RES 1996-1787 - Agmt with Stephen Center Inc . 77
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;o oMxHA.NF�� Planning Department
°s� R Omaha/Douglas Civic Center
ECEIVE- ( .(�; 1819 Farnam Street,Suite 1100
.105maha,Nebraska 68183 0110
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CLERK Telefax(402)444-6140
�TFD FEBRJr C( I Y
City of Omaha O M A H A, N E 8 R A S K A. Jeffrey P.Johnson,AICPDirector
Hal Daub,Mayor July 16, 1996
•
Honorable President
and Members of the City Council,
The attached proposed Resolution approves an Agreement between the City of Omaha and the
Stephen Center,Inc., a Nebraska non-profit corporation,2723 "Q" Street,Omaha,NE 68107,in the
amount of$40,950 to provide emergency shelter and essential services to homeless persons.
The City of Omaha has received a Fiscal Year 1996 Emergency Shelter Grant Entitlement of
$186,000 from the U. S. Department of Housing and Urban Development. The funds will be used
to provide emergency shelter and services to homeless persons.
The City solicited proposals from non-profits through a Request for Proposals process earlier this
year. A selection committee was convened to recommend allocation of these funds. The
recommended funding allocations are identified by organization and activity below:
Organization Operations Services Rehab Prevention Total
St. Vincent $ 26,850 $ 26,850
Stephen Center $ 25,300 $ 15,650 $ 40,950
Salvation Army $ 13,250 $ 13,250
Siena-Francis $ 30,100 $ 11,900 $ 42,000
Help the Homeless $ 38,650 $ 38,650
• YWCA $ 15,000 $ 15,000.
Total $120,900 $ 55,800 $ 0 $ 0 $176,700
City Admin. . 9,300
Grand Total $186,000
O
Honorable President
and Members of the City Council
Page 2
We urge your favorable consideration of this Resolution.
Respectfully Submitted, Referred to the City Council for Consideration:
7114.,/k/7//-L .
Jeffrey P. Johnson, AICPAre Mayor's Office/Title
Planning Department Director
Approved as to Funding: Approved:
c)cfrxt A A Sr—A7- €24,14. 4
Louis A. D'Ercole, Acting Director George D is, Acting Director ,7_02 9G
Finance Department Human Re ations Department c
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4:5
AGREEMENT
THIS AGREEMENT is entered into by and between the City of Omaha, a Municipal Corporation
in Douglas County,Nebraska(sometimes hereinafter referred to as"City"), and the Stephen Center,
Inc., 2723 "Q" Street, a corporation organized and existing pursuant to the provisions of the
Nebraska Non-Profit Corporation Act (sometimes hereinafter referred to as "Contractor") on the
terms, conditions and provisions as set forth below:
RECITALS:
WHEREAS, the City of Omaha 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 received a Fiscal Year 1996 allocation in the amount of
$186,000 of Stewart B. McKinney Homeless Assistance Act funds from the United States
Department of Housing and Urban Development for the purpose of providing shelter and services
to homeless and temporarily displaced families; and,
WHEREAS,the City of Omaha 1995 Consolidated Submission for Community Planning and
Development was approved by the City Council on November 21, 1995,by Resolution No. 3038,
setting out the City's Community Development Program for 1996, and identifying the provision of
emergency shelter and essential services for homeless persons as an urgent need in the City of
Omaha; and,
WHEREAS,it is in the best interests of the City of Omaha and the residents thereof that the
City enter into an Agreement with the Stephen Center, Inc., to provide funding in the amount of
$40,950 for the provision of emergency shelter and essential services to homeless persons.
NOW THEREFORE, in consideration of these mutual covenants, the Stephen Center and
the City of Omaha do hereby agree as follows:
SECTION 1. DEFINITIONS - ABBREVIATIONS
1.1 "City" shall mean-the City of Omaha, a Nebraska Municipal Corporation.
1.2 "Contractor" shall mean - the Stephen Center, Inc., 2723 "Q" Street, Omaha,
Nebraska 68107, a non-profit corporation. (See Exhibit "A")
1.3 "Director" shall mean-the Planning Department Director of the City of Omaha.
\
1.4 "Recipient" shall mean-the City of Omaha.
1.5 "Subrecipient" shall mean - a public or private nonprofit agency, authority or
organization receiving ESGP funds to undertake eligible activities. In this
Agreement,the Subrecipient is the Stephen Center, Inc.
1.6 "HUD" shall mean-the U.S. Department of Housing and Urban Development.
1.7 Emergency Shelter Grant Program (ESGP) - shall mean the program administered
by the City of Omaha and funded under Subtitle B of Title IV of the Stewart B.
McKinney Homeless Assistance Act (Pub. L. 100-77), as amended. The program
purpose is to provide assistance to homeless persons in accordance with Federal
Regulations in 24 CFR Part 576,the program objectives,priorities, and strategies as
stated in the City of Omaha Program Guidelines, the Consolidated Submission for
Community Planning and Development, and the most recent ESGP Request for
Proposals.
1.8 "ESGP Funds" shall mean - the portion of the Emergency Shelter Grant Program
awarded to the City as may be available during Program year 1996 for the use
specified herein,in an amount not to exceed$40,950 subject to the terms,conditions,
and requirements of said Grant. The pro-rata portion of FY96 funds received from
HUD is currently 32% of the specified amount. This amount is currently available
and may be drawn down to meet actual approved costs incurred by the Stephen
Center, Inc., as required. Availability of funds in excess of the above referenced
pro-rata portion is subject to and conditioned upon actual receipt of same,by the City
of Omaha.
1.9 "Grant" shall mean - non-repayable ESGP funds made subject to the terms,
conditions and provisions of the grant agreement under which said grant is made.
1.10 "Facility"shall mean- the Stephen Center,Inc.,located at 2723 "Q" Street, Omaha,
Nebraska 68107.
1.11 "Program Income" shall mean - gross income received by the Recipient or
Subrecipient directly generated from the use of ESGP funds. When such income is
generated by an activity that is only partially assisted with ESGP funds, the income
shall be prorated to reflect the percentage of ESGP funds used. (See Exhibit "B".)
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SECTION 2. DUTIES AND CONDITIONS OF CITY FINANCING.
2.1 Subject to and conditioned upon actual receipt of same, the City agrees to make
available to the Contractor$40,950 in ESGP funds,Fund No. 154, Organization No.
8500 in the form of a grant for the purposes set forth in this Agreement, and as
detailed in Exhibit "C" incorporated herein by this reference.
2.1.1 City funding pursuant to this Section shall be contingent upon receipt of
and subject to the availability of ESGP funds in amounts adequate to meet
any contractual obligations in force upon the date of execution of this
Agreement,as well as,this proposed obligation. Should adequate funding
not be available,the City shall notify the Contractor as soon as reasonably
possible. At such time,the responsibilities of the Contractor under Section
3 of this Agreement shall be released, the provisions of Section 5,
Paragraph 5.10 will be exercised and the Agreement will be terminated.
2.1.2 Reimbursement shall be on a monthly basis for the allowable expenditures.
Payments shall be made on the basis of monthly requests for payment and
shall be reimbursements for actual expenditures. Allowable expenditures
are identified as Exhibit "D".
2.1.3 Monthly billing will be submitted to the Director by the Stephen Center,
Inc.,with the monthly progress report. The monthly billing is due no later
than fifteen(15) days following each monthly reporting period.
2.2 The City shall refer client cases to the Stephen Center, Inc., as need dictates to
promulgate approved programs and activities.
2.3 The City shall review and monitor the required monthly reports that identify the
progress/accomplishments of the Stephen Center, Inc., on the activities included in
this Agreement and on contracts entered into with third parties pursuant thereto.
2.4 The City shall prepare monthly payment vouchers for the Stephen Center,Inc.,based
upon the contractor's monthly progress report and request for payment.
SECTION 3. DUTIES AND RESPONSIBILITIES OF THE CONTRACTOR
3.1 The Contractor does hereby certify, contract and agree that any and all funding
obtained or made available hereunder shall be used solely and exclusively for the
express purpose of providing shelter and services to homeless persons.
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_A
3.2 The Contractor shall provide services for clients as required in the scope of work as
attached hereto. (See Exhibit "C").
3.3 The Contractor shall submit a monthly progress report to the Director delineating the
Stephen Center,Inc.,accomplishments for the previous 30 day period on the specific
activities approved by the City Planning Department. (See Exhibit "C")
3.4 The Contractor shall submit a monthly financial report (income statement) to the
Director delineating the revenue and line item expenditures for the Stephen Center,
Inc. In addition, a monthly check register is to be submitted listing each expenditure
by check number, payee, date, and amount for all expenditures for which
reimbursement is requested.
3.5 The Contractor shall comply with all provisions and regulations of the Emergency
Shelter Grant Program and have an annual audit completed in compliance with OMB
Circular A-133. A copy of the audit shall be provided to the Director. OMB Circular
A-133, is attached as Exhibit "E".
3.6 The Contractor will comply with Section 504 of the Rehabilitation Act of 1973
regarding project accessibility and insure that all work on the facility is in accordance
with the design standards as stated in the Uniform Federal Accessibility Standards.
3.7 The Contractor specifically hereby states, agrees and certifies that it is familiar with
the limited purpose set forth in the Federal Laws, Rules and Regulations, and in the
laws of the State of Nebraska,for which personal information requested may be used
and that the information received will be used solely for those limited purposes and
not to harass, degrade or humiliate any person. The information released shall be
used for the limited purpose stated, and the Contractor further agrees to indemnify
and hold harmless the City of Omaha for any liability arising out of the improper use
by the Contractor of information provided.
3.8 The Contractor and any 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 of Omaha, as approved by the Planning Director, shall
have access to any books,documents,papers,records and accounts of the Contractor
or subcontractors which are directly pertinent to this project for the purpose of
making audit, examination, excerpts and transcriptions. Such records and accounts
shall be retained for five years from the contract period completion. Any contract
entered into by the Contractor with any Subcontractors shall include this Section to
ensure said access.
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II
3.9 Any program income received will be returned to the City of Omaha within thirty
(30) days of receipt.
3.10 The Contractor shall comply with all requirements of the Emergency Shelter Grant
Program and acknowledge, by execution of this Agreement, receipt of Department
of Housing and Urban Development Regulations 24 CFR Parts 50, 58, 575, and 576
Emergency Shelter Grant Program, Stewart B. McKinney Homeless Assistance Act
Final Rule, dated August 10, 1988, as amended. (See Exhibit "K").
3.11 Comply with all federal non-discrimination requirements and accommodate clients
without regard to race, color,handicap, familial status, sex, age,religion, or national
origin.
3.12 Provide access to the City for on-site reviews when requested.
SECTION 4. TERM OF THE AGREEMENT
This Agreement shall be in full force and effect and will continue for a period of
twelve (12) months, from the time of favorable consideration by the City Council of the City of
Omaha and execution by the Mayor.
SECTION 5. PROVISIONS OF THE AGREEMENT
5.1 Equal Employment Opportunity Section 3 Clause. Attached hereto as Exhibits "F"
and "G", and made a part hereof by this reference, are the equal employment
provisions of this Agreement.
5.2 Non-Discrimination. The Contractor shall not,in the performance of this Agreement,
discriminate or permit discrimination in violation of federal or state laws or local
ordinances because of race, color, handicap, familial status, sex, age, political or
religious opinions, affiliations or national origin.
5.3 Captions. Captions used in this Agreement are for convenience and are not used in
the construction of this Agreement.
5.4 Applicable Law. 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 terms and the
performance under this Agreement.
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e
5.5 Interest of the City. Pursuant to Section 8.05 of the Home Rule Charter, no elected
official or any officer or employee of the City shall have a financial interest, direct
or indirect, in any City agreement. Any violation of this section with the knowledge
of the person or corporation contracting with the City shall render the Agreement
voidable by the Mayor or Council.
5.6 Merger. This Agreement shall not be merged into any other oral or written
agreement, lease or deed of any type.
5.7 Modification. This Agreement contains 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.
5.8 Assignment. The Contractor may not assign its rights or obligations under this
Agreement without the express prior written consent of the City.
5.9 Strict Compliance. All provisions of this Agreement and each and every document
that shall be attached shall be strictly complied with as written, and no substitution
or change shall be made except upon written direction from authorized
representatives of the parties.
5.10 Termination. This agreement may be terminated by either party upon thirty(30)days
written notice to the other party. Said notice shall be given when received by
certified mail at the other party's usual place of business. This Agreement may be
suspended or terminated in accordance with 24 CFR 85.43,Enforcement or 24 CFR
85.44, Termination for Convenience (Exhibit "H"). 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.
5.11 Indemnification. The Contractor shall indemnify and hold the City harmless from
and against: (1)any and all claims arising from contracts between the Contractor and
third parties made to effectuate the purposes of this Agreement; and, (2) any and all
claims, liabilities or damages arising from the preparation or presentation of any of
the work covered by this Agreement.
5.12 Default. If, through any cause, the Contractor shall fail to fulfill in a timely and
proper manner any obligations under this Agreement,or violate any of the covenants,
representations or agreements hereof,the City may upon written notice terminate this
Agreement or such parts thereof as to this Agreement, and may hold the Contractor
liable for any damages caused to the City by reasons of such default and termination.
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5.13 Nebraska Law. This Agreement shall be a contract made under and governed by the
laws of the State of Nebraska.
5.14 Unenforceable Provisions. Any provision of this Agreement which is prohibited or
unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the
extent of such prohibition of enforceability without invalidating the remaining
provisions hereof or affecting the validity or enforceability of such provision in any
other jurisdiction.
5.15 Disclosure of Lobbying. The Contractor shall certify and disclose,to the best of its
knowledge and belief, that:
(a) No Federal appropriated funds have been paid or will be paid,by or on behalf of
the Contractor,to any person for influencing or attempting to influence an officer or
employee of Congress,or an employee of a Member of Congress in connection with
the awarding of any Federal contract, the making of any Federal grant,the making
of any Federal 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.
(b) 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 or employee of Congress, or an employee
of a Member of Congress in connection with this Federal contract, grant, loan, or
cooperative agreement, the Contractor shall complete and submit Standard
Form-LLL, "Disclosure Form to Report Lobbying", in accordance with its
instructions.
(c) The language of this certification be included in the award documents for all
subawards at all tiers, (including subcontracts, subgrants, and contracts under grants,
loans, and cooperative agreements) and that all subrecipients shall certify and
disclose accordingly.
5.16 Subrecipients. The Contractor shall comply with the requirements and the standards
of OMB Circular No. A-122, "Cost Principles for the Nonprofit Organizations"
(Exhibit "I"), and with the requirements of Attachments A, B, C, F, H, N and 0 to
OMB Circular A-110 (Exhibit "J").
5.17 Other Program Requirements. The Contractor shall be required to carry out each
activity of this Agreement in compliance with all Federal laws and regulations
described in Subtitle B of Title IV of the Stewart B. McKinney Homeless Assistance
Act (Pub. L. 100-77), as amended, and Federal Regulations in 24 CFR Part 576
(Exhibit "K").
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N e
5.18 Termination of Assistance. If an individual or family who receives assistance from
a recipient or subrecipient violates program requirements, the recipient or
subrecipient may terminate assistance in accordance with a formal process
established by the recipient or subrecipient that recognizes the rights of individuals
affected, which may include a hearing.
SECTION 6. AUTHORIZED REPRESENTATIVES
In further consideration of the mutual covenants herein contained,the parties hereto
expressly agree that for purposes of notice, including legal service of process,during the term of this
Agreement,and for the period of any applicable statute or limitations thereafter,the following named
individuals shall be authorized representatives of the parties:
(1) City of Omaha
Director- Planning Department
Omaha/Douglas Civic Center
1819 Farnam Street
Omaha,NE 68183
(2) The Stephen Center, Inc.
Judith Mascarrello, Executive Director
2723 "Q" Street
Omaha,NE 68107
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IN WITNESS WHEREOF,the parties have executed this Agreement as of the date
indicated below.
ATTEST: CITY OF 0 HA:
it/
/411
CIT OF HE CITY OF OMAHA MA OR OF THE CITY OF OMAH
WITNESS: THE STEPHEN CENTER, INC.
(-247--`---"'"
DITH MASCA LLO,
XECUTIVE DI CTOR
Date Date
APPROVED AS TO FORM:
ASSISTANT CITY ATTORNEY
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A ,
SCHEDULE OF EXHIBITS
Agreement
Exhibit Location Description
A 1.2 Articles of Incorporation, Corporate Resolution
B 1.11 Definition- Program income
C 2.1, 3.2, 3.3 Scope of Work and Reporting Requirements
D 2.1.2 Allowable Expenditures
E 3.5 OMB Circular No. A-133
F 5.1 Equal Employment Opportunity Clause
G 5.1 Affirmative Action Plan
H 5.10 Termination- CFR 85.43 and CFR 85.44
I 5.16 OMB Circular No. A-122
J 5.16 OMB Circular No. A-110, Attachments A, B, C, F, H,N, 0
K 3.11, 5.17 24 CFR Parts 50, 58, 575 & 576, ESGP Final Rule
P:\PLN 1\2216.MAF
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QEC 1 6 1983 '1
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SECRETARY'S =•CFFI
�� C •,I '^'7 ARTICLES OF INCORPORATION r;-d Lrcca:ded cs n roll
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STEPHEN CENTER, INC. S3Q P�
ARTICLE I
The name of the Corporation shall be Stephen Center, Inc. .
ARTICLE II
The Corporation shall have• perpetual 'uration. •
ARTICLE III -
•
The Corporation is organized%As a non-profit corporation to
•
establish facilities, or provide aid in order .:to establish
facilities, in which destitute, abandoned, .tiegiected and
dependent individuals may find or obtain suitable care and
fellowship; to provide special training and' rehabilitative
services to those in need of such services; and to promote
programs and activities designed to eliminate' violence among
destitute individuals.
ARTICLE 'IV
The Corporation shall have and- exercise all powers allowed
non-profit corporations by the Non-Profit Corporation Act of the
State of Nebraska, as amended, except] as otherwise limited in
these Articles of Incorporation.
ARTICLE V
Notwithstanding any provision to the contrary contained
within these Articles of Incorporation or the By-Laws of the
•
Corporation, ` this Organization shall abide by- -t?te-"' icwin
enumerated principles:
1. The corporation shall exist and conducts its affairs in .
conformity with and in furtherance of those of a charitable . '
organization' as defined. in Section 501 (c) (3) of the Internal,
•
COCK.Z.24."_24 i
Revenue Code of 1954.
2.- In the event the Corporation is dissolved for any
reason at any time, after the satisfaction of all Corporate
obligations all remaining assets shall be distributed exclusively
for the purposes of the Corporation in such manner, or to such
organization or organizations organized ..and operated exclusively
for charitable, educational, religious or scientific purposes as
shall at the ' time qualify as a exempt organization or
'-► organizations under Section 501 (c) (3) of the Internal Revenue
Code of 1954, or corresponding provisions of any subsequent
federal tax laws.
3. The Corporation shall not engage in- any of the
following acts:
as. defined in Section 4941 (d)
(a) Acts of self-dealing. of the Internal .Revenue Code of 1954 , or
corresponding prov
isions of any subsequent federal
tax laws. - . •
(b) Retain any excess business holdings as defined in
Section 4943 (c) of the Internal
Revenue Code
de anyf
• 1954, or corresponding provisions
_ subsequent federal tax laws.
(c) hal not e r at°such time andtribute s inn such manner e for astaxable
yd income
•
undistributed not to become subject
to unc.
•
taxes
imposed
by
Section 4942 of the Internal
Revenue Code of 1954, or
l tax corresponding provisions
of any subsequent -.
•
(d) No investment shall be Section made 4944 in uof ch athe nZnternal
er as to•
incur tax under S provisions- Revenue Code of
954, or f federal tax laws.corresponding-
of any subsequent •
(e) Shall not make any taxable expenditures as defined .
• • in Section 4945 (d) of the Internal
aRev of any
Revenue Code
f
•
ing
1954, or ent federalstaxdlaws. provisions
subsequ
4_ No •part of the net earnings of the Corporation shall
• inure to the benefit of, or be distributed to its members,
except that the �r.`
trustees, officers or other private persons, a reasonable'
Corporation shall be authorized and empowered to pay
ale :fY
compensation for services rendered and to make payments, ,-
•
•
,
•
distributions in furtherance of the purposes set forth in these
Articles of Incorporation.
5. No substantial part of the activities of the
Corporation shall be the carrying on of propaganda, or otherwise
attempting to influence legislation, and the Corporation shall'
not participate in, or intervene in, including the publishing or
distribution of statements, any political campaign on behalf of
any candidate for public office. -
6. The Corporation shall not carry on any other activities '
not permitted to be carried on by a corporation exempt from •
federal income tax under Section 501 (c) (3) of the Internal
Revenue . Code of 1954, or corresponding provisions of any .
subsequent federal tax laws or by a corporation, contributions to
which are . deductible under Section 170 (cj (2) of the . Internal
Revenue Code of 1954, or corresponding -provisions of any
subsequent federal . tax laws or such activities as may be in
violation of the .Nebraska Non-Profit Corporation Act, as .it shall
be amended. from time to time. •
ARTICLE VI
The street address of the initial' registered office of the
Corporation is 5002 South 54th 'Street, Omaha, Nebraska' 68117.
The name of the initial registered agent at - such address- _is
• Richard C. McNeil.'
•
- • ARTICLE VI -
The names and addresses of the initial Board of Directors of
the Corporation shall be as follows:
Name ' Address
Richard C. McNeil 5002 South 54th Street •
Omaha, Nebraska 68117
Sharon C. McNeil - ' 5002 '�cu—�i -fir:-Street -
Omaha, Nebraska 68117
William E. Reicks 5437 South 50th Street ! r
Omaha, Nebraska 68117 '' Q
John B. Balkus 5504 "S" Street
Omaha, Nebraska 68117
David C. Ostblum 5823 "T" Street
Omaha, Nebraska 68117
ARTICLE VIM
The names and addresses of the incorporators are:
Name Address •
Gregg H. Coffman 1823 Harney Street
100 Historic Library Plaza
Omaha, Nebraska 68102
Karen M. Beard 1823 Harney Street
100 Historic Library Plaza
• Omaha, Nebraska 68102
•
Dated this 15th day of December, 1983.
401
Greg. T'
Incorporator
�o i rnco�
7�• - •
41:42.-"D
• Kaaren M. Beard, Incorporator
GHC43
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colsa
COR
THE STEP EIS CENTER
2723 Q" Street • OMAHA, NEBR.ASKA 68107-344 7 • 731-0238
Crisis Shelter - MOBA Medical Clinic - Transitional Housing Program - HERO Program
April 2 1996
9,
CityPlanning
g
1819 Farnam Street
•
Omaha,Nebraska 68183
To Whom It May Concern:
Judith Mascarello, Executive Director of the Stephen Center has the authority to sign
any documents as necessary to fulfill the obligations of the Stephen Center.
Any Questions, you may call Ed Russell, President, of the Board of Directors, Stephen
Center.
,Sincerely,
J -th Mascarello
Executive Director
Les Schultz
Business Manager
.• .• . .
BOARD OF DIRECTORS
STEPEHN CENTER
1996
PRESIDENT: Edmund Russell
Russell & Associates
572 South 122 Street
Omaha, Nebraska 68154
344-1250
VICE-PRESIDENT: Vera O'Connor, R.S.M.
Regional Resident Services Manager
Mercy Services
920 South 107 Avenue, Suite 200
Omaha, Nebraska 68114
393-2096
TREASURER: Tom McCormick, Lt. Col. (Retired)
Community Volunteer
4906 Glenmorrie Drive
Omaha, Nebraska 68124
734-4622
SECRETARY: Cindy Frank
Community Volunteer
517 South 94 Avenue
Omaha, Nebraska 68114
399-9362
BOARD MEMBERS
Lee Bevilaqua, M.D. John Minton
10412 Pacific Street President, Mutual of Omaha(Retired)
Omaha, Nebraska 69114 825 South 113 Street
731-8810 Omaha, Nebraska 68154
333-7274
Robert Broderick Betty Nelum
Peter Kewitt (Retired) Psychotherapist, Operation Bridge •
3434 North 143 Circle 122 Applewood Mall
Omaha, Nebraska 68164 42 & Center
496-2815 Omaha,Nebraska
346-7100
�yS" O
•
Jacqueline Devaney Elizabeth Paragas
Community Volunteer Omaha Community Playhouse
3542 South a48 Street 7037 North 79 Court
Omaha, Nebraska 68106 Omaha, Nebraska 68122
553-5603 573-1601
Gerald Reis, M.D. Steve Hayes
9713 Nottingham Drive CEO Omaha Printing
Omaha, Nebraska 68114 4700 "F" Street
393-5970 Omaha, Nebraska 68117
734-4400
James Hollander Brandon Milton
CPA(Retired) A. Young& Co. Vice-President, Human Resources
9704 Nottingham Drive Catholic Health Services
Omaha,Nebraska 68114 3439 South 161 Circle
391-5080 Omaha, Nebraska 68130
334-1 104
Timothy McMahon Judith Mascarello
McMahon Marketing Executive Director, Stephen Center
Boystown Post Office 68010 2723 "Q" Street
496-9952 Omaha, Nebraska 68107
731-0238
Patty Mendlik Kathy Safranek
President, Stephen Center Sponsors Services Coordinator
1314 North 1219 Circle Early Intervention Program
Omaha, Nebraska 68154 6949 South 110 Street
496-1078 Omaha, Nebraska 68128
597-4964
Q
EXHIBIT
Community Development Block Grant Program Handbook 6500
Entitlement Grant Regulations September 1988
"Program income" means gross income received by the Recipient or a
Subrecipient directly generated from the use of CDBG funds. When such income
is generated by an activity that is only partially assisted with CDBG funds,
the income shall be prorated to reflect the percentage of CDBG funds used.
(1) Program income includes, but is not limited to the following:
(i) Proceeds from the disposition by sale or long term lease of real
property purchased or improved with CDBG funds;
(ii) Proceeds from the disposition of equipment purchased with CDBG
funds;
(iii) Gross income from the use or rental of real or personal property
acquired by the Recipient or. a Subrecipient with CDBG funds, less
the costs incidental to the generation of such income;
(iv) Gross income from the use or rental of real property owned by the
Recipient or a Subrecipient that was constructed or improved with
CDBG funds, less the costs incidental to the generation of such
income;
(v) Payments of principal and interest on loans made using CDBG funds;
(vi) Proceeds from the sale of loans made with CDBG funds;
(vii) Proceeds from the sale of obligations secured by loans made with
CDBG funds;
(viii) Interest earned on funds held in a revolving fund account;
(ix) Interest earned on program income pending disposition of such
income; and,
(x) Funds collected through special assessments made against
properties owned and occupied by households not of low and
moderate income, where such assessments are used to recover all
or part of the CDBG portion of a public improvement.
(2) Program income does not include interest earned (except for interest
described in § 570.513) on cash advances from the U.S. Treasury. Such
interest shall be remitted to HUD for transmittal to the U.S. Treasury
and will not be reallocated under section 106(c) or (d) of the Act.
Examples of other receipts that are not considered program income are
proceeds from fundraising activities carried out by Subrecipients
receiving CDBG assistance; funds collected through special assessments
used to recover the non-CDBG portion of a public improvement; and
proceeds from the disposition of real property acquired or improved with
CDBG funds when such disposition occurs after the applicable time period
specified in § 570.503(b)(8) for Subrecipient-controlled property or §
570.505 for Recipient-controlled property.
A
EXHIBIT C
SCOPE OF WORK
1. Provide availability of 50 emergency shelter beds and four transitional houses to homeless
persons and approximately 200 total hours of counseling services. The subject of counseling
services shall include, but not be limited to, the precipitating causes of the homelessness,
relocation planning, daily living skills, budgeting, education and job training, and general
case work.
2. Maintain the Facility in compliance with all relevant State and local codes and ordinances.
3. Keep the Facility open on a 24 hour, 7 day per week basis.
4. Provide three meals daily.
5. Coordinate emergency housing and essential services with other shelters and service
providers and referral agencies within the City, as need dictates.
6. Supplement the City ESGP Grant with matching funds, in an amount not less than$52,600,
to be used for homeless assistance.
a. Matching funds must be expended for homeless assistance during the effective period
of this Agreement.
b. The expenditure and use of matching funds is to be documented pursuant to Section
3, Paragraph 3.4 of this Agreement.
7. Allowable activities which are reimbursable under the provisions of this grant agreement are
based upon those activities proposed in the Stephen Center FY 1996 Emergency Shelter
Grant Program application which was submitted to the City of Omaha. A copy of the
application is on file in the City of Omaha Planning Department.
8. In addition to the requirements of Sections 3.2 and 3.3 of the Agreement, participate fully
with frequent regular and accurate updating of both client and program information into the
Omaha Continuum of Care Information System, as requested by, and deemed necessary by
the City of Omaha for the purpose of statistical evaluation, client tracking, and the
monitoring and coordination of client services.
9. Participate in the Omaha Continuum of Care "Evaluation and Feedback" process, and
provide the City of Omaha with updated information to maintain the "Continuum of Care"
Directory.
P:\PLN1\2217.MAF
EXHIBIT D
ALLOWABLE EXPENDITURES
Shelter Operations* $ 25,300
Counseling and Health Services 15,650
Total Grant $ 40,950
* Shelter Operations includes,but is not limited to, shelter maintenance and repairs,pest control,
equipment and furnishings, supplies, utilities,trash disposal, security, and insurance.
P:\PLN 1\2218.MAF
• • f !
R p.
EXECLITiVE OFr7CE OF THE PRESIDENT EXHIBIT
j_ OFFICE Or MANAGEMENT AND BUDGET.r
,; wASH GTCN.D.C.20603
March 8 , 1990
• OMB Circular No.• A-133
TO THE HEADS OF EXECUTIVE DEPARTMENTS AND ESTABLISHMENTS
SUBJECT: Audits of Institutions of Higher Education and Other
Nonprofit Institutions
1.. p'urv,se. Circular A-133 establishes audit requirements and .
defines Federal responsibilities for implementing and monitoring
such requirements for institutions of higher education and other
nonprofit institutions receiving Federal awards.
2. Authority. Circular A-133 is issued under the authority of
• the Budget and Accounting Act of 1921, as amended; the Budget and
Accounting Procedures Act of 1950, as amended; Reorganization
Plan No. 2 of '1970; and Executive Order No. 11541.
i
3. Zupersession. Circular A-133 supersedes Attachment F,
subparagraph 2h, of Circular A-110, "Uniform Administrative
Requirements for Grants and other Agreements with Institutions of
Higher Education, Hospitals, and other Nonprofit Organizations."
4. Applicability. The provisions of Circular A-133 apply to:
a. Federal departments and agencies responsible for
administering programs that involve grants, cost-type contracts
and other agreements with institutions of higher education and
other nonprofit recipients.
b. Nonprofit institutions, whether they are recipients,
receiving awards directly from Federal agencies, or are sub-
recipients, receiving awards indirectly through other recipients.
These principles, to the extent permitted by law, constitute
• guidance to be applied by agencies consistent with and within the
discretion, conferred by the statutes governing agency action.
5. Requirements and Resvonsibilities.
The specific requirements and responsibilities of Federal
departments and agencies and institutions of higher education and
other nonprofit institutions are set forth in the attachment. •
6. effective Date. The provisions of Circular A-133 are
effective upon publication and shall apply to audits of nonprofit
institutions for fiscal years that begin on or after January 1,
I 1990. Earlier implementation is encouraged. However, until this
Circulars implemented, the
provisions observed. of Attachment P to
Circular A-110 shall continuo to7. policy Review (Sunset) ate. circular A-133 will have a
policy review three years from the date of issuance.
8. Circular information concerning A-133
- may be obtained by- contacting' the Financial Management Division,
Office •of Management and Budget,. Washington, D.C. 20503,
• telephone (202) 395-3993.
..,:,:_:,,i,,,i, DUA•04-0‘.‘-4......----- .
. Richard G. Darman
Director
t
•
. �:
•
2 .
OMB CIRCULAR A-133
AUDITS OF INS.LLLIIJTlONS OF =GEER EIOCATION
AND GT= HONFROFI'T' L�TSri1vT10NS
A2TeA rt T
1. ge_*initions. For the purposes of this Circular, the
following definitions apply:
a. "Award" means financial assistance, and Federal
cost-type contracts used to buy services or goods for the use of
the Federal Government. It includes awards received directly
from the Federal agencies or indirectly through recipients. It
does not include procurement contracts to vendors under grants or
contracts, used to buy goods or services. Audits of such vendors
shall be covered by the terms and conditions of the contract.
b. "Cognizant agency" means the Federal agency assigned by
the Office of Management and Budget to carry out the
responsibilities described in paragraph 3 of this Attachment.
c. "CcoreinAted audit approach." means an audit wherein the
independent auditor, and other Federal and non-federal auditors
consider each other's work, in determining ng the nature, timing,
and extent of his or her awn auditing procedures. A coordinated
audit must be conducted in accordance with Gaverm=mmt Aud_itirc
Standards and meet the objectives and reporting requirements set
forth in paragraph 12 (b) -and 15, respectively, of this
Attachment. The objective of the coordinated audit approach is
to minimize duplication of audit effort, but not to limit the
scope of the audit work so as to preclude the independent auditor
from meeting the objectives set forth in paragraph 12 (b) or
issuing the reports required in paragraph 15 in a timely manner.
d. "Federal agency" has the same meaning as the ter
'agency' in Section 551 (1) of Title 5, United States Code.
e. "Federal Financial. Assistance."
(1) "Federal financial assistance" means assistance
provided by a Federal agency to a recipient or sub-recipient to
carry out a program. Such assistance may be in the form of:
• -- . grants;
-- contracts;
-- cooperative agreements;
-- loans;
-- loan guarantees ;
• - -- property;
-- interest subsidies;
-- insurance;
-- direct appropriations;
-- other non-cash assistance.
1011
•
•
•
•
(2) Such assistance does not,include direct Federal
cash assistance to individuals.
(3) Such assistance includes awards received directly
from Federal ie�as eFederal fundstby recipients8sub-recipients receive
funds idea if
(4) The granting agency is responsible for identifying
the
es source of
foruid awardedfyyi the to sourceof recipients; the fundsrawwardedttosresponsib
sub-
recipients.
f. "Generally accepted accounting principles" has the
meaning specified in the Gpve r ent auditinc Standards. .
g. "Independent auditor" means:
• (1) A Federal, State, or local government auditor who
•
meets the standards specified ids the ao rT eIT} 2Bdit
tandards; or
• (2) A public accountant who meets such standards.
h. "Intaxmal control structure" means the policies and .
• procedures established to provide reasonable assurance that:
(1) Resource.use is consistent with laws, regulations,
and award terms;
•
•
•
(2) Resources are safeguarded agaidkt waste, loss, and
. misuse; and
•
(3) Reliable data are obtained, maintained, and fairly
disclosed in reports.
i. " r�ajor program" means an individual award or a number
•
of awards in a category of Federal assistance or support for
which total expenditures are the larger. of three percent of tote:
Federal funds expended or $100,000, on which the auditor will be
required to express an opinion as to whether the major program
being aemiristered in compliance with laws and regulations.
Each of the following categories of Federal awards shall
constitute a major program where total expenditures are ,the
larger of three percent of total Federal funds expended or
$100, 000:
•
Research and Development.
•
- Student Financial Aid.
2
•
Individual awards not in the student aid cr.
research and development category.
j . *3Samagenent decision" means the evaluation by the
management of an establishment of the findings and -
recc=endations included in an audit report and the issuance of a
final decision by management .Concerning its response to such
findings and reco=e.^daticns, including actions concluded to be
necessary.
k. "Nonprofit institution" means any corporation, trust,
association, cooperative or other organization which 1) is
operated primarily for scientific, educational, service,
charitable, or similar purposes in the public interest; 2) is not
organized primarily for profit; and 3) uses its net proceeds to
• maintain, improve, and/or its operations. The term .
• "ncn...rofit institutions" includes institutions of higher
education, except those institutions that are audited as part of
single audits in accordance with Ci rc.:.lar A-128 "Audits of State
and Local Governments. * The term does not include hospitals
which are not affiliated with an institution of higher education,
or State and local governments and Indian tribes covered by
Ci_cilar A-128 +"Audits of State and Local Gcve..rgents."
