in an (i) An insurer or other benefit pro- amount in excess of the normal sever- vider as current year costs or pre- ance pay paid by the non-Federal enti- miums, or ty to an employee upon termination of (ii)An insurer or trustee to maintain employment and are paid to the em- • a trust fund or reserve for the sole pur- ployee contingent upon a change in 159 §200.432 2 CFR Ch. II (1-1-22 Edition) management control over, or owner- not these costs are recorded in the ac- ship of', the non-Federal entity's assets, counting records of the non-Federal en- are unallowable. tities, subject to the following: (4)Severance payments to foreign na- (1) The costs meet the requirements tionals employed by the non-Federal of Basic Considerations in §§200.402 entity outside the United States, to through 200.411; the extent that the amount exceeds the (2) The costs are properly supported customary or prevailing practices for by approved cost allocation plans in ac- the non-Federal entity in the United cordance with applicable Federal cost States, are unallowable, unless they accounting principles;and are necessary for the performance of (3) The costs are not otherwise borne Federal programs and approved by the directly or indirectly by the Federal Federal awarding agency. (5) Severance payments to foreign na- Government. tionals employed by the non-Federal [85 FR 49565,Aug.13,2020] entity outside,the United States due to the termination of the foreign national §200.432 Conferences. as a result of the closing of, or curtail- A conference is defined as a meeting, ment of activities by, the non-Federal retreat, seminar, symposium, work- entity in that country, are unallow- shop or event whose primary purpose is able, unless they are necessary for the the dissemination of technical infor- performance of Federal programs and mation beyond the non-Federal entity approved by the Federal awarding and is necessary and reasonable for agency. (j) For IHEs only. (1) Fringe benefits successful performance under the Fed- ' in the form of undergraduate and grad- ; eral award. Allowable conference costs uate tuition or remission of tuition for paid by the non-Federal entity as a individual employees are allowable, sponsor or host of the conference may provided such benefits are granted in include rental of facilities, speakers' accordance with established non-Fed- fees, costs of meals and refreshments, eral entity policies, and are distributed local transportation, and other items to all non-Federal entity activities on incidental to such conferences unless an equitable basis. Tuition benefits for further restricted by the terms and family members other than the em- conditions of the Federal award. As ployee are unallowable. needed, the costs of identifying, but (2) Fringe benefits in the form of tui- not providing, locally available depend- , tion or remission of tuition for indi- ent-care resources are allowable. Con- vidual employees not employed by ference hosts/sponsors must, exercise IHEs are limited to the tax-free discretion and judgment in ensuring amount allowed per section 127 of the that conference costs are appropriate, Internal Revenue Code as amended. necessary and managed in a manner (3) IHEs may offer employees tuition that minimizes costs to the Federal waivers or tuition reductions, provided award. The Federal awarding agency that the benefit does not discriminate may authorize exceptions where appro- in favor of highly compensated employ- priate for programs including Indian ees. Employees can exercise these ben- tribes, children, and the elderly. See efits at other institutions according to also§§200.438,200.456,and 200.475. institutional policy. See §200.466, for treatment of tuition remission pro- [85 FR 49567,Aug.13,2020] vided to students. §200.433 Contingency provisions. (k) Fringe benefit programs and other benefit costs. For IHEs whose costs are (a) Contingency is that part of a paid by state or local governments, budget estimate of future costs (typi- fringe benefit programs (such as pen- cally of large construction projects, IT sion costs and FICA) and any other systems, or other items as approved by benefits costs specifically incurred on the Federal awarding agency) which is behalf of, and in direct benefit to, the associated with possible events or con- non-Federal entity, are allowable costs ditions arising from causes the precise of such non-Federal entities whether or outcome of which is indeterminable at 160 OMB Guidance §200.434 the time of estimate, and that experi- erty is not counted towards cost shar- ence shows will likely result, in aggre- ing or matching requirements. gate, in additional costs for the ap- (c) Services donated or volunteered proved activity or project. Amounts for to the non-Federal entity may be fur- major project scope changes, unfore- nished to a non-Federal entity by pro- seen risks, or extraordinary events fessional and technical personnel, con- may not be included. sultants, and other skilled and un- (b) It is permissible for contingency skilled labor. The value of these serv- amounts other than those excluded in ices may not be charged to the Federal paragraph (a) of this section to be ex- award either as a direct or indirect plicitly included in budget estimates, cost. However, the value of donated to the extent they are necessary to im- services may be used to meet cost shar- prove the precision of those estimates. ing or matching requirements in ac- Amounts must be estimated using cordance with the provisions of broadly-accepted cost estimating §200.306. methodologies, specified in the budget (d) To the extent feasible, services documentation of the Federal award, donated to the non-Federal entity will and accepted by the Federal awarding be supported by the same methods used agency. As such, contingency amounts to support the allocability of regular are to be included in the Federal personnel services. award. In order for actual costs in- (e) The following provisions apply to curred to be allowable, they must com- nonprofit organizations. The value of ply with the cost principles and other services donated to the nonprofit orga- requirements in this part (see also nization utilized in the performance of §§200.300 and 200.403 of this part); be a direct cost activity must be consid- necessary and reasonable for proper ered in the determination of the non- and efficient accomplishment of Federal entity's indirect cost rate(s) project or program objectives, and be and, accordingly, must be allocated a verifiable from the non-Federal enti- proportionate share of applicable indi- ty's records. rect costs when the following cir- (c) Payments made by the Federal cumstances exist: awarding agency to the non-Federal (1) The aggregate value of the serv- entity's `contingency reserve" or any ices is material; similar payment made for events the (2) The services are supported by a occurrence of which cannot be foretold significant amount of the indirect with certainty as to the time or inten- costs incurred by the non-Federal enti- sity, or with an assurance of their hap- ty; pening, are unallowable, except as (i) In those instances where there is noted in§§200.431 and 200.447. no basis for determining the fair mar- [78 FR 78608, Dec. 26, 2013, as amended at 79 ket value of the services rendered, the FR 75886, Dec. 19, 2014; 85 FR 49567, Aug. 13, non-Federal entity and the cognizant 2020] agency for indirect costs must nego- tiate an appropriate allocation of indi- §200.434 Contributions and donations. rect cost to the services. (a) Costs of contributions and dona- (ii) Where donated services directly tions, including cash, property, and benefit a project supported by the Fed- services, from the non-Federal entity eral award, the indirect costs allocated to other entities,are unallowable. to the services will be considered as a (b)The value of services and property part of the total costs of the project. donated to the non-Federal entity may Such indirect costs may be reimbursed not be charged to the Federal award ei- under the Federal award or used to ther as a direct or indirect (F&A) cost. meet cost sharing or matching require- The value of donated services and prop- ments. erty may be used to meet cost sharing (f) Fair market value of donated or matching requirements (see services must be computed as described §200.306). Depreciation on donated as- in§200.306. sets is permitted in accordance with (g) Personal Property and Use of §200.436, as long as the donated prop- Space. 161 §200.435 2 CFR Ch. II (1-1-22 Edition) (1) Donated personal property and ing of a false certification) commenced use of space may be furnished to a non- by the Federal Government, a state, Federal entity. The value of the per- local government, or foreign govern- sonal property and space may not be ment, or joined by the Federal Govern- charged to the Federal award either as ment(including a proceeding under the a direct or indirect cost. False Claims Act), against the non- (2)The value of the donations may be Federal entity, (or commenced by third used to meet cost sharing or matching parties or a current or former em- share requirements under the condi- ployee of the non-Federal entity who tions described in §200.300 of this part. submits a whistleblower complaint of The value of the donations must be de- reprisal in accordance with 10 U.S.C. termined in accordance with §200.300. 2409 or 41 U.S.C.4712),are not allowable Where donations are treated as indirect if the proceeding: costs, indirect cost rates will separate (i)Relates to a violation of,or failure the value of the donations so that re to comply with, a Federal, state, local imbursement will not be made. or foreign statute, regulation or the [78 FR 78608, Dec. 26,2013, as amended at 79 terms and conditions of the Federal FR 75886, Dec. 19, 2014; 85 FR 49567, Aug. 13, award, by the non-Federal entity (in- 2020] eluding its agents and employees); and §200.435 Defense and prosecution of (ii) Results in any of the following criminal and civil proceedings, dispositions: claims,appeals and patent infringe- (A) In a criminal proceeding, a con- ments. viction. (a) Definitions for the purposes of this (B) In a civil or administrative pro- section. (1)Conviction means a judgment ceeding involving an allegation of or conviction of a criminal offense by fraud or similar misconduct, a deter- any court of competent jurisdiction, mination of non-Federal entity liabil- whether entered upon verdict or a plea, ity. including a conviction due to a plea of (C) In the case of any civil or admin- nolo contendere. istrative proceeding, the disallowance (2) Costs include the services of in- of costs or the imposition of a mone- house or private counsel, accountants, tary penalty, or an order issued by the consultants, or others engaged to as- Federal awarding agency head or dele- sist the non-Federal entity before, dur- gate to the non-Federal entity to take ing, and after commencement of a judi- corrective action under 10 U.S.C. 2409 cial or administrative proceeding, that or 41 U.S.C.4712. bear a direct relationship to the pro- (D)A final decision by an appropriate ceeding. Federal official to debar or suspend the (3)Fraud means: non-Federal entity, to rescind or void a (i) Acts of fraud or corruption or at- Fed- tempts to defraud the Federal Govern- eral awardral award, or terminate a ned ment or to corrupt its agents, by reason of a violation or failure to comply with a statute, regu- (ii) Acts that constitute a cause for lation, or the terms and conditions of debarment or suspension (as specified the Federal award. in agency regulations),and (iii) Acts which violate the False (E) A disposition by consent or corn- Claims Act (31 U.S.C. 3729-3732) or the promise, if the action could have re Anti-kickback Act (41 U.S.C. 1320a- sulted in any of the dispositions de- 7b(b)). scribed in paragraphs (b)(1)(ii)(A) (4) Penalty does not include restitu- through(D)of this section. tion, reimbursement, or compensatory (2) If more than one proceeding in- damages. volves the same alleged misconduct, (5) Proceeding includes an investiga- the costs of all such proceedings are tion. unallowable if any results in one of the (b) Costs. (1) Except as otherwise de- dispositions shown in paragraph (b) of scribed herein, costs incurred in con- this section. nection with any criminal, civil or ad- (c)If a proceeding referred to in para- ministrative proceeding (including fil- graph (b) of this section is commenced 162 OMB Guidance §200.436 by the Federal Government and is re- cluding the cost of all relief necessary solved by consent or compromise pur- to make such employee whole, where suant to an agreement by the non-Fed- the non-Federal entity was found liable eral entity and the Federal Govern- or settled, are unallowable. ment, then the costs incurred may be (g) Costs of prosecution of claims allowed to the extent specifically pro- against the Federal Government, in- vided in such agreement. cluding appeals of final Federal agency (d)If a proceeding referred to in para- decisions, are unallowable. graph (b) of this section is commenced (h) Costs of legal, accounting, and by a state,local or foreign government, consultant services, and related costs, the authorized Federal official may incurred in connection with patent in- allow the'costs incurred if such author- fringement litigation, are unallowable ized official determines that the costs were incurred as a result of: unless otherwise provided for in the (1)A specific term or condition of the Federal award. Federal award, or (i) Costs which may be unallowable (2) Specific written direction of an under this section, including directly authorized official of the Federal associated costs, must be segregated awarding agency. and accounted for separately. During (e) Costs incurred in connection with the pendency of any proceeding covered proceedings described in paragraph (b) by paragraphs (b) and (f) of this sec- of this section, which are not made un- tion, the Federal Government must allowable by that subsection, may be generally withhold payment of such allowed but only to the extent that: costs. However, if in its best interests, (1) The costs are reasonable and nec- the Federal Government may provide essary in relation to the administra- for conditional payment upon provision tion of the Federal award and activi- of adequate security, or other adequate ties required to deal with the pro- assurance, and agreement to repay all ceeding and the underlying cause of ac- unallowable costs, plus interest, if the tion; costs are subsequently determined to (2) Payment of the reasonable, nec- be unallowable. essary, allocable and otherwise allow- able costs incurred is not prohibited by [78 FR 78608, Dec. 26, 2013, as amended at 79 any other provision(s) of the Federal FR 75886,Dec.19,2014] award; (3) The costs are not recovered from §200.436 Depreciation. the Federal Government or a third (a)Depreciation is the method for al- party, either directly as a result of the locating the cost of fixed assets to peri- proceeding or otherwise;and, ods benefitting from asset use. The (4) An authorized Federal official non-Federal entity may be corn- must determine the percentage of costs pensated for the use of its buildings, allowed considering the complexity of capital improvements, equipment, and litigation, generally accepted prin- software projects capitalized in accord- ciples governing the award of legal fees in civil actions involving the United are with GAAP, thepro non-Federaled that they en- States, and such other factors as may are used, needed in the be appropriate. Such percentage must tity's activities, and properly allocated not exceed 80 percent. However, if an to Federal awards. Such compensation agreement reached under paragraph (c) must be made by computing deprecia- of this section has explicitly consid- tion. ered this 80 percent limitation and per- (b) The allocation for depreciation mitted a higher percentage, then the must be made in accordance with Ap- full amount of costs resulting from pendices III through IX. that agreement are allowable. (c) Depreciation is computed apply- (f) Costs incurred by the non-Federal ing the following rules. The computa- entity in connection with the defense tion of depreciation must be based on of suits brought by its employees or ex- the acquisition cost of the assets in- employees under section 2 of the Major volved. For an asset donated to the Fraud Act of 1988 (18 U.S.C. 1031), in- non-Federal entity by a third party, its 163 §200.437 2 CFR Ch. II (1-1-22 Edition) fair market value at the time of the do- then be depreciated over its estimated nation must be considered as the acqui- useful life. The building components sition cost. Such assets may be depre- must be grouped into three general ciated or claimed as matching but not components of a building: building both. For the computation of deprecia- shell (including construction and de- tion, the acquisition cost will exclude: sign costs), building services systems (1)The cost of land; (e.g., elevators, HVAC, plumbing sys- (2) Any portion of the cost of build- tem and heating and air-conditioning ings and equipment borne by or do- system) and fixed equipment (e.g., nated by the Federal Government, irre- sterilizers, casework, fume hoods, cold spective of where title was originally rooms and glassware/washers). In ex- vested or where it is presently located; ceptional cases, a cognizant agency (3) Any portion of the cost of build- may authorize a non-Federal entity to ings and equipment contributed by or use more than these three groupings. for the non-Federal entity that are al- When a non-Federal entity elects to de- ready claimed as matching or where preciate its buildings by its compo- law or agreement prohibits recovery; nents, the same depreciation methods (4) Any asset acquired solely for the must be used for indirect (F&A) pur- performance of a non-Federal award; poses and financial statements pur- and poses, as described in paragraphs (d)(1) (d) When computing depreciation and(2)of this section. charges, the following must be ob- (4) No depreciation may be allowed served: on any assets that have outlived their (1) The period of useful service or depreciable lives. useful life established in each case for usable capital assets must take into tr Where the replaceaceia theen smethodto is consideration such factors as type of introduced do depreciation use allow- be construction, nature of the equipment, anceommethod, the hmust de- technological developments in the par- prcomputed as if the asset had been m ticular area, historical data, and the thecia dateed over its entirewalife u(i.e., from li the the asset was acquired and renewal and replacement policies fol- ready for use to the date of disposal or lowed for the individual items or class- withdrawal from service). The total es of assets involved. amount of use allowance and deprecia- (2) The depreciation method used to tion for an asset(including imputed de- charge the cost of an asset (or group of preciation applicable to periods prior assets) to accounting periods must re- to the conversion from the use allow- fleet the pattern of consumption of the ance method as well as depreciation asset during its useful life. In the ab- after the conversion) may not exceed sence of clear evidence indicating that the total acquisition cost of the asset. the expected consumption of the asset will be significantly greater in the (e) Charges for depreciation must be early portions than in the later por- supported by adequate property tions of its useful life, the straight-line records, and physical inventories must method must be presumed to be the ap- be taken at least once every two years propriate method. Depreciation meth to ensure that the assets exist and are ods once used may not be changed un- usable, used, and needed. Statistical less approved in advance by the cog sampling techniques may be used in nizant agency. The depreciation meth- taking these inventories. In addition, adequate depreciation records showing ods used to calculate the depreciation amounts for indirect (F&A) rate pur- the amount of depreciation must be poses must be the same methods used maintained. by the non-Federal entity for its finan- [78 FR 78608, Dec. 26, 2013, as amended at 79 cial statements. FR 75886, Dec. 19, 2014; 85 FR 49568, Aug. 13, 'll (3) The entire building, including the 2020] shell and all components,may be treat- ed as a single asset and depreciated §200.437 Employee health and welfare over a single useful life. A building costs. may also be divided into multiple corn- (a) Costs incurred in accordance with ponents. Each component item may the non-Federal entity's documented 164 OMB Guidance §200.440 policies for the improvement of work- (3) Capital expenditures for improve- ing conditions, employer-employee re- ments to land, buildings, or equipment lations, employee health,and employee which materially increase their value performance are allowable. or useful life are unallowable as a di- (b) Such costs will be equitably ap- rect cost except with the prior written portioned to all activities of the non- approval of the Federal awarding agen- Federal entity. Income generated from cy, or pass-through entity. See§200.436, any of these activities will be credited for rules on the allowability of depre- to the cost thereof unless such income ciation on buildings, capital improve- has been irrevocably sent to employee ments, and equipment. See also welfare organizations. §200.465. (c) Losses resulting from operating (4) When approved as a direct charge food services are allowable only if the pursuant to paragraphs (b)(1) through non-Federal entity's objective is to op- (3) of this section, capital expenditures erate such services on a break-even will be charged in the period in which basis. Losses sustained because of oper- the expenditure is incurred, or as oth- ating objectives other than the above erwise determined appropriate and ne- are allowable only: gotiated with the Federal awarding (1) Where the non-Federal entity can agency. demonstrate unusual circumstances; (5) The unamortized portion of any and equipment written off as a result of a (2) With the approval of the cog- change in capitalization levels may be nizant agency for indirect costs. recovered by continuing to claim the otherwise allowable depreciation on §200.438 Entertainment costs. the equipment, or by amortizing the Costs of entertainment, including amount to be written off over a period amusement, diversion, and social ac- of years negotiated with the Federal tivities and any associated costs are cognizant agency for indirect cost. unallowable, except where specific (6) Cost of equipment disposal. If the costs that might otherwise be consid- non-Federal entity is instructed by the ered entertainment have a pro- Federal awarding agency to otherwise grammatic purpose and are authorized dispose of or transfer the equipment either in the approved budget for the the costs of such disposal or transfer Federal award or with prior written ap- are allowable. proval of the Federal awarding agency. (7) Equipment and other capital ex- penditures are unallowable as indirect §200.439 Equipment and other capital costs. See§200.436. expenditures. [78 FR 78608, Dec. 26, 2013, as amended at 79 (a) See §200.1 for the definitions of FR 75886, Dec. 19, 2014; 85 FR 49568, Aug. 13, capital expenditures, equipment, special 2020] purpose equipment, general purpose equipment, acquisition cost, and capital §200.440 Exchange rates. assets. (a) Cost increases for fluctuations in (b) The following rules of allow- exchange rates are allowable costs sub- ability must apply to equipment and ject to the availability of funding. other capital expenditures: Prior approval of exchange rate fluc- (1) Capital expenditures for general tuations is required only when the purpose equipment, buildings, and land change results in the need for addi- are unallowable as direct charges, ex- tional Federal funding, or the in- cept with the prior written approval of creased costs result in the need to sig- the Federal awarding agency or pass- nificantly reduce the scope of the through entity. project. The Federal awarding agency (2) Capital expenditures for special must however ensure that adequate purpose equipment are allowable as di- funds are available to cover currency rect costs, provided that items with a fluctuations in order to avoid a viola- unit cost of $5,000 or more have the tion of the Anti-Deficiency Act. prior written approval of the Federal (b) The non-Federal entity is re- awarding agency or pass-through enti- quired to make reviews of local cur- ty. rency gains to determine the need for 165 §200.441 2 CFR Ch. II (1-1-22 Edition) additional federal funding before the §200.443 Gains and losses on disposi- expiration date of the Federal award. tion of depreciable assets. Subsequent adjustments for currency (a) Gains and losses on the sale, re- increases may be allowable only when tirement, or other disposition of depre- the non-Federal entity provides the ciable property must be included in the Federal awarding agency with ade- year in which they occur as credits or quate source documentation from a chargesar which assets occur credits in to the cost grouping(s)in { commonly used source in effect at the which the property was included. The time the expense was made, and to the amount of the gain or loss to be in- extent that sufficient Federal funds are eluded as a credit or charge to the ap- available. propriate asset cost grouping(s) is the [78 FR 78608, Dec. 26, 2013, as amended at 79 difference between the amount realized FR 75886,Dec.19,2014] on the property and the undepreciated basis of the property. §200.441 Fines, penalties, damages (b) Gains and losses from the disposi- and other settlements. tion of depreciable property must not Costs resulting from non-Federal en- be recognized as a separate credit or tity violations of, alleged violations of, charge under the following conditions: or failure to comply with, Federal, (1) The gain or loss is processed state, tribal, local or foreign laws and through a depreciation account and is regulations are unallowable, except reflected in the depreciation allowable when incurred as a result of compli- under§§200.436 and 200.439. ance with specific provisions of the (2) The property is given in exchange Federal award, or with prior written as part of the purchase price of a simi- approval of the Federal awarding agen- lar item and the gain or loss is taken cy. See also§200.435. into account in determining the depre- [85 FR 49568,Aug.13,2020] elation cost basis of the new item. (3) A loss results from the failure to §200.442 Fund raising and investment maintain permissible insurance, except management costs. as otherwise provided in§200.447. (a) Costs of organized fund raising, (4) Compensation for the use of the including financial campaigns, endow- property was provided through use al- ment drives, solicitation of gifts and lowances in lieu of depreciation. bequests, and similar expenses incurred (5) Gains and losses arising from to raise capital or obtain contributions mass or extraordinary sales, retire- are unallowable. Fund raising costs for ments, or other dispositions must be the purposes of meeting the Federal considered on a case-by-case basis. program objectives are allowable with (c) Gains or losses of any nature aris- prior written approval from the Fed- ing from the sale or exchange of prop- eral awarding agency. Proposal costs erty other than the property covered in are covered in§200.460. paragraph (a) of this section, e.g., land, (b) Costs of investment counsel and must be excluded in computing Federal staff and similar expenses incurred to award costs. enhance income from investments are (d) When assets acquired with Fed- unallowable except when associated eral funds, in part or wholly, are dis- with investments covering pension, posed of, the distribution of the pro- self-insurance, or other funds which in- ceeds must be made in accordance with elude Federal participation allowed by §§200.310 through 200.316 of this part. this part. [78 FR 78608, Dec. 26, 2013, as amended at 79 (c) Costs related to the physical cus- FR 75886, Dec. 19, 2014; 85 FR 49568, Aug. 13, tody and control of monies and securi- 2020] ties are allowable. (d) Both allowable and unallowable §200.444 General costs of government. fund-raising and investment activities (a) For states, local governments, must be allocated as an appropriate and Indian Tribes, the general costs of share of indirect costs under the condi- government are unallowable (except as tions described in§200.413. provided in§200.475). Unallowable costs [85 FR 49568,Aug.13,2020] include: 166 OMB Guidance §200.446 (1) Salaries and expenses of the Office §200.446 Idle facilities and idle capac- of the Governor of a state or the chief ity. executive of a local government or the (a) As used in this section the fol- chief executive of an Indian tribe; lowing terms have the meanings set (2) Salaries and other expenses of a forth in this section: state legislature, tribal council, or (1) Facilities means land and build- similar local governmental body, such ings or any portion thereof, equipment as a county supervisor, city council, individually or collectively, or any school board, etc., whether incurred for other tangible capital asset, wherever purposes of legislation or executive di- located, and whether owned or leased rection; by the non-Federal entity. (3) Costs of the judicial branch of a (2) Idle facilities means completely government; unused facilities that are excess to the (4) Costs of prosecutorial activities non-Federal entity's current needs. unless treated as a direct cost to a spe- (3) Idle capacity means the unused capacity of partially used facilities. It cific program if authorized by statute is the difference between: or regulation (however, this does not (i) That which a facility could preclude the allowability of other legal achieve under 100 percent operating activities of the Attorney General as time on a one-shift basis less operating described in§200.435);and interruptions resulting from time lost (5) Costs of other general types of for repairs, setups, unsatisfactory ma- government services normally provided terials, and other normal delays and; to the general public, such as fire and (ii) The extent to which the facility police, unless provided for as a direct was actually used to meet demands cost under a program statute or regula- during the accounting period. A multi- tion. shift basis should be used if it can be (b) For Indian tribes and Councils of shown that this amount of usage would Governments (COGs) (see definition for normally be expected for the type of fa- Local government in §200.1 of this part), cility involved. up to 50% of salaries and expenses di- (4) Cost of idle facilities or idle ca rectly attributable to managing and pacity means costs such as mainte operating Federal programs by the nance, repair, housing, rent, and other relachief executive and his or her staff can and de costs, e.g., insurance, interest,ulin- be included in the indirect cost cal- and e theci costss These costs could safety culation without documentation. elude the of idle public safety emergency facilities, telecommuni- [78 FR 78608, Dec. 26, 2013, as amended at 79 cations, or information technology sys- FR 75886, Dec. 19, 2014; 85 FR 49568, Aug. 13, tern capacity that is built to withstand 2020] major fluctuations in load, e.g., con- solidated data centers. §200.445 Goods or services for per- (b) The costs of idle facilities are un- sonal use. allowable except to the extent that: (a) Costs of goods or services for per- (1) They are necessary to meet work- sonal use of the non-Federal entity's load requirements which may fluctuate employees are unallowable regardless and are allocated appropriately to all of whether the cost is reported as tax- benefiting programs;or able income to the employees. (2) Although not necessary to meet fluctuations in workload, they were (b) Costs of housing (e.g., deprecia- necessary when acquired and are now tion, maintenance, utilities, fur- idle because of changes in program re- nishings, rent), housing allowances and quirements, efforts to achieve more ec- personal living expenses are only al- onomical operations, reorganization, lowable as direct costs regardless of termination, or other causes which whether reported as taxable income to could not have been reasonably fore- the employees.In addition, to be allow- seen. Under the exception stated in able direct costs must be approved in this subsection, costs of idle facilities advance by a Federal awarding agency. are allowable for a reasonable period of time, ordinarily not to exceed one 167 §200.447 2 CFR Ch. II (1-1-22 Edition) year, depending on the initiative taken Federal entity's materials or work- to use, lease, or dispose of such facili- manship are unallowable. ties. (6) Medical liability (malpractice) in- (c) The costs of idle capacity are nor- surance. Medical liability insurance is mal costs of doing business and are a an allowable cost of Federal research factor in the normal fluctuations of programs only to the extent that the usage or indirect cost rates from period Federal research programs involve to period. Such costs are allowable, human subjects or training of partici- provided that the capacity is reason- pants in research techniques. Medical ably anticipated to be necessary to liability insurance costs must be treat- carry out the purpose of the Federal ed as a direct cost and must be as- , award or was originally reasonable and signed to individual projects based on is not subject to reduction or elimi- the manner in which the insurer allo- nation by use on other Federal awards, cates the risk to the population cov- i subletting, renting, or sale, in accord- ered by the insurance. ance with sound business, economic, or (c) Actual losses which could have security practices. Widespread idle ca- been covered by permissible insurance pacity throughout an entire facility or (through a self-insurance program or among a group of assets having sub- otherwise) are unallowable, unless ex- ' stantially the same function may be pressly provided for in the Federal considered idle facilities. award.However, costs incurred because of losses not covered under nominal de- §200.447 Insurance and indemnifica- ductible insurance coverage provided tion. in keeping with sound management (a) Costs of insurance required or ap- practice, and minor losses not covered proved and maintained, pursuant to by insurance, such as spoilage, break- the Federal award,are allowable. age, and disappearance of small hand (b) Costs of other insurance in con- tools, which occur in the ordinary nection with the general conduct of ac- course of operations, are allowable. tivities are allowable subject to the (d)Contributions to a reserve for cer- following limitations: tain self-insurance programs including (1) Types and extent and cost of cov- workers' compensation, unemployment erage are in accordance with the non- compensation, and severance pay are Federal entity's policy and sound busi- allowable subject to the following pro- ness practice. visions: (2) Costs of insurance or of contribu- (1) The type of coverage and the ex- tions to any reserve covering the risk tent of coverage and the rates and pre- of loss of, or damage to, Federal Gov- miums would have been allowed had in- ernment property are unallowable ex- surance (including reinsurance) been cept to the extent that the Federal purchased to cover the risks. However, awarding agency has specifically re- provision for known or reasonably esti- quired or approved such costs. mated self-insured liabilities, which do (3) Costs allowed for business inter- not become payable for more than one ruption or other similar insurance year after the provision is made, must must exclude coverage of management not exceed the discounted present fees. value of the liability. The rate used for (4) Costs of insurance on the lives of discounting the liability must be deter- trustees, officers, or other employees mined by giving consideration to such holding positions of similar respon- factors as the non-Federal entity's set- sibilities are allowable only to the ex- tlement rate for those liabilities and tent that the insurance represents ad- its investment rate of return. ditional compensation (see §200.431). (2)Earnings or investment income on The cost of such insurance when the reserves must be credited to those re- non-Federal entity is identified as the serves. beneficiary is unallowable. (3)(i) Contributions to reserves must (5)Insurance against defects. Costs of be based on sound actuarial principles insurance with respect to any costs in- using historical experience and reason- curred to correct defects in the non- able assumptions. Reserve levels must 168 OMB Guidance §200.448 be analyzed and updated at least bien- §200.448 Intellectual property. nially for each major risk being in- (a) Patent costs. (1) The following sured and take into account any rein- surance, coinsurance, etc. Reserve ley- costs related to securing patents and els related to employee-related cov- copyrights are allowable: erages will normally be limited to the (i) Costs of preparing disclosures, re- value of claims: ports, and other documents required by (A) Submitted and adjudicated but the Federal award, and of searching the not paid; art to the extent necessary to make (B) Submitted but not adjudicated; such disclosures; and (ii) Costs of preparing documents and (C)Incurred but not submitted. any other patent costs in connection with the filing and prosecution of a (ii) Reserve levels in excess of the United States patent application where amounts based on the above must be title or royalty-free license is required identified and justified in the cost allo- by the Federal Government to be con- cation plan or indirect cost rate pro- veyed to the Federal Government; and posal. (iii) General counseling services re- (4) Accounting records, actuarial lating to patent and copyright matters, studies, and cost allocations (or bil- such as advice on patent and copyright lings) must recognize any significant laws, regulations, clauses, and em- differences due to types of insured risk ployee intellectual property agree- and losses generated by the various in- ments(See also§200.459). sured activities or agencies of the non- (2) The following costs related to se- Federal entity. If individual depart- curing patents and copyrights are unal- ments or agencies of the non-Federal lowable: entity experience significantly dif- (i) Costs of preparing disclosures, re- ferent levels of claims for a particular port a of preparing dislosures, of risk, those differences are to be recog- searchingc, and theo art documents,u and es art to make disclosures nized by the use of separate allocations not required by the Federal award; or other techniques resulting in an eq- (ii) Costs in connection with filing uitable allocation. and prosecuting any foreign patent ap- (5) Whenever funds are transferred plication, or any United States patent from a self-insurance reserve to other application, where the Federal award accounts (e.g., general fund or unre- does not require conveying title or a stricted account), refunds must be royalty-free license to the Federal made to the Federal Government for Government. its share of funds transferred,including (b) Royalties and other costs for use of earned or imputed interest from the date of transfer and debt interest,if ap- patents and copyrights.copyright or(1)amortization on plicable, chargeable in accordance with a patent cost ofcqirior y purchase a of the acquiring by purchase a applicable Federal cognizant agency copyright, patent, or rights thereto, for indirect cost, claims collection reg- necessary for the proper performance ulations. of the Federal award are allowable un- (e) Insurance refunds must be cred- less: ited against insurance costs in the year (i) The Federal Government already the refund is received. has a license or the right to free use of (f) Indemnification includes securing the patent or copyright. the non-Federal entity against liabil- (ii) The patent or copyright has been ities to third persons and other losses adjudicated to be invalid, or has been not compensated by insurance or oth- administratively determined to be in- erwise. The Federal Government is ob- valid. ligated to indemnify the non-Federal (iii) The patent or copyright is con- entity only to the extent expressly pro- sidered to be unenforceable. vided for in the Federal award, except (iv) The patent or copyright is ex- as provided in paragraph(c) of this sec- pired. tion. (2) Special care should be exercised in [78 FR 78608, Dec. 26, 2013, as amended at 85 determining reasonableness where the FR 49568,Aug.13,2020] royalties may have been arrived at as a 169 §200.449 2 CFR Ch. II (1-1-22 Edition) result of less-than-arm's-length bar- an unrelated third party); or claims re- gaining,such as: imbursement of actual interest cost at (i) Royalties paid to persons, includ- a rate available via such a transaction. ing corporations, affiliated with the (4) The non-Federal entity limits non-Federal entity. claims for Federal reimbursement of (ii) Royalties paid to unaffiliated interest costs to the least expensive al- parties, including corporations, under ternative. For example, a lease con- an agreement entered into in con- tract that transfers ownership by the templation that a Federal award would end of the contract may be determined be made. less costly than purchasing through (iii) Royalties paid under an agree- other types of debt financing, in which ment entered into after a Federal case reimbursement must be limited to award is made to a non-Federal entity. the amount of interest determined if (3) In any case involving a patent or leasing had been used. copyright formerly owned by the non- (5) The non-Federal entity expenses Federal entity, the amount of royalty or capitalizes allowable interest cost in allowed must not exceed the cost which accordance with GAAP. would have been allowed had the non- (6) Earnings generated by the invest Federal entity retained title thereto. ment of borrowed funds pending their [78 FR 78608, Dec. 26, 2013, as amended at 79 disbursement for the asset costs are FR 75886, Dec. 19, 2014; 85 FR 49569, Aug. 13, used to offset the current period's al- 2020] lowable interest cost, whether that §200.449 Interest. cost is expensed or capitalized. Earn- ings subject to being reported to the (a) General. Costs incurred for inter- Federal Internal Revenue Service est on borrowed capital, temporary use under arbitrage requirements are ex- of endowment funds, or the use of the cludable. non-Federal entity's own funds, how ever represented, are unallowable. Fi- nancing costs (including interest) to apply to debt arrangements over $1 acquire, construct, or replace capital ties, unless the non-Federal entity million to purchase or construct facili- assets are allowable, subject to the conditions in this section. makes an initial equity contribution to (b) Capital assets. (1) Capital assets is the purchase of 25 percent or more. For defined as noted in §200.1 of this part. this purpose, "initial equity contribu- An asset cost includes (as applicable) tion" means the amount or value of acquisition costs, construction costs, contributions made by the non-Federal and other costs capitalized in accord entity for the acquisition of facilities ance with GAAP. prior to occupancy. (2) For non-Federal entity fiscal (i) The non-Federal entity must re- years beginning on or after January 1, duce claims for reimbursement of in- '� 2016, intangible assets include patents terest cost by an amount equal to im- and computer software. For software puted interest earnings on excess cash development projects, only interest at- flow attributable to the portion of the tributable to the portion of the project facility used for Federal awards. costs capitalized in accordance with (ii) The non-Federal entity must im- GAAP is allowable. pute interest on excess cash flow as fol- (c) Conditions for all non-Federal enti- lows: ties. (1)The non-Federal entity uses the (A) Annually, the non-Federal entity capital assets in support of Federal must prepare a cumulative (from the awards; inception of the project) report of (2) The allowable asset costs to ac- monthly cash inflows and outflows, re- quire facilities and equipment are lim- gardless of the funding source. For this ited to a fair market value available to purpose, inflows consist of Federal re- the non-Federal entity from an unre- imbursement for depreciation, amorti- lated(arm's length)third party. zation of capitalized construction in- (3) The non-Federal entity obtains terest, and annual interest cost. Out- the financing via an arm's-length flows consist of initial equity contribu- f, transaction (that is, a transaction with tions, debt principal payments(less the 170 OMB Guidance §200.450 pro-rata share attributable to the cost 9903.201-2(a). The non-Federal entity's of land), and interest payments. Federal awards are instead subject to (B)To compute monthly cash inflows CAS 414 (48 CFR 9904.414), "Cost of and outflows, the non-Federal entity Money as an Element of the Cost of Fa- must divide the annual amounts deter- cilities Capital", and CAS 417 (48 CFR mined in step (i) by the number of 9904.417), "Cost of Money as an Element months in the year (usually 12) that of the Cost of Capital Assets Under the building is in service. Construction". (C) For any month in which cumu- [78 FR 78608, Dec. 26, 2013, as amended at 80 lative cash inflows exceed cumulative FR 54409, Sept. 10, 2015; 85 FR 49569, Aug. 13, outflows, interest must be calculated 2020] on the excess inflows for that month and be treated as a reduction to allow- §200.450 Lobbying. able interest cost. The rate of interest (a)The cost of certain influencing ac- to be used must be the three-month tivities associated with obtaining Treasury bill closing rate as of the last grants, contracts, or cooperative agree- business day of that month. ments, or loans is an unallowable cost. (8) Interest attributable to a fully de- Lobbying with respect to certain preciated asset is unallowable. grants, contracts, cooperative agree- (d) Additional conditions for states, ments, and loans is governed by rel- local governments and Indian tribes. evant statutes, including among oth- For costs to be allowable, the non-Fed- ers, the provisions of 31 U.S.C. 1352, as eral entity must have incurred the in- well as the common rule, "New Re- terest costs for buildings after October strictions on Lobbying" published on 1, 1980, or for land and equipment after February 26, 1990,including definitions, September 1,1995. and the Office of Management and (1) The requirement to offset interest Budget "Governmentwide Guidance for earned on borrowed funds against cur- New Restrictions on Lobbying" and no- rent allowable interest cost (paragraph tices published on December 20, 1989, (c)(5), above) also applies to earnings June 15, 1990, January 15, 1992, and Jan- on debt service reserve funds. uary 19, 1996. (2) The non-Federal entity will nego- (b) Executive lobbying costs. Costs in- tiate the amount of allowable interest curred in attempting to improperly in- cost related to the acquisition of facili- fluence either directly or indirectly, an ties with asset costs of $1 million or employee or officer of the executive more, as outlined in paragraph (c)(7) of branch of the Federal Government to this section. For this purpose, a non- give consideration or to act regarding a Federal entity must consider only cash Federal award or a regulatory matter inflows and outflows attributable to are unallowable. Improper influence that portion of the real property used means any influence that induces or for Federal awards. tends to induce a Federal employee or (e) Additional conditions for IHEs. officer to give consideration or to act For costs to be allowable, the IHE regarding a Federal