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RES 2016-1209 - Agmt with Lamb's Remodeling for rehabilitation and lead hazard reduction work to 6124 N 36th St
Planning Department Omaha/Douglas Civic Center agt'et Cni n 1819 Farnam Street,Suite 1100 nor r �; '# Omaha,Nebraska 68183 n � t�. O F. �yc2 r. Q� � I '"i (402)444-6140 op 1- Telefax(402)444-6140 4TFD FEBR�A fi James R.The1e City of Omaha { Director Jean Stothert,Mayor August 30, 2016 Honorable President And Members of the City Council, The attached Resolution authorizes the City of Omaha to enter into an Agreement with Thomas F. Lamb, Sole Proprietor, Lamb's Remodeling, 21210 Welsh Road, Elkhorn, NE 68022 for the rehabilitation of property located at 6124 North 36t' Street, Omaha, Nebraska 68111. The Agreement provides for the rehabilitation and lead hazard reduction work as applicable in FY 2014 Urban Homestead Program and 2015 HOME funds to rehabilitate single family property located at 6124 North 36th Street, Omaha, Nebraska 68111, to be purchased and occupied by a low- and moderate-income family whose annual household income is at or below 80% the Median Income by Family Size (hereinafter referred to as the "Project"). This project was competitively bid with the lowest and best bid being received at $94,780.00. The Planning Department believes this bid is reasonable for the work on this property, based on the certified cost estimate and the bids received. This project will be funded under the 2014 Urban Homestead Program, which is included in the City's FY 2015 Consolidated Submission for Community Planning and Development Programs (hereinafter referred to as "Consolidated Plan"), approved February 24, 2015, by City Council Resolution No. 127, and the 2015 HOME Consolidated Plan approved November 17, 2015, Resolution No. 1462, as amended. The cost for this rehabilitation project is estimated at $94,780.00. The Urban Homestead Program funding shall be paid from FY 2015 HQME Funds, Fund No.12179, Org. No. 128071 and NAHTF Fund No. 12141, Org. No. 128101. This project meets the requirements of the Federal HOME Programs,the City's Urban Homestead Guidelines, is consistent with the FY 2015 Consolidated Plan and 2015 HOME Consolidated Plan, and is eligible for funding. Honorable President And Members of the City Council Page 2 The Contractor, Thomas F. Lamb, Sole Proprietor, Lamb's Remodeling, 21210 Welsh Road, Elkhorn, NE 68022 has on file a current Annual Contract Compliance Report Form (CC-1). As is City policy, the Human Rights and Relations Department will review the Contractor to ensure compliance with the Contract Compliance Ordinance. Your favorable consideration of this Resolution is requested. Sincerely, Referred to City Council for Consideration: g Vgyik 45- ames R. Thele 0 Date Mayor's Office Date Planning Director Approved as to Funding: Approved: 61(j. is Step n B. Curtiss ",''W.I ate Sp ncer K. Dannett Jr., 'rector Date Finance Director Human Rights and Rel ions Department JfjPln2420-cover letter 2014 URBAN HOMESTEAD REHABILITATION AND RESALE PROGRAM CONTRACTOR AGREEMENT TO CONTRACT FOR REHABILITATION WORK THIS AGREEMENT is entered into between the City of Omaha (hereinafter referred to as "City") and Thomas F. Lamb, Sole Proprietor, Lamb's Remodeling, 21210 Welsh Road, Elkhorn, Nebraska 68022 (hereinafter referred to as "Contractor"), based on terms, conditions and provisions as set forth below. RECITALS: WHEREAS, the City is a municipal corporation located in Douglas County, Nebraska, and is organized and existing under the laws of the State of Nebraska, and is authorized and empowered to exercise all powers conferred by the State constitution, laws, Home Rule Charter of the City of Omaha, 1956, as amended, and local ordinances, including but not limited to, the power to contract; and, WHEREAS, the City has received HOME Funds for implementing the Omaha-Council Bluffs Consortium Consolidated Submission for Community Planning and Development Programs Action Plan for Fiscal Year 2015, for the creation of affordable housing opportunities for renters and owners, among other objectives; and, WHEREAS, the City's FY 2015 Consolidated Submission for Community Planning and Development Programs (hereinafter referred to as "Consolidated Plan"), outlining priorities, programs and funding allocations for the 2015 program year, that included the Urban Homestead Program, was approved by City Council Resolution No. 127 on February 24, 2015, as amended; and, 1 A OPPORTUNITY WHEREAS, the Project is eligible for funding under the FY 2014 Urban Homestead Rehabilitation and Resale Program, and also eligible under the 2015 HOME program, $400,000.00 was allocated from these programs; and, WHEREAS, it is in the best interest of the City and the residents thereof that the City enter into an Agreement with the Contractor to provide rehabilitation funding based on a competitive bid process for the Project. NOW, THEREFORE, IN CONSIDERATION OF THESE MUTUAL COVENANTS, the parties do hereby agree as follows: SECTION 1. DEFINITIONS AND ABBREVIATIONS. 1.01 "Rehabilitation/Construction Completion" shall mean — the date the Project has been certified by the City as meeting all state, federal and local laws, ordinances, regulations and codes, including but not limited to, Section 8 Housing Quality Standards for Existing Homes (HQS) as established by HUD, the City of Omaha Property Rehabilitation Standards, Nebraska Department of Economic Development Rehabilitation Standards, and accessibility requirements, where applicable. 1.02 "Construction Completion" shall mean — the date Rehabilitation/Construction Completion has been certified and approved by the City, and all HOME funds allocated to the Agreement have been disbursed. 1.03 "Property" shall mean — the property located at, 6124 North 36th Street, Omaha, Nebraska, 68111 1.04 "HOME Funds" shall mean that portion of the FY 2014 Urban Homestead Program funds awarded to the City, subject to and conditioned upon actual receipt of same by the City of Omaha, as may be available to loan during the program FY 2012 for the use specified herein in an amount not to exceed$94,780.00. 1.05 "Contractor" shall mean Thomas F. Lamb, Sole Proprietor, Lamb's Remodeling, 21210 Welsh Road, Elkhorn, Nebraska 68022 - (referred to herein as the "Contractor") warranting itself to be licensed and/or bonded (if applicable) and qualified to perform the work specified herein. 1.06 "City" shall mean—the City of Omaha, a Nebraska Municipal Corporation. 1.07 "HUD" shall mean—the U.S. Department of Housing and Urban Development. 2 EQUAL HOUSING OPPORTUNITY 1.08 "Director" shall mean—the Planning Director of the City of Omaha. SECTION 2. RESPONSIBILITIES OF CONTRACTOR. 2.01 Overall Project Performance 2.01.1 The Contractor shall use the $94,780.00 in HOME Funds allocated in the 2014 Urban Homestead Program Funds for rehabilitation and lead hazard reduction work as applicable at the vacant and foreclosed-upon property located at 6124 North 36th Street, Omaha,Nebraska 68111 2.02 TIME FOR COMMENCEMENT AND COMPLETION. The Contractor agrees to complete, free of liens or rights of liens of contractors, mechanics, suppliers, or laborers, all work listed in the Work Write-up by the completion date indicated on the Proceed Order, subject to extensions approved by the City for the period of any excusable delays (including strikes, acts of God, or any other reasons beyond the control of the City or Contractor). The Contractor agrees that time is of the essence in the performance of the Agreement terms. 2.03 AGREEMENT PRICE. The Contractor agrees to accomplish work as described in the Work Write-up in accordance with each and every term and condition of this Agreement, for a total Agreement price of$94,780.00. 2.04 PROGRESS PAYMENTS. The Contractor agrees that the total Agreement price shall be paid in one or more progress payments. Should any work for which payment is requested. not be completed, be completed incorrectly, or not be done in a high quality workmanlike manner, the amount of such work shall be deducted from the payment request. Payment for any work so deducted may be requested on future requests for payment; provided said work has been satisfactorily completed and the reason for the initial denial of payment no longer exists. Partial lien waivers from Contractor shall be provided with each progress payment requested. Progress payments will be made up to and including 90% of the value of the work completed. Any further payment would be made when project is 100% complete. In the case of inclement weather or any other factor that the City determines that will prevent Construction completion, the Contractor will be paid based on the actual amount of work completed. Final lien waivers shall be presented from the Contractor at the time the request for final payment is made. Such progress payments shall be disbursed after inspection and approval of the work by the City. Final payment shall be due upon satisfactory completion and acceptance of work as being in compliance with this Agreement by the City, permit sign-off(if applicable), and submission of satisfactory waiver(s) of liens. The City shall not withhold payment to the Contractor except for non-compliance with the terms of this Agreement, and SHALL NOT REQUEST THE CONTRACTOR TO PERFORM WORK OUTSIDE THE SCOPE OF THIS AGREEMENT AS A CONDITION OF RECEIVING PAYMENT. Any work 3 O EQUAL HOUSING OPPORTUNITY completed that is not in compliance with the items set out in the Work Write-up will not be paid for out of the rehabilitation funds unless said additions/ deletions/changes have been authorized by a written and approved change order executed by all parties PRIOR TO the commencement of such work. Payment for any work completed without a written and approved change order is the sole responsibility of the Contractor. The Contractor acknowledges that it is a material breach of this Agreement to request or accept a progress or final payment which is in excess of the price of the work completed at the time such payment is requested. 2.04.1 Progress payments and final payment as may be authorized by the Director or his designated representative are subject to: 2.04.1.1 Receipt, verification and approval of a lien waiver and an AIA Document G702 "Application and Certification for Payment" or comparable document. All documents for each pay request submission must be forwarded to the Planning Department Construction Specialist assigned to the Project. 2.04.2 A 10% retainage of HOME Urban Homestead Program funds will be held by the City until all punch list items have been corrected to the satisfaction of the City Construction Specialist assigned to this project, and until the Construction Completion requirements as stated in Section 1, Paragraph 1.02 are satisfied. 2.05 WARRANT. The Contractor warrants that all improvements, hardware, and fixtures of whatever kind of nature to be installed or constructed on the Property by the Contractor or the Contractor's sub-contractors will be of good quality, suitable for their purpose, and free from defects in workmanship or materials or other deficiencies. This is a full warranty extending to the City of Omaha and subsequent Owners of the Property; provided, however, that warranty set forth in this paragraph shall apply only to the deficiencies and defects about which the City of Omaha or subsequent Owner(s) shall have notified the Contractor at the address stated above WITHIN ONE YEAR, except for any longer warranty periods specified in the warranty. (NOTE: Contractor to supply extended warranty documents to the City at the time of final inspection.) 2.06 TERM OF THE AGREEMENT This Agreement shall start effective upon the Notice to Proceed, and the terms of this Agreement shall be completed 120 days from Notice to Proceed. The Planning Director may extend the term of this Agreement, but in no event shall the date extend beyond 12 months from date approved by City Council. SECTION 3. STANDARD TERMS 4 A OPPORTUNITY 3.01 INSURANCE: During the continuance of the work under this Agreement, the Contractor and all subcontractors (as applicable) shall: 3.01.1 Maintain, at a minimum, the applicable following classes of coverage which will provide, at a minimum, the following amount of coverage: (1) Bid Security is required. No performance bond will be required for a Rehabilitation Agreement in an amount less than the federal government's small purchase threshold under 2 CFR, Part 215, Uniform Administration Requirements for Grants, currently at $100,000.00 (Exhibit "C"). On a case-by-case basis, the Director of the Planning Department can require a bond if it is in the best interest of the federal government and the City of Omaha. The contractor must be on the Planning Department approved contractors list. (2) Contractor's Personal Liability $1,000,000.00 (3) Combined Bodily Injury and Property Damage $2,000,000.00 ($1,000.000.00 per occurrence) (4) Product, including completed operations $1,000,000.00 (5) Worker's Compensation The Contractor agrees to provide evidence to the City of such insurance prior to the commencement of the work. Failure to provide adequate evidence of insurance, or failure to maintain the insurance as required by this paragraph, shall be grounds for termination of this Agreement at the option of the City of Omaha. The City of Omaha shall be named insured on all comprehensive liability insurance policies. 3.02 EQUAL EMPLOYMENT OPPORTUNITY CLAUSE. 3.02.1 Section 10-192 of the Omaha Municipal Code, Equal Employment Opportunity Clause. The Developer and its contractor shall not discriminate against any employee or applicant for employment because of race, religion, color, sex, age, sexual orientation, gender identity, national origin, familial or handicap status. As used herein, the word "treated" shall mean and include, without limitation, the following: recruited, whether by advertising or by other means; compensated; selected for training, including apprenticeship; promoted; upgraded; demoted; downgraded; transferred; laid off; and terminated. The Developer and its contractor agree to and shall post in conspicuous 5 A OPPORTUNITY places, available to employees and applicants for employment, notices to be provided by the contracting officers setting forth the provisions of this nondiscrimination clause. The contractors and its subcontractors shall, in all solicitations or advertisements for employees placed by or on behalf of the contractor, state that all qualified applicants will receive consideration for employment without regard to race, religion, color, sex, age, sexual orientation, gender identity, national origin, familial or handicap status. 3.02.2 The contractors or its subcontractors shall send to each representative of workers with which he has a collective bargaining agreement or other contract or understanding a notice advising the labor union or workers' representative of the contractor's commitments under the equal employment opportunity clause of the City and shall post copies of the notice in conspicuous places available to employees and applicants for employment. 3.02.3 The contractors or its subcontractors shall furnish to the Human Rights and Relations Department all federal forms containing the information and reports required by the federal government for federal agreements under federal rules and regulations, including the information required by Sections 10-192 to 10-194, inclusive, of the Omaha Municipal Code , and shall permit reasonable access to his records. Records accessible to the Human Rights and Relations Department shall be those which related to Paragraphs 3.02.1 through 3.02.10 of this subsection and only after reasonable notice is given the contractor. The purpose of this provision is to provide for investigation to ascertain compliance with the program provided herein. 3.02.4 The contractors or its subcontractors shall take such actions with respect to any subcontractor as the City may direct as a means of enforcing the provisions of Paragraphs 3.02.1 through 3.02.10 herein, including penalties and sanctions for noncompliance; however, in the event the contractor becomes involved in or is threatened with litigation as the result of such directions by the City, the City will enter into such litigation as is necessary to protect the interests of the City and to effectuate the provisions of this division, and, in the case of Agreements receiving federal assistance, the contractor or the City may request the United States to enter into such litigation to protect the interests of the United States. 3.02.5 The contractors shall file and shall cause his subcontractors, if any, to file compliance reports with the contractor in the same form and to the extent as required by the federal government for federal agreements under federal rules and regulations. Such compliance reports shall be filed with the City's Human Relations Department. Compliance reports A 6 OPPORTTUUNITY filed at such times as directed shall contain information as to the employment practices, policies, programs and statistics of the contractor and his subcontractors. 3.02.6 The contractors or its subcontractors shall include the provisions of Paragraphs 3.02.1 through 3.02.10 of this section, "Equal Employment Opportunity Clause", and Section 10.193 in every contract, subcontract or purchase order so that such provisions will be binding upon each subcontractor or vendor. (Code 1980, Section 10-192; Ord. No. 35344, Sections 1, 9-26-00) 3.02.7 The Contractor will comply with all provisions of Executive Order 11246 of September 24, 1965, (or as may be amended) and of the rules, regulations, and relevant orders of the U.S. Secretary of Labor. 3.02.8 The Contractor will furnish all information and reports required by Executive Order 11246 of September 24, 1965, (or as may be amended) and by the rules, regulations, and orders of the Secretary of Labor and/or the U.S. Secretary of Housing and Urban Development and will permit access to his/her books, records and accounts by the Secretary of Housing and Urban Development, or his/her designees, for purposes of investigation to ascertain compliance with such rules, regulations and orders. 3.02.9 In the event of the Contractor's noncompliance with the nondiscrimination clauses of this Amendment or with any of the said rules, regulations, or orders, this Agreement may be cancelled, terminated, suspended in whole or in part, and the Contractor may be declared ineligible for further government agreements or federally- assisted construction agreements in accordance with procedures authorized in Executive Order 11246 of September 24, 1965; and such other sanctions may be imposed and remedies invoked as provided in Executive Order 11246, or by rules, regulations or orders of the Secretary of Labor, or as otherwise provided by law. 3.03 ASSIGNMENT. The Contractor agrees not to assign this Agreement without written consent of the City of Omaha. 3.04 CHANGE ORDERS. The Contractor agrees not to make any changes to the Work Write-up or the Specifications, without a written change order executed by all parties prior to the commencement of the work. A written and executed change order is required even if the modification involves no change in the dollar amount of the Agreement. 3.05 PERMITS. AND CODES. The Contractor agrees to secure and pay for all applicable and necessary permits and licenses required for the Contractor's 7 A EQUAL HOUSING OPPORTUNITY performance of this Agreement in compliance with applicable requirements, including local building and housing codes where applicable, requirements, including local building and housing codes where applicable, whether or not covered by the specifications and drawings for the work, and further agrees to perform all work in conformance with the highest standard of all applicable codes and local property rehabilitation standards. 3.06 HOLD HARMLESS. The Contractor agrees to defend, indemnify and hold the City of Omaha harmless from any liability or claims for damages because of bodily injury, death, property damage, sickness, disease, or loss and expense arising from the Contractor's performance of this Agreement. Both parties agree that each Contractor and Subcontractor is acting in the capacity of an independent contractor. The Contractor further agrees to protect, defend and indemnify the City of Omaha from any claims by laborers, subcontractors, or suppliers for unpaid work or labor performed, or materials supplied in connection with this Agreement. The Contractor agrees to hold and save harmless the City of Omaha from any and all loss, cost or damages of every kind, nature or description arising under this Agreement. 3.07 ELIGIBILITY. The Contractor represents that he/she is not listed on the Disbarred and Suspended Contractor's List of the U.S. Department of Housing and Urban Development (HUD) or of the City, and further agrees not to hire or utilize as a subcontractor or supplier or any person or firm that is so listed. The contractor and all subcontractors and sub-tiers must be registered with the Nebraska Department of Labor. 3.08 CONDITION OF PREMISES. The Contractor agrees to keep the premises broom clean and orderly and to remove all debris as needed during the course of the work, in order to maintain work conditions which do not causes health or safety hazards. 3.09 LEAD-BASED PAINT. The Contractor agrees to use no lead-based paint in the performance of this Agreement, including the performance of any subcontractor. "Lead-based paint" means any paint containing more than six one-hundredths of one (1) per centum of lead by weight (calculated as lead metal) in the total nonvolatile content of the paint, or the equivalent measure of lead in the dried film of paint already applied. The Contractor further agrees to abide by all federal requirements regarding lead-based paint poison prevention. Lead-based Paint Regulations at 24 CFR 570.608 and 24 CFR Part 35 and in particular Sub-part B thereof. Such regulations pertain to all HUD-assisted housing and require that all owners, prospective owners or tenants or properties constructed prior to 1978 be properly notified that such properties may include 8 OPPORTUNIIYI lead-based paint and require specific treatments according to the amount of HUD funding allocated to the Project. 3.10 SECTION 3 —EMPLOYMENT OF LOW-INCOME PERSONS (SECTION 3 OF HUD ACT OF 1968 AS AMENDED). 12 U.S.C. 1701u). The Contractor agrees to abide by the following provisions and to include them in any subcontract into which the Contractor enters in performance of the Agreement. 3.10.1 The work to be performed under this Agreement is on a project assisted under a program providing direct federal financial assistance from the Department of Housing and Urban Development and is subject to the requirements of Section 3 of the Housing and Urban Development Act of 1968, as amended, 12 U.S.C. 1701u. Section 3 requires that to the greatest extent feasible, opportunities for training and employment be given lower income residents of the project area(s) and Agreements for work in connection with the project be awarded to business concerns which are located in, or owned in substantial part by persons residing in the area of the project. 3.10.2 The parties to this Agreement will comply with the provisions of said Section 3 and the regulations issued pursuant thereto by the Secretary of Housing and Urban Development as set forth in 24 CFR Part 135, and all applicable rules and orders of the Department issued thereunder prior to the execution of this Agreement. The parties to this Contact certify and agree that they are under no contractual or other disability which would prevent them from complying with these requirements. 3.10.3 The Contractor will include this Section 3 clause in every subcontract for work in connection with the project and will, at the direction of the applicant for, or recipient of, federal financing assistance take appropriate action pursuant to the subcontract upon a finding that the subcontractor is in violation of regulations issued by the Secretary of Housing and Urban Development, 24 CFR Part 135. The Contractor will not subcontract with any subcontractor where he/she has notice or knowledge that the latter has been found in violations of regulations under 24 CFR Part 135, and will not let any subcontract unless the subcontractor has first provided him/her with a preliminary statement of ability to comply with the requirements of these regulations. 3.10.4 Compliance with the provisions of Section 3, the regulations set forth in 24 CFR Part 135, and all applicable rules and orders of the Department issued thereunder prior to the execution of the Agreement, shall be a condition of the Federal financial assistance provided to the project, binding upon the applicant or recipient for such assistance, its successors, and assigns. Failure to fulfill these requirements shall subject the applicant or recipient, his/her contractors and subcontractors, 9 A EQUAL HOUSING OPPORTUNITY all successors, and assigns to those sanctions specified by the grant and/or loan agreement or contract through which federal assistance is provided, and to such sanctions as are specified by 24 CFR Part 135. 