1. "oversight" agency means the. Federal agency that
provides the predominant amount of direct funding to a recipient
not assigned a cognizant agency, unless no direct f ding is
received. Where there is no direct funding, the Federal agency
with the predominant indirect funding will assume the general
oversight responsibilities. The duties of the oversight agency
are described in paragraph 4 of this Attachment.
m. "Recipient" means an organization receiving financial
assistance to carry out a program directly from Federal agencies.
n. "Research and develcpzbent" includes all research
activities, both basic and applied, and all development
activities that are supported at universities, colleges, and
other nonprofit institutions. "Research" is defined as a
systematic study directed toward fuller .scientific knowledge or
understanding of the subj ect studied. "Developasnt" is the
systematic use of knowledge and understanding gained from
research directed toward the production of useful materials,
devices, systems, or methods, including design and development of
prototypes and processes .
o. "Student Financial Aid" includes those program's of
general student assistance in which institutions participate,
such as those authorized by Title IV of. the Higher Education Act
of 1965 which is administered by the U.S. Department of Education
and similar programs provided by other Federal agencies. It does
not include programs which provide fellowships or similar awards
3
• V e
•
to students on a competitive basis, or for specified studies or
research.
p. "Sub-recipient" means any person or government
department, agency, establishment, or nonprofit organization that
receives financial assistance to carry out a program through a
primary recipient or other sub-recipient, but does not include an
individual that is a beneficiary of such a program. A sub-
recipient may also be a direct recipient of Federal awards under
other agreements.
q. "vendor" means an organization providing a recipient or
sub-recipient with generally required goods or services that are.
related to the administrative support of the Federal assistance
program.
2 . Audit of Nonmrofit I^stitutiQrs. •
a. . cu;re ents Eased on Awards Receive4.
(1) Nonprofit institutions that receive $100,000 or
more a year in Federal awards shall have an audit made in
accordance with the provisions of this Circular. However,
nonprofit institutions receiving $100, 000 or more but receviving
awards under only one program have the option of having an audit
- of their institution prepared in accordance with the provisions
of the Circular or having an audit dads of the one program. For
prior or subsequent years, when an institution has only loan
guarantees or outstanding loans that vex* made previously, the
institution may be required to conduct audits for those programs,
in accordance with regulations of the Federal 'agencies providing
those guarantees or loans.
(2) Nonprofit institutions that receive at least
$25, 000 but loss than $100,000 a year in Federal awards shall
have an audit made in accordance with this Circular or have an
audit made of each Federal award, in accordance with Federal laws
and regulations governing the programs in which they participate.
(3) Nonprofit institutions receiving less than $25,000
a year in Federal awards are exempt from Federal audit
. requirements, but records must be available for review by
appropriate officials of the Federal grantor agency or
subgranting entity.
b. Oversight by Federal Agencies.
(1) To each of the larger nonprofit institutions the
Office of Management and budget (OMB) will assign a Federal -
agency as the cognizant 'agency for monitoring audits and ensuring
- the resolution of audit findings that affect the programs of more
than one agency.
4
- (2) Smaller institutions not assigned a cognizant
agency will be under the general oversight of the Federal agency
that provides them with the most funds.
(3) Assignments to Federal cognizant agencies for
carrying out responsibilities in this section are set forth in a
separate supplement to this Circular.
•
(4) Federal Government-caned, contractor-operated
facilities at institutions or laboratories operated primarily for
the Government are not included in the cognizance assignments.
These will remain the responsibility of the contracting agencies.
The listed assignments cover all of the functions in this
Circular unless otherwise indicated. The Office of Management
and Budget will coordinate changes in agency assignments.
3 . Cognizant Aaencv Rest,onsibilities. A cognizant agency
shall:
a. Ensure that audits are made and reports .are received in
a timely manner and in accordance with the recuire nts of this
Circular. 4
b. 'Provide technical advice and liaison to institutions.
and independent auditors.
• c. Obtain or make quality control reviews of selected-
audits made by non-Federal audit organizations, and provide the
results, when appropriate, to other interested organizations.
d. Promptly inform other affected Federal agencies and
appropriate Federal law enforcement officials of. any reported
illegal acts or irregularities. A cognizant agency should also
inform State or local law enforcement and prosecuting
authorities, if not advised by the recipient, of any violation of
law within their jurisdiction.
e. Advise the recipient of audits that have been found not
to have met the requirements set forth in this Circular. In such
instances, the recipient will work with the auditor to take
corrective action. If corrective action is not taken, the
cognizant agency shall notify the recipient and Federal awarding
agencies of the facts and make recommendations for follow-up
' action. Major inadequacies or repetitive substandard performance
of independent auditors shall be referred to appropriate
professional bodies for disciplinary action.
f. Coordinate, to the extent practicable, audits or
reviews made for Federal agencies that are in addition to the
audits made pursuant to this Circular, so that the additional
5
audits or reviews build upon audits performed in accordance with
the Circular. •
Ensure the resolution of audit findings, that affect the
• programs of more than one agency.
h. Seek the views of other interested_ agencies before
completing a coordinated program.
•
i. Help coordinate the audit work and reporting
responsibilities among independent public liceacccuntant auditors e
to
auditors, and.both resident and nor:
achieve the most cost-effective audit.
•
•
4 . Cversi cn 1 �.cenc' �e!,•oT4ibi 1;is es. An oversight agency
. shall provide technical advice and counsel to institutions and
independent auditors as�.�.aen requested
sboyma of tha recipient.
raspers responsibilities
oversight .agency may agency.
normally performed by a cognizant
-•'ni er,t R212911$Ti1iti+ . A recipient that receives a
Federal award and P' R��� rcvidea $25,000 or more ,of it during its
F •
fiscal year to a sub-recipient shall:
•
a. Ensure that the nonprofit institution sub-recipients
• that receive $25,000 or more have mat the audit rre ee ents-of
this Circular, and that sub-recipients subjec'•: to OMB
A-128 have met the audit requirements of that Circular;
b. Ensure that appropriate corrective' action is taken
within six months after receipt
pvith Federal laws andtraudit e<,ulations�
in instances of noncompliance
c. Consider whether sub-recipient audits necessitate
adjustment of the recipient's• own records;. and
d. R.equira each sub-recipient
permit
independent
auditors to have access to the records and
as .necessary for the recipient to fly with this Circular.
6. gelation to Other Audit Reir nt2.
•
a. • An audit made in accordance with this Circular shall be
ral
in lieu of any financial audit crud t made in acired under fcoz'dianctlwithethis
awards. To the extent that information
Circular provides Fed� ag� s wih the thair overall responsibilities,
they need carry out
they shall rely upon and use such information. However, a
• Federal agency shall make any additional audits or reviews
) - necessary to carry out responsibilities under Federal law and
• regulation. Any additional Federal audits or reviews shall be
•
6
planned and carried out in- such a way as to build upon work
performed by the independent auditor.
b. Audit planning by Federal audit agencies should
consider the extant to which reliance can be placed upon- work
performed by other auditors. Such auditors include State, local,
Federal, and other independent auditors, and a recipient's
internal auditors. Reliance placed upon the work of other
auditors should be documented arid, in accordance with,GavernmeTA
Auditinc Standards.
c. The provisions of this Circular do not limit the
authority of Federal agencies to make cr contract for audits and
evaluations of Federal awards, nor do they limit the authority of
any Federal agency Inspector General or other Federal official.
d. The provisions of this Circular do not authorize any
institution or sub-recipient thereof t.o constrain Federal
agencies, in any manner, from carrying cut additional audits,
evaluations or reviews.
e. A Federal agency that makes or contracts for audits, in
addition to the audits made by recipients pursuant to this
Circular, shall, consistent with other applicable laws and
regulations, arrange for funding the cost of such additional
audits. Such additional audits or reviews include financial,
• performance audits and program evaluations.
7. F`recuenc" of Audit. Audits shall usually be performed
annually but not less frequently than every two years.
8 . yanct3 ons. No audit coats may be charged to Federal awards
when audits required by this Circular have not been made or have
been made but not in accordance with this Circular. In cases of
continued inability or unwillingness to have a proper audit in
accordance with the Circular, Federal agencies must consider
appropriate sanctions including:
-- withholding a percentage of awards until the audit is
• completed satisfactorily;
-- withholding or disallowing overhead costs; or
_— suspending Federal awards until the audit is made.
9 . Audit Costs. The cost of audits made in accordance with the
provisions of this Circular are allowable charges to Federal
• awards. The charges may b-a considerad a direct cost or an
allocated indirect cost, determined in accordance with the
provisions of Circular A-21, "Cost Principles for Universities"
or Circular A-122, "Cost Principles for Nonprofit Organizations, "
l
7
•
•
FAR subpart 31, or other applicable cost principles or
regulati-ons.
10. Auditor Selection. In arranging for audit services
institutions shall follow the procurement standards prescribed by .
Circular A-110, "Uniform R.aquirements for Grants and Agreements
with Institutions of Higher Education, Hospitals and other
Nonprofit organizations. "
11. 2mall end Minority Audit Firms.
a. Small audit fires and audit firms owned and controlled
by socially and economically disadvantaged individuals shall have
the maximum practicable opportunity to participate in contracts
awarded to fulfill the requirements of this Circular.
b. Recipients of Federal awards shall take the following -
steps to further this goal:
(1) Ensure that small audit firms and audit firms
owned and controlled by socially and economically disadvantaged
individuals are used to the fullest extant practicable;
(2) Make information on forthcoming opportunities
available and arrange tiseframes for the audit to encourage and
facilitate participation by small audit firms and audit firms
owned and controlled by socially and economically disadvantaged
individuals;
(3) Consider in the contract process whether firms
competing for larger audits intend to subcontract with small
• audit firms and audit firs owned and controlled by socially and
economically disadvantaged individuals;
(4) Encourage contracting with small audit firms or
audit firms owned and controlled by socially and economically
disadvantaged individuals which have traditionally audited
government programs and in cases where this is not possible,
assure that these firms are given consideration for audit
• subcontracting opportunities;
-- (5) Encourage contracting with consortiums of shall
audit fires as described in section (1) , above, when a contract
• is too large for an individual small audit firm or audit firm
owned and controlled by socially and economically disadvantaged
individuals; and
(6) * Use the services and assistance, as appropriate,
of such organizations as the Small Business Administration in the
solicitation and utilization of small audit firms or audit firms
1 owned and controlled by socially and economically disadvantaged
individuals.
8
12. ,ScO of Audit and Audit Ob1 ert Ives.
a. The audit shall be made by an independent auditor. in
accordance with Government Auditing Standards developed by the
Comptroller General of the United States covering financial
audits. An audit under this Ciry lar should be an
organization-wide audit of the institution. However, there may
be instances where Federal. auditors are performing audits or ara
planning to perform audits at nonprofit institutions. In these
cases, to minimiza duplication of audit work, a coordinated audit
approach may be agreed upon between the independent auditor, *the
recipient and the cognizant agency cr the oversight agency.
Those auditors who assume responsibility for any or all of the •
reports called for by paragraph 15 should follow guidance set
forth in Gi7ve,mment Auditing Standards in using work per-formed by
others.
b. The auditor shall determine whether:
(1) . The financial statements of the institution
present fairly its financial position and the results cf its
operations in accordance with gene:ally accepted accounting
principles;
(2) The institution has an internal control structure
to provide reasonable assurance that the institution is managing
Federal awards in compliance with a^plicable laws and
regulations, and controls that ensure comaliance with the laws
and regulations that could have a material impact on the
financial statements; and
(3) The institution has complied with laws and
regulations that may have a direct and material effect on its
financial statement amounts and on mach major Federal program.
13 . Znterrnal Controls Over Federal rd ; Compliance Reviews.
a. General. The independent auditor shall detar=ine and
report on whether the recipient has an internal control structure
to provide, reasonable assurance that it is managing Federal
awards in ccpliance with applicable laws, regulations, and
contract terms, and that it safeguards Federal funds. In
performing these reviews, independent auditors should rely upon
• work performed by a recipient's internal auditors to the maximum
extent possible. The extant of such reliance should be based
upon the Goverment Auditing Standards.
b. Znternal Control Review.
(1) In order to provide this assurance on internal
controls, the auditor must obtain an understanding of the
1 9
internal -control structure and assess levels of internal control
risk. After obtaining an understanding of the controls, the
assessment must be made whether or not the auditor intends to
place reliance on the internal control structure.
•
(2) As part of this review, the auditor shall:
(a) Perform tests of controls to evaluate the
effectiveness of the design and operation of the policies and
procedures in preventing or detecting material noncompliance.
Tests of controls will not be required for those areas where the
internal control structure policies and procedures are likely to
be ineffective in preventing or detecting noncompliance, in which
case a reportable condition or a material weakness should be
reported in accordance with paragraph 15 c(2) of this Circular.
(b) Review the recipient's system for monitoring
sub-recipients and obtaining and acting cn sub-recipient Audit
reports.
•
(c) Determine whether controls are in effect to
ensure direct. and indirect costs were computed* and billed in
accordance with the guidance provided in the general requirements
section of the compliance supplement to this Circular.
► c. Comuliance Rev.ew.
•(1) The auditor shall determine whether the recipient
has complied with laws and regulations that may have a direct and
material effect on any of its major Federal programs. In
addition, transactions selected for non-major programs shall be
tested for compliance with Federal laws and regulations that
apply to such transactions.
(2) In order to determine• which major programs are to
be tested for compliance, recipients shall identify, in their
accounts, all Federal funds received and expended and the
• programs under which they ware received. This shall include
funds received directly from Federal agencies, through other
State and local governments or other recipients. To assist
recipients in identifying Federal awards, Federal agencies and
primary recipients shall provide the Catalog of Federal Domestic
• Ass istanca (Cgs) numbers to the recipisnte when making the
awards.
(3) The review must include the selection of an
adequate number of transactions from each major Federal financial
assistance program so that the auditor obtains sufficient
evidence to support the opinion on compliance required by
paragraph 15c(3) of this Attachment. The selection and testing
1 of transactions shall be based on the auditors' professional
judgment considering such factors as the amount of expenditures
10
for the program; the newness of the program or changes in its
conditions; prior experience with the program particularly as
revealed-in audits and other evaluations (e,a, , inspections,
program reviews, or system reviews required by Federal
AcquisitioniRsgulations) ; the extant to which the program is.
carried cut through sub-recipients; the extant to which the
program contracts for goods or services; the level to which the
program is already subj ect to program reviews or other forms of
independent oversight the •adequacy of -the controls for ensuring
compliance; the expectation of adherence or lack of adherence to
the applicable laws and regulations; and the potential impact of
adverse findings.
(4) In making the test of transactions, the auditor
shall determine whether:
•
-- the amounts reported as expenditures were for
allowable services, and
-- the records show that. those who received
services or benefits were eligible to receive
them.
(5) 'In addition to transaction tasting, the auditor'
shall determine whether:
matching requirements, levels of effort and
' earmarking limitations were met,
Federal financial reports and claims for
advances and reimbursement contain
information that is supported by books and
records from which the basic financial
statements have been prepared, and
-- amounts claimed or used for matching were
determined in accordance with 1) 0M3 Circular
A-21, "Cost Principles for Educational
Institutions"; 2) matching or cost sharing
requirements in Circular A-110, "Uniform
• Requirements for Grants and Agreements with
Institutions of Higher Education, Hospitals
and Other Nonprofit Organizations"; 3)
Circular A-122, "Cost. Principles for
Nonprofit Organizations"; 4) FAR subpart 31
cost principles; and ,5) other applicable cost
_ principles or regulations.
(6) The principal compliance requirements of the
largest 'Federal programs may be ascertained by referring to the
"Cotroliance Sumvle ment for Single ?audits of E4Ncationai
\ Institutions and Other Nonprofit oraanizatione, " and the
11
(;)4J
"Compliance Sumniement for Single Audits of State and Local
Governments," issued by OMB and available from the Government
Printing Office. For those programs not covered in: the
Compliance Supplements, the auditor should ascertain compliance
requirements by reviewing the statutes, regulations, and
agreements governing individual programa.
(7) Transactions related to other awards that are
selected In connection with examinations of .financial statements
and evaluations of internal controls shall be tested for
compliance with Federal laws and regulations that apply to such
transactions.
14 . Illegal Acts. If, during or in connection with the audit of
a nonprofit institution, the auditor becomes aware of illegal
acts, such acts shall be reported in accordance with the
provisions of the Government Auditing Standards.
15. audit ge=rts.
a. Audit reports must be prepared at the completion of the
audit.
b. The audit report shall state that the audit was made in
accordance with the provisions of this Circular.
c. The report shall be made up of at least the following
three parts:
(1) The financial statements and a schedule of Federal
awards and the auditor's report on the statements and the
schedule. The schedule of Federal awards should identify major
programs and show the total expenditures- for each program.
Individual ma j or programs other than Research and Development and
Student Aid should be listed by catalog number' as identified in
the Catalog of Federal botsitic Assistance. Expenditures for
Federal programs other than major program shall be shown under
the caption "other Federal assistance." Also, the value of
non-cash assistance such as loan guarantees, food commodities or
• donated surplus properties or the outstanding balance of loans
should be disclosed in the schedule. '
. (2) A written report of the independent auditor's
understanding of the internal control structure and the
assessment of control risk. The auditor's report should include
as a minimum: 1) the scope of the work in obtaining understanding
of the internal control structure and in assessing the control
risk, 2) the nonprofit institution's significant internal
controls or control structure including the controls established
to ensure compliance with laws and regulations that have a
material impact on the financial statements and those that
provide reasonable assurance that Federal awards are being
12
managed in compliance with applicable laws and regulations, and
3) the reportable conditions, including the identification of
'material. weaknesses, identified as a result of the auditor's work
in understanding and assessing the control risk. If the auditor
limits his/her consideration of the internal control structure
for any reason, the circumstances should be disclosed in the
report. •
• (3) The auditor's report on compliance containing:
-- An opinion as to whether each major Federal
program was being administered in compliance with
laws and regulations applicable to the matters
described in paragra_ 13 (c) (3) of this
Attachment, including compliance with laws and
•
regulations .pertain i rc to financial reports and
claims for advances and reimbursements;
-- A statement of positive assurance on those items
that were tested for compliance and negative
assurance on those items not tested;
-- Material findings of noncompliance presented in
their proper perspective:
4
o The size of the universe in number of items
and dollars,
o The number and dollar amount of transactions
tested by the auditors,
o The number•and corresponding dollar amount of
instances of noncompliance;
•
-- Where findings are specific to a particular
Federal award, an identification of total amounts
• questioned, if any, for each Federal award, as a
result of noncompliance and the auditor's
recommendations for necessary corrective action.
d. The three parts of the audit report may be bound into a
single document, or presented at the same time as separate
documents.-
e. Nonmaterial findings need not be .disclosed with the
compliance report but should be reported in writing to the
recipient in a separate communication. The recipient, in turn,
should forward the findings to
g the Federal grantor agencies or
subqrantor sources.
f. All fraud or illegal acts or- indications of such acts,
including all questioned costs found as the result of these acts
) s 13
that auditors become aware of, may be .covered in a separate
written report submitted in accordance with the Government
Auditing Standards.
g. The auditor's report should disclose the status of
known but uncorrected significant material findings and
recommendations from prior audits that affect the current audit
objective as specified in the Government Auditing Standards:
h. In addition to the audit report, the recipient shall
provide a report of its comments on the findings and
recommendations in the report, including a plan for corrective
action taken or planned and comments on the status of corrective
action taken on prior findings. If corrective action is not
necessary, a statement describing the reason it is not should •
accompany the audit report.
i. Copies of the audit report shall be submitte
d in
accordance with the reporting standards for financial audits
contained in the Government Audit nc Standards. Sub-recipient
auditors shall submit copies to recipients that provided Federal
awards. The report shall be due within 30 days after the
completion of the audit, but the audit should be completed and
the report submitted not later than 13 months after the end of
the recipient 's fiscal year unless a longer period is agreed to
with the cognizant or oversight agency.
j . Recipients of more than $100,000 in Federal awards
shall submit one copy of the audit report within 30 days after
issuance to a central clearinghouse to be designated by the -
office of Management and Budget. The clearinghouse will keep
completed audit reports on file.
r
k. Recipients shall keep audit reports, including sub-
recipient reports, on file for three years from their issuance.
16. Audit Resolution.
a. As provided in paragraph 3, the cognizant agency shall
be responsible for ensuring the resolution of audit findings that
affect the programs of more than one Federal agency. Resolution
of findings that relate to the programs of a single Federal
agency will be the responsibility of the recipient and the
agency. Alternate arrangements may be made on case-by-case basis
by agreement among the agencies concerned. *
b. A management decision shall be made within six months
after receipt of the report by the Federal agencies responsible
for audit resolution. Corrective action should proceed as
rapidly as possible.
} 14
17. audit Rom-knavery and_getortg. Workpapers and reports shall
be retained for a minimum of three years from the data of the
audit report, unless the auditor is notified in writing by the
cognizant-agency to extend the retention period. Audit .
workpapers shall be made available upon request to the cognizant
agency or its. designee or the General Accounting Office, at the
conpietion of the audit. "
•
•
•
•
4
•
•
•
•
•
•
•
•
15
EQUAL EMPLOYMENT OPPORTUNITY CLAUSE
During the performance of this contract, the contractor agrees as follows:
• ( 1 ) The contractor shall not discriminate against any employee applicant for employment •
because of race, religion, color, sex or national origin. The contractor shall take
affirmative action to ensure that applicants are employed and that employees are treated
during employment without regard to their race, religion, color, sex or national origin.
As used herein, the word "treated" shall mean and include, without limitation, the
• following: Recruited, whether 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 for
employment, notices to be provided by the contracting officers setting forth the
provisions of this nondiscrimination clause.
( 2 ) The contractor shall, in all solicitations of 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, religions, color, sex or national origin.
( 3 ) The contractor shall send to each labor union or 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 shall furnish to the contract compliance officer ail federal forms
containing the information and reports required by the federal government for federal
contracts under federal rules and regulations, and including the information required by
Section 1 Q-192 to 10-194, inclusive, and shall permit reasonable access to his
records. Records accessible to the contract compliance officer shall be those which are
related to Paragraphs (1) through (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 for herein.
( 5 ) The contractor 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 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 Sates.
( 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 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 Clauses, and Section 10-193 in every
subcontract or purchase order so that such provisions will be binding upon .each
subcontractor or vendor. i
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 135,
which implement Section 3. As evidenced by their execution of this contract, the parties to
this contract certify that they are under no contractual or other impediment that would
prevent them from complying with the part 135 regulations.
C. The contractor agrees to send to each labor organization or representative of workers with
. which the contractor has a collective bargaining agreement or other understanding, if any, a
notice advising the labor organization or workers' representative of the contractor's
commitments under this Section 3 clause, and will post copies of the notice in conspicuous
places at the work site where both employees and applicants for training and employment
positions can see the notice. The notice shall describe the Section 3 preference,shall set forth
minimum number and job titles subject to hire, availability of apprenticeship and training
positions, the qualifications for each; and the name and location of the person(s) taking
applications for each of the positions; and the anticipated date the work shall begin.
D. The contractor agrees to include this Section 3 clause in every subcontract subject to
compliance with regulations in 24 CFR part 135, 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 135. The
contractor will not subcontract with any subcontractor where the contractor has notice or
knowledge that the subcontractor has been found in violation of the regulations in 24 CFR
part 135.
E. The contractor will certify that any vacant employment positions, including training
positions, that are filled(1) after the contractor is selected but before the contract is executed,
and (2) with persons other than those to whom the regulations of 24 CFR part 135 require
employment opportunities to be directed, were not filled to circumvent the contractor's
obligations under 24 CFR part 135.
F. Noncompliance with HUD's regulations in 24 CFR part 135 may result in sanctions,
termination of this contract for default, and debarment or suspension from future HUD-
assisted contracts.
Effective August 1, 1994
G. With respect to work performed in connection with Section 3 covered Indian housing
assistance, Section 7(b) of the Indian Self-Determination and Education Assistance Act (25
U.S.C. 450e) also applies to the work to be performed under this contract. Section 7(b)
requires that to the greatest extent feasible (i) preference and opportunities for training and
employment shall be given to Indians, and (ii) preference in the award of contracts and
subcontracts shall be given to Indian organizations and Indian-owned Economic Enterprises.
Parties to this contract that are subject to the provisions of Section 3 and Section 7(b) agree
to comply with Section 3 to the maximum extent feasible, but not in derogation of
compliance with Section 7(b).
Providing Other Economic Opportunities.
(a) General. In accordance with the findings of the Congress, as stated in Section 3, that other
economic opportunities offer an effective means of empowering low-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; hiring Section 3 residents in
management and maintenance positions within other housing developments; and hiring
Section 3 residents in part-time positions.
(c) Other business-related economic opportunities. (1) A recipient or contractor may provide
economic opportunities to establish, stabilize or expand.Section 3 business concerns,
including micro-enterprises. Such opportunities include„ but are not limited to the formation
of Section 3 joint ventures, financial support for affiliating with franchise development, use
of labor only contracts for building trades, purchase of supplies 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.
Effective August 1, 1994
•
24 CFR 85.43 ENFORCEMENT
(a) Remedies for noncompliance. If a grantee or subgrantee materially fails
to comply with any term of an award, whether stated in. a. Federal statute
or regulation, an assurance, in a State plan or application, a notice of
award, or elsewhere, the awarding agency may take one or more of the
following actions, as appropriate in the circumstances:
(1) Temporarily withhold cash payments pending correction of the
deficiency by the grantee or subgrantee or more severe enforcement
action by the awarding agency,
(2) Disallow (that is, deny both use of funds and matching credit for)
all or part of the cost of the activity or action not in compliance,
(3) Wholly or partly suspend or terminate the current award for the
grantee 's or subgrantee 's program,
(4) Withhold further awards for the program, or
(5) Take other remedies that may be legally available.
(b) Hearings, appeals. In taking an enforcement action, the awarding agency
will provide the grantee or subgrantee an opportunity for such hearing,
appeal, or other administrative proceeding to which the grantee or
subgrantee is entitled under any statute or regulation applicable to the
action involved.
(c) Effects of suspension and termination. Costs of grantee or subgrantee
resulting from obligations incurred by the grantee or subgrantee during a
suspension or after termination of an award are not allowable unless the
awarding agency expressly authorizes them in the notice of suspension or
termination or subsequently. Other grantee or subgrantee costs during
suspension or after termination which are necessary and not reasonably
avoidable are allowable if:
(1) The costs result from obligations which were properly incurred by
the grantee or subgrantee before the effective date of suspension
or termination, are not in anticipation of it, and, in the case of
a termination, are noncancellable, and,
(2) The costs would be allowable if the award were not suspended or
expired normally at the end of the funding period in which the
termination takes effect.
(d) Relationship to Debarment and Suspension. The enforcement remedies
identified in this section, including suspension and termination, do not
preclude grantee or subgrantee from being subject to "Debarment and
Suspension" under E.O. 12549 (see § 85.35).
•
24 CFR 85.44 TERMINATION FOR CONVENIENCE
Except as provided in § . 85.43 awards may terminated in whole or in part
only as follows:
(a) By the awarding agency with the consent of the grantee or subgrantee in
which case the two parties shall agree upon the termination conditions, .
including the effective date and in the case of partial termination, the
portion to be terminated, or
(b) By the grantee or subgrantee upon written notification to the awarding
agency, setting forth the reasons for such termination, the effective
date, and in the case of partial termination, the portion to be
terminated. However, if, in the case of a partial termination, the
awarding agency determines that the remaining portion of the award will
not accomplish the purposes for which the award was made, the awarding
agency may terminate the award in its entirety under either § 85.43 or
paragraph (a) of this section.
9124u
•
•
Thursday
November 3, 1983
•
•
` Part 111
Office of •
�- = Management and
Budget
Department of.
-= Defense
General Services
Administration -
Circular A-122: Cost Principles for
_ • Nonprofit-Organizations; Lobbying and .
Related Activities •
•
E
•
, l . .
50880 FedetaY R14gister/ Vol. 48, No. 214 / Thursday, November 3, 1983 / Notices
OFFICE OF MANAGEMENT AND. •to use a more limited definition of compliance with a myriad of statutory
BUDGET . . unallowable costs;and provisions mandating that no federal
•to clarify and limit reporting and funds be used for lobbying purposes.
Circular A-122 Cost Principles.for recordkeeping requirements in the spirit and to comply,in balanced fashion, with
Nonprofit Organizations;Lobbying and of the Paperwork Reduction Act. P y
Related Activities •
fundamental First Amendment
III.Background of Circular A-122 imperatives.
AGENCY:Office of Management and - r. For contractors or grantees to use
Budget. • Circular A-122,"Cost Principles for federal monies to engage in lobbying is
Budget:Notice. Nonprofit Organizations,"establishes an inappropriate use of federal funds for
uniform rules for determining the costs•: I.Summaryof grants,contracts,and other a purpose that was not intended.Such
agreements.Like other OMB cost misuse of funds diverts precious
This notice offers interested parties an principle circulars for state and local grant or orresources co n fnom the totract.Morre mission er the
opportunity to comment on the Office of governments and for educational eover,government
Management and Budget's(0).8$}, institutions,A-122 is a management subsidy of the lobbying efforts of its
proposed revision to Circular A-122, directive addressed to the Heads of contractors and grantees distorts the
"Cost Principles for Nonprofit Federal Departments and Agencies and political process.It favors the political
Organizations."The proposed revision is the legal basis for defining allowable expression of some—organizations 1se of
with
makes unallowable the costs associated costs and setting forth procedures for contracts or grants—at the c,den
with lobbying and related activities. recovering them. others,who must carry on their political
Parallel revisions are being proposed for Circular A-122 was first issued in expression at their own expense.
defense and civilian contractors by the June.1980.It was developed by an Despite the frequently worthwhile
Department of Defense(DOD or interagency team made up of the major content of the lobbying conducted by
•
Defense), the General Services grant-making agencies and led by OMB. such
organizations,it runsnsagainst the
Administration(GSA),and NASA. Before issuance. public comments were grain of First Amendment gcvernment
These proposed revisions follow the A- sought and received and consultations neutrality in political debate for federal
122 revision text. were held with the General Accounting funds to be used in this manner.
The comments printed in the text of Office.The cost principles built upon 'Government neutrality in the democratic
the proposed revision are for accounting rules previously in use by Process is especially endangered by the !
explanatory purposes.They will not be federal agencies in their dealings with practice of using grant or contract funds
printed in the Circular after the nonprofit crganizetiore;.The Circular for lobbying and related activity
revisions are final. standardized and simplified those rules. because,as a general rule,only one side
II.Supplementary Information Generally, the circular provides that,to the debate is funded.Those favoring
be recovered from the federal grant programs and contracting activity
OMB published a proposal on January government,costs must be necessary, have the grants and contracts: those
24, 1983, to revise Circular A-122's reasonable,and related to the federally- opposed do not.Not to control this
treatment of the costs of lobbying and sponsored activity.In addition,costs practice,then,is not only to subsidize
related activities.Following publication, must be legal,proper,and consistent national debate over the extent and
OlsiB received approximately 48,300 with the policies that govern the. desirability of government spending,
comments from the general public, organization's other expenditures. domestic and military,but to subsidize
private and public organizations,and The disallowance of lobbying and systematically but one side of those
federal agencies.Approximately 18,500 related costs in the proposed revision is debates.
comments opposed the proposed comparable to the disallowance by Moreover,use of federal funds for
revisions,and approximately 31,800 Circular A-122 of other costs which are private lobbying and related political
supported them.Many of the opposing disallowed on grounds of public policy: activity can give the appearance of
comments expressed support for the for example,advertising,fundraising federal support of one political position
general principle that federal tax dollars costs,and entertainment.In each of over another.It can create
should not be used for lobbying and these examples,a determination has misunderstanding and interfere with the
related purposes,but objected that the been made that it would not bean neutral,non-ideological administration
means proposed in the January 24 notice appropriate or cost-efficient practice to of federally-funded programs.All
would disrupt the legitimate activities of permit federal tax dollars to be used for citizens have the right to receive the
federal nonprofit grantees and these purposes.In this notice,costs of benefits of federally-funded programs
contractors.On the other hand,many of lobbying and related activities are without
the supporting comments have impliedbeing made the captive
or stated a need for regulations proposed to be similarly disallowed, audience for a grass roots lobbying
significantly more restrictive than those IV.Purpose of the Revisions campaign,and without fear that delvery
of services is accomanied b federally- •
proposed in January.In order to accord _ The purpose of these revisions is to funded partisanship in polite al or public
the issues raised by these comments establish a comprehensive government- policy controversies.
further study,and to permit a new round wide set of cost principles to ensure that ' This proposal is designed to balance
of public comments on a revised • federally-appropriated funds are not
proposal,OMB withdrew the January 24 used by oa tors or grantees for the First Amendment rightsswith of theheeral •
proposal at the end of a 45-daygrantees and contractors •
public lobbying or related activities.The intent corresponding First Amendment
comment period.The current proposal is is not to discourage or in any way obligation and legitimate governmental
significantly changed from the January penalize-organizations for lobbying
- interest of ensuri that2.1 proposal. the most important changes efforts conducted with their owndoes e funds, ot subsidize the p litical ernment
have been: but to ensure that the federal •• to adopt an allocation method advocacy activities of private groups or
ar:ounting for the costs of lobbying and government
In addition oes not subsidize
later noted,the institutions.
First
Amendment
mNoe person toro receive
has a
related activities: revision is for the purpose of assuringtestAmendment ringtorpolii
governmental funding for political
1
Federal Register / Vol. 48, No. 214 / Thursday, November 3. 1983 / Notices 50861
expression; requiring grantees and fostered,or"prescribe[d] (as)orthodox" • 'publicity'and'propaganda.'Thus.there
contractors to bear the costs of their a particular view on such issues. West appears to be no firm distinction between the
own lobbying efforts does not infringe Virginia State Board of Education v. conduct which is premissible and that which
upon their constitutional rights.Free Barnette.319 U.S.624.645 (1943). is prohibited.
speech does not mean subsidized OMB has received thousands of Moreover,in the absence of clear and
speech.The Supreme Count emphasized letters from members of the public who fair guidelines enforceable across the
this point in a recent unanimous opinion are understandably concerned when board. agency officials have been
when it stated that the federal they see their tax money involved in reluctant to make politically-sensitive
• government"is not required by the First projects that involve political organizing determinations in particular cases.This
• Amendment to subsidize lobbying.. . . for causes they may not support. problem is especially serious where
We again reject the notion that First Furthermore,numerous cases have been there is a natural conjunction of interest
Amendment rights are somehow not cited and documented—by federal between agency officials and their
fully realized unless they are subsidized agencies, the Comptroller General, contractors and grantees. as where
by the State."Regan v. Taxation with Congress,and the general public—of grantees or contractors lobby for
Representation of Washington. 103 S. federal grant and contract funds that additional appropriations to the agency
Ct.1997, 2001 (198n). were used for lobbying or related iteolved.The thousands of grantees and
On the other hand,there are serious anti•.ities.Nevertheless, due to prior contractors who receive federal money
constitutional problems with a system insufficient regulatory restrictions and are a strong lobbying force in
that permits tax money to be used for limited enforcement efforts. the true Washington.and can use grant and
the political expression of private magnitude of these abuses has never contract funds to help perpetuate their
individuals or groups.Americans have been quantified.Many organizations programs, irrespective of the programs'
the First Amendment right both to receiving federal grants engage in merit or effectiveness.
engage freely in speech and political extensive lobbying and related political The improper use of federal funds for
expression,and to refrain from activity, but in many instances the
P lobbying and related activities has been
speaking, without interference or control financial and performance reports filed perceived as a problem for many years
on the part of the government or its by the organizations are insufficiently In 1919.Congress passed legislation
agents. Wooley v.Maynard. 430 U.S. detailed to permit the federal agency to making certain uses of federal funds for
705, 714(1977).The proposed revision is determine whether federal funds have lobbying purposes a criminal offense for
intended to ensure that the use of been used for those purposes and, federal employees: as early as 1948.the
Federalgrants,contracts and other therefore,misused.The problem has
General Accounting Office began to
agreements by private organizations been exacerbated by the lack of any unearth instances of federal grantees
engaging in lobbying does not erode or clear definitions of lobbying, and,in using federal funds for lobbying
infringe these rights,or patticular,of exactly what activities are purposes.Over the past ten years,
distort thepoliticalconstitutional byunallowable.
process Both criminal statutes-18 U.S.C. Congress has attached over fifty riders
encouraging or discouraging certain Section 1913—and appropriations
to appropriations bills addressing parts
forms of political activity. of the problem.In the past few years.