award or regu- must have incurred the interest costs latory matter on any basis other than after July 1, 1982, in connection with the merits of the matter. acquisitions of capital assets that oc- (c) In addition to the above, the fol- curred after that date. lowing restrictions are applicable to (f) Additional condition for nonprofit nonprofit organizations and IHEs: organizations. For costs to be allow- (1) Costs associated with the fol- able, the nonprofit organization in- lowing activities are unallowable: curred the interest costs after Sep- (i) Attempts to influence the out- tember 29, 1995, in connection with ac- comes of any Federal, state, or local quisitions of capital assets that oc- election, referendum, initiative, or curred after that date. similar procedure, through in-kind or (g) The interest allowability provi- cash contributions, endorsements, pub- sions of this section do not apply to a licity, or similar activity; nonprofit organization subject to "full (ii) Establishing, administering, con- coverage" under the Cost Accounting tributing to, or paying the expenses of Standards (CAS), as defined at 48 CFR a political party, campaign, political 171 §200.450 2 CFR Ch. II (1-1-22 Edition) action committee, or other organiza- lowable unless incurred to offer testi- tion established for the purpose of in- mony at a regularly scheduled Congres- fluencing the outcomes of elections in sional hearing pursuant to a written the United States; request for such presentation made by (iii)Any attempt to influence: the Chairman or Ranking Minority (A) The introduction of Federal or Member of the Committee or Sub- state legislation; committee conducting such hearings; (B)The enactment or modification of (ii) Any lobbying made unallowable any pending Federal or state legisla- by paragraph (c)(1)(iii) of this section tion through communication with any to influence state legislation in order member or employee of the Congress or to directly reduce the cost, or to avoid state legislature (including efforts to material impairment of the non-Fed- influence state or local officials to en- eral entity's authority to perform the gage in similar lobbying activity); grant, contract, or other agreement; or (C)The enactment or modification of (iii) Any activity specifically author- any pending Federal or state legisla- ized by statute to be undertaken with tion by preparing, distributing, or funds from the Federal award. using publicity or propaganda, or by (iv) Any activity excepted from the urging members of the general public, definitions of "lobbying" or "influ- or any segment thereof, to contribute encing legislation" by the Internal to or participate in any mass dem- Revenue Code provisions that require onstration, march, rally, fund raising nonprofit organizations to limit their drive, lobbying campaign or letter participation in direct and "grass writing or telephone campaign; or roots" lobbying activities in order to (D) Any government official or em- retain their charitable deduction sta- ployee in connection with a decision to tus and avoid punitive excise taxes, sign or veto enrolled legislation; I.R.C. §§501(c)(3), 501(h), 4911(a), includ- (iv) Legislative liaison activities, in- ing: eluding attendance at legislative ses- (A) Nonpartisan analysis, study, or sions or committee hearings, gathering research reports; information regarding legislation, and (B) Examinations and discussions of analyzing the effect of legislation, broad social, economic, and similar when such activities are carried on in problems;and support of or in knowing preparation (C) Information provided upon re- for an effort to engage in unallowable quest by a legislator for technical ad- lobbying. vice and assistance,as defined by I.R.C. (2) The following activities are ex- §4911(d)(2) and 26 CFR 56.4911-2(c)(1)- cepted from the coverage of paragraph (c)(3). (c)(1)of this section: (v) When a non-Federal entity seeks (i) Technical and factual presen- reimbursement for indirect (F&A) tations on topics directly related to costs, total lobbying costs must be sep- the performance of a grant, contract, arately identified in the indirect (F&A) or other agreement (through hearing cost rate proposal, and thereafter testimony, statements, or letters to treated as other unallowable activity the Congress or a state legislature, or costs in accordance with the proce- subdivision,member, or cognizant staff dures of§200.413. member thereof),in response to a docu- (vi)The non-Federal entity must sub- mented request (including,a Congres- mit as part of its annual indirect sional Record notice requesting testi- (F&A)cost rate proposal a certification mony or statements for the record at a that the requirements and standards of regularly scheduled hearing) made by this section have been complied with. the non-Federal entity's member of (See also§200.415.) congress, legislative body or a subdivi- (vii)(A)Time logs, calendars, or simi- sion, or a cognizant staff member lar records are not required to be cre- thereof, provided such information is ated for purposes of complying with readily obtainable and can be readily the record keeping requirements in put in deliverable form, and further §200.302 with respect to lobbying costs provided that costs under this section during any particular calendar month for travel, lodging or meals are unal- when: 172 OMB Guidance §200.453 (1) The employee engages in lobbying the appropriate indirect cost rate base (as defined in paragraphs (c)(1) and for allocation of indirect costs. (c)(2) of this section) 25 percent or less of the employee's compensated hours of §200.452 Maintenance and repair employment during that calendar costs. month;and Costs incurred for utilities, insur- (2) Within the preceding five-year pe- ante, security, necessary maintenance, riod, the non-Federal entity has not materially misstated allowable or un- Janitorial services, repair, or upkeep of allowable costs of any nature, includ buildings and equipment (including ing legislative lobbying costs. Federal property unless otherwise pro- (B) When conditions in paragraph vided for)which neither add to the per- (c)(2)(vii)(A)(1) and (2) of this section manent value of the property nor ap- are met, non-Federal entities are not preciably prolong its intended life, but required to establish records to support keep it in an efficient operating condi- the allowability of claimed costs in ad- tion, are allowable. Costs incurred for dition to records already required or improvements which add to the perma- maintained. Also, when conditions in nent value of the buildings and equip- paragraphs (c)(2)(vii)(A)(1) and (2) of ment or appreciably prolong their in- this section are met, the absence of tended life must be treated as capital time logs, calendars, or similar records expenditures (see §200.439). These costs will not serve as a basis for disallowing are only allowable to the extent not costs by contesting estimates of lob- paid through rental or other agree- bying time spent by employees during ments. a calendar month. (viii) The Federal awarding agency [85 FR 49569,Aug.13,2020] must establish procedures for resolving §200.453 Materials and supplies costs, in advance, in consultation with OMB, any significant questions or disagree including costs of computing de- ments concerning the interpretation or vices. application of this section. Any such (a) Costs incurred for materials, sup- advance resolutions must be binding in plies, and fabricated parts necessary to any subsequent settlements, audits, or carry out a Federal award are allow- investigations with respect to that able. grant or contract for purposes of inter- (b) Purchased materials and supplies pretation of this part, provided, how- must be charged at their actual prices, ever, that this must not be construed net of applicable credits. Withdrawals to prevent a contractor or non-Federal from general stores or stockrooms entity from contesting the lawfulness must be charged at their actual net of such a determination. cost under any recognized method of [78 FR 78608, Dec. 26, 2013, as amended at 85 prfcing inventory withdrawals, consist- FR 49569,Aug.13,2020] ently applied. Incoming transportation charges are a proper part of materials §200.451 Losses on other awards or and supplies costs. contracts. (c) Materials and supplies used for Any excess of costs over income the performance of a Federal award under any other award or contract of may be charged as direct costs. In the any nature is unallowable. This in- specific case of computing devices, eludes, but is not limited to, the non- charging as direct costs is allowable for Federal entity's contributed portion by devices that are essential and allo- reason of cost-sharing agreements or cable, but not solely dedicated, to the any under-recoveries through negotia- performance of a Federal award. tion of flat amounts for indirect (F&A) (d) Where federally-donated or fur- costs.Also,any excess of costs over au- nished materials are used in per- thorized funding levels transferred forming the Federal award, such mate- from any award or contract to another rials will be used without charge. award or contract is unallowable. All losses are not allowable indirect (F&A) [78 FR 78608, Dec. 26, 2013, as amended at 79 costs and are required to be included in FR 75887,Dec.19,2014] 173 §200.454 2 CFR Ch. II (1-1-22 Edition) §200.454 Memberships, subscriptions, §200.458 Pre-award costs. and professional activity costs. pre-award costs are those incurred (a) Costs of the non-Federal entity's prior to the effective date of the Fed- • membership in business, technical, and eral award or subaward directly pursu- professional organizations are allow- ant to the negotiation and in anticipa- able. tion of the Federal award where such (b) Costs of the non-Federal entity's costs are necessary for efficient and subscriptions to business, professional, timely performance of the scope of '.I and technical periodicals are allowable: work. Such costs are allowable only to (c) Costs of membership in any civic the extent that they would have been or community organization are allow- allowable if incurred after the date of able with prior approval by the Federal the Federal award and only with the awarding agency or pass-through enti- written approval of the Federal award- ty. ing agency. If charged to the award, (d) Costs of membership in any coun- these costs must be charged to the ini- try club or social or dining club or or- tial budget period of the award, unless ganization are unallowable. otherwise specified by the Federal (e) Costs of membership in organiza- awarding agency or pass-through enti- tions whose primary purpose is lob- ty. bying are unallowable. See also §200.450. [85 FR 49569,Aug.13,2020] [78 FR 78608, Dec. 26, 2013, as amended at 85 §200.459 Professional service costs. FR 49569,Aug.13,2020] (a) Costs of professional and consult- ant§200.455 Organization costs. services rendered by persons who are members of a particular profession Costs such as incorporation fees, bro- or possess a special skill, and who are kers' fees,fees to promoters,organizers not officers or employees of the non- or management consultants, attorneys, Federal entity, are allowable, subject accountants, or investment counselor, to paragraphs(b)and (c) of this section whether or not employees of the non- when reasonable in relation to the Federal entity in connection with es- services rendered and`when not contin- tablishment or reorganization of an or- gent upon recovery of the costs from ganization, are unallowable except the Federal Government. In addition, with prior approval of the Federal legal and related services are limited awarding agency. under§200.435. §200.456 Participant support costs. (b)In determining the allowability of costs in a particular case,no single fac- Participant support costs as defined tor or any special combination of fac- in §200.1 are allowable with the prior tors is necessarily determinative. How- approval of the Federal awarding agen- ever, the following factors are relevant: cy. (1) The nature and scope of the serv- [85 FR 49569,Aug.13,2020] ice rendered in relation to the service required. §200.457 Plant and security costs. (2) The necessity of contracting for and reasonable expenses the service, considering the non-Fed- Necessaryincurred for protection and security of ticueral entity's capability in the par facilities, personnel,and work products ticular Th area. osts, are allowable. Such costs include, but (3) The past thepat yearsea of such Fed- are not limited to, wages and uniforms particularly in prior to Fed eral awards. of personnel engaged in security activi- ties; equipment; barriers; protective (4) The impact Federal awardson the non-Federal entity's business (i.e., (non-military)gear, devices, and equip- what new problems have arisen). ment; contractual security services; (5)Whether the proportion of Federal and consultants. Capital expenditures work to the non-Federal entity's total for plant security purposes are subject business is such as to influence the to§200.439. non-Federal entity in favor of incur- [85 FR 49569,Aug.13,2020] ring the cost, particularly where the 174 OMB Guidance §200.463 services rendered are not of a con- (3) The non-Federal entity may tinuing nature and have little relation- charge the Federal award during close- ship to work under Federal awards. out for the costs of publication or shar- (6) Whether the service can be per- ing of research results if the costs are formed more economically by direct not incurred during the period of per- employment rather than contracting. formance of the Federal award. If (7) The qualifications of the indi- charged to the award, these costs must vidual or concern rendering the service be charged to the final budget period of and the customary fees charged, espe- the award, unless otherwise specified cially on non-federally funded activi- by the Federal awarding agency. ties. [78 FR 78608, Dec. 26, 2013, as amended at 85 (8) Adequacy of the contractual FR 49569,Aug.13,2020] agreement for the service(e.g., descrip- tion of the service, estimate of time re- §200.462 Rearrangement and recon- quired, rate of compensation, and ter- version costs. mination provisions). (a) Costs incurred for ordinary and (c) In addition to the factors in para- normal rearrangement and alteration graph (b) of this section, to be allow- of facilities are allowable as indirect able, retainer fees must be supported costs. Special arrangements and alter- by evidence of bona fide services avail- ations costs incurred specifically for a able or rendered. Federal award are allowable as a direct [78 FR 78608, Dec. 26, 2013, as amended at 85 cost with the prior approval of the Fed- FR 49569,Aug.13,2020] eral awarding agency or pass-through entity. §200.460 Proposal costs. (b) Costs incurred in the restoration Proposal costs are the costs of pre- or rehabilitation of the non-Federal en- paring bids, proposals, or applications tity's facilities to approximately the on potential Federal and non-Federal same condition existing immediately awards or projects, including the devel- prior to commencement of Federal opment of data necessary to support awards, less costs related to normal the non-Federal entity's bids or pro- wear and tear, are allowable. posals. Proposal costs of the current accounting period of both successful §200.463 Recruiting costs. and unsuccessful bids and proposals (a) Subject to paragraphs (b) and (c) normally should be treated as indirect of this section, and provided that the (F&A) costs and allocated currently to size of the staff recruited and main- all activities of the non-Federal entity. tained is in keeping with workload re- No proposal costs of past accounting quirements, costs of"help wanted" ad- periods will be allocable to the current vertising, operating costs of an em- period. ployment office necessary to secure and maintain an adequate staff, costs §200.461 Publication and printing of operating an aptitude and edu- costs. cational testing program, travel costs (a) Publication costs for electronic of employees while engaged in recruit- and print media, including distribu- ing personnel, travel costs of appli- tion, promotion, and general handling cants for interviews for prospective are allowable. If these costs are not employment, and relocation costs in- identifiable with a particular cost ob- curred incident to recruitment of new jective, they should be allocated as in- employees, are allowable to the extent direct costs to all benefiting activities that such costs are incurred pursuant of the non-Federal entity. to the non-Federal entity's standard (b) Page charges for professional recruitment program. Where the non- journal publications are allowable Federal entity uses employment agen- where: cies, costs not in excess of standard (1) The publications report work sup- commercial rates for such services are ported by the Federal Government; and allowable. (2)The charges are levied impartially (b) Special emoluments, fringe bene- on all items published by the journal, fits, and salary allowances incurred to whether or not under a Federal award. attract professional personnel that do 175 §200.464 2 CFR Ch. II (1-1-22 Edition) not meet the test of reasonableness or (3) The reimbursement does not ex- do not conform with the established ceed the employee's actual (or reason- practices of the non-Federal entity,are ably estimated)expenses. unallowable. (b) Allowable relocation costs for (c) Where relocation costs incurred current employees are limited to the incident to recruitment of a new em- following: ployee have been funded in whole or in (1) The costs of transportation of the part to a Federal award, and the newly employee, members of his or her imme- hired employee resigns for reasons diate family and his household, and within the employee's control within 12 personal effects to the new location. months after hire, the non-Federal en- (2) The costs of finding a new home, tity will be required to refund or credit such as advance trips by employees and the Federal share of such relocation spouses to locate living quarters and costs to the Federal Government. See temporary lodging during the transi- also§200.464. tion period, up to maximum period of (d) Short-term, travel visa costs (as 30 calendar days. opposed to longer-term, immigration (3) Closing costs, such as brokerage, visas) are generally allowable expenses legal, and appraisal fees, incident to that may be proposed as a direct cost. the disposition of the employee's Since short-term visas are issued for a former home. These costs, together specific period and purpose, they can be with those described in (4), are limited clearly identified as directly connected to 8 per cent of the sales price of the to work performed on a Federal award. employee's former home. For these costs to be directly charged (4)The continuing costs of ownership to a Federal award, they must: (for up to six months) of the vacant (1) Be critical and necessary for the former home after the settlement or conduct of the project; lease date of the employee's new per- (2) Be allowable under the applicable manent home, such as maintenance of cost principles; buildings and grounds (exclusive of fix- (3) Be consistent with the non-Fed- ing-up expenses), utilities, taxes, and eral entity's cost accounting practices property insurance. and non-Federal entity policy;and (5) Other necessary and reasonable (4) Meet the definition of "direct expenses normally incident to reloca- cost" as described in the applicable tion, such as the costs of canceling an cost principles. unexpired lease, transportation of per- ', sonal property, and purchasing insur- [78 FR 78608, Dec. 26, 2013, as amended at 79 ance against loss of or damages to per- FR 75887, Dec. 19, 2014; 85 FR 49569, Aug. 13, sonal property. The cost of canceling 2020] an unexpired lease is limited to three §200.464 Relocation costs of employ- times the monthly rental. ees. (c)Allowable relocation costs for new employees are limited to those de- (a) Relocation costs are costs inci- scribed in paragraphs (b)(1) and (2) of dent to the permanent change of duty this section. When relocation costs in- assignment (for an indefinite period or curred incident to the recruitment of for a stated period of not less than 12 new employees have been charged to a months) of an existing employee or Federal award and the employee re- upon recruitment of a new employee. signs for reasons within the employee's Relocation costs are allowable, subject control within 12 months after hire, to the limitations described in para- the non-Federal entity must refund or graphs (b), (c), and (d) of this section, credit the Federal Government for its provided that: share of the cost. If dependents are not (1) The move is for the benefit of the permitted at the location for any rea- employer. son and the costs do not include costs (2) Reimbursement to the employee of transporting household goods, the is in accordance with an established costs of travel to an overseas location. written policy consistently followed by must be considered travel costs in ac- the employer. cordance with §200.474 Travel costs, 176 OMB Guidance §200.465 and not this relocations costs of em- rectly or through corporations, trusts, ployees(See also§200.464). or similar arrangements in which they (d) The following costs related to re- hold a controlling interest. For exam- location are unallowable: ple, the non-Federal entity may estab- (1) Fees and other costs associated lish a separate corporation for the sole with acquiring a new home. purpose of owning property and leasing (2) A loss on the sale of a former it back to the non-Federal entity. home. (4) Family members include one (3) Continuing mortgage principal party with any of the following rela- and interest payments on a home being tionships to another party: sold. (i)Spouse,and parents thereof; (4) Income taxes paid by an employee (ii)Children,and spouses thereof; related to reimbursed relocation costs. (iii)Parents, and spouses thereof; [78 FR 78608, Dec. 26, 2013, as amended at 79 (iv)Siblings, and spouses thereof; FR 75887, Dec. 19, 2014; 85 FR 49570, Aug. 13, (v) Grandparents and grandchildren, 2020] and spouses thereof; §200.465 Rental costs of real pro pert (vi) Domestic partner and parents P P Y thereof, including domestic partners of and equipment. any individual in 2 through 5 of this (a) Subject to the limitations de- definition;and scribed in paragraphs (b) through (d) of (vii) Any individual related by blood this section, rental costs are allowable or affinity whose close association with to the extent that the rates are reason- the employee is the equivalent of a able in light of such factors as: rental family relationship. costs of comparable property, if any; (5) Rental costs under leases which market conditions in the area; alter- are required to be treated as capital natives available; and the type, life ex- leases under GAAP are allowable only pectancy, condition, and value of the up to the amount(as explained in para- property leased. Rental arrangements graph (b) of this section) that would be should be reviewed periodically to de- allowed had the non-Federal entity termine if circumstances have changed purchased the property on the date the and other options are available. lease agreement was executed. The pro- (b)Rental costs under "sale and lease visions of GAAP must be used to deter- back"arrangements are allowable only mine whether a lease is a capital lease. up to the amount that would be al- Interest costs related to capital leases lowed had the non-Federal entity con- are allowable to the extent they meet tinued to own the property. This 'the criteria in §200.449 Interest. Unal- amount would include expenses such as lowable costs include amounts paid for depreciation, maintenance, taxes, and profit, management fees, and taxes insurance. that would not have been incurred had (c) Rental costs under "less-than- the non-Federal entity purchased the arm's-length" leases are allowable only property. up to the amount(as explained in para- (6) The rental of any property owned graph (b) of this section). For this pur- by any individuals or entities affiliated pose, a less-than-arm's-length lease is with the non-Federal entity, to include one under which one party to the lease commercial or residential real estate, agreement is able to control or sub- for purposes such as the home office stantially influence the actions of the workspace is unallowable. other. Such leases include, but are not (d) Rental costs under leases which limited to those between: are required to be accounted for as a fi- (1) Divisions of the non-Federal enti- nanced purchase under GASB stand- ty; ards or a finance lease under FASB (2) The non-Federal entity under standards under GAAP are allowable common control through common offi- only up to the amount (as explained in cers, directors, or members; and paragraph (b) of this section) that (3) The non-Federal entity and a di- would be allowed had the non-Federal rector, trustee, officer, or key em- entity purchased the property on the ployee of the non-Federal entity or an date the lease agreement was executed. immediate family member, either di- Interest costs related to these leases 177 §200.466 2 CFR Ch. II (1-1-22 Edition) are allowable to the extent they meet (5) It is the IHE's practice to simi- the criteria in §200.449. Unallowable larly compensate students under-Fed- '! costs include amounts paid for profit, eral awards as well as other activities. management fees,and taxes that would (b) Charges for tuition remission and not have been incurred had the non- other forms of compensation paid to Federal entity purchased the property. students as, or in lieu of, salaries and (e) Rental or lease payments are al- wages must be subject to the reporting lowable under lease contracts where requirements in §200.430, and must be the non-Federal entity is required to treated as direct or indirect cost in ac- recognize an intangible right-to-use cordance with the actual work being lease asset (per GASB) or right of use performed. Tuition remission may be operating lease asset (per FASB) for charged on an average rate basis. See purposes of financial reporting in ac- also§200.431. cordance with GAAP. [78 FR 78608, Dec. 26, 2013, as amended at 85 (f) The rental of any property owned FR 49569,Aug.13,2020] by any individuals or entities affiliated with the non-Federal entity, to include §200.467 Selling and marketing costs. commercial or residential real estate, Costs of selling and marketing any for purposes such as the home office products or services of the non-Federal workspace is unallowable. entity (unless allowed under §200.421) [78 FR 78608, Dec. 26, 2013, as amended at 85 are unallowable, except as direct costs, FR 49569,Aug.13,2020] with prior approval by the Federal awarding agency when necessary for §200.466 Scholarships and student aid the performance of the Federal award. costs. [85 FR 49570,Aug.13,2020] (a) Costs of scholarships, fellowships, and other programs of student aid at §200.468 Specialized service facilities. IHEs are allowable only when the pur- i (a) The costs of services provided by pose of the Federal award is to provide highly complex or specialized facilities training to selected participants and operated by the non-Federal entity, the charge is approved by the Federal such as computing facilities, wind tun- awarding agency. However, tuition re- nels, and reactors are allowable, pro- mission and other forms of compensa- vided the charges for the services meet tion paid as, or in lieu of, wages to stu- the conditions of either paragraph (b) dents performing necessary work are or (c) of this section, and, in addition, allowable provided that: take into account any items of income (1) The individual is conducting ac- or Federal financing that qualify as ap- tivities necessary to the Federal plicable credits under§200.406. award; (b) The costs of such services, when (2) Tuition remission and other sup- material, must be charged directly to port are provided in accordance with applicable awards based on actual established policy of the IHE and con- usage of the services on the basis of a sistently provided in a like manner to schedule of rates or established meth- students in return for similar activities odology that: conducted under Federal awards as (1) Does not discriminate between ac- well as other activities; and tivities under Federal awards and other (3) During the academic period, the activities of the non-Federal entity, in- student is enrolled in an advanced de- cluding usage by the non-Federal enti- gree program at a non-Federal entity ty for internal purposes,and or affiliated institution and the activi- (2) Is designed to recover only the ag- ties of the student in relation to the gregate costs of the services. The costs Federal award are related to the degree of each service must consist normally program; of both its direct costs and its allocable (4)The tuition or other payments are share of all indirect (F&A)costs. Rates reasonable compensation for the work must be adjusted at least biennially, performed and are conditioned explic- and must take into consideration over/ itly upon the performance of necessary under-applied costs of the previous pe- work;and riod(s). 178 OMB Guidance §200.471 (c) Where the costs incurred for a tion afforded the Federal Government service are not material, they may be and, in the latter case, when the Fed- allocated as indirect(F&A)costs. eral awarding agency makes available (d) Under some extraordinary cir- the necessary exemption certificates, cumstances, where it is in the best in- (ii) Special assessments on land terest of the Federal Government and which represent capital improvements, the non-Federal entity to establish al- and ternative costing arrangements, such (iii)Federal income taxes. arrangements may be worked out with (2) Any refund of taxes, and any pay- the Federal cognizant agency for indi- ment to the non-Federal entity of in- rect costs. terest thereon, which were allowed as [78 FR 78608, Dec. 26, 2013, as amended at 85 Federal award costs, will be credited FR 49569,Aug.13,2020] either as a cost reduction or cash re- fund, as appropriate, to the Federal §200.469 Student activity costs. Government. However, any interest ac- Costs incurred for intramural activi- tually paid or credited to an non-Fed- ties, student publications, student eral entity incident to a refund of tax, clubs, and other student activities, are interest, and penalty will be paid or unallowable, unless specifically pro- credited to the Federal Government vided for in the Federal award. only to the extent that such interest accrued over the period during.which §200.470 Taxes (including Value the non-Federal entity has been reim- Added Tax). bursed by the Federal Government for (a) For states,local governments and the taxes, interest, and penalties. Indian tribes: (c) Value Added Tax (VAT) Foreign (1) Taxes that a governmental unit is taxes charged for the purchase of goods legally required to pay are allowable, or services that a non-Federal entity is except for self-assessed taxes that dis- legally required to pay in country is an proportionately affect Federal pro- allowable expense under Federal grams or changes in tax policies that awards. Foreign tax refunds or applica- disproportionately affect Federal pro- ble credits under Federal awards refer grams. to receipts, or reduction of expendi- (2) Gasoline taxes, motor vehicle tures, which operate to offset or reduce fees, and other taxes that are in effect expense items that are 'allocable to user fees for benefits provided to the Federal awards as direct or indirect Federal Government are allowable. costs. To the extent that such credits (3) This provision does not restrict accrued or received by the non-Federal the authority of the Federal awarding entity relate to allowable cost, these agency to identify taxes where Federal costs must be credited to the Federal participation is inappropriate. Where awarding agency either as costs or cash the identification of the amount of un- refunds. If the costs are credited back allowable taxes would require an inor- to the Federal award, the non-Federal dinate amount of effort, the cognizant entity may reduce the Federal share of agency for indirect costs may accept a costs by the amount of the foreign tax reasonable approximation thereof. reimbursement, or where Federal (b) For nonprofit organizations and award has not expired, use the foreign IHEs: government tax refund for approved ac- (1) In general, taxes which the non- tivities under the Federal award with Federal entity is required to pay and prior approval of the Federal awarding which are paid or accrued in accord- agency. ance with GAAP, and payments made to local governments in lieu of taxes §200.471 Telecommunication costs and which are commensurate with the local video surveillance costs. government services received are al- (a) Costs incurred for telecommuni- lowable, except for: cations and video surveillance services (i) Taxes from which exemptions are or equipment such as phones, internet, available to the non-Federal entity di- video surveillance, cloud servers are al- rectly or which are available to the lowable except for the following cir- non-Federal entity based on an exemp- cumstances: 179 §200.472 2 CFR Ch. II (1-1-22 Edition) (b) Obligating or expending covered (c) Loss of useful value of special telecommunications and video surveil- tooling, machinery, and equipment is lance services or equipment or services generally allowable if: as described in§200.216 to: (1) Such special tooling, special ma- (1) Procure or obtain, extend or chinery, or equipment is not reason- renew a contract to procure or obtain; ably capable of use in the other work of (2) Enter into a contract (or extend the non-Federal entity, or renew a contract)to procure; or (2) The interest of the Federal Gov- (3) Obtain the equipment, services, or ernment is protected by transfer of systems. title or by other means deemed appro- 685 FR 49570,Aug.13,2020] priate by the Federal awarding agency �9 (see also§200.313(d)),and §200.472 Termination costs. (3) The loss of useful value for any Termination of a Federal award gen- one terminated Federal award is lim- erally gives rise to the incurrence of ited to that portion of the acquisition costs, or the need for special treatment cost which bears the same ratio to the of costs, which would not have arisen total acquisition cost as the termi- had the Federal award not been termi- nated portion of the Federal award nated. Cost principles covering these bears to the entire terminated Federal items are set forth in this section. or They are to be used in conjunction which and other Federal awards award with the other provisions of this part `Which the special tooling, machinery, in termination situations. or equipment was acquired. (a) The cost of items reasonably usa- (d) Rental costs under unexpired ble on the non-Federal entity's other leases are generally allowable where work must not be allowable unless the clearly shown to have been reasonably non-Federal entity submits evidence necessary for the performance of the that it would not retain such items at terminated Federal award less the re- cost without sustaining a loss. In de- sidual value of such leases, if: ciding whether such items are reason- (1) The amount of such rental ably usable on other work of the non- claimed does not exceed the reasonable Federal entity, the Federal awarding use value of the property leased for the agency should consider the non-Federal period of the Federal award and such entity's plans and orders for current further period as may be reasonable, and scheduled activity. Contempora- and neous purchases of common items by (2) The non-Federal entity makes all the non-Federal entity must be re- reasonable efforts to terminate, assign, garded as evidence that such items are settle, or otherwise reduce the cost of reasonably usable on the non-Federal such lease. There also may be included entity's other work. Any acceptance of the cost of alterations of such leased common items as allocable to the ter- property, provided such alterations minated portion of the Federal award were necessary for the performance of must be limited to the extent that the the Federal award, and of reasonable quantities of such items on hand, in restoration required by the provisions transit, and on order are in excess of of the lease. the reasonable quantitative require (e) Settlement expenses including the ments of other work. following are generally allowable: (b) If in a particular case, despite all reasonable efforts by the non-Federal (1) Accounting, legal, clerical, and entity, certain costs cannot be discon- similar costs reasonably necessary for: tinued immediately after the effective (i) The preparation and presentation date of termination, such costs are to the Federal awarding agency of set- generally allowable within the limita- tlement claims and supporting data tions set forth in this part, except that with respect to the terminated portion any such costs continuing after termi- of the Federal award, unless the termi- nation due to the negligent or willful nation is for cause (see subpart D, in failure of the non-Federal entity to dis- eluding§§200.339-200.343);and continue such costs must be unallow- (ii) The termination and settlement able. of subawards. 180 OMB Guidance §200.475 (2) Reasonable costs for the storage, official business of the non-Federal en- transportation, protection, and disposi- tity. Such costs may be charged on an tion of property provided by the Fed- actual cost basis, on a per diem or eral Government or acquired or pro- mileage basis in lieu of actual costs in- duced for the Federal award. curred, or on a combination of the two, (f)Claims under subawards,including provided the method used is applied to the allocable portion of claims which an entire trip and not to selected days are common to the Federal award and of the trip, and results in charges con- to.other work of the non-Federal enti- sistent with those normally allowed in ty, are generally allowable. An appro- like circumstances in the non-Federal priate share of the non-Federal entity's entity's non-federally-funded activities indirect costs may be allocated to the and in accordance with non-Federal en- amount of settlements with contrac- tity's written travel reimbursement tors and/or subrecipients, provided that policies. Notwithstanding the provi- the amount allocated is otherwise con- sions of §200.444, travel costs of offi- sistent with the basic guidelines con- cials covered by that section are allow- tained in§200.414. The indirect costs so able with the prior written approval of allocated must exclude the same and the Federal awarding agency or pass- similar costs claimed directly or indi- through entity when they are specifi- rectly as settlement expenses. cally related to the Federal award. [78 FR 78608, Dec. 26, 2013. Redesignated and (b) Lodging and subsistence. Costs in- amended at 85 FR 49570,Aug.13,2020] curred by employees and officers for §200.473 Training and education costs. travel, including costs of lodging, other subsistence, and incidental expenses, The cost of training and education must be considered reasonable and oth- provided for employee development is erwise allowable only to the extent allowable. such costs do not exceed charges nor- [78 FR 78608,Dec.26,2013.Redesignated at 85 mally allowed by the non-Federal enti- FR 49570,Aug.13,2020] ty in its regular operations as the re- sult of the non-Federal entity's written §200.474 Transportation costs. travel policy. In addition, if these costs Costs incurred for freight, express, are charged directly to the Federal cartage, postage, and other transpor- award documentation must justify tation services relating either to goods that: purchased, in process, or delivered, are (1) Participation of the individual is allowable. When such costs can readily necessary to the Federal award;and be identified with the items involved, (2) The costs are reasonable and con- they may be charged directly as trans- sistent with non-Federal entity's es- portation costs or added to the cost of tablished travel policy. such items. Where identification with (c)(1) Temporary dependent care the materials received cannot readily costs (as dependent is defined in 26 be made, inbound transportation cost U.S.C. 152) above and beyond regular may be charged to the appropriate in- dependent care that directly results direct (F&A) cost accounts if the non- from travel to conferences is allowable Federal entity follows a consistent, eq- provided that: uitable procedure in this respect. Out- (i)The costs are a direct result of the bound freight, if reimbursable under individual's travel for the Federal the terms and conditions of the Federal award; award, should be treated as a direct (ii) The costs are consistent with the cost. non-Federal entity's documented tray- [78 FR 78608,Dec.26,2013.Redesignated at 85 el policy for all entity travel;and FR 49570,Aug.13,2020] (iii) Are only temporary during the travel period. §200.475 Travel costs. (2) Travel costs for dependents are (a) General. Travel costs are the ex- unallowable, except for travel of dura- penses for transportation, lodging, sub- tion of six months or more with prior sistence, and related items incurred by approval of the Federal awarding agen- employees who are in travel status on cy. See also§200.432. 181 §200.476 2 CFR Ch. II (1-1-22 Edition) (d) In the absence of an acceptable, §200.476 Trustees. written non-Federal entity policy re- Travel and subsistence costs of trust- garding travel costs, the rates and ees(or directors)at IHEs and nonprofit amounts established under 5 U.S.C. 5701-11, ("Travel and Subsistence Ex- organizations are allowable. See also §200.475. penses; Mileage Allowances"), or by the Administrator of General Services, [85 FR 49571,Aug.13,2020] or by the President (or his or her des- ignee) pursuant to any provisions of Subpart F—Audit Requirements such subchapter must apply to travel under Federal awards (48 CFR 31.205- GENERAL 46(a)). { (e) Commercial air travel. (1) Airfare §200.500 Purpose. costs in excess of the basic least expen- This part sets forth standards for ob- sive unrestricted accommodations taining consistency and uniformity class offered by commercial airlines among Federal agencies for the audit are unallowable except when such ac- of non-Federal entities expending Fed- commodations would: eral awards. (i)Require circuitous routing; AUDITS (ii) Require travel during unreason- able hours; §200.501 Audit requirements. (iii)Excessively prolong travel; (iv) Result in additional costs that (a)Audit required. A non-Federal exit- would offset the transportation say- , ty that expends$750,000 or more during ings;or the non-Federal entity's fiscal year in (v) Offer accommodations not reason- Federal awards must have a single or ably adequate for the traveler's med- program-specific audit conducted for ical needs. The non-Federal entity that year in accordance with the provi- • must justify and document these condi- sions of this part. tions on a case-by-case basis in order (b) Single audit. A non-Federal entity for the use of first-class or business- that expends $750,000 or more during class airfare to be allowable in such the non-Federal entity's fiscal year in cases. Federal awards must have a single (2) Unless a pattern of avoidance is audit conducted in accordance with detected, the Federal Government will §200.514 except when it elects to have a generally not question a non-Federal program-specific audit conducted in ac cordance with paragraph(c)of this sec- entity's determinations that cus- tomary standard airfare or other dis- count airfare is unavailable for specific (c) Program specific audit election. trips if the non-Federal entity can When an auditee expends Federal demonstrate that such airfare was not awards under only one Federal pro- available in the specific case. gram (excluding R&D) and the Federal (f) Air travel by other than commercial program's statutes, regulations, or the carrier. Costs of travel by non-Federal terms and conditions of the Federal award do not require a financial state- entity-owned, -leased, or -chartered ment audit of the auditee, the auditee aircraft include the cost of lease, char- may elect to have a program-specific ter, operation (including personnel audit conducted in accordance with costs), maintenance, depreciation, in- §200.507. A program-specific audit may surance, and other related costs. The not be elected for R&D unless all of the portion of such costs that exceeds the Federal awards expended were received cost of airfare as provided for in para- from the same Federal agency, or the graph (d) of this section, is unallow- same Federal agency and the same able. pass-through entity, and that Federal [78 FR 78608, Dec. 26, 2013, as amended at 79 agency, or pass-through entity in the FR 75887, Dec. 19, 2014. Redesignated and case of a subrecipient, approves in ad- amended at 85 FR 49570,Aug.13,2020] vance a program-specific audit. 