3.11 Plan Submissions. Contractor shall submit all plans, working drawings and/or specifications necessary or incidental to this Project to the City of Omaha for review and approval prior to the commencement of any construction work. 3.12 Minority/Women Owned Business Enterprise Plan. Contractor shall submit to the Director for review and approval a minority and women business participation plan, which discusses economic development and employment opportunities. These plans shall ensure that the Contractor and its subcontractors will make their best efforts to ensure that construction services, contracts and employment opportunities and affirmatively marketed to women and members of minority groups. 3.13 Section 504 of the Rehabilitation Act of 1973, as Amended (29 U.S.C. 794). No otherwise qualified individual will, solely by reason of his or her handicap, be excluded from participation (including employment), denied program benefits or subjected to discrimination under any program or activity receiving federal assistance funds. Section 504 applies to alteration to dwelling units in multi- family housing projects. This Project is exempt as a single-family unit (Exhibit «F„ 3.14 Davis-Bacon Labor Standards. Not required — see Exhibit "E", Exemption Checklist. 3.15 Property Standards (24 C.F.R. 92.251). During the construction period, the Contractor shall ensure that all work performed and the Construction Work meets all state, federal and local laws, ordinances, regulations and codes, including but not limited to, Section 8 Housing Quality Standards for Existing Homes (HQS) as established by HUD, the City of Omaha Property Rehabilitation Standards, Nebraska Department of Economic Development Rehabilitation Standards (Exhibit"D"), and accessibility requirements, where applicable. 3.15.1 After completion of Construction Work, the Property must comply with all appropriate City codes and ordinances, Federal Section 8 Housing Quality Standards and with fire safety codes (24 C.F.R. 570.02), City of Omaha Property Rehabilitation Standards, Nebraska Department of Economic Development Rehabilitation Standards, and accessibility requirements, if applicable. 3.16 Affirmative Marketing Plan. A copy of the Contractor's and its subcontractor's affirmative marketing plan shall be submitted to the City for review and approval. A 10 OPPORTUNITY 3.17 Section 109 of the Housing and Community Act of 1974. No person in the United States shall on the grounds of race, color, national origin, or sex be excluded from participation in, be denied benefits of or be subjected to discrimination under any program or activity funded in whole or in part with funds made available under this title. 3.18 Age Discrimination Act of 1975, as Amended (42 U.S.C. 6101, et. seq). No person will be excluded from participation, denied program benefits or subjected to discrimination on the basis of age under any program or activity receiving federal funding assistance. 3.19 Title VI of the Civil Rights Act of 1964. No person shall, on the grounds of race, color or national origin be excluded from participation in, be denied the benefits of, or be subjected to discrimination under any program or activity receiving federal financial assistance. 3.20 Attestation of Citizenship. To comply with Neb. Rev. Stat. 4-108 through 4-114, the Developer agrees to comply with the requirements of 3.20.1 and 3.20.2. 3.20.1 The Developer shall include the following language in all contracts and subcontracts for the physical performance of services: "The Contractor is required and hereby agrees to use a federal immigration verification system to determine the work eligibility status of new employees physically performing services within the State of Nebraska. A federal immigration verification system means the electronic verification of the work authorization program authorized by the illegal Immigration Reform and Immigrant Responsibility Act of 1996, 8 U.S.C. 1324a, known as the E-Verify Program, or an equivalent federal program designated by the United States Department of Homeland Security or other federal agency authorized to verify the work eligibility status of a newly hired employee. If the Contractor is an individual or sole proprietorship, the following - applies: a) The Contractor must complete the United States Citizenship Attestation Form available on the Department of Administrative Services website at www.das.state.ne.us. b) If the Contractor indicates on such attestation form that he or she is a qualified alien, the Contractor agrees to provide the U.S. Citizenship and Immigration Services documentation required to verify the Contractor's lawful presence in the United States using the Systematic Alien Verification for Entitlements (SAVE) Program. c) The Contractor understands and agrees that lawful presence in the United States is required and the Contractor may be disqualified or the contract terminated if such lawful presence cannot be verified as required by Neb. Rev. Stat. 4-108." 11 OPPORTUNITY 3.20.2 The Developer shall have each person signing the application for a benefit under this agreement execute a United States Citizenship Attestation Form For Public Benefit (Exhibit "M") verifying eligibility status for the purposes of receiving a public benefit. The Developer shall maintain aggregate records for the duration of the contract showing: (a)the number of applicants for public benefits under this agreement; and (b) the number of applicants rejected pursuant to the lawful presence requirement set forth in the above-referenced Nebraska statutes. Further the Developer shall provide a summary report to the City no later than December 15th each calendar year reflecting this applicant data for such calendar year. 3.21 Employee Classification Act. To comply with the Nebraska Employee Classification Act, all general and subcontractors who perform construction or delivery service pursuant to this contract shall submit to the City an Affidavit For Employee Classification Act (Exhibit "L") attesting that (1) each individual performing services for such contractor is properly classified under the Nebraska Employee Classification Act, 2010 LB 563 ("the Act"), (2) such contractor has completed a federal I-9 immigration form and has such form on file for each employee performing services, (3) such contractor has complied with Neb. Rev. Stat. section 4-114 (federal immigration verification system), (4) such contractor has no reasonable basis to believe that any individual performing services for such contractor is an undocumented worker, and (5) as of the time of the contract, such contractor is not barred from contracting with the state or any political subdivision pursuant to the Act. The contractor shall follow the provisions of the Act. A violation of the Act by a contractor is grounds for rescission of the contract by the City. SECTION 4. PROJECT RESPONSIBILITIES OF THE CONTRACTOR 4.01 Eligible Use of Funds. The Contractor hereby certifies, contracts and agrees that any and all funding obtained or made available hereunder shall be used solely and exclusively for the purposes described herein. 4.01.1 Ineligible Costs. The Contractor shall be responsible for payment of any Project costs that exceed those specified in this Agreement. 4.02 Terms and Conditions. The Contractor shall abide by all terms and conditions of this Agreement and shall be responsible for the security and maintenance of the sites described in Section 1.03 herein. 4.03 Documentation and Recordkeeping. The Contractor and its subcontractors shall maintain such records and accounts with respect to any of the matters covered in this Agreement, including property, personnel and financial records, as are deemed necessary by the City to assure a proper account for all expenses. The 12 EQUAL HOUSING OPPORTUNITY Comptroller General of the United States, or any of their duly authorized representatives, or any duly authorized representatives of the City, as approved by the Director, shall have access to any books, documents, papers, records and accounts of the Contractor, or its subcontractors which are directly pertinent to this Project for the purpose of making audit, examination, excerpts and transcriptions. Such records and accounts shall be made available to the City, its designees or the federal government at any time during normal business hours, and shall be retained for ten (10) years after expiration of the Agreement. In the event the terms of the Agreement would be extended, the record retention period would be extended for the additional time. Any contract entered into by the Contractor with any subcontractors shall include this section to insure said access. 4.03.1 Construction Progress Reports. The Contractor shall provide reports to the Director (AIA G702 Form or comparable document) describing the progress of construction, and any significant problems and/or delays in construction on this project. The Contractor shall submit these reports on a financial status report form as more specifically required in Section 4.03.2 herein. The progress reports are required until such time as all construction work is completed and the City issues the final payment of construction to the Owner. 4.03.2 Financial Status Reports. The Contractor shall submit financial status reports 2 CFR, Part 215, Uniform Administration Requirements for Grants) (Exhibit "C") along with pay requests. These reports shall accompany pay requests. In the event pay requests are not submitted for ninety (90) days, financial status report shall be due, at a minimum, 15 calendar days from the end of the calendar year quarter. Attached as Exhibit "K", and incorporated herein by this reference as though fully set forth, is a sample financial status report. 4.03.3 Record Retention. The Owner, its contractors and subcontractors shall maintain such records and accounts, including property, personnel and financial records, as are deemed necessary by the City to assure a proper accounting for all expenses. The Comptroller General of the United States, or any of their duly authorized representatives, or any duly authorized representatives of the City, as approved by the Director, 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 ten (10) years after expiration of the Agreement. (2 CFR, Part 215, Uniform Administration Requirements for Grants) (Exhibit"C"). 4.04 Soil Work Policy. The Contractor will comply with the Soil Work Policy for Housing Development Program projects that may involve the removal of 13 OPPORTUNITY structures, installation of public infrastructure and site preparation work prior to the construction of new residential structures. (See Attachment 4.) 4.05 Cost Principles. The Contractor shall comply with the requirements and the standards of 2 CFR, Part 225, "Cost Principles for State, Local and Indian Tribal Governments" (Exhibit"G"). 4.06 Accounting Standards. The Contractor agrees to comply with 2 CFR, Part 215, Uniform Administration Requirements for Grants and agrees to adhere to the accounting principles and procedures required therein, utilize adequate internal controls, and maintain necessary source documentation for all costs incurred. (Exhibit"C", attached hereto and incorporated herein as though fully set forth.) 4.07 Employment Insurance and Bonding. The Contractor shall purchase a blanket fidelity bond covering all employees, at a minimum, in an amount equal to cash advances from the City. The Contractor shall comply with bonding and insurance requirements of 2 CFR, Part 215, Uniform Administration Requirements for Grants (Exhibit"C") Bonding and Insurance. 4.08 Audits. The Contractor shall comply with all provisions and regulations of the Program and have an annual audit completed in compliance with 2 CFR, Part 200.5, Audit Requirements, attached hereto as Exhibit "J", and incorporated herein as though fully set forth. A copy of the audit shall be provided to the Director or his designee. The auditor shall determine the appropriate type of audit to be conducted; i.e., limited scope or full compliance. A single audit is not an allowable expense unless the Subrecipient expends total federal funds over $500,000.00 in each fiscal year. A limited-scope audit may be allowable provided the auditor conducts the audit in accordance with generally accepted auditing standards and the recipient expends less than $500,000.00 in each fiscal year. 4.09 Preconstruction Meeting. The Contractor and its subcontractors shall attend a preconstruction meeting with the City Construction Specialist prior to the start of any Rehabilitation work. 4.10 National Environment Policy Act of 1969. The Contractor shall not begin any rehabilitation or construction work of a Property until it receives approval by the City that all provisions of the National Environmental Policy Act of 1969 (NEPA) and related authorities listed in HUD's implementing regulations at 24 CFR Parts 50 and 58 have been met regarding the Property. 4.11 Environmental Review. The Contractor agrees to comply with the following regulations insofar as they apply to the performance of this Agreement. 4.11.1 Clean Air Act,42, U.S.C., 1857, et seq. 14 OPPORTUNITY 4.11.2 Federal Water Pollution Control Act, as amended, 33 U.S.C. 1251, et seq., as amended, 1318 relating to inspection, monitoring entry, reports and information, as well as other requirements specified in Section 114 and Section 308, and all regulations and guidelines issued thereunder. 4.11.3 Environmental Protection Agency (EPA) regulations pursuant to 40 C.F.R., as amended. 4.11.4 National Environmental Policy Act of 1969. 4.11.5 HUD Environmental Review Procedures (24 C.F.R. Part 58). 4.12 Flood Disaster Protection Act of 1973 (24 U.S.C. 4106 and P.L. 2234) in regard to the sale, lease or other transfer of land acquired, cleared or improved under the terms of the Agreement as it may apply to provisions of this Agreement. 4.13 Historic Preservation requirements set forth in the National Historic Preservation Act of 1966, as amended (16 U.S.C. 470) and the procedures set forth in 36 C.F.R., Part 800, Advisory Council on Historic Preservation Procedures for Protection of Historic Properties, insofar as they apply to the performance of this Agreement. In general, this requires concurrence from the State Historic Preservation Office for all rehabilitation and demolition of historic properties that are 45 year old or older or that are included on a Federal, State or local historic property list. SECTION 5. RESPONSIBILITIES OF THE CITY. 5.01 Performance Monitoring. The City will monitor the performance standards of the Contractor as stated herein. Substandard performance as determined by the City will constitute non-compliance with this Agreement. If action to correct such substandard performance is not taken by the Contractor within a reasonable period of time after being notified by the City, contract suspension or termination procedures may be initiated. 5.02 Payments. It is expressly agreed and understood that the total amount to be paid by the City under this Agreement shall not exceed $94,780.00 in HOME funds. The payment of these funds is subject to and conditioned upon actual receipt by the City of the same. Should adequate funding not be available to the City, the City shall notify the Contractor as soon as reasonably possible and the Agreement will be terminated. 5.02.1 Obligation for Payment. In no event shall the City become obligated to make any payments for any work performed, materials furnished, expense incurred, or any other expenditure of any kind whatsoever, unless same is expressly included in this Agreement; nor shall the City incur any liability hereunder, unless and until the Contractor has timely 15 OPPORTUNITY and fully complied with its duties and obligations hereunder. No payments shall be made for any work, labor, material or expenses incurred the Director deems to be: 5.02.1.1 Not in conformance with applicable state, federal and/or local laws, including but not limited to, the building, plumbing and/or electrical codes; or, 5.02.1.2 Not in conformance with all plans, working drawings and/or specifications as approved; or, 5.02.1.3 Unacceptable or substandard; or, 5.02.1.4 Not in accordance with this Agreement or related contracts as approved for this Project. SECTION 6. MUTUAL AGREEMENTS BETWEEN CITY AND CONTRACTOR. 6.01 Release of Information Laws. The Contractor specifically hereby states, agrees, and certifies that it is familiar with the limited purpose set forth in the Federal Laws, Rules and Regulations, and in the laws of the State of Nebraska, for which personal information requested may be used and that the information received will be used solely for those limited purposes and not to harass, degrade or humiliate any person. The information released shall be used for the limited purposes stated, and the Contractor further agrees to indemnify and hold harmless the City of Omaha for any liability arising out of improper use by the Contractor of information provided. 6.02 Applicable Laws. Parties to this Agreement shall conform with all existing and applicable City ordinances, resolutions, state laws, federal laws, and all existing and applicable rules and regulations. Nebraska law will govern the term and the performance under this Agreement. 6.03 Interest of the City. Pursuant to Section 8.05 of the Home Rule Charter, no elected official or any officer or employee of the City shall have a financial interest, direct or indirect, in any City agreement. Any violation of this section with the knowledge of the person or corporation contracting with the City shall render the Agreement voidable by the Mayor or Council. 6.04 Independent Contractor. Nothing contained in this Agreement is intended to, or shall be construed in any manner, as creating or establishing the relationship of employer/employee between the parties. The Contractor shall at all times remain an independent contractor with respect to the services to be performed under this Agreement. The City shall be exempt from payment of all Unemployment Compensation, FICA, retirement, life and/or medical insurance and Worker's Compensation Insurance as the Contractor is an Independent Contractor. 16 OPPORTUNITY 6.05 Captions. Captions used in this Agreement are for convenience and are not used in the construction of this Agreement. 6.06 Merger. This Agreement shall not be merged into any other oral or written agreement, lease or deed of any type. 6.07 Modification. This Agreement and any related documents securing the financing contain the entire agreement of the parties. No representations were made or relied upon by either party other than those that are expressly set forth herein. No agent, employee, or other representative of either party is empowered to alter any of the terms herein unless done in writing and signed by an authorized officer of the respective parties, pursuant to Section 10-142 of the Omaha Municipal Code. 6.08 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 without written direction from authorized representatives of the parties. 6.09 Termination. This Agreement may be suspended or terminated in accordance with 24 CFR 85.43, Enforcement or CFR 85.44, Termination for Convenience (Exhibit "H", attached hereto and incorporated herein by this reference as though fully set forth). Upon termination of this Agreement, all funds and interest in any account hereunder shall become the property of the City and shall be returned to the City. The Contractor agrees that the City of Omaha shall have the right to declare the Contractor in default if the Contractor fails to furnish materials or perform work in accordance with the provisions of this Agreement. In such event, the City of Omaha shall be responsible for providing written notice to the Contractor by registered/certified mail of such default. If the Contractor fails to remedy such default within ten (10) working days of such notice, the City shall have the right to select one or more substitute contractors. The City will assure that all substitute contractors, subcontractors, suppliers, etc. are paid from the funds received from the original Contractor. Lien waivers, warranties, etc., shall be obtained just as though the original Contractor had completed the job. 6.10 Inspection. The federal government, the City and their designees shall have the right to inspect all rehabilitation work, and the Contractor will take all steps necessary to assure that the federal government, the City or their designees are permitted to examine and inspect the rehabilitation work, and all contracts, materials, equipment, payrolls, and conditions of employment pertaining to the work, including all relevant data and records. 6.11 Unenforceable Provisions. Any provision of this Agreement which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be in effect to 17 EQUAL HOUSING OPPORTUNITY the extent of such prohibition or enforceability without invalidating the remaining provisions hereof or affecting the validity or enforceability of such provision in any other jurisdiction. 6.12 Conflict of Interest. The Contractor agrees to abide by the provisions of 24 CFR 92.356 with respect to conflicts of interest, and covenants that it presently has financial interest and shall not acquire any financial interest, direct or indirect, which would conflict in any manner or degree with the performance of services required under this Agreement. The Contractor further covenants that in the performance of this Agreement no person having such a financial interest shall be employed or retained by the Contractor hereunder. These conflict of interest provisions apply to any person who is an employee, agent, consultant, officer or elected official or appointed official of the City or any designated public agencies or Contractor which are receiving funds under the entitlement program. 6.13 Disclosure of Lobbying. The Contractor shall certify and disclose, to the best of its knowledge and belief,that: 6.13.1 No federally-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. 6.13.2 If any funds other than federally-appropriated funds have been paid or will be paid to any person for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, an officer of employee of Congress, or an employee of a Member of Congress in connection with this federal contract, grant, loan or cooperative agreement, the Contractor shall complete and submit standard Form- LLL, "Disclosure Form to Report Lobbying", in accordance with its instructions. 6.13.3 The language of this certification be included in the award documents for all subawards at all tiers (including subcontracts, subgrants, and contracts under grants, loans and cooperative agreements), and that all subrecipients shall certify and disclose accordingly. 6.14 Notices. The City and the Contractor hereby expressly agree that for purposes of notice, including legal service or process, during the term of this Agreement, and for the period of any applicable statute of limitations thereafter, the following named individuals shall be authorized representatives of the parties: 18 EQUAL HOUSING OPPORTUNITY 1) City: 2) Contractor: City of Omaha Thomas F. Lamb, Sole Proprietor Planning Department Lamb's Remodeling 1819 Farnam Street 21210 Welsh Road Suite 1100 Elkhorn, Nebraska 68022 Omaha,Nebraska 68183 In the event the authorized representative changes during the term of this Agreement, prior written notice will be given to the respective party at the address noted above. Compliance with the provisions of Section 3, the regulations set forth in 24 CFR Part 135, and all applicable rules and orders of the Department issued thereunder prior to the execution of the Agreement, shall be a condition of the federal financial assistance provided to the project, binding upon the applicant or recipient for such assistance, its successors and assigns. Failure to fulfill these requirements shall subject the applicant or recipient, his/her contractors and subcontractors, all successors, and assigns to those sanctions specified by the grant and/or loan agreement or contract through with federal assistance is provided, and to such sanctions as are specified by 24 CFR Part 135. 6.15 Applicability. This Agreement shall be binding upon the parties herein. 6.16 Miscellaneous Provisions. 6.16.1 That the City shall permit the Contractor to use, at no cost, existing utilities such as light, heat, power, and water necessary to the carrying out and completion of the work. 6.16.2 The parties agree that the reference to "days" in this Agreement shall mean consecutive calendar days; provided, however, that in the event the last consecutive day of the term shall be on a Sunday or legal holiday,the term shall then terminate on the next regular day. 6.16.3 The parties agree that materials and equipment that have been removed and replaced as part of the work shall belong to the Contractor unless otherwise specified by the City. 6.16.4 The parties agree that should any dispute arise respecting the percentage of completion, the construction, the meaning of drawings or specifications, or should any dispute respecting the true value of any 19 O EQUAL HOUSING OPPORTUNITY omitted or improper workmanship or materials, or of any loss sustained by the City of Omaha and if the manner of estimation is not herein otherwise provided for, the same shall be determined in the following manner: Either party shall notify the other in writing that the dispute be submitted to arbitration. Within ten (10) days after such written notice, each of the parties shall meet with the Director of the Planning Department, or his/her authorized representative, and both parties agree to be bound by the decision reached as a result of this meeting. 