The activities ofgovernment in a restrictions—including Section 807(a)of
the Treasury,Postal Service,and pressure has increased for further steps.
democracy necessarily involve a degree As a result:General Government Appropriations
of political advocacy,since government • On December 18,1981, the
officials are expected to communicate Act—currentlyprohibit the use of Department of Defense issued revisions
federal funds for certain types of
with the people,explain their programs. lobbying,but there is no clear, uniform to its Defense Acquisition Regulations
and provide leadership and direction to definition of prohibited activities to (DAR).addressing for the first time the
the nation.Thus.Members of Congress which grantees,contractors, auditors, issue of lobbying costs, and making such
and their staffs,the President and his costs unallowable under DOD contracts.
appointees.necessarilyagency officials,or the public can refer.
politicalPP The clear signal from Congress through • On April 27, and October e22.
s
participate in forms of political the appropriations laws and other 1982. DOD furtherr toughened its rules
advocacy. However,it is a distortion of disallowing lobbying costs. eliminating
the marketplace lace of ideas for the acticns has not been translated into.
. certain exceptions from coverage.
effective management controls.
government to use its financial power to The vagueness of existing anti- • On May 28,1982,NASA issued a
"tip this electoral process,"El:od v. new cost principle in the NASA
lobbying restrictions has hampered the
B::rns. 427 U S.3�3.356(1976).by Procurement Regulations (NASAPR)
ability of contractors and grantees to
suhsidizing the political advocacy making lobbying costs unallowable for
comply voluntarily with the restrictions,
activities of private organizations and and has made the job of auditors NASA contractors.This was revised
. corporations.This proposal will ensure. difficult, if not impossible. For example. August 16.1982.
to the extent consistent with the • On November 2,1982. the General
communications function of the . in recent General Accounting Office Services Administration issued a new
• (GAO) investigations of improper
government. that taxpayers are not lobbying expenditures. the contractors cost principle in the Federal
required. directly or indirectly,"to and grantees were able to urge that Procurement Regulations (FPR)making
contribute to the support of an current rules did not ban the lobbying costs unallowable for civilian
ideological cause(they) may oppose." contracts with commercial
expenditures.As the Investigations
.4hood v. Detroit Board of Education. Subcommittee of the House Armed organizations.
451 U.S. 209. 235-236(1977).The • Services Committee recently concluded: These developments,however,affect
. proposal also seeks to avoid the only defense and civilian contracts with
(1'lhere is a deficiency in the
appearance that,by awarding Federal commercial organizations.No generally
rants.contracts,or other agreements to appropriations acts'prohibition of lobbying applicable cost principle has been
3 g �.dth appropriated funds.A review of the issued to control the federal fundingof
organizations engaged in political legislative history of the publicity-
advocacy on particular sides of public propaganda appropriations acts restrictions lobbying under contracts and grants to
issues. the government has endorsed. pros ides no definition of the critical terms nonprofit organizations.
a ,
50862 Federal Register / Vol. 48. No. 214 / Thursday. November 3, 1983 / Notices •
This proposal thus addresses the final preamble,the proposals are in fact nonetheless be required to maintain
• major:'rea in which federal cost identical save for the inclusion in the fully documented time records in order
principles have not yet adopted DAR proposal of more restrictive to rebut auditor assertions of disbelief of
'restrictions on the use of federal funds definitions of lobbying and related their claims.The A-122 proposal
for lobbying and related activities by activities than are proposed for all other includes specific previsions to safeguard
private organizations.It has been covered artier.
prepared in nizati consultation with the parties.) against this potential problem and
GeneraliativeAccounting consultation
which 2.Existing rules have failed to stop or exempts indirect cost employees from
identify abuses:Cases have been cited documentation requirements. including
supports this initiative.The proposal is and documented of federal grant and the creation of time logs,calendars,or
similar in critical respects to the current contract funds that were used for similar records.if they self-certify that
Defense.NASA. and GSA procurement 'lobbying and related activities, they spent less than 25%of their time on
regulations. Parallel tevisions now being Moreover, insufficient regulatory lobbying or related activities.The
proposed by GSA and NASA will guidance under the current A-122 has proposed revision also mandates that
eliminate all differences: revisions now limited enforcement efforts so that the agency documentation guidance be
being proposed by Defense will true magnitude of actual abuses has not restricted further by review pursuant to
eliminate these differences save for been quantified.Such audits as now the Paperwork Reduction Act. to ensure
certain provisions late;described in this take place regarding the use of federal it is the least burdensome necessary to
notice which retain more restrictive
notice ions of lobbyingn contained in (he fuds for lobbying Ppurposes can easily satisfy the documentation requirement
present DAR. bogdown into disputes between objectives.The self-certification rights
attorneys and accountants regarding and protections of the proposal are only
V.Necessity for the A-122 Revision definitions,rules and standards.Thus, possible because of the clear definitions
regarding many agencies choose not to commit of lobbying and related activities that
There is little disagreement
the inappropriateness of using federal limited auditing resources to an effort are elsewhere set forth.It is impossible.
which,whatever its importance,can risky for grantees and ultimately
grant and contract funds for lobbying
related activities.Still,some have often be limited or even thwarted meaningless to sea-certify to
and •
tie that no regulations should be in because existing standards are vague compliance with a vague and ultimately
elfaeffect for contractors;alternatively, and unclear. meaningless standard.
e
err have agreed that none should be 3. The vagueness of existing, 5. The A-122 proposal explicitly
othin effect for nonprofit grantees. (Often, standards impose administrative and protects many activities presently
interpretative problems on nonprofit subject to claims of una/lowability A-
mid without even appreciating the irony
of their positions. those arguing fur self- grantees:The corollary to the above 122's comprehensive treatment of
exemption strenuously assert the need problem for auditing agencies is that lobbying makes many activities
fey strong regulation to restrict the use many nonprofit grantees—often the allowable that auditors might currently
of federal funds for lobbying purposes least financially endowed—are deem unallowable.Examples of the
sty everyone other than themselves.)The particularly disadvantaged if and as above include:
procurement agencies have properly actually audited.Many grantees may
:ejected the notion of no regulation for lack the resources or access to outside '-Lobbying at the stateb level to enhance
civilian, suace and defense contractors. professional assistance to effectively the perform torganization's grant
t r on a cost also,to
'i his revision of the OMB Circular is in resist forced,questionable or subjective recfo the gfpnt or contract; in
furtherance of the view that fair, construction by auditors of the presently state gsubgr of principles of federalism.
con::is,,nt :i:„ulntion makes sense for undefined"lobbying":term.Moreover, • d snt state may,through
:inn is in ;he intcreat of the government the absence of clearly defined standards appropriate processes.waive the •
:,s..;'l -is::unpr.;fit grantees.The ensures that all grantees are now disallowance provision for state
Ic;;l,,iv:.;,t points help explain that necessarily uncertain of the aIlowability lobbying by state subgiantees.
po ,e : of many intended expenditures— —All federal Executive Branch contacts
se
I I '.5 obi: ;r:r,iLle to cover whatever their good faith desire not to • except attempts to influence the
r oetrur:ors u::Jer tough guidelines spend grant funds for lobbying signing or veto of legislation.
while pl'ectivr:/y exemp:r::g nonprofit The A-122 proposal clearly ydef defines related to sec-,ice
grrur'r'":�iron:anv rcgo/ct:on:During the types of lobbying and related activities •
asactivity
as an elected or appointed official,or
past ears, lobby ire;provisions far are unallowable and,further and member of a governmental advisory
:nor,• resbic':ve than the proposed A- critically,provides:or binding advance panel.
122 rnvi ion h:,:e been added to the cost guidance from agencies in situations —Providing technical advice to
principles 4ov.;ruing all defense and where grantees are in doubt as to the legislative bodies in response to
civil'.::;emit;:'c:tw:;. iThese provisions meaning of the Circular.
:,re Li:�•r �!•rr{ :•i:e.�hcre in the specific written requests. •
4. The A-122 proposal also sod guards a. The Internal Revenue Code and
prear.:l'f,'.t Use of federal funds for c,ainst paperwork requirements to
other restrictions o lobbyinhave no
lohbci,ig and related purposes is no less whkhgrantees are presently subject: bearing on preventing the use of grantee
an abuse when ergaged in by grantees Aside from the current absence of fu:xis lobbying
than by contractors, and OMB knows of definitions of lobbying and related for Putposes:The notion
• no basis for differential.much lesses,au that Code lobbying provisions for tax
highly diff,•"•ential treatment of the two. effectively subject granteeso he re requirement further, exempt organizations preempt or
Since parallel revisions are being issued that they document certain allowable otherwise make unnecessary the
for A-122, the FPR,and the NASAPR expenses charged to the government. area is belied by ation of the fact thatth those
is
sets of cost principles, the present Yids requirement is particularly onerous provisions are for the purpose of
initiative guarantees uniformity of with indirect cost
("overhead") defining the character and status of
lobbying cost rules for both nonprofit employees who frequently spend limited such organizations.Under the Code,as
and profit-making recipients of federal amounts of time engaged in lobbying or long as an organization's lobbying
funds. (As is elsewhere described in the related activities—but who may expenditures do not exceed a certain
l
Federal Register / Vol. 48. No. 214 / Thursday. November 3. 1983 / Notices
50863
portion of its revenues. it is eligible for 7. The Comptroller General supports • Efforts to employ -
tax exempt status.The Code lobbying the need for A-122 revision:As p oy state or local
provisions are only determinative, ere legislature lobby Congress or state
however, of wherther an organization is Aa1 22 proposal al was p ren po ed in activee preamble, he legislatures;
sufficiently devoted to apublic purpose P P prepared Legislative liaison activities,r but
P t'P consultation with the General only to the extent that they are directly
to justify preferential tax treatment.The Accounting Office,which supports the related to unallowable lobbying
provisions do not address the issue of initiative and believes that the proposal activities as otherwise defined by the
whether federal grant monies should be satisfies the concerns which it had
used to subsidize lobbying—the sole expressed earlier. activities
areAll legislativevred liaison
. purpose of cost standards.Indeed,the activities are covered by DAR.)
fact that the code lobbying And. as noted elsewhere.after a GAO The proposal will make unallowable
y g provisions investigation of lobbying activities by only the portion of costs attributable to
do not address the use of grant monies grantees under Title X of the Public lobbying and related activities—not.as
for lobbying has been implicitly • Health Services Act, the Comptroller in the January 24 proposal. entire cost
• recognized by Congress on numerous General stated in September 1982: items used in part for political advocacy.
occasions through appropriation bill
riders prohibiting such expenditures. Clear federal guidance is needed both to Further,and critically, the proposal
Sea e.g.. Pub. 97-377,section ore Pub. ensure that Title X program funds are not will provide relief from paperwork and
L.96-74. section 607. used for lobbying and to preclude audit problems such as those
unnecessary controversy over whether experienced under the current DAR.
It is clear that because expenditures grantees are violating federal restrictions. - FPR,and NASAPR: for the purposes of
by Code does nonprofits
ot mean that federal grante hee move to revise and cost principles applicable to all specific
deral complying with thisn indirect employees
monies should be spent for those grantees is the appropriate mechanism to accounted for on an indirect basis will
purposes.For example, the Code does achieve these ends.[Emphasis added.( not he required to maintain time logs or
notprohibit tax exempt organizations similar records if they lobby less than
P g VI.Summary Description of proposal 25%of the time.The federal government
from spending their revenues on will rely
advertising or entertainment.Circular andT related activis proposal ties es the to ter describe"lobbying certifiction off their
lobbying time below 25%,
A-122, however,allows only certainexcept for organizations that have been
advertising costs,and disallows all unallowable activities instead of the
entertainment costs.Another example is expansive term"political advocacy" found to have materially misstated
section 503 of the Code, which denies used in the January 24 proposal.This allowable or unallowable costs within
tax exempt status in certain instances to reflects a significant tightening of the the preceding five-year period.Under
organizations using their revenues for definition of unallowable activity in the the proposal,the absence of time logs or
the private gain of controlling new proposal.Unlike the January 24 similar records not kept pursuant to
individuals.The regulatory scheme proposal, this proposal will not covertgrantee or contractor discretion will no
embodied in section 503 does not imply, covered• Lobbying at the local level longer serve as a basis for contesting or
( edmployees. claims for indirect cost
however, that the federal government under the current DAR and FPR); employees.
should not have more stringent • Appearances before Congress or In order to provide even-handed.
restrictions on the use of federal grant state legislatures at their written request government-wide rules for paperwork
monies for private gain.This point is (covered under the current DAR); and audits,Defense, GSA,and NASA
best understood by the fact that nothing • Contracts with Executive Branch are proposing
in the Code wouldprevent manyP P g parallel revisions in their
officials,other than in connection with procurement regulations.
grantees from spending all of their grant the veto or signing of enrolled bills,or
funds for lobbying purposes. attempts to use state or local officials as VII.Variances With the Lobbying
Correlatively,the fact that the Code conduits for unallowable lobbying • Provision of Defense Acquisition
• and other provisions of law regulate the (covered under the January 24 proposal); Regulations(DAR)
business community in its lobbying • Litigation on behalf of others not A standardized lobbying provision
activities. e.g..Section 162(e),IRC; directly authorized by grant or contract that will govern grantees and
Federal Election Campaign Act.2 U.S.C. (covered under the January 24 proposal); contractors alike resulted from
Sections 431-456,does not mean that • Lobbying at the state level that extensive negotiations among the four
there should be no provisions in the would affect the organization's ability or agencies which are responsible for the
DAR. FPR or NASAPR regarding such cost of performing a grant or contract - major sets of cost principles affecting
activities. Some in the business (covered under the current DAR.FPR, grants and contracts: the Federal
community have suggested that current and NASAPR); Procurement Regulations(FPR), which
provisions regarding the unallcwability • The entire cost of membershipdues covers civilian contractors and which is
of lobbying expenditures should be to trade associations or other administered by GSA: the NASA
superseded by definitions of lobbying organizations which have lobbying as a Procurement Regulationseweir(NASAPR);the
• set forth in the Federal Regulation of DAR,which covers defense contractors
Lobbying Act. 2 U.S.C.sections 261-270. substantial organizational purpose"
(covered under ti:e January 24 proposal). and is administered by the Department
That p,•:ition has been properly of Defense;and Circular A-122,which
rejected.and no Congressional intent or Unallowable activities will consist of: covers nonprofit organizations and is
operative theory can seriously support • Federal,state or local electioneering implemented under the guidance of
the n_lion that the Code•lobbyists and support of campaign organizations. OMB
registry:lion laws or any other like PACS,and the like; Although exact conformity was
statutes permit the government to avoid • Direct lobbying of Congress and,to reached between the lobbying
7. us responsibility to assure that federal the degree noted above. state provisions in the FPR. NASAPR,and the
grant and contract funds are spent for legisiatures: A-122 proposal.four exempted activities
authorized purposes and intended and • Crass roots lobbying concerning under these regulations are restricted
best uses. state or federal legislation: under the DAR proposal.The activities
•
.->k _ .
I
50864 Federal Register / Vol. 48, No. 214 / Thursday, November 3, 1983 / Notices
allowable under the proposed A-122. Institutions of Higher Education. spent in lobbying by such employees.or
FPR, and NASAPR,but unallowable Hospitals.and Other Nonprofit upon other evidence not precluded
under the proposed DAR are as follows: Organizations: Uniform Administrative above.As earlier noted,the absence of
(a)Local lobbying activities to Requirements." (See,e.g.Circular A-110. time logs or comparable records for
influence officials on local concerns. Attachments C and F.)The Circular, indirect cost employees not kept
(b) Providing technical advice or inter cilia,generally requires:grantees to pursuant to the discretion of the grantee u.sistance to Congress or state keep for a period of three years. or contractor will not serve as a basis
legislatures, or members or committees "(flinancial records,supporting
thereof,in response to a specific written documents, statistical records. all Onlyr c if a materialg o disallowing misstatement
clais f.
request; and if a misstatement is found
other records pertinent to(grantsl."and on the basis of other eviderce can an
the(c)
Lob Lbbyin
nd related activities
ivi is at to access for audit purposes "pertinent agency require the keeping of time logs
(1) purpose ofhooks,documents,papers and records for such employees.This avoids the
influencing legislation directly affecting of• • •recipient organizations."
the ability of the organization or cost to As later described in the preamble. necessity ofo bmployhhas who engage in
the organization of performing the grant the proposal also modifies. in certain incidentalr llo lobbying to federalto agencie
or contract;or(2) in the case of states' situations, the ability of auditors to for all of their time agencies.
subgrantees. if the restrictions are require the creation of certain Subparagraph a(5)requires agencies
to
waived by the state(the subgrantor) documents and records.See paragraph re of definitional issues arising
establish procedures for advance
through appropriate state processes. 1.a.(4)of the proposal. resolution re
(d) Legislative liaison activities that As with the DAR.FPR,and NASAPR, under this revision.This will alleviate
are unrelated to unallowable lobbying and as is already the case under A-122's the inevitable problems of interpretation
activities• as otherwise defined in the general rules for unallowable costs, the at the margin and will avoid creating a
proposal' costs identified as unallowable by these disincentive for organizations to engage
ViiI.Analysis revisions include not only costs of the , in borderline activity merely because of
The direct activity but also the costs of other the uncertainty of applicability of the
proposed revision comprises activities directly supporting such direct provisions.three paragraphs.The first creates a activity.Under the proposal, for Subparagraph b defines five
new paragraph in Attachment B to example,if a lobbyist spends four hours categories of lobbying and related
Circular A-122. to be called"B21 lobbying the Congress and an additional activities that are unallowable.It should
Lobbying and Related Activities." eight hours in study,consultation,and. be read in conjunction with
Paragraph B21 consists of three preparation for the lobbying,the full subparagraph c,which establishes
subparagraphs. twelve hours are disallowed,along with exceptions to these prohibitions.
Subparagraph- a establishes an the cost of anysupport ad framework for the overall services and any Subparagraph b(1)makes unallowable
a(1)represents other costs attributable to the lobbying certain electioneering activities at the
revision.Subparagraph from the current principles activity. federal,state,or local levels.It applies
no
departuret f on familiar hecet principles
As emphasized in the comment to referenda as well as to elections of
of cost
allocation
While the grantees
ant detail published along with the proposal's text candidates to office.The restrictions
of procedures wille precise
sadeil only the portion of cost items allocable should be familiar to nonprofit
of set according to individual agency y to the lobbying activity is unallowable.
This departs from the approach taken in organizations,y sincen they are prohibited
paract ice, this paragraph establishes a the January 24,1983,proposal which by 28 U.S.C.Section 501(c)(3).
general format similar to,and no more made the entire cost of any coat item Subparagraph b(2)makes unallowable
onerous than. that now applicable to used for lobbying activities unallowable. the financial or administrative support •
comparable unallowable activities.See. Subparagraph a(2)makes clear that
for example the HHS"Guide for of political entities—including political
example
lethe (May 1983),at the certification required as a part of the parties.compaigns,political action
Nonprofit Organizations"Indirect Cost 198l financial status report required under committees, or other organizations—
p. 73(Sample Direct Allocationv Method). Attachment G of Circular A-110 is with the purpose of influencing
deemed a certification of compliance elections.Thus,it bars indirect support
Indirect cost rate negotiations areof electioneering activities through
conducted between an organization and with this revision(paragraph B21,
a single et a an "Lobbying and Related Activities").It is intermediaries.
organization-by-organization align-zant agencyge on
nanther than important that a responsible official of . Subparagraph b(3)makes unallowable
onor a grant n-by- r basis.This approachthe contractor or grantee investigate and the costs of attempts to influence state
will agencies and recipient ensure compliance with these or federal legislation.Unlike the January
will saveizati:;ns eci time and provisions:however,no new paperwork 24.1983,proposal,this proposal confines
effort in considerable time
is required. the reach of unallowable lobbying to
receives casese where the organization
or Subparagraph a(3)restates the general legislative,but not executive,
contract.Further,oethanthe subparagraph rule for cost documentation,but is de';isionmaking.This is the traditional
modified by subparagraph a(4),%%high understanding of lobbying and was
follows existing accounting practice and provides that for the purposes of strongly urged by many commenters.
emphasizes that lobbying and related complying with this revision. Many commenting organizations
• costs must he identified and dealt with organizations are not required to stressed the necessity and
apporpriately. in accordance with the prepare or maintain time logs.Circular's provisions. , 8 appropriateness of contacts with
No detailed pro isions•kee en calendars,or like records to document officials charged not with passing laws
P g the time spent by indirect cost • but with executing them.Thus the only
requirements have been included in this employees who state in good faith that Executive Branch lobbying made
proposal,as such requirements are they spend less than 25^•%of their time on unallowable are attempts to influence a
generally set forth for all nonprofit lobbying and related activities.This
decision to sign or veto enacted
organizations in OMB Circular A-flu: means that the agency and auditor must legislation.and attempts to use state
"Grants and Agreements with rely on the good-faith estimates of time and local officials as conduits for
•
Federal Register / Vol. 48, No. 214 / Thursday, November 3. 1983 / Notices 50865
grantee and contractor lobbying of unallowable.Under the DAR.all lobbying exempted from unalluwability
Congress or state legislatures. legislative liaison activities are deemed under this section must be "directly
The coverage of subparagraph h(3) unallowable. related" to lower costs or better
has been limited to state and federal Subparagraph c sets forth five performance of grants or contracts.
legislation in these proposals, unlike the exceptions to subparagraph b.The costs Lobbying in the case of secondary.
prohibitions in the Internal Revenue of activities described in subparagraph c tangential or speculative links between
Code. the DAR.the FPR. and the . are not unallowable under this proposal. proposed state laws and grant or
NASAPR. because it is difficult to Note that this does not necessarily make contract costs or performance will
distinguish between legislative and such costs allowable:alluwahility or remain unallowable.
executive lobbying at the local level. unallowability of such costs will be • In recognition of the principles of
• . Many of the comments received from determined by the terms of the grant, federalism,states which are subgrantors
• organizations critical of the January 24, contract, or other agreement involved. for federal grants may, through
1983, proposal gave examples of Circular A-122 does not authorize costs appropriate state processes, waive the
contacts with local officials that are or expenditures:it exclusively limits the disallowance provision for state
vital to carrying out grants or allowability of costs or expenditures. lobbying by state subgrantees.
contracts—for example, obtaining Subparagraph c(1)exempts the The final exception.in subparagraph
zoning changes.police protection,or provision of technical advice or c(5). is for any activity specifically
permits. At the local level, there is no assistance to a legislature upon a authorized by statute to be undertaken
rigorous separation between legislative specific written request.This includes pursuant to the federal grant,contract.
and Executive Branches. and it would not merely testimony, but also or other agreement.The provisions of
be difficult to construct or enforce a rule conferences with legislators and staff this Circular do not override statutory
regarding legislative lobbying at the when requested.The exemption is law.
local level. meant to be permitted on a limited Paragraph 2 renumbers paragraphs
As indicated,however, in keeping basis. to fulfill the specific informational D21 through B50 of Circular A-122's
with the intent of the revision,b(3) needs of legislatures,and members and Attachment B.Since the cost items
includes a phrase clarifying that efforts staffs thereof. covered under Attachment B are
expended to influence state and local Subparagraph c(2),patterned after 26
officials to accomplish the lobbying U.S.C.4911(d)(2)(E),makes clear that numbered in alphabetical order,
activities defined in b(3) are likewise communications with Executive Branch "Lobbying and Related Activities"is
unallowable.Under the proposal,the officials are not unallowable, with two •appropriately designated as paragraph
government would not reimburse the exceptions: (1) to influence a decision to 821,necessitating the renumbering of
cost of meeting with mayors or city sign or veto legislation or(2) to influence Paragraphs B21 through B50 as A22
council representatives if the purpose is state or local officials to serve as • through D51.
to convince them to lobby the Co.agress conduits for unallowable lobbying Paragraph 3,like paragraph 2,is a
for legislation that the grantee or activities. as defined by this revision. technical language change.It changes
contractor favors. Subparagraph c(3)ensures that the the former term"lobbying"to the new
Subparagraph b(4)deals with grass salary of an employee does not become term"lobbying and related activities,"
roots lobbying.and is applicable only to unallowable because of participation in as used in this revision.
grass roots compaigns concerning civic affairs as an elected or appointed IX.Legal Authority
legislation.This provision is not meant official or member of a governmental The responsibility for implementing
to disallow associations from informing advisory panel. P Y P g
their membership about legislative Subparagraph c(4)exempts lobbying grant programs, including the power of
developments or soliciting their or related activity at the state level administration,has been delegated by
members' views as a basis for where it directly affects the ability of or Congress to the grant-and contract-
developing the associations'own cost to the organization of performing making agencies.Those agencies have
legislative positions. the grant or contract.Such lobbying can the direct legal authority to establish
The proposal's definition of grass directly benefit the federal government. cost principles and,prior to the late
roots lobbying is less inclusive than the The proposed exception does not permit 1970's,did so in a piecemeal fashion
Internal Revenue Code definition,in that the use of federal funds to lobby state without coordinated government-wide
the IRC includes Iocal lobbying;and legislatures to promote the ideological standards.OMB's legal authority in this
restricts "any attempt to influence any objectives of the organization,merely process derives from the President's
legislation through an attempt to affect because those objectives are consonant constitutional authority to"Take Care 1
the opinions of the general public or any with the purposes of the grant or that the Laws be Faithfully Executed."
segment thereof."This subparagraph contract.A recipient of a grant for U.S.Constitution,Article II.Section 3,as
restricts only efforts to obtain specified services to the elderly cannot thereby well as from general supervisory
lobbying actions on the part of the engage in lobbying on behalf of the responsibilities vested by Congress in
' public. (See 26 U.S.C.4911(d)(1)(A)). concerns of the eldery.Rather,the the President and in OMB.
Subparagraph b(5)makes unallowable lobbying must relate to the Grants management responsibility
the cost of legislative liaison activities organization's direct performance of the was placed in OMB by Executive Order
• when they relate to unallowable grant or contract.Fur example.a grantee No.11541 (July 1.1970), pursuant to
lobbying and related activities as in a drug rehabilitation program might Reorganization Plan No.2 of 1970,5
defined in paragraph b.This distinction be able to lobby a state legislature for U.S.C.App.Subsequently.grants
recognizes that while the primary laws permitting the prescription of management authority was transferred
purpose of an organization's"legislative methadone to heroin addicts,or a to GSA by Executive Order No.11717
liaison" unit is ordinarily to direct and grantee distributing dairy products to (May 9,1973) and retransferred back to
prepare for what has been defined in the needy might lobby against an OMB by Executive Order No.11893
this revision as unallowable lobbying, increased excise tax on milk that would (December 31,1975).Relevant statutory
there are many other functions served increase its distribution costs.It should authorities include the Budget and
that this revision does not make be understood,however. that state Accounting Act of 1921,ch.18.Section
ti
50866 Federal Register
g / Vol. 48, No. 214 / Thursday, November 3. 1983 / Notices
209,31 U.S.C.Section 18;the Budget and years.Although it has never enacted would be classified as unallowable
Accounting Procedures Act of 1950.ch. comprehensive legislation to address the under these revisions.Subparagraph c(5)
946 Section 104. 31 U.S.C.Section 18a; use of federal funds for lobbying Pub. L.No.97-258, Section 1,31 U.S.C. ona y g specifically
of pice proposal makesany activitysuch
Section 3507;Pub. L.No.93-400,Section Congress has government-wide ed the vehi le ofhasis. al ow able;thus,this revision doesnot
3.41 U.S.C. Section 402.Under these and appropriations acts to curb some of the conflict with any enacted statutes but is
other general management authorities, more flagrant abuses and to prod the consistent with the broad thrust of
OMB may develop plans for Executive Branch into action.Over the congressional policy in the area.
implementing better management with past ten years. some 40 to 50 riders have As noted, this proposal has been
"a view to efficient and economical been attached to appropriations bills to prepared in active consultation with the
service"and may issue supplementary address some aspects of the problem. General Accounting Office,which
interpretative guidelines"to promote These appropriations riders use many supports
believes
consistent and efficient use of different formulations,but have as a this proposal satisfies the concerns that
procurement contracts,grant common element the prohibition of the which the GAO had expressed earlier.
agreements, and cooperative use of appropriated funds for publicity
agreements."In its capacity of or propaganda purposes designed to
exercising the President's general X.Enforcement
management functions over the support or defeat legislation.One such Circular A-122 is a management
Branch. B has the power appropriations rider,Section 607(a) of directive to federal agencies
Executive supervise B and direct the managemento the Treasury, Postal Service,and establishing cost principles for use in
activities of federal agencies. General Government Appropriations connection with grants and contracts l
Agencies in turn, inenrpesate the Act, applies across the board to all with nonprofit organizations.It does not
provisions and requirements of federal agencies: contain its own enforcement
applicable OMB circulars into grant and No part of any appropriation contained in mechanism, though its terms are
contract agreements through regulations, this or any other Act.or of the funds incorporated in grants and contracts
grantt contract terms,h oru g means. available for expenditure by corporation or through agency regulations or grant
gr this or contract
the Circular otherme agency,shall be used for"publicity or instruments.The degree and nature of
InIncome legallyane binding upon provisionscontractors propaganda"purposes designed to support or enforcement of these anti-lobbying and grantees.Moreover,it has been held added).defeatlgislation before Congress.(Emphasis provisions will depend, therefore, on
that the provisions of OMB Circular A- operational experience and competing l
102 are legally applicable to grants even The Department of Interior demands on enforcement resources.
Appropriations Acts use the following This analysis of enforcement is
when the grant-making agency has not
explicitly implemented the Circular. formulation,which is more restrictive descriptive rather than prescriptive;it is
Qonnor Corporation v. hetCircular, than the Treasury formulation: presented to provide a context for public
.At/ante Rapid Transit Authority,441 F. No part of any appropriation contained in understanding of the proposal.
Supp.1168.1172 (N.D.Ga.1977). this Act shall be available for any activity or 1. Voluntary Compliance.The the publication or distribution of literature bedrock for enforcing these provisions is
Circular A-122 is on the same legal
fooling. that in any way tends to promote"public voluntary compliance by grantees and
In summary, the legal authority for support or opposition"to any legislative contractors.In the past,restrictions on
OMB cost principles derives from proposal on which congressional action is not the use of federal funds for lobbying and
complete,in accordance with 18 U.S.C.1913.
related activities have been
Congress and the President to manage The Labor,Health and Human inadequately communicated
OMB's delegated authority from
and
the Executive Branch with a view Services,Education,and Related defined.Neither agencies nor recipient
toward economy and efficiency,as it Agencies Appropriations Act states: organizations devoted much attention to
affects the agencies' exercise of their No part of any appropriation contained in proposal is expected to
•grate• administration functions. them.This r
this Act shall be used to pay the salary or . improve compliance significantly by:
This proposed revision,like cost expenses of any grant or contract recipient or • Defining unallowable activities so
r'.inciples disallowing advertising costs, agency acting for such recipient to engage in that organizations can comply in good
fundraising costs, and entertainment any activity designed to influence legislation faith,and
costs, is directly related to the efficient or appropriations pending before the
and economical administration of Congress. • Providing formats(indirect cost rate
• grants,contracts, and other agreements. Other agencies and entities affected • a atus report) innegoaons, rtwhich 1responsible
By prohibiting the use of grant and by appropriations riders(in addition to officials of the grantee or contractor will
contract monies for lobbying or related the generally applicable provision in the confront the issue of the organization's
activities(unless specifically authorized Treasury appropriation)include
compliance.
to be conducted with grant or contract Defense,State,Justice,Commerce,
To asor
in
st
anizations
f;nds by statute). funds can be directed District of Columbia,Legal Services agenciestshallgbe prepared tooresolve�,
toward their proper uses,thereby Corporation,ACTION,Community
achieving greater public benefit.As the Services Administration,and Health definitionaltlexpenditurestu concerning
Comptroller General has noted,"The Systems Agencies.Taken as a whole, ppotenture ial shouded in the
inevitablent this
cost principles applicable to all federal these provisions indicate a far-ranging difficulty ofhinterpretations at th
grantees is the appropriate mechanism Congressional concern to control the use margin.
to achieve these ends [of ensuring that of federal funds for lobbying purposes. 2.Sanctions. Penalties for violations
program funds are not used for Neither legislation nor legislative history of this revision are the same as for
l•ilthying)."GA0/}IRD-82-108 suggests any deliberate departure by the violations of existing A-122 provisions.
ISoptember 24. 1982J. at 27. Congress from this principle.
The The legal basis for the proposed In serveral specific instances, minorprincipal or inte sanction ini the eventnsof of revision is further supported by a series Congress has directly authorized the use these restrictions us cost recovery,i.e..
of congressional actions over the last 20 of appropriated funds for activities that the federal agency will obtain
Federal Register / Vol. 48. No. 214 / Thursday, November 3, 1983 / Notices 50867
' reimbursement from the contractor or activities and 40%on federal grant On the other hand, considerable
grantee of misspent funds.In more activities.40%of the salary may be • problems of definition and interpretation
serious cases.contracts and grants can allocated to the grant.This approach is arise when terms such as "substantial"
be suspended or terminated.or consistent with the DAR, FPR.and are used to define the point at which the
contractors and grantees can be NASAPR lobbying cost treatment entire cost of a meeting or conference is
debarred from further awards.The provisions,as well as the traditional to become wholly unallowable.
availability of these sanctions for accounting method of prorating costs Given the inherent difficulties in using
onviolating the
anti-lobbying
nti-lo by ng restrictions
has beenons between allowable and unallowable cost principles to attempt to deal with
appropriationsgactivities. this problem,it appears that the better
confirmed by the Office of Legal An alternative method of allocating
•
Counsel the Department of Justice. approach would be for agencies to adopt
3.Advance screening. One of the most costs of items used for both lobbying more stringent policies regarding the
effective means of enforcing these actitvities and grant/contract purposes funding of meetings and conferences
restrictions is to ensure that grants and that was considered and rejected was when they are likely to finance or
contracts officers are aware of the past the concept that no federal money can otherwise support clear lobbying
performance of organizations seeking be used to pay for any portion of a cost activities.(See Office of Management
new or continued funding. If an item that is used for lobbying activities and Budget Memorandum.M-82-4:
organization has not devoted past (1) in any way,or(2) over 5% of the "Improper Uses of Federal Funds."April
appropriations to the grant or contract time. 26, 1982.)
purposes, and has materially diverted The OMB proposal published on 2.Definition of Lobbying Activities.
them to lobbying(or other extraneous January 24.1983 followed this approach. One of the weaknesses of current
activities), questions can legitimately be Commenters argued that It would restrictions on tax-funded lobbying is
raised as to whether additional grants or increase the cost of performing federal the lack of a clear and detailed
contracts would be appropriate.Once grants and contracts because it would definition of exactly what is and what is
uniform and understood cost principles effectively require them to separate their not covered.In constructing the
are in place. it is expected that agencies lobbying activities from their grant or definition in this proposal. OMB has
will take steps to ensure more thorough contracts activities.This could lead to drawn upon experience and language
advance screening of grant and contract inefficient duplication of equipment and from Internal Revenue Code definitions.
applications. facilities—with attendent increased statutory provisions,Defense. GSA,and
• 4.Audits. Contractors and grantees costs to the taxpayer.They also argued NASA procurement regulations, and
are currently subject to audit that it would burden the First similar sources.Care has been taken not
requirements,and to the possibility of Amendment rights of contractors and to prohibit activities that are
audit by agency Inspectors General or grantees because engaging in lobbying legitimately necessary to the fulfillment
the Comptroller General;However,most activities could result in disallowance of , of the grant or contract.
audits have not focused on compliance otherwise legitimate costs.The purpose The proposal addresses the various
with anti-lobbying provisions. Audit of this proposal,however, is to enforce categories of lobbying(e.g..grass roots
strategy and priority will continue to be governmental neutrality by preventing lobbying),and defines the unallowable
established by the independent the use of federally appropriated funds activities.A separate section is devoted
judgment of these enforcement bodies. for lobbying and related activities.To to activities which are exceptions to the:
After uniform cost principles are the extent that an approach would general restrictions.
promulgated,it will become possible for significantly increase costs or burden
more vigorous and effective audit The following alternative definitions
g First Amendment expression. it is of unallowable activities have been
enforcement to take place.Stratified inappropriate. considered and rejected:
audits and other strategies can be used Scone commenters have urged that I
to create an incentive for greater g a. The definitions used in OMB's
nonprofit organizations should be
Jontcory24, 1983,proposal could be
compliance among all grantees and
contractors. ineligible to receive any federal funding
Alternatively, promulgationused:.This would result in disallowing,
of a defined set of rules can and will if they engage in any lobbying activities. among others,the following categories
Such an approach would be more
serve as a protective barrier against of activity not covered in this proposed
audit harassment.and will and should restrictive then OMB's January 24,19ti3, revision:
make for fairer and simpler audits for Proposal and would be strcngly opposed • Lobbying on local concerns at the
grantees and contractors.This should be by many affected groups.Further ore.a local level.
of particular benefit to smaller grantees wholesale preclusion of participation in
grants and contracts as a result of even • Lobbying at the state level,even
an,1 contractors who lack the means and a modest amount of lobbying would when the lobbying is directly related to
support staff to contend with audits raise difficult questions of legality and the cost to or ability of the organization
under the vague,ambiguous. and efficiency in a case where the applicant to perform the grant or contract.
differential rules now in effect.With was otherwise the most qualified • Attempts to influence"licensing,
expanded Inspector General and agency applicant. grants,ratemaking.formal or informal
audit staffs now in place, the protections adjudications.guidelines.and olio
afforded by the proposal are manifest. One variation from the allocation t g policy
principle considered by OMB related to statements."