182 OMB Guidance §200.502 (d)Exemption when Federal awards ex- ments, as necessary, to ensure compli- pended are less than$750,000. A non-Fed- ance by for-profit subrecipients. The eral entity that expends less than agreement with the for-profit sub- $750,000 during the non-Federal entity's recipient must describe applicable fiscal year in Federal awards is exempt compliance requirements and the for- from Federal audit requirements for profit subrecipient's compliance re- that year, except as noted in §200.503, sponsibility. Methods to ensure compli- but records must be available for re- ance for Federal awards made to for- view or audit by appropriate officials profit subrecipients may include pre- of the Federal agency, pass-through en- award audits, monitoring during the tity, and Government Accountability agreement, and post-award audits. See Office(GAO). also§200.332. (e) Federally Funded Research and De- velopment Centers (FFRDC). Manage- [78 FR 78608, Dec. 26, 2013, as amended at 79 ment of an auditee that owns or oper FR 75887, Dec. 19, 2014; 85 FR 49571, Aug. 13, ates a FFRDC may elect to treat the 2020] FFRDC as a separate entity for pur- §200.502 Basis for determining Fed- poses of this part. eral awards expended. (f) Subrecipients and contractors. An auditee may simultaneously be a re- (a) Determining Federal awards ex cipient, a subrecipient, and a con- pended. The determination of when a tractor. Federal awards expended as a Federal award is expended must be recipient or a subrecipient are subject based on when the activity related to to audit under this part. The payments the Federal award occurs. Generally, received for goods or services provided the activity pertains to events that re- as a contractor are not Federal awards. quire the non-Federal entity to comply Section§200.331 sets forth the consider- with Federal statutes, regulations, and ations in determining whether pay- the terms and conditions of Federal ments constitute a Federal award or a awards, such as: expenditure/expense payment for goods or services provided transactions associated with awards in- as a contractor. eluding grants, cost-reimbursement (g) Compliance responsibility for con- contracts under the FAR, compacts tractors. In most cases, the auditee's with Indian Tribes, cooperative agree- compliance responsibility for contrac- ments, and direct appropriations; the tors is only to ensure that the procure- disbursement of funds to subrecipients; ment, receipt, and payment for goods the use of loan proceeds under loan and and services comply with Federal stat- loan guarantee programs; the receipt of utes, regulations, and the terms and property; the receipt of surplus prop- conditions of Federal awards. Federal erty; the receipt or use of program in- award compliance requirements nor- come; the distribution or use of food mally do not pass through to contrac- commodities; the disbursement of tors. However, the auditee is respon- amounts entitling the non-Federal en- sible for ensuring compliance for pro- tity to an interest subsidy; and the pe- curement transactions which are strut- riod when insurance is in force. tured such that the contractor is re- (b) Loan and loan guarantees (loans). sponsible for program compliance or Since the Federal Government is at the contractor's records must be re- risk for loans until the debt is repaid, viewed to determine program compli- the following guidelines must be used ance. Also, when these procurement to calculate the value of Federal transactions relate to a major pro- awards expended under loan programs, gram, the scope of the audit must in- except as noted in paragraphs (c) and elude determining whether these trans- (d) of this section: actions are in compliance with Federal (1) Value of new loans made or re- statutes, regulations, and the terms ceived during the audit period;plus and conditions of Federal awards. (2) Beginning of the audit period bal- (h) For-profit subrecipient. Since this ance of loans from previous years for part does not apply to for-profit sub- which the Federal Government imposes recipients, the pass-through entity is continuing compliance requirements; responsible for establishing require- plus 183 §200.503 2 CFR Ch. II (1-1-22 Edition) (3) Any interest subsidy, cash, or ad- (j) Certain loans provided by the Na- ministrative cost allowance received. tional Credit Union Administration. For (c) Loan and loan guarantees(loans) at purposes of this part, loans made from IHEs. When loans are made to students the National Credit Union Share Insur- of an IHE but the IHE does not make ance Fund and the Central Liquidity the loans, then only the value of loans Facility that are funded by contribu- made during the audit period must be tions from insured non-Federal entities considered Federal awards expended in are not considered Federal awards ex- that audit period. The balance of loans pended. • for previous audit periods is not in- [78 FR 78608, Dec. 26, 2013, as amended at 79 eluded as Federal awards expended be- FR 75887,Dec.19,2014] cause the lender accounts for the prior balances. §200.503 Relation to other audit re- (d) Prior loan and loan guarantees quirements. (loans). Loans, the proceeds of which (a)An audit conducted in accordance were received and expended in prior with this part must be in lieu of any fi- years, are not considered Federal nancial audit of Federal awards which awards expended under this part when a non-Federal entity is required to un- the Federal statutes, regulations, and dergo under any other Federal statute the terms and conditions of Federal or regulation. To the extent that such awards pertaining to such loans impose audit provides a Federal agency with no continuing compliance require- the information it requires to carry ments other than to repay the loans. out its responsibilities under Federal (e) Endowment funds. The cumulative statute or regulation, a Federal agency balance of Federal awards for endow- must rely upon and use that informa- ment funds that are federally re- tion. stricted are considered Federal awards (b) Notwithstanding subsection (a), a expended in each audit period in which Federal agency, Inspectors General, or the funds are still restricted. GAO may conduct or arrange for addi- tional audits which are necessary to (f) Free rent. Free rent received by carry out its responsibilities under { itself is not considered a Federal award Federal statute or regulation. The pro- expended under this part. However, free visions of this part do not authorize rent received as part of a Federal any non-Federal entity to constrain, in award to carry out a Federal program any manner, such Federal agency from must be included in determining Fed- carrying out or arranging for such ad- eral awards expended and subject to ditional audits,except that the Federal audit under this part. agency must plan such audits to not be (g) Valuing non-cash assistance. Fed- duplicative of other audits of Federal eral non-cash assistance, such as free awards. Prior to commencing such an rent, food commodities, donated prop- audit, the Federal agency or pass- erty, or donated surplus property, must through entity must review the FAC be valued at fair market value at the for recent audits submitted by the non- time of receipt or the assessed value Federal entity, and to the extent such provided by the Federal agency. audits meet a Federal agency or pass- (h) Medicare. Medicare payments to a through entity's needs, the Federal non-Federal entity for providing pa- agency or pass-through entity must tient care services to Medicare-eligible rely upon and use such audits. Any ad- individuals are not considered Federal ditional audits must be planned and awards expended under this part. performed in such a way as to build (i) Medicaid. Medicaid payments to a upon work performed, including the subrecipient for providing patient care audit documentation, sampling, and services to Medicaid-eligible individ- testing already performed, by other uals are not considered Federal awards auditors. expended under this part unless a state (c) The provisions of this part do not requires the funds to be treated as Fed- limit the authority of Federal agencies eral awards expended because reim- to conduct, or arrange for the conduct bursement is on a cost-reimbursement of, audits and evaluations of Federal basis. awards, nor limit the authority of any 184 OMB Guidance §200.507 Federal agency Inspector General or tion or statute, in effect on January 1, other Federal official. For example, re- 1987, to undergo its audits less fre- quirements that may be applicable quently than annually, is permitted to under the FAR or CAS and the terms undergo its audits pursuant to this and conditions of a cost-reimbursement part biennially. This requirement must contract may include additional appli- still be in effect for the biennial period. cable audits to be conducted or ar- (b) Any nonprofit organization that ranged for by Federal agencies. had biennial audits for all biennial pe- (d) Federal agency to pay for additional riods ending between July 1, 1992, and audits. A Federal agency that conducts January 1, 1995, is permitted to under- or arranges for additional audits must, go its audits pursuant to this part bi- consistent with other applicable Fed- ennially. eral statutes and regulations, arrange for funding the full cost of such addi- §200.505 Sanctions. tional audits. In cases of continued inability or un- (e) Request for a program to be audited willingness to have an audit conducted as a major program. A Federal awarding in accordance with this part, Federal agency may request that an auditee agencies and pass-through entities have a particular Federal program au- must take appropriate action as pro- dited as a major program in lieu of the vided in§200.339. Federal awarding agency conducting or arranging for the additional audits. To [85 FR 49571,Aug.13,2020] allow for planning, such requests should be made at least 180 calendar §200.506 Audit costs. days prior to the end of the fiscal year See§200.425. to be audited. The auditee, after con- [85 FR 49571,Aug.13,2020] sultation with its auditor, should promptly respond to such a request by §200.507 Program-specific audits. informing the Federal awarding agency (a) Program-specific audit guide avail- whether the program would otherwise able. In some cases, a program-specific be audited as a major program using audit guide will be available to provide the risk-based audit approach de- specific guidance to the auditor with scribed in §200.518 and, if not, the esti- respect to internal controls, compli- mated incremental cost. The Federal awarding agency must then ance requirements, suggested aure- promptly procedures, and audit reporting re- confirm to the auditee whether it pro- wants the program audited as a major quirements. A listing of currentnbefoand program. If the program is to be au- gram-specific auditnc guides can, Part 8, dited as a major program based upon in the Appendixco VI, Program-Specificro supplement,f, it VI, Audit this Federal awarding agency request, Guides, which includes a website where and the Federal awarding agency a copy of the guide can be obtained. agrees to pay the full incremental When a current costs, then the auditee must have the program-specific, eauditor audt program audited as a major program. A guide is available, the must per- pass-through entity may use the provi- follow a program-specific and the guide when sions of this forming a audit. paragraph for a sub- (b) Program-specific audit guide not recipient. available. (1) When a current program- [78 FR 78608, Dec. 26, 2013, as amended at 85 specific audit guide is not available, FR 49570,Aug.13,2020] the auditee and auditor must have ba- sically the same responsibilities for the Federal program as they would have Except for the provisions for biennial for an audit of a major program in a audits provided in paragraphs (a) and single audit. (b) of this section, audits required by (2) The auditee must prepare the fi- this part must be performed annually. nancial statement(s) for the Federal Any biennial audit must cover both program that includes, at a minimum, years within the biennial period. a schedule of expenditures of Federal (a) A state, local government, or In- awards for the program and notes that dian tribe that is required by constitu- describe the significant accounting 185 §200.507 2 CFR Ch. II (1-1-22 Edition) policies used in preparing the schedule, complied with laws, regulations, and a summary schedule of prior audit find- the terms and conditions of Federal ings consistent with the requirements awards which could have a direct and of §200.511(b), and a corrective action material effect on the Federal pro- plan consistent with the requirements gram; and of§200.511(c). (iv) A schedule of findings and ques- (3)The auditor must: tioned costs for the Federal program (i) Perform an audit of the financial that includes a summary of the audi- statement(s) for the Federal program tor's results relative to the Federal in accordance with GAGAS; program in a format consistent with (ii) Obtain an understanding of inter- §200.515(d)(1) and findings and ques- nal controls and perform tests of inter- tioned costs consistent with the re- nal controls over the Federal program quirements of§200.515(d)(3). consistent with the requirements of (c) Report submission for program-spe- §200.514(c)for a major program; cific audits. (1) The audit must be corn- (iii) Perform procedures to determine pleted and the reporting required by whether the auditee has complied with paragraph (c)(2) or (c)(3) of this section Federal statutes, regulations, and the submitted within the earlier of 30 cal- terms and conditions of Federal awards endar days after receipt of the audi- that could have a direct and material tor's report(s), or nine months after effect on the Federal program con- the end of the audit period, unless a sistent with the requirements of different period is specified in a pro- §200.514(d)for a major program; gram-specific audit guide. Unless re (iv)Follow up on prior audit findings, stricted by Federal law or regulation, perform procedures to assess the rea- the auditee must make report copies sonableness of the summary schedule available for public inspection. of prior audit findings prepared by the Auditees and auditors must ensure auditee in accordance with the require- re- ments of§200.511, and report, as a cur- portingrt their package respectivedoparts not include pro- rent of the year audit finding, when the audi- tected personally identifiable informa- tor concludes that the summary sched- tion. ule of prior audit findings materially (2) When a program-specific audit misrepresents the status of any prior audit finding;and guide is available, the auditee must (v) Report any audit findings con- electronically submit to the FAC the sistent with the requirements of data collection form prepared in ac- §200.516. cordance with §200.512(b), as applicable (4) The auditor's report(s) may be in to a program-specific audit, and the re- the form of either combined or sepa- porting required by the program-spe- rate reports and may be organized dif- cific audit guide. ferently from the manner presented in (3) When a program-specific audit 'II this section. The auditor's report(s) guide is not available, the reporting must state that the audit was con- package for a program-specific audit ducted in accordance with this part must consist of the financial state- and include the following: ment(s)of the Federal program, a sum- (i) An opinion (or disclaimer of opin- mary schedule of prior audit findings, ion) as to whether the financial state- and a corrective action plan as de- ment(s) of the Federal program is pre- scribed in paragraph (b)(2) of this sec- sented fairly in all material respects in tion, and the auditor's report(s) de- accordance with the stated accounting scribed in paragraph (b)(4) of this sec- policies; tion. The data collection form prepared (ii) A report on internal control re- in accordance with§200.512(b), as appli- lated to the Federal program, which cable to a program-specific audit, and must describe the scope of testing of one copy of this reporting package internal control and the results of the must be electronically submitted to tests; the FAC. (iii)A report on compliance which in- (d) Other sections of this part may eludes an opinion (or disclaimer of apply. Program-specific audits are sub- opinion) as to whether the auditee ject to: 186 OMB Guidance §200.510 (1)200.500 Purpose through 200.503 Re- for audit services, the objectives and lation to other audit requirements, scope of the audit must be made clear paragraph(d); and the non-Federal entity must re- (2) 200.504 Frequency of audits quest a copy of the audit organization's through 200.506 Audit costs; peer review report which the auditor is (3) 200.508 Auditee responsibilities required to provide under GAGAS. Fac- through 200.509 Auditor selection; tors to be considered in evaluating (4)200.511 Audit findings follow-up; each proposal for audit services include (5) 200.512 Report submission, para- the responsiveness to the request for graphs(e)through (h); proposal, relevant experience, avail- (6)200.513 Responsibilities; ability of staff with professional quali- (7) 200.516 Audit findings through fications and technical abilities, the 200.517 Audit documentation; results of ty (8)200.521 Management decision; and peer and external Whenever (9)Other referenced provisions of this controls reviews, and price. Whenever part unless contrary to the provisions tipossible, the auditee smallmust make businesses,ps of this section, a program-specific minority-ownedne effort t utilize women's audit guide, or program statutes and firms, and ng audit regulations. business enterprises, in procuring audit services as stated in §200.321, or the [78 FR 78608, Dec. 26, 2013, as amended at 79 FAR(48 CFR part 42),as applicable. FR 75887, Dec. 19, 2014; 85 FR 49571, Aug. 13, (b) Restriction on auditor preparing in- 2020] direct cost proposals. An auditor who AUDITEES prepares the indirect cost proposal or cost allocation plan may not also be se- §200.508 Auditee responsibilities. lected to perform the audit required by The auditee must: this part when the indirect costs recov- (a) Procure or otherwise arrange for ered by the auditee during the prior the audit required by this part in ac- year exceeded $1 million. This restric- cordance with §200.509, and ensure it is tion applies to the base year used in properly performed and submitted the preparation of the indirect cost when due in accordance with§200.512. proposal or cost allocation plan and (b) Prepare appropriate financial any subsequent years in which the re- statements, including the schedule of sulting indirect cost agreement or cost expenditures of Federal awards in ac- allocation plan is used to recover costs. cordance with§200.510. (c) Use of Federal auditors. Federal (c) Promptly follow up and take cor- auditors may perform all or part of the rective action on audit findings, in- work required under this part if they cluding preparation of a summary comply fully with the requirements of schedule of prior audit findings and a this part. corrective action plan in accordance [78 FR 78608, Dec. 26, 2013, as amended at 85 with§200.511(b)and(c),respectively. FR 49572, Aug. 13, 2020; 86 FR 10440, Feb. 22, (d)Provide the auditor with access to 2021] personnel, accounts, books, records, supporting documentation, and other §200.510 Financial statements. information as needed for the auditor (a) Financial statements. The auditee to perform the audit required by this must prepare financial statements that part. reflect its financial position, results of [78 FR 78608, Dec. 26, 2013, as amended at 85 operations or changes in net assets, FR 49572,Aug.13,2020] and, where appropriate, cash flows for §200.509 Auditor selection. the fiscal year audited. The financial statements must be for the same orga- (a) Auditor procurement. In procuring nizational unit and fiscal year that is audit services, the auditee must follow chosen to meet the requirements of the procurement standards prescribed this part. However, non-Federal entity- by the Procurement Standards in wide financial statements may also in- §§200.317 through 200.327 of subpart D of elude departments, agencies, and other this part or the FAR (48 CFR part 42), organizational units that have separate as applicable. In requesting proposals audits in accordance with §200.514(a) 187 §200.511 2 CFR Ch. II (1-1-22 Edition) and prepare separate financial state- (6) Include notes that describe that ments. significant accounting policies used in (b) Schedule of expenditures of Federal preparing the schedule, and note awards. The auditee must also prepare whether or not the auditee elected to a schedule of expenditures of Federal use the 10% de minimis cost rate as awards for the period covered by the covered in§200.414. auditee's financial statements which [78 FR 78608, Dec. 26, 2013, as amended at 79 must include the total Federal awards FR 75887, Dec. 19, 2014; 85 FR 49572, Aug. 13, expended as determined in accordance 20207 with §200.502. While not required, the auditee may choose to provide infor- §200.511 Audit findings follow-up. mation requested by Federal awarding (a)General. The auditee is responsible agencies and pass-through entities to for follow-up and corrective action on make the schedule easier to use. For all audit findings. As part of this re- example, when a Federal program has sponsibility, the auditee must prepare multiple Federal award years, the a summary schedule of prior audit find- auditee may list the amount of Federal ings. The auditee must also prepare a awards expended for each Federal corrective action plan for current year award year separately. At a minimum, audit findings. The summary schedule the schedule must: of prior audit findings and the correc- (1) List individual Federal programs tive action plan must include the ref- by Federal agency. For a cluster of pro- erence numbers the auditor assigns to grams, provide the cluster name, list audit findings under §200.516(c). Since individual Federal programs within the the summary schedule may include cluster of programs, and provide the audit findings from multiple years, it applicable Federal agency name. For must include the fiscal year in which R&D, total Federal awards expended the finding initially occurred. The cor- rective action plan and summary must be shown either by individual Federal award or by Federal agency schedule of prior audit findings must include findings relating to the finan- ') and major subdivision within the Fed- cial statements which are required to eral agency. For example, the National be reported in accordance with Institutes of Health is a major subdivi- GAGAS. sion in the Department of Health and (b) Summary schedule of prior audit Human Services. (2) For Federal awards received as a findings. The summary schedule of ubreci ient the name of thepass- prior audit findings must report the s p status of all audit findings included in through entity and identifying number the prior audit's schedule of findings assigned by the pass-through entity and questioned costs. The summary must be included. schedule must also include audit find- (3) Provide total Federal awards ex- ings reported in the prior audit's sum- pended for each individual Federal pro- mary schedule of prior audit findings gram and the Assistance Listings Num- except audit findings listed as cor- ber or other identifying number when rected in accordance with paragraph the Assistance Listings information is (b)(1) of this section, or no longer valid not available. For a cluster of pro- or not warranting further action in ac- grams also provide the total for the cordance with paragraph (b)(3) of this cluster. section. (4)Include the total amount provided (1) When audit findings were fully to subrecipients from each Federal pro- corrected, the summary schedule need gram. only list the audit findings and state (5) For loan or loan guarantee pro- that corrective action was taken. grams described in §200.502(b), identify (2) When audit findings were not cor- in the notes to the schedule the bal- rected or were only partially corrected, ances outstanding at the end of the the summary schedule must describe audit period. This is in addition to in- the reasons for the finding's recurrence eluding the total Federal awards ex- and planned corrective action, and any pended for loan or loan guarantee pro- partial corrective action taken. When grams in the schedule. corrective action taken is significantly 188 OMB Guidance §200.512 different from corrective action pre- spection. Auditees and auditors must viously reported in a corrective action ensure that their respective parts of plan or in the Federal agency's or pass- the reporting package do not include through entity's management decision, protected personally identifiable infor- the summary schedule must provide an mation. explanation. (b)Data collection. The FAC is the re- (3) When the auditee believes the pository of record for subpart F of this audit findings are no longer valid or do part reporting packages and the data not warrant further action, the reasons collection form. All Federal agencies, for this position must be described in pass-through entities and others inter- the summary schedule. A valid reason ested in a reporting package and data for considering an audit finding as not collection form must obtain it by ac- warranting further action is that all of cessing the FAC. the following have occurred: (1) The auditee must submit required (i) Two years have passed since the data elements described in Appendix X audit report in which the finding oc- to Part 200, which state whether the curred was submitted to the FAC; audit was completed in accordance (ii) The Federal agency or pass- with this part and provides informa- through entity is not currently fol- tion about the auditee, its Federal pro- lowing up with the auditee on the audit grams, and the results of the audit. finding;and The data must include information (iii) A management decision was not available from the audit required by issued. this part that is necessary for Federal (c) Corrective action plan. At the com- agencies to use the audit to ensure in- pletion of the audit, the auditee must tegrity for Federal programs. The data prepare, in a document separate from elements and format must be approved the auditor's findings described in by OMB, available from the FAC, and §200.516, a corrective action plan to ad- include collections of information from dress each audit finding included in the the reporting current year auditor's reports. The cor- packagedescribed. Ae inr rective action plan must provide the paragraph (c) of this section A senior level representative of the auditee(e.g., name(s) of the contact person(s) re- state controller, director of finance, sponsible for corrective action, the cor- chief executive officer, or chief finan- rective action planned, and the antici- cial officer) must sign a statement to pated completion date. If the auditee be included as collec- does not agree with the audit findings part of the data er believes corrective action is not re- tion that says that the auditeet toms quired, then the corrective action plan plied thewtdh the requirements in of thaccoris include an explanation and spe- part, data were prepared accord- ance with this part (and the instruc- cific reasons. tions accompanying the form), the re- [78 FR 78608, Dec. 26, 2013, as amended at 85 porting package does not include pro- FR 49572,Aug.13,2020] tected personally identifiable informa- tion, the information included in its §200.512 Report submission. entirety is accurate and complete, and (a) General. (1) The audit must be that the FAC is authorized to make the completed and the data collection form reporting package and the form pub- described in paragraph (b) of this sec- licly available on a website. tion and reporting package described in (2) Exception for Indian Tribes and paragraph (c) of this section must be Tribal Organizations. An auditee that is submitted within the earlier of 30 cal- an Indian tribe or a tribal organization endar days after receipt of the audi- (as defined in the Indian Self-Deter- tor's report(s), or nine months after mination, Education and Assistance the end of the audit period. If the due Act (ISDEAA), 25 U.S.C. 450b(1)) may date falls on a Saturday, Sunday, or opt not to authorize the FAC to make Federal holiday, the reporting package the reporting package publicly avail- is due the next business day. able on a Web site,by excluding the au- (2) Unless restricted by Federal stat- thorization for the FAC publication in utes or regulations, the auditee must the statement described in paragraph make copies available for public in- (b)(1) of this section. If this option is 189 §200.513 2 CFR Ch. II (1-1-22 Edition) exercised, the auditee becomes respon- of the reporting package described in sible for submitting the reporting paragraph (c) of this section on file for package directly to any pass-through three years from the date of submis- entities through which it has received sion to the FAC. a Federal award and to pass-through (g)FAC responsibilities. The FAC must entities for which the summary sched- make available the reporting packages ule of prior audit findings reported the received in accordance with paragraph status of any findings related to Fed- (c) of this section and§200.507(c) to the eral awards that the pass-through enti- public, except for Indian tribes exer- ty provided. Unless restricted by Fed- cising the option in (b)(2) of this sec- eral statute or regulation, if the tion, and maintain a data base of corn- auditee opts not to authorize publica- pleted audits, provide appropriate in- tion,it must make copies of the report- formation to Federal agencies, and fol- ing package available for public inspec- low up with known auditees that have tion. not submitted the required data collec- (3) Using the information included in tion forms and reporting packages. the reporting package described in (h) Electronic filing. Nothing in this paragraph (c) of this section, the audi- part must preclude electronic submis- tor must complete the applicable data sions to the FAC in such manner as elements of the data collection form. may be approved by OMB. The auditor must sign a statement to be included as part of the data collec- [78 FR 78608, Dec. 26, 2013, as amended at 79 tion form that indicates, at a min- FR 75887, Dec. 19, 2014; 85 FR 49573, Aug. 13, imum, the source of the information 2020i included in the form, the auditor's re- sponsibility for the information, that FEDERAL AGENCIES the form is not a substitute for the re- §200.513 Responsibilities. porting package described in paragraph (c) of this section, and that the content (a)(1) Cognizant agency for audit ro- of the form is limited to the collection sponsibilities. A non-Federal entity ex- of information prescribed by OMB. pending more than$50 million a year in (c) Reporting package. The reporting Federal awards must have a cognizant package must include the: agency for audit. The designated cog- (1) Financial statements and sched- nizant agency for audit must be the ule of expenditures of Federal awards Federal awarding agency that provides discussed in §200.510(a) and (b), respec- the predominant amount of funding di- tively; rectly (direct funding) (as listed on the (2) Summary schedule of prior audit Schedule of expenditures of Federal findings discussed in§200.511(b); awards, see §200.510(b)) to a non-Fed- (3) Auditor's report(s) discussed in eral entity unless OMB designates a §200.515;and specific cognizant agency for audit. (4) Corrective action plan discussed When the direct funding represents less in§200.511(c). than 25 percent of the total expendi- (d) Submission to FAC. The auditee tures (as direct and subawards) by the must electronically submit to the FAC non-Federal entity, then the Federal the data collection form described in agency with the predominant amount paragraph (b) of this section and the of total funding is the designated cog- reporting package described in para- nizant agency for audit. graph(c)of this section. (2) To provide for continuity of cog- (e) Requests for management letters nizance, the determination of the pre- issued by the auditor. In response to re- dominant amount of direct funding quests by a Federal agency or pass- must be based upon direct Federal through entity, auditees must submit a awards expended in the non-Federal en- copy of any management letters issued tity's fiscal years ending in 2019, and by the auditor. every fifth year thereafter. (f) Report retention requirements. (3) Notwithstanding the manner in Auditees must keep one copy of the which audit cognizance is determined, data collection form described in para- a Federal awarding agency with cog- graph (b) of this section and one copy nizance for an auditee may reassign 190 OMB Guidance §200.513 cognizance to another Federal award- ciencies require corrective action by ing agency that provides substantial the auditor. When advised of defi- funding and agrees to be the cognizant ciencies, the auditee must work with agency for audit. Within 30 calendar the auditor to take corrective action. days after any reassignment, both the If corrective action is not taken, the old and the new cognizant agency for cognizant agency for audit must notify audit must provide notice of the the auditor, the auditee, and applicable change to the FAC, the auditee, and, if Federal awarding agencies and pass- known, the auditor. The cognizant through entities of the facts and make agency for audit must: recommendations for follow-up action. (i)Provide technical audit advice and Major inadequacies or repetitive sub- liaison assistance to auditees and audi- standard performance by auditors must tors. be referred to appropriate state licens- (ii) Obtain or conduct quality control ing agencies and professional bodies for reviews on selected audits made by disciplinary action. non-Federal auditors, and provide the (vi) Coordinate, to the extent prac- results to other interested organiza- tical, audits or reviews made by or for tions. Cooperate and provide support to Federal agencies that are in addition the Federal agency designated by OMB to the audits made pursuant to this to lead a governmentwide project to part, so that the additional audits or determine the quality of single audits reviews build upon rather than dupli- by providing a reliable estimate of the cate audits performed in accordance extent that single audits conform to with this part. applicable requirements, standards, (vii) Coordinate a management deci- and procedures; and to make rec- sion for cross-cutting audit findings ommendations to address noted audit (see in §200.1 of this part) that affect quality issues, including recommenda- the Federal programs of more than one tions for any changes to applicable re- agency when requested by any Federal quirements, standards and procedures awarding agency whose awards are in- indicated by the results of the project. eluded in the audit finding of the The governmentwide project can rely auditee. on the current and on-going quality (viii) Coordinate the audit work and control review work performed by the reporting responsibilities among audi- agencies, State auditors, and profes- tors to achieve the most cost-effective sional audit associations. This govern- audit. mentwide audit quality project must (ix) Provide advice to auditees as to be performed once every 6 years (or at how to handle changes in fiscal years. such other interval as determined by (b) Oversight agency for audit respon- OMB), and the results must be public. sibilities. An auditee who does not have (iii) Promptly inform other affected a designated cognizant agency for Federal agencies and appropriate Fed- audit will be under the general over- eral law enforcement officials of any sight of the Federal agency determined direct reporting by the auditee or its in accordance with §200.1 oversight auditor required by GAGAS or statutes agency for audit. A Federal agency with and regulations. oversight for an auditee may reassign (iv) Advise the community of inde- oversight to another Federal agency pendent auditors of any noteworthy or that agrees to be the oversight agency important factual trends related to the for audit. Within 30 calendar days after quality of audits stemming from qual- any reassignment, both the old and the ity control reviews. Significant prob- new oversight agency for audit must lems or quality issues consistently provide notice of the change to the identified through quality control re- FAC, the auditee, and, if known, the views of audit reports must be referred auditor. The oversight agency for to appropriate state licensing agencies audit: and professional bodies. (1) Must provide technical advice to (v) Advise the auditor, Federal auditees and auditors as requested. awarding agencies, and, where appro- (2) May assume all or some of the re- priate, the auditee of any deficiencies sponsibilities normally performed by a found in the audits when the defi- cognizant agency for audit. 191 -if §200.514 2 CFR Ch. II (1-1-22 Edition) (c) Federal awarding agency respon- (iii) Responsible for designating the sibilities. The Federal awarding agency Federal agency's key management sin- must perform the following for the gle audit liaison. Federal awards it makes (See also the (6) Provide OMB with the name of a 2 211 : keymanagement single audit liaison requirements of 00. g q § ) (1) Ensure that audits are completed who must: and reports are received in a timely (i) Serve as the Federal awarding manner and in accordance with the re- agency's management point of contact quirements of this part. for the single audit process both within (2) Provide technical advice and and outside the Federal Government. counsel to auditees and auditors as re- (ii) Promote interagency coordina- quested. tion, consistency, and sharing in areas (3) Follow-up on audit findings to en- such as coordinating audit follow-up; sure that the recipient takes appro- identifying higher-risk non-Federal en- priate and timely corrective action. As tities; providing input on single audit part of audit follow-up, the Federal and follow-up policy; enhancing the awarding agency must: utility of the FAC; and studying ways (i) Issue a management decision as to use single audit results to improve prescribed in§200.521; Federal award accountability and best (ii) Monitor the recipient taking ap- practices. propriate and timely corrective action; (iii) Oversee training for the Federal (iii) Use cooperative audit resolution awarding agency's program manage- mechanisms(see the definition of coop- ment personnel related to the single erative audit resolution in §200.1 of this audit process. part) to improve Federal program out- (iv) Promote the Federal awarding comes through better audit resolution, agency's use of cooperative audit reso- follow-up,and corrective action; and lution mechanisms. (iv) Develop a baseline, metrics, and (v) Coordinate the Federal awarding targets to track, over time, the effec- agency's activities to ensure appro- tiveness of the Federal agency's proc- priate and timely follow-up and correc- ess to follow-up on audit findings and tive action on audit findings. on the effectiveness of Single Audits in (vi) Organize the Federal cognizant improving non-Federal entity account- agency for audit's follow-up on cross- ability and their use by Federal award- cutting audit findings that affect the ing agencies in making award deci- Federal programs of more than one sions. Federal awarding agency. (4) Provide OMB annual updates to (vii) Ensure the Federal awarding the compliance supplement and work agency provides annual updates of the with OMB to ensure that the compli- compliance supplement to OMB. ance supplement focuses the auditor to (viii) Support the Federal awarding test the compliance requirements most agency's single audit accountable offi- likely to cause improper payments, cial's mission. fraud, waste, abuse or generate audit [78 FR 78608, Dec. 26, 2013, as amended at 79 finding for which the Federal awarding FR 75887, Dec. 19, 2014; 85 FR 49573, Aug. 13, agency will take sanctions. 2020] (5) Provide OMB with the name of a single audit accountable official from AUDITORS among the senior policy officials of the Federal awarding agency who must be: §200.514 Scope of audit. (i) Responsible for ensuring that the (a) General. The audit must be con- agency fulfills all the requirements of ducted in accordance with GAGAS. The paragraph (c) of this section and effec- audit must cover the entire operations tively uses the single audit process to of the auditee, or, at the option of the reduce improper payments and improve auditee, such audit must include a se- Federal program outcomes. ries of audits that cover departments, (ii) Held accountable to improve the agencies, and other organizational effectiveness of the single audit process units that expended or otherwise ad- based upon metrics as described in ministered Federal awards during such paragraph(c)(3)(iv)of this section. audit period, provided that each such 192 OMB Guidance §200.514 audit must encompass the financial rial weakness in accordance with statements and schedule of expendi- §200.516, assess the related control risk tures of Federal awards for each such at the maximum, and consider whether department, agency, and other organi- additional compliance tests are re- zational unit, which must be consid- quired because of ineffective internal ered to be a non-Federal entity. The fi- control. nancial statements and schedule of ex- (d) Compliance. (1) In addition to the penditures of Federal awards must be requirements of GAGAS, the auditor for the same audit period. must determine whether the auditee (b) Financial statements. The auditor has complied with Federal statutes, must determine whether the financial regulations, and the terms and condi- statements of the auditee are presented tions of Federal awards that may have fairly in all material respects in ac- a direct and material effect on each of cordance with generally accepted ac- its major programs. counting principles. The auditor must (2) The principal compliance require- also determine whether the schedule of ments applicable to most Federal pro- expenditures of Federal awards is stat- grams and the compliance require- ed fairly in all material respects in re- ments of the largest Federal programs lation to the auditee's financial state- are included in the compliance supple- ments as a whole. ment. (c) Internal control. (1) The compli- (3) For the compliance requirements ance supplement provides guidance on related to Federal programs contained internal controls over Federal pro- in the compliance supplement,an audit grams based upon the guidance in of these compliance requirements will Standards for Internal Control in the meet the requirements of this part. Federal Government issued by the Where there have been changes to the Comptroller General of the United compliance requirements and the States and the Internal Control—Inte- changes are not reflected in the corn- grated Framework, issued by the Com- pliance supplement, the auditor must mittee of Sponsoring Organizations of determine the current compliance re- the Treadway Commission(COSO). quirements and modify the audit proce- (2) In addition to the requirements of dures accordingly. For those Federal GAGAS, the auditor must perform pro- programs not covered in the compli- cedures to obtain an understanding of ance supplement, the auditor must fol- internal control over Federal programs low the compliance supplement's guid- sufficient to plan the audit to support ance for programs not included in the a low assessed level of control risk of supplement. noncompliance for major programs. (4) When internal control over some (3) Except as provided in paragraph or all of the compliance requirements (c)(4) of this section, the auditor must: for a major program are likely to be in- (i) Plan the testing of internal con- effective in preventing or detecting trol over compliance for major pro- noncompliance, the planning and per- grams to support a low assessed level forming of testing described in para- of control risk for the assertions rel- graph (c)(3) of this section are not re- evant to the compliance requirements quired for those compliance require- for each major program;and ments. However, the auditor must re- (ii) Perform testing of internal con- port a significant deficiency or mate- trol as planned in paragraph (c)(3)(i) of rial weakness in accordance with this section. §200.516, assess the related control risk (4) When internal control over some at the or all of the compliance requirements (e) Audit follow-up. The auditor must for a major program are likely to be in- follow-up on prior audit findings, per- effective in preventing or detecting form procedures to assess the reason- noncompliance, the planning and per- ableness of the summary schedule of forming of testing described in para- prior audit findings prepared by the graph (c)(3) of this section are not re- auditee in accordance with §200.511(b), quired for those compliance require- and report, as a current year audit ments. However, the auditor must re- finding, when the auditor concludes port a significant deficiency or mate- that the summary schedule of prior 193 §200.515 2 CFR Ch. II (1-1-22 Edition) audit findings materially misrepre- the terms and conditions of Federal sents the status of any prior audit find- awards which could have a direct and ing. The auditor must perform audit material effect on each major program follow-up procedures regardless of and refer to the separate schedule of whether a prior audit finding relates to findings and questioned costs described a major program in the current year. in paragraph(d)of this section. (f)Data collection form. As required in (d) A schedule of findings and ques- §200.512(b)(3), the auditor must com- tinned costs which must include the plete and sign specified sections of the following three components: data collection form. (1) A summary of the auditor's re- [78 FR 78608, Dec. 26, 2013, as amended at 79 sults,which must include: FR 75887, Dec. 19, 2014; 85 FR 49574, Aug. 13, (i) The type of report the auditor 2020;86 FR 10440,Feb.22,2021] issued on whether the financial state- §200.515 Audit reporting. ments audited were prepared in accord- ance with GAAP (i.e., unmodified opin- The auditor's report(s) may be in the ion, qualified opinion, adverse opinion, form of either combined or separate re- or disclaimer of opinion); ports and may be organized differently (ii) Where applicable, a statement from the manner presented in this sec- about whether significant deficiencies tion. The auditor's report(s)must state or material weaknesses in internal con- that the audit was conducted in ac- trol were disclosed by the audit of the cordance with this part and include the financial statements; following: (iii) A statement as to whether the (a) Financial statements. The auditor audit disclosed any noncompliance must determine and provide an opinion that is material to the financial state- (or disclaimer of opinion) whether the ments of the auditee; financial statements of the auditee are presented fairly in all materials re- (iv) Where applicable, a statement spects in accordance with generally ac- abouto whether significant deficiencis con- cepted accounting principles (or a spe- trolr over weaknesses in internal dis- cial purpose framework such as cash, closed over major programs were modified cash, or regulatory as re- (v) by the audit; quired by state law). The auditor must The type of report the auditor also decide whether the schedule of ex- issued on compliance for major pro penditures of Federal awards is stated grams (i.e., unmodified opinion, quali- fairly in all material respects in rela- fied opinion, adverse opinion, or dis- claimertion to the auditee's financial state of opinion); mints as a whole. (vi) A statement as to whether the (b) A report on internal control over audit disclosed any audit findings that financial reporting and compliance the auditor is required to report under with provisions of laws, regulations, §200.516(a); contracts, and award agreements, non- (vii) An identification of major pro- compliance with which could have a grams by listing each individual major material effect on the financial state- program;however,in the case of a clus- ments. This report must describe the ter of programs, only the cluster name scope of testing of internal control and as shown on the Schedule of Expendi- compliance and the results of the tests, tures of Federal Awards is required; and, where applicable, it will refer to (viii) The dollar threshold used to the separate schedule of findings and distinguish between Type A and Type B questioned costs described in para- Programs, as described in §200.518(b)(1) graph(d)of this section. or (3) when a recalculation of the Type (c) A report on compliance for each A threshold is required for large loan major program and a report on internal or loan guarantees;and control over compliance. This report (ix) A statement as to whether the must describe the scope of testing of auditee qualified as a low-risk auditee internal control over compliance, in- under§200.520. elude an opinion or disclaimer of opin- (2) Findings relating to the financial ion as to whether the auditee complied statements which are required to be re- with Federal statutes, regulations, and ported in accordance with GAGAS. 