6.16.5 As governmental funds are being used, the Contractor agrees that he/she and his/her subcontractors will obey all civil rights and equal employment opportunity provisions of local, state or federal law and abide by the provisions of the attached Section 3 clause. The Contractor further agrees to comply with all requests by the governmental agency for employment agency for employment records to enforce this position. 6.16.6 The Contractor agrees to comply with affirmative action requirements mandated by Executive Order 11246 and the regulations promulgated thereunder; and the civil rights compliance ordinance of the Omaha Municipal Code. SECTION 7. WORK WRITE-UP CHECKLIST. 7.01 Work Description: Each item of work and material must be described in sufficient detail to provide a standard against which the completed work may be judged. 7.02 Price. This shall reflect the actual price, including profit and overhead. In no case shall reimbursement to the Contractor exceed the actual amount of the funds available under this Agreement. 7.03 Schedule for Completing Work. In accordance with the payment schedule which will allow the City to monitor actual performance against estimates of what will be necessary to complete the project on time must be provided. SECTION 8. DEFAULT PROVISIONS. 8.01 Remedies. If, through any cause, the Contractor shall fail to fulfill in a timely and proper manner any obligations under this Agreement, or violate any of the covenants, representations or agreements hereof, the City may upon written notice terminate this Agreement or such parts thereof as to this Agreement, and may initiate legal proceedings for any damages caused to the City by reasons of such default and termination. ® 20 O PUPOORTUNITY IN WITNESS WHEREOF, the parties have executed this Agreement as of the date indicated below. ATTEST: CITY OF OMAHA: r aor -tad9/A,4 Y CLERK F THE CITY MAHA MAYOR OF THE CITY OF OMAHA Lamb's Remodeling 21210 Welsh Road Elkhorn,NE 68022 WITNESS: B, • j c�..7 B ,/ Thomas F. Lamb, Sole Proprietor a////4: 0/7y /6 Date Date APPROVED AS TO FORM: Assistant City Attorney Date 21 EQUAL MOUSING OPPORTUNITY SCHEDULE OF EXHIBITS Agreement Exhibit Location Description A Bid Tab B 2.03, 2.04, Work Write-up Change Order and/or 3.04, 7.01, 7.03 Addendum if Applicable C 3.01.1 (1), 4.03.2, 2 CFR, Part 215 Uniform Administration 4.03.3, 4.06, 4.07 Requirements for Grants D 1.01, 3.15, 3.15.1 NDED Rehabilitation Standards E 3.14 Davis-Bacon Exemption Checklist F 3.13 Section 504 G 4.05 2 CFR, Part 225, Cost Principles H 6.09 Termination—24 CFR 85.43 — 85.44 I Articles of Incorporation, Corporate Resolution, By-laws, or Partnership Papers as applicable J 4.08 2 CFR, Part 200.5 Audit Requirements K 4.03.2 Financial Status Report L 3.21 Employee Classification Act M 3.20.2 United States Citizenship Attestation ATTACHMENTS Description 1. _ Equal Opportunity 2. Section 3 Clause 3. Minority and Women Business Plan 4. Soil Work Policy 5. Cost Certification 6. Lead-based Paint Procedures 7. Procurement Standards 8. Affirmative Marketing Policy Approved and revised 5/10/10 22 E41,1 ; bil- A- 0 c v 03 0 - "a te p -I CO CD N 0 D Z m O •a 03 a `< D " rn3 rvv ca -I _ � zST) z -I v O N W plob i Q C) to 00 03 0 ? ;2 CD cD cn - CDN i•r CD o M g m 0 �G C CI) Z tt -0 °• 0 Ca co O tov On 0 Z a D -• W CO 'p,1,, D CD y Q c q CD 9) co 7Jc Sari m 0 n Z CS- 3 cn O w m .� m Q o • N 0 0 o C) cn o -< cn xi w P 00 c m 0 w 0Z E go cn cn o m o 01 -•-. 0 0 0 0 0 0 coo 7 .‹ y 70 m 7J c CD rt � Cl) co c`ao m 41, 4 0 it",. 0 0 co z 7J c C) Z m - 7/ c nz rn . 7Jc () z m � ie tbi 1°MAH`' " 44 Planning Department 6' ;r:-. f " Omaha/Douglas Civic Center ,'s► l► `� 1819 Farnam Street,Suite 1100 _ rip '� t, _r °® r '► 6124 N 36t" Street Omaha,Nebraska 68183 o�'"= `z =' '°^' (402)444-5150 o�4rED FEBtI�1.,- Omaha, NE. 68111 4. Telefax(402)444-6140 James R.Thele City of Omaha Director Jean Stothert,Mayor Constr. Specialist: Mark Laux Ph.: 444-5150, Ext. 2025 For Window Replacement and Paint Stabilization Work, The Contractor Shall: • Comply with HUD's "Guidelines for the Evaluation and Control of Lead-Based Paint Hazards in Housing". (Copies are available at the Planning Department.) • Comply with standards called for in the "Construction and Rehabilitation Specifications, Housing and Community Development Division, City of Omaha, Nebraska". (Copies are available at the Planning Department.). • At all times keep the site of work and surrounding area free from accumulations of waste materials or rubbish caused by the work. • Upon daily completion of work clean up rubbish, excess material, equipment, and etc., that is connected with the work, and leave all parts of the work areas in a neat, sanitary, lead safe presentable condition • Comply with the State of Nebraska Health and Human Services Regulation and Licensure, Title 178 Chapter 23 Lead Based Pint Regulation. The Contractor Shall: 1). The sequence of work activities shall be contractor option. 2). Use trained, certified, supervised workers to do the lead work and paint stabilization. 3). HEPA vacuum and clean all surfaces and horizontal surfaces to achieve clearance. - Schedule clearance testing after lead hazard reduction work&cleaning. 4). Make every effort to match existing materials &surrounding surfaces. 5). Examine worksite to determine conditions&what is required to perform the work. - The bid includes cost to perform the lead work&cost to achieve clearance. 6). Place dumpster on site for entire project for debris removal. 7). Achieve lead clearance on interior and exterior. 8). Contractor shall complete and submit"Citizenship Attestation"/"Employee Classification"form to the Planning Department, per State requirements, at Contract. All subcontractors shall complete and submit this form to the Contractor before 1 the start of construction. The contractor will submit these forms, as well as an attached subcontractor form before any construction may begin. Lead Related Work Exterior 1. Wet scrape all existing exposed fascia, soffit, and outside trim including trim at garage overhead door before installing metal covering. All exposed woodwork is to then be wrapped in brown break metal and soffits to be brown aluminum. Prior to installation of metal, wrap all wood trim with Tyvek or approved equal with all seams to be taped and edges sealed. 2. Wet scrape existing siding on garage. All wood to be covered with Tyvek or approved equal with seems and edges sealed. Install fan fold prior to installation of vinyl siding, Dutch lap double 4" including all necessary trim and starter strip prior to installing starter strip, install break metal to enclose the bottom of the existing lap siding along the foundation. 3. Existing front, rear and garage exterior doors and frames to be removed, along with storm doors, using lead safe procedures. Install new 6 panel fiberglass exterior doors and frames, including all hardware. All hardware installed per City specifications. Paint all doors and jambs. All doors to be keyed alike including new door at garage. 4. Removal of existing siding, soffit & fascia on the house. It is assumed that it is lead base paint under siding, therefore the contractor shall include using lead safe procedures due to the fact that possible lead may be on substructure. All wood to be covered with Tyvek or approved equal with seems and edges sealed. Install fan fold prior to installation of vinyl siding, Dutch lap double 4" including all necessary trim and starter strip prior to installing starter strip, install break metal to enclose the bottom of the existing lap siding along the foundation. 5. Upon removing metal siding, soffit or fascia, any leftover paint chips will be vacuumed using Hepa vac filter on a shop vac. 6. Remove existing shutters. 7. Remove existing garage overhead door and install new door per material specification sheet. 8. Remove existing gutters and downspouts. Install new 5K gutters and 4x3 downspouts on the house and the garage. 9. At front porch, remove existing metal column and install new 6"x6" column with a vinyl wrap to enclose wood column. This is to include trim wraps to match vinyl wrap of column sold with the kit. 10. Remove and replace garage trim and buck as necessary. This includes all trim that is presently exposed. 2 Work at Windows 1. Existing windows: Remove all existing window, sash and storm window using lead safe procedures. This includes existing vinyl windows and large fixed window. o Install new white vinyl, Low E, double hung, argon filled, windows with full screens. o Remove existing windows at garage, bathroom and north side of kitchen window, the northwest corner. Frame and infill the open to match the existing surfaces. o Trim and metal wrap exterior of all windows. Caulk at window and far edge of trim. o Repair/ replace trim and drywall as needed; caulk and paint all interior trim per City specifications. o Note, all windows that require egress shall be included in the work including any additional framing that is required to complete the work. 2. Basement windows. o Remove and replace all basement window units with vinyl sliding windows to match existing size & configuration. o New windows to be white, Low E, insulated glass, argon filled, vinyl window with full screen. o Caulk around windows and repair any sill damage. Trim windows inside. o Scrape and paint foundation openings of windows using lead safe practices. o All paint to be one coat primer and two coats enamel. o Install new window wells, with 8" of gravel inside. o Rake area smooth, removing any dirt necessary, and reseed disturbed area. Approved Window Manufactures 1. Simonton Prisma Ultra Gold 4. Silverline 8500/9500 2. Stanley Pro-Fit 5. Pella Themastar 3. Winnova CVD-200 6. Gerkin Series 4800 3 General Note: All work to be completed in accordance with City of Omaha Planning Department Specifications dated Dec. 1, 2009. (Copies are available at the Planning Department) Contractor is responsible for securing of premises and to supply Construction Specialist with information to acquire access at any time. Note: This project has an alternate bid work that will be detailed at the end of the write-up. If the alternate is accepted, the project duration will remain the same with 120 days for completion. Normal Work — Exterior Carpentry and Misc. 1. Install 2 new storm doors. 2. Remove existing wood ramp including footings leading to front door. Make sure holes are backfilled and compacted. 3. Along east side of garage, approximately 3' feet from the wall, excavate to remove dirt and install a Versa Lock retaining wall or approved equal so that the existing ground elevation will be below the siding to meet code. Confirm the final elevation along the siding is low enough so that the dirt can be sloped properly to have proper drainage away from the building and not to cause ponding. 4. Remove and replace retaining wall along drive, steps, down south property line and across west property line, using Versa-lock or approved equal. 5. Remove and replace window wells with new galvanized wells with 8" of gravel fill below window sill. If now wells present, allow for new backfill along foundation and therefore window wells may be required. 6. Remove existing satellite dish from roof 7. Scrape, caulk, prime and paint foundation on house and garage. 8. Install new address and mailbox to meet code requirements. 9. Fill any low areas with dirt then seed and straw. 4 10. Backfill and seed after form removal of concrete replacement any area disturbed during exterior work. 11. Remove existing roof on house and garage. Install new 3 tab asphalt shingles according to code, including all flashing, freeze guard, gutter apron and D style edging along rakes. Work to include valley metal,vent pipe covers and removal of existing chimney and infilled and installation of standard roof vents per code. 12. At existing wood deck in rear of house, clean deck,power wash,replace any rotten wood and apply 2 coats of stain sealer to match existing color. 13. Remove existing mailbox slot and fill in area. 14. Remove all debris under deck,backfill to get proper drainage and install a wood lattice with 1"x4"trim and apply same finish that is utilized on the deck. 15. Remove T posts in back yard. 16. At the southwest corner of the property, remove existing concrete slab and foundation. Backfill and compact foundation area. 17. Along entire house, backfill to have proper drainage to meet code. 18. Install seed and straw at all disturbed and backfilled locations. Concrete 1. Remove and replace concrete walk from street to front stoop. This work to include replacement of these step at the front stoop. 2. Remove existing private concrete walk/path along north side of the house in its entirety and backfill installed for positive drainage. 3. Remove and replace concrete walk from deck to garage. This will include a landing at the steps of the deck to support stair treads. It will also include steps at the retaining wall to get down to the garage and a slab at the entrance door to the garage. 4. Remove and replace 2 courses of concrete block and stoop at front entrance. 5. Remove and replace concrete driveway and approach. Prep and compact sub grade. Concrete to be 4"thick with wire mesh, lifted during the pour. Expansion joint to be installed between new and existing concrete and as per code. Sub grade to be inspected prior to installation of concrete by Construction Specialist. Electrical 1. Remove and replace light fixture at front of house. 2. Remove and replace light fixture at rear of house. 3. Remove and replace light fixtures at garage. 4. Install GFI outlets at front and rear of house. 5. Install new disconnect for A/C unit. Wire per code. Plumbing 1. Remove old hose bibs and install 2 new frost free bibs. 5 HVAC 1. Remove existing A/C unit and install new unit sized according to house sq. ft. Unit must meet energy star requirements. A.C. unit will not be installed until the house has been sold, closed and occupied. Interior General Notes: 1. New and existing doors to include all new hardware including hinges, door stop/bumper. Hardware to be bright brass. 2. Any work being done that causes damage to the siding or associated trim and interior drywall will be replaced at the contractors expense. 3. Work to include removal of all personal property left in the house or garage. Carpentry & misc. Living/Dining/Foyer room: 1. Remove existing tack strip and install carpet, pad and tack strip. 2. Install vinyl and underlayment at door entrance and dining room. 3. Repair damaged drywall, fill nail holes, etc., to match existing surfaces. Apply a knock texture to walls after repairs. Texture to be approved by Construction Specialist prior to application. 4. Remove misc. items i.e. curtain rods, blinds, etc. 5. Clean and paint existing closet shelving support and seal existing rod and shelf. 6. Patch any damaged drywall in ceiling and texture a light stomp texture. Texture to be approved by Construction Specialist prior to installation. 7. Remove the other door and replace with slab door and jamb. 8. Remove mailbox slot and infill to match existing. 9. Clean, repair damage and paint existing door and jamb, and install new hardware. 10. Remove and replace existing base, door and window casing and trim including sill. 11. Remove and replace cased opening and trim at entrance leading to kitchen. 12. Prime and paint walls, ceiling, doors and trim per specifications. Southeast Bedroom: 1. Remove existing tack strip and install carpet, pad and tack strip. 2. Clean and paint existing closet shelving support and seal existing rod and shelf 3. Patch any damaged drywall in ceiling and texture a light stomp texture. Texture to be approved by Construction Specialist prior to installation. 4. Clean, repair damage and paint existing door and jamb, and install new hardware. 6 5. Remove the other door and replace with slab door and jamb. 6. Replace bypass door track and rollers. 7. Repair damaged drywall, fill nail holes, etc., to match existing surfaces. Apply a knock texture to walls after repairs. Texture to be approved by Construction Specialist prior to application. 8. Remove misc. items i.e. curtain rods, blinds, etc. 9. Remove and replace existing base, door and window casing and trim including sill. 10. Prime and paint walls, ceiling, doors and trim per specifications. Southwest Bedroom: 1. Remove existing tack strip and install carpet,pad and tack strip. 2. Clean and paint existing closet shelving support and seal existing rod and shelf. 3. Patch any damaged drywall in ceiling and texture a light stomp texture. Texture to be approved by Construction Specialist prior to installation. 4. Clean, repair damage and paint existing doors and jamb, and install new hardware. 5. Replace bypass door track and rollers. 6. Repair damaged drywall, fill nail holes, etc., to match existing surfaces. Apply a knock texture to walls after repairs. Texture to be approved by Construction Specialist prior to application. 7. Remove misc. items i.e. curtain rods, blinds, etc. 8. Remove and replace existing base, door and window casing and trim including sill. 9. Prime and paint walls, ceiling, doors and trim per specifications. Bathroom: 1. Remove all fixtures, toilet, tub/surround, sink, med cabinets, laundry chute etc. 2. Remove all walls and ceiling. 3. Install and finish new drywall walls and ceiling including textures. 4. Insulate exterior wall as required including were window was removed. 5. Repair bad subfloor as required. Install underlayment and new vinyl. 6. Clean,repair damage and paint existing door and jamb, and install new hardware. 7. Install new toilet accessories: 2 towel bars, toilet paper holder and shower curtain rod. 8. Install new 24"vanity and marblelite sink. 9. Install new shoe molding and fill holes. 10. Install new medicine cabinet, matching size of sink. Hall: 1. Remove existing tack strip and install carpet,pad and tack strip. 2. Clean and paint existing closet shelving support and seal existing rod and shelf. 3. Patch any damaged drywall in ceiling and texture a light stomp texture. Texture to be approved by Construction Specialist prior to installation. 4. Clean, repair damage and paint existing doors and jamb, and install new hardware. 5. Remove shelf in wall and patch to match existing surfaces. 7 6. Repair damaged drywall, fill nail holes, etc., to match existing surfaces. Apply a knock texture to walls after repairs. Texture to be approved by Construction Specialist prior to application. 7. Remove misc. items i.e. curtain rods, blinds, etc. 8. Remove and replace existing base, door and window casing and trim including sill. 9. Prime and paint walls, ceiling, doors and trim per specifications. 10. Remove and replace cased opening and trim. Kitchen: 1. Remove existing cabinets & counter tops and misc. items. 2. Patch any damaged drywall in ceiling and texture a light stomp texture. Texture to be approved by Construction Specialist prior to installation. 3. Repair damaged drywall, fill nail holes, etc., to match existing surfaces. Apply a knock texture to walls after repairs. Texture to be approved by Construction Specialist prior to application. Texture not to be installed at cabinet areas. 4. Remove all appliances. 5. Remove and replace existing base, door and window casing and trim including sill. 6. Insulate wall at window removal and patch to match existing surfaces. 7. Install approximately 20' of cabinets and counter top and also upper cabinets at stove and refrigerator. 8. Remove existing flooring and underlayment, Replace bad subfloor and install new underlayment and vinyl floor sheeting. 9. Prime and paint walls, ceiling, doors and trim per specifications. 10. Install new dishwasher, range hood, range and refrigerator with ice maker. Include in the bid an allowance for the appliance of$2,000.00. Incidentals needed for installation are not included in the allowance. The Construction Specialist will make appliance selection and will require coordination between the Contractor and Specialist for selection and pick up/delivery of these items from any supplier. Any overage or decrease in the purchase of the appliance will be handled through a change order. 11. Stairs Down: 1. Remove all carpet, pad and tack strip. 2. Repair damaged drywall, fill nail holes, etc., to match existing surfaces at ceiling and walls. Texture walls and ceiling. 3. Were drywall is not installed on wall (but is a panel of some type), remove and install drywall. 4. Scrape, prep, and paint stairs and stringers. 5. Repair, clean and prep and paint spindles and trim along the side of stairs. 6. Remove and replace existing door and jamb. 7. Remove and replace stair handrail per code. 8. Prime and paint walls, ceiling, doors and trim per specifications. 8 Basement: 1. Remove all interior walls. 2. Remove existing vinyl floor, wood floor and tile floor. 3. Remove drywall ceiling and ceiling tile and grid. 4. Fill holes in concrete block walls to match existing surfaces. 5. Remove all shelves, peg board,bar, security system, any remaining appliances, book shelves, cabinets, etc. and finish walls to match existing surfaces. 6. Remove closet doors,track, shelf and rod and finish to match existing surfaces. 7. Prepare all floor surfaces for paint, include caulking cracks. 8. Paint all walls, floors, columns and beam per specifications. 9. At storage cabinets under stairs, clean out area, adjust doors, and install new hardware and paint like adjacent walls. 10. Insulate at rim joist were accessible. 11. Remove chimney in its entirety which includes any removal and replacement of walls as required to complete the work and patch the floor. Garage: 1. Remove cabinets,peg board, bench, etc. 2. Remove garage door opener. 3. Use degreaser and power wash floor. Painting of Interior: 1. 1 All existing trim is to have dings,holes, etc. filled& sanded smooth to match existing surfaces. 2. All existing trim and new trim, doors, and jambs to receive 1 coat of primer and 2 coats of finish paint, which may be different color or finish than the walls. 3. All walls and ceilings to receive 1 coat of primer &2 coats of finish paint. Newly textured ceilings do not require painting; however, texturing material must have paint mixed in with texture material. 4. Seal new handrail in stairwell. 5. Scrape and caulk all cracks on foundation walls that remain exposed. Paint with dry lock sealer, then paint with standard latex if additional coating required. 6. Paint all concrete floors in basement with floor paint, per specifications. Electrical Interior: General Note: All outlets, switches,cable, telephone and misc. to replaced, including new cover plates,with the same color throughout entire house.When item calls for removal or relocation,it is unacceptable to remove and install blank cover unless prior approval from Construction Specialist. All work must be completed according to code Living/Dining/Foyer Room: 1. Install fixture and switch for living room. 9 2. Remove and replace dining room fixture. 3. Remove and replace fixture at Foyer. Southeast Bedroom: 1. Remove and replace ceiling fixture. 2. Install smoke detector. All smoke detectors on all floors to be A.C. powered & interconnected. 3. Remove existing light and switch for closet. Southwest Bedroom: 1. Remove and replace ceiling fixture. 2. Install smoke detector. 3. Remove existing light and switch for closet. Hall: 1. Remove and replace ceiling fixtures. 2. Install smoke detector. Bathroom: 1. Install new exhaust fan/light to be switched separately. 2. Remove existing vanity fixture and install new fixture. 3. Install new GFI for proper operation. 4. Remove old electrical as required. 5. Install vanity light and switch. Kitchen: 1. Outlet for refrigerator; must be on separate circuit. 2. Install outlet under sink for garbage disposal & connect to switch above counter. 3. Remove existing fixture over sink and install can lite if soffit. 4. Remove and replace ceiling fixtures (1 to be fluorescent and the other like bedrooms). 5. Install GFI outlets at sink and along counter per current code. 6. Supply power for range hood and make connection. 7. Install 220 outlet for stove. 8. Make cord connection if necessary for stove. 9. Remove the outlet in the face of the soffit in its entirety. Attic: 1. Install electrical as required for Radon System. Coordinate location with Radon installer. Stairs Down: 1. Remove and replace ceiling fixture. 2. Install additional ceiling fixture at top or bottom of stairs as required. 10 Basement: 1. Replace panel box with new 125 amp panel box or what is required for adequate power but not less than 125 amp. Eliminate any sub-panels. 2. Remove lights as required due to demolition and install keyless lights as required for adequate lighting. 3. Remove and replace 220 and 110 outlets for washer and dryer. 4. Install smoke/carbon monoxide detector. 5. Bring all electrical up to code due to removals and exposed wiring 6. Install electrical for electric water heater. 7. Make final connection to furnace. 8. Secure any loose cable and telephone wiring for clean finished appearance. Garage: 1. Remove/replace/install ceiling fixture. 