XI.Alternative Approaches to Major the costs of conducting meetings and • Contacts with Executive Branch
Issues in The Revision conferences that are held in "substantial officials concerning any governmental
1. General Cost Treatment.This part" to promote lobbying. decisions.
proposal makes unallowable only the The practice of partisan meeting • Litigation on behalf of others not
portion of a cost item that is actually sponsors scheduling large blocks of directly authorized by grant or contract.
used in lobbying activities. as opposed "open time" to facilitate lobbying during • Encouragement of grass roots
to the entire item.Thus,if an employee Washington meetings could make the lobbying to influence notice and
spends 60%of his time on lobbying allocation approach impractical. comment rulemaking.
9
50868 Federal Register / Vol. 48, No. 214 / Thursday, November 3, 1983 / Notices
• Membership dues or contributions included"making available the results activity—rather than to identify specific
to organizations which have lobbying as of nonpartisan analysis,study, or activities that should not be subsidized
a "substantial organizational purpose." research, the distribution of which is not by the federal government.The result of
Many commenters on the January 24 primarily designed to influence the adopting any of those previously
proposal felt that the scope of outcome of any federal, state,or local established definitions in whole would
unallowable lobbying activities in that election,referendum,initiative,or be to disallow certain activities that are
proposal was too broad and would similar procedure, or any governmental properly allowable,and to allow certain
result in disallowing certain legitimate decision."The current proposal's activities that are not proper purposes
activities appropriately funded under a revised lobbying definition and for the expenditure of federal funds.
. grant^r contract.For example,many accounting treatment do not make such Therefore, the approach of this
contracts with Executive Branch activity unallowable in the first place,so proposal has been to use concepts and
officials at the local,state,and federal the inclusion of such exception-is not definitions from the DAR.FPR. •
levels are considered necessary to only unnecessary but confusing. NASAPR.and Internal Revenue Code
performance of the grant or contract. b.Lobbying could be defined us
e appropriate. and to d
and,often, compliance with the law. -broadly as possible, with a detailed list from)them rwhere appropriate.The evista
Moreover. the concept of lobbying has of the unallowable activities:Some "Analysis" section of this preamble
traditionally been understood to be an criticism was made of OMB's January 24 identifies the areas of deviation and the
attempt to influence legislative rather proposal for not being comprehensive rationale for them.Several areas of
than executive actions.Departure from enough in its restrictions on lobbying particular interest,however, should be
this understanding appears to create activities.Commenters felt that because noted. Unlike the DAR,FPR,NASAPR.
uncertainty and uneasiness among of the ambiguous nature of lobbying and and IRC, this proposal does not include
affected parties.Thus,OMB has rejected quasi-lobbying activities,it was more local lobbying,because of the difficulty
as too broad a definition of lobbying efficient to restrict the broadest scope of in distinguishing legislative from
that would deem Executive Branch these activities.As noted above, this executive lobbying at the local level and
contacts (other than in connection with argument was rejected in rewriting the the necessity of frequent contact by
the signing or veto of legislation)as proposal; in fact, the definitions have contractors and grantees with local
unallowable. been made less expansive.
Unlike the January24 proposal. the officials or matters of administrative
P P C. The lobbying restriction could concern to the contract and grant.
current draft does not disallow the consist of a broad,but undefined. issue of legislative
promotion of grass roots lobbying to prohibition on lobbying activities:This activity,ethis proposal basically
ison adopts
influence notice and comment is essentially the approach being used the FPR and NASAPR position in
rulemaking.The reason for the original currently in the grants area through making such activity unallowable only
inclusion of this provision was that such assorted appropriation bill riders,and it when related to otherwise unallowable
ralemakings are quasi-legislative in has not been effective.By not specifying lobbying. When legislative liaison
character and that it is inappropriate for which activities are restricted,agencies activity is performed in preparation for
the government to be financing march are required to do much more •
e
captains, rally orgainizers and other interpretative and negotiation work to revb�on s intent l d to make suchcontradicttactivity
such persons for the performance of implement the restriction.Grantees and completely allowable.On the other
such activities in connection with grass contractors are uncertain as to what is hand,legislative liaison can serve other
roots campaigns regarding such restricted,and whether the govenment is functions not made unallowable by this
regulations. On the other hand, the serious in enforcing those restrictions.In revision.
consultation process relative to the
current 'haft disclosed serious concerns complicate atn. e auchdits is conducted wouldn approach o3.Documentation hen temethod of cost Requiremt was
ents:
current
about .he possible applicability of any determine whether funds had been used hand d from to al disallowance eof cost
provi:ion regarding regulations to joint for lobbying purposes,and would be items partially involved in lobbying(the
or collaborative efforts by grantees or particularly burdensome to smaller
contractors to share information and grantees and contractors. "propry oportio24 al"proposal)cost
e the atment used for
el
thereby to improve the comments made d. The lobbying restriction could be cost items related to both unallowable
by them ,i federal agencies.It is OMB's made identical in coverage to that of and allowable activities,documentation
intention. in light of the above,that this current Defense. CSA,or NASA
matter should be studied during the procurement regulations,or to the ofn amounts of allowable and
of the coming year determine unallowable costs became a necessity.
courser��. be known, tod f o definition of"influencing legislation"in The principal alternative considered
what extent,can the federal government the Internal Revenue Code:There would was to adopt the documentation '
now grass federal
government
e substantial advantages to this philosophy of the GSA,Defense,and
now financests of march captains,lobbyingapproach,since current DAR,FPR, NASA procurement regulations'
rally NASAPR,and IRS restrictions are well- restrictions on lobbying,i.e., to place the
organizers and the like in connection established and, in the case of thethe
with notice and comment rulemaking. internal Revenue Code, well- prove in all contractorces or grantee to
Agency auditors and others will reasonably prove instances the
defined.However, the DAR.FPR, and appropriateness of a cost.This
• examine this matter so as to determined NASAPR provisions are unfamiliar to approach,while consistent with the cost-
whether additional language is needed the nonprofit community,while the IRS principles in general,would entail an
in the Circalar to deal with this matter. restrictions on lobbying by 501(c)(3) implied burden on indirect cost
The exception in the January proposal organizations are unfamiliar to defense employees to maintain records (time
for distribution of nonpartisan analysis and civilian contractors.Moreover, the logs,calendars,or the like) to establish
for non-lobbying purposes is made IRS definition of"influencing superfluous by changes in the current legislation"is intended to identify the lobbying oorl related activon of theirtit esspent
.This on
draft, and thus has been deleted.As character of the organization—whether would be particularly onerous for high
previously stated, the exception it is engaged in "substantial"lobbying officials g y g level officia s who,in the ordinary
I.
Federal Register / Vol. 48, No. 214 / Thursday, November 3. 1983 / Notices 508B9
course of business.frequently engage in the federal funds corporate grant funds are used for the purposes
only a small amount of lobbying.OMB organizational documents: audit reports; that were intended.and not to facilitate
(along with Defense,GSA. and NASA) publications,newsletters,periodicals, lobbying campaigns.As noted above.
therefore proposes to allow grantees etc.issued by the recipient organization; current financial control procedures do
and contractors to certify in good faith and/or other information relating to a not permit an accurate estimate of the
the amout of lobbying and related recipient organization's activities? amount of tax dollars now diverted to
activities performed by indirect cost (3)Is the broad exclusion of local ' lobbying efforts by grantees and
employees(i.e., those who do not level lobbying from coverage of these contractors:whether Iarge or small,
• already have to account for their time provisions necessary or desirable? correction of this problem will produce a
. spent directly on a grant or contract). (4)Are any additional exceptions net gain to the intended beneficiaries of
• Only if the employee is engaged necessary or desirable?Are any of the federal programs.The costs to be
(according to the organization's own exceptions provided in this proposal considered are primarily accounting and
estimate or outside evidence) in unnecessary or undesirable? recordkeeping costs for grantees and
lobbying or related activities more than (5)Restrictions on the encouragement contractors,as well as federal agencies.
25%of his time could further of grass roots lobbying inherently These new costs,however.are minimal
documentation be required. If a require an understanding of the in both absolute and relative amounts.
contractor or grantee is determined to distinction between providing and in many instances the revisions •
have materially misstated allowable or information and encouraging lobbying. should reduce audit and compliance i
unallowable costs within the preceding The intent of the section on grass roots costs.Furthermore,much of the
five-year period, more extensive lobbying (subparagraph b(4)) is that accounting work that the revision
documentation could be required. internal communications between an requires is already mandated by other
OMB also considered and rejected organization and its bona fide members sections of Circular A-122.or Circular
more extensive"sunshine"provisions to provide legislative information is A-110.This proposal has nonetheless
which would have called for full allowable,but the promotion of been prepared in accordance with the
disclosure by recipient organizations of membership lobbying is not. In light of analytical requirements of Executive
detailed information concerning their the above, is it desirable to add Order 12291.
personnel, public policy positions. language to the Circular regarding such 1
affiliations of officers and directors, internal communications: if so.what XiV.Paperwork Reduction Act
publications,and other such form should this language take? Requirements
information.OMB believes such (6) Is the allocation method the proper In accordance with the requirements
- reporting requirements would exceed accounting method for disallowing costs of the Paperwork Reduction Act of 1980.
those necessary to achieve the purpose related to sponsoring meetings and 44 U.S.C.3501 et seq., and 5 CFR Part
of these proposals,i.e..to ensure that conferences when these are used to 1320, the collection of information
federally appropriated funds are not promote lobbying?Would it be possible requirements contained in this proposed
used for lobbying or related activities by to disallow the entire cost of a meeting revision have been submitted for review
grantees and contractors.However, or conference if a "substantial part"is to OMB's Office of Information and
-OMB has explicitly sought comments on devoted to promoting lobbying?If so, Regulatory Affairs.
this issue.(See Issues for Comment. how should the term"substantial"be
paragraph 2.) defined? Comments about the appropriateness
4.Penalties:OMB considered and (7)Are there are any cases where the of collection of information
rejected as too stringent a penalty explanatory comments in the proposal requirements in this proposal should be
provision which would require the and the preamble are not sufficiently addressed to Edward C. Springer.Office
return to the federal government of all clear or detailed to enable of Information and Regulatory Affairs.
grant or contract funds received by a understanding of the proposal's Office of Management and Budget.
nonprofit organization found to be meaning? Washington,D.C.20503.(202)395-4814.
engaged in lobbying or related activities. XIII.Designation as"Non-major"Rule XV.Comment Submittal and Further
Instead.OMB has opted to follow the g 1 Information
standard A-122 penalties of cost OMB has determined that the
recovery and, in certain cases, proposed revision to A-122 does not Comments should be submitted in
suspension. termination, and debarment. qualify as a "major rule"under the duplicate to the Financial Management
XII.Issues for Comment criteria as listed in Executive Order Division.Office of Management and
12291: Budget.Washington,D.C. 29593.All
In addition to any other comments. (h) "Major rule" means my regulation comments should be received within 45
the public is specifically invited to that is likely to result in: days of this notice.
comment on the following issues: (1) An annual effect on the economy FOR FURTHER INFORMATION CONTACT:
(1) Do the provisions of Subparagraph of 5100 million or more:
a(4)(concerning the maintenance of time (2)A increase in costs orprices John J. , Officerdan,Financial Management andManagement
t majorBranch,Office of and
• logs and similar records) adequately for consumers.individual industries. Budget..Washington.D.C.20503(202)
protect against unreasonable federal. state.or local government 395-6823.
recordkeepiitg burdens without agencies,or geographic regions; or
renderingtheseprovisions Issued in Washington.D.C..November I.
(3)Significant adverse effects an 1983
unenforceable?What changes. if any. competition,employment,investment.
are recommended? productivity,innovation,or on the Darrell Johnson.
(2)Should broader disclosure ability of United States-based Budge!and Management Officer.
requirements for recipient organizations enterprises to compete with foreign- (Circular A-122)
he included to facilitate the monitoring based enterprises in domestic or export Cost Principles for Nonprofit
of their activities?For example.should markets. Organizations
recipient organizations be required to The principal effect of the proposed •
provide the agency granting or awarding revisions will be to ensure that federal Circular A-122 is revised as follows:
50870 Federal Register / Vol. 48. No. 214 / Thursday, November 3. 1983 / Notices
1.insert a new paragraph in (5)Agencies shall establish or prop:,aanda purposes designed to support
Attachment B.as follows:"B21 procedures for resolving in advance.in ur defeat legislation pending before
Lobbying and Related Activities." consultation with O�MiB,any significant Congress. E.g..Pub.L.96-74,Section 1307.93
a.(1)Organizations shall include.as questions or disagreements concerning Stilt.5 3.'rhe Internal Revenue Code defines
part of their annual indirect cost the interpretation or application of -influencing influence legislation"as including(federal.
a"any
proposal, a statement identifying by subparagraphs or b.Anyy*such advance attempt to any(federal,state,ur
category costs attributable in whole or resolution, if in'writing, shall be bindinglocal)legislation through communication with
in part to activities made unallowable bod ,memberrwithor any governmentvern of a official
legislative
or
in any subsequent settlements.audits.or body,or ofial or
by subparagraph b,and staling how investigations with respect to that grant employee who may participate in the
• they are accounted for. or contract for purposes of formulation of the legislation."20 U.S.C.
Comment•.The fact that a cost included in interpretation of this Circular. Section 4911(d)(1)(B).This provision is
the proposal discussed in subparagraph a(1) b. Notwithstanding othei provisions of narrower than the Internal Revenue Code
(such as an employee's salary,an item of this Circular, casts associated with the provisions because it does not apply to
equipment,or the cost of a facility)may be following activities are unallowable: influencing legislation at the local level.
used in part for lobbying or related activities, (1)AttemptsMoreover.subparagraph c(5)excludes from
as defined by subparagraph B21 b,does not to influence the outcomes
of any Federal.State,or local election. the coverage of this provision any lobbying or
make the remainder unallowable. related activity at the state level directly
referendum, initiative,or similar related to :he ability of or cost to the
(2)The certification required as a part procedure, through in kind or cash
of the Financial Status Report required ccntributions, endorsements,publicity, contract organization of performing the grant or
under Attachment G of Circular.A-110 or similar activity;
shall be deemed to be a certfication that (4) Preparation,distribution, or use of
the requirements and standards of this Comment:The Internal Revenue Code
paragraph, and of other of of prohibits tax-exempt charitable organizations publicity or propaganda designed to
from"interven(ing(in(including the influence legislation pending before
Circular A-122 respecting"lobbying and publishing or distributing of statements).any Congress or a State legislature by urging
related activities,"have been compiled political campaign on behalf of any candidate members of the general public or any
with. for public office."26 U.S.C.Section 501(c)(3). segment thereof to contribute to or
(3)Organizations shall maintain In addition.for purposes of defining participate in any mass demonstration.
adequate records to demonstrate that "influencing legislation."the Internal
the determination of costs as being Revenue Code defines"legislation"to include march,bbyirally,or ifgndori a to drive.
allowable or unallowable pursuant to "action with respect to Acts.bills, lobbying campaign,or letter writing or
subparagraph a(1)above complies with resolutions,or similar items. . .by the public telephone campaign,for the purpose of
the requirements of this circular. in a referendum;initfaufve,constitutional influencing such legislation;or
amendment,or similar procedure."20 U.S.C. Comment:The Treasury,Postal Service,
Comment:As with other costs under this Section 4911(e)(2).
Circular.to the extent that such In one respect.this subparagraph is trand tonallyeral contains o rn ani erpro providing:g " o
documentation is not provided by the narrower than the Internl Ree to p'rt f any y proia i ridcontaineder in thiso
organization,the amount that cannot provisions,because it is confined to ant t any appropriation used inpublicity
or
reasonably be demonstrated to be allowable. "contributions,endorsements,publicity,or any other ndAct...purposesl used for o ly
up to the entire cost in question,shall be similar activity." or propaganda legislation pendingnigned a support
disallowed. in contrast to the broader or defeat before proscription of"participat(ion)or Congress."E.g.,P.L 96-74,Section 807,93
(4)For the purposes of complyingwith interven[tionl.directly or.indirectly • Stat.575.The Internal Revenue Code defines
subparagraph a, there will be no (2)Establishing,administering. "influencing legislation"to include:"any
requirement for time logs,calendars,or contributing to, or paying the expenses attempt to influence any(federal,state,or
similar records documenting the of a political party,campaign,political local)legislation through an attempt to affect
activities of an employee whose salary action committee,or other organization the opinions of the general public or any
is treated as an indirect cost.and the established for the purpose of segment thereof."29 U.S.C.Section 4911
absence of time logs or comparable influencing the outcomes of elections; narrowly(A).This subparagraph is more
records for indirect cost employees not it tailored than effortshese ptoobtain
kept pursuant to the discretion of the Comment:The Internal Revenue Service because is limited to to obtain
grantee or contractor will not serve es a aativ tie u ders included .26r U.S.C.Section disqualifyingn the list of 01() 3)he and d esdnot,therefore,cctions on the
mer part of the errblrr
basis for contesting or disallowing following:"participa(tion)or intervenjtion), attempts"to affect the opinions of the general
claims, unless: (a) the employee engages directly or indirectly,in any political public or any segment thereof,"if such
in lobbying or related activities more c:ampaigr,on behalf of or in oopoeitio:, In any attempts do not lead to concerted action.This
than 25%of the time or(b)the candidate for public office."26 CFR Section is consistent with the GAO's interpretation of
ergnni;:;.tion has materially misstated 1.501(c)(3)-(c)(3)(iii). the"publicity or propaganda"appropriations
allowable or unallowable costs Within (3)Attempts to influence legislation rider.See 8-202975(Nov.3,1981).
the preceding five year period.Agency pending before Congress or a State -
(5)Legislative liaison activities,
guidance regarding the extent and legislature by communicating with any including attendance at legislative
n-ture of documentation required member or employee of the Congress or sessions or committee hearings,
pursuant to subparagraph a(3)shall be legislature, (including efforts to gathering information regarding
i c'viewcd under the criteria of the influence state or local officials tolegislation, 8 g act of
Paperwork P.eduction Act, to ensure that ergagn in similar lobbying activit pendingl and analyzing theto theet
requirements are the least burdensome with any government official or Y).or that uch activities
ctin t es do
not el extent
necessary to
to satisfy the objectives of employee in connection with a decision lobbying or urelated activities asedefined
tt:is subparagraph. to sign or veto enacted legislation;
8 by paragraph 1.b.hereof.
C.'or:traert,'This provision is for the purpose Comment:The Treasury,Postal Service. Comment:The costa of all legislative
of assuring that agencies and auditors must and General Government Appropriations Act .liaison activities are made unallowable for
rely on the good faith estimates of time spent traditionally contains a rider providing:"No contractors under the current Defense
on lubbying by such employees.or upon part of any appropriation contained in this or Acquisition Regulations(DAR):Section 15-
outsi,le evidence. any other Act. . .shall be used for publicity 205.51,but are allowable for civilian
•
•
Federal Register I Vol. 48, No. 214 / Thursday, November 3. 1983 / Notices 50871
contractors under the current Federal enrolled bills.or attempts to use state and affects the ability of or cost to the grantee or
Procurement Regulations(FPR),Section 1- local officials as conduits.for grantee and contractor of performing the grant or
• 15.205-52. contractor lobbying of Congress or state contract:or(b)when states choose to adopt
This subparagraph is narrower than the legislatures. rules waiving such restrictions for their
DAR provisions,because it only makes
legislative liaison costs unallowable if they (3)Any activity in connection with an federal grant subgrantees.
relate to-otherwise unallowable lobbying employee's 'Service as an elected or (5)Any activity specifically
activities. appointed official or member of a authorized by statute to be undertaken,
C.Notwithstanding subparagraph b. governmental advisory panel: pursuant to the federal grant,contract,
costs associated with the following (4)Any lobbying or related activity at or other agreement.
activities are not unallowable under this the state level for the purpose of
paragraph: influencing legislation directly affecting Comment:This circular does not,nor could
(1)Providing technical advice or the ability of the organization or post to it,limit the ability of Congress subject to
assistance to the Congress or a State the organization of performing :he grant, constitutional constraints,to appropriate
legislature or to a member,committee, contract,or other agreement:however, funds for the use by contractors or grantees
or other subdivision thereof, in response state overnments actin fur lobbying or related activities.
p 8 g'as subgrantors •
to a specific written request by such may. through appropriate state 2.Renumber subsequent paragraphs
member. legislative body.or processes,waive the current practice of Attachment B.
subdivision: under OMB Circular A-102 making 3.Insert language in subparagraph
Comment This tracks the exception at 26 Circular A-122 applicable to nonprofit B.4.b of Attachment A. so that it reads
•
U.S.C.Section 4911(d)(2)(B). subgrantees with regard to such as follows:
(2)Any communication with an lobbying activities at the state level as b.Promotion,lobbying or related
are deemed appropriate. activities(as executive branch official or employee. Comment:The lnterrnal Revenue Code B21(b)of Attachment B subparagraph nd public
other than a communication made ), p
expressly unallowable by paragraph provisions defining"influencing legislation" relations.
ex
ex3 hereof. cover lobbying at the state and local level,us
( ) do the current Defense Acquistion Comments This is a technical language
Comment:This is identical in substance to Regulations(DAR).Section 15-205.51 and the change,which amends the former term
the exception at 26 U.S.C.Section 4911 current Federal Procurement Regulations "lobbying"to"lobbying and related
(d)(2)(F).Reud in conjunction with (FPR).Section 1-15.205-52.This activities."The added language is"or related
subparagraph b(3).the effect is to make clear subparagraph is narrower than those activities(as defined by subparagraph B21th)
that the only contacts with executive branch provisions because(1)lobbying at the local of Attachment B)."
officials made unallowable are those in level is not covered.and(2)lobbying at the 11'rt riot 83-xrae Fled 11-2-63: mini
connection with the signing or veto rr state level is not covered if it(a)directly SILtiNG COOE 3110-01-tr
7.7
ItECE
''"''% EXECUTIVE OFFICE OF THE PRESIDENT 1 v�+t
k OFFICE OF MANAGEMENT AND BUDGET
dX.F1„ APR 4 1994
WASHINGTON. D.G. 20503
November 19, 1993•
D h U
THE DIRECTOR
Ofti
CIRCULAR NO. A-110
Revised
TO THE HEADS OF EXECUTIVE DEPARTMENTS AND ESTABLISHMENTS
SUBJECT: Uniform Administrative Requirements for Grants and
Agreements With Institutions of Higher Education,
Hospitals, and Other Non-Profit Organizations
1. Purpose. This. Circular sets forth standards for obtaining
consistency and uniformity among Federal agencies in the
administration of grants to and agreements with institutions
of higher education, hospitals, and other non-profit
organizations.
2. Authority. Circular A-110 is issued under the authority of
31 U.S.C.C. 503 (the Chief Financial Officers Act) , 31 U.S.C.
1111, 41 U.S.C. 405 (the Office of Federal Procurement
Policy Act) , Reorganization Plan No. 2 of 1970, and E.O.
11541 ("Prescribing the Duties of the .Office of Management
and Budget and the Domestic Policy Council in the Executive
Office of the President") .
3 . Policy. Except as provided herein, the standards set forth
in this Circular are applicable to all Federal agencies. If
any statute specifically prescribes policies or specific
requirements that differ from the standards provided herein,
the provisions of the statute shall govern.
The provisions of the sections of this Circular shall be
applied by Federal agencies to recipients. Recipients shall
apply the provisions of this Circular to subrecipients
performing substantive work under grants and agreements that
are passed through or awarded by the primary recipient, if
such subrecipients are organizations described in paragraph
1.
This Circular does not apply to grants, contracts, or other
agreements between the Federal Government and units of State
or local governments covered by OMB Circular A-102 , "Grants
and Cooperative Agreements with State and Local
Governments, " and the Federal agencies' grants management
common rule which standardized and codified the
administrative requirements Federal agencies impose on State
and local grantees. In addition, subawards and contracts to
State or local governments are not covered by this Circular.
However, this Circular applies to subawards made' by State
and local governments to organizations covered by this
•
Circular. Federal agencies may apply the provisions of this
Circular to commercial organizations, foreign governments,
organizations under the jurisdiction of foreign governments,
and international organizations.
4. Definitions. Definitions of key terms used in this Circular
are contained in Section .2 in the Attachment.
5. Reauired Action. The specific requirements and
responsibilities of Federal agencies and institutions of
higher education, hospitals, and other non-profit
organizations are set forth in this Circular. Federal
agencies responsible for awarding and administering grants
to and other agreements with organizations described in
paragraph 1 shall adopt the language in the Circular unless
different provisions are required by Federal statute or are
approved by OMB.
•
6. OMB Resmonsibilities. OMB will review agency regulations
and implementation of this Circular, and will provide
interpretations of policy requirements and assistance to
insure effective and efficient implementation. Any
exceptions will be subject to approval by OMB, as indicated
in Section .4 in the Attachment. Exceptions will only be
made in particular cases where adequate justification is
presented.
7. Information Contact. Further information concerning this
Circular may be obtained by contacting the Office of Federal
Financial Management, Office of Management and Budget,
Washington, DC 20503, Telephone (202) 395-3993.
8. Termination Review Date. This Circular, will have a policy
review three years from date of issuance.
9. Effective Date. The standards set forth in this Circular
which affect Federal agencies will be effective 30 days
after publication of the final revision in the Federal
Register. Those standards which Federal agencies impose on
grantees will be adopted by agencies in codified regulations
within six months after publication in the Federal Register.
Earlier implementation is encoura.
41 E. Panetta
Director
Attachment
-2-
•
Grants and Agreements with Institutions of Higher Education,
Hospitals, and Other Non-Profit Organizations
SUBPART A - GENERAL
•
Sec
. 1 Purpose.
.2 Definitions.
. 3 Effect on other issuances.
.4 Deviations.
. 5 Subawards.
SUBPART B - PRE-AWARD REQUIREMENTS
. lo Purpose.
. 11 Pre-award policies.
. 12 Forms for applying for Federal assistance.
. 13 Debarment and suspension.
. 14 Special award conditions.
. 15 Metric system of measurement.
. 16 Resource Conservation and Recovery Act.
. 17 Cehtifications and representations.
SUBPART
C - POST-AWARD REQUIREMENTS
• Financial and Program Management
. .20 Purpose of financial and program management.
• . 21 Standards for financial management systems.
.22 Payment.
.23 Cost sharing or matching.
. 24 Program income.
. 25 Revision of budget and program plans.
.26 Non-Federal audits.
.27 Allowable costs.
. 28 Period of availability of funds. •
Property Standards
. 30 Purpose of property standards.
• . 31 Insurance coverage.
.32 Real property.
.33 Federally-owned and exempt property.
.34 Equipment.
. 35 Supplies and other expendable property.
. 36 Intangible property.
.37 Property trust relationship.
• 3
Procurement Standards
.40 Purpose of procurement standards.
. 41 Recipient responsibilities.
.42 Codes of conduct.
.43 Competition. •
. 44 Procurement procedures.
.45 Cost and price analysis. .
. 46 Procurement records.
. 47 Contract administration.
.48 Contract provisions.
Reports and Records
. 50 Purpose of reperts and records.
. 51 Monitoring and reporting program performance.
. 52 Financial reporting.
. 53 Retention and access requirements for records.
Termination and Enforcement
. 60 Purpose of termination and enforcement.
. 61 Termination.
. 62 Enforcement.
SUBPART D - AFTER-THE-AWARD REQUIREMENTS
.70 Purpose. •
. 71 Closeout procedures. •
.72 Subsequent adjustments and continuing responsibilities.
.73 Collection of amounts due.
p
APPENDIX A —CONTRACT PROVISIONS
SUBPART A - General
. 1 Purpose. This Circular establishes uniform
administrative requirements for Federal grants and agreements
awarded to institutions of higher education, hospitals, and other
non-profit organizations. Federal awarding agencies shall not
impose additional or inconsistent requirements, except as
provided in Sections .4 , and . 14 or unless specifically
required by Federal statute or executive order. Non-profit
organizations that implement Federal programs. for the States are
also subject to State requirements.
. 2 Definitions.
(a) Accrued expenditures means the charges incurred by the
recipient during a given period requiring the provision of
4
funds for: (1) goods and other tangible property received;
(2) services performed by employees, contractors,
subrecipients, and other payees; and, (3) other amounts
becoming owed under programs for which no current services
or performance is required.
(b) Accrued income means the sum of: (1) earnings during a given
period from (i) services performed by the recipient, and
(ii) goods and other tangible property delivered to
purchasers, and (2) amounts becoming owed to the recipient
for which no current services or performance is required by
the recipient..
(c) Acquisition cost of equipment means the net invoice price of
the equipment, including the cost of mcdificaticns,
attachments, accessories, or auxiliary apparatus necessary
to make the property usable for the purpose for which it was
acquired. Other charges, such as the cost of installation,
transportation, taxes, duty or protective in-transit
insurance, shall be included or excluded from the unit
acquisition cost in accordance with the recipient's regular
accounting practices.
(d) Advanc+ means a payment made by Treasury check or other
appropriate payment mechanism to a recipient upon its
request either before outlays are made by the recipient or
through the use of predetermined payment schedules.
(e) Award means •f inancial assistance that provides support or
stimulation to accomplish a public purpose. Awards include
grants and other agreements in the form of money or property
in lieu of money, by the Federal Government to an eligible
recipient. -The term does not include: technical assistance,
which provides services instead of money; other assistance
in the form of loans, loan guarantees, interest subsidies,
or insurance; direct payments of any kind to individuals;
and, contracts which are required to be entered into and
administered under procurement laws and regulations.
(f) Cash contributions means the recipient's cash outlay,
including the outlay of money contributed to the recipient
by third parties.
(g) Closeout means the process by which a Federal awarding
agency determines that all applicable administrative actions
and all required work of the award have been completed by
the recipient and Federal awarding agency.
(h) Contract means a procurement contract under an award or
subaward, and a procurement subcontract under a recipient's
or subrecipient's contract.
5
at
(i) Cost sharing or matching mean thatrpo pGortion
onrof project or
program costs not borne by the
(j) pate of completion means the date on which all work under an
award is completed or the date on the award document, or any
supplement or amendment thereto, on which Federal
sponsorship ends.
(k) Disallowed costs means those
charges
to bean award tha unallowablet inthe
Federal awarding agency determines to
accordance with the applicable Federal cost principles or
other terms and conditions contained in the award.
(1) Equipment means tangible nonexpendable personal property
including exempt property charged directly to the award
having a useful life of more than one year and an
acquisition cost of $5000 or more per unit. However,
consistent with recipient policy, lower limits may be
established.
(m) Excess property means property under the control of any
Federal awarding agency that, as determined by the head
thereof, is no longer required for its needs or the
discharge of its responsibilities.
(n) Exempt property means tangible personal property acquired in
whole or in part with Federal funds, where the Federal
awarding agency has statutory authority to vest title in the
recipient without further obligation to the Federal
Government. An example of exempt property authority is
contained in the Federal Grant and Cooperative Agreement Act
(31 U.S.C. 6306) , for property acquired under an award to
conduct basic or applied research by a non-profit
institution of higher education or non-profit organization
whose principal purpose is conducting scientific research.
(o) Federal awarding agency means the Federal agency that
provides an award to the recipient.
(p) Federal funds authorized means the total amount of Federal
funds obligated by the Federal Government for use by the
recipient. This amount may include any authorized carryover
of unobligated funds from prior funding periods when
permitted by agency regulations or agency implementing
instructions.
(q) Federal share of real property, equipment, or supplies means
that percentage of the property's acquisition costs and any
improvement expenditures paid with Federal funds.
(r) Funding period means the period of time when Federal funding
is available for obligation by the recipient.
6
(s) Intangible property and debt instruments means, but is not
limited to, trademarks, copyrights, patents and patent
applications and such property as loans, notes and other
debt instruments, lease agreements, stock and other
instruments of property ownership, whether considered
tangible or intangible.
(t) Obligations means the amounts of orders placed, contracts
and grants awarded, services received and similar
transactions during a given period that require payment by
the recipient during the same or a future period.
(u) Outlays or expenditures means charges made to the project or
program. They may be reported on a cash or accrual basis.
For reports prepared on a cash basis, outlays are the sum of
cash disbursements for direct charges for goods and
services, the amount of indirect expense charged, the value
of third party in-kind contributions applied and the amount
of cash advances and payments made to subrecipients. For
basis, outlays on an accrual are the sum of
reports prepared
cash disbursements for direct charges for goods and
services, the amount of indirect expense incurred, the value
of in-kind contributions applied, and the net increase (or
decreate) in the amounts owed by the recipient for goods and
other property received, for services performed by
employees, contractors, subrecipients and other payees and
other amounts becoming owed under programs for which no
current services or performance are required.
(v) Personal property means property of any kind except real
property. It may be tangible, having physical existence, or
intangible, having no physical existence, such as
copyrights, patents, or securities.
(w) prior approval means written approval by an authorized
official evidencing prior consent.
(x) Program income means gross income earned by the recipient
that is directly generated by a supported activity or earned
as a result of the award (see exclusions in paragraphs
. 24 (e) and (h) ) . Program income includes, but is not
limited to, income from fees for services performed, the use
or rental of real or personal property acquired under
federally-funded projects, the sale of commodities or items
fabricated under an award, license fees and royalties on
patents and copyrights, and interest on loans made with
award funds. Interest earned on advances of Federal funds
is not program income. Except as otherwise provided in
Federal awarding agency regulations or the terms and
conditions of the award, program income does not include the
receipt of principal on loans, rebates, credits, discounts,
etc. , or interest earned on any of them.
7
(y) project costs means all allowable costs, as set forth in the
applicable Federal cost principles, incurred by a recipient
and the value of the contributions made by third parties in
accomplishing the objectives of the award during the project
period.
(z) Protect period means the period established in the award
document during which Federal sponsorship begins and ends.
(aa) Property means, unless otherwise stated, real property,
equipment, intangible property and debt instruments.
(bb) Real property means land, including land improvements,
structures and appurtenances thereto, but excludes movable
machinery and equipment.
(cc) Recipient means an organization receiving financial
assistance directly from Federal awarding agencies to carry
out a project or program. The term includes public and
private institutions of higher education, public and private
hospitals, and other quasi-public and private non-profit
organizations such as, but not limited to, community action.
agencies, research institutes, educational associations, and
health centers. The term may include commercial
organizations, foreign or international organizations (such
as agencies of the United Nations) which are recipients,
subrecipients, or contractors or subcontractors of
recipients or subrecipients at the discretion of the Federal
awarding agency. The term does not include government-owned
contractor-operated facilities or research centers providing
continued support for mission-oriented, large-scale programs
that are government-owned or controlled, or are designated
as federally-funded research and development centers.