194 OMB Guidance §200.516 (3) Findings and questioned costs for quirement for a major program identi- Federal awards which must include fled in the compliance supplement. audit findings as defined in §200.516(a). (3) Known questioned costs that are (i) Audit findings (e.g., internal con- greater than $25,000 for a type of com- trol findings, compliance findings, pliance requirement for a major pro- questioned costs, or fraud) that relate gram. Known questioned costs are to the same issue must be presented as those specifically identified by the a single audit finding. Where practical, auditor. In evaluating the effect of audit findings should be organized by questioned costs on the opinion on Federal agency or pass-through entity. compliance, the auditor considers the (ii)Audit findings that relate to both best estimate of total costs questioned the financial statements and Federal (likely questioned costs), not just the awards, as reported under paragraphs questioned costs specifically identified (d)(2) and (d)(3) of this section, respec- (known questioned costs). The auditor tively, must be reported in both sec- tions of the schedule. However, the re- must alsoreportknown questioned porting in one section of the schedule costswhen likelyr questioned costs are may be in summary form with a ref- pgreaterliance than $25,000 for a type of pliance requirement for a major pro- erence to a detailed reporting in the sts, other section of the schedule. gram. In reporting questioned costs, (e) Nothing in this part precludes the auditor must include information combining of the audit reporting re- to provide proper perspective for judg quired by this section with the report- ing the prevalence and consequences of ing required by §200.512(b) when al the questioned costs. lowed by GAGAS and appendix X to (4) Known questioned costs that are this part. greater than $25,000 for a Federal pro- gram which is not audited as a major [78 FR 78608, Dec. 26, 2013, as amended at 79 program. Except for audit follow-up, FR 75887, Dec. 19, 2014; 85 FR 49574, Aug. 13, the auditor is not required under this 2020] part to perform audit procedures for §200.516 Audit findings. such a Federal program; therefore, the ques- (a) Audit findings reported. The audi- auditor will normally not find tor mustu report the following as audit tioned costs for a program that is not audited as a major program. However, findings in a schedule of findings and if the auditor does become aware of questioned costs: (1) Significant deficiencies and mate- that is notned auditedcost for as majorFederal program rial weaknesses in internal control (e.that is not part of audit a u program over major programs and significant auditd procedures)s folle knop nr other ques- instances of abuse relating to major se greateraod the known , programs. The auditor's determination tioned costs are than $25,000, of whether a deficiency in internal con- then the auditor must report this as an trol is a significant deficiency or a ma- audit finding. aerial weakness for-the purpose of re (5) The circumstances concerning porting an audit finding is in relation why the auditor's report on compliance to a type of compliance requirement for each major program is other than for a major program identified in the an unmodified opinion, unless such cir- Compliance Supplement. cumstances are otherwise reported as (2) Material noncompliance with the audit findings in the schedule of find- provisions of Federal statutes, regula- ings and questioned costs for Federal tions, or the terms and conditions of awards. Federal awards related to a major pro- (6) Known or likely fraud affecting a gram. The auditor's determination of Federal award, unless such fraud is whether a noncompliance with the pro- otherwise reported as an audit finding visions of Federal statutes, regula- in the schedule of findings and ques- tions, or the terms and conditions of tioned costs for Federal awards. This Federal awards is material for the pur- paragraph does not require the auditor pose of reporting an audit finding is in to report publicly information which relation to a type of compliance re- could compromise investigative or 195 §200.517 2 CFR Ch. 11 (1-1-22 Edition) legal proceedings or to make an addi- recipient, to permit them to determine tional reporting when the auditor con- the cause and effect to facilitate firms that the fraud was reported out- prompt and proper corrective action. A side the auditor's reports under the di- statement of the effect or potential ef- rect reporting requirements of GAGAS. fect should provide a clear, logical link (7) Instances where the results of to establish the impact or potential audit follow-up procedures disclosed impact of the difference between the that the summary schedule of prior condition and the criteria. audit findings prepared by the auditee (6) Identification of questioned costs in accordance with §200.511(b) materi- and how they were computed. Known ally misrepresents the status of any questioned costs must be identified by prior audit finding. applicable Assistance Listings num- (b) Audit finding detail and clarity. ber(s) and applicable Federal award Audit, findings must be presented in identification number(s). sufficient detail and clarity for the (7)Information to provide proper per- auditee to prepare a corrective action spective for judging the prevalence and plan and take corrective action, and consequences of the audit findings, for Federal agencies and pass-through such as whether the audit findings rep- entities to arrive at a management de- resent an isolated instance or a sys- 1 cision. The following specific informa- temic problem. Where appropriate, in- 1 tion must be included, as applicable, in stances identified must be related to audit findings: the universe and the number of cases (1) Federal program and specific Fed- examined and be quantified in terms of eral award identification including the dollar value. The auditor should report Assistance Listings title and number, whether the sampling was a statis- J Federal award identification number tically valid sample. and year, name of Federal agency, and (8) Identification of whether the name of the applicable pass-through audit finding was a repeat of a finding entity. When information, such as the in the immediately prior audit and if Assistance Listings title and number so any applicable prior year audit find- or Federal award identification num- ing numbers. ber, is not available, the auditor must (9) Recommendations to prevent fu- provide the best information available ture occurrences of the deficiency iden- to describe the Federal award. tified in the audit finding. (2) The criteria or specific (10) Views of responsible officials. of require- ment upon which the audit finding is the auditee. based, including the Federal statutes, (c) Reference numbers. Each audit regulations, or the terms and condi finding in the schedule of findings and tions of the Federal awards. Criteria questioned costs must include a ref- generally identify the required or de- erence number in the format meeting sired state or expectation with respect the requirements of the data collection to the program or operation. Criteria form submission required by§200.512(b) provide a context for evaluating evi to allow for easy referencing of the dence and understanding findings. audit findings during follow-up. (3) The condition found, including [78 FR 78608, Dec. 26, 2013, as amended at 85 facts that support the deficiency iden- FR 49574,Aug.13,2020] tified in the audit finding. (4) A statement of cause that identi- . §200.517 Audit documentation. fies the reason or explanation for the (a) Retention of audit documentation. condition or the factors responsible for The auditor must retain audit docu- the difference between the situation mentation and reports for a minimum that exists(condition) and the required of three years after the date of or desired state (criteria), which may issuance of the auditor's report(s) to also serve as a basis for recommenda- the auditee, unless the auditor is noti- tions for corrective action. fied in writing by the cognizant agency (5) The possible asserted effect to for audit, oversight agency for audit, provide sufficient information to the cognizant agency for indirect costs, or auditee and Federal agency, or pass- pass-through entity to extend the re- through entity in the case of a sub- tention period. When the auditor is 196 OMB Guidance §200.518 aware that .the Federal agency, pass- (2) Federal programs not labeled through entity, or auditee is con- Type A under paragraph (b)(1) of this testing an audit finding, the auditor section must be labeled Type B pro- must, contact the parties contesting grams. the audit finding for guidance prior to (3) The inclusion of large loan and destruction of the audit documentation loan guarantees(loans)must not result and reports. in the exclusion of other programs as (b) Access to audit documentation. Type A programs. When a Federal pro- Audit documentation must be made gram providing loans exceeds four available upon request to the cognizant times the largest non-loan program it or oversight agency for audit or its des- is considered a large loan program,and ignee, cognizant agency for indirect the auditor must consider this Federal cost, a Federal agency, or GAO at the program as a Type A program and ex- completion of the audit, as part of a elude its values in determining other quality review, to resolve audit find- Type A programs. This recalculation of ings, or to carry out oversight respon- the Type A program is performed after sibilities consistent with the purposes removing the total of all large loan of this part. Access to audit docu- programs. For the purposes of this mentation includes the right of Federal paragraph a program is only considered agencies to obtain copies of audit docu- to be a Federal program providing mentation, as is reasonable and nec- loans if the value of Federal awards ex- essary. pended for loans within the program comprises fifty percent or more of the §200.518 Major program determina- total Federal awards expended for the tion. program. A cluster of programs is (a) General. The auditor must use a treated as one program and the value risk-based approach to determine of Federal awards expended under a which Federal programs are major pro- loan program is determined as de- grams. This risk-based approach must scribed in§200.502. include consideration of: current and (4) For biennial audits permitted prior audit experience, oversight by under §200.504, the determination of Federal agencies and pass-through en- Type A and Type B programs must be tities,and the inherent risk of the Fed- based upon the Federal awards ex- eral program. The process in para- pended during the two-year period. graphs (b) through (h) of this section (c) Step two. (1) The auditor must must be followed. identify Type A programs which are (b) Step one. (1) The auditor must low-risk. In making this determina- identify the larger Federal programs, tion, the auditor must consider wheth- which must be labeled Type A pro- er the requirements in §200.519(c), the grams. Type A programs are defined as results of audit follow-up, or any Federal programs with Federal awards changes in personnel or systems affect- expended during the audit period ex- ing the program indicate significantly ceeding the levels outlined in the table increased risk and preclude the pro- in this paragraph(b)(1): gram from being low risk. For a Type A program to be considered low-risk, it Total Federal awards ex- Type NB threshold must have been audited as a major pro- pended gram in at least one of the two most Equal to or exceed$750,000 $750,000. recent audit periods (in the most re- but less than or equal to cent audit period in the case of a bien- $25 million. nial audit), and, in the most recent Exceed$25 million but less Total Federal awards ex- than or equal to$100 mil- pended times.03. audit period, the program must have lion. not had: Exceed$100 million but less $3 million. (i) Internal control deficiencies than or equal to$1 billion. which were identified as material Exceed$1 billiona but less Total Federal ards.003.ex- weaknesses in the auditor's report on than or equal to$10 billion. pended times.003. Exceed$10 billion but less $30 million. internal control for major programs as than or equal to$20 billion. required under§200.515(c); Exceed$20 billion Total Federal awards ex- (ii) A modified opinion on the pended times.0015. pro- gram in the auditor's report on major 197 II §200.519 2 CFR Ch. II (1-1-22 Edition) programs as required under §200.515(c); (2) All Type B programs identified as or high-risk under step three (paragraph (iii)Known or likely questioned costs (d)of this section). that exceed five percent of the total (3) Such additional programs as may Federal awards expended for the pro- be necessary to comply with the per- gram. centage of coverage rule discussed in (2) Notwithstanding paragraph (c)(1) paragraph (f) of this section. This may of this section, OMB may approve a require the auditor to audit more pro- Federal awarding agency's request that grams as major programs than the a Type A program may not be consid- number of Type A programs. ered low risk for a certain recipient. aud( ePermeetse theof criteriaoverage rule. If the 00.520, For example, it maybe necessary for a the auditor meets only in the major large Type A program to be audited as pro rm need audit major a major program each year at a par- grgraphs (es)(1) identified in Step 4 (para- a titular recipient to allow the Federal such additional and (2)erof lt rs grams with such Federal programs with awarding agency to comply with 31 Federal awards expended that, in ag- U.S.C. 3515. The Federal awarding gregate, all major programs encompass agency must notify the recipient and, at least 20 percent (0.20) of total Fed if known, the auditor of OMB's ap- eral awards expended. Otherwise, the proval at least 180 calendar days prior auditor must audit the major programs to the end of the fiscal year to be au- identified in Step 4 (paragraphs (e)(1) dited. and (2) of this section) and such addi- (d) Step three. (1) The auditor must tional Federal programs with Federal identify Type B programs which are awards expended that, in aggregate, all high-risk using professional judgment major programs encompass at least 40 and the criteria in §200.519. However, percent (0.40) of total Federal awards the auditor is not required to identify expended. more high-risk Type B programs than (g) Documentation of risk. The auditor at least one fourth the number of low- must include in the audit documenta- risk Type A programs identified as low- tion the risk analysis process used in risk under Step 2 (paragraph (c) of this determining major programs. section). Except for known material (h) Auditor's judgment. When the weakness in internal control or oomph.- major program determination was per- ance problems as discussed in formed and documented in accordance §200.519(b)(1) and (2) and (c)(1), a single with this Subpart, the auditor's judg- criterion in risk would seldom cause a ment in applying the risk based ap- Type B program to be considered high- proach to determine major programs risk. When identifying which Type B must be presumed correct. Challenges programs to risk assess, the auditor is by Federal agencies and pass-through encouraged to use an approach which entities must only be for clearlyy im- encouraged providesproper use of the requirements in this an opportunity for different part. However, Federal agencies and high-risk Type B programs to be au- Pass-through entities may provide dited as major over a period of time. auditors guidance about the risk of a (2)The auditor is not expected to P per- particular Federal program and the form risk assessments on relatively auditor must consider this guidance in small Federal programs. Therefore, the determining major programs in audits auditor is only required to perform risk not yet completed. assessments on Type B programs that exceed twenty-five percent (0.25) of the [78 FR 78608, Dec. 26, 2013, as amended at 79 Type A threshold determined in Step 1 FR 75887, Dec. 19, 2014; 85 FR 49574, Aug. 13, 2020] (paragraph(b)of this section). (e) Step four. At a minimum, the §200.519 Criteria for Federal program auditor must audit all of the following risk. as major programs: (a) General. The auditor's determina- (1) All Type A programs not identi- tion should be based on an overall eval- fied as low risk under step two (para- uation of the risk of noncompliance oc- graph(c)(1) of this section). curring that could be material to the 198 OMB Guidance §200.520 Federal program. The auditor must will provide this identification in the consider criteria, such as described in compliance supplement. paragraphs (b), (c), and (d) of this sec- (d) Inherent risk of the Federal pro- ton, to identify risk in Federal pro- gram. (1) The nature of a Federal pro- grams. Also, as part of the risk anal- gram may indicate risk. Consideration ysis, the auditor may wish to discuss a should be given to the complexity of particular Federal program with the program and the extent to which auditee management and the Federal the Federal program contracts for agency or pass-through entity. goods and services. For example, Fed- (b) Current and prior audit experience. eral programs that disburse funds (1) Weaknesses in internal control over through third-party contracts or have Federal programs would indicate high- eligibility criteria may be of higher er risk. Consideration should be given risk. Federal programs primarily in- to the control environment over Fed- volving staff payroll costs may have eral programs and such factors as the high risk for noncompliance with re- expectation of management's adher- quirements of §200.430, but otherwise ence to Federal statutes, regulations, be at low risk. and the terms and conditions of Fed- (2)The phase of a Federal program in eral awards and the competence and its life cycle at the Federal agency experience of personnel who administer may indicate risk. For example, a new the Federal programs. Federal program with new or interim (i) A Federal program administered regulations may have higher risk than under multiple internal control struc- an established program with time-test- tures may have higher risk. When as- ed regulations. Also, significant sessing risk in a large single audit, the changes in Federal programs, statutes, auditor must consider whether weak- regulations, or the terms and condi- nesses are isolated in a single oper- tions of Federal awards may increase ating unit (e.g., one college campus) or risk. pervasive throughout the entity. (3)The phase of a Federal program in (ii) When significant parts of a Fed- its life cycle at the auditee may indi- eral program are passed through to cate risk. For example, during the first subrecipients, a weak system for moni- and last years that an auditee partici- toring subrecipients would indicate pates in a Federal program, the risk higher risk. may be higher due to start-up or close- (2) Prior audit findings would indi- out of program activities and staff. cate higher risk, particularly when the (4) Type B programs with larger Fed- situations identified in the audit find- eral awards expended would be of high- ings could have a significant impact on er risk than programs with substan- a Federal program or have not been tially smaller Federal awards ex- corrected. pended. (3) Federal programs not recently au- dited as major programs may be of [78 FR 78608, Dec. 26, 2013, as amended at 85 higher risk than Federal programs re- FR 49575,Aug.13,2020] cently audited as major programs with- out audit findings. §200.520 Criteria for a low-risk (c) Oversight exercised by Federal agen- auditee. cies and pass-through entities. (1) Over- An auditee that meets all of the fol- sight exercised by Federal agencies or lowing conditions for each of the pre- pass-through entities could be used to ceding two audit periods must qualify assess risk. For example, recent moni- as a low-risk auditee and be eligible for toring or other reviews performed by reduced audit coverage in accordance an oversight entity that disclosed no with§200.518. significant problems would indicate (a) Single audits were performed on lower risk, whereas monitoring that an annual basis in accordance with the disclosed significant problems would provisions of this Subpart, including indicate higher risk. submitting the data collection form (2)Federal agencies, with the concur- and the reporting package to the FAC rence of OMB, may identify Federal within the timeframe specified in programs that are higher risk. OMB §200.512. A non-Federal entity that has 199 §200.521 2 CFR Ch. II (1-1-22 Edition) biennial audits does not qualify as a required, the Federal agency or pass- low-risk auditee. through entity may also issue a man- (b) The auditor's opinion on whether agement decision on findings relating the financial statements were prepared to the financial statements which are in accordance with GAAP, or a basis of required to be reported in accordance accounting required by state law, and with GAGAS. the auditor's in relation to opinion on (b) Federal agency. As provided in the schedule of expenditures of Federal §200.513(a)(3)(vii), the cognizant agency awards were unmodified. for audit must be responsible for co- (c) There were no deficiencies in in- ordinating a management decision for ternal control which were identified as audit findings that affect the programs material weaknesses under the require- of more than one Federal agency. As ments of GAGAS. provided in §200.513(c)(3)(i), a Federal (d) The auditor did not report a sub- awarding agency is responsible for stantial doubt about the auditee's abil- issuing a management decision for ity to continue as a going concern. findings that relate to Federal awards (e) None of the Federal programs had it makes to non-Federal entities. { audit findings from any of the fol- (c) Pass-through entity. As provided in lowing in either of the preceding two §200.332(d), the pass-through entity audit periods in which they were classi- must be responsible for issuing a man- ' fied as Type A programs: agement decision for audit findings (1) Internal control deficiencies that that relate to Federal awards it makes were identified as material weaknesses to subrecipients. in the auditor's report on internal con- (d) Time requirements. The Federal trol for major programs as required awarding agency or pass-through enti- under§200.515(c); ty responsible for issuing a manage- (2) A modified opinion on a major ment decision must do so within six program in the auditor's report on months of acceptance of the audit re- major programs as required under port by the FAC. The auditee must ini- §200.515(c);or tiate and proceed with corrective ac- (3) Known or likely questioned costs tion as rapidly as possible and correc- that exceeded five percent of the total tive action should begin no later than Federal awards expended for a Type A upon receipt of the audit report. program during the audit period. (e) Reference numbers. Management [78 FR 78608, Dec. 26, 2013, as amended at 85 decisions must include the reference FR 49575,Aug.13,2020] numbers the auditor assigned to each audit finding in accordance with MANAGEMENT DECISIONS §200.516(c). §200.521 Management decision. [78 FR 78608, Dec. 26, 2013, as amended at 85 FR 49575,Aug.13,2020] (a) General. The management deci- sion must clearly state whether or not APPENDIX I TO PART 200—FULL TEXT OF the audit finding is sustained, the rea- NOTICE OF FUNDING OPPORTUNITY sons for the decision, and the expected auditee action to repay disallowed The full text of the notice of funding op- costs, make financial adjustments, or portunity is organized in sections. The re- take other action. If the auditee has quired format outlined in this appendix indi- not completed corrective action, a cates immediately following the title of each section whether that section is required in timetable for follow-up should be every announcement or is a Federal award- given. Prior to issuing the manage- ing agency option.The format is designed so ment decision, the Federal agency or that similar types of information will appear pass-through entity may request addi- in the same sections in announcements of tional information or documentation different Federal funding opportunities. To- from the auditee, including a request ward that end, there is text in each of the for auditor assurance related to the following sections to describe the types of in- documentation, as a way of mitigating formation that a Federal awarding agency would include in that section of an actual disallowed costs. The management de- announcement. cision should describe any appeal proc- A Federal awarding agency that wishes to ess available to the auditee. While not include information that the format does not 200 OMB Guidance Pt. 200,App. I specifically discuss may address that subject nouncement; the expected performance indi- in whatever section(s) is most appropriate. cators, targets, baseline data, and data col- For example, if a Federal awarding agency lection; the anticipated number of Federal chooses to address performance goals in the awards; the expected amounts of individual announcement,it might do so in the funding Federal awards (which may be a range); the opportunity description,the application con- amount of funding per Federal award,on av- tent,or the reporting requirements. erage,experienced in previous years;and the Similarly, when this format calls for a anticipated start dates and periods of per- type of information to be in a particular sec- formance for new Federal awards. This sec- tion, a Federal awarding agency wishing to tion also should address whether applica- address that subject in other sections may tions for renewal or supplementation of ex- elect to repeat the information in those sec- isting projects are eligible to compete with tions or use cross references between the sec- applications for new Federal awards. tions (there should be hyperlinks for cross- This section also must indicate the type(s) references in any electronic versions of the of assistance instrument(e.g.,grant, cooper- announcement). For example, a Federal ative agreement)that may be awarded if ap- awarding agency may want to include Sec- plications are successful. If cooperative tion A information about the types of non- agreements may be awarded, this section ei- Federal entities who are eligible to apply. ther should describe the "substantial in- The format specifies a standard location for volvement" that the Federal awarding agen- that information in Section C.1 but does not cy expects to have or should reference where preclude repeating the information in Sec- the potential applicant can find that infor- tion A or creating a cross reference between the potential npthe u fundingng pthat infor- mation (e.g., in the opportunity de- Section A and C.1,as long as a potential ap- scription in Section A. or Federal award ad- plicant can find the information quickly and ministration information in Section D. If easily from the standard location. procurement contracts also may be awarded, The sections of the full text of the an- this must be stated. nouncement are described in the following paragraphs. C.ELIGIBILITY INFORMATION A.PROGRAM DESCRIPTION—REQUIRED This section addresses the considerations This section contains the full program de- or factors that determine applicant or appli- scription of the funding opportunity.It may cation eligibility. This includes the eligi- be as long as needed to adequately commu- bility of particular types of applicant organi- nicate to potential applicants the areas in zations, any factors affecting the eligibility which funding may be provided. It describes of the principal investigator or project direc- the Federal awarding agency's funding prior- tor, and any criteria that make particular ities or the technical or focus areas in which projects ineligible. Federal agencies should the Federal awarding agency intends to pro- make clear whether an applicant's failure to vide assistance. As appropriate, it may in- meet an eligibility criterion by the time of elude any program history(e.g.,whether this an application deadline will result in the is a new program or a new or changed area of Federal awarding agency returning the ap- program emphasis). This section must in- plication without review or, even though an elude program goals and objectives, a ref- application may be reviewed, will preclude erence to the relevant Assistance Listings, a the Federal awarding agency from making a description of how the award will contribute Federal award.Key elements to be addressed to the achievement of the program's goals are: and objectives, and the expected perform- 1. Eligible Applicants—Required. Announce- ance goals,indicators,targets,baseline data, ments must clearly identify the types of en- data collection, and other outcomes such tities that are eligible to apply. If there are Federal awarding agency expects to achieve, no restrictions on eligibility, this section and may include examples of successful may simply indicate that all potential appli- projects that have been funded previously. cants are eligible.If there are restrictions on This section also may include other informa- eligibility, it is important to be clear about tion the Federal awarding agency deems nec- the specific types of entities that are eligi- essary,and must at a minimum include cita- ble, not just the types that are ineligible. tions for authorizing statutes and regula- For example, if the program is limited to tions for the funding opportunity. nonprofit organizations subject to 26 U.S.C. 501(c)(3) of the tax code (26 U.S.C. 501(c)(3)), B.FEDERAL AWARD INFORMATION—REQUIRED the announcement should say so. Similarly, This section provides sufficient informa- it is better to state explicitly that Native tion to help an applicant make an informed American tribal organizations are eligible decision about whether to submit a proposal. than to assume that they can unambiguously Relevant information could include the total infer that from a statement that nonprofit amount of funding that the Federal awarding organizations may apply.Eligibility also can agency expects to award through the an- be expressed by exception, (e.g., open to all 201 Pt. 200, App. I 2 CFR Ch. II (1-1-22 Edition) types of domestic applicants other than indi- ceptable. However, since high-speed Internet viduals). This section should refer to any access is not yet universally available for portion of Section D specifying documenta- downloading documents, and applicants may tion that must be submitted to support an have additional accessibility requirements, eligibility determination (e.g., proof of there also should be a way for potential ap- 501(c)(3)status as determined by the Internal plicants to request paper copies of materials, Revenue Service or an authorizing tribal res- such as a U.S. Postal Service mailing ad- olution). To the extent that any funding re- dress, telephone or FAX number, Telephone striction in Section D.6 could affect the eli- Device for the Deaf (TDD), Text Telephone gibility of an applicant or project, the an- (TTY) number, and/or Federal Information nouncement must either restate that restric- Relay Service(FIRS)number. tion in this section or provide a cross-ref- 2. Content and Form of Application Submis- erence to its description in Section D.6. sion—Required. This section must identify 2. Cost Sharing or Matching—Required. An- the required content of an application and nouncements must state whether there is re- the forms or formats that an applicant must quired cost sharing, matching, or cost par- use to submit it. If any requirements are ticipation without which an application stated elsewhere because they are general re- • would be ineligible (if cost sharing is not re- quirements that apply to multiple programs quired, the announcement must explicitly or funding opportunities, this section should say so). Required cost sharing may be a cer- refer to where those requirements may be tain percentage or amount, or may be in the found. This section also should include re- form of contributions of specified items or quired forms or formats as part of the an- activities(e.g.,provision of equipment).It is nouncement or state where the applicant important that the announcement be clear may obtain them. about any restrictions on the types of cost This section should specifically address (e.g., in-kind contributions) that are accept- content and form or format requirements - able as cost sharing.Cost sharing as an eligi- for: i. Pre-applications, letters of intent, or bility criterion includes requirements based white papers required or encouraged (see in statute or regulation, as described in Section D.4), including any limitations on §200.306 of this Part. This section should the number of pages or other formatting re- refer to the appropriate portion(s)of section D. stating any pre-award requirements for quirements similar to those for full applica- submission of letters or other documentation tions. ii.The application as a whole. For all sub- to verify commitments to meet cost-sharin g ons requirements if a Federal award is made. omn the numberthis would includepae , fontany lidatype- 3. Other—Required,if applicable.If there are face,the of paper size,z, ber andoftype- other eligibility criteria (i.e., criteria that margins, number copies, otherhave the effect of making an application or and sequencen mor assembly requirements.re- projectI- ineligible for Federal awards,wheth- electronic submission is specialald q er referred to as "responsiveness" criteria, quired, this could include require- menu for formatting or signatures. "go-no go" criteria, "threshold" criteria, or iii. Component pieces of the application in other ways), mutt be clearly stated and (e.g., if all copies of the application must must include a reference to the regulation of bear original signatures on the face page or requirement that describes the restriction, the program narrative may not exceed 10 as applicable. For example, if entities that pages). This includes any pieces that may be have been found to be in violation of a par- submitted separately by third parties (e.g., ticular Federal statute are ineligible, it is references or letters confirming commit- important to say so. This section must also ments from third parties that will be con- state any limit on the number of applica- tributing a portion of any required cost shar- tions an applicant may submit under the an- ing). nouncement and make clear whether the iv. Information that successful applicants limitation is on the submitting organization, must submit after notification of intent to individual investigator/program director, or make a Federal award,but prior to a Federal both. This section should also address any award. This could include evidence of com- eligibility criteria for beneficiaries or for pliance with requirements relating to human program participants other than Federal subjects or information needed to comply award recipients. with the National Environmental Policy Act D.APPLICATION AND SUBMISSION INFORMATION (NEPA)(42 U.S.C.4321-4370h). 3. Unique entity identifier and System for 1. Address to Request Application Package— Award Management (SAM)—Required. This Required. Potential applicants must be told paragraph must state clearly that each ap- how to get application forms, kits, or other plicant(unless the applicant is an individual materials needed to apply (if this announce- or Federal awarding agency that is excepted ment contains everything needed, this sec- from those requirements under 2 CFR tion need only say so). An Internet address 25.110(b) or(c), or has an exception approved where the materials can be accessed is ac- by the Federal awarding agency under 2 CFR 202 OMB Guidance Pt. 200, App. I 25.110(d)) is required to: (i) Be registered in elude the format of submission,i.e.,paper or SAM before submitting its application; (ii) electronic, for each type of required submis- Provide a valid unique entity identifier in its sion. Applicants should not be required to application; and (iii) Continue to maintain submit in more than one format and this sec- an active SAM registration with current in- tion should indicate whether they may formation at all times during which it has an choose whether to submit applications in active Federal award or an application or hard copy or electronically,may submit only plan under consideration by a Federal award- in hard copy, or may submit only electroni- ing agency. It also must state that the Fed- tally. eral awarding agency may not make a Fed- This section also must indicate where ap- cant award to an applicant until the appli-has complied with all applicable unique plications(and any pre-applications)must be entity identifier and SAM requirements and, submitted if sent by postal mail, electronic if an applicant has not fully complied with means, or hand-delivery. For postal mail the requirements by the time the Federal submission,this must include the name of an awarding agency is ready to make a Federal office, official, individual or function (e.g., award,the Federal awarding agency may de- application receipt center) and a complete termine that the applicant is not qualified to mailing address. For electronic submission, receive a Federal award and use that deter- this must include the URL or email address; mination as a basis for making a Federal whether a password(s) is required; whether award to another applicant. particular software or other electronic capa- 4. Submission Dates and Times—Required. bilities are required;what to do in the event Announcements must identify due dates and of system problems and a point of contact times for all submissions. This includes not only the full applications but also any pre- who will be available in the event the appli- liminary submissions (e.g., letters of intent, cant experiences technical difficulties." white papers,or pre-applications).It also in- E.APPLICATION REVIEW INFORMATION eludes any other submissions of information before Federal award that are separate from 1. Criteria—Required. This section must ad- the full application. If the funding oppor- dress the criteria that the Federal awarding tunity is a general announcement that is agency will use to evaluate applications. open for a period of time with no specific due This includes the merit and other review cri- dates for applications, this section should teria that evaluators will use to judge appli- say so. Note that the information on dates cations,including any statutory,regulatory, that is included in this section also must ap- or other preferences(e.g.,minority status or pear with other overview information in a 10- Native American tribal preferences) that cation preceding the full text of the an- will be applied in the review process. These nouncement(see§200.204 of this part). criteria are distinct from eligibility criteria 5. Intergovernmental Review—Required,if ap- plicable.If the funding opportunity is subject that are addressed before an application is to Executive Order 12372, "Intergovern- accepted for review and any program policy mental Review of Federal Programs," the or other factors that are applied during the notice must say so and applicants must con- selection process, after the review process is tact their state's Single Point of Contact completed. The intent is to make the appli- (SPOC) to find out about and comply with cation process transparent so applicants can the state's process under Executive Order make informed decisions when preparing 12372, it may be useful to inform potential their applications to maximize fairness of applicants that the names and addresses of the process.The announcement should clear- the SPOCs are listed in the Office of Manage- ly describe all criteria, including any sub- ment and Budget's website. criteria. If criteria vary in importance, the 6. Funding Restrictions—Required. Notices announcement should specify the relative must include information on funding restric- percentages,weights,or other means used to tions in order to allow an applicant to de- distinguish among them. For statutory, reg- velop an application and budget consistent ulatory, or other preferences, the announce- with program requirements. Examples are ment should provide a detailed explanation whether construction is an allowable activ- of those preferences with an explicit indica- ity, if there are any limitations on direct tion of their effect(e.g.,whether they result costs such as foreign travel or equipment in additional points being assigned). purchases, and if there are any limits on in- direct costs (or facilities and administrative costs).Applicants must be advised if Federal i With respect to electronic methods for awards will not allow reimbursement of pre- providing information about funding oppor Federal award costs. tunities or accepting applicants'submissions 7. Other Submission Requirements—Required. of information, each Federal awarding agen- This section must address any other submis- cy is responsible for compliance with Section sion requirements not included in the other 508 of the Rehabilitation Act of 1973 (29 paragraphs of this section. This might in- U.S.C.794d). 203 ii Pt.200, App. I 2 CFR Ch. 11 (1-1-22 Edition) If an applicant's proposed cost sharing will amount of Federal share greater than the be considered in the review process (as op- simplified acquisition threshold, is required posed to being an eligibility criterion de- to review and consider any information scribed in Section C.2), the announcement about the applicant that is in the designated must specifically address how it will be con- integrity and performance system accessible sidered (e.g., to assign a certain number of through SAM (currently FAPIIS) (see 41 additional points to applicants who offer U.S.C.2313); cost sharing,or to break ties among applica- ii.That an applicant,at its option,may re- tions with equivalent scores after evaluation view information in the designated integrity against all other factors).If cost sharing will and performance systems accessible through not be considered in the evaluation, the an- SAM and comment on any information about nouncement should say so, so that there is itself that a Federal awarding agency pre- no ambiguity for potential applicants.Vague viously entered and is currently in the des- statements that cost sharing is encouraged, ignated integrity and performance system without clarification as to what that means, accessible through SAM; are unhelpful to applicants.It also is impor- tant that the announcement be clear about iii. That the Federal awarding agency will any restrictions on the types of cost(e.g.,in- consider any comments by the applicant, in kind contributions) that are acceptable as addition to the other information in the des- cost sharing. ignated integrity and performance system, 2. Review and Selection Process—Required. in making a judgment about the applicant's This section may vary in the level of detail integrity, business ethics, and record of per- t provided. The announcement must list any formance under Federal awards when com- program policy or other factors or elements, pleting the review of risk posed by appli- other than merit criteria, that the selecting cants as described in§200.206. official may use in selecting applications for 4. Anticipated Announcement and Federal Federal award(e.g., geographical dispersion, Award Dates—Optional. This section is in- program balance, or diversity). The Federal tended to provide applicants with informa- awarding agency may also include other ap- tion they can use for planning purposes. If propriate details. For example, this section there is a single application deadline fol- may indicate who is responsible for evalua- lowed by the simultaneous review of all ap- tion against the merit criteria(e.g.,peers ex- plications, the Federal awarding agency can ternal to the Federal awarding agency or include in this section information about the Federal awarding agency personnel) and/or anticipated dates for announcing or noti- who makes the final selections for Federal fying successful and unsuccessful applicants awards.If there is a multi-phase review proc- and for having Federal awards in place.If ap- ess (e.g.,an external panel advising internal plications are received and evaluated on a Federal awarding agency personnel who "rolling" basis at different times during an make final recommendations to the deciding extended period, it may be appropriate to official),the announcement may describe the give applicants an estimate of the time need- phases. It also may include: the number of ed to process an application and notify the people on an evaluation panel and how it op- applicant of the Federal awarding agency's erates, the way reviewers are selected, re- decision. viewer qualifications, and the way that con- flicts of interest are avoided.With respect to F.FEDERAL AWARD ADMINISTRATION '.� electronic methods for providing informa- INFORMATION tion about funding opportunities or accept- ing applicants' submissions of information, 1. Federal Award Notices—Required. This each Federal awarding agency is responsible section must address what a successful appli- for compliance with Section 508 of the Reha- cant can expect to receive following selec- bilitation Act of 1973(29 U.S.C.794d). tion. If the Federal awarding agency's prac- In addition,if the Federal awarding agency tice is to provide a separate notice stating permits applicants to nominate suggested re- that an application has been selected before viewers of their applications or suggest those it actually makes the Federal award, this they feel may be inappropriate due to a con- section would be the place to indicate that flict of interest, that information should be the letter is not an authorization to begin included in this section. performance (to the extent that it allows 3. For any Federal award under a notice of charging to Federal awards of pre-award funding opportunity,if the Federal awarding costs at the non-Federal entity's own risk). agency anticipates that the total Federal This section should indicate that the notice share will be greater than the simplified ac- of Federal award signed by the grants officer quisition threshold on any Federal award (or equivalent) is the authorizing document, under a notice of funding opportunity may and whether it is provided through postal include,over the period of performance, this mail or by electronic means and to whom.It section must also inform applicants: also may address the timing, form, and con- i. That the Federal awarding agency,prior tent of notifications to unsuccessful appli- to making a Federal award with a total cants.See also§200.211. 