2. Remove/replace/install outlet in ceiling for future garage door opener. 3. Bring electrical to code. Plumbing Interior: Kitchen: 1. Remove existing sink and install new 8" stainless steel sink. Include new faucet and shut- offs. 2. Hook up water supply& drain hose for dishwasher. Install new supply line with shut-off. 3. Install water supply line for refrigerator ice maker and hook up icemaker. 4. Eliminate existing gas line for stove and cap in basement. Bathroom: 1. Install new fiberglass bathtub with surround, new toilet, and new shower/tub faucet. 2. Replace shut-offs or install if not present at water supply lines. 3. Install faucet, supply and waste lines for sink. Rough in for new location and eliminate existing abandon lines. 4. Remove existing tub. 5. Install new toilet. Basement: 1. Install washer box with waste connected and new supply valves. 2. Replace floor drain per code. 3. Install floor drain in furnace room. 4. Remove existing water heater and install new 90% water heater. 5. Re-install water meter. 6. Remove all galvanized water piping and replace with copper. 11 7. Replace all stacks in its entirety. 8. Remove existing drains and water lines for toilet, shower and sink. At floors, lines are to be removed below floor, permanently capped and fill with concrete to match existing surfaces. 9. Remove and replace water heater with 80%electric energy star system. 10. Snake all sanitary lines to main at street. HVAC: 1. Install supply& return register grills in all rooms. 2. Install rigid vent pipe for dryer vent to within 4' of floor. 3. Service existing furnace, including cleaning, operation, replacement of and an additional filter. 4. Seal duct work as required. 5. Install new thermostat. NOTE: SEE ATTACHED MATERIAL SPECIFICATION SHEET. THIS WRITE UP INCLUDES PURCHASE OF ALL MATERIAL BY CONTRACTOR OR SUBCONTRACTOR. ENTIRE PROJECT MUST BE PROFESSIONALY CLEANED UPON COMPLETION OF PROJECT. MATERIAL SPECIFICATION SHEET DOORS: Interior: Mastercraft 6 Panel Duracore- hinges to be bright brass Hardware: Kwikset Tustin Lever or Tylo knobs—bright brass Door stops/bumpers: Match knob finish Exterior: Entry: 6 Panel Fiberglass Insulated w/peep hole, same hardware as listed above & dead bolt keyed alike. Storm (Front): Larson white full view clear glass—brass 415-2653 (Rear): Larson Alpine white 630-03 Storm window: Climate Rite Energy Savings- white Garage door/overhead: Extruded panel white insulated back Garage/walk thru: 6 Panel Fiberglass insulated, same hardware as listed above & Dead bolt keyed alike. 12 Exterior Other: Siding: ABTCQ Timbercrest dutchlap double 4 as noted in work write-up. Repair/replace: match existing Alum. Fascia/soffit: standard white or match existing Metal wrap: standard white or match existing Gutter/downspouts: standard white or match existing Window wells: standard galvanized Door bells: Carlon wired chime kit CK221RP Address#'s: 3" or 4"black unless otherwise noted. Shingles: Black or white 3 tab asphalt(unless repair than match exist.) Mailbox: Standard house attached box w/paper holder in black finish unless noted otherwise. Electrical: Porch(ceiling): Patriot McCormick outdoor ceiling light 356-1012 finished as noted in work write-up. Living room: Patriot Galaxy 15" 351-0101 brass Dining room: Patriot Saturn Chandelier 350-3180 (brass) Stairwell: Patriot 11"ceiling light 351-4203 (package of 2) Bedroom: Patriot 13" ceiling light 351-4207 Vanity: Thomas oak/brass 3 light M-1738-1 Bath Exhaust/light: Standard Braon white finish, CFM to match room. Fan switched separately from light. Kitchen above sink: Standard in cabinet mount Kitchen ceiling: KCM series white crown mold 48"T8, 348-4034 Basement: Standard keyless or pull chain Basement @ Laundry (if specified) standard T8 48" dual fluorescent w/cover Porch(wall mount) Front: Harmony Coach Design House 6006WH Rear or side: Standard white Design House jelly jar 500181 Spot light: 200 watt Copper Lighting White twin head(non motion) MX1W Outlets, switches, cover plates: per code,white or ivory(match existing) Plumbing: Bath faucet: Moen Traditional CA84003 or Delta Bath shower: Moen Lexie 82576 or Delta Kitchen faucet: Moen dual knob w/sprayer CA87681 or Delta Moen dual handle CA87004 or Delta Bath sink/pedestal: Eljer Darrow Pedestal sink 695-7322 Vanity top: Crane recessed rectangle bright white# 8934 (sized accordingly to vanity) Kitchen sink: Standard insulated stainless steel 8" depth double bowl. Toilet: Eljer Titan round bowl white 695-7042 Tub/surround: Advanta fiberglass 1 piece 671-4550 13 Shower base: Standard white fiberglass (sized accordingly) Hot water heater: must be Energy Star(sized accordingly) Cabinets: Bathroom: Pace Southampton series oak (sized accordingly) Med. Cabinet: to match vanity Kitchen: Schrock Callahan Oak (honey finish) Hardware: Expo 33/8" brass pull 223-9379, brass concave knob 223-9382 Counter top: Standard no drip edge, Formica Ant. White Papercraft 663-58 Appliances: Noted as an allowance Paint: Exter. primer: Standard suitable for application area Exter. foundation: Latex exterior semi-gloss Entry doors &jambs: Latex exterior semi-gloss Inter. primer: standard suitable for application (unless directly noted in bid write-up) Inter ceiling: Flat ceiling white Inter. walls: Latex Eggshell, Kitchen& bath Latex Satin Inter. doors &trim: Latex semi-gloss Polyurethane: Minwax clear satin or semi-gloss (match existing) Inter. block wall: Drylock sealer, then paint if required. Floor Covering: Pad: 1/2" Apollo VI Rebound 701-1160 Carpet: Legends Walnut 777-1356 Vinyl flooring: Mannington Jump Start Misc. Interior: Bathroom tile: 6"x8"white Towel bar: Delta South Hampton 24" bar 675-4050 Towel ring: Delta South Hampton 675-4053 Toilet paper holder: Delta South Hampton 675-4052 Furnace & A/C: Must be Energy Star(sized accordingly) 90% efficient. Note: All items specified are noted form Menards. Approved equals are acceptable after bidding providing necessary product information, samples & models have been submitted and approved. 14 ALTERNATE# 1 The following work will be added to the bid project if this work is accepted: 1. Grind out stumps in yard 2. Remove existing wood fence along the south property, including footings and backfill. 3. Remove existing chain link fence along the north and west property that runs parallel with the wooden fence, including the footings and backfill. 4. Remove and replace the chain link fencing along the east property line,remove vegetation in its entirety including roots and backfill. 5. Power wash, make necessary repairs to fence and seal existing remaining wood fence (both sides). 6. Remove 3 trees along the north property,the pine trees along the west property. Work to include grinding of stumps 8"below grade, apply stump killer, removal of grindings and backfill. The trees will be marked with an orange "X". 7. Remove existing hedges along the north property line including the roots in its entirety, and backfill. 8. Remove remaining vegetation along any remaining fence and foundation including roots. 9. Trim all trees so that the canopy is at least feet above the ground and remove all dead branches, sucker branches (intent is for clean appearance). 10. All work to including proper backfill with compaction, seeding and straw. Bid Price for Alternate# 1: $ 15 us cryyFMN.NC*Ii E.Jh ii,, I rJF.`xlh•..�t�,ai ��VV�� PARTS 200-214 [RESERVED] 215.36 Intangible property, 215.37 Property trust relationship. PART 215-UNIFORM ADMINISTRA- PROCUREMENT STANDARDS TIVE REQUIREMENTS FOR GRANTS 215.40 Purpose of procurement standards. AND AGREEMENTS WITH INSTITU- 215.41 Recipient responsibilities. TIONS OF HIGHER EDUCATION, 215.92 codes of condct, HOSPITALS, AND OTHER NON- 215.44 PrmpetitionProcurement, 215.44 procedures. PROFIT ORGANIZATIONS (OMB 215.45 Cost and price analysis. CIRCULAR A-1 10) 215.46 Procurement records. 215.47 Contract administration. Sec. 215.48 Contract provisions. 215.0 About this part. REPORTS AND RECORDS Subpart A-General 215.50 Purpose of reports and records. 215.51 Monitoring and reporting program 215.1 Purpose. performance. 215.2 Definitions. 215.52 Financial reporting. 215.3 Effect on other issuances, 215.53 Retention and access requirements 215.4 Deviations. for records. 215.5 Subawards. TERMINATION AND ENFORCEMENT Subpart B-Pre-Award Requirements 215.60 Purpose of termination and enforce- ment, 215.10 Purpose. 215.61 Termination. 215.11 Pre-award policies. 215.62 Enforcement. 215.12 Forms for applying for Federal assist- ance. Subpart D-Atter-the-Award Requirements 215.13 Debarment and suspension. 215.14 Special award conditions. 215.70 Purpose. 215.15 Metric system of measurement. 215.71 Closeout procedures. 215.16 Resource Conservation and Recovery 215.72 Subsequent adjustments and con- Act. tinning responsibilities. 215.17 Certifications and representations. 215.73 Collection of amounts due, Subpart C-Post-Award Requirements APPENDIX A TO PART 215-CONTRACT PROVI- SIONS FINANCIAL AND PROGRAM MANAGEMENT AUTHORITY: 31 U.S.C. 503; 31 U.S.C. 1111; 41 215.20 Purpose of financial and program U.S.C.405;Reorganization Plan No.2 of 1970; management. E.O. 11541, 35 FR 10737, 3 CFR, 1966-1970, p. 215.21 Standards for financial management systems. SOURCE: 69 FR 26281, May 11, 2004, unless 215.22 Payment. otherwise noted. 215.23 Cost sharing or matching. 215.24 Program income. §215.0 About this part. 215.25 Revision of budget and program plans. (a) Purpose. This part contains OMB 215.26 Non-Federal audits. guidance to Federal agencies on the ad- 215.27 Allowable costs. ministration of grants to and agree- 215.28 Period of availability of funds. ments with institutions of higher edu- 215.29 Conditional exemptions. cation, hospitals, and other non-profit PROPERTY STANDARDS organizations. The guidance sets forth standards for obtaining consistency 215.30 Purpose of property standards, and uniformity in the agencies' admin- 215.31 Insurance coverage. istration of those grants and agree- 215.32 Real property. ments. 215.33 Federally-owned and exempt prop- erty. (b) Applicability. (1) Except as pro- 215.34 Equipment. vided herein, the standards set forth in 215.35 Supplies and other expendable prop- this part are applicable to all Federal erty. agencies. If any statute specifically 77 §215.1 2 CFR Ch. II (1-1-12 Edition) prescribes policies or specific require- where adequate justification is pre- ments that differ from the standards sented. provided in this part, the provisions of (5) Conducting broad oversight of the statute shall govern. government-wide compliance with the (2) The provisions of subparts A guidance in this part. through D of this part shall be applied (d) Federal agency responsibilities. The by Federal agencies to recipients. Re- head of each Federal agency that cipients shall apply the provisions of awards and administers grants and those subparts to subrecipients per- agreements subject to the guidance in forming substantive work under grants this part is responsible for: and agreements that are passed (1) Implementing the guidance in through or awarded by the primary re- subparts A through D of this part by eipient, if such subrecipients are orga- adopting the language in those sub- nizations described in paragraph (a) of parts unless different provisions are re- this section. quired by Federal statute or are ap- (3)This part does not apply to grants, proved by OMB. contracts, or other agreements be- (2) Ensuring that the agency's corn- tween the Federal Government and ponents and subcomponents comply units of State or local governments with the agency's implementation of covered by OMB Circular A-102, the guidance in subparts A through D "Grants and Cooperative Agreements of this part. with State and Local Governments" (3) Requesting approval from OMB and the Federal agencies' grants man- for deviations from the guidance in agement common rule (see §215.5) subparts A. through D of this part in which standardize the administrative situations where the guidance requires requirements Federal agencies impose that approval. on State and local grantees. In addi- (4) Performing other functions speci- tion, subawards and contracts to State fled in this part. or local governments are not covered suance. by this part. However, this part applies T(e) Relationship to previouseviously to subawards made by State and local was guidance in this part previously Sub- governments to organizations covered was issuedA oa OMB oCf this part o0. to n by this part. parts A through D of this contain Federal agencies may apply the the guidance that was in the attach- (4) ment to the OMB circular. Appendix A provisions of subparts A through D of to this part contains the guidance that this part to commercial organizations, was in the appendix to the attachment. foreign governments, organizations under the jurisdiction of foreign gov- at onfconcern g thiContast. Further infor- ernments, and international organiza- t in d by contactingo this part Office mayof ed- tions. tamed the of Fed (c) OMB responsibilities. OMB1 re eral Financial Management, Office of sponsible for: Management and Budget, Washington, DC 20503, telephone(202)395-3993. (1) Issuing and maintaining the guid- (g) Termination Review Date. This part ance in this part. (2) Interpreting the policy require- will have a policy review three years ments in this part and providing assist- from the date of issuance. ance to ensure effective and efficient implementation. Subpart A—General (3) Reviewing Federal agency regula- tions implementing the guidance in §216.1 Purpose. this part, as required by Executive This part establishes uniform admin- Order 12866. istrative requirements for Federal (4) Granting any deviations to Fed- grants and agreements awarded to in- eral agencies from the guidance in this stitutions of higher education, hos- part, as provided in §215.4. Exceptions pitals, and other non-profit organiza- will only be made in particular cases Lions. Federal awarding agencies shall not impose additional or inconsistent 'See 5 CFR 1310.9 for availability of OMB requirements, except as provided in circulars. §§215.4, and 215.14 or unless specifically 78 OMB Circulars and Guidance §215.2 required by Federal statute or execu- money; other assistance in the form of tive order. Non-profit organizations loans, loan guarantees, interest sub- that implement Federal programs for sidies, or insurance; direct payments of the States are also subject to State re- any kind to individuals; and, contracts quirements. which are required to be entered into 215.2 Definitions. and administered under procurement laws and regulations. (a) Accrued expenditures means the (f) Cash contributions means the re- charges incurred by the recipient dur- cipient's cash outlay, including the ing a given period requiring the provi- outlay of money contributed to the re- sion of funds for: cipient by third parties. (1) Goods and other tangible property (g) Closeout means the process by received; which a Federal awarding agency de- (2) Services performed by employees, termines that all applicable adminis- contractors, subrecipients, and other trative actions and all required work of payees; and, the award have been completed by the (3) Other amounts becoming owed recipient and Federal awarding agency. under programs for which no current services or performance is required. (h) Contract means a procurement (b) Accrued income means the sum of: contract under an award or subaward, (1) Earnings during a given period and a procurement subcontract under a from: recipient's or subrecipient's contract. (i) Services performed by the recipi- (i) Cost sharing or matching means ent,and that portion of project or program (ii) Goods and other tangible prop- costs not borne by the Federal Govern- erty delivered to purchasers,and ment. (2) Amounts becoming owed to the (j) Date of completion means the date recipient for which no current services on which all work under an award is or performance is required by the re- completed or the date on the award cipient. document, or any supplement or (c)Acquisition cost of equipment means amendment thereto, on which Federal the net invoice price of the equipment, sponsorship ends. including the cost of modifications, at- (k) Disallowed costs means those tachments, accessories, or auxiliary charges to an award that the Federal apparatus necessary to make the prop- awarding agency determines to be un- erty usable for the purpose for which it allowable, in accordance with the ap- was acquired. Other charges, such as plicable Federal cost principles or the cost of installation, transportation, other terms and conditions contained taxes, duty or protective in-transit in- in the award. surance, shall be included or excluded (1) Equipment means tangible non- from the unit acquisition cost in ac- cordance with the recipient's regular expendable personal property including accounting practices. exempt property charged directly to (d) Advance means a payment made the award having a useful life of more by Treasury check or other appropriate than one year and an acquisition cost payment mechanism to a recipient of $5,000 or more per unit. However, upon its request either before outlays consistent with recipient policy, lower are made by the recipient or through limits may be established the use of predetermined payment (m) Excess property means property schedules. under the control of any Federal (e) Award means financial assistance awarding agency that, as determined that provides support or stimulation to by the head thereof, is no longer re- accomplish a public purpose. Awards quired for its needs or the discharge of include grants and other agreements in its responsibilities. the form of money or property in lieu (n) Exempt property means tangible of money, by the Federal Government personal property acquired in whole or to an eligible recipient. The term does in part with Federal funds, where the not include: technical assistance, Federal awarding agency has statutory which provides services instead of authority to vest title in the recipient 79 §215.2 2 CFR Ch. II (1-1-12 Edition) without further obligation to the Fed- bursements for direct charges for goods eral Government. An example of ex- and services, the amount of indirect ex- empt property authority is contained pense incurred, the value of in-kind in the Federal Grant and Cooperative contributions applied, and the net in- Agreement Act (31 U.S.C. 6306), for crease (or decrease) in the amounts property acquired under an award to owed by the recipient for goods and conduct basic or applied research by a other property received, for services non-profit institution of higher edu- performed by employees, contractors, cation or non-profit organization subrecipients and other payees and whose principal purpose is conducting other amounts becoming owed under scientific research. programs for which no current services (o) Federal awarding agency means or performance are required. the Federal agency that provides an (v) Personal property means property award to the recipient. of any kind except real property. It (p)Federal funds authorized means the may be tangible, having physical exist- total amount of Federal funds obli- ence, or intangible, having no physical gated by the Federal Government for existence, such as copyrights, patents, use by the recipient. This amount may or securities. include any authorized carryover of un- (w) Prior approval means written ap- obligated funds from prior funding pe- proval by an authorized official evi- riods when permitted by agency regula- denting prior consent. tions or agency implementing instruc- (x) Program income means gross in- tions. come earned by the recipient that is di- (q) Federal share of real property, rectly generated by a supported activ- equipment, or supplies means that per- ity or earned as a result of the award tentage of the property's acquisition (see exclusions in §215.24(e) and (h)). costs and any improvement expendi- Program income includes, but is not tures paid with Federal funds. limited to, income from fees for serv- (r)Funding period means the period of ices performed, the use or rental of real time when Federal funding is available or personal property acquired under for obligation by the recipient, federally-funded projects, the sale of (s) Intangible property and debt instru- commodities or items fabricated under ments means, but is not limited to, an award, license fees and royalties on trademarks, copyrights, patents and patents and copyrights, and interest on patent applications and such property loans made with award funds. Interest as loans, notes and other debt instru- earned on advances of Federal funds is ments, lease agreements, stock and not program income. Except as other- other instruments of property owner- wise provided in Federal awarding ship, whether considered tangible or in- agency regulations or the terms and tangible. conditions of the award, program in- (t) Obligations means the amounts of come does not include the receipt of orders placed, contracts and grants principal on loans, rebates, credits, dis- awarded, services received and similar counts, etc., or interest earned on any transactions during a given period that of them. require payment by the recipient dur- (y) Project costs means all allowable ing the same or a future period. costs, as set forth in the applicable (u) Outlays or expenditures means Federal cost principles, incurred by a charges made to the project or pro- recipient and the value of the contribu- gram. They may be reported on a cash lions made by third parties in accom- or accrual basis. For reports prepared plashing the objectives of the award on a cash basis, outlays are the sum of during the project period. cash disbursements for direct charges (z) Project period means the period es- for goods and services, the amount of tablished in the award document dur- indirect expense charged, the value of ing which Federal sponsorship begins third party in-kind contributions ap- and ends. plied and the amount of cash advances (aa) Property means, unless otherwise and payments made to subrecipients. stated, real property, equipment, in- For reports prepared on an accrual tangible property and debt instru- basis, outlays are the sum of cash dis- ments. 