(dd) Research and development means all research activities, both
basic and applied, and all development activities that are
supported at universities, colleges, and other non-profit
institutions. "Research" is defined as a systematic study
directed toward fuller scientific knowledge or understanding
of the subject studied. "Development" is the systematic use
of knowledge and understanding gained from research directed
toward the production of useful materials, devices, systems,
or methods, including design and development of prototypes
and processes. The term research also includes activities
involving the training of individuals in research techniques
where such activities utilize the same facilities as other
research and development activities and where such
activities are not included in the instruction function.
(ee) Small awards means a grant or cooperative agreement not
exceeding the small purchase threshold fixed at 41 U.S.C.
403 (11) (currently $25, 000) .
8
(ff) Subaward means an award of financial assistance in the form
of money, or property in lieu of money, made under an award
by a recipient to an eligible subrecipient or .by a
subrecipient to a lower tier subrecipient. The term
includes financial assistance when provided by any legal
agreement, even if the agreement is called a contract, but
does not include procurement of goods and services nor does
it include any form of assistance which is excluded from the
definition of "award" in paragraph (e) .
(gg) Subrecipient means the legal entity to which i subaward is
made and which is accountable to the recipient for the use
of the funds provided. The term may include foreign or
international organizations (such as agencies of the United
Nations) at the discretion ofthe Fe
deral awarding agency.
(hh) Supplies means all personal property excluding equipment,
• intangible property, and debt instruments as defined in this
section, and inventions of a contractor conceived or first
actually reduced to practice in the performance of work
under a funding agreement ("subject inventions") , as defined
in 37 CFR part 401, "Rights to Inventions Made by Nonprofit
Organizations and Small Business Firms Under Government
GrantA, Contracts, and Cooperative Agreements. "
(ii) Suspension means an action by a Federal awarding agency that
temporarily withdraws Federal sponsorship under an award,
pending corrective action by the recipient or pending a
decision to terminate the award by the Federal awarding
agency. Suspension of an award is a separate action from
suspension under Federal agency regulations implementing
E.O.s 12549 and 12689 , "Debarment and Suspension. "
(jj ) Termination means the cancellation of Federal sponsorship,
in whole or in part, under an agreement at any time prior to
the date of completion.
(kk) Third party in-kind contributions means the value of non-
cash contributions provided by non-Federal third parties.
Third party in-kind contributions may be in the form of real
property, equipment, supplies and other expendable property,
and the value of goods and services directly benefiting and
specifically identifiable to the project or program.
(11) Unliauidated obligations, for financial reports prepared on
a cash basis, means the amount of obligations incurred by
the recipient that have not been paid. For reports prepared
on an accrued expenditure basis, they represent the amount
of obligations incurred by the recipient for which an outlay
has not been recorded.
9
(mm) Unobligated balance means the portion of the funds
authorized by the Federal awarding agency that has not been
obligated by the recipient and is determined by deducting
the cumulative obligations from the cumulative funds
authorized.
(nn) Unrecovered indirect cost means the difference between the
amount awarded and the amount which could have been awarded
under the recipient's approved negotiated indirect cost
rate.
(oo) Working capital advance means a procedure where by funds are
advanced to the recipient to cover its estimated
disbursement needs for a given initial period.
. 3 Effect on other issuances. For awards subject to this
Circular, all administrative requirements of codified program
regulations, program manuals, handbooks and other nonregulatory
materials which are inconsistent with the requirements of this
Circular shall be superseded, except to the extent they are
required by statute, or authorized in accordance with the
deviations provision in Section . 4.
. 4 Deviations. The Office of Management and Budget (OMB)
may grant exceptions for classes of grants or recipients subject
to the requirements of this Circular when exceptions are not
prohibited by statute. However, in the interest of maximum
uniformity, exceptions from the requirements of this Circular
shall be permitted only in unusual circumstances. Federal
awarding agencies may apply more restrictive requirements to a
class of recipients when approved by OMB. Federal awarding
agencies may apply less restrictive requirements when awarding
small awards, except for those requirements which are statutory.
Exceptions on a case-by-case basis may also be made by Federal
awarding agencies.
. 5 Subawards. Unless sections of this Circular specifically
exclude subrecipients from coverage, the provisions of this
Circular shall be applied to subrecipients performing work under
awards if such subrecipients are institutions of higher
education, hospitals or other non-profit organizations. State
and local government subrecipients are subject to the provisions
of regulations implementing the grants management common
rule, "Uniform Administrative Requirements for Grants and
Cooperative Agreements to State and Local Governments, " published
at 53 FR 8034 (3/11/88) .
SUBPART B - Pre-Award Requirements
. 10 Purpose. Sections . 11 through .17 prescribes
forms and instructions and other pre-award matters to be used in
applying for Federal awards.
10
•
. 11 Pre-award policies.
(a) Use of Grants and Cooperative Agreements, and Contracts. In
each instance, the Federal awarding agency shall decide on
the appropriate award instrument (i.e. , grant, cooperative
agreement, or contract) . The Federal Grant and Cooperative
Agreement Act (31 U.S.C. 6301-08) governs the use of grants,
cooperative agreements and contracts. A grant or
cooperative agreement shall be used only when the principal
purpose of a transaction is to accomplish a public purpose
of support or stimulation authorized by Federal statute.
The statutory criterion for choosing between grants and
cooperative agreements is that for the latter, "substantial
involvement is expected between -the executive agency and the
State, local government, or other recipient when carrying
out the activity contemplated in the agreement. " Contracts
shall be used when the principal purpose is acquisition of
property or services for the direct benefit or use of the
Federal Government.
(b) Public Notice and Priority Setting. Federal awarding
agencies shall notify the public of its intended funding
priorities for discretionary grant programs, unless funding
priorities are established by Federal statute.
. 12 Forms for applying for Federal assistance.
(a) Federal awarding agencies shall comply with the applicable
report clearance requirements of 5 CFR part 1320,
"Controlling Paperwork Burdens on the Public, " with regard
to all forms used by the Federal awarding agency in place of
or as a supplement to the Standard Form 424 (SF-424) series.
(b) Applicants shall use the SF-424 series or those forms and ,
instructions prescribed by the Federal awarding agency.
(c), For Federal programs covered by E.O. 12372,
"Intergovernmental Review of Federal Programs , " the
applicant shall complete the appropriate sections of the SF-
_ 424 (Application for Federal Assistance) indicating whether
the application was subject to review by the State Single
Point of Contact (SPOC) . The name and address of the SPOC
for a particular State can be obtained from the Federal
awarding agency or the Catalog of Federal Domestic
Assistance. The SPOC shall advise the applicant whether the
program for which application is made has been selected by
that State for review.
(d) Federal awarding agencies that do not use the SF-424 form
should indicate whether the application is subject to review
by the State under E.O. 12372.
11
. 13 Debarment and suspension. Federal awarding agencies and
recipients shall comply with the nonprocurement debarment and
suspension common rule implementing E.O.s 12549 and 12689,
"Debarment and Suspension. "' This common rule restricts subawards
and contracts with certain parties that are debarred, suspended
or otherwise excluded from or ineligible for participation in
Federal assistance programs or activities.
. 14 Special award conditions. If an applicant or recipient:
(a) has a history of poor performance, (b) is not financially
stable, (c) has a management system that does not beet the
standards prescribed in this Circular, (d) has not conformed to
the terms and conditions of a previous award, or (e) is not
otherwise responsible, Federal awarding agencies may impose
additional requirements as needed, provided that such applicant
or recipient is notified in writing as to: the nature of the
additional requirements, the reason why the additional
requirements are being imposed, the nature of the corrective.
action needed, the time allowed for completing the corrective
actions, and the method for requesting reconsideration of the
additional requirements imposed. Any special conditions shall be
promptly removed once the conditions that prompted them have been
corrected.
. 15 Metric system of measurement. The Metric Conversion
Act, as amended by the Omnibus Trade and Competitiveness Act (15
U. S.C. 205) declares that the metric system is the preferred
measurement system for U.S. trade and commerce. The Act requires
each Federal agency to establish a date or dates in consultation
with the Secretary of Commerce, when the metric system of
measurement will be used in the agency's procurements, grants,
and other business-related activities. Metric implementation may
take longer where the use of the system is ilnitially impractical
or likely to cause significant inefficiencies in the
accomplishment of federally-funded activities. Federal awarding
agencies shall follow the provisions of E.O. 12770, "Metric Usage
in Federal Government Programs. "
. 16 Resource Conservation and Recovery Act (RCRA) (Pub. L.
94-580 codified at 42 U.S.C. 6962) . Under the Act, any State
agency or agency of a political subdivision of a State which is
using appropriated Federal funds must comply with Section 6002 .
Section 6002 requires that preference be given in procurement
programs to the purchase of specific products containing recycled
materials identified in guidelines developed by the Environmental
Protection Agency (EPA) (40 CFR parts 247-254) . Accordingly,
State and local institutions of higher education, hospitals, and
non-profit organizations that receive direct Federal awards or
other Federal funds shall give preference in their procurement
programs funded with Federal funds to the purchase of recycled
products pursuant to the EPA guidelines.
12
. 17 Certifications and representations. Unless prohibited
by statute or codified regulation, each Federal awarding agency
is authorized and encouraged to allow recipients to submit
certifications and representations required by statute, executive
order, or regulation on an annual basis, if the recipients have
ongoing and continuing relationships with the agency. Annual
certifications and representations shall be signed by responsible
officials with the authority to ensure recipients' compliance
with the pertinent requirements.
SUBPART C - Post-Award Requirements
Financial and Program Manactement
. 20 Purpose of financial and program management. Sections
.21 through .28 prescribe standards for financial
management systems, methods for making payments and rules for:
satisfying cost sharing and matching requirements, accounting for
program income, budget revision approvals, making audits,
determining allowability of cost, and establishing fund
availability.
. 21 Standards for financial management systems.
4
(a) Federal awarding agencies shall require recipients to relate
financial data to performance data and develop unit cost
information whenever practical.
(b) Recipients' financial management systems shall provide for
the following.
(1) Accurate, current and complete disclosure of the
financial results of each federally-sponsored project
or program in accordance with the reporting
requirements set forth in Section .52. If a
Federal awarding agency requires reporting on an
accrual basis from a recipient that maintains its
records on other than an accrual basis, the recipient
shall not be required to establish an accrual
accounting system. These recipients .may develop such
accrual data for its reports on the basis of an
analysis of the documentation on hand.
(2) Records that identify adequately the source and
application of funds for federally-sponsored
activities. These records shall contain information
pertaining to Federal awards, authorizations,
obligations, unobligated balances, assets, outlays,
income and interest.
(3) Effective control over and accountability for all
funds, property and other assets. Recipients. shall
13
_i (I)
adequately safeguard all such assets and assure they
are used solely for authorized purposes.
(4) Comparison of outlays with budget amounts for each
award. Whenever appropriate, financial information
should be related to performance and unit cost data.
(5) Written procedures to minimize the time elapsing
between the transfer of funds to the recipient from the
U.S. Treasury and the issuance or redemption of checks,
warrants or payments by other means for program
purposes by the recipient. To the extent that the
provisions of the Cash Management Improvement Act
(CMIA) (Pub. L. 101-453) govern, payment methods of
State agencies, instrumentalities, and fiscal agents
shall be consistent with CMIA Treasury-State Agreements
or the CMIA default procedures codified at 31 CFR part
205, "Withdrawal of Cash from the Treasury for Advances
under Federal Grant and Other Programs. "
(6) Written procedures for determining the reasonableness,
allocability and allowability of costs in accordance
with the provisions of the applicable Federal cost
principles and the terms and conditions of the award.
(7) Accounting records including cost accounting records
that are supported by source documentation.
(c) Where the Federal Government guarantees or insures the
repayment of money borrowed by the recipient, the Federal
awarding agency, at its discretion, may require adequate
bonding and insurance if the bonding and insurance
requirements of the recipient are not degmed adequate to
protect the interest of the Federal Government.
(d) The Federal awarding agency may require adequate fidelity
bond coverage where the recipient lacks sufficient coverage
to protect the Federal Government's interest.
(e) Where bonds are required in the situations described above,
the bonds shall be obtained from companies holding
certificates of authority as acceptable sureties, as
prescribed in 31 CFR part 223 , "Surety Companies Doing
Business with the United States. "
14
.22 Payment.
•
(a) Payment methods shf�oml mthemize Unitedthe
States elapsing
Treasurybetween
thethe
transfer of funds b
issuance or redemption of checks, warrants, or payment y
other means by the recipients. Payment methods of State
agencies or instrumentalities shall be consistent with
Treasury-State CMIA agreements or default procedures
codified at 31 CFR part 205.
(b) Recipients are to be paid in advance, provided they maintain
or demonstrate the willingness to maintain: (1) written
procedures that minimize the time elapsing between the
transfer of funds and disbursement by the recipient, and (2)
financial management systems that meet the standards for
fund control and accountability as established in Section
.21. Cash advances to a recipient organization shall be
limited to the minimum amounts needed and be timed to be in
accordance with the actual, immediate cash requirements of
the recipient organization in carrying out the purpose of
the approved program or project. The timing and amount of
cash advances shall be as close as is administratively
feasible to the actual disbursements by the recipient
organization for direct program or project costs and the
proportionate share of any allowable indirect costs.
(c) Whenever possible, advances shall be consolidated to cover
anticipated cash needs for all awards made by the Federal
awarding agency to the recipient.
•
• (1) Advance payment mechanisms include, but are not limited
to, Treasury check and electronic funds transfer.
(2) Advance payment mechanisms are subject to 31 CFR part
205.
(3) Recipients shall be authorized to submit requests for
advances and reimbursements at least monthly when electronic
• fund transfers are not used.
(d) Requests for Treasury check advance payment shall be
submitted on SF-270, "Request for Advance or Reimbursement, "
or other forms as may be authorized by OMB. This form is
not to be used when Treasury check advance payments are made
to the recipient automatically through the use of a
predetermined payment schedule or if precluded by special
Federal awarding agency instructions for electronic funds
transfer.
(e) Reimbursement is the preferred method when the requirements
in paragraph (b) cannot be met. Federal awarding agencies
may also use this method on any construction agreement, or
15
\i/I
if the major portion of the construction project is
accomplished through private market financing or Federal
loans, and the Federal assistance constitutes a minor
portion of the project.
(1) When the reimbursement method is used, the Federal
awarding agency shall make payment within 30 days after
receipt of the billing, unless the billing is improper.
(2) Recipients shall be authorized to submit request for
reimbursement at least monthly when electronic- funds
transfers are not used.
(f) If a recipient cannot meet the criteria for advance payments
and the Federal awarding agency has determined that
reimbursement is not feasible because the recipient lacks
sufficient working capital, the Federal awarding agency may
provide cash on a working capital advance basis. Under this
procedure, the Federal awarding agency shall advance cash to
the recipient to cover its estimated disbursement needs for
an initial period generally geared to the awardee's
disbursing cycle. Thereafter, the Federal awarding agency .
shall reimburse the recipient for its actual cash
disbursements. The working capital advance method of
payment shall not be used for recipients unwilling or unable
to provide timely advances to their subrecipient to meet the
subrecipient's actual cash disbursements.
(g) To the extent available, recipients shall disburse funds
available from repayments to and interest earned on a
revolving fund, program income, rebates, refunds, contract
settlements, audit recoveries and interest earned on such
funds before requesting additional cash payments.
(h) Unless otherwise required by statute, Federal awarding
agencies shall not withhold payments for proper charges made
by recipients at any time during the project period unless
(1) or (2) apply.
(1) A recipient has failed to comply with the project
objectives, the terms and conditions of the award, or
Federal reporting requirements.
(2) The recipient or subrecipient is delinquent in a debt to
the United States as defined in OMB Circular A-129 ,
"Managing Federal Credit Programs. " Under such conditions,
the Federal awarding agency may, upon reasonable notice,
inform the recipient that payments shall not be made for
obligations incurred after a specified date until the
conditions are corrected or the indebtedness to the Federal
Government is liquidated.
16
(i) Standards governing the use of banks and other institutions
as depositories of funds advanced under awards are as
follows.
(1) Except for situations described in paragraph (i) (2) ,
Federal awarding agencies shall not require separate
depository accounts for funds provided to a recipient
or establish any eligibility requirements for .
depositories for funds provided to a recipient.
However, recipients must be able to, account for the
receipt, obligation and expenditure of funds. .
(2) Advances of Federal funds shall be deposited and
maintained in insured accounts whenever possible.
(j) Consistent with the national goal of expanding the
opportunities for women-owned and minority-owned business
enterprises, recipients shall be encouraged to use women-
owned and minority-owned banks (a bank which is owned at
least 50 percent by women or minority group members) .
(k) Recipients shall maintain advances of Federal funds in
interest bearing accounts, unless (1) , (2) or (3) apply.
(1) The recipient receives less than $120, 000 in Federal
awards per year.
(2) The best reasonably available interest bearing account
would not be expected to earn interest in excess of $250 per
year on Federal cash balances.
(3) The depository would require an average or minimum
balance so high that it would not be feasible within the
expected Federal and non-Federal cash resources.
(1) For those entities where CMIA and its implementing
regulations do not apply, interest earned on Federal
advances deposited in interest bearing accounts shall be
remitted annually to Department of Health and Human
Services, Payment Management System, Rockville, MD 20852 .
Interest amounts up to $250 per year may be retained by the
recipient for administrative expense. State universities
and hospitals shall comply with CMIA, as it pertains to
interest. If an entity subject to CMIA uses its own funds
to pay pre-award costs for discretionary awards without
prior written approval from the Federal awarding agency, it
waives its right to recover the interest under CMIA.
(m) Except as noted elsewhere in this Circular, only the
following forms shall be authorized for the recipients in
requesting advances and reimbursements. Federal agencies
17
shall not require more than an original and two copies of
these forms.
(1) SF-270, Request for Advance or Reimbursement. Each
Federal awarding agency shall adopt the SF-270 as a
standard form for all nonconstruction programs when
electronic funds transfer or predetermined advance
methods are not used. Federal awarding agencies,
however, have the option of using this form for
construction programs in lieu of the SF-271, "Outlay
Report and Request for Reimbursement for Construction
Programs. "
(2) SF-271, Outlay Report and Request for Reimbursement for
Construction Programs. Each Federal awarding agency
shall adopt the SF-271 as the standard form to be used
for requesting reimbursement for construction programs . ,
However, a Federal awarding agency may substitute the
SF-270 when the Federal awarding agency determines that
it provides adequate information to meet Federal needs.
. 23 Cost sharing or matching.
(a) All contributions, including cash and third party in-kind,
shall be accepted as part of the recipient's cost sharing or
matching when such contributions meet all of the following
criteria.
(1) Are verifiable from the recipient's records.
(2) Are not included as contributions for any other
federally-assisted project or program.
r
(3) Are necessary and reasonable for proper and efficient
accomplishment of project or program objectives.
(4) Are allowable under the applicable cost principles.
(5) Are not paid by the Federal Government under another
award, except where authorized by Federal statute to be
used for cost sharing or matching.
(6) Are provided for in the approved budget when required
by the Federal awarding agency.
(7) Conform to other provisions of this Circular, as
applicable.
(b) Unrecovered indirect costs may be included as part of cost
sharing or matching only with the prior approval of the
Federal awarding agency.
18
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(c) Values for recipient contributions of services and property
shall be established in accordance with the applicable cost
principles. If a Federal awarding agency authorizes
recipients to donate buildings or land for
construction/facilities acquisition projects or long-term
use, the value of the donated property for cost sharing or
matching shall be the lesser of (1) or (2) .
(1) The certified value of the remaining life of the
property recorded in the recipient's accounting records
at the time of donation.
(2) The current fair market value. However, when there is
sufficient justification, the Federal awarding agency
may approve the use of the current fair market value of
the donated property, even if it exceeds the certified
value at the time - of donation to the project.
(d) Volunteer services furnished by professional and technical
personnel, consultants, and other skilled and unskilled
labor may be counted as cost sharing or matching if the
service is an integral and necessary part of an approved
project or program. Rates for volunteer services shall be
consistent with those paid for similar work in the
recipient's organization. In those instances in which the
required skills are not found in the recipient organization,
rates shall be consistent with those paid for similar work
in the labor market in which the recipient competes for the
kind of services involved. In either case, paid fringe
benefits that are reasonable, allowable, and allocable may
be included in the valuation.
(e) When an employer other than the recipient furnishes the
services of an employee, these services shall be valued at
the employee's regular rate of pay (plus an amount of fringe
benefits that are reasonable, allowable, and allocable, but
exclusive of overhead costs) , provided these services are in
the same skill for which the employee is normally paid.
(f) Donated supplies may include such items as expendable
equipment, office supplies, laboratory supplies or workshop
and classroom supplies. Value assessed to donated supplies
included in the cost sharing or matching share shall be
reasonable and shall not exceed the fair market value of the
property at the time of the donation.
(g) The method used for determining cost sharing or matching for
donated equipment, buildings and land for which title passes
to the recipient may differ according to the purpose of the
award, if (1) or (2) apply.
19
(1) If the purpose of the award is to assist the recipient
in the acquisition of equipment, buildings or land, the
total value of the donated property may be claimed as
cost sharing or matching.
(2) If the purpose of the award is to support activities
that require the use of equipment, buildings or land,
normally only depreciation or use charges for equipment
and buildings may be made. However, the full value of
equipment or other capital assets and fair rental
charges for land may be allowed, provided that the
Federal awarding agency has approved the charges.
(h) The value of donated property shall be determined in
accordance with the usual accounting policies of the
recipient, with the following qualifications.
(1) The value of donated land and buildings shall not
exceed its fair market value at the time of donation to
the recipient as established by an independent
appraiser (e.g. , certified real property appraiser or
General Services Administration representative) and
certified by a responsible official of the recipient.
(2) The value of donated equipment shall not exceed the
fair market value of equipment of the same age and
condition at the time of donation.
(3) The value of donated space shall not exceed the fair
rental value of comparable space as established by an
independent appraisal of comparable space and
facilities in a privately-owned building in the same
locality.
(4) The value of loaned equipment shall not exceed its fair
rental value.
(5) The following requirements pertain to the recipient's
supporting records for in-kind contributions from third
parties.
(i) Volunteer services shall be documented and, to the
extent feasible, supported by the same methods
used by the recipient for its own employees.
(ii) The basis for determining the valuation for
personal service, material, equipment, buildings
and land shall be documented.
I
20
.24 Program income.
(a), Federal awarding agencies shall apply the standards set
forth in this section in requiring recipient organization
to account for program income related to projects finance_
in whole or in part with Federal funds.
(b) Except as provided in paragraph (h) below, program income
earned during the project period shall be retained by the
recipient and, in accordance with Federal awarding agency
regulations or the terms and conditions of the award, shall
be used in one or more of the ways listed in the following.
(1) Added to funds committed to the project by the Federal
awarding agency and recipient and used to further
eligible project or program objectives.
(2) Used to finance the non-Federal share of the project or
program.
(3) Deducted from the total project or program allowable
cost in determining the net allowable costs on which
the Federal share of costs is based.
4
(c) When an agency authorizes the disposition of program income
as described in paragraphs (b) (1) or (b) (2) , program income
in excess of any limits stipulated shall be used in
accordance with paragraph (b) (3) .
(d) In the event that the Federal awarding agency does not
specify in its regulations or the terms and conditions of
the award how program income is to be used, paragraph (b) (3)
shall apply automatically to all projects or programs except
research. For awards that support research, paragraph
(b) (1) shall apply automatically unless the awarding agency
indicates in the terms and conditions another alternative on
the award or the recipient is subject to special award
conditions, as indicated in Section . 14 .
(e) Unless Federal awarding agency regulations or the terms and
conditions of the award provide otherwise, recipients shall
have no obligation to the Federal Government regarding
program income earned after the end of the project period.
(f) If authorized by Federal awarding agency regulations or the
terms and conditions of the award, costs incident to the
generation of program income may be deducted from gross
income to determine program income, provided these costs
have not been charged to the award.
21
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.O
(g) Proceeds from the sale of property shall be handled in
accordance with the requirements of the Property Standards
(See Sections .30 through . 37) .
(h) Unless Federal awarding' agency regulations or the terms and
condition of the award provide otherwise, recipients shall
have no obligation to the Federal Government with respect to
program income earned from license fees and royalties for
copyrighted material, patents, patent applications,
trademarks, and inventions produced under an award.
However, Patent and Trademark Amendments (35 U.S. C. 18)
apply to inventions made under an experimental,
developmental, or research award.
. 25 Revision of budget and program plans.
(a) The budget plan is the financial expression of the project
or program as approved during the award process. It may
include either the Federal and non-Federal share, or only
the Federal share, depending upon Federal awarding agency
requirements. It shall be related to performance for
program evaluation purposes whenever appropriate.
(b) Recipients are required to report deviations from budget and
program plans, and request prior approvals for budget and
program plan revisions, in accordance with this section.
(c) For nonconstruction awards, recipients shall request prior
approvals from Federal awarding agencies for one or more of
the following program or budget related reasons.
(1) Change in the scope or the objective of the project or
program (even if there is no associated budget revision
requiring prior written approval) .
(2) Change in a key person specified in the application or
award document.
(3) The absence for more than three months, or a 25 percent
reduction in time devoted to the project, by the
approved project director or principal investigator.
(4) The need for additional Federal funding.
(5) The transfer of amounts budgeted for indirect costs to
absorb increases in direct costs, or vice versa, if
approval is required by the Federal awarding agency.
(6) The inclusion, unless waived by the Federal awarding
agency, of costs that require prior approval in
accordance with OMB Circular A-21, "Cost Principles for
Institutions of Higher Education, " OMB Circular A-122,
22
"Cost Principles for Non-Profit Organizations , " or 45
CFR part 74 Appendix E, "Principles for Determining
Costs Applicable to Research and Development under
Grants and Contracts with Hospitals, " or .48 CFR part
31, "Contract Cost Principles and Procedures, " as
applicable.
(7) The transfer of funds allotted for training allowances
(direct payment to trainees) to other categories of
expense.
(8) Unless described in the application and funded in the
approved awards, the subaward, transfer or contracting
out of any work under an award. This provision does
not apply to the purchase of supplies, material,
equipment or general support services.
(d) No other prior approval requirements for specific items may
be imposed unless a deviation has been approved by OMB.
(e) Except for requirements listed in paragraphs (c) (1) and
(c) (4) of this section, Federal awarding agencies are
authorized, at their option, to waive cost-related and
administrative prior written approvals required by this
Circular and OMB Circulars A-21 and A-122 . Such waivers may
include authorizing recipients to do any one or more of the
following.
(1) Incur pre-award costs 90 calendar days prior to award
or more than 90 calendar days with the prior approval
of the Federal awarding agency. All pre-award costs
are incurred at the recipient's risk (i.e. , the Federal
awarding agency is under no obligation to reimburse
such costs if for any reason the recipient does not
receive an award or if the award is less than
anticipated and inadequate to cover such costs) .
(2) Initiate a one-time extension of the expiration date of
the award of up to 12 months unless one or more of the
following conditions apply. For one-time extensions,
the recipient must notify the Federal awarding agency
in writing with the supporting reasons and revised
expiration date at least 10 days before the expiration
date specified in the award. This one-time extension
may not be exercised merely for the purpose of using
unobligated balances.
(i) The terms and conditions of award prohibit
the extension.
(ii) The extension requires additional Federal
funds.
23
4
(iii) The extension involves any change in the
approved objectives or scope of the project.
(3) Carry forward unobligated balances to subsequent
funding periods.
(4) For awards that support research, unless the Federal
awarding agency provides otherwise in the award or in
the agency's regulations, the prior approval
requirements described in paragraph (e) are
automatically waived (i.e. , recipients need not obtain
such prior approvals) unless one of the conditions
included in paragraph (e) (2) applies.
(f) The Federal awarding agency may, at its option, restrict the
transfer of funds among direct cost categories or programs,
functions and activities for awards in which the Federal
share of the project exceeds $100, 000 and the cumulative
amount of such transfers exceeds or is expected to exceed 10
percent of the total budget as last approved by the Federal
awarding agency. No Federal awarding agency shall permit a
transfer that would cause any Federal appropriation or part
thereof to be used for purposes other than those consistent
with the original intent of the appropriation.
(g) All other changes to nonconstruction budgets, except for the
changes described in paragraph (j ) , do not require prior
approval.
(h•) For construction awards, recipients shall request prior
written approval promptly from Federal awarding agencies for
budget revisions whenever (1) , (2) or (3) apply.
(1) The revision results from changes in the scope or the
objective of the project or program.
(2) The need arises for additional Federal funds to
complete the project.
(3) A revision is desired which involves specific costs for
which prior written approval requirements may be
imposed consistent with applicable OMB cost principles
listed in Section . 27 .
(i) No other prior approval requirements for specific items may
be imposed unless a deviation has been approved by OMB.
(j) When a Federal awarding agency makes an award that provides
support for both construction and nonconstruction work, the
Federal awarding agency may require the recipient to request
prior approval from the Federal awarding agency before
24
making any fund or budget transfers between the two types of
work supported.
(k) For both construction and nonconstruction awards, Federal
awarding agencies shall require recipients to notify the
Federal awarding agency in writing promptly whenever the
amount of Federal authorized funds is expected to exceed the
needs of the recipient for the project period by more than
$5000 or five percent of the Federal award, whichever is
greater. This notification shall not be required if an
application for additional funding is submitted for a
continuation award.
(1) When requesting approval for budget revisions, recipients
shall use the budget forms that were used in the application
unless the Federal awarding agency indicates a letter of
request suffices.
(m) Within 30 calendar days from the date of receipt of the
request for budget revisions, Federal awarding agencies
shall review the request and notify the recipient whether
the budget revisions have been approved. If the revision is
still under consideration at the end of 30 calendar days,
the Federal awarding agency shall inform the recipient in
writing of the date when the recipient may expect the
decision.
.26 Non-Federal audits.
(a) Recipients and subrecipients that are institutions of higher
education or other non-profit organizations shall be subject
to the audit requirements contained in OMB Circular A-133 ,
"Audits of Institutions of Higher Education and Other Non-
- Profit Institutions. "
(b) State and local governments shall be subject to the audit
requirements contained in the Single Audit Act (31 U. S.C.
7501-7) and Federal awarding agency regulations implementing
OMB Circular A-128 , "Audits of State and Local
Governments. "
(c) Hospitals not covered by the audit provisions of OMB
Circular A-133 shall be subject to the audit requirements of
the Federal awarding agencies.
(d) Commercial organizations shall be subject to the audit
requirements of the Federal awarding agency or the prime
recipient as incorporated into the award document.
.27 Allowable costs. For each kind of recipient, there is a
set of Federal principles for determining allowable costs.
Allowability of costs shall be determined in accordance with the
25
•
cost principles applicablenci les a to the entity incurring the costs.
Thus, allowability of costs incurred by State, local or
federally-recognized Indian tribal governments is determined in
accordance with the provisions of OMB Circular A-87, "Cost
Principles for State and Local Governments. " The allowability of
costs incurred by non-profit organizations is determined in
accordance with the provisions of OMB Circular A-122, "Cost
Principles for Non-Profit Organizations. " The allowability of
costs incurred by institutions of higher education is determined
in accordance with the provisions of OMB Circular A-21, "Cost
Principles for Educational Institutions. " The allowability of
costs incurred by hospitals is determined in accordance with the
provisions of Appendix E of 45 CFR part 74 , "Principles for
Determining Costs Applicable to Research and Development Under
Grants and Contracts with Hospitals. " The allowability of costs
incurred by commercial organizations and those non-profit
organizations listed in Attachment C to Circular A-122 is
determined in accordance with the provisions of the Federal
Acquisition Regulation (FAR) at 48 CFR part 31.
.28 Period of availability of funds. Where a funding period
is specified, a recipient may charge to the grant only allowable
costs resulting from obligations incurred during the funding
period and any pre-award costs authorized by the Federal awarding
agency.
Property Standards
. 30 Purpose of property standards. Sections . 31 through
. 37 set forth uniform standards governing management and
disposition of property furnished by the Federal Government whose
cost was charged to a project supported by a Federal award.
Federal awarding agencies shall require recipients to observe
these standards under awards and shall not impose additional
requirements, unless specifically required by Federal statute.
The recipient may use its own property management standards and
procedures provided it observes the provisions of Sections
.31 through .37 .
. 31 Insurance coverage. Recipients shall, at a minimum,
provide the equivalent insurance coverage for real property and
equipment acquired with Federal funds as provided to property
owned by the recipient. Federally-owned property need not be
insured unless required by the terms and conditions of the award.
.32 Real property. Each Federal awarding agency shall
prescribe requirements for recipients concerning the use and
_ disposition of real property acquired in whole or in part under
awards. Unless otherwise provided by statute, such requirements,
at a minimum, shall contain the following.
26
(a) Title to real property shall vest in the recipient subject
to the condition that the recipient shall use the real
property for the authorized purpose of the project as long
as it is needed and shall not encumber the property without
approval of the Federal awarding agency.
(b) The recipient shall obtain written approval by the Federal
awarding agency for the use of real property in other
federally-sponsored projects when the recipient determines
that the property is no longer needed for the purpose of the
original project. Use in other projects shall be limited to
those under federally-sponsored projects (i.e. , awards) or
programs that have purposes consistent with those authorized
for support by the Federal awarding agency.
(c) When the real property is no longer needed as provided in
paragraphs (a) and (b) , the recipient shall request
disposition instructions from the Federal awarding agency or
its successor Federal awarding agency. The Federal awarding
agency shall observe one or more of the following
disposition instructions.
(1) The recipient may be permitted to retain title without
further obligation to the Federal Government after it
compensates the Federal Government for that percentage
of the current fair market value of the property
attributable to the Federal participation in the
project.
(2) The recipient may be directed to sell the property
under guidelines provided by the Federal awarding
agency and pay the Federal Government for that
percentage of the current fair market value of the
property attributable to the Federal participation in
the project (after deducting actual and reasonable
selling and fix-up expenses, if any, from the sales
proceeds) . When the recipient is authorized or
required to sell the property, proper sales procedures
shall be established that provide for competition to
the extent practicable and result in the highest
possible return.
(3) The recipient may be directed to transfer title to the
property the Federal Government or to an eligible
third party provided that, in such cases, the recipient
shall be entitled to compensation for its attributable
percentage of the current fair market value of the
property.
27
•
. 33 Federally-owned and exempt property.
(a) Federally-owned property.
(1) Title to federally-owned property remains vested in the
Federal Government. Recipients shall submit annually
an inventory listing of federally-owned property in
their custody to the Federal awarding agency. Upon
completion of the award or when the property is no
longer needed, the recipient shall report_ the property
to the Federal awarding agency for further Federal
agency utilization.
(2) If the Federal awarding agency has no further need for
the property, it shall be declared excess and reported
to the General Services Administration, unless the
Federal awarding agency has statutory authority to
dispose of the property by alternative methods (e.g. ,
the authority provided by the Federal Technology
Transfer Act (15 U.S.C. 3710 (I) ) to donate research
equipment to educational and non-profit organizations
in accordance with E.O. 12821, "Improving Mathematics
and Science Education in Support of the National
Education Goals. ") Appropriate instructions shall be
issued to the recipient by the Federal awarding agency.
(b) Exempt property. When statutory authority exists, the
Federal awarding agency has the option to vest title to
property acquired with Federal funds in the recipient
without further obligation to the Federal Government and
under conditions the Federal awarding agency considers
appropriate. Such property is "exempt property. " Should a
Federal awarding agency not establish cohditions, title to
exempt property upon acquisition shall vest in the recipient
without further obligation to the Federal Government.
.34 Equipment.
(a) Title to equipment acquired by a recipient with Federal
funds shall vest in the recipient, subject to conditions of
this section.
(b) The recipient shall not use equipment acquired with Federal
funds to provide services to non-Federal outside
organizations for a fee that is less than private companies
charge for equivalent services, unless specifically
authorized by Federal statute, for as long as the Federal
Government retains an interest in the equipment.