204 OMB Guidance Pt. 200,App. II 2. Administrative and National Policy Re- this requirement is to be as helpful as pos- quirements—Required.This section must iden- sible to potential applicants, so the Federal tify the usual administrative and national awarding agency should consider approaches policy requirements the Federal awarding such as giving: agency's Federal awards may include. Pro- i. Points of contact who may be reached in viding this information lets a potential ap- multiple ways(e.g.,by telephone, FAX, and/ plicant identify any requirements with or email,as well as regular mail). which it would have difficulty complying if ii. A fax or email address that multiple its application is successful. In those cases, people access, so that someone will respond early notification about the requirements al- even if others are unexpectedly absent dur- lows the potential applicant to decide not to ing critical periods. apply or to take needed actions before re- iii.Different contacts for distinct kinds of ceiving the Federal award. The announce- help(e.g., one for questions of programmatic ment need not include all of the terms and content and a second for administrative conditions of the Federal award, but may questions). refer to a document(with information about H.OTHER INFORMATION—OPTIONAL how to obtain it) or Internet site where ap- plicants can see the terms and conditions. If This section may include any additional this funding opportunity will lead to Federal information that will assist a potential ap- awards with some special terms and condi- plicant.For example,the section might: tions that differ from the Federal awarding i. Indicate whether this is a new program agency's usual (sometimes called "general") or a one-time initiative. terms and conditions, this section should ii. Mention related programs or other up- highlight those special terms and conditions. coming or ongoing Federal awarding agency Doing so will alert applicants that have re- funding opportunities for similar activities. ceived Federal awards from the Federal iii. Include current Internet addresses for awarding agency previously and might not Federal awarding agency Web sites that may otherwise expect different terms and condi- be useful to an applicant in understanding tions. For the same reason, the announce- the program. ment should inform potential applicants iv.Alert applicants to the need to identify about special requirements that could apply proprietary information and inform them to particular Federal awards after the review about the way the Federal awarding agency of applications and other information, based will handle it. on the particular circumstances of the effort v.Include certain routine notices to appli- to be supported(e.g.,if human subjects were cants (e.g., that the Federal Government is to be involved or if some situations may jus- not obligated to make any Federal award as tify special terms on intellectual property, a result of the announcement or that only data sharing or security requirements). grants officers can bind the Federal Govern- 3. Reporting—Required. This section must ment to the expenditure of funds). include general information about the type [78 FR 78608, Dec. 26, 2013, as amended at 80 (e.g., financial or performance), frequency, FR 43310, July 22, 2015; 85 FR 49575, Aug. 13, and means of submission (paper or elec- 20201 tronic) of post-Federal award reporting re- quirements. Highlight any special reporting APPENDIX II TO PART 200—CONTRACT requirements for Federal awards under this PROVISIONS FOR NON-FEDERAL ENTI- funding opportunity that differ (e.g., by re- TY CONTRACTS UNDER FEDERAL port type, frequency, form/format, or cir- cumstances for use) from what the Federal awarding agency's Federal awards usually In addition to other provisions required by require.Federal awarding agencies must also the Federal agency or non-Federal entity,all describe in this section all relevant require- contracts made by the non-Federal entity ments such as those at 2 CFR 180.335 and under the Federal award must contain provi- 180.350. sions covering the following,as applicable. If the Federal share of any Federal award (A)Contracts for more than the simplified may include more than$500,000 over the pe- acquisition threshold, which is the inflation riod of performance, this section must in- adjusted amount determined by the Civilian form potential applicants about the post Agency Acquisition Council and the Defense award reporting requirements reflected in Acquisition Regulations Council (Councils) appendix XII to this part. as authorized by 41 U.S.C. 1908,must address G.FEDERAL AWARDING AGENCY CONTACT(S)— administrative, contractual, or legal rem- REQUIRED edies in instances where contractors violate or breach contract terms, and provide for The announcement must give potential ap- such sanctions and penalties as appropriate. plicants a point(s) of contact for answering (B)All contracts in excess of$10,000 must questions or helping with problems while the address termination for cause and for con- funding opportunity is open. The intent of venience by the non-Federal entity including 205 • Pt. 200,App. II 2 CFR Ch. II (1-1-22 Edition) the manner by which it will be effected and with 40 U.S.C.3702 and 3704,as supplemented the basis for settlement. by Department of Labor regulations(29 CFR (C) Equal Employment Opportunity. Ex- Part 5).Under 40 U.S.C.3702 of the Act, each cept as otherwise provided under 41 CFR contractor must be required to compute the Part 60, all contracts that meet the defini- wages of every mechanic and laborer on the tion of"federally assisted construction con- basis of a standard work week of 40 hours. tract"in 41 CFR Part 60-1.3 must include the Work in excess of the standard work week is equal opportunity clause provided under 41 permissible provided that the worker is corn- CFR 60-1.4(b), in accordance with Executive pensated at a rate of not less than one and a Order 11246, "Equal Employment Oppor- half times the basic rate of pay for all hours tunity" (30 FR 12319,12935, 3 CFR Part,1964- worked in excess of 40 hours in the work 1965 Comp.,p.339), as amended by Executive week.The requirements of 40 U.S.C. 3704 are Order 11375, "Amending Executive Order applicable to construction work and provide 11246 Relating to Equal Employment Oppor- that no laborer or mechanic must be re- tunity," and implementing regulations at 41 quired to work in surroundings or under CFR part 60, "Office of Federal Contract working conditions which are unsanitary, Compliance Programs, Equal Employment hazardous or dangerous. These requirements Opportunity,Department of Labor." do not apply to the purchases of supplies or (D)Davis-Bacon Act,as amended(40 U.S.C. materials or articles ordinarily available on 3141-3148).When required by Federal program the open market, or contracts for transpor- legislation, all prime construction contracts tation or transmission of intelligence. in excess of $2,000 awarded by non-Federal (F) Rights to Inventions Made Under a entities must include a provision for compli- Contract or Agreement.If the Federal award ance with the Davis-Bacon Act (40 U.S.C. meets the definition of"funding agreement" 3141-3144, and 3146-3148) as supplemented by under 37 CFR§401.2 (a) and the recipient or Department of Labor regulations (29 CFR subrecipient wishes to enter into a contract Part 5, "Labor Standards Provisions Appli- with a small business firm or nonprofit orga- cable to Contracts Covering Federally Fi- nization regarding the substitution of par- nanced and Assisted Construction"). In ac- ties, assignment or performance of experi- cordance with the statute, contractors must mental, developmental, or research work be required to pay wages to laborers and me- under that "funding agreement," the recipi- chanics at a rate not less than the prevailing ent or subrecipient must comply with the re- wages specified in a wage determination quirements of 37 CFR Part 401,"Rights to In- made by the Secretary of Labor.In addition, ventions Made by Nonprofit Organizations contractors must be required to pay wages and Small Business Firms Under Govern- not less than once a week. The non-Federal ment Grants, Contracts and Cooperative entity must place a copy of the current pre- Agreements," and any implementing regula- vailing wage determination issued by the De- tions issued by the awarding agency. partment of Labor in each solicitation. The (G)Clean Air Act(42 U.S.C.7401-7671q.)and decision to award a contract or subcontract the Federal Water Pollution Control Act (33 must be conditioned upon the acceptance of U.S.C. 1251-1387),as amended—Contracts and the wage determination.The non-Federal en- subgrants of amounts in excess of $150,000 tity must report all suspected or reported must contain a provision that requires the violations to the Federal awarding agency. non-Federal award to agree to comply with The contracts must also include a provision all applicable standards, orders or regula- for compliance with the Copeland "Anti- tions issued pursuant to the Clean Air Act Kickback" Act (40 U.S.C. 3145), as supple- (42 U.S.C. 7401-7671q) and the Federal Water mented by Department of Labor regulations Pollution Control Act as amended(33 U.S.C. (29 CFR Part 3, "Contractors and Sub- 1251-1387).Violations must be reported to the contractors on Public Building or Public Federal awarding agency and the Regional Work Financed in Whole or in Part by Loans Office of the Environmental Protection or Grants from the United States").The Act Agency(EPA). provides that each contractor or sub- (H) Debarment and Suspension (Executive recipient must be prohibited from inducing, Orders 12549 and 12689)—A contract award by any means, any person employed in the (see 2 CFR 180.220)must not be made to par- construction,completion, or repair of public ties listed on the governmentwide exclusions work, to give up any part of the compensa- in the System for Award Management tion to which he or she is otherwise entitled. (SAM), in accordance with the OMB guide- The non-Federal entity must report all sus- lines at 2 CFR 180 that implement Executive pected or reported violations to the Federal Orders 12549 (3 CFR part 1986 Comp., p. 189) awarding agency. and 12689 (3 CFR part 1989 Comp., p. 235), (E) Contract Work Hours and Safety "Debarment and Suspension." SAM Exclu- Standards Act (40 U.S.C. 3701-3708). Where sions contains the names of parties debarred, applicable,all contracts awarded by the non- suspended, or otherwise excluded by agen- Federal entity in excess of$100,000 that in- cies, as well as parties declared ineligible volve the employment of mechanics or labor- under statutory or regulatory authority ers must include a provision for compliance other than Executive Order 12549. 206 • OMB Guidance Pt. 200, App. III (I) Byrd Anti-Lobbying Amendment (31 ciples, this activity may be considered a U.S.C. 1352)—Contractors that apply or bid major function even though an institution's for an award exceeding$100,000 must file the accounting treatment may include it in the required certification. Each tier certifies to instruction function. the tier above that it will not and has not (2) Departmental research means research, used Federal appropriated funds to pay any development and scholarly activities that person or organization for influencing or at- are not organized research and, con- tempting to influence an officer or employee sequently, are not separately budgeted and of any agency,a member of Congress, officer accounted for. Departmental research, for or employee of Congress,or an employee of a purposes of this document, is not considered member of Congress in connection with ob- as a major function, but as a part of the in- taining any Federal contract, grant or any struction function of the institution. other award covered by 31 U.S.C. 1352. Each (3) Only mandatory cost sharing or cost tier must also disclose any lobbying with sharing specifically committed in the project non-Federal funds that takes place in con- budget must be included in the organized re- nection with obtaining any Federal award. search base for computing the indirect(F&A) Such disclosures are forwarded from tier to cost rate or reflected in any allocation of in- tier up to the non-Federal award. direct costs. Salary costs above statutory (J)See§200.323. limits are not considered cost sharing. (K)See§200.216. b. Organized research means all research (L)See§200.322. and development activities of an institution that are separately budgeted and accounted [78 FR 78608, Dec. 26, 2013, as amended at 79 for.It includes: FR 75888, Dec. 19, 2014; 85 FR 49577, Aug. 13, (1) Sponsored research means all research 2020] and development activities that are spon- sored by Federal and non-Federal agencies APPENDIX III TO PART 200—INDIRECT and organizations.This term includes activi- (F&A) COSTS IDENTIFICATION AND ties involving the training of individuals in ASSIGNMENT, AND RATE DETERMINA- research techniques (commonly called re- TION FOR INSTITUTIONS OF HIGHER search training),where such activities utilize EDUCATION (IHES) the same facilities as other research and de- velopment activities and where such activi- A.GENERAL ties are not included in the instruction func- tion.This appendix provides criteria for identi- fying and computing indirect (or indirect (2) University rese arch means all research sepa- (F&A))rates at IHEs (institutions). Indirect and development activities that are rately budgeted and accounted for by the in- (F&A) costs are those that are incurred for stitution under an internal application of in- common or joint objectives and therefore stitutional funds. University research, for cannot be identified readily and specifically purposes of this document, must be corn- with a particular sponsored project, an in- bined with sponsored research under the structional activity, or any other institu- function of organized research. tional activity. See subsection B.1 for a die- a.Other sponsored activities means programs cussion of the components of indirect(F&A) and projects financed by Federal and non- costs. Federal agencies and organizations which 1.Major Functions of an Institution in- volve the performance of work other than in- struction and organized research. Examples Refers to instruction, organized research, of such programs and projects are health other sponsored activities and other institu- service projects and community service pro- tional activities as defined in this section: grams.However,when any of these activities a. Instruction means the teaching and are undertaken by the institution without training activities of an institution. Except outside support, they may be classified as for research training as provided in sub- other institutional activities. section b,this term includes all teaching and d. Other institutional activities means all ac- training activities, whether they are offered tivities of an institution except for instruc- for credits toward a degree or certificate or tion, departmental research, organized re- on a non-credit basis, and whether they are search, and other sponsored activities,as de- offered through regular academic depart- fined in this section; indirect(F&A)cost ac- ments or separate divisions, such as a sum- tivities identified in this Appendix para- mer school division or an extension division. graph B,Identification and assignment of in- Also considered part of this major function direct (F&A) costs; and specialized services are departmental research, and, where facilities described in§200.468 of this part. agreed to,university research. (1)Sponsored instruction and training means 2.Criteria for Distribution specific instructional or training activity es- a. Base period. A base period for distribu- tablished by grant, contract, or cooperative tion of indirect (F&A) costs is the period agreement. For purposes of the cost prin- during which the costs are incurred. The 207 • Pt. 200, App. III 2 CFR Ch. II (1-1-22 Edition) base period normally should coincide with basis, such expenses should be set aside as a the fiscal year established by the institution, separate cost grouping for distribution on but in any event the base period should be so such basis to organized research, instruc- selected as to avoid inequities in the dis- tional,and other activities at the institution tribution of costs. or within the department. b. Need for cost groupings. The overall ob- (4) If activities provide their own pur- jective of the indirect(F&A) cost allocation chasing, personnel administration, building process is to distribute the indirect (F&A) maintenance or similar service,the distribu- costs described in Section B, Identification tion of general administration and general and assignment of indirect (F&A) costs, to expenses, or operation and maintenance ex- the major functions of the institution in pro- penses to such activities should be accom- portions reasonably consistent with the na- plished through cost groupings which include ture and extent of their use of the institu- only that portion of central indirect (F&A) tion's resources.In order to achieve this ob- costs (such as for overall management) jective, it may be necessary to provide for which are properly allocable to such activi- selective distribution by establishing sepa- ties. rate groupings of cost within one or more of (5) If the institution elects to treat fringe the indirect (F&A) cost categories referred benefits as indirect (F&A) charges, such to in subsection B.1. In general, the cost costs should be set aside as a separate cost groupings established within a category grouping for selective distribution to related should constitute, in each case, a pool of cost objectives. those items of expense that are considered to (6)The number of separate cost groupings be of like nature in terms of their relative within a category should be held within contribution to (or degree of remoteness practical limits, after taking into consider- from)the particular cost objectives to which ation the materiality of the amounts in- distribution is appropriate. Cost groupings volved and the degree of precision attainable should be established considering the general through less selective methods of distribu- guides provided in subsection c of this sec- tion. tion. Bach such pool or cost grouping should d.Selection of distribution method. then be distributed individually to the re- d.Selection of distribution method. lated cost objectives, using the distribution (1) Actual conditions must be taken into base or method most appropriate in light of account in selecting the method or base to the guidelines set forth in subsection d of be used in distributing individual cost this section. groupings.The essential consideration in se- c. General considerations on cost groupings. lecting a base is that it be the one best suit- The extent to which separate cost groupings ed for assigning the pool of costs to cost ob- and selective distribution would be appro- jectives in accordance with benefits derived; priate at an institution is a matter of judg- with a traceable cause-and-effect relation- ment to be determined on a case-by-case ship;or with logic and reason,where neither basis.Typical situations which may warrant benefit nor a cause-and-effect relationship is the establishment of two or more separate determinable. cost groupings (based on account classifica- (2)If a cost grouping can be identified di- tion or analysis) within an indirect (F&A) rectly with the cost objective benefitted, it cost category include but are not limited to should be assigned to that cost objective. the following: (3) If the expenses in a cost grouping are (1)If certain items or categories of expense more general in nature,the distribution may relate solely to one of the major functions of be based on a cost analysis study which re- the institution or to less than all functions, sults in an equitable distribution of the such expenses should be set aside as a sepa- costs. Such cost analysis studies may take rate cost grouping for direct assignment or into consideration weighting factors, popu- selective allocation in accordance with the lation, or space occupied if appropriate.Cost guides provided in subsections b and d. analysis studies,however,must(a)be appro- (2)If any types of expense ordinarily treat- priately documented in sufficient detail for ed as general administration or depart- subsequent review by the cognizant agency mental administration are charged to Fed- for indirect costs, (b) distribute the costs to eral awards as direct costs,expenses applica- the related cost objectives in accordance ble to other activities of the institution with the relative benefits derived, (c)be sta- when incurred for the same purposes in like tistically sound,(d)be performed specifically circumstances must, through separate cost at the institution at which the results are to groupings, be excluded from the indirect be used,and(e)be reviewed periodically,but (F&A) costs allocable to those Federal not less frequently than rate negotiations, awards and included in the direct cost of updated if necessary, and used consistently. other activities for cost allocation purposes. Any assumptions made in the study must be (3)If it is determined that certain expenses stated and explained. The use of cost anal- are for the support of a service unit or facil- ysis studies and periodic changes in the ity whose output is susceptible of measure- method of cost distribution must be fully ment on a workload or other quantitative justified. 208 OMB Guidance Pt. 200,App. III (4) If a cost analysis study is not per- (1) Depreciation on buildings used exclu- formed, or if the study does not result in an sively in the conduct of a single function, equitable distribution of the costs, the dis- and on capital improvements and equipment tribution must be made in accordance with used in such buildings, must be assigned to the appropriate base cited in Section B, un- that function. less one of the following conditions is met: (2)Depreciation on buildings used for more (a)It can be demonstrated that the use of than one function, and on capital improve- a different base would result in a more equi- ments and equipment used in such buildings, table allocation of the costs, or that a more must be allocated to the individual functions readily available base would not increase the performed in each building on the basis of costs charged to Federal awards,or usable square feet of space, excluding corn- (b)The institution qualifies for,and elects mon areas such as hallways, stairwells, and to use, the simplified method for computing rest rooms. indirect (F&A) cost rates described in Sec- (3) Depreciation on buildings, capital im- tion D. provements and equipment related to space (5) Notwithstanding subsection (3), effec- (e.g., individual rooms, laboratories) used tive July 1,1998,a cost analysis or base other jointly by more than one function(as deter- than that in Section B must not be used to mined by the users of the space) must be distribute utility or student services costs. treated as follows. The cost of each jointly Instead,subsection B.4.c,may be used in the used unit of space must be allocated to bene- recovery of utility costs. fitting functions on the basis of: e.Order of distribution. (a) The employee full-time equivalents (1)Indirect (F&A) costs are the broad cat- (FTEs) or salaries and wages of those indi- egories of costs discussed in Section B.1. vidual functions benefitting from the use of (2) Depreciation, interest expenses, oper- that space;or ation and maintenance expenses,and general (b)Institution-wide employee FTEs or sal- administrative and general expenses should aries and wages applicable to the benefitting be allocated in that order to the remaining major functions (see Section A.1) of the in- indirect (F&A) cost categories as well as to stitution. the major functions and specialized service (4) Depreciation on certain capital im- facilities of the institution. Other cost cat- provements to land, such as paved parking egories may be allocated in the order deter- areas,fences,sidewalks,and the like,not in- mined to be most appropriate by the institu- cluded in the cost of buildings,must be allo- tions.When cross allocation of costs is made cated to user categories of students and em- as provided in subsection(3),this order of al- ployees on a full-time equivalent basis. The location does not apply. amount allocated to the student category (3) Normally an indirect (F&A) cost cat- must be assigned to the instruction function egory will be considered closed once it has of the institution. The amount allocated to been allocated to other cost objectives, and the employee category must be further allo- costs may not be subsequently allocated to cated to the major functions of the institu- it. However, a cross allocation of costs be- tion in proportion to the salaries and wages tween two or more indirect (F&A) cost cat- of all employees applicable to those func- egories may be used if such allocation will tions. result in a more equitable allocation of 3.Interest costs. If a cross allocation is used,an appro- priate modification to the composition of Interest on debt associated with certain the indirect (F&A) cost categories described buildings, equipment and capital improve- in Section B is required. ments, as defined in§200.449,must be classi- fied as an expenditure under the category B.IDENTIFICATION AND ASSIGNMENT OF Facilities. These costs must be allocated in INDIRECT(F&A)COSTS the same manner as the depreciation on the 1.Definition of Facilities and Administration buildings, equipment and capital improve- ments to which the interest relates. See §200.414 which provides the basis for these indirect cost requirements. 4.Operation and Maintenance Expenses 2.Depreciation a. The expenses under this heading are those that have been incurred for the admin- a. The expenses under this heading are the istration, supervision, operation, mainte- portion of the costs of the institution's nance,preservation,and protection of the in- buildings, capital improvements to land and stitution's physical plant. They include ex- buildings, and equipment which are com- penses normally incurred for such items as puted in accordance with§200.436. janitorial and utility services; repairs and b. In the absence of the alternatives pro- ordinary or normal alterations of buildings, vided for in Section A.2.d, the expenses in- furniture and equipment; care of grounds; cluded in this category must be allocated in maintenance and operation of buildings and the following manner: other plant facilities; security; earthquake 209 it Pt. 200, App. III 2 CFR Ch. II (1-1-22 Edition) and disaster preparedness; environmental cational institutions and other expenses of a safety; hazardous waste disposal; property, general character which do not relate solely liability and all other insurance relating to to any major function of the institution;i.e., property; space and capital leasing; facility solely to (1) instruction, (2) organized re- planning and management; and central re- search, (3) other sponsored activities, or (4) ceiving. The operation and maintenance ex- other institutional activities. The general pense category should also include its allo- administration and general expense category cable share of fringe benefit costs, deprecia- should also include its allocable share of tion,and interest costs. fringe benefit costs, operation and mainte- b. In the absence of the alternatives pro- nance expense, depreciation, and interest vided for in Section A.2.d, the expenses in- costs. Examples of general administration eluded in this category must be allocated in and general expenses include:Those expenses the same manner as described in subsection incurred by administrative offices that serve 2.b for depreciation. the entire university system of which the in- c. A utility cost adjustment of up to 1.3 stitution is a part; central offices of the in- percentage points may be included in the ne- stitution such as the President's or gotiated indirect cost rate of the IHE for or- Chancellor's office, the offices for institu- ganized research, per the computation alter- tion-wide financial management, business natives in paragraphs (c)(1) and (2) of this services, budget and planning, personnel section: management, and safety and risk manage- (1)Where space is devoted to a single func- ment; the office of the General Counsel; and tion and metering allows unambiguous meas- the operations of the central administrative urement of usage related to that space,costs management information systems. General must be assigned to the function located in administration and general expenses must that space. not include expenses incurred within non- \ (2) Where space is allocated to different university-wide deans' offices, academic de- functions and metering does not allow unam- , partments,organized research units,or simi- biguous measurement of usage by function, lar organizational units.(See subsection 6.) costs must be allocated as follows: b. In the absence of the alternatives pro- (i) Utilities costs should be apportioned to vided for in Section A.2.d, the expenses in- functions in the same manner as deprecia- eluded in this category must be grouped first tion, based on the calculated difference be- according to common major functions of the tween the site or building actual square foot- institution to which they render services or age for monitored research laboratory space provide benefits. The aggregate expenses of (site, building, floor, or room), and a sepa- each group must then be allocated to serv- rate calculation prepared by the IHE using iced or benefitted functions on the modified the "effective square footage" described in total cost basis. Modified total costs consist subsection(c)(2)(ii)of this section. of the same elements as those in Section C.2. (ii)"Effective square footage"allocated to When an activity included in this indirect research laboratory space must be calculated (F&A) cost category provides a service or as the actual square footage times the rel- product to another institution or organiza- ative energy utilization index(REUI)posted tion, an appropriate adjustment must be on the OMB Web site at the time of a rate made to either the expenses or the basis of determination. allocation or both,to assure a proper alloca- A. This index is the ratio of a laboratory tion of costs. energy use index (lab EUI) to the cor- responding index for overall average college 6.Departmental Administration Expenses or university space(college EUI). a. The expenses under this heading are B.In July 2012,values for these two indices those that have been incurred for adminis- (taken respectively from the Lawrence trative and supporting services that benefit Berkeley Laboratory"Labs for the 21st Cen- common or joint departmental activities or tury"benchmarking tool and the US Depart- objectives in academic deans' offices, aca- ment of Energy "Buildings Energy demic departments and divisions, and orga- Databook" and were 310 kBtu/sq ft-yr. and nized research units. Organized research 155 kBtu/sq ft-yr., so that the adjustment units include such units as institutes, study ratio is 2.0 by this methodology. To retain centers, and research centers. Departmental currency, OMB will adjust the EUI numbers administration expenses are subject to the from time to time(no more often than annu- following limitations. ally nor less often than every 5 years),using (1) Academic deans' offices. Salaries and reliable and publicly disclosed data. Current operating expenses are limited to those at- values of both the EUIs and the REUI will be tributable to administrative functions. posted on the OMB website. (2)Academic departments: 5.General Administration and General Expenses (a) Salaries and fringe benefits attrib- utable to the administrative work(including a. The expenses under this heading are bid and proposal preparation) of faculty (in- those that have been incurred for the general eluding department heads) and other profes- executive and administrative offices of edu- sional personnel conducting research and/or 210 OMB Guidance Pt.200,App. III instruction, must be allowed at a rate of 3.6 share of the expenses allocated in subsection percent of modified total direct costs. This (1)must be allocated to the appropriate func- category does not include professional busi- tions of the department on the modified ness or professional administrative officers. total cost basis. This allowance must be added to the com- putation of the indirect (F&A) cost rate for 7.Sponsored Projects Administration major functions in Section C; the expenses a.The expenses under this heading im l are - covered by the allowance must be excluded i from the departmental administration cost ted to those incurred by a separate im- pool. No documentation is required to sup- zation(s)established primarily to administer port this allowance. sponsored projects, including such functions (b) Other administrative and supporting as grant and contract administration (Fed- expenses incurred within academic depart- eral and non-Federal), special security, pur- ments are allowable provided they are treat- chasing,personnel,administration,and edit- ed consistently in like circumstances. This ing and publishing of research and other re- would include expenses such as the salaries ports.They include the salaries and expenses of secretarial and clerical staffs, the salaries of the head of such organization, assistants, of administrative officers and assistants, and immediate staff, together with the sala- travel, office supplies, stockrooms, and the ries and expenses of personnel engaged in like. supporting activities maintained by the or- (3) Other fringe benefit costs applicable to ganization,such as stock rooms,print shops, the salaries and wages included in sub- and the like. This category also includes an sections (1) and (2) are allowable, as well as allocable share of fringe benefit costs, gen- an appropriate share of general administra- eral administration and general expenses, tion and general expenses, operation and operation and maintenance expenses,and de- maintenance expenses,and depreciation. preciation. Appropriate adjustments will be (4) Federal agencies may authorize reim- made for services provided to other functions bursement of additional costs for department or organizations. heads and faculty only in exceptional cases b. In the absence of the alternatives pro- where an institution can demonstrate undue vided for in Section A.2.d, the expenses in- hardship or detriment to project perform- eluded in this category must be allocated to ance. the major functions of the institution under b.The following guidelines apply to the de- which the sponsored projects are conducted termination of departmental administrative on the basis of the modified total cost of costs as direct or indirect(F&A)costs. sponsored projects. (1) In developing the departmental admin- c. An appropriate adjustment must be istration cost pool,special care should be ex- made to eliminate any duplicate charges to ercised to ensure that costs incurred for the Federal awards when this category includes same purpose in like circumstances are similar or identical activities as those in- treated consistently as either direct or indi- cluded in the general administration and rect (F&A) costs. For example, salaries of general expense category or other indirect technical staff, laboratory supplies (e.g., (F&A) cost items, such as accounting, pro- chemicals), telephone toll charges, animals, curement,or personnel administration. animal care costs, computer costs, travel costs, and specialized shop costs must be 8.Library Expenses treated as direct costs wherever identifiable to a particular cost objective. Direct charg- a. The expenses under this heading are ing of these costs may be accomplished those that have been incurred for the oper- through specific identification of individual ation of the library, including the cost of costs to benefitting cost objectives, or books and library materials purchased for through recharge centers or specialized serv- the library,less any items of library income ice facilities, as appropriate under the cir- that qualify as applicable credits under cumstances.See§§200.413(c)and 200.468. §200.406.The library expense category should (2) Items such as office supplies, postage, also include the fringe benefits applicable to local telephone costs,and memberships must the salaries and wages included therein, an normally be treated as indirect(F&A)costs. appropriate share of general administration c. In the absence of the alternatives pro- and general expense, operation and mainte- vided for in Section A.2.d, the expenses in- nance expense, and depreciation. Costs in- cluded in this category must be allocated as curred in the purchases of rare books (mu- follows: seum-type books) with no value to Federal (1) The administrative expenses of the awards should not be allocated to them. dean's office of each college and school must b. In the absence of the alternatives pro- be allocated to the academic departments vided for in Section A.2.d, the expenses in- within that college or school on the modified cluded in this category must be allocated total cost basis. first on the basis of primary categories of (2) The administrative expenses of each users, including students, professional em- academic department, and the department's ployees,and other users. 211 Pt. 200, App. III 2 CFR Ch. II (1-1-22 Edition) (1) The student category must consist of activities described in subsections 2 through full-time equivalent students enrolled at the 9. institution, regardless of whether they earn b.The items in this group must be treated credits toward a degree or certificate. as a credit to the affected individual indirect (2) The professional employee category (F&A) cost category before that category is must consist of all faculty members and allocated to benefitting functions. other professional employees of the institu- tion, on a full-time equivalent basis. This C.DETERMINATION AND APPLICATION OF category may also include post-doctorate INDIRECT(F&A)COST RATE OR RATES fellows and graduate students. (3) The other users category must consist 1.Indirect(F&A)Cost Pools of a reasonable factor as determined by insti- a. (1) Subject to subsection b, the separate tutional records to account for all other categories of indirect (F&A) costs allocated users of library facilities. to each major function of the institution as c. Amount allocated in paragraph b of this prescribed in Section B, must be aggregated section must be assigned further as follows: and treated as a common pool for that func- (1) The amount in the student category tion. The amount in each pool must be di- must be assigned to the instruction function vided by the distribution base described in of the institution. subsection 2 to arrive at a single indirect (2) The amount in the professional em- (F&A)cost rate for each function. ployee category must be assigned to the (2) The rate for each function is used to major functions of the institution in propor- distribute indirect(F&A)costs to individual tion to the salaries and wages of all faculty Federal awards of that function. Since a members and other professional employees common pool is established for each major applicable to those functions. function of the institution, a separate fndi- (3)The amount in the other users category rect(F&A)cost rate would be established for must be assigned t9 the other institutional each of the major functions described in Sec- activities function of the institution. tion A.1 under which Federal awards are car- 9.Student Administration and Services car- ried(3 out. (3 out. Each institution's indirect (F&A) cost a. The expenses under this heading are rate process must be appropriately designed those that have been incurred for the admin- to ensure that Federal sponsors do not in istration of student affairs and for services any way subsidize the indirect(F&A)costs of to students, including expenses of such ac- other sponsors, specifically activities spon- tivities as deans of students,admissions,reg- sored by industry and foreign governments. istrar, counseling and placement services, Accordingly, each allocation method used to student advisers, student health and infir- identify and allocate the indirect(F&A)cost mary services, catalogs, and commence- pools, as described in Sections A.2 and B.2 ments and convocations. The salaries of through B.9,must contain the full amount of members of the academic staff whose respon- the institution's modified total costs or sibilities to the institution require adminis- other appropriate units of measurement used trative work that benefits sponsored projects to make the computations. In addition, the may also be included to the extent that the final rate distribution base (as defined in portion charged to student administration is subsection 2) for each major function (orga- determined in accordance with subpart E of nized research, instruction,etc.,as described this Part. This expense category also in- in Section A.1 functions of an institution) cludes the fringe benefit costs applicable to must contain all the programs or activities the salaries and wages included therein, an which utilize the indirect (F&A) costs allo- appropriate share of general administration cated to that major function.At the time an jj and general expenses, operation and mainte- indirect(F&A) cost proposal is submitted to nance,interest expense,and depreciation. a cognizant agency for indirect costs, each b. In the absence of the alternatives pro- institution must describe the process it uses vided for in Section A.2.d, the expenses in to ensure that Federal funds are not used to this category must be allocated to the in- subsidize industry and foreign government '.j struction function, and subsequently to Fed- funded programs. eral awards in that function. 2.The Distribution Basis 10. Offset for Indirect (F&A) Expenses Other- wise Provided for by the Federal Govern- Indirect(F&A)costs must be distributed to went applicable Federal awards and other benefit- ting activities within each major function a. The items to be accumulated under this (see section A.1) on the basis of modified heading are the reimbursements and other total direct costs (MTDC), consisting of all payments from the Federal Government salaries and wages,fringe benefits,materials which are made to the institution to support and supplies, services, travel, and up to the solely,specifically, and directly, in whole or first $25,000 of each subaward (regardless of in part, any of the administrative or service the period covered by the subaward). MTDC 212 OMB Guidance Pt.200,App. III is defined in§200.1. For this purpose,an indi- forward adjustment(over-or under-recovery) rect (F&A) cost rate should be determined from the prior period, to the forecast dis- for each of the separate indirect (F&A) cost tribution base. Unrecovered amounts under pools developed pursuant to subsection 1. lump-sum agreements or cost-sharing provi- The rate in each case should be stated as the sions of prior years must not be carried for- percentage which the amount of the par- ward for consideration in the new rate nego- ticular indirect (F&A) cost pool is of the tiation. There must, however,be an advance modified total direct costs identified with understanding in each case between the in- such pool. stitution and the cognizant agency for indi- .Negotiated Lump Sum for Indirect(F&A) rect costs as to whether these differences Costs will be considered in the rate negotiation rather than making the determination after A negotiated fixed amount in lieu of indi- the differences are known. Further, institu- rect(F&A)costs may be appropriate for self- tions electing to use this carry-forward pro- contained, off-campus, or primarily subcon- vision may not subsequently change without tracted activities where the benefits derived prior approval of the cognizant agency for from an institution's indirect(F&A)services indirect costs. In the event that an institu- cannot be readily determined. Such nego- tion returns to a post-determined rate, any tiated indirect(F&A)costs will be treated as over-or under-recovery during the period in an offset before allocation to instruction,or- which negotiated fixed rates and carry-for- ganized research, other sponsored activities, ward provisions were followed will be in- and other institutional activities. The base eluded in the subsequent post-determined on which such remaining expenses are allo- rates. Where multiple rates are used, the cated should be appropriately adjusted. same procedure will be applicable for deter- mining each rate. 4.Predetermined Rates for Indirect(F&A)Costs Public Law 87-638(76 Stat.437)as amended 6.Provisional and Final Rates for Indirect (41 U.S.C. 4708) authorizes the use of pre- (F&A)Costs determined rates in determining the "indi Where the cognizant agency for indirect rect costs" (indirect (F&A) costs)applicable costs determines that cost experience and under research agreements with educational other pertinent facts do not justify the use institutions.The stated objectives of the law of predetermined rates, or a fixed rate with are to simplify the administration of cost- a carry-forward, or if the parties cannot type research and development contracts(in- agree on an equitable rate,a provisional rate eluding grants) with educational institu- must be established. To prevent substantial tions, to facilitate the preparation of their overpayment or underpayment, the provi- budgets, and to permit more expeditious sional rate may be adjusted by the cognizant closeout of such contracts when the work is agency for indirect costs during the institu- completed. In view of the potential advan- tion's fiscal year. Predetermined or fixed tages offered by this procedure, negotiation rates may replace provisional rates at any of predetermined rates for indirect (F&A) time prior to the close of the institution's costs for a period of two to four years should fiscal year. If a provisional rate is not re- be the norm in those situations where the placed by a predetermined or fixed rate prior cost experience and other pertinent facts to the end of the institution's fiscal year, a available are deemed sufficient to enable the final rate will be established and upward or parties involved to reach an informed judg- downward adjustments will be made based on ment as to the probable level of indirect the actual allowable costs incurred for the (F&A) costs during the ensuing accounting period involved. periods. 7.Fixed Rates for the Life of the Sponsored 5.Negotiated Fixed Rates and Carry-Forward Agreement Provisions a.Except as provided in paragraph(c)(1)of When a fixed rate is negotiated in advance §200.414,Federal agencies must use the nego- for a fiscal year (or other time period), the tiated rates in effect at the time of the ini- over-or under-recovery for that year may be tial award throughout the life of the Federal included as an adjustment to the indirect award. Award levels for Federal awards may (F&A) cost for the next rate negotiation. not be adjusted in future years as a result of When the rate is negotiated before the carry- changes in negotiated rates. "Negotiated forward adjustment is determined,the carry- rates" per the rate agreement include final, forward amount may be applied to the next fixed, and predetermined rates and exclude subsequent rate negotiation. When such ad- provisional rates. "Life" for the purpose of justments are to be made,each fixed rate ne- this subsection means each competitive seg- gotiated in advance for a given period will be ment of a project. A competitive segment is computed by applying the expected indirect a period of years approved by the Federal (F&A) costs allocable to Federal awards for awarding agency at the time of the Federal the forecast period plus or minus the carry- award. If negotiated rate agreements do not 213 Pt. 200, App. III 2 CFR Ch. II (1-1-22 Edition) extend through the life of the Federal award tion or documentation of these costs re- at the time of the initial award, then the ne- quired(see subsection c).Where a negotiated gotiated rate for the last year of the Federal indirect (F&A) cost agreement includes this award must be extended through the end of alternative, an institution must make no the life of the Federal award. further charges for the expenditure cat- b. Except as provided in §200.414, when an egories described in Section B.5, Section B.6, educational institution does not have a nego- Section B.7,and Section B.9. tiated rate with the Federal Government at b. In negotiations of rates for subsequent the time of an award (because the edu- periods, an institution that has elected the cational institution is a new recipient or the option of subsection a may continue to exer- parties cannot reach agreement on a rate), cise it at the same rate without further iden- the provisional rate used at the time of the tification or documentation of costs. award must be adjusted once a rate is nego- c. If an institution elects to accept a tiated and approved by the cognizant agency threshold rate as defined in subsection a of for indirect costs. this section, it is not required to perform a detailed analysis of its administrative costs. 