80 OMB Circulars and Guidance §215.2 (bb) Real property means land, includ- money, or property in lieu of money, ing land improvements, structures and made under an award by a recipient to appurtenances thereto, but excludes an eligible subrecipient or by a sub- movable machinery and equipment. recipient to a lower tier subrecipient, (cc) Recipient means an organization The term includes financial assistance receiving financial assistance directly when provided by any legal agreement, from Federal awarding agencies to even if the agreement is called a con- carry out a project or program. The tract, but does not include procure- term includes public and private insti= ment of goods and services nor does it tutions of higher education, public and include any form of assistance which is private hospitals, and other quasi-pub- excluded from the definition of lit and private non-profit organizations "award"in§215.2(e). such as,but not limited to, community (gg)Subrecipient means the legal enti- action agencies, research institutes, ty to which a subaward is made and educational associations, and health which is accountable to the recipient centers. The term may include corn- for the use of the funds provided. The mercial organizations, foreign or inter- term may include foreign or inter- national organizations (such as agen- national organizations (such as agen- cies of the United Nations) which are ties of the United Nations) at the dis- recipients, subrecipients, or contrac- cretion of the Federal awarding agen- tors or subcontractors of recipients or cy. subrecipients at the discretion of the (hh)Supplies means all personal prop- Federal awarding agency. The term erty excluding equipment, intangible does not include government-owned property, and debt instruments as de- contractor-operated facilities or re- fined in this section, and inventions of search centers providing continued a contractor conceived or first actually support for mission-oriented, large- reduced to practice in the performance scale programs that are government- of work under a funding agreement owned or controlled, or are designated ("subject inventions"), as defined in 37 as federally-funded research and devel- CFR part 401, "Rights to Inventions opment centers. Made by Nonprofit Organizations and (dd) Research and development means Small Business Firms Under Govern- all research activities, both basic and ment Grants, Contracts, and Coopera- applied, and all development activities tive Agreements." that are supported at universities, col- (ii) Suspension means an action by a leges, and other non-profit institu- Federal awarding agency that tempo- tions. "Research" is defined as a sys- rarily withdraws Federal sponsorship tematic study directed toward fuller under an award, pending corrective ac- scientific knowledge or understanding tion by the recipient or pending a deci- of the subject studied. "Development" sion to terminate the award by the is the systematic use of knowledge and Federal awarding agency. Suspension understanding gained from research di- of an award is a separate action from rected toward the production of useful suspension under Federal agency regu- materials, devices, systems, or meth- lations implementing E.O. 12549 (51 FR ods, including design and development 6370, 3 CFR,1986 Comp., p. 189) and E.O. of prototypes and processes. The term 12689(54 FR 34131,3 CFR, 1989 Comp., p. research also includes activities in- 235), "Debarment and Suspension." volving the training of individuals in (jj) Termination means the cancella- research techniques where such activi- tion of Federal sponsorship,in whole or ties utilize the same facilities as other in part, under an agreement at any research and development activities time prior to the date of completion. and where such activities are not in- (kk) Third party in-kind contributions eluded in the instruction function. means the value of non-cash contribu- (ee) Small awards means a grant or tions provided by non-Federal third cooperative agreement not exceeding parties. Third party in-kind contribu- the small purchase threshold fixed at tions may be in the form of real prop- 41 U.S.C.403(11)(currently$25,000). erty, equipment, supplies and other ex- (ff) Subaward means an award of fi- pendable property, and the value of nancial assistance in the form of goods and services directly benefiting 81 §215.3 2 CFR Ch. II (1-1-12 Edition) and specifically identifiable to the utory. Exceptions on a case-by-case project or program. basis may also be made by Federal (11) Unliquidated obligations, for finan- awarding agencies. cial reports prepared on a cash basis, means the amount of obligations in- §215.5 Subawards. curred by the recipient that have not Unless sections of this part specifi- been paid. For reports prepared on an cally exclude subrecipients from cov- accrued expenditure basis, they rep- erage, the provisions of this part shall resent the amount of obligations in- be applied to subrecipients performing curred by the recipient for which an work under awards if such subrecipi- outlay has not been recorded. ents are institutions of higher edu- (mm) Unobligated balance means the cation,hospitals or other non-profit or- portion of the funds authorized by the ganizations. State and local govern- Federal awarding agency that has not ment subrecipients are subject to the been obligated by the recipient and is provisions of regulations implementing determined by deducting the cumu- the grants management common rule, lative obligations from the cumulative "Uniform Administrative Require- funds authorized. ments for Grants and Cooperative (nn) Unrecovered indirect cost means Agreements to State and Local Gov- the difference between the amount ernments," published at 7 CFR parts awarded and the amount which could 3015 and 3016, 10 CFR part 600, 13 CFR have been awarded under the recipi- part 143, 15 CFR part 24, 20 CFR part ent's approved negotiated indirect cost 437,22 CFR part 135,24 CFR parts 44, 85, rate. 111, 511, 570, 571, 575, 590, 850, 882, 905, (oo) Working capital advance means a 941, 968, 970, and 990, 28 CFR part 66, 29 procedure whereby funds are advanced CFR parts 97 and 1470, 32 CFR part 278, to the recipient to cover its estimated 34 CFR parts 74 and 80, 36 CFR part disbursement needs for a given initial 1207,38 CFR part 43,40 CFR parts 30, 31, period. and 33, 43 CFR part 12, 44 CFR part 13, §215.3 Effect on other issuances. 45 CFR parts 74, 92, 602, 1157, 1174, 1183, For awards subject to this part, all 1234,and 2015, and 49 CFR part 18. administrative requirements of codi- [69 FR 26281, May 11, 2004, as amended at 70 fied FR 51880,Aug.31,2005] program regulations, program manuals, handbooks and other non- Subpart B-Pre-Award regulatory materials which are incon- {� sistent with the requirements of this Requirements part shall be superseded, except to the extent they are required by statute, or §216.1U Purpose. authorized in accordance with the devi- Sections 215.11 through 215.17 pre- ations provision in§215.4. scribe forms and instructions and other pre-award matters to be used in apply- §215.4 Deviations. ing for Federal awards. The Office of Management and Budg- et (OMB) may grant exceptions for §215.11 Pre-award policies. classes of grants or recipients subject (a) Use of Grants and Cooperative to the requirements of this part when Agreements, and Contracts. In each in- exceptions are not prohibited by stat- stance, the Federal awarding agency ute. However, in the interest of max- shall decide on the appropriate award imum uniformity, exceptions from the instrument (i.e., grant, cooperative requirements of this part shall be per- agreement, or contract). The Federal mitted only in unusual circumstances. Grant and Cooperative Agreement Act Federal awarding agencies may apply (31 U.S.C. 6301-08) governs the use of more restrictive requirements to a grants, cooperative agreements and class of recipients when approved by contracts. A grant or cooperative OMB. Federal awarding agencies may agreement shall be used only when the apply less restrictive requirements principal purpose of a transaction is to when awarding small awards, except accomplish a public purpose of support for those requirements which are stat- or stimulation authorized by Federal 82 OMB Circulars and Guidance §215.15 statute. The statutory criterion for agency regulations implementing E.O.s choosing between grants and coopera- 12549 and 12689, "Debarment and Sus- tive agreements is that for the latter, pension." Under those regulations, cer- "substantial involvement is expected tails parties who are debarred, sus- between the executive agency and the pended or otherwise excluded may not State, local government, or other re- be participants or principals in Federal cipient when carrying out the activity assistance awards and subawards, and contemplated in the agreement." Con- in certain contracts under those tracts shall be used when the principal awards and subawards. purpose is acquisition of property or [70 FR 51879,Aug.31,2005] services for the direct benefit or use of the Federal Government. §215.14 Special award conditions. (b) Public Notice and Priority Set- If an applicant or recipient:has a his- ting. Federal awarding agencies shall tory of poor performance,is not finan- notify the public of its intended fund- daily stable, has a management sys- ing priorities for discretionary grant tern that does not meet the standards programs, unless funding priorities are prescribed in this con- established by Federal statute. part, os not formed to the terms and conditions of §215.12 Forms for applying fur Fed. a previous award, or is not otherwise eral assistance. responsible, Federal awarding agencies (a) Federal awarding agencies shall may impose additional requirements as with the applicable report needed, provided that such applicant or comply clearance requirements of 5 CFR part recipient natureof notifiedhein writing as to: the the additional require- 1320, "Controlling Paperwork Burdens ments, the reason why the additional on the Public," with regard to all requirements are being imposed, the forms used by the Federal awarding nature of the corrective action needed, agency in place of or as a supplement the time allowed for completing the to the Standard Form 424 (SF-424) se- corrective actions, and the method for ries. requesting reconsideration of the addi- (b) Applicants shall use the SF-424 tional requirements imposed. Any spe- series or those forms and instructions cial conditions shall be promptly re- prescribed by the Federal awarding moved once the conditions that agency. prompted them have been corrected. (c) For Federal programs covered by E.O. 12372, "Intergovernmental Review §215.15 Metric system of measure- of Federal Programs," (47 FR 30959, 3 ment. CFR, 1982 Comp., p. 197) the applicant The Metric Conversion Act, as shall complete the appropriate sections amended by the Omnibus Trade and of the SF-424 (Application for Federal Competitiveness Act (15 U.S.C. 205) de- Assistance) indicating whether the ap- dares that the metric system is the plication was subject to review by the preferred measurement system for U.S. State Single Point of Contact (SPOC), trade and commerce. The Act requires The name and address of the SPOC for each Federal agency to establish a date a particular State can be obtained from or dates in consultation with the See- the Federal awarding agency or the retary of Commerce, when the metric Catalog of Federal Domestic Assistance. system of measurement will be used in The SPOC shall advise the applicant the agency's procurements, grants, and whether the program for which applica- other business-related activities. Met- tion is made has been selected by that ric implementation may take longer State for review. where the use of the system is initially (d)Federal awarding agencies that do impractical or likely to cause signifi- not use the SF-424 form should indi- cant inefficiencies in the accomplish- cate whether the application is subject ment of federally-funded activities. to review by the State under E.O.12372. Federal awarding agencies shall follow §215.13 Debarment and suspension. the provisions of E.O. 12770, "Metric Usage in Federal Government Pro- Federal awarding agencies and re- grams" (56 FR 35801, 3 CFR, 1991 Comp., cipients shall comply with Federal p. 343). 8 §215.16 2 CFR Ch. II (1-1-12 Edition) §215.16 Resource Conservation and data to performance data and develop Recovery Act. unit cost information whenever prac- Under the Act, any State agency or tical. agency of a political subdivision of a (b) Recipients' financial management State which is using appropriated Fed- systems shall provide for the following. eral funds must comply with section (1) Accurate, current and complete 6002. Section 6002 requires that pref- disclosure of the financial results of erence be given in procurement pro- each federally-sponsored project or grams to the purchase of specific prod- program in accordance with the report- ucts containing recycled materials ing requirements set forth in§215.52. If identified in guidelines developed by a Federal awarding agency requires re- the Environmental Protection Agency porting on an accrual basis from a re- (EPA) (40 CFR parts 247-254). Accord- cipient that maintains its records on ingly, State and local institutions of other than an accrual basis, the recipi- higher education, hospitals, and non- ent shall not be required to establish profit organizations that receive direct an accrual accounting system. These Federal awards or other Federal funds recipients may develop such accrual shall give preference in their procure- data for its reports on the basis of an meat programs funded with Federal analysis of the documentation on hand. funds to the purchase of recycled prod- (2) Records that identify adequately ucts pursuant to the EPA guidelines. the source and application of funds for federally-sponsored activities. These §215.17 Certifications and representa- records shall contain information per- tions. taming to Federal awards, authoriza- Unless prohibited by statute or codi- tions, obligations, unobligated bal- fled regulation, each Federal awarding antes, assets, outlays, income and in- agency is authorized and encouraged to terest. allow recipients to submit certifi- (3) Effective control over and ac- cations and representations required countability for all funds, property and by statute, executive order, or regula- other assets. Recipients shall ade- tion on an annual basis, if the recipi- quately safeguard all such assets and eats have ongoing and continuing rela- assure they are used solely for author- tionships with the agency. Annual cer- ized purposes. tifications and representations shall be (4) Comparison of outlays with budg- signed by responsible officials with the et amounts for each award. Whenever authority to ensure recipients' oomph - appropriate, financial information ance with the pertinent requirements. should be related to performance and unit cost data. Subpart C—Post Award (5) Written procedures to minimize Requirements the time elapsing between the transfer of funds to the recipient from the U.S. FINANCIAL,AND PROGRAM MANAGEMENT Treasury and the issuance or redemp- tion of checks, warrants or payments §215.20 Purpose of financial and pro- by other means for program purposes gram management. by the recipient. To the extent that the Sections 215.21 through 215.28 pre- provisions of the Cash Management Im- scribe standards for financial manage- provement Act (CMIA) (Pub. L. 101-453) merit systems, methods for making govern, payment methods of State payments and rules for: satisfying cost agencies, instrumentalities, and fiscal sharing and matching requirements, agents shall be consistent with CMIA accounting for program income, budget Treasury-State Agreements or the revision approvals, making audits, de- CMIA default procedures codified at 31 termining allowability of cost, and es- CFR part 205, "Withdrawal of Cash tablishing fund availability. from the Treasury for Advances under Federal Grant and Other Programs." §215.21 Standards for ffiianciai man- (6) Written procedures for deter- agement systems. mining the reasonableness, allowability (a) Federal awarding agencies shall and allowability of costs in accordance require recipients to relate financial with the provisions of the applicable 81 OMB Circulars and Guidance §215.22 Federal cost principles and the terms the actual disbursements by the recipi- and conditions of the award, ent organization for direct program or (7) Accounting records including cost project costs and the proportionate accounting records that are supported share of any allowable indirect costs, by source documentation. (c)Whenever possible, advances shall (c) Where the Federal Government be consolidated to cover anticipated guarantees or insures the repayment of cash needs for all awards made by the money borrowed by the recipient, the Federal awarding agency to the recipi- Federal awarding agency, at its discre- ent. tion, may require adequate bonding (1) Advance payment mechanisms in- and insurance if the bonding and insur- elude, but are not limited to, Treasury ance requirements of the recipient are check and electronic funds transfer. not deemed adequate to protect the in- (2) Advance payment mechanisms are terest of the Federal Government. subject to 31 CFR part 205. (d)The Federal awarding agency may (3) Recipients shall be authorized to require adequate fidelity bond coverage submit requests for advances and reim- where the recipient lacks sufficient bursements at least monthly when coverage to protect the Federal Gov- electronic fund transfers are not used. ernment's interest. (d) Requests for Treasury check ad- (e) Where bonds are required in the vance payment shall be submitted on situations described above, the bonds SF-270, "Request for Advance or Reim- shall be obtained from companies hold- bursement," or other forms as may be ing certificates of authority as accept- authorized by OMB. This form is not to able sureties, as prescribed in 31 CFR be used when Treasury check advance part 223, "Surety Companies Doing payments are made to the recipient Business with the United States." automatically through the use of a pre- determined payment schedule or if pre- §215.22 Payment. chided by special Federal awarding (a) Payment methods shall minimize agency instructions for electronic the time elapsing between the transfer funds transfer. of funds from the United States Treas- (e) Reimbursement is the preferred ury and the issuance or redemption of method when the requirements in checks, warrants, or payment by other §215.12(b) cannot be met. Federal means by the recipients. Payment awarding agencies may also use this methods of State agencies or instru- method on any construction agree- mentalities shall be consistent with ment, or if the major portion of the Treasury-State CMIA agreements or construction project is accomplished default procedures codified at 31 CFR through private market financing or part 205. Federal loans, and the Federal assist- (b) Recipients are to be paid in ad- ance constitutes a minor portion of the vance, provided they maintain or dem- project. onstrate the willingness to maintain: (1) When the reimbursement method (1)Written procedures that minimize is used, the Federal awarding agency the time elapsing between the transfer shall make payment within 30 days of funds and disbursement by the re- after receipt of the billing, unless the cipient, and billing is improper, (2) Financial management systems (2) Recipients shall be authorized to that meet the standards for fund con- submit request for reimbursement at trol and accountability as established least monthly when electronic funds in §215.21. Cash advances to a recipient transfers are not used. organization shall be limited to the (f) If a recipient cannot meet the cri- minimum amounts needed and be teria for advance payments and the timed to be in accordance with the ac- Federal awarding agency has deter- tual, immediate cash requirements of mined that reimbursement is not fea- the recipient organization in carrying sible because the recipient lacks suffi- out the purpose of the approved pro- cient working capital, the Federal gram or project. The timing and awarding agency may provide cash on a amount of cash advances shall be as working capital advance basis. Under close as is administratively feasible to this procedure, the Federal awarding 85 §215.22 2 CFR Ch. II (1-1-12 Edition) agency shall advance cash to the re- (2)Advances of Federal funds shall be cipient to cover its estimated disburse- deposited and maintained in insured ment needs for an initial period gen- accounts whenever possible. orally geared to the awardee's die- (j) Consistent with the national goal bursing cycle. Thereafter, the Federal of expanding the opportunities for awarding agency shall reimburse the women-owned and minority-owned recipient for its actual cash disburse- business enterprises, recipients shall be ments. The working capital advance encouraged to use women-owned and method of payment shall not be used minority-owned banks(a bank which is for recipients unwilling or unable to owned at least 50 percent by women or provide timely advances to their sub- minority group members). recipient to meet the subrecipient's ac- (k) Recipients shall maintain ad- tual cash disbursements. vances of Federal funds in interest (g) To the extent available, recipi- bearing accounts, unless paragraphs ents shall disburse funds available from (k)(1), (2) or(3)of this section apply, repayments to and interest earned on a (1) The recipient receives less than revolving fund, program income, re- $120,000 in Federal awards per year. bates, refunds, contract settlements, (2) The best reasonably available in- audit recoveries and interest earned on terest bearing account would not be ex- such funds before requesting additional petted to earn interest in excess of$250 cash payments. per year on Federal cash balances. (h)Unless otherwise required by stat- (3) The depository would require an ute, Federal awarding agencies shall average or minimum balance so high not withhold payments for proper that it would not be feasible within the charges made by recipients at any time expected Federal and non-Federal cash during the project period unless para- resources. graphs (h)(1) or (2) of this section (1) For those entities where CMIA apply. and its implementing regulations at 31 (1) A recipient has failed to comply CFR part 205 do not apply, interest with the project objectives, the terms earned on Federal advances deposited and conditions of the award, or Federal in interest bearing accounts shall be reporting requirements. remitted annually to Department of (2) The recipient or subrecipient is Health and Human Services, Payment delinquent in a debt to the United Management System, Rockville, MD States as defined in OMB Circular A- 20852. Interest amounts up to $250 per 129, "Managing Federal Credit Pro- year may be retained by the recipient grams." Under such conditions, the for administrative expense. State uni- Federal awarding agency may, upon versities and hospitals shall comply reasonable notice, inform the recipient with CMIA, as it pertains to interest. If that payments shall not be made for an entity subject to CMIA uses its own obligations incurred after a specified funds to pay pre-award costs for discre- date until the conditions are corrected tionary awards without prior written or the indebtedness to the Federal Gov- approval from the Federal awarding ernment is liquidated. agency, it waives its right to recover (i) Standards governing the use of the interest under CMIA. banks and other institutions as deposi- (m)Except as noted elsewhere in this tories of funds advanced under awards part, only the following forms shall be are as follows. authorized for the recipients in re- (1) Except for situations described in questing advances and reimburse- paragraph (i)(2) of this section, Federal ments. Federal agencies shall not re- awarding agencies shall not require quire more than an original and two separate depository accounts for funds copies of these forms. provided to a recipient or establish any (1) SF-270, Request for Advance or eligibility requirements for deposi- Reimbursement. Each Federal award- tories for funds provided to a recipient. ing agency shall adopt the SF-270 as a However, recipients must be able to ac- standard form for all nonconstruction count for the receipt, obligation and programs when electronic funds trans- expenditure of funds. fer or predetermined advance methods 86 OMB Circulars and Guidance §215.23 are not used. Federal awarding agen- (1) The certified value of the remain- cies, however, have the option of using ing life of the property recorded in the this form for construction programs in recipient's accounting records at the lieu of the SF-271, "Outlay Report and time of donation. Request for Reimbursement for Con- (2) The current fair market value. struction Programs." However, when there is sufficient jus- (2) SF-271, Outlay Report and Re- tification, the Federal awarding agen- quest for Reimbursement for Construe- cy may approve the use of the current tion Programs. Each Federal awarding fair market value of the donated prop- agency shall adopt the SF-271 as the erty, even if it exceeds the certified standard form to be used for requesting value at the time of donation to the reimbursement for construction pro- project. grams. However, a Federal awarding (d) Volunteer services furnished by agency may substitute the SF-270 professional and technical personnel, when the Federal awarding agency de- consultants, and other skilled and un- termines that it provides adequate in- skilled labor may be counted as cost formation to meet Federal needs. sharing or matching if the service is an §215.23 Cost sharingintegral and necessary part of an ap- or matching. proved projector program. Rates for (a) AU contributions, including cash volunteer services shall be consistent and third party in-kind, shall be ac- with those paid for similar work in the cepted as part of the recipient's cost recipient's organization. In those in- sharing or matching when such con- stances in which the required skills are tributions meet all of the following cri- not found in the recipient organization, teria. rates shall be consistent with those (1) Are verifiable from the recipient's paid for similar work in the labor mar- records. ket in which the recipient competes for (2) Are not included as contributions the kind of services involved. In either for any other federally-assisted project case, paid fringe benefits that are rea- or program. sonable, allowable, and allocable may (3) Are necessary and reasonable for be included in the valuation. proper and efficient accomplishment of (e) When an employer other than the project or program objectives. recipient furnishes the services of an (4) Are allowable under the applica- employee, these services shall be val- ble cost principles. ued at the employee's regular rate of (5) Are not paid by the Federal Gov- pay (plus an amount of fringe benefits ernment under another award, except that are reasonable, allowable, and al- where authorized by Federal statute to locable, but exclusive of overhead be used for cost sharing or matching. costs), provided these services are in (6) Are provided for in the approved the same skill for which the employee budget when required by the Federal is normally paid. awarding agency. (f) Donated supplies may include (7) Conform to other provisions of such items as expendable equipment, this part, as applicable. office supplies, laboratory supplies or (b)Unrecovered indirect costs may be workshop and classroom supplies. included as part of cost sharing or Value assessed to donated supplies in- matching only with the prior approval eluded in the cost sharing or matching of the Federal awarding agency. share shall be reasonable and shall not (c) Values for recipient contributions exceed the fair market value of the of services and property shall be estab- property at the time of the donation. lished in accordance with the applica- (g) The method used for determining ble cost principles. If a Federal award- cost sharing or matching for donated ing agency authorizes recipients to