(c) The recipient shall use the equipment in the project or
program for which it was acquired as long as needed, whether
or not the project or program continues to be supported by
28
Federal funds and shall not encumber the property without
approval of the Federal awarding agency. When no longer
needed for the original project or program, the recipient
shall use the equipment in connection with its other
federally-sponsored activities, in the following order of
priority: (i) Activities sponsored by the Federal awarding
agency which funded the original project, then (ii)
activities sponsored by other Federal awarding agencies.
(d) During the time that equipment is used on the.project or
program for which it was acquired, the recipient shall make
it available for use on other projects or programs if such
other use will not interfere with the work on the project or
program for which the equipment was originally acquired.
First preference fcr such other use shall be given to other
projects or programs sponsored by the Federal awarding
agency that financed the equipment; second preference shall
be given to projects or programs sponsored by other Federal
awarding agencies. If the equipment is owned by the Federal
Government, use on other activities not sponsored by the
Federal Government shall be permissible if authorized by the
Federal awarding agency. User charges shall be treated as
program income.
(e) When acquiring replacement equipment, the recipient may use
the equipment to be replaced as trade-in or sell the
equipment and use the proceeds to offset the costs of the
replacement equipment subject to the approval of the Federal
awarding agency.
(f) The recipient's property management standards for equipment
acquired with Federal funds and federally-owned equipment
shall include all of the following.
(1) Equipment records shall be maintained accurately and
shall include the following information.
(i) A description of the equipment.
(ii). Manufacturer's serial number, model number,
Federal stock number, national stock number,
or other identification -number.
(iii) Source of the equipment, including the award
number.
(iv) Whether title vests in the recipient or the
Federal Government.
(v) Acquisition date (or date received, if the
equipment was furnished by the Federal
Government) and cost.
29
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010
•
_ (vi) Information from which one can calculate the
percentage of Federal participation in the
cost of the equipment (not applicable to
equipment furnished by the Federal
Government) .
(vii) Location and condition of the equipment and
the date the information was reported.
(viii) Unit acquisition cost.
(ix) Ultimate disposition data, including date of
disposal and sales price or the method used
to determine current fair market value where
a recipient compensates the Federal awarding
agency for its share.
(2) Equipment owned by the Federal Government shall be
identified to indicate Federal ownership.
(3) A physical inventory of equipment shall be taken and
the results reconciled with the equipment records at
least once every two years. Any differences between
quantities determined by the physical inspection and
those shown in the accounting records shall be
investigated to determine the causes of the difference.
The recipient shall, in connection :with the inventory,
verify the existence, current utilization, and
continued need for the equipment.
(4) A control system shall be in effect to insure adequate
safeguards to prevent loss, damage, or theft of the
equipment. Any loss, damage, or theft of equipment
shall be investigated and fully documented; if the
equipment was owned by the Federal Government, the
recipient shall promptly notify the Federal awarding
agency.
(5) Adequate maintenance procedures shall be implemented to
keep the equipment in good condition.
(6) Where the recipient is authorized or required to sell
the equipment, proper sales procedures shall be
established which provide for competition to the extent
practicable and result in the highest possible return.
(g) When the recipient no longer needs the equipment, the
equipment may be used for other activities in accordance
with the following standards. For equipment with a current
per unit fair market value of $5000 or more, the recipient
may retain the equipment for other uses provided that
compensation is made to the original Federal awarding agency
30
•
or its successor. The amount of compensation shall be
computed by applying the percentage of Federal participation
in the cost of the original project or program to the
current fair market value of the equipment. If the
recipient has no need for the equipment, the recipient shall
request disposition instructions from the Federal awarding
agency. The Federal awarding agency shall determine whether
the equipment can be used to meet the agency's requirements.
If no requirement exists within that agency, the
availability of the equipment shall be reported to the
General Services Administration by the Federal awarding
agency to determine whether a requirement for the equipment
exists in other Federal agencies. The Federal awarding
agency shall issue instructions to the recipient no later
than 120 calendar days after the recipient's request and the
following procedures shall govern.
(1) If so instructed or if disposition instructions are not
issued within 120 calendar days after the recipient's
request, the recipient shall sell the equipment and
reimburse the Federal awarding agency an amount
computed by applying to the sales proceeds the
percentage of Federal participation in the cost of the
original project or program. However, the recipient
shall be permitted to deduct and retain from the
Federal share $500 or ten percent of the proceeds,
whichever is less, for the recipient's selling and
handling expenses.
(2) If the recipient is instructed to ship the equipment
elsewhere, the recipient shall be reimbursed by the
Federal Government by an amount which is computed by
applying the percentage of the recipient's
participation in the cost of the original project or
program to the current fair market value of the
equipment, plus any reasonable shipping or interim
storage costs incurred.
(3) If the recipient is instructed to otherwise dispose of
the equipment, the recipient shall be reimbursed by the
Federal awarding agency for such costs incurred in its
disposition.
(4) The Federal awarding agency may reserve the right to
transfer the title to the Federal Government or to a
third party named by the Federal Government when such
third party is otherwise eligible under existing
statutes. Such transfer shall be subject to the
following standards.
31
41:
(i) The equipment shall be appropriately
identified in the award or otherwise made
known to the recipient in writing.
(ii) The Federal awarding agency shall issue
disposition instructions within 120 calendar
days after receipt of a final inventory. The
final inventory shall list all equipment
acquired with grant funds and federally-owned
equipment. If the Federal awarding agency
fails to issue disposition instructions
within the 120 calendar day period, the
recipient shall apply the standards of this
section, as appropriate.
(iii) When the Federal awarding agency exercises
its right to take title, the equipment shall
be subject to the provisions for federally-
owned equipment.
. 35 Supplies and other expendable property.
(a) Title to supplies and other expendable property shall vest
in the recipient upon acquisition. If there is a residual
inventory of unused supplies exceeding $5000 in total
aggregate value upon termination or completion of the
project or program and the supplies are not needed for any
other federally-sponsored project or program, the recipient
shall retain the supplies for use on non-Federal sponsored
activities or sell them, but shall, in either case,
compensate the Federal Government for its share. The amount
of compensation shall be computed in the same manner as for
equipment.
(b) The recipient shall not use supplies acquired with Federal
funds to provide services to non-Federal outside
organizations for a fee that is less than private companies
charge for equivalent services, unless specifically
authorized by Federal statute as long as the Federal
Government retains an interest in the supplies.
. 36 Intangible property.
(a) The recipient may copyright any work that is subject to
copyright and was developed, or for which ownership was
purchased, under an award. The Federal awarding agency(ies)
reserve a royalty-free, nonexclusive and irrevocable right
to reproduce, publish, or otherwise use the work for Federal
purposes, and to authorize others to do so.
(b) Recipients are subject to applicable regulations governing
patents and inventions, including government-wide
32
regulations issued by the Department of Commerce at 37 CFR
part 401, "Rights to Inventions Made by Nonprofit
Organizations and Small Business Firms Under Government
Grants, Contracts and Cooperative Agreements. "
(c) Unless waived by the Federal awarding agency, the Federal
Government has the right to (1) and (2) .
(1) Obtain, reproduce, publish or otherwise use the data
first produced under an award.
(2) Authorize others to receive, reproduce, publish, or
otherwise use such data for Federal purposes.
(d) Title to intangible property and debt instruments acquired
under an award or subaward vests upon acquisition in the
recipient. The recipient shall use that property for the
• originally-authorized purpose, and the recipient shall not
encumber the property without approval of the Federal
awarding agency. When no longer needed for the originally
authorized purpose, disposition of the intangible property
shall occur in accordance with the provisions of paragraph,
.344 (g)
.37 Property trust relationship. Real property, equipment,
intangible property and debt instruments that are acquired or
improved with Federal funds shall be held in trust by the
recipient as trustee for the beneficiaries of the project or
program under which the property was acquired or improved.
Agencies may require recipients to record liens or other
appropriate notices of record to indicate that personal or real
property has been acquired or improved with Federal funds and
that use and disposition conditions apply to the property.
Procurement Standards
.40 Purpose of procurement standards. Sections .41
through .4 set forth standards for use by recipients in
establishing procedures for the procurement of supplies and other
expendable property, equipment, real property and other services
with Federal funds. These standards are furnished to ensure that
such materials and services are obtained in an effective manner
and in compliance with the provisions of applicable Federal
statutes and executive orders. No additional procurement
standards or requirements shall be imposed by the Federal
awarding agencies upon recipients, unless specifically required
by Federal statute or executive order or approved by OMB.
.41 Recipient responsibilities. The standards contained in
this section do not relieve the recipient of the contractual
responsibilities arising under its contract(s) . The recipient is
the responsible authority, without recourse to the Federal
33
4.
awarding agency, regarding the settlement and satisfaction of all
contractual and administrative issues arising out of procurements
entered into in support of an award or other agreement. This
includes disputes, claims, protests of award, source evaluation
or other matters of a contractual nature. Matters concerning
violation of statute are to be referred to such Federal, State or
local authority as may have proper jurisdiction.
.42 Codes of conduct. The recipient shall maintain written
standards of conduct governing the performance of its employees
engaged in the award and administration of contracts. No
employee, officer, or agent shall participate in the selection,
award, or administration of a contract supported by Federal funds
if a real or apparent conflict of interest would be involved.
Such a conflict would arise when the employee, officer, or agent,
any member of his or her immediate family, his or her partner, or
an organization which employs or is about to employ any of the
parties indicated herein, has a financial or other interest in
the firm selected for an award. The officers, employees, and
agents of the recipient shall neither solicit nor accept
gratuities, favors, or anything of monetary value from
contractors, or parties to subagreements. However, recipients
may set standards for situations in which the financial interest
is not substantial or the gift is an unsolicited item of nominal
value. The standards of conduct shall provide for disciplinary
actions to be applied for violations of such standards by
officers, employees, or agents of the recipient.
.43 Competition. All procurement transactions shall be
conducted in a manner to provide, to the maximum extent
practical, open and free competition. The recipient shall be
alert to organizational conflicts of interest as well as
noncompetitive practices among contractors that may restrict or
eliminate competition or otherwise restrain trade. In order to
ensure objective contractor performance and eliminate unfair
competitive advantage, contractors that develop or draft
specifications, requirements, statements of work, invitations for
bids and/or requests for proposals shall be excluded from
competing for such procurements. Awards shall be made to the
bidder or offeror whose bid or offer is responsive to the
solicitation and is most advantageous to the recipient, price,
quality and other factors considered. Solicitations shall
clearly set forth all requirements that the bidder or offeror
shall fulfill in order for the bid or offer to be evaluated by
the recipient. Any and all bids or offers may be rejected when
it is in the recipient's interest to do so.
.44 Procurement procedures.
(a) All recipients shall establish written procurement
procedures. These procedures shall provide for, at a
minimum, that (1) , (2) and (3) apply.
34
(1) Recipients avoid purchasing unnecessary items.
(2) Where appropriate., an analysis is made of lease and
purchase alternatives to determine which would be the
most economical and practical procurement for the
Federal Government.
(3) Solicitations. for goods and services provide for all of
the following.
(i) A clear and accurate description of the
technical requirements for the material,
product or service to be procured. In
competitive procurements, such a description
shall not contain features which unduly
restrict competition.
(ii) Requirements which the bidder/offeror must
fulfill and all other factors to be used in
evaluating bids or proposals.
(iii) A description, whenever practicable, of
4 technical requirements in terms of functions
• to be performed or performance required,.
including the range. of acceptable
• characteristics or .minimum acceptable
standards.
•
:(iv) The specific features of "brand name or
equal" descriptions that bidders are required
• to meet when such items are included in the
• solicitation.
(v) The acceptance, to the extent practicable and
economically feasible, of products and
services dimensioned in the metric system of
measurement.
(vi) Preference, to the extent practicable and
economically feasible, for products and
services that conserve natural resources and
protect the environment and are energy
efficient.
(b) Positive .efforts shall be made by recipients to utilize
small businesses, minority-owned firms, and women's business
enterprises, whenever possible. Recipients of Federal
awards 'shall take all of the following. steps to further this
goal. '
35 •
(1) Ensure that small businesses, minority-owned firms, and
women's business enterprises are used to the fullest
extent practicable.
(2) Make information on forthcoming opportunities available
and arrange time frames for purchases and contracts to
encourage and facilitate participation by small
businesses, minority-owned firms, and women's business
enterprises.
(3) Consider in the contract process whether firms
competing for larger contracts intend to subcontract
with small businesses, minority-owned firms, and
women's business enterprises.
(4) Encourage contracting with consortiums of small
businesses, minority-owned firms and women's business
enterprises when a contract is too large for one of
these firms to handle individually.
(5) Use the services and assistance, as appropriate, of
such organizations as the Small Business Administration
and the Department of Commerce's Minority Business.
Development Agency in the solicitation and utilization
of small businesses, minority- owned firms and women's
business enterprises.
(c) The type of procuring instruments used (e.g. , fixed price
contracts, cost reimbursable contracts, purchase orders, and
incentive contracts) shall be determined by the recipient
but shall be appropriate for the particular procurement and
for promoting the best interest of the program or project
involved. The "cost-plus-a-percentage-of-cost" or
"percentage of construction cost" methods of contracting
shall not be used.
(d) Contracts shall be made only with responsible contractors
who possess the potential ability to perform successfully
under the terms and conditions of the proposed procurement.
Consideration shall be given to such matters as contractor
integrity, record of past performance, financial and
technical resources or accessibility to other necessary
resources. In certain circumstances, contracts with certain
parties are restricted by agencies' implementation of E.O. s
12549 and 12689 , "Debarment and Suspension. "
(e) Recipients shall, on request, make available for the Federal
awarding agency, pre-award review and procurement documents,
such as request for proposals or invitations for bids,
independent cost estimates, etc. , when any of the following
conditions apply. .
36
(1) A recipient's procurement procedures or operation fails
to comply with the procurement standards in the Federal
awarding agency's, implementation of this Circular.
(2) The procurement is expected to exceed the small
purchase threshold fixed at 41 U.S.C. 403 (11)
• (currently $25, 000) and is to be awarded without
competition or only one bid or offer is received in
response to a solicitation.
(3) The procurement, which is expected to exceed the small
purchase threshold, specifies a "brand name" product.
(4) The proposed award over the small purchase threshold is
to be awarded to other than the apparent low bidder
under a sealed bid procurement.
(5) A proposed contract modification changes the scope of a
contract or increases the contract amount by more than
the amount of the small purchase threshold.
.45 Cost and price analysis. Some form of cost or price .
analysis s iall be made and documented in the procurement files in
connection with every procurement action. Price analysis may be
accomplished in various ways, including the comparison of price
quotations submitted, market prices and similar indicia, together
with discounts. Cost analysis is the review and evaluation of
each element of cost to determine reasonableness, allocability
and allowability.
. 46 Procurement records. Procurement records and files for
purchases in excess of the small purchase threshold shall include
the following at a minimum: (a) basis for contractor selection,
(b) justification for lack of competition when competitive bids
or offers are not obtained, and (c) basis for award cost or
price.
.47 Contract administration. A system for contract
administration shall be maintained to ensure contractor
conformance with the terms, conditions and specifications of the
contract and to ensure adequate and timely follow up of all
purchases. Recipients shall evaluate contractor performance and
document, as appropriate, whether contractors have met the terms,
conditions and specifications of the contract.
.48 Contract provisions. The recipient shall include, in
addition to provisions to define a sound and complete agreement,
the following provisions in all contracts. The following
provisions shall also be applied to subcontracts.
(a) Contracts in excess of the small purchase threshold shall
contain contractual provisions or conditions that allow for
37
•
administrative, contractual, or legal remedies in instances
in which a contractor violates or breaches the contract
terms, and provide for such remedial actions as may be
appropriate.
(b) All contracts in excess of the small purchase threshold
shall contain suitable provisions for termination by the
recipient, including the manner by which termination shall
be effected and the basis for settlement. In addition, such
contracts shall describe conditions under which the contract
may be terminated for default as well as conditions where
the contract may be terminated because of circumstances
beyond the control of the contractor.
(c) Except as otherwise required by statute, an award that
requires the contracting (or subcontracting) for
construction or facility improvements shall provide for the
- recipient to follow its own requirements relating to bid
guarantees, performance bonds, and payment bonds unless the
construction contract or subcontract exceeds $100 , 000. For
those contracts or subcontracts exceeding $100, 000 , the
Federal awarding agency may accept the bonding policy and
requirements of the recipient, provided the Federal awarding
agency has made a determination that the Federal
Government's interest is adequately protected. If such a
determination has not been made, the minimum requirements
shall be as follows.
(1) A bid guarantee from each bidder equivalent to five
percent of the bid price. The "bid guarantee" shall
consist of a firm commitment such as a bid bond,
certified check, or other negotiable instrument
accompanying a bid as assurance that the bidder shall,
upon acceptance of his bid, execute such contractual
documents as may be required within the time specified.
(2) A performance bond on the part of the contractor for
100 percent of the contract price. A "performance
bond" is one executed in connection with a contract to
secure fulfillment of all the contractor's obligations
under such contract.
(3) A payment bond on the part of the contractor for 100
percent of the contract price. A "payment bond" is one
executed in connection with a contract to assure
payment as required by statute of all persons supplying
labor and material in the execution of the work
provided for in the contract.
(4) Where bonds are required in the situations described
herein, the bonds shall be obtained from companies
holding certificates of authority as acceptable
38
sureties pursuant to 31 CFR part 223 , "Surety Companies
Doing Business with the United States. "
(d) All negotiated contracts- (except those for less than the
small purchase threshold) awarded by recipients shall
include a provision to the effect that the recipient, the
Federal awarding agency, the Comptroller General of the
United States, or any of their duly authorized
representatives, shall have access to any books, documents,
papers and records of the contractor which are directly
pertinent to a specific program for the purpose of making
audits, examinations, excerpts and transcriptions.
(e) All contracts, including small purchases, awarded by
recipients and their contractors shall contain the
procurement provisions of Appendix A to this Circular, as
applicable.
Reports and Records
. 50 Purpose of reports and records. Sections .51
through . 53 set forth the procedures for monitoring and
reporting on the recipient's financial and program performance
and the necJssary standard reporting forms. They also set forth
record retention requirements.
.51 Monitoring and reporting program performance.
(a) Recipients are responsible for managing and monitoring each
project, program, subaward, function or activity supported
by the award. Recipients shall monitor subawards to ensure
subrecipients have met the audit requirements as delineated
in Section . 26.
(b) The Federal awarding agency shall prescribe the frequency
with which the performance reports shall be submitted.
Except as provided in paragraph .51(f) , performance
reports shall not be required more frequently than quarterly
or, less frequently than annually. Annual reports shall be
due 90 calendar days after the grant year; quarterly or
semi-annual reports shall be due 30 days after the reporting
period. The Federal awarding agency may require annual
reports before the anniversary dates of multiple year awards
in lieu of these requirements. The final performance
reports are due 90 calendar days after the expiration or
termination of the award.
(c) If inappropriate, a final technical or performance report
shall not be required after completion of the project.
(d) When required, performance reports shall generally contain,
for each award, brief information on each of the following.
39
(1) A comparison of actual accomplishments with the goals
and objectives established for the period, the findings
of the investigator, or both. Whenever appropriate and
the output of programs or projects can be readily
quantified, such quantitative data should be related to
cost data' for computation of unit costs.
(2) Reasons why established goals were not met, if
appropriate.
(3) Other pertinent information including, when
appropriate, analysis and explanation of cost overruns
or high unit costs.
(e) Recipients shall not be required to submit more than the
original and two copies of performance reports.
(f) Recipients shall immediately notify the Federal awarding
agency of developments that have a significant impact on the
award-supported activities. Also, notification shall be
given in the case of problems, delays, or adverse conditions
which materially impair the ability to meet the objectives
of the award. This notification shall include a statement
of the action taken or contemplated, and any assistance
needed to resolve the situation.
(g) Federal awarding agencies may make site visits, as needed.
(h) Federal awarding agencies shall comply with clearance
requirements of 5 CFR part 1320 when requesting performance
data from recipients.
. 52 Financial reporting.
(a) The following forms or such other forms as may be approved
by OMB are authorized for obtaining financial information
from recipients.
(1) SF-269 or SF-269A, Financial Status Report.
(i) Each Federal awarding agency shall require
recipients to use the SF-269 or SF-269A to
report the status of funds for all
nonconstruction projects or programs. A
Federal awarding agency may, however, have
the option of not requiring the SF-269 or SF-
269A when the SF-270, Request for Advance or
Reimbursement, or SF-272, Report of Federal
Cash Transactions, is determined to provide
adequate information to meet its needs,
except that a final SF-269 or SF-269A shall
40
be required at the completion of the project
when the SF-270 is used only for advances.
(ii) The Federal awarding agency shall prescribe
whether the report shall be on a cash or
accrual basis. If the Federal awarding
agency requires accrual information and the
recipient's accounting records are not
normally kept on the accrual basis, the
recipient shall not be required to convert
its accounting system, but shall develop such
accrual information through best estimates
based on an analysis of the documentation on
hand.
(iii) The Federal awarding agency shall determine
the frequency of the Financial Status Report
for each project or program, considering the
size and complexity of the particular project
or program. However, the report shall not be
required more frequently than quarterly or
less frequently than annually. A final
4 report shall be required at the completion of
the agreement.
(iv) The Federal awarding agency shall require
recipients to submit the SF-269 or SF-269A
(an original and no more than two copies) no
later than 30 days after the end of each
specified reporting period for quarterly and
semi-annual reports, and 90 calendar days for
annual and final reports. Extensions of
reporting due dates may be approved by the
Federal awarding agency upon request of the
recipient.
(2) SF-272 , Report of Federal Cash Transactions.
(i) When funds are advanced to recipients the
Federal awarding agency shall require each
recipient to submit the SF-272 and, when
necessary, its continuation sheet, SF-272a.
The Federal awarding agency shall use this
report to monitor cash advanced to recipients
and to obtain disbursement information for
each agreement with the recipients.
2 (ii) Federal awarding agencies may require
forecasts of Federal cash requirements in the
"Remarks" section of the report.
41
(iii) When practical and deemed necessary, Federal
awarding agencies may require recipients to
report in the "Remarks" section the amount of
cash advances received in excess of three
days. Recipients shall provide short
narrative explanations of actions taken to
reduce the excess balances.
(iv) Recipients shall be required to submit not
more than the original and two _copies of the
SF-272 15 calendar days following the end of
each quarter. The Federal awarding agencies
may require a monthly report from those
recipients receiving advances totaling $1
million or more per year.
(v) Federal awarding agencies may waive the
requirement for submission of the SF-272 for
any one of the following reasons: (1) When
monthly advances do not exceed $25 , 000 per
recipient, provided that such advances are
monitored through other forms contained in
this section; (2) If, in the Federal awarding
agency's opinion, the recipient' s accounting
controls are adequate to minimize excessive
Federal advances; or, (3) When the electronic
payment mechanisms provide adequate data.
(b) When the Federal awarding agency needs additional
information or more frequent reports, the following shall be
observed.
(1) When additional information is need&d to comply with
legislative requirements, Federal awarding agencies
shall issue instructions to require recipients to
submit such information under the "Remarks" section of
the reports.
(2) When a Federal awarding agency determines that a
recipient's accounting system does not meet the
standards in Section . 21, additional pertinent
information to further monitor awards may be obtained
upon written notice to the recipient until such time as
the system is brought up to standard. The Federal
awarding agency, in obtaining this information, shall
comply with report clearance requirements of 5 CFR part
1320.
(3) Federal awarding agencies are encouraged to shade out
any line item on any report if not necessary.
42
(4) Federal awarding agencies may accept the. identical
information from the recipients in machine readable
format or computer printouts or electronic outputs in
lieu of prescribed formats.
(5) Federal awarding agencies may provide computer or
electronic outputs to recipients when such expedites or
contributes to the accuracy of reporting.
.53 Retention and access requirements for records.
(a) This section sets forth requirements for record retention
and access to records for awards to recipients. Federal
awarding agencies shall not impose any other record
retention or access requirements upon recipients.
(b) Financial records, supporting documents, statistical
records, and all other records pertinent to an award shall
be retained for a period of three years from the date of
submission of the final expenditure report or, for awards
that are renewed quarterly or annually, from the date of the
submission of the quarterly or annual financial report, as
authorized by the Federal awarding agency. The only
exceptions are the following.
(1) If any litigation, claim, or audit is started before
the expiration of the 3-year period, the records shall
be retained until all litigation, claims or audit
findings involving the records have been resolved and
final action taken.
(2) Records for real property and equipment acquired with
Federal funds shall be retained for 3 years after final
- disposition.
(3) When records are transferred to or maintained by the
Federal awarding agency, the 3-year retention
requirement is not applicable to the recipient.
(4) Indirect cost rate proposals, cost allocations plans,
etc. as specified in paragraph . 53 (g) .
(c) Copies of original records may be substituted for the
original records if authorized by the Federal awarding
agency.
(d) The Federal awarding agency shall request transfer of
certain records to its custody from recipients when it
determines that the records possess long term retention
value. However, in order to avoid duplicate recordkeeping,
a Federal awarding agency may make arrangements for
43
recipients to retain any records that are continuously
needed for joint use.
(e) The Federal awarding agency, the Inspector General,
Comptroller General of the United States, or any of their
duly authorized representatives, have the right of timely
and unrestricted access to any books, documents, papers, or
other records of recipients that are pertinent to the
awards, in order to make audits, examinations, excerpts,
transcripts and copies of such documents. This right also
includes timely and reasonable access to a recipient's
personnel for the purpose of interview and discussion
related to such documents. The rights of access in this
paragraph are not limited to the required retention period,
but shall last as long as records are retained.
(f) Unless required by statute, no Federal awarding agency shall
place restrictions on recipients that limit public access to
the records of recipients that are pertinent to an award,
except when the Federal awarding agency can demonstrate that
such records shall be kept confidential and would have been
exempted from disclosure pursuant to the Freedom of
Information Act (5 U.S.C. 552) if the records had belonged
to the Federal awarding agency.
(g) Indirect cost rate proposals, cost allocations plans, etc.
Paragraphs (g) (1) and (g) (2) apply to the following types of
documents, and their supporting records: indirect cost rate
computations or proposals, cost allocation plans, and any
similar accounting computations of the rate at which a
particular group of costs is chargeable (such as computer
usage chargeback rates or composite fringe benefit rates) .
(1) If submitted for negotiation. If the recipient submits
to the Federal awarding agency or the subrecipient
submits to the recipient the proposal, plan, or other
computation to form the basis for negotiation of the
rate, then the 3-year retention period for its
supporting records starts on the date of such
submission.
(2) If not submitted for negotiation. If the recipient is
not required to submit to the Federal awarding agency
or the subrecipient is not required to submit to the
recipient the proposal, plan, or other computation for
negotiation purposes, then the 3-year retention period
for the proposal, plan, or other computation and its
supporting records starts at the end of the fiscal year
(or other accounting period) covered by the proposal,
plan, or other computation.
44
Termination and Enforcement
. 60 Purpose of termination and enforcement. Sections
. 61 and . 62 set forth uniform suspension, termination and
enforcement procedures.
. 61 Termination.
(a) Awards may be terminated in whole or in part only if (1) ,
(2) or (3) apply.
(1) By the Federal awarding agency, if a recipient
materially fails to comply with the terms and
conditions of an award.
(2) By the Federal awarding agency with the consent of the
recipient, in which case the two parties shall agree
• upon the termination conditions, including the
effective date and, in the case of partial termination,
the portion to be terminated.
(3) By the recipient upon sending to the Federal awarding.
agency written notification setting forth the reasons
for such termination, the effective date, and, in the
case of partial termination, the portion to be
terminated. However, if the Federal awarding agency
determines in the case of partial termination that the
reduced or modified portion of the grant will not
accomplish the purposes for which the grant was made,
it may terminate the. grant in its entirety under either
paragraphs (a) (1) or (2) .
(b) If costs are allowed under an award, the responsibilities of
the recipient referred to in paragraph .71 (a) , including
those for property management as applicable, shall be
considered ed in the te
rmination of the award, and provision
shall be made for continuing responsibilities of the
recipient after termination, as appropriate.
. 62 Enforcement.
(a) Remedies for noncompliance. If a recipient materially fails
to comply with the terms and conditions of an award, whether
stated in a Federal statute, regulation, assurance,
application, or notice of award, the Federal awarding agency
may, in addition to imposing any of the special conditions
outlined in Section . 14 , take one or more of the
following actions, as appropriate in the circumstances.
(1) Temporarily withhold cash payments pending correction
of the deficiency by the recipient or more severe
enforcement action by the Federal awarding agency.
45
(2) Disallow (that is, deny both use of funds and any
applicable matching credit for) all or part of the cost
of the activity or action not in compliance.
(3) Wholly or partly suspend or terminate the current
award.
(4) Withhold further awards for the project or program.
(5) Take other remedies that may be legally available.
(b) Hearings and appeals. In taking an enforcement action, the
awarding agency shall provide the recipient an opportunity
for hearing, appeal, or other administrative proceeding to
which the recipient is entitled under any statute or
regulation applicable to the action involved.
(c) Effects of suspension and termination. Costs of a recipient
resulting from obligations incurred by the recipient during
a suspension or after termination of an award are not
allowable unless the awarding agency expressly authorizes
them in the notice of suspension or termination or
subsequently. Other recipient costs during suspension or
after termination which are necessary and not reasonably
avoidable are allowable if (1) and (2) apply.
(1) The costs result from obligations which were properly
incurred by the recipient before the effective date of
suspension or termination, are not in anticipation of
it, and in the case of a termination, are
noncancellable.
(2) The costs would be allowable if th4 award were not
suspended or expired normally at the end of the funding
period in which the termination takes effect.
(d) Relationship to debarment and suspension. The enforcement
remedies identified in this section, including suspension
and termination, do not preclude a recipient from being
subject to debarment and suspension under E.O.s 12549 and
12689 and the Federal awarding agency implementing
regulations (see Section . 13) .
SUBPART D - After-the-Award Requirements
.70 Purpose. Sections .71 through .73 contain
closeout procedures and other procedures for subsequent
disallowances and adjustments.
46
Nj
.71 Closeout procedures.
•
(a) Recipients shall submit, w_=hin 90 calendar days after the
date. of completion of ,the award, all financial, performance,
and other reports as required by the terms and conditions of.
the award. The Federal awarding agency may approve
extensions when requested by the recipient.
(b) Unless the Federal awarding agency authorizes an extension,
a recipient shall liquidate all obligations incurred under
the award not later than 90 calendar days after the funding
period or the date of completion as specified in the terms
and conditions of the award or in agency implementing
instructions.
(c) . The Federal awarding agency shall make prompt payments to a
recipient for allowable reimbursable costs under the award
being closed out.
(d) The recipient shall promptly refund any balances of
unobligated cash that the Federal awarding agency has
advanced or paid and that is not authorized to be retained.
by thq recipient for use in other projects. OMB Circular A-
129 governs unreturned amounts that become delinquent debts.
(e) When authorized by the terms and conditions of the award,
the Federal awarding agency shall make a settlement for any
upward or downward adjustments to the Federal share of costs
after closeout reports are received.
(f) The recipient shall account for any real and personal
property acquired with Federal funds or received from the
Federal Government in accordance with Sections . 31
through . 37 .
(g) In the event a final audit has not been performed prior to
the closeout of an award, the Federal awarding agency shall
retain the right to recover an appropriate amount after
fully considering the recommendations on disallowed costs
resulting from the final audit.
. 72 Subsequent adjustments and continuing responsibilities.
(a) The closeout of an award does not affect any of the
following.
(1) The right of the Federal awarding agency to disallow
costs and recover funds on the basis of a later audit
or other review.
47
(2) The obligation of the recipient to return any funds due
as a result of later refunds, corrections, or other
transactions.
(3) Audit requirements in Section .26.
(4) Property management requirements in Sections . 31
through .37 .
(5) Records retention as required in Section - . 53 .
(b) After closeout of an award, a relationship created under an
award may be modified or ended in whole or in part with the
consent of the Federal awarding agency and the recipient,
provided the responsibilities of the recipient referred to
in paragraph .73 (a) , including those for property
management as applicable, are considered and provisions made
for continuing responsibilities of the recipient, as
appropriate.
.73 Collection of amounts due.
(a) Any funds paid to a recipient in excess of the amount to
which the recipient is finally determined to be entitled
under the terms and conditions of the award constitute a
debt to the Federal Government. If not paid within a
reasonable period after the demand for payment, the Federal
awarding agency may reduce the debt by (1) , (2) or (3 ) .
(1) Making an administrative offset against other requests
for reimbursements.
(2) Withholding advance payments otherwise due to the
recipient.
(3) Taking other action permitted by statute.
(b) Except as otherwise provided by law, the Federal awarding
agency shall charge interest on an overdue debt in
accordance with 4 CFR Chapter II, "Federal Claims Collection
Standards. "
48
Appendix A
Contract Provisions
All contracts, awarded by a recipient including small
purchases, shall contain the following provisions as applicable:
1. Equal Employment Opportunity - All contracts shall contain a
provision requiring compliance with E.O. 11246, "Equal Employment
Opportunity, " as amended by E.O. 11375, "Amending Executive Order
11246 Relating to Equal Employment Opportunity, " and as
supplemented by regulations at 41 CFR part 60, "Office "of Federal
Contract Compliance Programs, Equal Employment Opportunity,
Department of Labor. "
2 . Copeland "Anti-Kickback" Act L18 U. S.C. 874 and 40 U. S. C.
276c) - All contracts and subgrants in excess of $2000 for
construction or repair awarded by ,recipients and subrecipients
shall include a provision for compliance with the Copeland "Anti-
Kickback" Act (18 U.S.C. 874) , as supplemented by Department of
Labor regulations (29 CFR part 3 , "Contractors and Subcontractors
on Public Building or Public Work Financed in Whole or in Part by
Loans or Grants from the United States") . The Act provides that
each contractor or subrecipient shall be prohibited from
inducing, by any means, any person employed in the construction,
completion, or repair of public work, to give up any part of the
compensation to which he is otherwise entitled. The recipient
shall report all suspected or reported violations to the Federal
awarding agency.
3 . Davis-Bacon Act, as amended (40 U. S.C. 276a to a-7) - When
required by Federal program legislation, all construction
contracts awarded by the recipients and subrecipients of more
than $2000 shall include a provision for compliance with the
Davis-Bacon Act (40 U.S.C. 276a to a-7) and as supplemented by
Department of Labor regulations (29 CFR part 5, "Labor Standards
Provisions Applicable to Contracts Governing Federally Financed
and Assisted Construction") . Under this Act, contractors shall
be required to pay wages to laborers and mechanics at a rate not
less than the minimum wages specified in a wage determination
made by the Secretary of Labor. In addition, contractors shall
be required to pay wages not less than once a week. The
recipient shall place a copy of the current prevailing wage
determination issued by the Department of Labor in each
•
solicitation and the award of a contract shall be conditioned
upon the acceptance of the wage determination. The recipient
shall report all suspected or reported violations to the Federal
awarding agency.
4 . Contract Work Hours and Safety Standards Act (40 U. S. C. 327-
333) - Where applicable, all contracts awarded by recipients in
excess of $2000 for construction contracts and in excess of $2500
49
an 0
for other contracts that involve the employment of mechanics or
laborers shall include a provision for compliance with Sections
102 and 107 of the Contract Work Hours and Safety Standards Act
(40 U.S.C. 327-333) , as supplemented by Department of Labor
regulations (29 CFR part .5) . Under Section 102 of the Act, each
contractor shall be required to compute the wages of every
mechanic and laborer on the basis of a standard work week of 40
hours. Work in excess of the standard work week is permissible
provided that the worker- is compensated at a rate of not less
than 1 1/2 times the basic rate of pay for all hours worked in
excess of 40 hours in the work week. Section 107 of the Act is
applicable to construction work and provides that no laborer or
mechanic shall be required to work in surroundings or under
working conditions which are unsanitary, hazardous- or dangerous.
These requirements do- not apply to the purchases of supplies or
materials or articles ordinarily available on the open market, or
contracts for transportation or transmission of intelligence.