8.Limitation on Reimbursement of However, in order to compute the facilities Administrative Costs components of its indirect (F&A) cost rate, a. Notwithstanding the provisions of sub- the institution must reconcile its indirect section C.1.a, the administrative costs (F&A) cost proposal to its financial state- charged to Federal awards awarded or ments and make appropriate adjustments jl amended (including continuation and re- and reclassifications to identify the costs of newal awards)with effective dates beginning each major function as defined in Section on or after the start of the institution's first A.1,as well as to identify and allocate the fa- fiscal year which begins on or after October cilities components. Administrative costs 1, 1991, must be limited to 26% of modified that are not identified as such by the insti- total direct costs(as defined in subsection 2) tution's accounting system(such as those in- for the total of General Administration and curred in academic departments) will be General Expenses, Departmental Adminis- classified as instructional costs for purposes tration, Sponsored Projects Administration, of reconciling indirect (F&A) cost proposals and Student Administration and Services to financial statements and allocating facili- (including their allocable share of deprecia- ties costs. tion, interest costs, operation and mainte- nonce expenses, and fringe benefits costs, as 10.Individual Rate Components provided by Section B,and all other types of In order to provide mutually agreed-upon expenditures not listed specifically under information for management purposes, each one of the subcategories of facilities in Sec- indirect (F&A) cost rate negotiation or de- tion B. termination must include development of a b. Institutions should not change their ac- rate for each indirect(F&A)cost pool as well counting or cost allocation methods if the ef- as the overall indirect(F&A)cost rate. feet is to change the charging of a particular type of cost from F&A to direct,or to reclas- 11.Negotiation and Approval of Indirect(F&A) sify costs, or increase allocations from the Rate administrative pools identified in paragraph a. Cognizant agency for indirect costs is B.1 of this Appendix to the other F&A cost defined in Subpart A. pools or fringe benefits. Cognizant agencies (1) Cost negotiation cognizance is assigned for indirect cost are authorized to allow to the Department of Health and Human changes where an institution's charging Services (HHS) or the Department of De- practices are at variance with acceptable fense's Office of Naval Research (DOD), nor- practices followed by a substantial majority mally depending on which of the two agen- of other institutions. cies (HHS or DOD) provides more funds di- 9.Alternative Method for Administrative Costs rectly to the educational institution for the most recent three years. Information on a. Notwithstanding the provisions of sub- funding must be derived from relevant data section C.1.a, an institution may elect to gathered by the National Science Founda- claim a fixed allowance for the "Adminis- tion. In cases where neither HHS nor DOD tration"portion of indirect(F&A)costs.The provides Federal funding directly to an edu- allowance could be either 24% of modified cational institution, the cognizant agency total direct costs or a percentage equal to for indirect costs assignment must default to 95% of the most recently negotiated fixed or HHS. Notwithstanding the method for cog- predetermined rate for the cost pools in- nizance determination described in this sec- cluded under"Administration" as defined in tion, other arrangements for cognizance of a Section B.1,whichever is less. Under this al- particular educational institution may also ternative, no cost proposal need be prepared be based in part on the types of research per- for the"Administration"portion of the indi- formed at the educational institution and rect(F&A)cost rate nor is further identifica- must be decided based on mutual agreement 214 • OMB Guidance Pt. 200,App. III between HHS and DOD.Where a non-Federal to reach agreement with an educational in- entity only receives funds as a subrecipient, stitution with regard to rates or audit peso- see§200.332. lution, the appeal system of the cognizant (2)After cognizance is established,it must agency for indirect costs must be followed continue for a five-year period. for resolution of the disagreement. b.Acceptance of rates.See§200.414. c. Correcting deficiencies. The cognizant 12.Standard Format for Submission agency for indirect costs must negotiate changes needed to correct systems defi- For facilities and administrative (indirect ciencies relating to accountability for Fed- (F&A)) rate proposals, educational institu- eral awards. Cognizant agencies for indirect tions must use the standard format, shown costs must address the concerns of other af- in section E of this appendix,to submit their fected agencies,as appropriate,and must ne- indirect (F&A) rate proposal to the cog- gotiate special rates for Federal agencies nizant agency for indirect costs. The cog- that are required to limit recovery of indi- nizant agency for indirect costs may, on an rect costs by statute. institution-by-institution basis,grant excep- d. Resolving questioned costs. The cog- tions from all or portions of Part II of the nizant agency for indirect costs must con- standard format requirement. This require- duct any necessary negotiations with an edu- ment does not apply to educational institu- cational institution regarding amounts ques- tions that use the simplified method for cal- tioned by audit that are due the Federal culating indirect(F&A)rates,as described in Government related to costs covered by a ne- Section D of this Appendix. gotiated agreement. As provided in section C.10 of this appen- e. Reimbursement. Reimbursement to cog- dix,each F&A cost rate negotiation or deter- nizant agencies for indirect costs for work performedminationrh must include development of a rate under this Part may be made by for each F&A cost pool as well as the overall reimbursement billing under the Economy F&A rate. Act,31 U.S.C.1535. f. Procedure for establishing facilities and D. SIMPLIFIED METHOD FOR SMALL administrative rates must be established by INSTITUTIONS one of the following methods: (1) Formal negotiation. The cognizant 1.General agency for indirect costs is responsible for negotiating and approving rates for an edu- a.Where the total direct cost of work cov- cational institution on behalf of all Federal ered by this Part at an institution does not agencies. Federal awarding agencies that do exceed$10 million in a fiscal year, the sim- not have cognizance for indirect costs must plified procedure described in subsections 2 notify the cognizant agency for indirect or 3 may be used in determining allowable costs of specific concerns (i.e., a need to es- indirect (F&A) costs. Under this simplified tablish special cost rates)which could affect procedure, the institution's most recent an- the negotiation process.The cognizant agen- nual financial report and immediately avail- cy for indirect costs must address the con- able supporting information must be utilized cerns of all interested agencies, as appro- as a basis for determining the indirect(F&A) priate. A pre-negotiation conference may be cost rate applicable to all Federal awards. scheduled among all interested agencies, if The institution may use either the salaries necessary.The cognizant agency for indirect and wages (see subsection 2) or modified Costs must then arrange a negotiation con- total direct costs (see subsection 3) as the ference with the educational institution. distribution basis. (2)Other than formal negotiation.The cog- b. The simplified procedure should not be nizant agency for indirect costs and edu- used where it produces results which appear cational institution may reach an agreement inequitable to the Federal Government or on rates without a formal negotiation con- the institution. In any such case, indirect ference; for example, through correspond- (F&A) costs should be determined through ence or use of the simplified method de- use of the regular procedure. scribed in this section D of this Appendix. g. Formalizing determinations and agree- 2.Simplified Procedure—Salaries and Wages ments. The cognizant agency for indirect Base costs must formalize all determinations or agreements reached with an educational in- a. Establish the total amount of salaries stitution and provide copies to other agen- and wages paid to all employees of the insti- cies having an interest. Determinations tution. should include a description of any adjust- b. Establish an indirect (F&A) cost pool ments, the actual amount, both dollar and consisting of the expenditures (exclusive of percentage adjusted,and the reason for mak- capital items and other costs specifically ing adjustments. identified as unallowable)which customarily h. Disputes and disagreements. Where the are classified under the following titles or cognizant agency for indirect costs is unable their equivalents: 215 'III ) Pt. 200, App. III 2 CFR Ch. II (1-1-22 Edition) (1) General administration and general ex- The distribution basis, that consists of all penses(exclusive of costs of student adminis- institution's direct functions. tration and services, student activities, stu- d. Establish the indirect (F&A) cost rate, '.i dent aid,and scholarships). determined by dividing the amount in the in- (2) Operation and maintenance of physical direct (F&A) cost pool, subsection b, by the plant and depreciation(after appropriate ad- amount of the distribution base, subsection justment for costs applicable to other insti- c. tutional activities). e. Apply the indirect (F&A) cost rate to (3)Library. the modified total direct costs for individual (4) Department administration expenses, agreements to determine the amount of indi- which will be computed as 20 percent of the rect (F&A) costs allocable to such agree- salaries and expenses of deans and heads of ments. departments. In those cases where expenditures classi- E.DOCUMENTATION REQUIREMENTS fied under subsection (1) have previously The standard format for documentation re- been allocated to other institutional activi- ties, they may be included in the indirect proposals ents for indirect(indirect(F&A))rate p reg- (F&A) cost pool. The total amount of sala- proposals for claiming costs under the ries and wages included in the indirect(F&A) ular method is available on the OMB n ebsite. cost pool must be separately identified. c.Establish a salary and wage distribution F.CERTIFICATION base,determined by deducting from the total of salaries and wages as established in sub- 1.Certification of Charges section a from the amount of salaries and wages included under subsection b. To assure that expenditures for Federal d. Establish the indirect (F&A) cost rate, awards are proper and in accordance with determined by dividing the amount in the in- the agreement documents and approved direct (F&A) cost pool, subsection b, by the project budgets, the annual and/or final fis- amount of the distribution base, subsection cal reports or vouchers requesting payment c under the agreements will include a certifi- e.Apply the indirect(F&A)cost rate to di- cation, signed by an authorized official of rect salaries and wages for individual agree- the university, which reads "By signing this ments to determine the amount of indirect report,I certify to the best of my knowledge (F&A)costs allocable to such agreements. and belief that the report is true, complete, and accurate,and the expenditures,disburse- 3.Simplified Procedure—Modified Total Direct ments and cash receipts are for the purposes Cost Base and intent set forth in the award documents. I am aware that any false, fictitious, or a.Establish the total costs incurred by the fraudulent information, or the omission of institution for the base period. any material fact, may subject me to crimi- b. Establish an indirect (F&A) cost pool nal, civil or administrative penalties for consisting of the expenditures (exclusive of fraud, false statements, false claims or oth- capital items and other costs specifically erwise. (U.S.Code,Title 18, Section 1001 and identified as unallowable)which customarily are classified under the following titles or Title 31,Sections 3729-3733 and 3801-3812)". their equivalents: 2.Certification of Indirect(F&A)Costs II, (1) General administration and general ex- penses(exclusive of costs of student adminis- a. Policy. Cognizant agencies must not ac- tration and services, student activities, stu- cept a proposed indirect cost rate unless dent aid,and scholarships). such costs have been certified by the edu- (2) Operation and maintenance of physical cational institution using the Certificate of plant and depreciation(after appropriate ad- indirect (F&A) Costs set forth in subsection justment for costs applicable to other insti- F.2.c tutional activities). b.The certificate must be signed on behalf (3)Library. of the institution by the chief financial offi- (4) Department administration expenses, cer or an individual designated by an indi- which will be computed as 20 percent of the vidual at a level no lower than vice president salaries and expenses of deans and heads of or chief financial officer. departments. In those cases where expendi- An indirect(F&A)cost rate is not binding tures classified under subsection (1) have upon the Federal Government if the most re- previously been allocated to other institu- cent required proposal from the institution tional activities,they may be included in the has not been certified. Where it is necessary indirect(F&A)cost pool. The modified total to establish indirect (F&A) cost rates, and direct costs amount included in the indirect the institution has not submitted a certified (F&A) cost pool must be separately identi- proposal for establishing such rates in ac- fied. cordance with the requirements of this sec- c. Establish a modified total direct cost tion,the Federal Government must unilater- distribution base, as defined in Section C.2, ally establish such rates. Such rates may be 216 • OMB Guidance Pt. 200,App. IV based upon audited historical data or such costs under the conditions described in other data that have been furnished to the §200.413(d). After direct costs have been de- cognizant agency for indirect costs and for termined and assigned directly to awards or which it can be demonstrated that all unal- other work as appropriate, indirect costs are lowable costs have been excluded.When indi- those remaining to be allocated to benefit- rect(F&A)cost rates are unilaterally estab- ting cost objectives.A cost may not be allo- lished by the Federal Government because of cated to a Federal award as an indirect cost failure of the institution to submit a cer- if any other cost incurred for the same pur- tified proposal for establishing such rates in pose, in like circumstances, has been as- accordance with this section, the rates es- signed to a Federal award as a direct cost. tablished will be set at a level low enough to 2. "Major nonprofit organizations" are de- ensure that potentially unallowable costs fined in paragraph (a) of §200.414. See indi- will not be reimbursed. rect cost rate reporting requirements in sec- c. Certificate. The certificate required by tions B.2.e and B.3.g of this Appendix. this section must be in the following form: B.ALLOCATION OF INDIRECT COSTS AND Certificate of Indirect(F&A)Costs DETERMINATION OF INDIRECT COST RATES This is to certify that to the best of my 1.General knowledge and belief: a. If a nonprofit organization has only one (1)I have reviewed the indirect(F&A)cost major function, or where all its major func- proposal submitted herewith; (2)All costs included in this proposal[iden- tions benefit from its indirect costs to ap- tify date] to establish billing or final indi- proximately the same degree, the allocation rect (F&A) costs rate for [identify period of indirect costs and the computation.of an covered by rate] are allowable in accordance indirect cost rate may be accomplished with the requirements of the Federal agree- through simplified allocation procedures, as ment(s) to which they apply and with the described in section B.2 of this Appendix. cost principles applicable to those agree- b. If an organization has several major ments. functions which benefit from its indirect (3)This proposal does not include any costs costs in varying degrees, allocation of indi- which are unallowable under subpart E of rect costs may require the accumulation of this part such as(without limitation):Public such costs into separate cost groupings which then are allocated individually to ben- relations costs, contributions and donations, entertainment costs,fines and penalties,lob- efitting functions by means of a base which bying costs, and defense of fraud best measures the relative degree of benefit. pro- The indirect costs allocated to each function ceedings;and are then distributed to individual Federal (4) All costs included in this proposal are awards and other activities included in that properly allocable to Federal agreements on function by means of an indirect cost rate(s). the basis of a beneficial or causal relation- c. The determination of what constitutes ship between the expenses incurred and the an organization's major functions will de- agreements to which they are allocated in accordance with applicable requirements. Pend on its purposeder in being; the typeslieof I declare that the foregoing is true and cor- and services it ber ; to the noun, its clients, rect. and its members;and the amount of effort it devotes to such activities as fundraising, Institution of Higher Education: public information and membership activi- Signature: ties. Name of Official: d. Specific methods for allocating indirect Title: costs and computing indirect cost rates Date of Execution: along with the conditions under which each [78 FR 78608, Dec. 26, 2013, as amended at 79 method should be used are described in sec- FR 75888, Dec. 19, 2014; 80 FR 54409, Sept. 10, tion B.2 through B.5 of this Appendix. 2015;85 FR 49577,Aug.13,2020] e.The base period for the allocation of in- direct costs is the period in which such costs APPENDIX IV TO PART 200—INDIRECT are incurred and accumulated for allocation (F&A) COSTS IDENTIFICATION AND to work performed in that period. The base ASSIGNMENT, AND RATE DETERMINA- period normally should coincide with the or- ganization's FOR NONPROFIT ORGANIZA- mus fiscal year but, in any event, must be so selected as to avoid inequities in TIONS the allocation of the costs. A.GENERAL 2.Simplified Allocation Method 1. Indirect costs are those that have been a.Where an organization's major functions incurred for common or joint objectives and benefit from its indirect costs to approxi- cannot be readily identified with a par- mately the same degree, the allocation of in- ticular final cost objective. Direct cost of direct costs may be accomplished by(i)sepa- minor amounts may be treated as indirect rating the organization's total costs for the 217 • Pt. 200, App. IV 2 CFR Ch. II (1-1-22 Edition) base period as either direct or indirect, and of the allocation base which best measures (ii) dividing the total allowable indirect the relative benefits provided to each func- costs (net of applicable credits) by an equi- tion.The groupings are classified within the table distribution base. The result of this two broad categories: "Facilities" and "Ad- process is an indirect cost rate which is used ministration," as described in section A.3 of to distribute indirect costs to individual this Appendix.The indirect cost pools are de- Federal awards.The rate should be expressed fined as follows: as the percentage which the total amount of (1) Depreciation. The expenses under this allowable indirect costs bears to the base se- heading are the portion of the costs of the lected. This method should also be used organization's buildings, capital improve- where an organization has only one major ments to land and buildings, and equipment function encompassing a number of indi- vidual projects or activities, and may be which are computed in accordance with used where the level of Federal awards to an §200.436. organization is relatively small. (2) Interest. Interest on debt associated b. Both the direct costs and the indirect with certain buildings, equipment and cap- costs must exclude capital expenditures and ital improvements are computed in accord- unallowable costs. However, unallowable ance with§200.449. costs which represent activities must be in- (3) Operation and maintenance expenses. cluded in the direct costs under the condi- The expenses under this heading are those tions described in§200.413(e). that have been incurred for the administra- c. The distribution base may be total di- tion, operation, maintenance, preservation, rect costs (excluding capital expenditures and protection of the organization's physical and other distorting items, such as sub- plant. They include expenses normally in- awards for $25,000 or more), direct salaries curred for such items as:janitorial and util- and wages,or other base which results in an ity services; repairs and ordinary or normal equitable distribution. The distribution base alterations of buildings,furniture and equip- must exclude participant support costs as de- fined in§200.1. ment; care of grounds; maintenance and op- eration of buildings and other plant facili- quired in accordance with section B.5 of this ties; security; earthquake and disaster pre- Appendix, the indirect cost rate developed paredness; environmental safety; hazardous under the above principles is applicable to waste disposal; property, liability and other all Federal awards of the organization. If a insurance relating to property; space and special rate(s)is required, appropriate modi- capital leasing; facility planning and man- fications must be made in order to develop agement; and central receiving. The oper- the special rate(s). ation and maintenance expenses category e. For an organization that receives more must also include its allocable share of than$10 million in direct Federal funding in fringe benefit costs, depreciation, and inter- a fiscal year, a breakout of the indirect cost est costs. component into two broad categories,Facili- (4) General administration and general ex- ties and Administration as defined in para- penses. The expenses under this heading are graph(a)of§200.414, is required. The rate in those that have been incurred for the overall each case must be stated as the percentage general executive and administrative offices which the amount of the particular indirect of the organization and other expenses of a cost category (i.e., Facilities or Administra- general nature which do not relate solely to tion) is of the distribution base identified any major function of the organization.This with that category. category must also include its allocable 3.Multiple Allocation Base Method share of fringe benefit costs, operation and maintenance expense, depreciation, and in- a. General. Where an organization's indi- terest costs. Examples of this category in- rect costs benefit its major functions in elude central offices, such as the director's varying degrees,indirect costs must be accu- office, the office of finance, business serv- mulated into separate cost groupings, as de- ices, budget and planning, personnel, safety scribed in subparagraph b. Each grouping and risk management,general counsel,man- must then be allocated individually to bane- agement information systems, and library fitting functions by means of a base which costs. best measures the relative benefits. The de- fault allocation bases by cost pool are de- In developing this cost pool, special care scribed in section B.3.c of this Appendix. should be exercised to ensure that costs in- b. Identification of indirect costs. Cost curred for the same purpose in like cir- groupings must be established so as to per- cumstances are treated consistently as ei- mit the allocation of each grouping on the ther direct or indirect costs. For example, basis of benefits provided to the major func- salaries of technical staff, project supplies, tions. Each grouping must constitute a pool project publication, telephone toll charges, of expenses that are of like character in computer costs, travel costs, and specialized terms of functions they benefit and in terms services costs must be treated as direct costs 218 OMB Guidance Pt. 200, App. IV wherever identifiable to a particular pro- (ii) organization-wide employee FTEs or gram.The salaries and wages of administra- salaries and wages applicable to the benefit- tive and pooled clerical staff should nor- ting functions of the organization. mally be treated as indirect costs. Direct (d) Depreciation on certain capital im- charging of these costs maybe appropriate provements to land, such as paved parking as described in§200.413. Items such as office areas,fences,sidewalks,and the like,not in- supplies,postage,local telephone costs,peri- eluded in the cost of buildings,must be allo- odicals and memberships should normally be cated to user categories on a FTE basis and treated as indirect costs. distributed to major functions in proportion c. Allocation bases. Actual conditions to the salaries and wages of all employees must be taken into account in selecting the applicable to the functions. base to be used in allocating the expenses in (2) Interest. Interest costs must be allo- each grouping to benefitting functions. The cated in the same manner as the deprecia- essential consideration in selecting a method tion on the buildings, equipment and capital or a base is that it is the one best suited for equipment to which the interest relates. assigning the pool of costs to cost objectives (3) Operation and maintenance expenses. in accordance with benefits derived; a trace- Operation and maintenance expenses must able cause and effect relationship; or logic be allocated in the same manner as the de- and reason, where neither the cause nor the preciation. effect of the relationship is determinable. (4) General administration and general ex- When an allocation can be made by assign- penses. General administration and general ment of a cost grouping directly to the func- expenses must be allocated to benefitting tion benefitted,the allocation must be made functions based on modified total costs in that manner. When the expenses in a cost (MTC).The MTC is the modified total direct grouping are more general in nature, the al- costs(MTDC),as described in§200.1,plus the location must be made through the use of a allocated indirect cost proportion. The ex- selected base which produces results that are penses included in this category could be equitable to both the Federal Government grouped first according to major functions of and the organization. The distribution must the organization to which they render serv- be made in accordance with the bases de- ices or provide benefits. The aggregate ex- scribed herein unless it can be demonstrated penses of each group must then be allocated that the use of a different base would result to benefitting functions based on MTC. in a more equitable allocation of the costs, d.Order of distribution. or that a more readily available base would (1) Indirect cost categories consisting of not increase the costs charged to Federal depreciation,interest,operation and mainte- awards. The results of special cost studies nance, and general administration and gen- (such as an engineering utility study) must eral expenses must be allocated in that order not be used to determine and allocate the in- to the remaining indirect cost categories as direct costs to Federal awards. well as to the major functions of the organi- (1) Depreciation. Depreciation expenses zation. Other cost categories should be allo- must be allocated in the following manner: cated in the order determined to be most ap- (a) Depreciation on buildings used exclu- propriate by the organization. This order of sively in the conduct of a single function, allocation does not apply if cross allocation and on capital improvements and equipment of costs is made as provided in section B.3.d.2 used in such buildings, must be assigned to of this Appendix. that function. (2)Normally,an indirect cost category will (b)Depreciation on buildings used for more be considered closed once it has been allo- than one function, and on capital improve- cated to other cost objectives, and costs ments and equipment used in such buildings, must not be subsequently allocated to it. must be allocated to the individual functions However,a cross allocation of costs between performed in each building on the basis of two or more indirect costs categories could usable square feet of space, excluding corn- be used if such allocation will result in a mon areas, such as hallways, stairwells, and more equitable allocation of costs. If a cross restrooms. allocation is used, an appropriate modifica- (c) Depreciation on buildings, capital im- tion to the composition of the indirect cost provements and equipment related space categories is required. (e.g., individual rooms, and laboratories) e. Application of indirect cost rate or used jointly by more than one function (as rates. Except where a special indirect cost determined by the users of the space) must rate(s)is required in accordance with section be treated as follows.The cost of each joint- B.5 of this Appendix, the separate groupings ly used unit of space must be allocated to of indirect costs allocated to each major the benefitting functions on the basis of: function must be aggregated and treated as a (i)the employees and other users on a full- common pool for that function. The costs in time equivalent (FTE) basis or salaries and the common pool must then be distributed to wages of those individual functions benefit- individual Federal awards included in that ting from the use of that space;or function by use of a single indirect cost rate. 219 Pt. 200, App.'IV 2 CFR Ch. 11 (1-1-22 Edition) f. Distribution basis. Indirect costs must gle Federal award or it may consist of work be distributed to applicable Federal awards under a group of Federal awards performed and other benefitting activities within each in a common environment. These factors major function on the basis of MTDC (see may include the physical location of the definition in§200.1), work, the level of administrative support re- g. Individual Rate Components. An indi- quired, the nature of the facilities or other rect cost rate must be determined for each resources employed,the scientific disciplines separate indirect cost pool developed. The or technical skills involved, the organiza- rate in each case must be stated as the per- tional arrangements used, or any combina- centage which the amount of the particular tion thereof. When a particular segment of indirect cost pool is of the distribution base work is performed in an environment which identified with that pool. Each indirect cost appears to generate a significantly different rate negotiation or determination agreement level of indirect costs, provisions should be must include development of the rate for made for a separate indirect cost pool appli- each indirect cot pool as well as the overall cable to such work. The separate indirect indirect cost rate. The indirect cost pools cost pool should be developed during the must be classified within two broad cat- course of the regular allocation process, and egories: "Facilities" and "Administration," the separate indirect cost rate resulting as described in§200.414(a). therefrom should be used, provided it is de- termined that (i) the rate differs signifi- 4.Direct Allocation Method cantly from that which would have been ob- a. Some nonprofit organizations treat all tained under sections B.2,B.3,and B.4 of this costs as direct costs except general adminis- Appendix, and (ii) the volume of work to tration and general expenses. These organi- which the rate would apply is material. zations generally separate their costs into C.NEGOTIATION AND APPROVAL OF INDIRECT three basic categories: (i) General adminis- COST RATES tration and general expenses, (ii) fund- raising, and (iii) other direct functions (in- 1.Definitions cluding projects performed under Federal As used in this section,the following terms awards). Joint costs, such as depreciation, have the meanings set forth in this section: rental costs, operation and maintenance of a. Cognizant agency for indirect costs means facilities, telephone expenses, and the like the Federal agency responsible for negoti- are prorated individually as direct costs to ating and approving indirect cost rates for a each category and to each Federal award or nonprofit organization on behalf of all Fed- other activity using a base most appropriate eral agencies. to the particular cost being prorated. b.Predetermined rate means an indirect cost b.This method is acceptable,provided each rate, applicable to a specified current or fu- joint cost is prorated using a base which ac- ture period,usually the organization's fiscal curately measures the benefits provided to year.The rate is based on an estimate of the each Federal award or other activity. The costs to be incurred during the period.A pre- bases must be established in accordance with determined rate is not subject to adjust- reasonable criteria and be supported by cur- ment. rent data. This method is compatible with c. Fixed rate means an indirect cost rate the Standards of Accounting and Financial which has the same characteristics as a pre- Reporting for Voluntary Health and Welfare determined rate, except that the difference Organizations issued jointly by the National between the estimated costs and the actual Health Council, Inc., the National Assembly costs of the period covered by the rate is car- of Voluntary Health and Social Welfare Or- ried forward as an adjustment to the rate ganizations, and the United Way of America. computation of a subsequent period. c. Under this method, indirect costs con- d. Final rate means an indirect cost rate sist exclusively of general administration applicable to a specified past period which is and general expenses. In all other respects, based on the actual costs of the period. A the organization's indirect cost rates must final rate is not subject to adjustment. be computed in the same manner as that de- e. Provisional rate or billing rate means a scribed in section B.2 of this Appendix. temporary indirect cost rate applicable to a 5.Special Indirect Cost Rates specified period which is used for funding,in- terim reimbursement, and reporting indirect In some instances, a single indirect cost costs on Federal awards pending the estab- rate for all activities of an organization or lishment of a final rate for the period. for each major function of the organization f. Indirect cost proposal means the docu- may not be appropriate, since it would not mentation prepared by an organization to take into account those different factors substantiate its claim for the reimbursement which may substantially affect the indirect of indirect costs. This proposal provides the costs applicable to a particular segment of basis for the review and negotiation leading work.For this purpose,a particular segment to the establishment of an organization's in- of work may be that performed under a sin- direct cost rate. 220 OMB Guidance Pt. 200,App. IV g.Cost objective means a function,organiza- justment can be made;(ii)the mix of Federal tional subdivision, contract, Federal award, and non-Federal work at the organization is or other work unit for which cost data are too erratic to permit an equitable carry-for- desired and for which provision is made to ward adjustment; or (iii) the organization's accumulate and measure the cost of proc- operations fluctuate significantly from year esses,projects,jobs and capitalized projects. to year. f.Provisional and final rates must be nego- 2.Negotiation and Approval of Rates tiated where neither predetermined nor fixed a. Unless different arrangements are rates are appropriate. Predetermined or agreed to by the Federal agencies concerned, fixed rates may replace provisional rates at the Federal agency with the largest dollar any time prior to the close of the organiza- value of Federal awards directly funded to an tion's fiscal year. If that event does not organization will be designated as the cog- occur,a final rate will be established and up- nizant agency for indirect costs for the nego- ward or downward adjustments will be made tiation and approval of the indirect cost based on the actual allowable costs incurred rates and,where necessary, other rates such for the period involved. as fringe benefit and computer charge-out g.The results of each negotiation must be rates.Once an agency is assigned cognizance formalized in a written agreement between for a particular nonprofit organization, the the cognizant agency for indirect costs and assignment will not be changed unless there the nonprofit organization. The cognizant is a shift in the dollar volume of the Federal agency for indirect costs must make avail- awards directly funded to the organization able copies of the agreement to all concerned for at least three years. All concerned Fed- Federal agencies. eral agencies must be given the opportunity h.If a dispute arises in a negotiation of an to participate in the negotiation process but, indirect cost rate between the cognizant after a rate has been agreed upon, it will be agency for indirect costs and the nonprofit accepted by all Federal agencies. When a organization,the dispute must be resolved in Federal agency has reason to believe that accordance with the appeals procedures of • special operating factors affecting its Fed- the cognizant agency for indirect costs. eral awards necessitate special indirect cost i.To the extent that problems are encoun- rates in accordance with section B.5 of this tered among the Federal agencies in connec- Appendix, it will, prior to the time the rates tion with the negotiation and approval proc- are negotiated, notify the cognizant agency ess, OMB will lend assistance as required to for indirect costs. (See also §200.414.) If the resolve such problems in a timely manner. nonprofit does not receive any funding from any Federal agency, the pass-through entity D.Certification of Indirect(F&A)Costs is responsible for the negotiation of the indi- (1) Required Certification. No proposal to rect cost rates in accordance with establish indirect (F&A) cost rates must be §200.332(a)(4). acceptable unless such costs have been cer- .b. Except as otherwise provided in tified by the nonprofit organization using §200.414(0, a nonprofit organization which has not previously established an indirect forhe Certificate of Indirectf tisappendix.(F&A Costs es - cost rate with a Federal agency must submit forth in section j.signed this The orga- its - initial indirect cost proposal immediately tificate must be on behalf of the after the organization is advised that a Fed- than by an individual at a level no lower eras award will be made and, in no event, than vice president or chief financial officer later than three months after the effective for the organization. date of the Federal award. (2) Each indirect cost rate proposal must c.Unless approved by the cognizant agency be accompanied by a certification in the fol- for indirect costs in accordance with lowing form: §200.414(g), organizations that have pre- Certificate of Indirect(F&A)Costs viously established indirect cost rates must submit a new indirect cost proposal to the This is to certify that to the best of my cognizant agency for indirect costs within knowledge and belief: six months after the close of each fiscal year. (1)I have reviewed the indirect(F&A)cost d.A predetermined rate may be negotiated proposal submitted herewith; for use on Federal awards where there is rea- (2)All costs included in this proposal[iden- sonable assurance, based on past experience tify date] to establish billing or final indi- and reliable projection of the organization's rect (F&A) costs rate for [identify period costs, that the rate is not likely to exceed a covered by rate] are allowable in accordance rate based on the organization's actual costs. with the requirements of the Federal awards e. Fixed rates may be negotiated where to which they apply and with subpart E of predetermined rates are not considered ap- this part. propriate.A fixed rate,however,must not be (3)This proposal does not include any costs negotiated if(i) all or a substantial portion which are unallowable under subpart E of of the organization's Federal awards are ex- this part such as(without limitation):Public pected to expire before the carry-forward ad- relations costs, contributions and donations, 221 Pt.200, App.V 2 CFR Ch. II (1-1-22 Edition) entertainment costs,fines and penalties,lob- able basis. Examples of such services might bying costs, and defense of fraud pro- include general accounting, personnel ad- ceedings;and ministration,purchasing,etc. (4) All costs included in this proposal are 3.Billed central services means central serv- properly allocable to Federal awards on the ices that are billed to benefitted agencies or basis of a beneficial or causal relationship programs on an individual fee-for-service or between the expenses incurred and the Fed- similar basis.Typical examples of billed cen- eral awards to which they are allocated in tral services include computer services, accordance with applicable requirements. transportation services, insurance, and I declare that the foregoing is true and cor- fringe benefits. rect. 4. Cognizant agency for indirect costs is de- Nonprofit Organization: fined in §200.1. The determination of cog- nizant agency for indirect costs for states Signature: and local governments is described in section Name of Official: Title: F.1. Date of Execution: 5. Major local government means local gov- ernment that receives more than$100 million [78 FR 78608, Dec. 26, 2013, as amended at 80 in direct Federal awards subject to this Part. FR 54410, Sept. 10,2015; 85 FR 49579, Aug. 13, 2020] C.SCOPE OF THE CENTRAL SERVICE COST ALLOCATION PLANS APPENDIX V TO PART 200—STATE/LOCAL GOVERNMENTWIDE CENTRAL SERVICE The central service cost allocation plan will include all central service costs that COST ALLOCATION PLANS will be claimed(either as a billed or an allo- catedA.GENERAL cost)under Federal awards and will be documented as described in section E. omit- • 1.Most governmental units provide certain ted from the plan will not be reimbursed. services,such as motor pools,computer cen- ters, purchasing, accounting, etc., to oper- D.SUBMISSION REQUIREMENTS ating agencies on a centralized basis. Since 1.Each state will submit a plan to the De- federally-supported awards are performed partment of Health and Human Services for within the individual operating agencies, each year in which it claims central service there needs to be a process whereby these costs under Federal awards. The plan should central service costs can be identified and include(a)a projection of the next year's al- assigned to benefitted activities on a reason- located central service cost(based either on able and consistent basis.The central service actual costs for the most recently completed cost allocation plan provides that process. year or the budget projection for the coming All costs and other data used to distribute year),and(b)a reconciliation of actual allo- the costs included in the plan should be sup- cated central service costs to the estimated ported by formal accounting and other costs used for either the most recently com- records that will support the propriety of the pleted year or the year immediately pre- costs assigned to Federal awards. ceding the most recently completed year. 2. Guidelines and illustrations of central 2. Each major local government is also re- service cost allocation plans are provided in quired to submit a plan to its cognizant a brochure published by the Department of agency for indirect costs annually. Health and Human Services entitled "A 3. All other local governments claiming Guide for State, Local and Indian Tribal Gov- central service costs must develop a plan in ernments: Cost Principles and Procedures for accordance with the requirements described Developing Cost Allocation Plans and Indirect in this Part and maintain the plan and re- Cost Rates for Agreements with the Federal lated supporting documentation for audit. Government."A copy of this brochure may be These local governments are not required to obtained from the HHS Cost Allocation Serv- submit their plans for Federal approval un- ices or at their website. less they are specifically requested to do so B.DEFINITIONS by the cognizant agency for indirect costs. Where a local government only receives 1. Agency or operating agency means an or- funds as a subrecipient,the pass-through en- ganizational unit or sub-division within a tity will be responsible for monitoring the governmental unit that is responsible for the subrecipient's plan. performance or administration of Federal 4. All central service cost allocation plans awards or activities of the governmental will be prepared and, when required, sub- unit. mitted within six months prior to the begin- 2. Allocated central services means central ping of each of the governmental unit's fis- services that benefit operating agencies but cal years in which it proposes to claim cen- are not billed to the agencies on a fee-for- tral service costs. Extensions may be grant- service or similar basis.These costs are allo- ed by the cognizant agency for indirect costs cated to benefitted agencies on some reason- on a case-by-case basis. 222 OMB Guidance Pt. 200, App. V E.DOCUMENTATION REQUIREMENTS FOR sheet for each fund based on individual ac- SUBMITTED PLANS counts contained in the governmental unit's The documentation requirements described accounting system;a revenue/expenses state- in this section may be modified,expanded,or ment, with revenues broken out by source, reduced by the cognizant agency for indirect e.g., regular billings, interest earned, etc.; a costs on a case-by-case basis. For example, listing of all non-operating transfers (as de- the requirements may be reduced for those fined by GAAP) into and out of the fund; a central services which have little or no im- description of the procedures (methodology) pact on Federal awards. Conversely, if a re- used to charge the costs of each service to view of a plan indicates that certain addi- users, including how billing rates are deter- tional information is needed, and will likely mined; a schedule of current rates; and, a be needed in future years, it may be rou- schedule comparing total revenues (includ- tinely requested in future plan submissions. ing imputed revenues)generated by the serv- Items marked with an asterisk(*) should be ice to the allowable costs of the service, as submitted only once; subsequent plans determined under this part, with an expla- should merely indicate any changes since the nation of how variances will be handled. last plan. (2) Revenues must consist of all revenues generated by the service, including unbilled 1.General and uncollected revenues.If some users were All proposed plans must be accompanied by not billed for the services(or were not billed the following: an organization chart suffi- at the full rate for that class of users), a ciently detailed to show operations including schedule showing the full imputed revenues the central service activities of the state/ associated with these users must be pro- local government whether or not they are vided. Expenses must be broken out by ob- shown as benefitting from central service ject cost categories (e.g., salaries, supplies, functions; a copy of the Comprehensive An- etc.). nual Financial Report(or a copy of the Exec- c. Self-insurance funds. For each self-insur- utive Budget if budgeted costs are being pro- ance fund, the plan must include: the fund posed)to support the allowable costs of each balance sheet; a statement of revenue and central service activity included in the plan; expenses including a summary of billings and, a certification (see subsection 4.) that and claims paid by agency; a listing of all the plan was prepared in accordance with non-operating transfers into and out of the this Part,contains only allowable costs,and fund; the type(s) of risk(s) covered by the was prepared in a manner that treated simi- fund (e.g., automobile liability, workers' lar costs consistently among the various compensation, etc.); an explanation of how • Federal awards and between Federal and the level of fund contributions are deter- non-Federal awards/activities. mined, including a copy of the current actu- arial report (with the actuarial assumptions 2.Allocated Central Services used) if the contributions are determined on For each allocated central service*, the an actuarial basis; and, a description of the plan must also include the following: a brief procedures used to charge or allocate fund description of the service, an identification contributions to benefitted activities. Re- of the unit rendering the service and the op- serve levels in excess of claims(1)submitted erating agencies receiving the service, the and adjudicated but not paid, (2) submitted items of expense included in the cost of the but not adjudicated,and(3)incurred but not service, the method used to distribute the submitted must be identified and explained. cost of the service to benefitted agencies, d. Fringe benefits. For fringe benefit costs, and a summary schedule showing the alloca- the plan must include:a listing of fringe ben- tion of each service to the specific benefitted efits provided to covered employees, and the agencies. If any self-insurance funds or overall annual cost of each type of benefit; fringe benefits costs are treated as allocated current fringe benefit policies; and proce- (rather than billed) central services, docu- dures used to charge or allocate the costs of mentation discussed in subsections 3.b. and the benefits to benefitted activities. In addi- c.must also be included. tion, for pension and post-retirement health 3.Billed Services insurance plans, the following information must be provided: the governmental unit's a. General. The information described in funding policies, e.g., legislative bills,trust this section must be provided for all billed agreements, or state-mandated contribution central services, including internal service rules, if different from actuarially deter- funds, self-insurance funds, and fringe ben- mined rates;the pension plan's costs accrued efit funds. for the year; the amount funded, and date(s) b.Internal service funds. of funding; a copy of the current actuarial (1) For each internal service fund or simi- report(including the actuarial assumptions); lar activity with an operating budget of$5 the plan trustee's report; and, a schedule million or more, the plan must include: A from the activity showing the value of the brief description of each service; a balance interest cost associated with late funding. 