do- equipment, buildings and land for nate buildings or land for construction/ which title passes to the recipient may facilities acquisition projects or long- differ according to the purpose of the term use, the value of the donated award, if paragraphs (g)(1)or(2) of this property for cost sharing or matching section apply. shall be the lesser of paragraphs (c)(1) (1) If the purpose of the award is to or(2)of this section. assist the recipient in the acquisition 87 §215.24 2 CFR Ch. 11 (1-1-12 Edition) of equipment, buildings or land, the related to projects financed in whole or total value of the donated property in part with Federal funds. may be claimed as cost sharing or (b) Except as provided in paragraph matching. (h) of this section, program income (2) If the purpose of the award is to earned during the project period shall support activities that require the use be retained by the recipient and, in ac- of equipment, buildings or land, nor- cordance with Federal awarding agency mally only depreciation or use charges regulations or the terms and condi- for equipment and buildings may be tions of the award, shall be used in one made. However, the full value of equip- or more of the ways listed in the fol- ment or other capital assets and fair lowing. rental charges for land may be allowed, (1) Added to funds committed to the provided that the Federal awarding project by the Federal awarding agency agency has approved the charges. and recipient and used to further eligi- (h) The value of donated property ble project or program objectives. shall be determined in accordance with (2) Used to finance the non-Federal the usual accounting policies of the re- share of the project or program. cipient, with the following qualifica- (3)Deducted from the total project or tions. (1) The value of donated land and theegnetram allowable cost in which the net allowable costs on which the buildings shall not exceed its fair mar- Federal share of costs is based. ket value at the time of donation to (c) When an agency authorizes the the recipient as established by an inde- disposition of program income as de- pendent appraiser (e.g., certified real scribed in paragraphs (b)(1) or (b)(2) of property appraiser or General Services this section, program income in excess Administration representative) and of any limits stipulated shall be used in certified by a responsible official of the recipient. accordance with paragraph (b)(3) of this section. (2) The value of donated equipment (d) In the event that the Federal shall not exceed the fair market value awarding agency does not specify in its of equipment of the same age and con- regulations or the terms and condi- dition at the time of donation. tions of the award how program income (3) The value of donated space shall is to be used, paragraph (b)(3) of this not exceed the fair rental value of corn- section shall apply automatically to parable space as established by an inde- all projects or programs except re- pendent appraisal of comparable space search. For awards that support re- and facilities in a privately-owned search, paragraph (b)(1) of this section building in the same locality. shall apply automatically unless the (4) The value of loaned equipment awarding agency indicates in the terms shall not exceed its fair rental value. and conditions another alternative on (5) The following requirements per- the award or the recipient Is subject to taro to the recipient's supporting special award conditions, as indicated records for in-kind contributions from in§215.14. third parties. (e) Unless Federal awarding agency (i) Volunteer services shall be docu- regulations or the terms and condi- mented and, to the extent feasible, sup- tions of the award provide otherwise. ported by the same methods used by recipients shall have no obligation to the recipient for its own employees. the Federal Government regarding pro- (ii) The basis for determining the gram income earned after the end of valuation for personal service, mate- the project period. rial, equipment, buildings and land (f) If authorized by Federal awarding shall be documented. agency regulations or the terms and §215.24 Program income. conditions of the award, costs incident to the generation of program income (a) Federal awarding agencies shall may be deducted from gross income to apply the standards set forth in this determine program income, provided section in requiring recipient organiza- these costs have not been charged to tions to account for program income the award. 88 OMB Circulars and Guidance §215.25 (g)Proceeds from the sale of property (6) The inclusion, unless waived by shall be handled in accordance with the the Federal awarding agency, of costs requirements of the Property Stand- that require prior approval in accord- ards(see§215.30 through§215.37). ance with any of the following, as ap- (h) Unless Federal awarding agency plicable: regulations or the terms and condition (i) 2 CFR part 220, "Cost Principles of the award provide otherwise, recipi- for Educational Institutions (OMB Cir- ents shall have no obligation to the cular A-21);" Federal Government with respect to (ii) 2 CFR part 230, "Cost Principles program income earned from license for Non-Profit Organizations(OMB Cir- fees and royalties for copyrighted ma- cular A 122);" terial, patents, patent applications, (iii) 45 CFR part 74, Appendix E, trademarks, and inventions produced "Principles for Determining Costs Ap- under an award. However, Patent and plicable to Research and Development Trademark Amendments (35 U.S.C. 18) under Grants and Contracts with Hos- apply to inventions made under an ex- pitals;"and perimental, developmental, or research (iv) 48 CFR part 31, "Contract Cost award. Principles and Procedures." pro- (7) The transfer of funds allotted for §215.25 Revision of budget and grain plans. training allowances (direct payment to trainees) to other categories of ex- (a) The budget plan is the financial pense. expression of the project or program as (8) Unless described in the applica- approved during the award process. It tion and funded in the approved may include either the Federal and awards, the subaward, transfer or con- non-Federal share, or only the Federal tracting out of any work under •an share, depending upon Federal award- award. This provision does not apply to ing agency requirements. It shall be re- the purchase of supplies, material, lated to performance for program eval- equipment or general support services. uation purposes whenever appropriate. (b) Recipients are required to reportother prior approval require- (b) for specific items may be i be im- - deviations from budget and program posed unless a deviation has been ap- plans, and request prior approvals for proved by OMB. budget and program plan revisions, in (e) Except for requirements listed in accordance with this section. paragraphs (c)(1) and (c)(4) of this see- (c) For nonconstruction awards, re- tion, Federal awarding agencies are au- cipients shall request prior approvals thorized, at their option, to waive cost- from Federal awarding agencies for one related and administrative prior writ- or more of the following program or ten approvals required by 2 CFR parts budget related reasons. 220 and 230 (OMB Circulars A-21 and A- (1) Change in the scope or the objec- 122). Such waivers may include author- tive of the project or program (even if izing recipients to do any one or more there is no associated budget revision of the following. requiring prior written approval). (1) Incur pre-award costs 90 calendar (2) Change in a key person specified days prior to award or more than 90 in the application or award document. calendar days with the prior approval (3) The absence for more than three of the Federal awarding agency. All months, or a 25 percent reduction in pre-award costs are incurred at the re- time devoted to the project, by the ap- cipient's risk (i.e., the Federal award- proved project director or principal in- hag agency is under no obligation to re- vestigator. imburse such costs if for any reason (4) The need for additional Federal the recipient does not receive an award funding. or if the award is less than anticipated (5) The transfer of amounts budgeted and inadequate to cover such costs). for indirect costs to absorb increases in (2) Initiate a one-time extension of direct costs, or vice versa, if approval the expiration date of the award of up is required by the Federal awarding to 12 months unless one or more of the agency. following conditions apply. For one- 89 §215.26 2 CFR Ch. II (1-1-12 Edition) time extensions, the recipient must no- (3) A revision is desired which In- tify the Federal awarding agency in volves specific costs for which prior writing with the supporting reasons written approval requirements may be and revised expiration date at least; 10 imposed consistent with applicable days before the expiration date speci- OMB cost principles listed in§215.27. fied in the award. This one-time exten- (1) No other prior approval require- sion may not be exercised merely for ments for specific items may be im- the purpose of using unobligated bal- posed unless a deviation has been ap- ances. proved by OMB. (i)The terms and conditions of award (j) When a Federal awarding agency prohibit the extension. makes an award that provides support (ii)The extension requires additional for both construction and nonconstruc- Federal funds. tion work, the Federal awarding agen- (iii) The extension involves any cy may require the recipient to request change in the approved objectives or prior approval from the Federal award- scope of the project. ing agency before making any fund or (3) Carry forward unobligated bal- budget transfers between the two types ances to subsequent funding periods. of work supported. (4) For awards that support research, (k) For both construction and non- unless the Federal awarding agency construction awards, Federal awarding provides otherwise in the award or in agencies shall require recipients to no- the agency's regulations, the prior ap- tify the Federal awarding agency in proval requirements described in this writing promptly whenever the amount paragraph(e) are automatically waived of Federal authorized funds is expected (i.e., recipients need not obtain such to exceed the needs of the recipient for prior approvals) unless one of the con- the project period by more than $5000 ditions included in paragraph (e)(2) ap- or five percent of the Federal award, plies. whichever is greater. This notification (f) The Federal awarding agency shall not be required if an application may, at its option, restrict the transfer for additional funding is submitted for of funds among direct cost categories a continuation award. or programs, functions and activities (1) When requesting approval for for awards in which the Federal share budget revisions, recipients shall use of the project exceeds $100,000 and the the budget forms that were used in the cumulative amount of such transfers application unless the Federal award- exceeds or is expected to exceed 10 per- ing agency indicates a letter of request cent of the total budget as last ap- suffices, proved by the Federal awarding agen- (m) Within 30 calendar days from the cy. No Federal awarding agency shall date of receipt of the request for budg permit a transfer that would cause any et revisions, Federal awarding agencies Federal appropriation or part thereof shall review the request and notify the to be used for purposes other than recipient whether the budget revisions those consistent with the original in- have been approved. If the revision is tent of the appropriation. still under consideration at the end of (g)All other changes to nonconstruc- 30 calendar days, the Federal awarding tion budgets, except for the changes de- agency shall inform the recipient in scribed in paragraph (j) of this section, writing of the date when the recipient do not require prior approval. may expect the decision. (h) For construction awards, recipi- [69 FR 26281, May 11, 2004. as amended at 70 eats shall request prior written ap- FR 51880,Aug.31,2005] proval promptly from Federal awarding agencies for budget revisions whenever §215.26 Non-Federal audits. paragraphs (h)(1), (2) or (3) of this sec- (a) Recipients and subrecipients that tion apply. are institutions of higher education or (1) The revision results from changes other non-profit organizations (includ- in the scope or the objective of the ing hospitals) shall be subject to the project or program. audit requirements contained in the (2) The need arises for additional Single Audit Act Amendments of 1996 Federal funds to complete the project. (31 U.S.C, 7501-7507) and revised OMB 90 OMB Circulars and Guidance §215.29 Circular A-133, "Audits of States, visions of the Federal Acquisition Reg- Local Governments, and Non-Profit Or- ulation(FAR)at 48 CFR part 31. ganizations." (b) State and local governments shall PO FR 51880,Aug.31,2005) be subject to the audit requirements §215.28 Period of availability of funds. contained in the Single Audit Act Amendments of 1996 (31 U.S.C. 7501 Where a funding period is specified, a 7507) and revised OMB Circular A 133, recipient may charge to the grant only "Audits of States, Local Governments, allowable costs resulting from obliga- and Non-Profit Organizations." tions incurred during the funding author- (c) pe- For profit hospitals not covered riod and any pre-award costs by the audit provisions of revised OMB lzed by the Federal awarding agency. Circular A-133 shall be subject to the §215.29 Conditional exemptions. audit requirements of the Federal awarding agencies. (a) OMB authorizes conditional ex- (d) Commercial organizations shall emption from OMB administrative re- be subject to the audit requirements of quiremertts and cost principles circu- the Federal awarding agency or the lars for certain Federal programs with prime recipient as incorporated into statutorily-authorized consolidated the award document. planning and consolidated administra- tive funding, that are identified by a §215.27 Allowable costs. Federal agency and approved by the head of the Executive department or For each kind of recipient, there is a establishment. A Federal agency shall set of Federal principles for deter- consult with OMB during its consider- mining allowable costs. Allowability of ation of whether to grant such an ex- costs shall be determined in accord- emption. ance with the cost principles applicable (b) To promote efficiency in State to the entity incurring the costs. Thus, and local program administration, allowability of costs incurred by State, when Federal non-entitlement pro- local or federally-recognized Indian grams with common purposes have spe- tribal governments is determined in cific statutorily-authorized consoli- accordance with the provisions of 2 dated planning and consolidated ad- CFR part 225, "Cost Principles for ministrative funding and where most of State, Local, and Indian Tribal Govern- the State agency's resources come ments(OMB Circular A-87." The allow- from non-Federal sources, Federal ability of costs incurred by non-profit agencies may exempt these covered organizations is determined in accord- State-administered, non-entitlement once with the provisions of 2 CFR part grant programs from certain OMB 230, "Cost Principles for Non-Profit Or- grants management requirements. The ganizations(OMB Circular A-122)." The exemptions would be from: allowability of costs incurred by insti- (1) The requirements in 2 CFR part tutions of higher education is deter- 225, "Cost Principles for State, Local, mined in accordance with the provi- and Indian Tribal Governments (OMB sions of 2 CFR part 220, "Cost Prin- Circular A-87)" other than the ciples for Educational Institutions allocability of costs provisions that are (OMB Circular A-21)."The allowability contained in subsection C.3 of appendix of costs incurred by hospitals is deter- A to that part; mined in accordance with the provi- (2) The requirements in 2 CFR part sions of appendix E of 45 CFR part 74, 220, "Cost Principles for Educational "Principles for Determining Costs Ap- Institutions (OMB Circular A 21)" plicable to Research and Development other than the allocability of costs pro- Under Grants and Contracts with Hos- visions that are contained in paragraph pitals." The allowability of costs in- C.4 in section C of the appendix to that curred by commercial organizations part; and those non-profit organizations list- (3) The requirements in 2 CFR part ed in Attachment C to Circular A-122 is 230, "Cost Principles for Non-Profit Or- determined in accordance with the pro- ganizations (OMB Circular A-122)" 91 §215.30 2 CFR Ch. II (1-1-12 Edition) other than the allocability of costs pro- §215.31 Insurance coverage. visions that are in paragraph A.4 in Recipients shall, at a minimum, pro- section A of appendix A to that part; vide the equivalent insurance coverage (4) The administrative requirements for real provisions of part 215 (OMB Circular A- property and dquipmenptrovided ac 110, "Uniform Administrative Require- to quiredrwith owned funds as recipient. nt. to property owned by the recipient. ments for Grants and Agreements with Federally-owned property need not be Institutions of Higher Education, Hos- insured unless required by the terms pitals, and Other Non-Profit Organiza- and conditions of the award. tions,");and (5) The agencies' grants management §215.32 Real property. common rule(see§215.5)_ Each Federal awarding agency shall (c) When a Federal agency provides prescribe requirements for recipients this flexibility, as a prerequisite to a concerning the use and disposition of State's exercising this option, a State real property acquired in whole or in must adopt its own written fiscal and part under awards. Unless otherwise administrative requirements for ex- provided by statute, such require- pending and accounting for all funds, ments, at a minimum, shall contain which are consistent with the provi- the following. sions of 2 CFR part 225, "Cost Prin- (a)Title to real property shall vest in ciples for State, Local, and Indian the recipient subject to the condition Tribal Governments (OMB Circular A- that the recipient shall use the real 87)" and extend such policies to all sub- property for the authorized purpose of recipients.These fiscal and administra- the project as long as it is needed and tive requirements must be sufficiently shall not encumber the property with- specific to ensure that: funds are used out approval of the Federal awarding in compliance with all applicable Fed- agency. oral statutory and regulatory provi- (b)The recipient shall obtain written sions, costs are reasonable and nec- approval by the Federal awarding agen- essary for operating these programs, cy for the use of real property in other and funds are not be used for general federally-sponsored projects when the expenses required to carry out other recipient determines that the property responsibilities of a State or its sub- is no longer needed for the purpose of recipients. the original project. Use in other projects shall be limited to those under [69 FR 26281, May 11, 2004, as amended at 70 federally-sponsored projects (i.e., FR 51881,Aug.31,2005] awards) or programs that have pur- PROPERTY STANDARDS poses consistent with those authorized for support by the Federal awarding' §215.30 Purpose of property stand- agency. ards. (c) When the real property is no Sections 215.31 through 215.37 set longer needed as provided in para- forth uniform standards governing graphs (a) and (b) of this section, the management and disposition of prop- recipient shall request disposition in erty furnished by the Federal Govern- age structions from the Federal awarding a agency or its successor Federal award- ment whose cost was charged to a ing agency. The Federal awarding project supported by a Federal award. agency shall observe one or more of the Federal awarding agencies shall re- following disposition instructions. quire recipients to observe these stand- (1)The recipient may be permitted to ards under awards and shall not impose retain title without further obligation additional requirements, unless specifi- to the Federal Government after it cally required by Federal statute. The compensates the Federal Government recipient may use its own property for that percentage of the current fair management standards and procedures market value of the attrib- provided it observes the provisions ofue property oni §215.31 through§215.37. the pr to the Federal participation in the project. OMB Circulars and Guidance §215.34 (2) The recipient may be directed to (b) Exempt property. When statutory sell the property under guidelines pro- authority exists, the Federal awarding vided by the Federal awarding agency agency has the option to vest title to and pay the Federal Government for property acquired with Federal funds that percentage of the current fair in the recipient without further obliga- market value of the property attrib- tion to the Federal Government and utable to the Federal participation in under conditions the Federal awarding the project (after deducting actual and agency considers appropriate. Such reasonable selling and fix-up expenses, property is "exempt property." Should if any, from the sales proceeds). When a Federal awarding agency not estab- the recipient is authorized or required lish conditions, title to exempt prop- to sell the property, proper sales proce- erty upon acquisition shall vest in the dures shall be established that provide recipient without further obligation to for competition to the extent prac- the Federal Government. ticable and result in the highest pos- sible return. §215.34 Equipment. (3) The recipient may be directed to (a) Title to equipment acquired by a transfer title to the property to the recipient with Federal funds shall vest Federal Government or to an eligible in the recipient, subject to conditions third party provided that, in such of this section. cases, the recipient shall be entitled to (b) The recipient shall not use equip- compensation for its attributable per- ment acquired with Federal funds to tentage of the current fair market provide services to non-Federal outside value of the property. organizations for a fee that is less than private companies charge for equiva- §215.33 Federally-owned and exempt lent services, unless specifically au- property. thorized by Federal statute, for as long (a) Federally-owned property. (1) Title as the Federal Government retains an Interest in the equipment. to federally-owned property remains equip- vested in the Federal Government. Re- (c) The recipient shall use the cipients shall submit annually an in- ment in the project or program for need- ventory listing of federally-owned which it ewrs or acquired as long aso pro- property in their custody to the Fed- ed, whethercontinuesnotbe project byr ed- eral awarding agency. Upon completion gram ad hto ll supportedt encumber the of the award or when the property is no eral funds and shall not the Fed- longer needed, the recipient shall re- propertyeral awarding dwing agency.ut apy When of the nger port the property to the Federal award- needed for the no loo pro- ing agency for further Federal agency ram, e ecioriginal project ore uutilization. gram, the recipient shall use the equip- ment in connection with its other fed- (2) If the Federal awarding agency erally-sponsored activities, in the fol- has no further need for the property, it lowing order of priority: shall be declared excess and reported to (1) Activities sponsored by the Fed- the General Services Administration, eral awarding agency which funded the unless the Federal awarding agency original project, then has statutory authority to dispose of (2)Activities sponsored by other Fed- the property by alternative methods eral awarding agencies. (e.g., the authority provided by the (d) During the time that equipment Federal Technology Transfer Act (15 is used on the project or program for U.S.C. 3710 (I)) to donate research which it was acquired, the recipient equipment to educational and non-prof- shall make it available for use on other it organizations in accordance with projects or programs if such other use E.O. 12821, "Improving Mathematics will not interfere with the work on the and Science Education in Support of project or program for which the equip- the National Education Goals" (57 FR ment was originally acquired. First 54285, 3 CFR, 1992 Comp., p. 323)). Ap- preference for such other use shall be propriate instructions shall be issued given to other projects or programs to the recipient by the Federal award- sponsored by the Federal awarding ing agency. agency that financed the equipment; 93 §215.34 2 CFR Ch. 11 (1-1-12 Edition) second preference shall be given to ferences between quantities deter- projects or programs sponsored by mined by the physical inspection and other Federal awarding agencies. If the those shown in the accounting records equipment is owned by the Federal shall be investigated to determine the Government, use on other activities causes of the difference. The recipient not sponsored by the Federal Govern- shall, in connection with the inven- ment shall be permissible if authorized tory, verify the existence, current uti- by the Federal awarding agency. User lization, and continued