5 . Rights to Inventions Made Under a Contract or Agreement -
Contracts or agreements for the performance of experimental,
developmental, or research work shall provide for the rights of
the Federal Government and the recipient in any resulting
invention in accordance with 37 CFR part 401, "Rights to
Inventions Made by Nonprofit Organizations and Small Business
Firms Under Government Grants, Contracts and Cooperative
Agreements, " and any implementing regulations issued by the
awarding agency.
6 . Clean Air Act (42 U. S. C. 7401 et see. ) and the Federal Water
Pollution Control Act (33 U. S. C. 1251 et sea. ) . as amended -
Contracts and subgrants of amounts in excess of $100, 000 shall
contain a provision that requires the recipient to agree to
comply with all applicable standards, orders" or regulations
issued pursuant to the Clean Air Act (42 U.S.C. 7401 et seq. ) and
the Federal Water Pollution Control Act as amended (33 U.S.C.
1251 et seq. ) . Violations shall be reported to the Federal
awarding agency and the Regional Office of the Environmental
Protection Agency (EPA) .
7 . Byrd Anti-Lobbvine Amendment (31 U.S.C. 1352) - Contractors
who apply or bid for an award of $100, 000 or more shall file the
required certification. Each tier certifies to the tier above
that it will not and has not used Federal appropriated funds to
pay any person or organization for influencing or attempting to
influence an officer or employee of any agency, a member of
Congress, officer or employee of Congress, or an employee of a
member of Congress in connection with obtaining any Federal
contract, grant or any other award covered by 31 U.S.C. 1352.
Each tier shall also disclose any lobbying with non-Federal funds
that takes place in connection with obtaining any Federal award.
Such disclosures are forwarded from tier to tier up to the
recipient.
50
•
•
8. Debarment and Suspension (E.O. s 12549 and 12689) — No
contract shall be made to parties listed on the General Services
Administration's List of Parties Excluded from Federal
Procurement or Nonprocurement Programs in accordance with E.O. s
12549 and 12689, "Debarment' and Suspension. " This list contains
the names of parties debarred, suspended, or otherwise excluded
by agencies, and contractors declared ineligible under statutory
or regulatory authority other than E.O. 12549 . Contractors with
awards that exceed the small purchase threshold shall provide the
required certification regarding its . exclusion status and that of
its principal employees.
•
•
• •
•
•
•
•
•
•
51
f Federal Register / Vol. 54, No. 214 / Tuesday, November 7, 1989 / Rules and Regulations 46799
/` TABULATION OF ANNUAL REPORTING BURDEN, EMERGENCY SHELTER GRANTS PROGRAM-FINAL RULE
/ Number of
/// Number of responses Total
Description of Information collection Provision of final rule respond- per annual res.onses hours
Hours oer Total
ems respond- responses
J erns
f
Application(annual)to HUD „ ..._......_.....__ ... _.. §576.51(b)(1). 375 1 375 1.00 375.00
Waiver requests to HUD _ __.__ .........._........ ...._.... §576.21(c) ..... 50 1 50 1.00 50.00
State Certification that nonprofit applicants will provide local government §576.51(b)(2)(ii) 50 1 50 .25 12.50
certification of approval. .
Homeless prevention non-supplanting certification §576.51(b)(2)(viii). 375 1 375 .25 93.75
Environment Review certification. _ _...._._..._._.._�. ..... §576.51(b)(2)(ix) 375 1 375 .25 93.75 .
Uniform Relocation Act Assurance._ _.._..„...._._ „... .. §576.51(b)(2)(x) 375 1 375 .25 93.75
. Assurance that Displacement is Minimized .... ._......__.... .. §576.51(b)(2)(xi)_ 375 1 375 .25 93.75
Drug Free Workplace Certification..__ . _.._..__ ..........._..._. §576.51(b)(2)(xi)_ 375 1 375 .25 93.75
Description of Revised Proposed Use of Funds... §576.51(d)....__.._. 50 1 50 .50 25.00
Uniform Relocation Act Appeals Process. __ ___..__. §576.80 4 I 1 4 2.00 8.00 •
Total Burden._._......._....._...__...._ _ _ 939.25
The Catalog of Federal Domestic Subpart F-Reallocations shelter for the homeless, and for
Assistance program number for the 576.61 Reallocation of grant amounts:Iack homeless prevention activities.The
Emergency Shelter Grants Program is of approved Comprehensive Homeless Emergency Shelter Grants program
CFDA No.14.231. Assistance Plan:formula cities and authorized by the Homeless Housing
List of Subjects in 24 CFR Part 576 576.83 counties. Actof grant amounts:lack Act of 1986 is contained in 24 CFR part
of approved Comprehensive Homeless ��5'
Grant programs-Housing and Assistance Plan:States and Territories. (b)Purpose.The program is designed
community development,Emergency 578.67 Reallocation of grant amounts: to help improve the quality of existing
shelte. grants,Reporting and returned or unused amounts. emergency shelters for the homeless,to
recordkeeping requirements. Subpart G-Program Requirements help make available additional
emergency shelters, to help meet the
Accordingly,the Department is 576.71 Matching funds. costs of operating emergency shelters
revising 24 CFR part 576 to read as 575.73 Use as an emergency shelter. .
576.75 Building standards.
follows: and of providing certain essential social
576.77 Assistance to the homeless. services to homeless individuals,so that
PART 576.79 Other Federal requirements, these persons have access not only to
576-EMERGENCY PROGRAM:S SHELTERART B 578.80 Relocation and acquisition. safe and sanitary shelter,but also to the
GRANTSe Subpart H-Grant Administration supportive services and others kinds of
McX1NNEY HOMELESS ASSISTANCE
ACT 578.81 Responsibility for grant assistance they need to improve their
• administration.onssituations.The program is also intended
Sec. 576.83 Method of payment to restrict the increase of homelessness
576.85 Performance reports. through the funding of preventive
Subpart A-General 578.87 Recordkeeping. programs and activities.
576.1 Applicability and purpose. 576.89 Sanctions.
576.3 Definitions. Authority:Sec.418 of the Stewart B §576.3 Definitions.
576.5 Waivers. McKinney Homeless Assistance Act(Pub.L Comprehensive Homeless Assistance
100-77,approved July 22,1987):sec.7(d)of Plan or Comprehensive Plan means the
Subpart B-Eligible Activities the Department of Housing and Urban Comprehensive Homeless Assistance
576.71 Eligible activities. Development Act(42 U.S.C.3535(d)). Plan established by subtitle A of title IV
576.22. Limitations on the use of assistance. of the Stewart B.McKinney Homeless
576.23 Who may carry out eligible activities. Subpart A-General Assistance Act(Pub.L 100-777,
Subpart C.-Comprehensive Homeless §576.1 Applicability and purpose. approved July 22.1987).
Assistance Plan (a) General.This part implements the Conversion means a change in the use
576.31 Comprehensive Homeless Assistance Emergency Shelter Grants program of a building to an emergency shelter for
Plan. contained in subtitle B of title IV of the the homeless under this part,where the
Stewart B.McKinney Homeless cost of conversion and any
Subpart 0-Allocations Assistance Act(Pub.L.100-77, rehabilitation costs exceed 75 percent of
I 576.41 Overall allocation of grant amounts. approved July 22,1987).The program the value of the building before
578.43 Allocation of grant amounts to authorizes the Secrtary of Housing and conversion.If such costs do not exceed
States.metropolitan cities,and urban Urban Development to make grants to 75 percent of the value of the building
counties. States and units of general local before conversion.they are to be
576.45 Allocation of grant amounts to government(and to private nonprofit considered rehabilitation and the three-
Territories. organizations providing assistance to year use requirement under§578.73
Subpart E-Award and Use of Grant homeless individuals in the case of applies.The conversion of any building
Amounts grants made with reallocated amounts) to an emergency shelter that is assisted
578.51 Application requirements. for the rehabilitation or conversion of under this part must meet local
578.521 Application re u remereview buildings for use as emergency shelter government safety and sanitation
578.53 ReviewEnvir and approval of applications. for the homeless,for the payment of standards under§576.75.For projects of
576.55 Deadlines for using grant amounts. certainoperating and social service 15 cr more units where rehabilitation
expenses in connection with emergency costs are 75 percent or more of the
4iaoo Federal Rester I Vol. 54, No. 214 / Tuesday, November 7, 1989 / Rules and Regulations '
from
letter of award requiring payment
replacement cometet
r quidbuilding.
me
that (2)An institution that provides a the grant amount are obligated.
CFRproj 8t must meet the requirements of 24 temporary�ded be ete for individuals
CFR 8.23(a). intended to be institutionalized;or Private nonprofit croanization means
Emergency shelter means any facility, (3)A public or private place not a secular or religious organization
the primary purpose of which is to designed for,or ordinarily used as.a described in section 501(c)of the
provide temporary or transitional shelter regular sleeping accommodation for Internal Revenue Code of 1988 which:
human beings. (a)Is exempt from taxation under
specificf
od the homeless in generalf theor for 4 The term does not include any subtitle A of the Code:
populations of the homeless. individual imprisoned or otherwise (b)Has an accounting system and a
Emergency shelter grant amounts or detained pursuant to an Act of the voluntary board;and
madegr
a amounts mean grant amounts Congress or a State law. (c)Practices nondiscrimination the
Essential
services
under includes pars Homeless prevention means activities (c) s assistance.nondi
concerneds th ems health.
or programs designed to prevent the provision
gabuse,with employment,a d may. incidence of homelessness,including Rehabilitation means labor,materials.
bu and notoucation and may to): tools,and other costs of improving
drug (but not limited
include(but are o limited to):p (a)Short-term subsidies to defray rent buildings,including repair directed
(a)Assistance in obtaining permanent and utility arrearages for families that toward an accumulation of deferred
housing.(b have received eviction or utility maintenance:replacement of principal
(b)Medical and psychological rvisi termination notices; fixtures and components of existing
counseling and supervision. (b)Security deposits or first month's buildings;installation of security
•
(c)EmNutr tional counseling. rent to permit a homeless family to devices;and improvement through
(d)Nutritional counseling. move into its own apartment; alterations or incidental additions to,or
(e)Substance abuse treatment and (c)Mediation programs for landlord- enhancement of,existing buildings,
improvements to increase the
counseling. including imp m buildings,tenant disputes; as, and
(f)Assistance in obtaining other (d)Legal services programs for the efficient use of energy
• Federal.State.and local assistance representation of indigent tenants in �e ct ramie accesanges sible necessary
persons tomake
including mental health benefits; eviction proceedings;
employment counseling;medical (e)Payments to prevent foreclosure on physical handicaps.Rehabilitation also
assistance:Veteran's benefits;and a home;and includes the conversion of a building to
income support assistance such as (f)Other innovative programs and an emergency shelter for the homeless
Supplemental Security Income benefits, activities designed to prevent the under this part,where the cost of
Aid to Families with Dependent incidence of homelessness. conversion and any rehabilitation costs
HUD means the Department of does not exceed 75 percent of the value
Stamps:
General Assistance,and Food Housing and Urban Development of the building before conversion.
Stamps: Rehabilitation assisted under this part
(g)Other services such as child care, Major rehabilitation means must meet local government safety and
transportation,job placement and job rehabilitation percentthat involves ot costs in sanitation standardsone under §safety
In
training,and excess of 75 of the value of the
(h)Staff salaries necessary to provide building before rehabilitation.Major the above services. rehabilitation assisted under this part addition.for projects of 15 or more units
where rehabilitation costs are 75 percent
Formula city or county means a must meet local government safety and or more of the replacement cost of the
metropolitan city or urban county that is sanitation standards under§578.75.Is.eligible to receive an allocation of grant addition,for projects of 15 or more units building,that project must meet the amounts under§576.43. where rehabilitation costs are 75 percent accessibility requirements of section 504
of the Rehabilitation Act of 1973.as
Grantee means the entity that or more of the replacement cost of the executes a grant agreement with HUD building,that project must meet the amended,as set forth in 24 CFR 8.23(a);
or where rehabilitation costs are less
under this part.For purposes of this requirements of 24 CFR 8.23(a). that than 75 percent offathe o project replacement
meet cost
part,grantee is: Metropolitan city means a city the building. P )
(a)Any State,metropolitan city,or was classified as a metropolitian city ofho requirements of 24 CFR must3
urban county that receives a grant under section 102(a)(4)of the Housing Renovation means rehabilitation that
•
allocation under§578.43: and Community Development Act of involves costs of 75 percent or less of
(b)Any Territory that receives a grant 1E74 for the fiscal year immediately the value of building
allocation under § 578.45;and preceding the fiscal year for which value
o the Renovations'before assisted
grant• under this mustuo meet local
(c)Any State,Territory,unit of emergency shelter amounts are rehabunder
this partt and to sanitation
general local government.or private made available. rivate
nonprofit organization that receives a Nonprofit recipient means any p standards.(§safety 575.75.)In addition,for
projects of or grant
ubbased on a reallocation under assistance to the homeless,
tow which a f rehabilitation5 mo argi units where
than 75
subpart F.e State or unit of general local government perant the costsreplacement arele cost of the
Homeless means: building,of}th ject must meet the
(a) a individual or family which distributes emergency shelter grant
lacks a fixed.dense; and adequate amounts.bligated means that the grantee or requirements of 24 CFR 8•23(b).
ni;,iit';:me residence:or State each States
(b)An individual or family which has State recipient,as appropriate,has andateem meanseach of the several Rico•
a primary nighttime residence that is: placed orders.awarded contracts, Territory theCo means each of the following:
Ric
(1)A supervised publicly or privately received services.or entered si firom the Islands.Guam.American
operated shelter designed to provide transactions that require payment
temporary living accommodations the grant amount.Grant amounts that a Samoa.the Northern Mof the Pacific),
ariana Islands.
(including welfare hotels.congregate unit of general local government or State Palau T other trritrust t tryy or possession of
shelters,and transitional housing for awards to a private nonprofit iF
persons with mental illness);
organization by a written agreement or the United States.
.•,t
Federal Register / Vol. 54,.No. 214 / Tuesday, November 7. 1989 / Rules and Regulations 46801
•
State recipient means any unit of resume payments within a reasonable them.State waiver requests should be
general local government or nonprofit period of time:and forwarded directly to HUD.
organization to which a State makes (D)The assistance must not supplant
available emergency shelter grant funding for preexisting homeless §576.22 limitations on the use of
amounts. prevention activities from any other assistance.
Unit of general local government sources. (a)Ineligible activities.Emergency
means any city,county, town. township, (b)Limitations on provisions of shelter grant amounts may not be used
parish,village,or other general purpose essential services—(1) Units of general for activities other than those authorized
political subdivision of a State. local government. Grant amounts under § 576.21(a), (b). and(c).
Urban county means a county that provided by HUD to units of general (b)P L'narily religious
was classified as an urban county under local government may be used to organizations--(i)Provision of
section 102 a 6 of the Housingand provide an essential service under
( )O assistance.(i)Assistance may be
Community Development Act of 1974 for paragraph(a)(2)of this section only if provided under this part to a grantee or •
the fiscal year immediately preceding the service is a new service,or is a recipient that is a primarily religious •
the fiscal year for which emergency quantifiable increase in the level of a organization if the primarily religious
shelter grant amounts are made service above that which the unit of organization agrees to provide all
available. general local government provided with
Value of the buildin means the local funds during the 12 calendar eligible activities under this program in
g months immediately before it received a manner that is free from religious
monetary value assigned to a building initial grant amounts:and not more than influences and in accordance with the
by an independent real estate appraiser, following principles:
or as otherwise reasonably established 20 percent of the total ci each grant A It will not discriminate against
by the grantee or the State recipient amount provided to a unit of general ( ) g
any employee or applicant for
local government is used for these
§578.5 Waivers. services(whether or not the unit of local employment on the basis of religion and
government provides some or all of will not limit employment or give
The Secretary of HUD may waive any these grants funds to a nonprofit preference in employment to persons on
requirement of this part that is not recipient). the basis of religion;
required by Iaw,whenever it is (2)States.Grant amounts provided by (B) It will not discriminate against any
determined that undue hardship will a State to State recipients may be used person applying for shelter or any of the
result from applying the requirement,or to provide an essential service under eligible activities under this part on the •
where would adversely ely affect the lication of the purposes of tuirement he servh ice a new)of service,oris .is ay if basis housingof relcr other elion gible bleactivi not �s ort
the Emergency Shelter Grants Program
under this part quantifiable increase in the level of a give preference to persons on the basis
service above that which the unit of of religion:and
Subpart B—Eligible Activities general local government(or,in the case (C)It will provide no religious
of a nonprofit organization.the unit of instruction or counseling,conduct no
§57E.21 Eligible activities general local government in which the religious worship or services,engage in
(a)Eligible activities.Emergency proposed activities are to be located) no religious proselytizing,and exert no
shelter grant amounts may be used for provided with local funds during the 12 other religious influence in the provision
one or more of the following activities months immediately before the State of shelter and other eligible activities
relating to emergency shelter for the recipient received initial grant amounts; under this part;and
homeless. and not more than 20 percent of the (ii)HUD will provide assistance to a
(1)Renovation.major rehabilitation. aggregate amount of each ESG grant to a recipient that is a primarily religious
or conversion of buildings for use as State is used for these services. organization if the assistance will not be
emergency shelters for the homeless. (3)In calculating the 20 percent used by the organization to acquire a
(2)Provision of essential services to limitation under paragraph(b)(1)or(2) structure (in the case of homeless
the homeless. of this section homeless prevention prevention activities under
(3)Payment of maintenance,operation activities under paragraph(a)(4)of this §576.21(a)(4))or to rehabilitate a
section are to be treated as essential
(including administration but excluding services. structure owned by the organization,
staffing coats,rent.repair, security,fuels except as described in paragraph(b)(2)
cand equipment,insurance.utilities,and (rent. Waiver of limit on essential services. (1)HUD may waive the 20 of this section.
furnishings. percent limitation on essential services (2J Rehabilitation or conversion of
(4)(i)Developing and implementing in paragraphs (b)(1)and(2) of this ' emergency shelters in structures owned
homeless prevention activities. section if the State or unit of local by primarily religious organizations.
(ii)If grant funds under paragraph government receiving the assistance Emergency shelter grant amounts may
(a)(4)(i)of this section are to be used to demonstrates that program activities be used to rehabilitate or convert to an
assist families that have received other than essential services and emergency shelter a structure that is
eviction notices or notices of homeless prevention(i.e..maintenance owned by a primarily religious
termination of utility services, the and operating costs,renovation. organization,only if:
following conditions must be met rehabilitation and conversion activities) (i)The structure(or portion thereof)
(A)The inability of the family to make are already being carried out in the that is to be renovated,rehabilitated or
the required payments must be the locality with other resources. converted with HUD assistance has
result of a sudden reduction in income; (2) Waiver requests from State been leased to an existing or newly
(B)The assistance must be necessary recipients under this paragraph(c)must established wholly secular organization
to avoid eviction of the family or first be sent to the State.The State must (which may be established by the
termination of services to the family; promptly send the requests to HUD, religious organization under the
(C)There must be a reasonable together with any comments or provisions of paragraph(b)(3)of this
prospect that the family will be able to recommendations the State may have on section):
;; O
46802 Federal Register /•Vol. 54, No. 214 / Tuesday, November 7, 1989 / Rules and Regulations .
(ii)The HUD assistance is provided to organization to provide essential Subpart C—Comprehensive Homeless
the secular organization(and not the services or undertake homeless Assistance Plan
religious organization) to make the prevention activities for the project.In
improvements: such a case,the religious organization 1578.31 Comprehensive Homeless
(iii)The leased structure will be used must agree in the contract to carry outAssi
stance Plan.
exclusively for secular purposes its contractual responsibilities in a (a)Prohibition of assistance. (1)Grant
available to all persons regardless of manner free from religious influences amounts may be made available to the
religion: and in accordance with the principles following jurisdictions,only if they have
(iv)The lease payments paid to the set forth in paragraph(b)(1)(i)of this a HUD-approved Comprehensive Plan:
primarily religious organization do not section. (i)States,for allocations under
exceed the fair market rent for the (C)The rehabilitation.conversion or §576.43 and reallocations under •
structure before the renovation. renovation of emergency shelters are §§576.61,576.63,and 576.67;
rehabilitation or conversion was done: subject to the requirements of paragraph (ii)Formula cities and counties,for
(v)The portion of the cost of any (b)(2)of this section. allocations under 576.43 and
improvementsportov of the structure benefitn any
be allocated eased (ii)HUD will not require the religious reallocations under§ 57 6.63 and 578.87;
to,and paid for by,the willlgious organization to establish the secular
organization before the selection of its (Ili)Territories,for allocations under
organization; and application.Insuch a case,the religious § 576.45 and reallocations under
(vi)The primarily religious organization may apply on behalf of the §§078.63 and 576.87.
organization agrees that if the recipient Secular organization.The application (2)Reallocation amounts may be
does not retain the use of the leased will be reviewed on the basis of the made available under§576.87 to units
premises for wholly secular purposes for religious ofganization's financial of general local government that are not
the useful life of the improvements,the formula cities and counties,and to
primarily religious organization will pay responsibility and capacity,and its private nonprofit organizations,only if
an amount equal to the residual value of commitment to provide appropriate the formula city or county or the States
the improvements to the original grantee resources to the secular organization that would be served by the proposed
from which the amounts used to after formation.Since the secular activities have an approved
renovate,rehabilitate or convert the organization will not be in existence at Comprehensive Plan.For units of
building were derived;e.g.,if the the time of the application,it will be - general local government(non-formula
amounts used under this paragraph required to demonstrate that it meets the cities and counties),the State must have
initially were made available to a State definition of private nonprofit an approved Plan.For nonprofit
or to a unit of general local government organization contained in §576.3.The organizations,if the proposed activities
as a formula allocation or reallocation, obligation of funds will be conditioned are to serve a formula city or county or
the amount that the primarily religious upon compliance with these Territory,the city,county or Territory
organization provides to the recipient requirements. must have an approved Plan:if the
must be remitted to the State or unit of proposed activities are not to serve such
general Iocal government,as §578.23 Who may carry out eligible city or county,the State or Territory
appropriate.While the original grantee activmes. must have an approved Plan.
is expected to use this amount to (a)Grantees and State recipients.All (3)Grant amounts may not be made
alleviate homelessness in the original grantees(except States)and State available to,or within the jurisdiction
grantee's jurisdiction,there is no recipients maycarry out activities with of,any State or formula city or
requirement that funds received after P county
the close of the grant period be used Inemergency shelter grant amounts.All of that does not annually:
accordance with the requirements of a Slate's formula allocation must be (i)Submit to HUD a Comprehensive
made available to the following entities: Plan,and simultaneously forward to the
this part.If.however,a private nonprofit
organization is the Iessee as well as the (1)Units of general local government relevant State or.formula cities and
grantee, the organization must remit the in the State,which may include formula counties the necessary information
amount referred to above to HUD. cities and counties,whether or not such copies.
(3)Assistance to a wholly secular cities and counties receive grant (ii)Review its progress in carrying out
private nonprofit organization amounts directly from HUD;or its Comprehensive Plan and report the
established by a primarily religious (2)Private nonprofit organizations,if results of the review and
organization. the unit of local government in which (iii)Respond to timely HIJ HUD
(i)A primarily religious organization the proposed activities are to be Iocated recommendations on the progress
may establish a wholly secular private certifies that it approves each project. report.
nonprofit organization to serve as a (b)Nonprofit recipients.Units of (b)Notification of Plan requirements.
recipient.The secular organization may general local government—both HUD will publish the requirements that
be eligible to receive all forms of (including(ia to theComprehensive review
Plann
grantees and State recipients—may
assistance available under this part. . distribute all or part of their grant report the progress paragraph
a ap wand
(A)The secular organization must amounts to nonprofit recipients to be section oiand in Plan amendments ts)of
agree to provide shelter and other used for emergency shelter grant this and
eligible activities under this part in a activities.In addition.States mayreferred ast necessary.r Prospective in the Federal
manner that is free from religious Register •
Si distribute all or a portion of their grant grantees should familiarize themselves
influences and in accordance with the amounts to nonprofit recipients if the with these requirements.HUD will also
principles set forth in paragraph (b)(1)(i) unit of general local government in provide notice of the Plan's
of this section. which the proposed activities are to be requirements when HID notifies
(B)The secular organization may located certifies that it approves the prospective grantees of their grant
enter into a contract with the religious project. allocations under subpart D or the
�w
Federal Register I Vol. 54. No. 214 / Tuesday, November 7, 1989 / Rules and Regulations 46803
availability of reallocation amounts Subpart E—Award and Use of Grant activity conducted outside the
under subpart F. Amounts applicant's jurisdiction. the applicant
(c)Reallocations.Sections 578.81 and • will secure and provide to 1-HUD a
576.63 govern the reallocation of grant §576.51 Application requirements. certification that the activity is
amounts initially allocated to a State or (a)Application deadlines.To receive consistent with the CHAP submitted by
a formula city or county under§578.43, grant amounts,a State or formula city or the following jurisdiction,as applicable:
or to a Territory under§ 578.45,if the county that elects to receive an (A)If the activity is conducted within
jurisdiction does not obtain approval of emergency shelter grant on the basis of the boundaries of a city or urban county
its Plan within the time periods specified an allocation under§ 576.43, and a having its own CHAP, then a
in those sections. Territory that elects to receive an certification from the appropriate
emergency shelter grant on the basis of official of that jurisdiction: or
Subpart 0—Allocations an allocation under§578.45.must (B) If the activity is not conducted
§576.41 Overall allocation of grant submit an application that meets the within a unit of local government having
amounts. requirements of paragraph(b)of this its own CHAP,then a certification from
section.The application must be
(a) Territories. HUD will set aside for the appropriate State official.
allocation to the Territories under submitted to the responsible HUD field (ii)A certification that the State.
§ 578.45 an amount equal to 0.2 percent office,no later than 45 days after the formula city or county,or Territory will
of the total amount of each date of the notification to the State,city provide the matching supplemental
appropriation under this part in any or county,or the Territory,of its grant funds required by § 576.71.The
fiscal year. allocation,as provided by § 576.43(c)or certification must describe the sources
(b)States.metropolitan cities and § 578.45(b),respectively. and amounts of the supplemental funds.
(b)Application.The application must
urban counties.HUD will allocate the A States matching supplemental funds
contain:
amounts that remain after the set-aside certification is to be submitted with its
(1)A Standard Form 424.Item(11)of
to Territories under paragraph(a)of this interim performance report. as provided
section to States,metropolitan cities, Standard Form 424 must contain a by § 578.85.
description of the proposed use of the
and urban counties under§578.43. emergency shelter grant amounts.In the (iii) A certification that the State will
case of a formula cityrequire any nonprofit organization that
§576.43 Allocation of grant amounts to or coon ''or a applies for funding to submit a
States,metropolitan cities,and urban Territory,the proposed use must be certification of approval of the proposed
counties, identified for each of the four categories
(a) Calculation of allocations.In of eligible activities under§§578.21 project(s)from the unit of general local
determining the amount of the allocation (a)(1),(a)(2),(a)(3),and(a)(4).In government in which the proposed
for each State,metropolitan city,and addition,the formula city or county,or projects are to be located.
urban county,HUD will provide that the Territory must include a description of (iv)A certification that the formula
percentage of the total amount available the process and criteria for awarding its city or county,or Territory, will comply,
for allocation to any State,metropolitan grant funds to units of general local and that the State will ensure that its
city, or urban county is equal to the government and nonprofit organizations. State recipients comply,with
percentage of the total amount available In the case of a State,the proposed use (A)The requirements of§578.73
for section 108 of the Housing and must identify: concerning the continued use of
Community Development Act of 1974 for (i)How the State intends to buildings,for which emergency shelter
the prior fiscal year that was allocated implement the requirement in §578.23(a) grant amounts are used.as emergency
to such State,metropolitan city,or that the grant be made available to units shelter for the homeless;
urban county. of general local government and/or (B)The building standards
(b)Reallocation to State. Except al private nonprofit organizations in the requirements of§578.75;and
otherwise provided by law,if an State,or (C)The requirements of§ 576.77
allocation to a metropolitan city or (ii)The specific units of general local concerning assistance to the homeless.
urban county would be less than.05 government in the State that will receive (v) If grant amounts are proposed to
percent of each appropriation under this the grant,or be used to provide emergency shelter for
part in any fiscal year, the amount is (iii)The nonprofit organizations that the homeless in hotels or motels,or
added to the allocation for the State in will receive grant funds directly from the other commercial facilities providing
which the city or county is located. State.and the local jurisdictions in transient housing.a certification from
(c)Notification of allocation amount which the proposed activities will be the State.metropolitan city, or urban
HUD will notify in'writing each State, located. county that:
metropolitan city,and urban county that In addition.the State must include a (A) Leases negotiated between the
is eligible to receive an allocation under description of the process and criteria grantee, or State recipient or nonprofit
this section,of the amount of its for awarding its grant funds to State recipient(as appropriate), and providers
allocation. recipients. of such housing provide (or will provide)
(2)The following certifications and that the living space will be rented at
§575.45 Allocation of grant amounts to assurances: substantially less than the daily room
Territories. (i)A certification by the public official rate otherwise charged by the facility;
(a)Each Territory.HUD will allocate responsible for submitting the and
amounts set aside for Territories under Comprehensive Plan for the State. (B)The grantee,or State recipient(as
§ 578.41 to each Territory,based upon formula city or county.or Territory that appropriate),has considered using other
its proportionate share of the total is applying for ESG funding for the facilities as emergency shelter. and has
population of all Territories. proposed activities that the activities determined that use of the facilities
(b)Notification of allocation amount are consistent with the Plan.In the case referred to in this paragraph (b)(2)(v)
HUD will notify each Territory of the of a formula city or county, there must provides the most cost-effective means
amount of its allocation under this be an additional certification that before of providing emergency shelter for the
section. any of the grant funds are used for an homeless in its jurisdiction.In the case
46804 Federal Register / Vol. 54, No. 214 / Tuesday, November 7, 1989 / Rules and Regulations
of grant funds provided to nonprofit free workplace in accordance with the (2)Environmental regulations provide
recipients, the coat-effectiveness Drug Free Workplace Act of 1988(see 24 for certain categorical exclusions under
determination under this paragraph Li'it part 24.subpart F). NEPA and under part 58 set conditions
must be completed by the formula city (c)Environmental review.The under which excluded activities may be
or county,Territory or State in which environmental effects of each determined exempt from all
the proposed activities are to be located. application must be assessed in environmental review requirements.In
(vi)A certification that the formula accordance with the provisions of the cases where proposed assistance and
city or county,or Territory,will conduct National Environmental Policy Act of matching contributions solely involve
its emergency shelter grant activities 1989(42 U.S.C.4321(NEPA))and the operating costa for facilities or the
under this part,and that the State or related authorities listed in HUD's provision of essential services,and the
unit of general local government(as implementing regulations at 24 CFR structures and sites involved in the
appropriate)will ensure that State parts 50 or 58,as appropriate.See project meet the program requirements •
recipients cr nonprofit recipients §578.52 for a full discussion of the of this part,these activities are
conduct their activities under this part, environmental requirements for categorically excluded by regulation and
in conformity with the applications for assistance. may be determined fully exempt from
nondiscrimination and equal (d)Substantial change in proposed
environmental review.
opportunity requirements contained in use of funds. (1)If at any time after (b)Responsibility for review. (1)HUD
§ 576.79(a) and the other requirements of submission of an application under this will perform the environmental review,
this part and of other applicable Federal section, there is a substantial change inperform
In accordance with part 50,for
law. the proposed use of funds,there must be
(vii)A certification by the State, submitted to the responsible HUD field applications submitted by private
formula city or county,or Territory that office a description of the revised nonprofit organizations for reallocated
the submission of the application proposed use of funds and a funds,and any governmental entities
required by this paragraph(b)is certification(as required by paragraph with general purpose powers found not
authorized under applicable provisions (b)(2)(i)of this section)that the to have the legal capacity to carry out
of law,and that the grantee possesses proposed use of funds is consistent with this responsibility.
the legal authority to carry out the applicable Comprehensive Homeless (2)AppIicants that are States,
emergency shelter grant activities in Assistance Plan.The revised proposed Territories.formula cities and counties,
accordance with the provisions of this use of funds and certification of or other governmental entities with .
part. consistency will be approved as general purpose powers,and that are
(viii)A certification by the State. expeditiously as possible.and will be deemed to have the legal capacity to do
formula city or county,or Territory that deemed approved 30 days after HUD so,must assume responsibility for
any ESG funds allocated under receives them,unless notification is environmental review.decisionmaking,
§ 578.21(a)(4)(ii) (homeless prevention provided by HUD within that period that and action for each application for
for families that have received eviction they are not approved,and the basis for assistance in accordance with part 58.
notices or notices of termination of the denial of approval.ESG funds may Specifically,States.Territories or units
utility services)will not supplant not be obligated by a grantee or by a of general local government must
funding for preexisting homeless nonprofit recipient for the revised complete the environmental review for
prevention activities from any other proposed use of funds until: each application for assistance,as
sources. (i)HUD accepts the revised proposed follows:
(ix)Where the grantee is a State, use and certification.or 30 days have (A)In the case of ESG grants to States
Territory,formula city or county,or passed from the date of HUD receipt that are distributed to units of general
other governmental entity with general and local government,the unit of general
purpose powers,an assurance by the (ii)Environmental review of the local government must assume the
grantee that it will assume all the revised proposed use of funds has been re
sponsibilities esponsibilities specified
environmental review responsibilities completed in accordance with § 576.52. in section environmental
lo4 r(1)of the Housing and
that would otherwise be performed by (2) In the case of a State,a State may Community Development Act of 1974.
HUD as the responsible Federal official not obligate funds until the revised and the State will assume HUD's
under NEPA and related authorities proposed use of grant funds has been functions with regard to the release of
citied in 24 CFR 58.5,including approved by HUD;and funds.as provided by section 104(g)(4)
acceptance of Federal court jurisdiction, (3)Submission of the certification and of that Act.
under§578.52. the description of the revised use of
(x)An assurance that the State, funds under this paragraph(d)may (B)In the case of ESG grants to States
Territory,formula city or county will require amendment of the applicable that are distributed to nonprofit
comply with the requirements of the Comprehensive Homeless Assistance organizations, the State will assume the
Uniform Relocation Assistance and Real Plan.Requirements for Plan environmental responsibilities specified
Property Acquisition and Real Property amendments may be found in the In section 104(g)(1)of that Act and HUD
Acquisition Policies Act cf 1970(URA) notification that HUD provides for will perform the release of funds
(42 U.S.C.4601-4855)at § 576.80. Plans.(See § 578.31(b)). functions of section 104(g)(2).
(xi)An assurance that the grantee and (C)In the case of ESG grants to a unit
Its recipients will take all reasonable §576.52 Environmental review. of general local government or Territory.
steps to minimize the displacement of (a) Generally. (1)The environmental whether used directly by the grantee or
persons(families.individuals. effects of each application must be distributed to nonprofit organizations.
businesses,nonprofit oganizations,and assessed in accordance with the the unit of general local government or
farms)as a result of a project assisted provisions of the National Territory will assume the environmental
under this Part.in accordance with the Environmental Policy Act of 1989 responsibilities specified in section
URA. (NEPA)and the related authorities listed 104(g)(1)of that Act and HUD will
(xii)A certification that the grantee in HUD's implementing regulations at 24 perform the release of funds functions of
and its recipients will provide a drag CFR parts 50 and 58. section 104(g)(2).