223 it Pt. 200, App. V 2 CFR Ch. II (1-1-22 Edition) 4.Required Certification Department of the Interior—Indian tribal Each central service cost allocation plan governments, territorial governments, and will be accompanied by a certification in the trict s and local park and recreational dis- following form: Department of Labor—State and local labor CERTIFICATE OF COST ALLOCATION departments. PLAN Department of Education—School districts and state and local education agencies. This is to certify that I have reviewed the Department of Agriculture—State and local cost allocation plan submitted herewith and agriculture departments. to the best of my knowledge and belief: Department .of Transportation—State and (1)All costs included in this proposal[ideas- local airport and port authorities and transit tify date]to establish cost allocations or bil- districts. lings for[identify period covered by plan]are Department of Commerce—State and local allowable in accordance with the require- economic development districts. ments of this Part and the Federal award(s) Department of Housing and Urban Develop- to which they apply. Unallowable costs have been adjusted for in allocating costs as indi- meat—State and local housing and develop- cated in the cost allocation plan. ment districts. (2) All costs included in this proposal are Environmental Protection Agency—State and properly allocable to Federal awards on the local water and sewer districts. basis of a beneficial or causal relationship 2.Review between the expenses incurred and the Fed- eral awards to which they are allocated in All proposed central service cost allocation accordance with applicable requirements. plans that are required to be submitted will Further, the same costs that have been be reviewed,negotiated,and approved by the treated as indirect costs have not been cognizant agency for indirect costs on a claimed as direct costs. Similar types of timely basis. The cognizant agency for indi- costs have been accounted for consistently. rect costs will review the proposal within six I declare that the foregoing is true and cor- months of receipt of the proposal and either rect. negotiate/approve the proposal or advise the Governmental Unit: governmental unit of the additional docu- mentation needed to support/evaluate the Signature: proposed plan or the changes required to Name of Official: make the proposal acceptable. Once an Title: agreement with the governmental unit has Date of Execution: been reached,the agreement will be accepted F.NEGOTIATION AND APPROVAL OF'CENTRAL and used by all Federal agencies,unless pro- '� SERVICE PLANS hibited or limited by statute. Where a Fed- eral awarding agency has reason to believe 1.Federal Cognizant Agency for Indirect Costs that special operating factors affecting its Assignments for Cost Negotiation Federal awards necessitate special consider- ation, the funding agency will, prior to the In general, unless different arrangements time the plans are negotiated, notify the are agreed to by the concerned Federal agen- cognizant agency for indirect costs. cies, for central service cost allocation plans, the cognizant agency responsible for 3.Agreement review and approval is the Federal agency The results of each negotiation must be with the largest dollar value of total Federal awards with a governmental unit. For indi- formalized in a written agreement between rect cost rates and departmental indirect the cognizant agency for indirect costs and cost allocation plans, the cognizant agency the governmental unit. This agreement will is the Federal agency with the largest dollar be subject to re-opening if the agreement is value of direct Federal awards with a govern- subsequently found to violate a statute or mental unit or component, as appropriate. the information upon which the plan was ne- Once designated as the cognizant agency for gotiated is later found to be materially in- indirect costs, the Federal agency must re- complete or inaccurate. The results of the main so for a period of five years. In addi- negotiation must be made available to all tion,the following Federal agencies continue Federal agencies for their use. to be responsible for the indicated govern- mental entities: 4.Adjustments Department of Health and Human Services— Negotiated cost allocation plans based on a Public assistance and state-wide cost alloca- proposal later found to have included costs tion plans for all states (including the Dis- that: (a) are unallowable (i) as specified by trict of Columbia and Puerto Rico), state law or regulation,(ii)as identified in subpart and local hospitals, libraries and health dis- F, General Provisions for selected Items of tricts. Cost of this Part, or (iii) by the terms and 224 OMB Guidance Pt.200,App. V conditions of Federal awards,or(b)are unal- proved plan, or for unallowable costs that lowable because they are clearly not allo- must be reimbursed immediately. cable to Federal awards,must be adjusted,or a refund must be made at the option of the 4.Adjustments of Billed Central Services cognizant agency for indirect costs, includ- Billing rates used to charge Federal awards ing earned or imputed interest from the date must be based on the estimated costs of pro- of transfer and debt interest, if applicable, viding the services, including an estimate of chargeable in accordance with applicable the allocable central service costs. A com- Federal cognizant agency for indirect costs regulations. Adjustments or cash refunds biled parison of the revenue generated by each billed service (including total revenues may include, at the option of the cognizant whether or not billed or collected)to the ac- agency for indirect costs, earned or imputed tual allowable costs of the service will be interest from the date of expenditure and de- made at least annually, and an adjustment linquent debt interest, if applicable, charge- will be made for the difference between the able in accordance with applicable cognizant revenue and the allowable costs. These ad- agency claims collection regulations. These justments will be made through one of the adjustments or refunds are designed to cor- following adjustment methods: (a)a cash re- rect the plans and do not constitute a re- fund including earned or imputed interest opening of the negotiation. from the date of transfer and debt interest,if G.OTHER POLICIES applicable, chargeable in accordance with applicable Federal cognizant agency for indi- 1.Billed Central Service Activities rect costs regulations to the Federal Govern- ment for the Federal share of the adjust- Each billed central service activity must ment, (b) credits to the amounts charged to separately account for all revenues (includ- the individual programs, (c) adjustments to ing imputed revenues)generated by the serv- future billing rates,or(d)adjustments to al- ice, expenses incurred to furnish the service, located central service costs.Adjustments to and profit/loss. allocated central services will not be per- mitted where the total amount of the adjust- 2. Working Capital Reserves ment for a particular service (Federal share Internal service funds are dependent upon and non-Federal) share exceeds $500,000. Ad- a reasonable level of working capital reserve justment methods may include,at the option to operate from one billing cycle to the next. of the cognizant agency, earned or imputed Charges by an internal service activity to interest from the date of expenditure and de- provide for the establishment and mainte- linquent debt interest, if applicable, charge- nance of a reasonable level of working cap- able in accordance with applicable cognizant ital reserve, in addition to the full recovery agency claims collection regulations. of costs,are allowable.A working capital re- 5.Records Retention serve as part of retained earnings of up to 60 calendar days cash expenses for normal oper- All central service cost allocation plans ating purposes is considered reasonable. A and related documentation used as a basis working capital reserve exceeding 60 cal- for claiming costs under Federal awards endar days may be approved by the cog- must be retained for audit in accordance nizant agency for indirect costs in excep- with the records retention requirements con- tional cases. tained in subpart D of this part. 3.Carry-Forward Adjustments of Allocated 6.Appeals Central Service Costs If a dispute arises in the negotiation of a Allocated central service costs are usually plan between the cognizant agency for indi- negotiated and approved for a future fiscal rect costs and the governmental unit, the year on a "fixed with carry-forward" basis. dispute must be resolved in accordance with Under this procedure, the fixed amounts for the appeals procedures of the cognizant the future year covered by agreement are agency for indirect costs. not subject to adjustment for that year. However, when the actual costs of the year 7.OMB Assistance involved become known, the differences encoun- tweenbe- the fixed amounts previously approved To the extent that problems are and the actual costs will be carried forward tared among the Federal agencies or govern- used as an adjustment to the fixed mental units in connection with the negotia- and established for a later tion and approval process,OMB will lend as- amountsyear. This sistance, as required, to resolve such prob- "carry-forward"procedure applies to all cen- lems in a timely manner. tral services whose costs were fixed in the approved plan. However, a carry-forward ad- [78 FR 78608, Dec. 26, 2013, as amended at 80 justment is not permitted,for a central serv- FR 54410, Sept. 10, 2015; 85 FR 49581,Aug. 13, ice activity that was not included in the ap- 2020] 225 1 ' 1 Pt. 200, App.VI 2 CFR Ch. II (1-1-22 Edition) APPENDIX VI TO PART 20(}—PUBLIC D. SUBMISSION, DOCUMENTATION, AND AP- ASSISTANCE COST ALLOCATION PLANS PROVAL OF PUBLIC ASSISTANCE COST ALLO- CATION PLANS A.GENERAL 1. State public assistance agencies are re- Federally-financed programs administered quired to promptly submit amendments to by state public assistance agencies are fund- the cost allocation plan to HHS for review ed predominately by the Department of and approval. Health and Human Services (HHS). In sup- 2. Under the coordination process outlined port of its stewardship requirements, HHS in section E, affected Federal agencies will has published requirements for the develop- review all new plans and plan amendments ment, documentation, submission, negotia- and provide comments, as appropriate, to HHS. The effective date of the plan or plan tion, and approval of public assistance cost amendment will be the first day of the cal- allocation plans in Subpart E of 45 CFR Part endar quarter following the event that re- 95.All administrative costs(direct and indi- quired the amendment, unless another date rect)are normally charged to Federal awards is specifically approved by HHS.HHS,as the by implementing the public assistance cost cognizant agency for indirect costs acting on allocation plan.This Appendix extends these behalf of all affected Federal agencies, will, requirements to all Federal awarding agen- as necessary, conduct negotiations with the cies whose programs are administered by a state public assistance agency and will in- state public assistance agency. Major feder- form the state agency of the action taken on ally-financed programs typically adminis- the plan or plan amendment. tered by state public assistance agencies in • - clude: Temporary Aid to Needy Families E.REVIEW OF IMPLEMENTATION OF APPROVED (TANF), Medicaid, Food Stamps, Child Sup- PLANS port Enforcement, Adoption Assistance and 1. Since public assistance cost allocation Foster Care, and Social Services Block plans are of a narrative nature, the review Grant. during the plan approval process consists of evaluating the appropriateness of the pro- B.DEFINITIONS posed groupings of costs (cost centers) and the related allocation bases. As such, the 1. State public assistance agency means a Federal Government needs some assurance state agency administering or supervising that the cost allocation plan has been imple- the administration of one or more public as- mented as approved.This is accomplished by sistance programs operated by the state as reviews by the Federal awarding agencies, identified in Subpart E of 45 CFR Part 95. single audits, or audits conducted by the For the purpose of this Appendix, these pro- cognizant agency for indirect costs. grams include all programs administered by 2. Where inappropriate charges affecting the state public assistance agency. more than one Federal awarding agency are 2. State public assistance agency costs means identified, the cognizant HHS cost negotia- all costs incurred by, or allocable to, the tion office will be advised and will take the state public assistance agency, except ex- lead in resolving the issue(s)as provided for penditures for financial assistance, medical in Subpart E of 45 CFR Part 95. contractor payments, food stamps, and pay- 3. If a dispute arises in the negotiation of ments for services and goods provided di- a plan or from a disallowance involving two rectly to program recipients. or more Federal awarding,agencies, the dis- pute must be resolved in accordance with the C.POLICY appeals procedures set out in 45 CFR Part 16. State public assistance agencies will de- Disputes involving only one Federal award- ing agency will be resolved in accordance velop, document and implement, and the with the Federal awarding agency's appeal Federal Government will review, negotiate, process. and approve, public assistance cost alloca- 4.To the extent that problems are encoun- tion plans in accordance with Subpart E of 45 tered among the Federal awarding agencies CFR Part 95. The plan will include all pro- or governmental units in connection with grams administered by the state public as- the negotiation and approval process,the Of- sistance agency. Where a letter of approval fice of Management and Budget will lend as- or disapproval is transmitted to a state pub- sistance, as required, to resolve such prob- lic assistance agency in accordance with lems in a timely manner. Subpart E, the letter will apply to all Fed- eral agencies and programs. The remaining F.UNALLOWABLE COSTS sections of this Appendix (except for the re- Claims developed under approved cost allo- quirement for certification) summarize the cation plans will be based on allowable costs provisions of Subpart E of 45 CFR Part 95. as identified in this Part.Where unallowable costs have been claimed and reimbursed, 226 OMB Guidance Pt. 200,App.VII they will be refunded to the program that re- local-wide central service costs, general ad- imbursed the unallowable cost using one of ministration of the non-Federal entity ac- the following methods: (a)a cash refund, (b) counting and personnel services performed offset to a subsequent claim,or(c)credits to within the non-Federal entity, depreciation the amounts charged to individual Federal on buildings and equipment, the costs of op- awards. Cash refunds, offsets, and credits erating and maintaining facilities. may include at the option of the cognizant 5. This Appendix does not apply to state agency for indirect cost, earned or imputed public assistance agencies. These agencies interest from the date of expenditure and de- should refer instead to Appendix VI to this linquent debt interest, if applicable, charge- part. able in accordance with applicable cognizant agency for indirect cost claims collection B.DEFINITIONS regulations. 1.Base means the accumulated direct costs [78 FR 78608, Dec. 26, 2013, as amended at 85 (normally either total direct salaries and FR 49581,Aug.13,2020] wages or total direct costs exclusive of any extraordinary or distorting expenditures) APPENDIX VII TO PART 200—STATES AND used to distribute indirect costs to indi- LOCAL GOVERNMENT AND INDIAN vidual Federal awards. The direct cost base TRIBE INDIRECT COST PROPOSALS selected should result in each Federal award bearing a fair share of the indirect costs in A.GENERAL reasonable relation to the benefits received from the costs. 1. Indirect costs are those that have been 2. Base period for the allocation of indirect incurred for common or joint purposes. costs is the period in which such costs are in- These costs benefit more than one cost ob- curred and accumulated for allocation to ac- jective and cannot be readily identified with tivities performed in that period. The base a particular final cost objective without ef- period normally should coincide with the fort disproportionate to the results achieved. governmental unit's fiscal year, but in any After direct costs have been determined and event,must be so selected as to avoid inequi- assigned directly to Federal awards and ties in the allocation of costs. other activities as appropriate,indirect costs 3. Cognizant agency for indirect costs means are those remaining to be allocated to bene- the Federal agency responsible for reviewing fitted cost objectives. A cost may not be al- and approving the governmental unit's indi- located to a Federal award as an indirect rect cost rate(s)on the behalf of the Federal cost if any other cost incurred for the same Government. The cognizant agency for indi- purpose, in like circumstances, has been as- rect costs assignment is described in Appen- signed to a Federal award as a direct cost. dix V,section F. 2. Indirect costs include (a) the indirect 4.Final rate means an indirect cost rate ap- costs originating in each department or plicable to a specified past period which is agency of the governmental unit carrying based on the actual allowable costs of the pe- out Federal awards and(b) the costs of cen- riod. A final audited rate is not subject to tral governmental services distributed adjustment. through the central service cost allocation 5. Fixed rate means an indirect cost rate plan(as described in Appendix V to this part) which has the same characteristics as a pre- and not otherwise treated as direct costs. determined rate, except that the difference 3. Indirect costs are normally charged to between the estimated costs and the actual, Federal awards by the use of an indirect cost allowable costs of the period covered by the rate. A separate indirect cost rate(s) is usu- rate is carried forward as an adjustment to ally necessary for each department or agen- the rate computation of a subsequent period. cy of the governmental unit claiming indi- 6. Indirect cost pool is the accumulated rect costs under Federal awards. Guidelines costs that jointly benefit two or more pro- and illustrations of indirect cost proposals grams or other cost objectives. are provided in a brochure published by the 7. Indirect cost rate is a device for deter- Department of Health and Human Services mining in a reasonable manner the propor- entitled"A Guide for States and Local Govern- tion of indirect costs each program should ment Agencies: Cost Principles and Procedures bear. It is the ratio (expressed as a percent- for Establishing Cost Allocation Plans and Indi- age) of the indirect costs to a direct cost rect Cost Rates for Grants and Contracts with base. the Federal Government." A copy of this bro- 8. Indirect cost rate proposal means the doc- chure may be obtained from HHS Cost Allo- umentation prepared by a governmental unit cation Services or at their website. or subdivision thereof to substantiate its re- 4. Because of the diverse characteristics quest for the establishment of an indirect and accounting practices of governmental cost rate. units,the types of costs which may be classi- 9.Predetermined rate means an indirect cost fied as indirect costs cannot be specified in rate, applicable to a specified current or fu- all situations. However, typical examples of ture period, usually the governmental unit's indirect costs may include certain state/ fiscal year.This rate is based on an estimate 227 Pt. 200, App.VII 2 CFR Ch. II (1-1-22 Edition) of the costs to be incurred during the period. credits) by an equitable distribution base. Except under very unusual circumstances, a The result of this process is an indirect cost predetermined rate is not subject to adjust- rate which is used to distribute indirect ment. (Because of legal constraints, pre- costs to individual Federal awards. The rate determined rates are not permitted for Fed- should be expressed as the percentage which eral contracts; they may, however, be used the total amount of allowable indirect costs for grants or cooperative agreements.) Pre- bears to the base selected. This method determined rates may not be used by govern- should also be used where a governmental mental units that have not submitted and unit's department or agency has only one negotiated the rate with the cognizant agen- major function encompassing a number of in- cy for indirect costs.In view of the potential dividual projects or activities, and may be advantages offered by this procedure, nego- used where the level of Federal awards to tiation of predetermined rates for indirect that department or agency is relatively costs for a period of two to four years should small. be the norm in those situations where the b. Both the direct costs and the indirect cost experience and other pertinent facts costs must exclude capital expenditures and available are deemed sufficient to enable the unallowable costs. However, unallowable parties involved to reach an informed judg- costs must be included in the direct costs if ment as to the probable level of indirect they represent activities to which indirect costs during the ensuing accounting periods. costs are properly allocable. 10.Provisional rate means a temporary indi- c.The distribution base may be(1)total di- rect cost rate applicable to a specified period rect costs (excluding capital expenditures which is used for funding,interim reimburse- and other distorting items, such as pass- ment, and reporting indirect costs on Fed- through funds, subcontracts in excess of eral awards pending the establishment of a $25,000, participant support costs, etc.), (2) "final"rate for that period. direct salaries and wages, or(3)another base which results in an equitable distribution. C.ALLOCATION OF INDIRECT COSTS AND DETERMINATION OF INDIRECT COST RATES 3.Multiple Allocation Base Method 1.General a. Where a non-Federal entity's indirect costs benefit its major functions in varying a. Where a governmental unit's depart- degrees, such costs must be accumulated ment or agency has only one major function, into separate cost groupings. Each grouping or where all its major functions benefit from must then be allocated individually to bene- the indirect costs to approximately the same fitted functions by means of a base which degree, the allocation of indirect costs and best measures the relative benefits. the computation of an indirect cost rate may b.The cost groupings should be established be accomplished through simplified alloca- so as to permit the allocation of each group- tion procedures as described in subsection 2. ing on the basis of benefits provided to the b. Where a governmental unit's depart- major functions. Each grouping should con- ment or agency has several major functions stitute a pool of expenses that are of like which benefit from its indirect costs in vary- character in terms of the functions they ben- ing degrees, the allocation of indirect costs efit and in terms of the allocation base may require the accumulation of such costs which best measures the relative benefits into separate cost groupings which then are provided to each function. The number of allocated individually to benefitted func- separate groupings should be held within tions by means of a base which best meas- practical limits, taking into consideration ures the relative degree of benefit.The indi- the materiality of the amounts involved and rect costs allocated to each function are the degree of precision needed. then distributed to individual Federal c.Actual conditions must be taken into ac- awards and other activities included in that count in selecting the base to be used in allo- function by means of an indirect cost rate(s). cating the expenses in each grouping to ben- c. Specific methods for allocating indirect efitted functions. When an allocation can be costs and computing indirect cost rates made by assignment of a cost grouping di- along with the conditions under which each rectly to the function benefitted, the alloca- method should be used are described in sub- tion must be made in that manner.When the sections 2,3 and 4. expenses in a grouping are more general in 2.Simplified Method nature, the allocation should be made through the use of a selected base which pro- a. Where a non-Federal entity's major duces results that are equitable to both the functions benefit from its indirect costs to Federal Government and the governmental approximately the same degree, the alloca- unit.In general,any cost element or related tion of indirect costs may be accomplished factor associated with the governmental by (1) classifying the non-Federal entity's unit's activities is potentially adaptable for total costs for the base period as either di- use as an allocation base provided that:(1)it rect or indirect,and(2)dividing the total al- can readily be expressed in terms of dollars lowable indirect costs (net of applicable or other quantitative measures (total direct 228 OMB Guidance Pt. 200,App.VII costs, direct salaries and wages, staff hours elimination from the indirect cost pool those applied, square feet used, hours of usage, costs for which the law prohibits reimburse- number of documents processed, population ment. served,and the like),and(2)it is common to the benefitted functions during the base pe- D.SUBMISSION AND DOCUMENTATION OF riod. PROPOSALS d. Except where a special indirect cost rate(s) is required in accordance with para- I.Submission of Indirect Cost Rate Proposals graph (C)(4) of this Appendix, the separate a. All departments or agencies of the gov- groupings of indirect costs allocated to each ernmental unit desiring to claim indirect major function must be aggregated and costs under Federal awards must prepare an treated as a common pool for that function. indirect cost rate proposal and related docu- The costs in the common pool must then be mentation to support those costs. The pro- distributed to individual Federal awards in- posal and related documentation must be re- eluded in that function by use of a single in- tained for audit in accordance with the direct cost rate. records retention requirements contained in e.The distribution base used in computing §200.334. the indirect cost rate for each function may b. A governmental department or agency be(1)total direct costs(excluding capital ex- unit that receives more than $35 million in penditures and other distorting items such direct Federal funding must submit its indi- as pass-through funds,subawards in excess of rect cost rate proposal to its cognizant agen- $25,000, participant support costs, etc.), (2) cy for indirect costs.Other governmental de- direct salaries and wages, or(3)another base partment or agency must develop an indirect which results in an equitable distribution. cost proposal in accordance with the require- An indirect cost rate should be developed for ments of this Part and maintain the proposal each separate indirect cost pool developed. and related supporting documentation for The rate in each case should be stated as the audit. These governmental departments or percentage relationship between the par- agencies are not required to submit their titular indirect cost pool and the distribu- proposals unless they are specifically re- tion base identified with that pool. quested to do so by the cognizant agency for indirect costs. Where a non-Federal entity 4.Special Indirect Cost Rates only receives funds as a subrecipient, the a. In some instances,a single indirect cost pass-through entity will be responsible for rate for all activities of a non-Federal entity negotiating and/or monitoring the subrecipi- or for each major function of the agency may ent's indirect costs. not be appropriate. It may not take into ac- c. Each Indian tribal government desiring count those different factors which may sub- reimbursement of indirect costs must submit stantially affect the indirect costs applicable its indirect cost proposal to the Department to a particular program or group of pro- of the Interior(its cognizant agency for indi- grams.The factors may include the physical rect costs). location of the work,the level of administra- d. Indirect cost proposals must be devel- tive support required, the nature of the fa- oped (and, when required, submitted) within cilities or other resources employed, the or- six months after the close of the govern- ganizational arrangements used,or any corn- mental unit's fiscal year,unless an exception bination thereof. When a particular Federal is approved by the cognizant agency for indi- award is carried out in an environment rect costs. If the proposed central service which appears to generate a significantly cost allocation plan for the same period has different level of indirect costs, provisions not been approved by that time, the indirect should be made for a separate indirect cost cost proposal may be prepared including an pool applicable to that Federal award. The amount for central services that is based on separate indirect cost pool should be devel- the latest federally-approved central service oped during the course of the regular alloca- cost allocation plan. The difference between tion process, and the separate indirect cost these central service amounts and the rate resulting therefrom should be used,pro- amounts ultimately approved will be com- vided that: (1) The rate differs significantly pensated for by an adjustment in a subse- from the rate which would have been devel- quent period. oped under paragraphs (C)(2) and (C)(3) of this Appendix, and (2) the Federal award to 2.Documentation of Proposals which the rate would apply is material in The following must be included with each amount. indirect cost proposal: b. Where Federal statutes restrict the re- a.The rates proposed,including subsidiary imbursement of certain indirect costs, it work sheets and other relevant data, cross may be necessary to develop a special rate referenced and reconciled to the financial for the affected Federal award.Where a"re- data noted in subsection b.Allocated central stricted rate" is required, the same proce- service costs will be supported by the sum- dure for developing a non-restricted rate will mary table included in the approved central be used except for the additional step of the service cost allocation plan. This summary 229 Pt. 200, App.VII 2 CFR Ch. II (1-1-22 Edition) table is not required to be submitted with E.NEGOTIATION AND APPROVAL OF RATES the indirect cost proposal if the central serv- 1. Indirect cost rates will be reviewed, ne ice cost allocation plan for the same fiscal year has been approved by the cognizant gotiated, and approved by the cognizant agency for indirect costs and is available to agency on a timely basis. Once a rate has the funding agency. been agreed upon, it will be accepted and b. A copy of the financial data (financial used by all Federal agencies unless prohib- statements, comprehensive annual financial ited or limited by statute. Where a Federal report, executive budgets, accounting re- awarding agency has reason to believe that ports, etc.)upon which the rate is based.Ad- special operating factors affecting its Fed- justments resulting from the use of eral awards necessitate special indirect cost unaudited data will be recognized,where ap- rates, the funding agency will, prior to the propriate, by the Federal cognizant agency time the rates are negotiated,notify the cog- for indirect costs in a subsequent proposal. nizant agency for indirect costs. • c. The approximate amount of direct base 2. The use of predetermined rates, if al- costs incurred under Federal awards. These lowed, is encouraged where the cognizant costs should be broken out between salaries agency for indirect costs has reasonable as- and wages and other direct costs. d. A chart showing the organizational surance based on past experience and reli- structure of the agency during the period for able projection of the non-Federal entity's which the proposal applies, along with a rates, that the rate ba ed on actuallc sts.likely Long-term agree- and/or functionalstatement(s) noting the duties and/or responsibilities of all units that corn- ments utilizing predetermined rates extend- prise the agency. (Once this is submitted, ing over two or more years are encouraged, only revisions need be submitted with subse- where appropriate. quent proposals.) 3. The results of each negotiation must be 3.Required certification. formalized in a written agreement between the cognizant agency for indirect costs and Each indirect cost rate proposal must be the governmental unit. This agreement will accompanied by a certification in the fol- be subject to re-opening if the agreement is lowing form: subsequently found to violate a statute, or CERTIFICATE OF INDIRECT COSTS the information upon which the plan was ne- gotiated is later found to be materially in- This is to certify that I have reviewed the complete or inaccurate. The agreed upon indirect cost rate proposal submitted here- rates must be made available to all Federal with and to the best of my knowledge and agencies for their use. belief: 4. Refunds must be made if proposals are (1)All costs included in this proposal[iden- later found to have included costs that (a) tify date] to establish billing or final indi- are unallowable(i)as specified by law or reg- rect costs rates for [identify period covered ulation, (ii) as identified in §200.420, or (iii) by rate]are allowable in accordance with the requirements of the Federal award(s) to by the terms and conditions of Federal which they apply and the provisions of this awards, or (b) are unallowable because they Part. Unallowable costs have been adjusted are clearly not allocable to Federal awards. for in allocating costs as indicated in the in- These adjustments or refunds will be made direct cost proposal regardless of the type of rate negotiated (2) All costs included in this proposal are (predetermined,final,fixed, or provisional). properly allocable to Federal awards on the F.OTHER POLICIES basis of a beneficial or causal relationship between the expenses incurred and the agree- ments to which they are allocated in accord- ance 1.Fringe Benefit Rates with applicable requirements. Further, If overall fringe benefit rates are not ap- the same costs that have been treated as in- proved for the governmental unit as part of direct costs have not been claimed as direct the central service cost allocation plan, costs. Similar types of costs have been ac- these rates will be reviewed, negotiated and counted for consistently and the Federal approved for individual recipient agencies Government will be notified of any account- during the indirect cost negotiation process. ing changes that would affect the predeter- In these cases, a proposed fringe benefit rate mined rate. computation should accompany the indirect I declare that the foregoing is true and cor- cost proposal. If fringe benefit rates are not rect. used at the recipient agency level (i.e., the Governmental Unit: agency specifically identifies fringe benefit Signature: costs to individual employees), the govern- Name of Official: mental unit should so advise the cognizant Title: agency for indirect costs. Date of Execution: 230 OMB Guidance Pt. 200, App. VIII 2.Billed Services Provided by the Recipient APPENDIX VIII TO PART 200-NONPROFIT Agency ORGANIZATIONS EXEMPTED FROM In some cases, governmental departments SUBPART E OF PART 200 or agencies (components of the govern- mental unit) provide and bill for services 1. Advance Technology Institute (ATI), Charleston,South Carolina similar to those covered by central service 2.Aerospace Corporation, El Segundo, Cali- cost allocation plans (e.g., computer cen- fornia ters). Where this occurs, the governmental 3. American Institutes of Research (AIR), departments or agencies (components of the Washington,DC governmental unit)should be guided by the 4.Argonne National Laboratory,Chicago,Il- requirements in Appendix V relating to the linois development of billing rates and documenta- 5. Atomic Casualty Commission, Wash- tion requirements, and should advise the ington,DC cognizant agency for indirect costs of any 6. Battelle Memorial Institute, billed services. Reviews of these types of Headquartered in.Columbus,Ohio services (including reviews of costing/billing 7. Brookhaven National Laboratory, Upton, methodology, profits or losses, etc.) will be New York made on a case-by-case basis as warranted by 8. Charles Stark Draper Laboratory, Incor- the circumstances involved. porated,Cambridge,Massachusetts 9.CNA Corporation(CNAC),Alexandria,Vir- 3.Indirect Cost Allocations Not Using Rates ginia In certain situations, governmental de- 10. Environmental Institute of Michigan, Ann Arbor,Michigan partments or agencies (components of the 11. Georgia Institute of Technology/Georgia governmental unit),because of the nature of Tech Applied Research Corporation/Geor- their Federal awards,may be required to de- gia Tech Research Institute, Atlanta, velop a cost allocation plan that distributes Georgia indirect(and, in some cases, direct) costs to 12. Hanford Environmental Health Founda- the specific funding sources.In these cases,a tion,Richland,Washington narrative cost allocation methodology 13.IIT Research Institute,Chicago,Illinois should be developed, documented, main- 14. Institute of Gas Technology, Chicago, Il- tained for audit, or submitted, as appro- linois priate, to the cognizant agency for indirect 15. Institute for Defense Analysis, Alexan- costs for review,negotiation,and approval. dria,Virginia 4.Appeals 16.LMI,McLean,Virginia 17. Mitre Corporation, Bedford, Massachu- If a dispute arises in a negotiation of an in- setts direct cost rate (or other rate) between the 18.Noblis,Inc.,Falls Church,Virginia cognizant agency for indirect costs and the 19.National Radiological Astronomy Observ- governmental unit, the dispute must be re- atory,Green Bank,West Virginia solved in accordance with the appeals proce- 20. National Renewable Energy Laboratory, dures of the cognizant agency for indirect Golden,Colorado costs. 21. Oak Ridge Associated Universities, Oak Ridge,Tennessee 5.Collection of Unallowable Costs and 22. Rand Corporation, Santa Monica, Cali- • Erroneous Payments fornia 23. Research Triangle Institute, Research Costs specifically identified as unallowable Triangle Park,North Carolina and charged to Federal awards either di- 24. Riverside Research Institute, New York, rectly or indirectly will be refunded(includ- New York ing interest chargeable in accordance with 25. South Carolina Research Authority applicable Federal cognizant agency for indi- (SCRA),Charleston,South Carolina rect costs regulations). 26. Southern Research Institute, Bir- mingham,Alabama 6.OMB Assistance 27. Southwest Research Institute, San Anto- To the extent that problems are encoun- nio,Texas tered among the Federal agencies or govern- 28.SRI International,Menlo Park,California mental units in connection with the negotia- 29. Syracuse Research Corporation, Syra- tion and approval process, OMB will lend as- cuse,New York sistance, as required, to resolve such prob- 30. Universities Research Association, Incor- lems in a timely manner. porated (National Acceleration Lab), Ar • - gonne,Illinois [78 FR 78608, Dec. 26, 2013, as amended at 79 31.Urban Institute,Washington DC FR 75889, Dec. 19, 2014; 85 FR 49581, Aug. 13, 32. Nonprofit insurance companies, such as 2020] Blue Cross and Blue Shield Organizations 231 Exhibit E MEMORANDUM TO FILE RE: SECTION 504 ACCESSIBILITY REQUIREMENTS CONTRACTOR: NOC Redevelopment Group, LLC PROPERTY: 3 819 North 24th Street Omaha,NE 68110 X The above named project is not exempt from Section 504 Accessibility Requirements. Accessibility modifications required: Accessibility requirements must be met to the extent that is feasible. The above named project is exempt from Section 504 Accessibility Requirements for the following reason(s): :Z/f6: 2020 Ed Dantzler, Construction Man r Section 504 Officer Dat Exhibit H "General Decision Number: NE20230057 01/20/2023. Superseded General Decision Number: NE20220057' State: Nebraska Construction Type: Building BUILDING CONSTRUCTION INCLUDING WORK ON INDUSTRIAL SITES County: Douglas County in Nebraska. BUILDING CONSTRUCTION PROJECTS (does not include single family homes or apartments up to and including 4 stories). Note: Contracts subject to the Davis-Bacon Act are generally required to pay at least the applicable minimum wage rate. required under Executive Order 14026 or Executive Order 13658. Please note that these Executive Orders apply to covered contracts entered into by the federal government that are subject to the Davis-Bacon Act itself, but do not apply to contracts subject only to the Davis-Bacon Related Acts, including those set forth at 29 CFR 5.1(a)(2)-(60). If the contract is entered , Executive Order 14026 into on or after January 30, generally applies to the 2022, or the contract is contract. renewed or extended (e.g., an . The contractor must pay option is exercised) on or all covered workers at after January 30, 2022: least $16.20 per hour (or the applicable wage rate listed on this wage determination, if it is higher) for all hours spent performing on the contract in 2023. If the contract was awarded on . Executive Order 13658 or between January 1, 2015 and generally applies to the January 29, 2022, and the contract. contract is not renewed or . The contractor must pay all extended on or after January covered workers at least 30, 2022: $12.15 per hour (or the applicable wage rate listed on this wage determination, if it is higher) for all hours spent performing on that contract in 2023. The applicable Executive Order minimum wage rate will be adjusted annually. If this contract is covered by one of the Executive Orders and a classification considered necessary for performance of work on the contract does not appear on this wage determination, the contractor must still submit a conformance request. Additional information on contractor requirements and worker protections under the Executive Orders is available at 1 \.•„ http://www.dol.gov/whd/govcontracts. U ,t' t0( Afrik Modification Number Publication Date ;; 0, 01/06/2023 1 01/13/2023 2 01/20/2023 * BRNE0001-001 05/30/2022 Rates Fringes BRICKLAYER $ 31.70 17.74 CARP0427-001 07/01/2022 Rates Fringes CARPENTER (Including Acoustical Ceiling Installation) ....$ 30.00 15.58 CARP0427-004 07/01/2022 Rates Fringes CARPENTER (Drywall Hanging, Finishing/Taping Only) $ 30.00 15.58 ELEC0022-001 06/01/2022 Rates Fringes ELECTRICIAN $ 41.60 17.98 ELEV0028-001 01/01/2023 Rates Fringes ELEVATOR MECHANIC $ 51.29 37.335+a+b FOOTNOTE: a. Vacation Pay: 8% for persons with 5 or more years of service, 6% for persons with less than 5 years of service. b. Paid Holidays: New Year's Day, Memorial Day, Independence Day, Labor Day, Veterans' Day, Thanksgiving Day, Friday after Thanksgiving, and Christmas Day. ENGI0571-004 10/01/2020 Rates Fringes OPERATOR: Crane $ 32.64 13.29 OPERATOR: Forklift $ 27.26 13.29 IRON0021-002 06/01/2022 Rates Fringes IRONWORKER, STRUCTURAL $ 33.55 20.23 LAB01140-003 06/01/2017 Rates Fringes LABORER (Mason Tender, Brick & Hod)...'...,.....:.�.: .. � :..;$ 21.69 9.40 PLUM0016-003 05/16/2021 Rates Fringes PLUMBER (Excluding HVAC Pipe Installation) $ 39.95 13.81 PLUM0464-006 05/29/2022 -, Rates Fringes PIPEFITTER (Includes HVAC Pipe Installation and Excludes HVAC System Installation) $ 40.13 16.10 SFNE0669-001 01/01/2023 Rates Fringes SPRINKLER FITTER (Fire Sprinklers) $ 39.80 24.55 SHEE0003-001 07/01/2021 Rates Fringes SHEET METAL WORKER (Including HVAC Duct & System Installation) $ 37.26 17.76 * SUNE2011-031 10/27/2011 Rates Fringes CAULKER $ 17.13 0.00 CEMENT MASON/CONCRETE FINISHER $ 18.44 4.08 ELECTRICIAN (Low Voltage Wiring) $ 21.54 5.99 FORM WORKER $ 19.07 3.84 GLAZIER $ 17.67 1.71 LABORER: Common or General $ 15.47 ** 5,34 OPERATOR: Backhoe/Excavator/Trackhoe $ 22.55 5.72 OPERATOR: Bobcat/Skid Steer/Skid Loader $ 23.11 0.91 OPERATOR: Loader $ 20.76 4.64 PAINTER: Brush, Roller and Spray $ 14.26 ** 0.00 ROOFER $ 13.57 ** 0077 TRUCK DRIVER, Includes Dump and Tandem Truck $ 14.77 ** 1.41 WELDERS - Receive rate prescribed for craft performing operation to which welding is incidental. _ a— ©_ _=== —.7— u = _mom _R ** Workers in this classification may be entitled to a higher minimum wage under Executive Order 14026 ($16.20) or 13658 ($12.15). Please see the Note at the top of the wage determination for more information. Note: Executive Order (EO) 13706, Establishing Paid Sick Leave for Federal Contractors applies to all contracts subject to the Davis-Bacon Act for which the contract is awarded (and any solicitation was issued) on or after January 1, 2017. If this contract is covered by the E0, the contractor must provide employees with 1 hour of paid sick leave for every 30 hours they work, up to 56 hours of paid sick leave each year. Employees must be permitted to use paid sick leave for their own illness, injury or other health-related needs, including preventive care; to assist a family member (or person who is like family to the employee) who is ill, injured, or has other health-related needs, including preventive care; or for reasons resulting from, or to assist a family member (or person who is like family to the employee) who is a victim of, domestic violence, sexual assault, or stalking. Additional information on contractor requirements and worker protections under the EO is available at https://www.dol.gov/agencies/whd/government-contracts. Unlisted classifications needed for work not included within the scope of the classifications listed may be added after award only as provided in the labor standards contract clauses (29CFR 5.5 (a) (1) (ii)). The body of each wage determination lists the classification and wage rates that have been found to be prevailing for the cited type(s) of construction in the area covered by the wage determination. The classifications are listed in alphabetical order of ""identifiers"" that indicate whether the particular rate is a union rate (current union negotiated rate for local), a survey rate (weighted average rate) or a union average rate (weighted union average rate). Union Rate Identifiers A four letter classification abbreviation identifier enclosed in dotted lines beginning with characters other than ""SU"" or ""UAVG"" denotes that the union classification and rate were prevailing for that classification in the survey. Example: PLUM0198-005 07/01/2014. PLUM is an abbreviation identifier of the union which prevailed in the survey for this classification, which in this example would be Plumbers. 