need for the charges shall be treated as program in- equipment_ come. (4) A control system shall be in effect (e) When acquiring replacement to insure adequate safeguards to pre- equipment, the recipient may use the vent loss, damage, or theft of the equipment to be replaced as trade-in or equipment. Any loss, damage, or theft sell the equipment and use the pro- of equipment shall be investigated and ceeds to offset the costs of the replace- fully documented; if the equipment was ment equipment subject to the ap- owned by the Federal Government, the proval of the Federal awarding agency. recipient shall promptly notify the (f) The recipient's property manage- Federal awarding agency. ment standards for equipment acquired (5) Adequate maintenance procedures with Federal funds and federally-owned shall be implemented to keep the equipment shall include all of the fol- equipment in good condition. lowing: (1) Equipment records shall be main- (6) Where the recipient is authorized tained accurately and shall include the or required to sell the equipment, prop- following information. er sales procedures shall be established (1)A description of the equipment. which provide for competition to the (li) Manufacturer's serial number, extent practicable and result in the model number, Federal stock number, highest possible return. national stock number, or other identi- (g) When the recipient no longer fication number. needs the equipment, the equipment (iii) Source of the equipment, includ- may be used for other activities in ac- ing the award number. cordance with the following standards. (iv) Whether title vests in the recipi- For equipment with a current per unit ent or the Federal Government. fair market value of$5000 or more, the (v) Acquisition date (or date re- recipient may retain the equipment for ceived, if the equipment was furnished other uses provided that compensation by the Federal Government)and cost. is made to the original Federal award- (vi) Information from which one can ing agency or its successor. The calculate the percentage of' Federal amount of compensation shall be corn- participation in the cost of the equip- puted by applying the percentage of ment (not applicable to equipment fur- Federal participation in the cost of the nished by the Federal Government). original project or program to the cur- (vii) Location and condition of the rent fair market value of the equip- equipment and the date the informa- ment. If the recipient has no need for tion was reported. the equipment, the recipient shall re- (viii)Unit acquisition cost. quest disposition instructions from the (ix) Ultimate disposition data, in- Federal awarding agency. The Federal eluding date of disposal and sales price awarding agency shall determine or the method used to determine cur- whether the equipment can be used to rent fair market value where a recipi- meet the agency's requirements. If no ent compensates the Federal awarding requirement exists within that agency, agency for its share. the availability of the equipment shall (2) Equipment owned by the Federal be reported to the General Services Ad- Government shall be identified to indi- ministration by the Federal awarding cate Federal ownership. agency to determine whether a require- (3)A physical inventory of equipment ment for the equipment exists in other shall be taken and the results rec- Federal agencies. The Federal award- onciled with the equipment records at ing agency shall issue instructions to least once every two years. Any dif- the recipient no later than 120 calendar OMB Circulars and Guidance §215.36 days after the recipient's request and the equipment shall be subject to the the following procedures shall govern, provisions for federally-owned equip- (1) If so instructed or if disposition ment. instructions are not issued within 120 calendar days after the recipient's re- §215.35 Supplies and other expend- quest, the recipient shall sell the able property. equipment and reimburse the Federal (a) Title to supplies and other ex- awarding agency an amount computed pendable property shall vest in the re- by applying to the sales proceeds the cipient upon acquisition. If there is a percentage of Federal participation in residual inventory of unused supplies the cost of the original project or pro- exceeding $5000 in total aggregate gram. However, the recipient shall be value upon termination or completion permitted to deduct and retain from of the project or program and the sup- the Federal share$500 or ten percent of the proceeds, whichever is less, for the plies are not needed for any other fed recipient's selling and handling ex- erally-sponsored project or program, penses. the recipient shall retain the supplies (2) If the recipient is instructed to for use on non-Federal sponsored ac- ship the equipment elsewhere, the re- tivities or sell them, but shall, in ei- cipient shall be reimbursed by the Fed- ther case, compensate the Federal Gov- eral Government by an amount which ernment for its share. The amount of is computed by applying the percent- compensation shall be computed in the age of the recipient's participation in same manner as for equipment. the cost of the original project or pro- (b) The recipient shall not use sup- gram to the current fair market value plies acquired with Federal funds to of the equipment, plus any reasonable provide services to non-Federal outside shipping or interim storage costs in- organizations for a fee that is less than curved. private companies charge for equiva- (3) If the recipient is instructed to lent services, unless specifically au- otherwise dispose of the equipment, the thorized by Federal statute as long as recipient shall be reimbursed by the the Federal Government retains an in- Federal awarding agency for such costs terest in the supplies. incurred in its disposition, (4)The Federal awarding agency may §215.36 Intangible property. reserve the right to transfer the title (a) The recipient may copyright any to the Federal Government or to a work that is subject to copyright and third party named by the Federal Gov- was developed, or for which ownership ernment when such third party is oth- was purchased, under an award. The erwise eligible under existing statutes. Federal awarding agency(ies) reserve a Such transfer shall be subject to the royalty-free, nonexclusive and irrev- following standards. ocable right to reproduce, publish, or (i) The equipment shall be appro- otherwise use the work for Federal pur- priately identified in the award or oth- erwise made known to the recipient in poses, and to authorize others to do so. writing. (b) Recipients are subject to applica- (ii) The Federal awarding agency ble regulations governing patents and shall issue disposition instructions inventions, including government-wide within 120 calendar days after receipt regulations issued by the Department of a final inventory. The final 'riven- of Commerce at 37 CFR part 401, tory shall list all equipment acquired "Rights to Inventions Made by Non- with grant funds and federally-owned profit Organizations and Small Busi- equipment. If the Federal awarding ness Firms Under Government Grants, agency fails to issue disposition in- Contracts and Cooperative Agree- structions within the 120 calendar day ments." period, the recipient shall apply the (c) The Federal Government has the standards of this section, as appro- right to: priate. (1) Obtain, reproduce, publish or oth- (iii) When the Federal awarding erwise use the data first produced agency exercises its right to take title, under an award. 95 §215.37 2 CFR Ch. II (1-1-12 Edition) (2)Authorize others to receive, repro- (B) A Federal agency publicly and of- duce, publish, or otherwise use such ficially cites the research findings in data for Federal purposes. support of an agency action that has (d) (1) In addition, in response to a the force and effect of law. Freedom of Information Act (FOIA) re- (iii) Used by the Federal Government quest for research data relating to pub- in developing an agency action that lished research findings produced under has the force and effect of law is de- an award that was used by the Federal fined as when an agency publicly and Government in developing an agency officially cites the research findings in action that has the force and effect of support of an agency action that has law, the Federal awarding agency shall the force and effect of law. request, and the recipient shall pro- (e) Title to intangible property and vide, within a reasonable time, the re debt instruments acquired under an search data so that they can be made award or subaward vests upon acquisi- available to the public through the pro- tion in the recipient. The recipient cedures established under the FOIA. If shall use that the Federal awarding agency obtains property for the origi- the research data solely in response to pally authorized purpose, and the re- a FOIA request,the agency may charge cipient shall not encumber the prop the requester a reasonable fee equaling erty without approval of the Federal the full incremental cost of obtaining awarding agency. When no longer need- the research data. This fee should re- ed for the originally authorized pur- flect costs incurred by the agency, the pose, disposition of the intangible prop- recipient, and the applicable subrecipi- erty shall occur in accordance with the ents. This fee is in addition to any fees provisions of§215.34(g). the agency may assess under the FOIA [69 FR 26281, May 11, 2004, as amended at 70 (5 U.S.C.552(a)(4)(A)). FR 51881,Aug.31,2005] (2) The following definitions apply for purposes of paragraph (d) of this §215.37 Property trust relationship. section: Real property, equipment, intangible (i)Research data is defined as the re- property and debt instruments that are corded factual material commonly ac- acquired or improved with Federal cepted in the scientific community as funds shall be held in trust by the re- necessary to validate research findings, cipient as trustee for the beneficiaries but not any of the following: P pi- of the project or program under which nary analyses, drafts of scientific a- pers, plans for future research, peer re the property was acquired or improved.. views, or communications with col- Agencies may require recipients to leagues. This "recorded" material ex- record liens or other appropriate no eludes physical objects(e.g., laboratory tices of record to indicate that per samples). Research data also do not in- sonal or real property has been ac- elude: quired or Improved with Federal funds (A) Trade secrets, commercial infor- and that use and disposition conditions mation, materials necessary to be held apply to the property. confidential by a researcher until they PROCUREMENT STANDARDS are published, or similar information which is protected under law; and (B) Personnel and medical informa- §215.40 Purpose of procurement tion and similar information the dis- closure standards. of which would constitute a Sections 215.41 through 215.48 set clearly unwarranted invasion of per- forth standards for use by recipients in sonal privacy, such as information that establishing procedures for the pro- could be used to identify a particular curement of supplies and other expend- person in a research study. able property,equipment, real property (ii) Published is defined as either and other services with Federal funds. when: These standards are furnished to en- (A) Research findings are published sure that such materials and services in a peer-reviewed scientific or tech- are obtained in an effective manner nical journal; or and in compliance with the provisions 96 OMB Circulars and Guidance §215.44 of applicable Federal statutes and ex- §215.43 Competition. ecutive orders. No additional procure- All procurement transactions shall ment standards or requirements shall be conducted in a manner to provide, be imposed by the Federal awarding to the maximum extent practical, open agencies upon recipients, unless spe- and free competition. The recipient cifically required by Federal statute or shall be alert to organizational con- executive order or approved by OMB. filets of interest as well as noncompeti- §215.41 Recipient responsibilities. tive practices among contractors that Themay restrict or eliminate competition standards contained in this sec- or otherwise restrain trade. In order to tion do not relieve the recipient of the ensure objective contractor perform- contractual responsibilities arising ance and eliminate unfair competitive under its contract(s). The recipient is advantage, contractors that develop or the responsible authority, without re- draft specifications, requirements, course to the Federal awarding agency, statements of work, invitations for regarding the settlement and satisfac- bids and/or requests for proposals shall tion of all contractual and administra- be excluded from competing for such tive issues arising out of procurements procurements.Awards shall be made to entered into in support of an award or the bidder or offeror whose bid or offer other agreement. This includes dis- is responsive to the solicitation and is putes, claims, protests of award, source most advantageous to the recipient, evaluation or other matters of a con- price, quality and other factors consid- tractual nature. Matters concerning ered. Solicitations shall clearly set violation of statute are to be referred forth all requirements that the bidder to such Federal, State or local author- or offeror shall fulfill in order for the ity as may have proper jurisdiction. bid or offer to be evaluated by the re- cipient. Any and all bids or offers may be rejected when it is in the recipient's The recipient shall maintain written interest to do so. standards of conduct governing the performance of its employees engaged §215.44 Procurement procedures. in the award and administration of (a)All recipients shall establish writ- contracts. No employee, officer, or ten procurement procedures. These agent shall participate in the selection, procedures shall provide for, at a min- award, or administration of a contract imum, that paragraphs (a)(1), (2) and supported by Federal funds if a real or (3)of this section apply. apparent conflict of interest would be (I) Recipients avoid purchasing un- involved. Such a conflict would arise necessary items. when the employee, officer, or agent, (2) Where appropriate, an analysis is any member of his or her immediate made of lease and purchase alter- family, his or her partner, or an orga- natives to determine which would be nization which employs or is about to the most economical and practical pro- employ any of the parties indicated curement for the Federal Government. herein,has a financial or other interest (3) Solicitations for goods and serv- in the firm selected for an award. The ices provide for all of the following. officers, employees, and agents of the (i) A clear and accurate description recipient shall neither solicit nor ac- of the technical requirements for the cept gratuities, favors, or anything of material, product or service to be pro- monetary value from contractors, or cured. In competitive procurements, parties to subagreements. However, re- such a description shall not contain cipients may set standards for situa- features which unduly restrict coin- tiona in which the financial interest is petition. not substantial or the gift is an unso- (ii) Requirements which the bidder/ licited item of nominal value. The offeror must fulfill and all other fac- standards of conduct shall provide for tors to be used in evaluating bids or disciplinary actions to be applied for proposals. violations of such standards by offi- (iii) A description, whenever prac- cers, employees, or agents of the re- ticable, of technical requirements in cipient. terms of functions to be performed or 97 §215.45 2 CFR Ch. II (1-1-12 Edition) performance required, including the propriate for the particular procure- range of acceptable characteristics or ment and for promoting the best inter- minimum acceptable standards. est of the program or project involved. (iv) The specific features of "brand The "cost-plus-a-percentage-of-cost" name or equal" descriptions that bid- or "percentage of construction cost" ders are required to meet when such methods of contracting shall not be items are included in the solicitation. used. (v) The acceptance, to the extent (d)Contracts shall be made only with practicable and economically feasible, responsible contractors who possess of products and services dimensioned in the potential ability to perform suc- the metric system of measurement. cessfully under the terms and condi- (vi) Preference, to the extent prac- tions of the proposed procurement. ticable and economically feasible, for Consideration shall be given to such products and services that conserve matters as contractor integrity, record natural resources and protect the envi- of past performance, financial and ronment and are energy efficient. technical resources or accessibility to (b) Positive efforts shall be made by other necessary resources. In certain recipients to utilize small businesses, circumstances, contracts with certain minority-owned firms, and women's parties are restricted by agencies' im- business enterprises, whenever pos- plementation of E.O.s 12549 and 12689, sible. Recipients of Federal awards "Debarment and Suspension." shall take all of the following steps to (e)Recipients shall, on request, make further this goal. available for the Federal awarding (1) Ensure that small businesses, mi- agency, pre-award review and procure- nority-owned firms, and women's buss- ment documents, such as request for ness enterprises are used to the fullest proposals or invitations for bids, inde- extent practicable. pendent cost estimates, etc., when any (2) Make information on forthcoming of the following conditions apply. opportunities available and arrange (1) A recipient's procurement proce- time frames for purchases and con- dures or operation fails to comply with tracts to encourage and facilitate par- the procurement standards in the Fed- ticipation by small businesses, minor- eral awarding agency's implementation ity-owned firms, and women's business of this part. enterprises. (2) The procurement is expected to (3) Consider in the contract process exceed the small whether firms competing for larger purchase threshold contracts intend to subcontract with fixed$25,000)a 41 U.S.C. 403 awarded(currently small businesses, minority-owned competitionand is to be without firms, and women's business enter- or only one bid or offer is prises. received in response to a solicitation, (4) Encourage contracting with con- (3) The procurement, which is ex- sortiums of small businesses, minority- thresh to exceed the small purchase owned firms and women's business en threshold, specifies a "brand name" terprises when a contract is too large product. for one of these firms to handle individ- (4) The proposed award over the ually. small purchase threshold is to be (5)Use the services and assistance, as awarded to other than the apparent appropriate, of such organizations as low bidder under a sealed bid procure- the Small Business Administration and ment. the Department of Commerce's Minor- (5) A proposed contract modification ity Business Development Agency in changes the scope of a contract or in- the solicitation and utilization of creases the contract amount by more small businesses, minority-owned firms than the amount of the small purchase and women's business enterprises. threshold. (c)The type of procuring instruments §215.46 Cost and price analysis. used(e.g., fixed price contracts, cost re- imbursable contracts, purchase orders, Some form of cost or price analysis and incentive contracts)shall be deter- shall be made and documented in the mined by the recipient but shall be ap- procurement files in connection with sa OMB Circulars and Guidance §215.48 every procurement action. Price anal- conditions where the contract may be ysis may be accomplished in various terminated because of circumstances ways, including the comparison of beyond the control of the contractor. price quotations submitted, market (c) Except as otherwise required by prices and similar indicia, together statute, an award that requires the with discounts. Cost analysis is the re- contracting (or subcontracting) for view and evaluation of each element of construction or facility improvements cost to determine reasonableness, shall provide for the recipient to follow allocability and allowability. its own requirements relating to bid §21b.46 Procurement records. guarantees, performance bonds, and payment bonds unless the construction Procurement records and files for contract or subcontract exceeds purchases in excess of the small pur- $100,000. For those contracts or sub- chase threshold shall include the fol- contracts exceeding $100,000, the Fed- lowing at a minimum: eral awarding agency may accept the (a)Basis for contractor selection; bonding policy and requirements of the (b) Justification for lack of competi- recipient, provided the Federal award- tion when competitive bids or offers ing agency has made a determination are not obtained;and that the Federal Government's interest (c)Basis for award cost or price. is adequately protected. If such a§215.47 Contract administration, de- termination has not been made, the minimum requirements shall be as fol- A system for contract administration lows. shall be maintained to ensure con- (1) A bid guarantee from each bidder tractor conformance with the terms, equivalent to five percent of the bid conditions and specifications of the price. The "bid guarantee" shall con- contract and to ensure adequate and sist of a firm commitment such as a timely follow up of all purchases. Re- bid bond, certified check, or other ne- cipients shall evaluate contractor per- gotiable instrument accompanying a formance and document, as appro- bid as assurance that the bidder shall, priate, whether contractors have met upon acceptance of his bid, execute the terms, conditions and specifica- such contractual documents as may be Lions of the contract, required within the time specified. §215.48 Contract provisions. (2)A performance bond on the part of P the contractor for 100 percent of the The recipient shall include, in addi- contract price. A "performance bond" Lion to provisions to define a sound and is one executed in connection with a complete agreement, the following pro- contract to secure fulfillment of all the visions in all contracts. The following contractor's obligations under such provisions shall also be applied to sub- contract. contracts. (3)A payment bond on the part of the (a) Contracts in excess of the small contractor for 100 percent of the con- purchase threshold shall contain con- tract price. A "payment bond" is one tractual provisions or conditions that executed in connection with a contract allow for administrative, contractual, to assure payment as required by stat- or legal remedies in instances in which ute of all persons supplying labor and a contractor violates or breaches the material in the execution of the work contract terms, and provide for such provided for in the contract. remedial actions as may be appro- (4) Where bonds are required in the priate. situations described herein, the bonds (b) All contracts in excess of the shall be obtained from companies hold- small purchase threshold shall contain ing certificates of authority as accept- suitable provisions for termination by able sureties pursuant to 31 CFR part the recipient, including the manner by 223, "Surety Companies Doing Business which termination shall be effected with the United States." and the basis for settlement. In addi- (d) All negotiated contracts (except tion, such contracts shall describe con- those for less than the small purchase ditions under which the contract may threshold) awarded by recipients shall be terminated for default as well as include a provision to the effect that 99 §215.50 2 CFR Ch. II (1-1-12 Edition) the recipient, the Federal awarding (d) When required, performance re- agency, the Comptroller General of the ports shall generally contain, for each United States, or any of their duly au- award, brief information on each of the thorized representatives, shall have ac- following. cess to any books, documents, papers (1) A comparison of actual accom- and records of the contractor which are plishments with the goals and objec- directly pertinent to a specific pro- tives established for the period, the gram for the purpose of making audits, findings of the investigator, or both. examinations, excerpts and tran- Whenever appropriate and the output scriptions. of programs or projects can be readily (e) All contracts, including small quantified, such quantitative data purchases, awarded by recipients and should be related to cost data for corn- their contractors shall contain the pro- putation of unit costs. curement provisions of appendix A to (2) Reasons why established goals this part, as applicable. were not met, if appropriate. (3) Other pertinent information in- REPORTS AND RECORDS eluding, when appropriate, analysis and explanation of cost overruns or §215.50 Purpose of reports and high unit costs. records. (e)Recipients shall not be required to Sections 215.51 through 215.53 set submit more