Federal Register / Vol. 54. No. 214 / Tuesday, November 7, 1989 / Rules and Regulations 46805
(3)The assumption of legal need not complete the review until a (2)Does not contain the items
responsibility by an applicant under reasonable time after grant award.In required by §576.5.(b);or
paragraph(b)(2) of this section does not such cases,the award is subject to (3)Does not otherwise comply with
preclude the applicant's arranging for completion of the environmental the requirements of this part or of other
the conduct of technical reviews by responsibilities set out in 24 CFR.part 58 Federal law.
cooperating local governments having within a reasonable time after
(c)Conditional grant.HUD may make
an established technical capability(e.g., notification of the award. (This a conditional grant restricting the
by a metropolitan city in which the provision does not preclude the obligation and use of emergency shelter
project is proposed to be located).The applicant from enclosing its grant amounts.Conditional grants may
applicant under such arrangement must environmental certification and Request be made where there is substantial
independently evaluate information for Release of Funds with its evidence that there has been,or there .
submitted and assume responsibility for application.) will be,a failure to meet the •
its accuracy,scope and content;meet (i)Upon completion of the requirements of this part In such a case,
legal requirements attached to the requirements in 24 CFR part 58, the reason for the conditional grant,the
Release of Funds by HUD;determine the applicants must certify the completion action necessary to remove the
completeness of the review;meet any and submit a Request for Release of condition,and the deadline for taking •
requirements for consultation,as Funds.This submission is not required those actions will be specified.Failure
applicable,under 24 CFR 58.5 in cases in which the applicant to satisfy the condition may result in
authorities;and assure the completion of determines and documents.in imposition of a sanction under§576.89,
any mitigation measures resulting from accordance with 24 CFR 58.34,that its or in any other action authorized under
technical review or from State program components are exempt applicable Federal law.
consultations.The arrangements (ii)HUD will not release funds for an (d) Grant agreement The grant will be
described in this paragraph are in emergency shelter grant activity if the made by means of a grant agreement
addition to the ability of an applicant to grantee,recipient,or any other party executed by HUD and the grantee.HUD
adept relevant and adequate prior commits emergency shelter grant funds will not disburse funds before the grant
reviews conducted by HUD or other (i.e.,incurs any costs or expenditures to agreement is fully executed.
governmental entity for a related be paid or reimbursed with such funds) (e)Reallocation amounts.Any
program or purpose,if the reviews meet before the grantee submits, and HUD emergency shelter grant amounts that
the particular requirements of the approves,any required Request for are returned to HUD because of:
Federal environmental law or authority Release of Funds. (1)A failure to meet the application
under which they would be adopted (3)A general applicant that believes deadline under§.576.51(a);or
and if certain conditions are met(e.g.,a that it does not have the legal capacity (2)An application disapproval under
determination that no environmentally to carry out the responsibilities required paragraph(b)of this section will be
significant changes have occurred'since by 24 CFR part 58 should contact the reallocated under § 576.67.
the review was completed.) appropriate HUD field office for further
(c)Environmental review by HUD. instructions.Determinations of legal §576.55 Deadlines for using grant
With regard to the environmental effects capacity will be made on a case-by-case amounts.
of applications for which HUD performs basis. (a)(1)States.Each State must make
the review,HUD will undertake its (e)Location of projects in floodplains. available to its State recipients all
review in accordance with the Activities that are to be assisted with emergency shelter grant amounts that it
provisions of NEPA and the related emergency shelter grant funds and that was allocated under§ 578.43,within 85
authorities listed in 24 CFR 50.4.Any are located in any 100-year floodplain. days of the date of the grant award by
application subject to environmental as designated by maps prepared by the HUD.A State may set aside up to 10
review by HUD that requires an Federal Emergency Management percent of its grant funds for homeless
Environmental Impact Statement(EIS) Agency(FEMA),are subject to the prevention activities under
(generally, an application that HUD floodplain review requirements of § 576.21(a)(4).These set-aside funds
determines would have a significant Executive Order 11988,Floodplain must be made available to State
impact on the human environment in Management(May 24,1977).Executive recipients within 180 days of the grant
accordance with the environmental Order 11988 review,as referenced under award by HUD.
assessment procedures at 24 CFR part parts 50 and 58,is to be performed (2)State recipients—(i) Obligation of
50, subpart E)will not be eligible for during the environmental review. grant funds.Each State recipient must
assistance under this part have its grant amounts obligated(as
(d)Environmental review by $576.53 Review and approval of that term is defined at § 576.3)within
applicants. (1)An applicant that is applications. 180 days of the date on which the State
required. under paragraph(b)(2)of this (a) Time for approval. An application made the grant amounts available to the
section. to assume environmental from a State.formula city or county,or State recipient.In the case of grants for
review responsibility must include in its Territory will be processed and homeless prevention activities under
application an assurance that the approved as expeditiously as possible, § 576.21(a)(4),State recipients are
applicant will assume all the and will be deemed approved 30 days required to obligate grant amounts
environmental review responsibilities after HUD receives it.unless within that within 30 days of the date on which the
that would otherwise be performed by period HUD notifies the applicant that State made the grant amounts available
HUD as the responsible Federal official the application is not approved. to the State recipient.
under NEPA and related authorities (b)Review of application. HUD will (ii)Expenditure of grant funds.Each
listed in 24 CFR 58.5.including approve an application,unless it State recipient must spend all of its
acceptance of jurisdiction of the Federal determines that the application: grant amounts within 24 months of the
court3. (1) Was not received or postmarked date on which the State made the grant
(2) Applicants required to assume within the time period specified in amounts available to the State recipient.
environmental review responsibility § 578.31(a); In the case of giants for homeless
V
466C5 Federal Register / Vol. 54, No. 214 / Tuesday, Ncvember 7, 1989 / Rules and Regulations
prever.tion activities.State recipients (1)Execute a grant agreement with demonstrate extraordinary need or large
must spend such sums within 180 days HUD to receive grant amounts allocated numbers of homeless individuals.
of the date on which the State made the to the State under§576.43 for the fiscal (c)Notification of fund availability.
grant amounts available to the recipient. year for which the amounts to be HUD will make reallocations to States
(b)Formula cities and counties,and reallocated were initially made under this section by direct notification
Territories.)—(1)Obligations of funds. available. or Federal Register Notice that will set
Each formula city and county,and each (2)If necessary,submit an amendment forth the terms and conditions under
Territory,must have all grant amounts to its application for that fiscal year for which grant amounts under this section
that it was allocated under§ 578.43 or the reallocation amounts it wishes to are to be reallocated and grant awards
§ 578.45 obligated within 180 days of the receive.The amendment must(to the made.In the case of reallocations to
date of the grant award by HUD. extent necessary)meet the requirements Territories, the responsible HUD field
(2)Expenditure of grant funds.Each of§576.51(b),and must be submitted to office will promptly notify each .
formula city and county,and each the responsible HUD field office no later Territory of any reallocation amounts
Territory,must spend all of the grant than 30 days after notification is given under this section,and indicate the
amounts it was allocated under§573.43 to the State under paragraph(c)of this terms and conditions under which
or§576.45 within 24 months of the date section. reallocation amounts are to be made
cf the grant award by HUD. (e)Review and approval. (1)Section available and grant awards made.
(c)Reallocation amounts. (1)Any 576.53(except paragraph(e))governs (d)Eligibility for reallocation
emergency shelter grant amounts that the review and approval of application amounts. Ln order to receive reallocation
are not made available Or obligated amendments under this section. amounts under this section,the formula
within the time periods specified in (2) D will endeavor to make grant city or county, or State or Territory,
paragraphs(a)(1)(State distributions to awards within 30 days of the application must:
State recipients)or(b) (formula city or amendment deadline,or as soon (1)Submit an amendment to its
• county or Territory allocation)of this thereafter as practicable. application for that fiscal year for the
section,respectively,will be reallocated (3)Program activities represented by reallocation amounts it wishes to
under 576.67. proposed amendments are subject to
§ environmental review under§578.52 in receive.The amendment must meet:
(2)The State must recapture any grant the same manner as original proposals. (i)To the extent necessary, the
amounts that a State recipient does notrequirements of§576.51(b)and
obligate and end within the time (f)Deadlines for using reallocated
g p- grant amounts. Section 578.55 governs (ii)Such additional requirements as
period specified in paragraph(a)(2) the use of amounts reallocated under HUD may specify in the notification
(State recipients)of this section.The this section. under paragraph(c)of this section.
State,at its option,must make these (g)Amounts that cannot be Amendments are subject to
grant amounts and other amounts reallocated Any grant amounts that environmental review under 5578.52.
returned to the State(except amounts cannot be reallocated to a State under The amendment must be submitted to
referred to in§576.22(b)(2)(vi)) this section will be reallocated to the responsible HUD field office no later
available as soon as practicable to other formula cities and counties located in than 30 days after such notification is
units of general local government for use the State and then to other States and given.
within the time period specified in Territories,as provided by§578.83. (2)Execute a grant agreement with
paragraph(a)(2)of this section,or to Amounts that are reallocated under this HUD to receive grant amounts allocated
HUD for reallocation under§578.87. section,but that are returned or unused. under§578.43 or§576.45(as
will be reallocated under§578.87. appropriate)for the fiscal year for which
Subpart F—Reallocations the amounts to be reallocated were
§§578.61 Reallocation of grant amouMr, §578.83 Reattocatton of grant amounts; initially made available.
lack of approved 1ealllo ComprehensivetSonof countHome tack of approved Comprehensive Homeless (e)Review and approval.{1)Section
.Assistance w formula cities and Assistance State°and Territorits. 578.53(except paragraph(e)),and such
counties. (a)Applicability.This section applies additional requirements as HUD may
where: specify in the notification under
(a)Applicability.This section applies (1)A State or Territoryfails to obtain paragraph(c)of this section,govern the
where a formula city or county fails to
obtain approval of its Comprehensive approval of its Comprehensive Plan review and approval of application
Plan within 90 days of the date upon within 90 days of the date upon which amendments under this section.HUD
which amounts under this part first amounts under this part first become will rank the amendments and make
become available for allocation under available for allocation in any fiscal grant awards under this section on the
year,or basis of the followingfactors:
§578.43 in any fiscal year.
(b) Grantee.HUD will make available (2)Grant amounts cannot be (i)The nature and extent of the unmet
reallocated to a State under§578.81. homeless need within the jurisdiction In
the amounts that a city or county (b)Grantees HUD will reallocate the which the grant amounts will be used;
referred to in paragraph(a)of this amounts that a State referred to in (ii)The extent to which the proposed
section would have received to the State paragraph(a)of this section would have activities address this need;and
in which the city or county is located. received,first.to formula cities and (iii)The ability of the grantee to carry
(c)Notification of fund availability. counties located in the State that out the proposed activities promptly.
The responsible HUD field office will demonstrate extraordinary need or large (2)HUD will endeavor to make grant
promptly notify the State of the numbers of homeless individuals and if awards within 30 days of the application
availability of any reallocation amounts grant amounts remain,then to other amendment deadline,or as soon
under this section. States and Territories that meet this thereafter as practicable.
(d)Eligibility for reallocation criterion.HUD will make available the (f)Grant amounts.HUD may make a
amounts.In order to receive reallocation amounts that a Territory under grant award fcr less than the amount
amount.)under this section,the State paragraph(a)(1)of this section would applied far er fcr fewer than all of the
must: have received to other Territories that activities identified in the application
Federal Rea ster / Vol. 54, No. 214 / Tuesday, November 7, 1989 / Rules and Regulations 4sao7
amendment.based on competing
p g (2) Territories.Returned grant (e)Selection criteria.HUD will award
demand for grant amounts and the amounts that were allocated to a grants under paragraphs (c)and(d)of
extent to which the respective activities Territory will be made available first,to this section based on consideration of
address the needs of the homeless. other Territories and if grant amounts the following criteria:
(g)Deadlines for using reallocated remain, then to States. (1)The nature and extant of the unmet
grant amounts. Section 576.55 governs (3)Further reallocation:States, homeless need within the jurisdiction in
the use of amounts reallocated under formula cities and counties,and which the grant amounts will be used:
this section. Territories.Any grant amounts that (2)The extent to which the proposed
(h)Amounts that are not reallocated. (i)Remain after applying the activities address this need:and
Any grant amounts that are not preceding provisions of this paragraph (3)The ability of the grantee to carry
reallocated under this section.or that (c), or out the proposed activities promptly. .
are reallocated,but are unused,will be (ii)Are returned to HUD after (f) When grant amounts are returned
reallocated under§ 576.67(d).Any reallocation under such provisions,will or unused. (1)For purposes of this
amounts that are reallocated,but are be further reallocated under paragraph section.emergency shelter grant
returned, will be reallocated under (d) of this section. amounts are considered"returned"
§576.67(c). (4) Other grantees.Returned grant when they become available for
amounts that were initially made reallocation because a grantee does not
§578.67 Reallocation of grant amounts; available to private nonprofit execute a grant agreement with HUD for
returned or unused amounts. organizations,units of general local them,e.g.,when a grantee for which an
(a) General. From time to time,HUD government and States under paragraph allocation is made under § 578.43 or
will reallocate emergency shelter grant (d)of this section will be made available §578.45 fails to meet the application
amounts that are returned or unused,as under that paragraph. deadlines under§578.51(a),or has its
those terms are defined in paragraph(f) (5)The responsible HUD field office application disapproved under
of this section.HUD will make will announce the availability of § 573.53(b),or approved with a reduced
reallocations under this section by returned grant amounts.The grant amount in accordance with
direct notification or Federal Register announcement will establish deadlines #578.89.
Notice that will set forth the terms and for submitting applications,and will set (2)For purposes of this section,
conditions under which the grant out other terms and conditions relating emergency shelter grant amounts are
amounts are to be reallocated and grant to grant awards,consistent with this considered"unused"(i.e.Federal
awards are to be made. part.The announcement will specify the . deobligation)when they become
(b)FENIA boards.HUD may use State application documents to be submitted, available for reallocation by HUD after
and local boards estabiished under the which include: a grantee has executed a grant
Emergency Food and Shelter Program (i)A Standard Form 424, agreement with HUD for them:e.g.,
administered by the Federal Emergency (ii)Certifications required at where:
Management Agency,as a resource to 576.51(b)(2)(v);and (i)A State fails to.make its grant
identify potential applicants for amounts available to State recipients
reallocated grant amounts. (iii)Other certifications and within the time period specified in
c�Reallocation—returned grant assurances similar to those required
( ' g from a formula city or county,or a 578.55(a)(1):
amounts. (1)States and formula cities Territo (ii)A formula city or county fails to
ry,under§§ 578.51(b)(2).
and counties.HUD will endeavor to obligate grant amounts within the time
reallocate returned emergency shelter (6)Tne responsible HUD field office specified in§578.55(b);
grant amounts that were initiallymay establish maximum grant amounts.
(iii)A State recaptures grant amounts
allocated under§576.43 to a State or a considering the grant amounts available,
from a State recipient and makes them
formula city or county,for use within the and will rank the applications using the available to HUD as provided in
same jurisdiction.Reallocation of these criteria in paragraph(e)of this section. §57 6.55(c)(2);
grant amounts is subject to the following (7)HUD may make a grant award for (iv)Grant amounts become available
requirements: less than the amount applied for or for as a result of imposition of a sanction
(i)Returned grant amounts that were fewer than all of the activities identified (other than a reduction of grant
allocated to a State will be made in the application,based on competing amounts)under§ 578.89 or the close-out
available (A)first,to units of general demands for grant amounts and the of a grant or
local government within the State and extent to which the respective activities (v)A grantee referred to in paragraph
(B) if grant amounts remain.then to address the needs of the homeless. (b) of this section fails to obligate grant
other States. (8)HUD will endeavor to make grant amounts within the time period
(ii)Returned grant amounts that were awards within 30 days of the application specified in its grant agreement
allocated to a formula city or county will deadline or as soon thereafter as Amounts that remain after
be made available: practicable. reallocation under §576.63 or §578.87(c)
(A)First.for use in the city or county, (9)Grants awarded under this section are considered unused for purposes of
to units of general local government that are subject to environmental review this section.
are authorized under applicable law to under § 578.52.
carry out activities serving the homeless (d)Reallocation--unused grant Subpart G—Pragmm Requirements
in the jurisdiction: amounts. Unused grant amounts will be
(B)If grant amounts remain,then to available,in HUD's discretion,for §578.71 Matching funds.
the State in which the city or county is reallocation from time to time to: (a)General.Each grantee must match
located: (1)Units of general local government the funding provided by HUD under this
(C) If grant amounts remain,to units and States demonstrating extraordinary Part with an equal amount of funds from
of general local government in the State; need or large numbers of homeless sources other than under this part
and individuals: and These funds must be provided after the
(D) If grant amounts remain,to other (2) Private nonprofit organizations date of the grant award to the grantee.
States. vroviding assistance to the homeless. Funds used to match a previous ESG
0
&W1 Federal Register / Vol. 54, No. 214 / Tuesday, November 7, 1989 / Rules and Regulations
grant may not be used to match a initial occupancy as an emergency minority and women'a business
subsequent grant award under this part. shelter for the homeless. enterprises in connection with activities
A grantee may comply with this (2)In the case of a building that was funded under this part;and
requirement by providing the operated as an emergency shelter before (6)The requirement that the grantee
supplemental;rinds itself:or through receipt of grant amounts under this part. (or in the case of States,the State
supplemental funds or voluntary efforts on the date that grant amounts are first recipient)make known that use of the
provided by any State recipient or obligated for the shelter. facilities and services is available to all
nonprofit recipient(as appropriate).
§576.75 Building standards. on a nondiscriminatory basis.Where the
(b)Calculating the matching.mount procedures that a grantee or recipient
In calculating the amount of matching Any building for which emergency intends to use to make known the
funds,there may be included the value shelter grant amounts are used for availability of such facilities and •
of any donated material or building;the renovation,conversion,or major services are unlikely to reach persons •
value of any lease on a building;any rehabilitation must meet local with handicaps or persons of any
salary paid to staff of the grantee or to government safety and sanitation particular race,color,religion,sex,age
any State recipient or nonprofit recipient standards. or national origin within their service
(as appropriate)in carrying out the §576.77 Assistance to the homeless. area who may qualify for them,the
emergency shelter program;and the time Homeless individuals and families
recipient or grantee must establish
and services contributed by volunteersadditional procedures that will ensure
to carry out the emergency shelter must be given assistance in obtaining that these prsons are made aware of
program,determined at the rate of$5 (a)Appropriate supportive services, the facilities and services.Grantees and
perpurposes �i :is paragraph including permanent housing,medical
hour.For P mph P m health treatment,mental health recipients must also adopt and
(b), the grantee will determine the valueimplement procedures designed to make
or treatment,counseling,supervision.and
of any donated material or building,
any lease,using any method reasonablyother services essential for achieving available to interested persons
independent living;and information concerning the existence
calculated to establish a fair market (b)Other Federal.State,local,and and location of services and facilities
value. private assistance available for such that are accessible to persons with a
§576.73 Use as an emergency shelter. individuals. handicap.
(b)Applicability of OMB Circulars.1
(a)(1)General.Any building for which §576.73 Other Federal requirements. The policies,guidelines,and
emergency shelter grant amounts are Use of emergency shelter grant requirements of 24 CFR part 85(codified
used for one or more eligible activities amounts must comply with the following pursuant to OMB Circular No.A-102)
described in 3 578.21(a)(1)must be additional requirements: and OMB Circular No.A-87,as they
maintained as a shelter for the homeless (a)Nondiscrimination and Equal relate to the acceptance and use of
for not less than a three-year period or, Opportunity.(1)The requirements of the emergency shelter grant amounts by
if the grant amounts are used for major Fair Housing Act(42 U.S.C.3801-20)and States and units of general local
rehabilitation or conversion of the implementing regulationspart building,for not less than a 10-year p 8 at 24 CFR government,and Nos.A-110 and A-122
period.
100;Executive Order 11063 and as they relate to the acceptance and use
implementing regulations at 24 CFR part of emergency shelter grant amounts by
(2)(i)Any building for which 107;and title VI of the Civil Rights Act private nonprofit organizations.
emergency shelter grant amounts are of 1964(42 U.S.C.2000d-2000d-4)and (c)Lead-based paint.The
used for eligible activities described in implementing regulations issued at 24 requirements,as applicable,of the Lead-
§ 576.21(a)(2)or(a)(3)must be CFR part 1; Based Paint Poisoning Prevention Act
-:-maintained as a shelter for the homeless (2)The prohibitions against (42 U.S.C.4821-4848)and implementing
for the period during which such discrimination on the basis of age under regulations at 24 CFR part 35.In
assistance is provided.A substitute site the Age Discrimination Act of 1975(42 addition.the grantee(or in the case of
or shelter may be used during this U.S.C.6101-07)and implementing States,the State recipient)must also
period so long as the same general regulations at 24 CFR part 148 and the meet the following requirements relating
population is served. prohibitions against discrimination to inspection and abatement of defective
(ii)For purposes of this section.the against otherwise qualified individuals lead-based paint surfaces:
term"same general population"means with handicaps under section 504 of the
either the same types of homeless Rehabilitation Act of 1973(29 U.S.C. (1)Treatment of defective paint
persons originally served with ESG 794)and implementing regulations at 24 surfaces must be performed before final
inspection and approval of the
assistance(i.e.battered spouses,
CFR part 8.For purposes of the
runaway children,fa.-niiies,or mentally emergency shelter grants program,the renovation,tv rIItbs rehabilitation conversion
ill individuals)or persons in the same term"dwelling units"in 24 CFR part 8
geographic area. shall include sleeping accommodations. (2)Appropriate action must be takes
(3)Using emergency shelter grant (3)The requirements of Executive h protectardsassociated shelter o with lead-baseda bm the
amounts for homeless prevention Order 11248 and the regulations issued hazards with
activities under§ 578.21(a)(4) does not under the Order at 41 CFR chapter 60; paint abatement procedures.
trigger any period of use requirements. (4)The requirements of section 3 of (d)Conflicts of interest.In addition to
(b)Calculating the applicable period. the Housing and Urban Development the conflict of interest requirements In
The three-and 10-year periods referred Act of 1968,12 U.S.C.1701u(see OMB Circulars A-102 and A-110,no
to in paragraph(a)of this section begin § 570.607(b)of this chapter); person—
to run: (5)The requirements of Executive
(1)In the case of a building that was Orders 11825,12432,and 12138. 'ao Grouters referenced in this section aze
not operated as an emergency shelter Consistent with HL'D's responsibilities available at the Entitlement Cities Dtvieiaa Room
for the homeless before receipt of grant under these Orders,the grantee must 72.52.,Department of Hweing end Development.
Development.451 Seventh Street.et.SW.,Washington.
amounts under this part.on the date of make efforts to encourage the use of DC 20410.
Federal Register / Vol. 54. No. 214 / Tuesday, November 7, 1989 / Rules and Regulations 46809
(1)(i) Who is an employee, agent, requirements of 24 CFR part 24.subpart rehabilitation.or demolition for a
consultant,officer. or elected or F. project assisted under this Part.
appointed official of the grantee,State (i)Audit.The financial management Permanent,involuntary moves for an
recipi.nt,or nonprofit•recipient(or of system used by a State or unit of general assisted project include:
any designated public agency) that local government that is a grantee or (A)A permanent move from the real
receives emergency shelter grant State recipient must provide for audits property(building or complex)following
amounts and(ii)who exercises or has in accordance with 24 CFR part 44.A notice by the grantee,recipient or
exercised any functions or private nonprofit organization is subject property owner to move permanently
responsibilities with respect to assisted to the audit requirements of OMB from the property, if the move occurs on
activities,or Ci,.vlar A-110. or after the date that the grantee or
(2)Who is in a position to participate (j)Intergovernmental review.The recipient submits to HUD an application •
in a decisionmakirg process or gain requirements of Executive Order 12372 for assistance that is later approved and •
inside information with regard to such and the regulations issued under the funded:
activities,may obtain a personal or order at 24 CFR part 52. to the extent (B)A permanent move from the real
financial interest or benefit from the provided by Federal Register notice in property that occurs before the
activity, or have an interest in any accordance with 24 CFR 52.3. submission of the application to HUD,if
contract, subcontract,or agreement with
§576.30 Relocation and acquisition. the grantee,recipient or HUD
respect thereto,or the proceeds
thereunder, either for him or herself or (a)Minimizing displacement. determines that the displacement
for those with whom he or she has Consistent with the other goals and resulted directly from acquisition,
objectives of this Part,grantees and rehabilitation,or demolition for the
family or business ties,during his or her recipients must assure that they have project, or
tenure, or for one year thereafter.HUD taken all reasonable steps to minimize (C) A permanent move from the real
• may grant an exception to this exclusion the displacement of persons (families, property by a tenant-occupant of a
• as provided in 3 570.511(d) and(e)of individuals,businesses,nonprofit dwelling unit that occurs after the
this chapter. organizations,and farms)as a result of a execution of the agreement between the
(e) Use of debarred,suspended,or project assisted under this Part recipient and HUD if:
ineligible contractors.The provisions of (b)Relocation assistance for (1) The tenant has not been provided
24 CFR part 24 relating to the displaced persons.A displaced person a reasonable opportunity to lease and •
employment,engagement of services, (defined in paragraph(f)(1) of this occupy a suitable,decent,safe and
awarding of contracts,or funding of any section)must be provided relocation sanitary dwelling in the same building/
contractors or subcontractors during any assistance at the levels described in, complex following the completion of the
period of debarment,suspension,or and in accordance with,49 CFR part 24, project at a rent,including estimated
placement in ineligibility status are which contains the government-wide- average utility costs, that does not
applicable to grantees and recipients regulations implementing the Uniform exceed the greater of the tenant's rent
under this part. Relocation Assistance and Real and estimated average utility costs
(f)Flood insurance.No site proposed Property Acquisition Policies Act of 1970 before the initiation of negotiations,or
on which renovation,major (URA)(42 U.S.C.4601-4655). 30 percent of gross household income:or
rehabilitation.or conversion of a (c)Real property acquisition (2)The tenant has been required to
building is to be assisted under this part. requirements.The acquisition of real relocate temporarily but the tenant is
other than by grant amounts allocated to property for a project is subject to the not offered payment for all reasonable
States under § 576.43,may be located in. URA and the requirements described in
an area that has been identified by the 49 CFRpart 24.subpart B. out-connectionof-pocket with expenses incurredora in
Federal Emergency Management F atonor the temporary
g (d)Responsibility of grantees and relocation other conditions of the
Agency(:'ESA)as having special flood recipients.Each grantee and recipient
hazards,unless must assure that it will comply with the remporary relocation are not
(1)(i)The community in which the URA.the regulations at 49 CFR part 24, reasonable.and the tenanto does not
area is situated is participating in the return Thet the building/complex;to; or
Insurance
F g and the requirements of this section.The (3) tenant is required to move to
National Flood Insurance Program and cost of assistance required by this
the regulations thereunder(44 CFR Parts section may be paid from local public another unit inthe same building/
59 through 79)or funds,funds provided in accordance complex but is not offered
out-of-
(ii)Lass than a year has passed since with this part.or funds available from poreimbursementk ases for all reasonable FE?�tA notification regarding such other sources. pocket expenses incurred in connection
hazards;and (e)Appeals.A person who disagrees with the move.
(2)The grantee will ensure that flood with the grantee's or recipient's (ii) A person does not qualify as a
insurance on the structure is obtained in determination concerning a payment or "displaced person"if:
compliance with section 102(a)of the other assistance required by this section (A)The person has been evicted for
Flood Disaster Production Act of 1973 may file a written appeal of that cause based upon a serious or repeated
[42 U.S.C.4001 et seq.]. determination with the grantee or violation of material terms of the lease
(g) Coastal bar-:ere.In accordance recipient.The appeal procedures to be or occupancy agreement and HUD
with the Coastal Barrier Resources Act, followed are described in 49 CFR 24.10. determines that the eviction was not
16 U.S.C.3501,no financial assistance (F)Definition.—(1)Displaced person. undertaken for the purpose of evading
under this part may be made available (i)The term"displaced person"means a the obligation to provide relocation
within the Coastal Barrier Resources person(family,individual.business, assistance;
System. nonprofit organization,or farm)that (B) The person moved into the
(h)Dr:.g Free Workplace Act of 1988. moves from real property, or moves property after the submission of the
Each grantee is required to certify that it personal property from real property, application and,before commencing
(and its recipients; will maintain a drug- permanently and involuntarily, as a occupancy,received written notice of
free workplace inaccordance with the direct result of acquisition, the expected displacement;
t
A ii„.4 to
4c8 r 0 Federal Register / Vol. 54. No. 214 I Tuesday, November 7, 1989 / Rules and Regulations
(C)The person is ineligible under 49 0 576.35 Performance reports: after all ESG funds are expended and all
CFR 24.2(g)(2);or (a)Interim performance report—(1) activities are completed.
(DJ HUD determines that the person Timing of report(i)A formula city or *578.87 Reeardkeeping.
was not displaced as a direct result of county,or Territory,must submit its
acquisition,rehabilitation.or demolition interim performance report to HUD no Each grantee must ensure that records
for the project later than 30 days after the end of the are maintained for a three-year period to
(iii)The grantee or recipient may,at 180-day period allowed for the document compliance with the
any time,request a HUD determination obligation of grant amounts under provisions of this part.
ofdisplacement is or would §578.55(b),or 30 days after the date
whether a
when all grant amounts are obligated.
4 578 89 Sanctions.
he covered under this section. whichever comes first. (a)HUD sanctions.If HUD determines •
(2)Initiation of negotiations.For (ii)A State must submit its interim that a grantee is not complying with the
purposes of determining the type of performance report not later than 30 requirements of this part or of other
replacement housing payment to be days from the date of the State's applicable Federal law,HUD may(in
made to a residential tenant displaced distribution of funds to its State addition to any remedies that may
as a direct result of privately undertaken recipients:except that where the otherwise be available) take any of the
rehabilitation,demolition,or acquisition responsible field office grants a State an following sanctions,as appropriate:
of the real property,the term"initiation extension of the 65-day deadline for (1)Issue a warning letter that further
of negotiations"means the execution of making available its grant funds under failure to comply with such
the agreement between the grantee and §578.55(a)(1)a corresponding extension requirements will result in a more
HUD. for filing of the interim report will serious sanction;
automatically be granted. (2)Condition a future grant:
Subpart H—Grant Administration (iii)A grantee referred to in §578.87, (3)Direct the grantee to stop the
"Reallocation of funds,"must submit its incurring of costs with grant amounts;
§578.81 Rasper.slbility far grant interim performance report to HUD (4)Require that some or all of the
administration. within the period specified in its grant grant amounts be remitted to HUD;
Grantees are responsible for ensuring agreement. (5)Reduce the level of funds the
that emergency shelter grant amounts (2)Report content. (i)In the case of a grantee would otherwise be entitled to
are administered in accordance with the grantee other than a State,the interim receive;or
requirements of this part and other performance report must contain (8)Elect not to provide future grant
applicable laws.In the case of States information on the amount of funds funds to the grantee until appropriate
malting grant amounts available to State obligated for each of the four categories actions are taken to ensure compliance. i
recipients,and in the case of units of of eligible activities described in (b)State sanctions.If a State
general local government distributing §578.21(a)(1),(2),(3),and(4). determines that a State recipient is not
grant amounts to nonprofit recipients, (ii)A State interim performance report complying with the requirements of this
the States and the units of local must provide this information for each part or other applicable Federal laws,
government are responsible for ensuring State recipient. the State must take appropriate actions,
that their respective recipients carry out State must submit with3)Matching a its certification.
A which may include the actions described
terim
the recipients'emergency shelter grant State must
se report the matching funds in paragraph(a)of this section.Any
peprograms in compliance with all certification required by grant amounts that become available to
applicable requirements. a State as a result of a sanction under
§576.51(b)(2)(ii). this section must,at the option of the
§576.33 Method of payment. (b)Annual performance report—(1) State,be made available(as soon as
Report content A grantee other than a practicable)to other nonprofit
Payments are made to a grantee upon State must provide HUD with an annual r an natios or units of general local its request after the grant agreement has performance report on the obligation g the I
been fullyexecuted,and mayinclude a government located in State for use
days' and expenditure of funds for each of the within the time periods specified in
workingcapital advance for 30 da s t
four categories of eligible activities §578.55(a)(2),or to HUD for reallocation
cash needs or an advance of$5,000, described in§ 576.21(a)(1),(2),(3),and
whichever is greater.Thereafter,the (4).A State must provide this under§578.67(d).
grantee will be reimbursed for the (c)Reallocations.Any grant amounts
information for each State recipient that become available to HUD as a
amount of its actual cash disbursements. (2) Timing of report.The initial annual
If a grantee requests a working capital performance report is required for the result of the imposition of a sanction
under this section will be reallocated
advance,it must base the request on a period ending December 31 following
realistic.firm estimate of the amounts the submission of the interim report,and under§576.67(d).
required to be disbursed over the 30-day is due no later than 30 days after Dated:October 28,1989.
period in payment of eligible activity December 31.A grantee must continue Anna Kondrataa,
costs.Payments with respect to grants to submit this report annually until all Assistant Secretary for Community Nanning
of$120,000,or more,will be made by emergency shelter grant amounts are and Development
letter of credit,if the grantee meets the reported as expended,except that the (FR Doc.89-28112 Filed 11-5-89:8:45 am]
requirements of 24 CFR 85.21. final report is to be submitted 90 days BILLING CODE 4210-=-41
*V.5. GGVESU'ENT PRIUUNG cFF;cs::c?5 26i-:58 01027
•
•
•
•
•
•
EMERGENCY SHELTER GRANTS PROGRAM
FY 1995 OPERATING INSTRUCTIONS
I. LEGISLATIVE CHANGES
No statutory changes were made in 1994 that affect the FY
1995 allocations . The following paragraphs describe the
statutory changes made in previous years that continue to be
program requirements which do not require issuing new regulations
to implement. •
•
A. Section 832 of the Cranston-Gonzalez National
Affordable Housing Act (Pub. L. 101-625, November 28 ,
1990) made the following changes in ESG concerning use
of funds for administration, the essential services
cap, homeless prevention activities, and the matching
requirements .
1. Section 832 (b) permits a recipient to use up to
five (5) percent of any annual grant received for
administrative purposes . The statute specifies
that in the case of State grantees, the. State
shall share the amount available for
administration with local governments funded. by
the State. The definition of administrative costs
is the same •as that for the Supportive Housing
Demonstration Program. The Supportive Housing
Demonstration Program Final regulations define
administrative costs_gat 24 CFR 577.125 (e) as the
costs of administering the assistance.
2 . Section 832 (c) raises the amount available for
essential services from 20 percent to 30 percent.
•
•
• 3 . Section 832 (d) institutes a separate cap for
• homeless prevention activities of 30 percent.
4!(.1?›
- 1
t •
.•
3
Stewart B McKinney Homeless. Assistance Act by
• adding a subsection that requires- that tF,7-rniTIAtion
of assistance to any individual or family be in.
accordance with formal process- This addition. _
• ta the statute states:
"If an. individual or family who receives
assistance from a recipient violates
program requirements, the recipient may
terminate assistance in accordance with a
formal process established by the recipient
that recognizes the rights of individuals
affected, which may include a hearing. "
ntsk
Id30 MV1
9661 8g AYH
*II
•
03A 1333d
.7'
*la CA
•
C-25A
• CITY OF OMAHA
LEGISLATIVE CHAMBER ..a. ,-
Q
Omaha, Nebr July 16 ` 19 96 f
„t
;
RESOLVED BY THE CITY COUNCIL OF THE CITY OF OMAHA:
r'.
WHEREAS,the provision of emergency shelter and essential services for home1kss persons , r,ry
is an urgent need in the City of Omaha; and,
WHEREAS,the Stephen Center,Inc.,will provide shelter and essential services for homeless •
persons, as provided in the grant application submitted to the City of Omaha in response to the FY96
Emergency Shelter Grant Program Request for Proposals; and,
WHEREAS, the City of Omaha has previously funded shelters and service providers for the
Purpose of assisting homeless persons and families with the provision of food, health services,
counseling, and shelter; and,
WHEREAS, the Emergency Shelter Grant Program Selection Committee and the Mayor.
recommend approval of this grant; and,
WHEREAS, it is beneficial and desirable to continue to provide shelter and services to
homeless persons and families through the Stephen Center,Inc., for a twelve-month period.
NOW, THEREFORE,BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF
OMAHA:
THAT, the attached Agreement, as recommended by the Mayor,between the City of Omaha
and the Stephen Center, Inc., 2723 "Q" Street, Omaha, Nebraska 68107,in the amount of$40,950
for the purpose of providing shelter and essential services to homeless persons and families for the
one year period of said Agreement,is hereby approved. Funds shall be paid from the City of Omaha
Emergency Shelter Grant Fund No. 154, Organization 8500.
APPROVED AS TO FORM:
P:\PLN1\2220.MAF (,,ZeA.e__ elf
ASSISTANT CITY ATTORNEY
By.... el;;;44;All >
�Councilmember
Adopted iJu.�...� 1996 .--�i
er City erk
A roved. . *,20 ....
I/� �.. / '`'
PP f�
Mayor
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