0198 indicates the local union number or district council number where applicable, i.e., Plumbers Local 0198. The next number, 005 in the example, is an internal number used in processing the wage determination. 07/01/2014 is the effective date of the most current negotiated rate, which in this example is July 1, 2014. Union prevailing wage rates are updated to reflect all rate changes in the collective bargaining agreement (CBA) governing this classification and rate.. Survey Rate Identifiers Classifications listed under the ""SU"" identifier indicate that no one rate prevailed for this classification in the survey and the published rate is derived by computing a weighted average rate based on all the rates reported in the survey for that classification. As this weighted average rate includes all rates reported in the survey, it may include both union and non-union rates. Example: SULA2012-007 5/13/2014. SU indicates the rates are survey rates based on a weighted average calculation of rates and are not majority rates. LA indicates the State of Louisiana. 2012 is the year of survey on which these classifications and rates are based. The next number, 007 in the example, is an internal number used in producing the wage determination. 5/13/2014 indicates the survey completion date for the classifications and rates under that identifier. Survey wage rates are not updated and remain in effect until a new survey is conducted. Union Average Rate Identifiers Classification(s) listed under the UAVG identifier indicate that no single majority rate prevailed for those classifications; however, 100% of the data reported for the classifications was union data. EXAMPLE: UAVG-OH-0010 08/29/2014. UAVG indicates that the rate is a weighted union average rate. OH indicates the state. The next number, 0010 in. the example, is an internal number used in producing the wage determination. 08/29/2014 indicates the survey completion date for the classifications and rates under that identifier. A UAVG rate will be updated once a year, usually in January of each year, to reflect a weighted average of the current negotiated/CBA rate of the union locals from which the rate is based. WAGE DETERMINATION APPEALS PROCESS 1.) Has there been an initial decision in the matter? This can be: 30 an existing published wage determination 10 a survey underlying a wage determination 4; a Wage and Hour Division letter setting forth a position on a wage determination matter a conformance (additional classification and rate) ruling On survey related matters, initial contact, including requests for summaries of surveys, should be with the Wage and Hour National Office because National Office has responsibility for the Davis-Bacon survey program. If the response from this initial contact is not satisfactory, then the process described in 2.) and 3.) should be followed. With regard to any other matter not yet ripe for the formal process described here, initial contact should be with the Branch of Construction Wage Determinations. Write to: Branch of Construction Wage Determinations Wage and Hour Division U.S. Department of Labor 200 Constitution Avenue, N.W. Washington, DC 20210 2.) If the answer to the question in 1.) is yes, then an interested party (those affected by the action) can request review and reconsideration from the Wage and Hour Administrator (See 29 CFR Part 1.8 and 29 CFR Part 7). Write to: Wage and Hour Administrator U.S. Department of Labor 200 Constitution Avenue, N.W. Washington, DC 20210 The request should be accompanied by a full statement of the interested party's position and by any information (wage payment data, project description, area practice material, etc.) that the requestor considers relevant to the issue. 3.) If the decision of the Administrator is not favorable, an interested party may appeal directly to the Administrative Review Board (formerly the Wage Appeals Board). Write to: Administrative Review Board U.S. Department of Labor 200 Constitution Avenue, N.W. Washington, DC 20210 4.) All decisions by the Administrative Review Board are final. END OF GENERAL DECISIO" Exhibit J Federal Financial Report OMB Number;4040-0014 (Follow fora)Instructions) Expiration Date;01/31/2019 1,Federal Agency and Organizational Element to Which Report is Submitted 2,Federal Grant or Other Identifying Number Assigned by Federal Agency(To report multiple grants,use FFR Attachment) a 3.Recipient Organization(Name and complete address including Zip code) Recipient Organization Name: Street): , Street2; City: j County; Stater Province: Country: ,[USA: UNITED STATES ZIP l Postal Code: 4a. DUNS Number 4b.EIN 5,Recipient Account Number or Identifying Number ,� (To report multiple grants,use FFR Attachment) 6.Report Type 7 Basis of Accounting 8.Project/Grant Period 9,Reporting Period End Date 0 Quarterly 13 Cash From: To; [:=1 Semi-Annual El Accrual I , `, Annuai ❑Final 10.Transactions Cumulative (Use lines a-c for single or multiple grant reporting) Federal Cash(To report multiple grants,also use FFR attachment): a.Cash Receipts 0.00 b,Cash Disbursements p Op c.Qash on Hand(line a minus b) t) day) (Use lines d-o for single grant reporting) Federal Expenditures and Unobligated Balance; ii.Total Federal funds authorized. o,0o e.Federal share of expenditures 0,00 f.Federal share of unliquidated obligations 0,00 g.Total Federal share(sum of lines e and f) �' ir,Da h.Unobligated balance of Federal Funds(line d minus g) t?',t(u Recipient Share: i.Total recipient share required r,;00 J.Recipient share of expenditures 0.00 k. Remaining recipient share to be provided(line I minus j) b,00 Program Income: I,Total Federal program income earned [ 0.00 m,Program Income expended in accordance with the deduction alternative o cp1 n.Program Income expended in accordance with the addition alternative ti.do o.Unexpended program Income(line I minus line m or line n) l (i,'r}.qy 11.Indirect Expense e,Amount a.Type b.Rate c.Period From Period To d::Base f.Federal Share Charged " a , g.Totals: 12,Remarks;Attach any explanations deemed necessary or information required by Federal sponsoring agency In compliance with governing legislation: Add Attachment Delete Attachment View Attachment 13.Certification:By signing this report,I certify that it is true,complete,and accurate to the best of my knowledge. I am aware that any false, fictitious,or fraudulent Information may subject me to criminal,civil or administrative penalties.(U.S.Code,Title 18,section 1001) a.Name and Title of Authorized Certifying Official Prefix; First Name:L 1 Middle Name: Last Name ,. Suffix:" Title: I j o 1 b.Signature of Authorized Certifying Official c.Telephone(Area code,number and extension) d.Email Address e.Date Report Submitted` yyy$A enC�use oniy } . i ''Pm;, 3 ri )4. I t x0 t �4 i �i rgti t Y' Y 15 6' Standard Form 425 Federal Financial Report Instructions Report Submissions 1) Recipients will be instructed by Federal agencies to submit the Federal Financial Report(FFR) to a single location,except when an automated payment management reporting system is utilized. In this case,a second submission location may be required by the agency. 2) If recipients need more space to support their FFRs, or FFR Attachments,they should provide supplemental pages. These additional pages must indicate the following information at the top of each page; Federal grant or other identifying number(if reporting on a single award),recipient organization, Data Universal Numbering System (DUNS)number,Employer Identification Number (EIN),and period covered by the report. Reporting Requirements 1) The submission of interim FFRs will be on a quarterly, semi-annual, or annual basis,as directed by the Federal agency.A final FFR shall be submitted at the completion of the award agreement.The following reporting period end dates shall be used for interim reports: 3/31, 6/30, 9/30,or 12/31. For final FFRs, the reporting period end date shall be the end date of the project or grant period. 2) Quarterly and semi-annual interim reports shall be submitted no later than 30 days after the end of each reporting period.Annual reports shall be submitted no later than 90 days after the end of each reporting,period. Final reports shall be submitted no later than 90 days after the project or grant period end date. Note: For single award reporting: I) Federal agencies may require both cash management information on lines 10(a) through 10(c) and financial status information lines 10(d) through 10(o). 2) 10(b)and 10(e)may not be the same until the final report. Line Item Instructions for the Federal Financial Report FFR Reporting Item Instructions Number Cover nformation 1. Federal Agency and Enter the name of the Federal agency and organizational element Organizational Element to identified in the award document or as instructed by the agency. Which Report is Submitted 2 Federal Grant or Other For a single award,enter the grant number assigned to the award by the Identifying Number Federal agency. For multiple awards,report this information on the FFR Assigned by Federal Attachment. Do not complete this bob if reporting on multiple awards. Agency 3 Recipient Organization inter the name and complete address of the recipient organization including zip code. 4a DUNS Number Enter the recipient organization's Data Universal Numbering System .. (DUNS)number or Central Contract Registry extended DUNS number. 4b EIN Enter the recipient organization's Employer Identification Number(EIN).' a Recipient Account Number Enter the account;number or any other'identifying number assigned by the or Identifying Number recipient to the award.This number is for the recipient's use only and is not required by the Federal agency. For multiple awards,report this. Revised 6/28/2010 FFR, Reporting Item Instructions Number information on the FFR Attachment. Do not complete this box if reporting on multiple awards. 6 Report Type Mark appropriate box. Do not complete this box if reporting on multiple awards, 7 Basis of Accounting;., Specify whether a cash or accrual basis was used for recording (Cash/Accrual) transactions related to the award(s)and for preparing this FFR. Accrual basis of accounting refers to the accounting method in which expenses are recorded when incurred. For cash basis accounting, expenses are recorded when they are paid. g Project/Grant Period, Indicate the period established in the award document during which From: (Month, Day, Year) Federal sponsorship begins and ends. Note: Some agencies award multi-year grants for a project period that is funded in increments or budget periods (typically annual increments). Throughout the project period,agencies often require cumulative reporting for consecutive budget periods. Under these circumstances, enter the beginning and ending dates of the project period not the budget period. Do nol complete this line if reporting on multiple awards. Project/Grant Period,To: See the above instructions for"Project/Grant'Period, From: (Month, Day, (Month, Day, Year) Year)." ro Reporting Period End Enter the ending date of the reporting period. For quarterly,semi-annual, Date: (Month, Day, Year) and annual interim reports, use the following reporting period end dates: 3/3`1, 6/30, 9/30, or 12/31. For final FFRs, the reporting period end date shall be the end date of the project or grant period. 10 Transactions Enter cumulative amounts from date of the inception of the award through the end date of the reporting period specified in line 9. Use Lines 10a through 10e, Lines 10d through I0o,or Lines 10a through 10o,as specified by the Federal agency, when reporting on single grants. Use Line 12, Remarks,to provide any information deemed necessary to support or explain FFR data. Federal Cash (To report multiple grants,also use FFR Attachment) l0a Cash Receipts Enter the cumulative amount of actual cash received from the Federal agency as of the reporting period end date. I Ob Cash Disbursements Enter the cumulative amount of Federal fund disbursements(such as cash or checks) as of the reporting period end date. Disbursements are the sum of actual cash disbursements for direct charges for goods and services,the amount of indirect expenses charged to the award, and the amount of cash advances and payments made to subrecipients and contractors. For multiple grants, report each grant separately on the FFR Attachment. The sum of the cumulative cash disbursements on the FFR Attachment must equal the amount entered on Line 10b, FFR. lQc Cash On Hand (Line 10a Enter the amount of Line 10a minus Line 10b. This amount represents Minus Line 10b) immediate cash needs. If more than three business days of cash are on hand,the Federal agency may require an explanation Revised 6/28/2010 FER ; Reporting kern InstructiouS Number on Line 12,Remarks, explaining why the drawdown was made prematurely or other reasons for the excess cash. Federal Expenditures and Unobligated Balance: Do not complete this section if reporting on multiple awards. 1 Od Total Federal Funds Enter the total Federal funds authorized as of the reporting period end Authorized date. I Oe Federal Share of m of Federal fund expenditures. reports preare Expenditures cashEnter basisthea, expenditountures are the sum ot:cash disbForursementsrepo 'fordirext pd on a charges for property and services; the amount of indirect expense charged; and the amount of cash advance payments and payments made to subrecipients. For reports prepared on an accrual basis, expenditures are the sum of cash disbursements for direct charges for property and services; the amount of indirect expense incurred;.and the net increase or decrease in the amounts owed by the recipient for(1) goods and other property received; (2) services performed by employees,contractors, subrecipients, and other payees;and(3) programs for which no current services or performance are required. Do not include program income expended in accordance with the deduction alternative, rebates,refunds, or other credits. (Program income expended in accordance with the deduction alternative should be reported separately on Line 10o.) I Of: Federal Share of Unliquidated obligations on a cash basis are obligations incurred, but not. Unliquidated Obligations yet paid. On an accrual basis, they are obligations incurred,but for which an expenditure has not yet been recorded. Enter the Federal portion of unliquidated obligations.Those obligations include direct and indirect expenses incurred but not yet paid or charged to the award, including amounts due to subrecipients and contractors. On the final report,this line should be zero unless the awarding agency has provided other instructions. Do not include any amount in Line 10f' that has been reported in Line 1Oe. Do not include any amount in Line 10f for u future commitment of funds (such as a long-term contract)for which an obligation or expense has not been incurred. I tlg Total Federal Share (Sum Enter the sum of Lines 10e and 1 Of. of Lines 10e and 10f) l Oh Unobligated Balance of Enter the amount of Line l Od minus Line 10g. Federal Funds(Line 10d Minus Line 1Og) Recipient Share: Do not complete this section if reporting on multiple awards. 101 Total Recipient Share Enter the total required recipient share for reporting period specified in Required line 9. The required recipient share should include all matching and cost sharing provided by recipients and third-party providers to meet the level required by the Federal agency. This amount should not include cost sharing and match amounts in excess of the amount required by the Federal agency,(for example,cost overruns for which the recipient incurs additional expenses and, therefore, contributes a greater level of cost Revised 6/28/2010 FFR., Reporting Item Instructions Number sharing or match than the level required by the Federal agency). Wi Recipient Share of Enter the recipient share of actual cash,disbursements or outlays(less any Expenditures rebates,refunds, or other credits) including payments to subrecipients and contractors. This amount may include the value of allowable third party in-kind contributions and recipient share of program income used to finance the non-Federal share of the project or program. Note: On the final report this line should be equal to or greater than the amount of Line 10i. 101( Remaining Recipient Share Enter the amount of Line 10i minus Line 10j. If recipient share in Line to be Provided (Line 10i 10j is greater than the required match amount in Line 10i,enter zero. Minus Line 10j) Program Income: Do not complete this section if reporting on multiple awards. 101 Total Federal Program Enter the amount of Federal program income earned. Do not report any Income Earned program income here that is being allocated as part of the recipient's cost sharing amount included in Line l 0j. 1001 Program Income Expended Enter the amount of program income that was used to reduce the Federal in Accordance With the share of the total project costs. Deduction Alternative I(in; Program Income Expended Enter the amount of program income that was added to funds committed in Accordance With the to the total project costs and expended to further eligible project or Addition Alternative program activities. 10o Unexpended Program Enter the amount of Line 101 minus Line 10m or Line 1 On.This amount Income(Line 101 Minus equals the program income that has been earned but not expended,as of Line 10m or Line IOn) the reporting period end date. 1 1. indirect Expense: Complete this information only if required by the awarding agency. Enter cumulative amounts from date of the inception of the award through the end date of the reporting period specified in line 9. 1 la Type of Rate(s) State whether indirect cost rate(s) is Provisional, Predetermined,Final, or Fixed. 11 b Rate Enter the indirect cost rate(s) in effect during,the reporting period. 1 10 Period From; Period To Enter the beginning and ending effective dates for the rate(s). 1 l.d , Base Enter the amount of the base against which the rates)was applied. 1 l e Amount Charged Enter the amount of indirect costs charged during the time period specified. (Multiply 11 b. x 11 d.) 11 f Federal Share Enter the Federa share of the amount in l 1e. l l g Totals Enter the totals for columns lid, 11 e, and l lf. Remarks,Certification, and Agency Use Only 12 Remarks Enter any explanations or additional information required by the Federal sponsoring agency including excess cash as stated in line 10c. 13a; Typed or Printed Name and Enter the name and title of the authorized certifying official. title of Authorized Certifyinn Official 1 3b Signature of Authorized The authorized certifying official must sign here. Certifying Official 13c Telephone(Area Code, Enter the telephone number(including area code and extension) of the Number and Extension) individual listed in Line 13a. 13d E-mail Address Enter the e-mail address of the individual listed in Line 13a. Revised 6/28/2010 FFR Reporting Itenq Instructions Number 13e• Date Report Submitted Enter the date the FFR is submitted to the Federal agency using the (Month,Day, Year) month,day,year format. 14 Agency Vse Only 'This section is reserved for Federal agency use. Revised 6/28/2Q 10 Exhibit K UNITED STATES CITIZENSHIP ATTESTATION FORM FOR PUBLIC BENEFIT For the purposes of complying with Neb. Rev. Stat. §§ 4-108 through 4-114, I attest as follows: ❑ I am a citizen of the United States. OR E I am a qualified alien under the Federal Immigration and Nationality Act. My immigration status and alien number as follows: , and I agree to provide a copy of my USCIS (United States Citizenship and Immigration Services) documentation upon request. I hereby attest that my response and the information provided on this form and any related application for public benefits are true, complete and accurate and I understand that this information may be used to verify my lawful presence in the United States. PRINT NAME: By: SIGNATURE: DATE: O PPORTUNITv Q:Library/HCD Forms/Citizenship-Attestation Form for Public Benefit 10/26/2009 Exhibit L 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 A OPP9RTUNN Approved 6/1/10 2 CFR Part 200.338-340 Exhibit N 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, as appropriate in the circumstances: (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. O EQUAL HOUSING OPPORTUNITY Rev. 09/30/19 Exhibit O MINORITY BUSINESS & WOMEN BUSINESS ENTERPRISE PLAN June 2021 PLANNING DEPARTMENT CITY OF OMAHA or cos;F{rl�A.,�.,b„ omaha Dad ,l, 7,V2414,iti II ,.L. ,,.,,.. CITY PLANNING 4 David K.Fanslau Jean Stothert, City of Omaha Mayor Planning Department City of Omaha Omaha/Douglas Civic Center 1 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. 2 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. 3 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 4 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 5 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 Contract Woman Own BRE ID/SSN Amt. 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: 6 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 Contract Woman Own BRE ID/SSN Amt. 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: $ El 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 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. 8 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 O�' iftYUUSS R 9 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: hcdbidcomp l ianceacityofomaha.org christian.espinosa@a,cityofomaha.org wdurand@selectgreaterornaha.com wayne.brown@urbanleagueneb.org melissa.tedescoAsba.gov vdogaa,,unomaha.edu salbaAgoodwillomaha.org vazquez@greatplainspva.org 10 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) 11 Reviewed and approved 06/24/2021 Exhibit P t � Riaua1934° IUp Omaha,Ne 68110 1402.320.7272 I nocredevelopmentgroup@gmail.com Native Omaha Building Redevelopment Project Address 3918 North 24th St Omaha,Ne 68110 Budget: Facade/Structural Improvements Amount Commercia Store Front $48,000 Exterior Doors $20,000 Windows I $31,000 Unit Masonry $70,000 Balcony/Stairs ; $41,000 Wood Framing $108,000 Painting ------- — $17,000_ --- ----- ---- Total - --,- ---- $335,00 • 3 1 1 _ ; 1 I ill"-It ; Z teg IC' en- 8 11 3 8 ; z „ I : 111, 1E 1 s• E. I 1 s;,2 g 8 ;18 'i] 2PPR222NRPRIP2222R2pAPfiR2p RPRP2 ^ vaa 3 IS 22ii4iRKS '8' 8 8 3' pAR2P9, 2Ril0g2p2Ri2 § P. R2R22i129, PgREA2P 2 2 2 :4 72' 8 8' 8 '2 2 k 31 Al I Ai I t 121 si p g kgggg g 5 1 _ d k I Exhibit Q Re-Evaluation of the CEST Review for Former Native Omaha Building Rehabilitation(Environmental Review Record 2021-031) Februqry 24, 202. The.February 2023 amendment to the former Native Omaha Building Rehabilitation project substantially changes the scope of work presented in the original plan dated August 2021.The original plan called for the rehabilitation of the Native Omaha building, located at 3819 N 24 St. According to 24 CFR Part 58.47(a)(1)the City must re-evaluate its findings to determine if the original findings are still valid when "the recipient proposes substantial changes in the nature, magnitude,or extent of the project,including adding new activities not anticipated in the original scope of work."The level of review was determined to be CEST due to the rehabilitation work not changing the size or capacity more.than'20%and land use not changing(24 CFR 58.35(a)(3)(iii)).Additional project activities, include commercial storefront improvements,exterior door replacement,window replacement, unit masonry, balcony/stair improvements,wood framing,and painting,The cost for these activities would. be $335,000.The original CEST review determined there were no environmental concerns associated with the project and was in compliance with HUD environmental review regulations under 24 CFR Part 58 and related laws,authorities,and requirements: According to 24 CFR Part 58.47(b)(1),"if the original findings are still valid but the data or conditions upon which they were based have changed,the responsible entity must affirm the original findings and update its ERR by including this re-evaluation and its determination based on its findings."The original, determination of the review found the project to be in compliance with HUD environmental review regulations under 24 CFR Part 58 and related laws, authorities, and requirements. Based.on the City's review of site conditions and a review of the original environmental review,the changed project scope poses no additional environmental risk to the project.Therefore,the original findings are valid. According to 24 CFR Part 58.47(b)(1),"under these circumstances, if a FONSI notice has already been published, no further publication of a FONSI notice is required."The original review did not meet the requirements necessary for FONSI notice.The new project scope does not affect this. No publication is required. *40 Amy nresel 24-Feb-2023 City Planner 4_... Tit+ !C��'1' 02.3 . 272' noce 6104Omaha, redeueloprnentgroupagmail.com Native Omaha Building Redevelopment Project Address 3918 North 24th Sr O iaha,Ne 68110 Budgets Fa ads/Structural m rover cents Amount c M„ Commercia Store Front $4S 000 � � Exterior Doors $20,000 Windows $31,000 Unit Masonry z $70,000 kony/Scairs,.: $4 ,000 Wood Framing $108i000, ; { Painting £ ... 0 . Total '$35pp , Exhibit S Federal Sub-award Reporting System(FSRS) 9 Digit DUNS Number: Organization Name: Address: Address/City/State/Zip+4 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? OYES eN0 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? OYES ONO 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 1 2 3 4 5 Signature of Authorized Official Date Requirements for Federal Funding Accountability and Transparency Act Implementation In September 2010,the Office of Management and Budget issued Interim Final Guidance in the Federal Register(Volume 75, No. 177, September 14, 2010, 2 CFR Part 170)to establish reporting requirements necessary for the implementation of the Federal Funding Accountability and Transparency Act of 2006 (Pub. L. 109-282), as amended by section 6202 of Public Law 110-252. This award term implements those requirements and is located at 2 CFR Part 170. Learn more Appendix A to Part 170—Award Term Reporting Subawards and Executive Compensation. a.Reporting of first-tier subawards. 1; Applicability. Unless you are exempt as provided in paragraph d. of this award term, you must report each action that obligates $25,000 or more in Federal funds that does not include Recovery funds(as defined in section 1512(a)(2) of, the American Recovery and Reinvestment Act of 2009, Pub. L. 111-5)for a subaward to an entity (see definitions in paragraph e. of this award term). 2. Where and when to report. i. You must report each obligating action described in paragraph a.1. of this award term to the Federal Funding Accountability and Transparency Act Subaward Reporting System(FSRS). It. For subaward information, report no later than the end of the month following the month in which the obligation was made. (For example, if the obligation was made on November 7, 2010, the obligation must be reported by no later than December 31, 2010.) 3. What to report, You must report the information about each obligating action that the submission instructions posted at http://www.fsrs.gov specify. b. Reporting Total Compensation of Recipient Executives, 1 Applicability and what to report. You must report total compensation for each of your five most highly compensated executives for the,preceding completed fiscal year, if L the total Federal funding authorized to date under this award is$25,000 or more; ii, in the preceding fiscal year, you received- A. 80 percent or more of your annual gross revenues from Federal procurement contracts(and subcontracts) and Federal financial i I ff assistance subject to the Transparency Act, as defined at 2 CFR 170.320 (and subawards); and i B; $25,000,000 or more in annual gross revenues from Federal procurement contracts (and subcontracts) and Federal financial assistance subject to the Transparency Act,as defined at 2 CFR 170.320 (and subavards); and I. Ili, The public does not have access to information about the compensation of the executives through periodic reports filed under section 13(a) or i 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a),78o(d)) r or section 6104 of the Internal Revenue Code of 1986. (To determine if i the public has access to the compensation information, see the U.S. Security and Exchange Commission total compensation filings at the i Executive Compensation page of the SEC website.) 2. Where and when to report. You must report executive total compensation described in paragraph;b.1. of this award term: , As part of your registration profile at the Central Contractor Registry. i li. By the end of the month following the month in which this award is made, and annually thereafter. c. Reporting of Total Compensation of Subrecipient Executives. i k 1, Applicability and what to report. Unless you are exempt as provided in paragraph I d, of this award term,for each first-tier subrecipient under this award,you shall I report the names and total compensation of each of the subrecipient's five most highly compensated executives for the subrecipient's preceding completed fiscal year, if t, in the subrecipient's preceding fiscal year, the subrecipient received— A. 80 percent or more of its annual gross revenues from Federal procurement contracts (and subcontracts)and Federal financial i assistance subject to the Transparency Act, as defined at 2 CFR 170.320(and subawards); and i 8, $25,000,000 or more in annual gross revenues from Federal procurement contracts(and subcontracts), and Federal financial assistance subject to the Transparency Act(and subawards); and Ii. The public does not have access to information about the compensation of the executives 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. (To determine if the public has access to the compensation information, see the U.S, Security and Exchange Commission total compensation filings at the Executive Compensation page of the SEC welpsite.) 2. Where and,when to report. You must report subrecipient executive total compensation described in paragraph c.1. of this award term: i. To the recipient. IL, By the end of the month following the month during which you make the subaward. For example, if a subaward is obligated on any date during the month of October of a given year(i.e., between October 1 and 31), you must report any required compensation information of the subrecipient by November 30 of that year. , i d. Exemptions lf, in the previous tax year, you had gross income, from all sources, under$300,000, you are exempt from the requirements to report: t. Subawards,and II. The total compensation of the five most highly compensated executives of any subrecipient. e. Definitions. For purposes of this award term: 1. "Entity" means all of the following, as defined in 2 CFR part 25: i; A Governmental organization, which is a State,local government, or Indian tribe; ii.: A foreign public entity, in A domestic or foreign nonprofit organization; i, A domestic or foreign for-profit organization; v; A Federal agency, but only as a subrecipient under an award or subaward to a non-Federal entity. 2. "Executive" means officers, managing partners, or any other employees in management positions. 3. "Subaward": i. This term means a legal instrument to provide support for the performance of any portion of the substantive project or program for which you received this award and that you as the recipient award to an eligible subrecipient. IL The term does not include your procurement of property and services needed to carry out the project or program (for further explanation, see Sec. II .210 of the attachment to OMB Circular A-133, "Audits of States, Local Governments, and Non-Profit Organizations"). RI,, A subaward may be provided through any legal agreement, including an agreement that you or a subrecipient considers a contract. 4. Subrecipient means an entity that: i; Receives a subaward from you (the recipient) under this award; and ii. Is accountable to you for the use of the Federal funds provided by the subaward. $: "Total compensation" means the cash and noncash dollar value earned by the executive during the recipient's or subrecipient's preceding fiscal year and includes the following (for more information see 17 CFR 229:402(c)(2)): i, Salary and bonus. ii. Awards of stock, stock options, and stock appreciation rights. Use the dollar amount recognized for financial statement reporting purposes with respect to the fiscal year in accordance with the Statement of Financial Accounting Standards No. 123(Revised 2004) (FAS 123R), Shared Based Payments. ill. Earnings for services under non-equity incentive plans. This,does not include group life, health, hospitalization or medical reimbursement plans that do not discriminate in favor of executives,and are available generally to all salaried employees. Iv, Change in pension value. This is the change in present value of defined benefit and actuarial pension plans. v. Above-market earnings on deferred compensation which is not tax- qualified. vi. Other compensation, if the aggregate value of all such other compensation (e.g. severance, termination payments, value of life insurance paid on behalf of the employee,perquisites or property)for the executive exceeds$10,000. is Exhibit T Certification Regarding U.S.Department of.Housing Debarment and Suspension and Urban Development Certification. A: Certification Regarding Debarment, a'- Suspension and Other Responsibility Matters — Primary' Covered Transaction$ t 1.The prospective primary participant certifies to the best of Its knowledge 4. The prospective primary participant shall provide immediate and belief that its principals: written notice to the department or agency to whom this proposal is; submitted if at any time the prospective primary participant learns a. Are not presently debarred, suspended, proposed for debarment, that its certification was erroneous when submitted or has become declared ineligible, or voluntarily excluded from covered transactions by erroneous by reason of changed circumstances, any Federal debarment or agency; 5. The terms covered transaction, debarred, suspended, b. Have not within a three-year period preceding this proposal, been Ineligible, lower tier covered transaction, participant, person, convicted of or had a civil judgment rendered against them for commission primary covered transaction, principal, proposal, and of fraud or a criminal offense in connection with obtaining,attempting to voluntarily excluded, as used in this clause,have the meanings obtain, or performing a public (Federal, State, or local) transaction or set out in the Definitions and Coverage sections of the rules ti contract under a public transaction; violation of Federal or State antitrust implementing Executive Order 12549. You may contact the statutes or commission of embezzlement, theft, forgery, bribery, department or agency to which this proposal is being submitted for falsification,or destruction of records,making false statement,or receiving assistance in obtaining a copy of these,regulations. stolen property; 6. The prospective primarya p p participant agrees by submitting this c.Are not presently indicted for orotherwise criminally or civilly charged by proposal that,should theproposed covered transaction be entered a governmental entity(Federal, State or local)with commission of any of into,it shall not knowingly enter any lower tier covered transaction the offenses enumerated in paragraph(1)(b)of this certification;and with a person who is debarred,'suspended,declared ineligible, or voluntarily excluded from participation in this covered transaction, d. Have not within a three-year period preceding this application/proposal unless authorized by the department or agency entering into this had one or more public transactions(Federal,State or local)terminated for transaction. t cause or default. 7.The prospective primary participant further agrees by submitting 2.Where the prospective primary participant is unable to certify to any of this proposal that it will include the clause titled "Certification i the statement in this certification,such prospective participant shall attach Regarding Debarment, Suspension, Ineligibility and Voluntary an explanation to this proposal. Exclusion,- Lower Tier Covered Transaction," provided by the department or agency entering into this covered transaction,without instructions for Certification(A) modification, in all lower tier covered transactions and In all i' , solicitations for lower tier covered transactions. I a 1. By signing and submitting this proposal, the prospective primary participant is providing the certification set out below. 8. A participant in a covered transaction may rely upon a certification of a prospective participant in a lower tier covered 2.The inability of a person to provide the certification required below will transaction that it is not debarred, suspended, ineligible, or not necessarily result in denial of participation in this covered transaction. voluntarily excluded form the covered transaction, unless it knows The prospective participant shall submit an explanation of why it cannot that the certification is erroneous. A participant may decide the provide the certification set out below. The certification or explanation will method and frequency by which it determines this eligibility of its be considered in connection with the department or agency's principals. Each participant may, but is not required to,check the determination whether to enter into this transaction. However,failure of Non-procurement list. the prospective primary participant to furnish a certification of the prospective primary participant to furnish a certification or an explanation 9.Nothing contained in the foregoing shall be construed to require shall disqualify such person from participation in this transaction, establishment of a system of records in order to render in good faith 3' the certification required by this clause. The knowledge and 3. The certification in this clause is a material representation of fact upon information of a participant is not required to exceed that which is which reliance was In place when the department or agency determined to normally possessed by a prudent person in the ordinary course of A enter into this transaction. If it Is later determined that the prospective business dealings. primary participant knowingly rendered an erroneous certification, In . addition to other remedies available to the Federal Government, the 10.Except for transactions authorized under paragraph(6)of these ,,, department or agency may terminate this transaction for cause or.default.' instructions, if a participant in a covered transaction knowingly enters into a lower tier covered transaction with a person who Is suspended, debarred, Ineligible, or voluntarily excluded from participation In this transaction, in addition to other remedies available to the Federal Government, the department or agency may terminate this transaction for cause of default. l ( Page 1 of 2 form HUD-2992(3/98) Certification B: Certification Regarding Debarment, Suspension, Ineligible and Voluntary Exclusion—Lower Tier Covered Transactions 1, The prospective lower tier participant certifies, by submission of this 5.The prospective lower tier participant agrees by submitting this proposal,that neither It not its principals is presently debarred,suspended, proposal that should the proposed covered transaction be entered proposed for debarment, declared ineligible, or voluntarily excluded from into,It shall not knowingly enter Into an lower tier transaction with a participation in this transaction by any Federal department or agency. person who is debarred, suspended, declared ineligible, or voluntarily excluded from participation in this covered transaction, 2.Where the prospective lower tier participant Is unable to testify to any of unless authorized by the department or agency with which this the statements In this certification,such prospective participant shall attach transaction originated. an explanation to this proposal. B. The prospective lower tier participant further agrees by. Instructions for Certification(B) submitting this proposal that It will include this clause titled "Certification Regarding Debarment, Suspension, ineligibility and 1. By signing and submitting this proposal, the prospective lower tier Voluntary Exclusion Lower Tier Covered Transaction,",without participant is providing the certification set out below, modification, in all lower tier covered transactions and in all solicitations for lower tier covered transactions. 2,The certification in this clause is a material representation of fact upon i• which reliance was placed when this transaction was entered into. If It is 7. A participant In a,covered transaction may rely upon a later determined that the prospective lower tier participant knowingly certification of a prospective participant in a lower tier covered rendered an erroneous certification,in addition to other remedies available transaction that it is''not debarred, suspended, ineligible, or to the Federal Government, the department or agency with which this voluntarily excluded from the covered transaction,unless it knows transaction originated may pursue available remedies,Including suspension that the certification is erroneous. A participant may decide the and/or debarment. method and frequency by which it determines the eligibility of its principals. Each participant may,but Is not required to,check the 3. The prospective lower tier participant shall provide immediate written Non-procurement list. notice to the person to which this proposal is submitted if at any time the prospective lower tier participant learns that its certification was;erroneous 8.Nothing contained in the foregoing shall be construed to require when submitted or has become by reason of changed circumstances, establishment of a system of records In order to render in good faith the certification required by this clause, The knowledge and 4• The terms covered transaction, debarred, suspended, ineligible, Information of a participant Is not required to exceed that which is lower tier covered transaction, participant, person,primary covered hormally possessed by.a prudent person in the ordinary course of transaction, principal, proposal, and voluntarily excluded, as used in business dealings. this clause, have the meanings set out In the Definitions and Coverage sections of rules implementing Executive Order 12549. You may contact 9.Except for transactions authorized under paragraph(5)of these the person to which this proposal is submitted for assistance In obtaining a Instructions, if a participant in a lower covered transaction copy of these regulations, knowingly enters into a lower tier covered transaction with a person who is suspended,debarred,ineligible,or voluntarily excluded from participation in this transaction, in addition to other remedies available to the Federal Government, the department or agency with which this transaction originated may pursue available remedies including suspension and/or debarment. I 1 Applicant Date Signature of Authorized Certifying Officiate ` Title } Page 2 of 2 form HUD-2992(3/98) Exhibit U Certification for U.S. Department of Housing and Urban Development a Drug-Free Workplace Applicant Name Program/Activity Receiving Federal Grant Funding; Acting on behalf of the above named Applicant as its Authorized Official,I make the following certifications and agreements to the Department of Housing and Urban Development(HUD) regarding the sites listed below: I certify that the above named Applicant will or will continue (I)> Abide by the terms of the statement; and to provide adrug-free workplace by: (2) Notify the employer in writing of his or her convic- a. Publishing a statement notifying employees that the un- tion for a violation of a criminal drug statute occurring in the lawful manufacture,distribution,dispensing,possession,or use workplace no later than five calendar days after such conviction; of a controlled substance is prohibited in the Applicant's work- e. Notifying the agency in writing,within ten calendar days place and specifying the actions that will be taken against after receiving notice under subparagraph d.(2) from an em- employees for violation of such prohibition, ployee or otherwise receiving actual notice of such conviction. b. Establishing an on-going drug-free awareness program to Employers of convicted employees must provide notice,includ- inform emploYees--- ing position title, to every grant officer or other designee on (1) The dangers'of drug abuse in the workplace; whose grant activity the convicted employee was working, unless the Federalagency has designated a central point for,the .. (2) The Applicant's policy of maintaining a drug-free receipt of such notices. Notice shall include the identification workplace; number(s)of each affected grant; (3) Any available drug counseling, rehabilitation, and f. Taking one of the following actions, within 30 calendar employee assistance programs and days of receiving notice under subparagraph d:(2),with respect (4) The penalties that may be imposed upon employees to any employee who is so convicted- for drug abuse violations occurring in the workplace. (1) Taking appropriate personnel action against such an c. Making it a requirement that each employee to be engaged employee,up to and including termination, consistent with the in the performance of the grant be given a copy of the statement requirements of the Rehabilitation Act of 1973,as amended; or required by paragraph a.; (2) Requiring such employee to participate satisfacto- d.Notifying the employee in the statement required by pars- rely in a drug abuse assistance or rehabilitation program ap- graph a.that,as a condition of employment under the grant,the proved for such purposes by a Federal,State,or local health,law employee will--- enforcement, or other appropriate agency; g. Making a good faith effort to continue to maintain a drug- free workplace through implementation of paragraphs a: thru f. 2, Sites for Work Performance, The Applicant shall list(on separate pages)the site(s)for the performance of work done in connection with the HUD funding of the program/activity shown above: Place of Performance shall include the street address, city, county, State, and zip code. Identify each sheet with the Applicant name and;address and the program/activity receiving grant funding.) Check here I If there are workplaces on file that are not identified on the attached sheets. I hereby certify that all the information stated herein,as well as any information'provided in the accompaniment herewith,is true and accurate. Warning: HUD will prosecute false claims and statements, Conviction may result in criminal and/or civil penalties. (18 U.S.C.1001,1010,1012; 31 U.S.C.3729,3802) Name of Authorized Official Title Signature Date form HUD-60070(3/98) ref.Handbooks 7417.1,7475.13,7485.1&.3 Attachment 1 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 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) Revised and approved 5/23/2012 Attachment 2 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. 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.