than the original and two forth the procedures for monitoring copies of performance reports. and reporting on the recipient's finan (f) Recipients shall immediately no- cial and program performance and the tify the Federal awarding agency of de- necessary standard reporting forms. velopments that have a significant im They also set forth record retention re- pact on the award supported activities. quirements. Also, notification shall be given in the case of problems, delays, or adverse §215.51 Monitoring and reporting pro- conditions which materially impair the gram performance, ability to meet the objectives of the (a) Recipients are responsible for award. This notification shall include a managing and monitoring each project, statement of the action taken or con- templated, and any assistance needed program, subaward, function or aotiv- to resolve the situation. ity supported by the award. Recipients (g) Federal awarding agencies may shall monitor subawards to ensure sub- make site visits, as needed. recipients have met the audit require- (h) Federal awarding agencies shall ments as delineated in§215.26. comply with clearance requirements of (b) The Federal awarding agency 5 CFR part 1320 when requesting per- shall prescribe the frequency with formance data from recipients. which the performance reports shall be submitted. Except as provided in §215.52 Financial reporting. §215.51(f), performance reports shall (a)The following forms or such other not be required more frequently than forms as may be approved by OMB are quarterly or, less frequently than an- authorized for obtaining financial in- nually. Annual reports shall be due 90 formation from recipients. calendar days after the grant year; (1) SF-269 or SF-269A, Financial Sta- quarterly or semi-annual reports shall tus Report. be due 30 days after the reporting Pe- (i) Each Federal awarding agency riod.The Federal awarding agency may shall require recipients to use the SF- require annual reports before the anni- 269 or SF-269A to report the status of versary dates of multiple year awards funds for all nonconstruction projects in lieu of these requirements. The final or programs. A Federal awarding agen- performance reports are due 90 cal- cy may, however, have the option of endar days after the expiration or ter- not requiring the SF-269 or SF-269A mination of the award. when the SF-270, Request for Advance (c) If inappropriate, a final technical or Reimbursement, or SF-272, Report or performance report shall not be re- of Federal Cash Transactions, is deter- quired after completion of the project. mined to provide adequate information IOC OMB Circulars and Guidance §215.52 to meet its needs, except that a final days. Recipients shall provide short SF-269 or SF-269A shall be required at narrative explanations of actions taken the completion of the project when the to reduce the excess balances. SF-270 is used only for advances. (iv) Recipients shall be required to (ii) The Federal awarding agency submit not more than the original and shall prescribe whether the report shall two copies of the SF-272 15 calendar be on a cash or accrual basis. If the days following the end of each quarter. Federal awarding agency requires ac- The Federal awarding agencies may re- crual information and the recipient's quire a monthly report from those re- accounting records are not normally cipients receiving advances totaling $1 kept on the accrual basis, the recipient million or more per year. shall not be required to convert its ac- (v) Federal awarding agencies may counting system, but shall develop waive the requirement for submission such accrual information through best of the SF-272 for any one of the fol- estimates based on an analysis of the lowing reasons: documentation on hand. (A) When monthly advances do not (iii) The Federal awarding agency exceed $25,000 per recipient, provided shall determine the frequency of the that such advances are monitored Financial Status Report for each through other forms contained in this project or program, considering the size and complexity of the particular section; agen- project or program. However, the re- (B) If, in the Federal awarding port shall not be required more fre- con opinion, adequatethe tpieo accounting ex- quently than controls are to minimize quarterly or less fre- cessive Federal advances;or, quently than annually. A final report (C) When the electronic payment shall be required at the completion of mechanisms provide adequate data. the agreement. (iv) The Federal awarding agency (b) When the Federal awarding agen- shall require recipients to submit the cy needs additional information or SF-269 or SF-269A (an original and no more frequent reports, the following more than two copies) no later than 30 shall be observed. days after the end of each specified re- (1) When additional information is porting period for quarterly and semi- needed to comply with legislative re- annual reports, and 90 calendar days quirements, Federal awarding agencies for annual and final reports. Exten- shall issue instructions to require re- sions of reporting due dates may be op- cipients to submit such information proved by the Federal awarding agency under the "Remarks" section of the re- upon request of the recipient. ports. (2) SF-272, Report of Federal Cash (2) When a Federal awarding agency Transactions. determines that a recipient's account- (i) When funds are advanced to re- ing system does not meet the standards cipients the Federal awarding agency in §215.21, additional pertinent infor- shall require each recipient to submit mation to further monitor awards may the SF-272 and, when necessary, its be obtained upon written notice to the continuation sheet, SF-272a. The Fed- recipient until such time as the system eral awarding agency shall use this re- is brought up to standard. The Federal port to monitor cash advanced to re- awarding agency, in obtaining this in- cipients and to obtain disbursement in- formation, shall comply with report formation for each agreement with the clearance requirements of 5 CFR part recipients. 1320. (ii) Federal awarding agencies may (3) Federal awarding agencies are en- require forecasts of Federal cash re- couraged to shade out any line item on quirements in the "Remarks" section any report if not necessary. of the report. (4) Federal awarding agencies may (iii) When practical and deemed nec- accept the identical information from essary, Federal awarding agencies may the recipients in machine readable for- require recipients to report in the mat or computer printouts or elec- "Remarks" section the amount of cash tronic outputs in lieu of prescribed for- advances received in excess of three mats. 101 §215.53 2 CFR Ch. II (1-1-12 Edition) (5) Federal awarding agencies may (e)The Federal awarding agency, the provide computer or electronic outputs Inspector General, Comptroller Gen- to recipients when such expedites or eral of the United States, or any of contributes to the accuracy of report- their duly authorized representatives, mg. have the right of timely and unre- stricted access to any books, docu- *215.53 Retention and access require- ments, papers, or other records of re- ments for records. cipients that are pertinent to the (a) This section sets forth require- awards, in order to make audits, ex- ments for record retention and access aminations, excerpts, transcripts and to records for awards to recipients. copies of such documents. This right Federal awarding agencies shall not also includes timely and reasonable ac- impose any other record retention or cess to a recipient's personnel for the access requirements upon recipients, purpose of interview and discussion re- (b)Financial records, supporting doc- lated to such documents, The rights of uments, statistical records, and all access in this paragraph are not lim- other records pertinent to an award ited to the required retention period, shall be retained for a period of three but shall last as long as records are re- years from the date of submission of tained. the final expenditure report or, for (f) Unless required by statute, no awards that are renewed quarterly or Federal awarding agency shall place annually, from the date of the submis- restrictions on recipients that limit lion of the quarterly or annual finan- public access to the records of recipi- cial report, as authorized by the Fed- ents that are pertinent to an award, ex- eral awarding agency. The only excep- cept when the Federal awarding agency tions are the following. can demonstrate that such records (1)If any litigation, claim, or audit is shall be kept confidential and would started before the expiration of the 3- have been exempted from disclosure year period, the records shall be re- pursuant to the Freedom of Informa- tained until all litigation, claims or tion Act (5 U.S.C. 552) if the records audit findings involving the records had belonged to the Federal awarding have been resolved and final action agency. taken. (g) Indirect cost rate proposals, cost al- (2) Records for real property and locations plans, etc. Paragraphs (g)(1) equipment acquired with Federal funds and (g)(2) of this section apply to the shall be retained for 3 years after final following types of documents, and their disposition. supporting records: indirect cost rate (3)When records are transferred to or computations or proposals, cost alloca- maintained by the Federal awarding tion plans, and any similar accounting agency, the 3-year retention require- computations of' the rate at which a ment is not applicable to the recipient. particular group of costs is chargeable (4) Indirect cost rate proposals, cost (such as computer usage chargeback allocations plans, etc. as specified in rates or composite fringe benefit §215.53(g). rates). (c) Copies of original records may be (1) If submitted for negotiation. If the substituted for the original records if recipient submits to the Federal authorized by the Federal awarding awarding agency or the subrecipient agency. submits to the recipient the proposal, (d) The Federal awarding agency plan, or other computation to form the shall request transfer of certain basis for negotiation of the rate, then records to its custody from recipients the 3-year retention period for its sup- when it determines that the records porting records starts on the date of possess long term retention value. such submission. However, in order to avoid duplicate (2) If not submitted for negotiation. If recordkeeping, a Federal awarding the recipient is not required to submit agency may make arrangements for re- to the Federal awarding agency or the cipients to retain any records that are subrecipient is not required to submit continuously needed for joint use. to the recipient the proposal, plan, or 102 OMB Circulars and Guidance §215.62 other computation for negotiation pur- the terms and conditions of an award, poses, then the 3-year retention period whether stated in a Federal statute, for the proposal, plan, or other corn- regulation, assurance, application, or pu tation and its supporting records notice of award, the Federal awarding starts at the end of the fiscal year (or agency may, in addition to imposing other accounting period) covered by any of the special conditions outlined the proposal, plan, or other computa- in §215.14, take one or more of the fol- tion. lowing actions, as appropriate in the circumstances. TERMINATION AND ENFORCEMENT (1) Temporarily withhold cash pay- ments pending correction of the deli- enforcement. ciency by the recipient or more severe enforcement action by the Federal Sections 215.61 and 215.62 set forth awarding agency. uniform suspension, termination and (2) Disallow(that is, deny both use of enforcement procedures. funds and any applicable matching 1.215.61 `termination. credit for) all or part of the cost of the activity or action not in compliance. (a) Awards may be terminated in (3) Wholly or partly suspend or ter- whole or in part only if paragraphs minate the current award. (a)(1),(2)or(3)of this section apply. (4) Withhold further awards for the (1) By the Federal awarding agency, project or program. if a recipient materially fails to corn- (5) Take other remedies that may be ply with the terms and conditions of an legally available. award. (b)Hearings and appeals. In taking an (2) By the Federal awarding agency enforcement action, the awarding with the consent of the recipient, in agency shall provide the recipient an which case the two parties shall agree opportunity for hearing, appeal, or upon the termination conditions, in- other administrative proceeding to eluding the effective date and, in the which the recipient is entitled under case of partial termination, the portion any statute or regulation applicable to to be terminated. the action involved. (3) By the recipient upon sending to (c) Effects of suspension and termi- the Federal awarding agency written nation. Costs of a recipient resulting notification setting forth the reasons from obligations incurred by the re- for such termination, the effective cipient during a suspension or after date, and, in the case of partial termi- termination of an award are not allow- nation, the portion to be terminated. able unless the awarding agency ex- However, if the Federal awarding agen- pressly authorizes them in the notice cy determines in the case of partial of suspension or termination or subse- termination that the reduced or modi- quently. Other recipient costs during fied portion of the grant will not ac- suspension or after termination which complish the purposes for which the are necessary and not reasonably grant was made, it may terminate the avoidable are allowable if paragraphs grant in its entirety under either para- (c)(1)and(2) of this section apply. graphs(a)(1)or(2)of this section. (1) The costs result from obligations (b) If costs are allowed under an which were properly incurred by the re- award, the responsibilities of the re- cipient before the effective date of sus- cipient referred to in§215.71(a), includ- pension or termination, are not in an- ing those for property management as ticipation of it, and in the case of a ter- applicable, shall be considered in the urination, are noncancellable. termination of the award, and provi- (2) The costs would be allowable if sion shall be made for continuing re- the award were not suspended or ex- sponsibilities of the recipient after ter- pired normally at the end of the fund- mination,as appropriate. ing period in which the termination takes effect. §215.62 Enforcement. (d) Relationship to debarment and sus- (a)Remedies for noncompliance.If a re- pens-ion. The enforcement remedies cipient materially fails to comply with identified in this section, including 103 §215.70 2 CFR Ch. II (1-1-12 Edition) suspension and termination, do not an award, the Federal awarding agency preclude a recipient from being subject shall retain the right to recover an ap- to debarment and suspension under propriate amount after fully consid- E.O.s 12549 and 12689 and the Federal ering the recommendations on dis- awarding agency implementing regula- allowed costs resulting from the final tions (see§215.13). audit. Subpart D—After-the-Award §215.72 Subsequent adjustments and Requirements continuing responsibilities. (a) The closeout of an award does not §215.70 Purpose. affect any of the following: Sections 215.71 through 215.73 contain (1) The right of the Federal awarding closeout procedures and other proce- agency to disallow costs and recover dures for subsequent disallowances and funds on the basis of a later audit or adjustments. other review. (2) The obligation of the recipient to §215.71 Closeout procedures. return any funds due as a result of (a)Recipients shall submit, within 90 later refunds, corrections, or other calendar days after the date of comple- transactions. tion of the award, all financial, per- (3)(4 Audit requirements in§t15.26. formance, and other reports as required Property management require by the terms and conditions of the ments in§§215.31 through 215.37. award. The Federal awarding agency (5) Records retention assrequired in may approve extensions when re- §215. 3.quested by the recipient. (b)A After closeout of an award, a rela- (b)Unless the Federal awarding agen- tionship created under an award may be modified or ended in whole or in cy authorizes an extension, a recipient shall liquidate all obligations incurred part with the consent of the Federal under the award not later than 90 cal- awarding agency and the recipient, endar days after the funding period or Provided the responsibilities of the re the date of completion as specified in cipient referred to in paragraph (a) of the terms and conditions of the award this section, including those for prop or in agency implementing instruc- erty management as applicable, are tions. considered and provisions made for (c) The Federal awarding agency continuing responsibilities of the re- shall make prompt payments to a re- cipient, as appropriate. cipient for allowable reimbursable [69 FR 26281, May 11, 2004, as amended at 70 costs under the award being closed out. FR 51881,Aug.31,2005) (d) The recipient shall promptly re- fund any balances of unobligated cash §215.73 Collection of amounts due. that the Federal awarding agency has (a) Any funds paid to a recipient in advanced or paid and that is not au- excess of the amount to which the re- thorized to be retained by the recipient cipient is finally determined to be enti- for use in other projects. OMB Circular tied under the terms and conditions of A-129 governs unreturned amounts that the award constitute a debt to the Fed- become delinquent debts. eral Government. If not paid within a (e)When authorized by the terms and reasonable period after the demand for conditions of the award, the Federal payment, the Federal awarding agency awarding agency shall make a settle- may reduce the debt by paragraphs ment for any upward or downward ad- (a)(1), (2)or(3)of this section. justments to the Federal share of costs (1) Making an administrative offset after closeout reports are received. against other requests for reimburse- (f) The recipient shall account for ments. any real and personal property ac- (2) Withholding advance payments quired with Federal funds or received otherwise due to the recipient. from the Federal Government in ac- (3) Taking other action permitted by cordance with§215.31 through§215.37. statute. (g) In the event a final audit has not (b) Except as otherwise provided by been performed prior to the closeout of law, the Federal awarding agency shall 104 OMB Circulars and Guidance Pt. 215, App.A charge interest on an overdue debt in port all suspected or reported violations to accordance with 4 CFR Chapter II, the Federal awarding agency. "Federal Claims Collection Stand- 4.Contract Work Hours and Safety Standards ards." Act (40 U.S.C. 327-333)—Where applicable, all contracts awarded by recipients in excess of A TO PART 215—CONTRACT $2000 for construction contracts and in ex- APPENDIXcess of$2500 for other contracts that involve PROVISIONS the employment of mechanics or laborers shall include a provision for compliance with All contracts, awarded by a recipient in- sections 102 and 107 of the Contract Work eluding small purchases, shall contain the Hours and Safety Standards Act (40 U.S.C. following provisions as applicable: 327-333), as supplemented by Department of 1. Equal.Employment Opportunity—All con- Labor regulations(29 CFR part 5).Under sec- tracts shall contain a provision requiring tion 102 of the Act, each contractor shall be compliance with E.O. 11246, "Equal Employ- required to compute the wages of every me- ment Opportunity" (30 FR 12319, 12935, 3 chanic and laborer on the basis of a standard CFR, 1964-1965 Comp., p. 399),as amended by work week of 40 hours.Work in excess of the E.O. 11375, "Amending Executive Order 11246 standard work week is permissible provided Relating to Equal Employment Oppor- that the worker is compensated at a rate of tunity," and as supplemented by regulations not less than 11 times the basic rate of pay at 41 CFR part 60, "Office of Federal Con- for all hours worked in excess of 40 hours in tract Compliance Programs. Equal Employ- the work week.Section 107 of the Act is ap- ment Opportunity,Department of Labor." plicable to construction work and provides 2. Copeland "Anti-Kickback" Act (18 U.S.C. that no laborer or mechanic shall be required 874 and 40 U.S.C.276c)—All contracts and sub- to work in surroundings or under working grants in excess of$2000 for construction or conditions which are unsanitary, hazardous repair awarded by recipients and subrecipi- or dangerous. These requirements do not ents shall include a provision for compliance apply to the purchases of supplies or mate- with the Copeland "Anti-Kickback" Act (18 rials or articles ordinarily available on the U.S.C. 874), as supplemented by Department open market, or contracts for transportation of Labor regulations (29 CFR part 3, "Con- or transmission of intelligence, tractors and Subcontractors on Public Build- 5. Rights to Inventions Made Under a Con- ing or Public Work Financed in Whole or in tract or Agreement—Contracts or agreements Part by Loans or Grants the for the performance of experimental, devel- Partes"). or provides fromeach Unitedt opmental, or research work shall provide for tractor . Thesu Actppro shallesthat eaprch ed the rights of the Federal Government and from inducing, by any means, any person accordancetce recipient withh7 any CFRre part 4 invention to 37 part 401, "Rights to employed in the construction,completion,or Inventions Made by Nonprofit Organizations repair of public work, to give up any part of and Small Business Firms Under Govern- the compensation to which he is otherwise ment Grants, Contracts and Cooperative entitled. The recipient shall report all sus- Agreements," and any implementing regula- pected or reported violations to the Federal tions issued by the awarding agency. awarding agency. 6. Clean Air Act (42 U.S.C. 7401 et seq.) and 3. Davis-Bacon Act, as amended (40 U.S.C. the Federal Water Pollution Control Act (33 276a to a-7)—When required by Federal pro- U.S.C. 1251 et seq.), as amended—Contracts gram legislation, all construction contracts and subgrants of amounts in excess of awarded by the recipients and subrecipients $100,000 shall contain a provision that re- of more than $2000 shall include a provision quires the recipient to agree to comply with for compliance with the Davis-Bacon Act(40 all applicable standards, orders or regula- U.S.C. 276a to a-7) and as supplemented by tions issued pursuant to the Clean Air Act Department of Labor regulations (29 CFR (42 U.S.C. 7401 et seq.)and the Federal Water part 5,"Labor Standards Provisions Applica- Pollution Control Act as amended(33 U.S.C. ble to Contracts Governing Federally Fi- 1251 et seq.). Violations shall be reported to nanced and Assisted Construction"). Under the Federal awarding agency and the Re- this Act,contractors shall be required to pay glottal Office of the Environmental Protec- wages to laborers and mechanics at a rate tion Agency(EPA). not less than the minimum wages specified 7. Byrd Anti-Lobbying Amendment(31 U.S.C. in a wage determination made by the Sec- 1352)-Contractors who apply or bid for an retary of Labor. In addition, contractors award of $100,000 or more shall file the re- shall be required to pay wages not less than quired certification. Each tier certifies to once a week.The recipient shall place a copy the tier above that it will not and has not of the current prevailing wage determination used Federal appropriated funds to pay any issued by the Department of Labor in each person or organization for influencing or at- solicitation and the award of a contract shall tempting to influence an officer or employee be conditioned upon the acceptance of the of any agency,a member of Congress, officer wage determination. The recipient shall re- or employee of Congress,or an employee of a 105 Pt. 220 2 CFR Ch. I1 (1-1-12 Edition) member of Congress in connection with ob- §220.10 Scope. taming any Federal contract, grant or any other award covered by 31 U.S.C. 1352. Each The principles in this part deal with tier shall also disclose any lobbying with the subject of cost determination, and non-Federal funds that takes place in con- make no attempt to identify the cir- nection with obtaining any Federal award. cumstances or dictate the extent of Such disclosures are forwarded from tier to agency and institutional participation tier up to the recipient. in the financing of a particular project. 8. Debarment and Suspension (E.O.s 12549 Provision for profit or other increment and 12689)—A contract award with an above cost is outside the scope of this amount expected to equal or exceed $25,000 part. and certain other contract awards(see 2 CFR 180.220)shall not be made to parties listed on *220.15 Policy. the government-wide Excluded Parties List System, in accordance with the OMB guide- The principles in this part are de- lines at 2 CFR part 180 that implement E.O.s signed to provide that the Federal Gov- 12549 (3 CFR, 1986 Comp., p. 189) and 12689 (3 ernment bear its fair share of total CFR, 1989 Comp., p. 235). "Debarment and costs, determined in accordance with Suspension."The Excluded Parties List Sys- generally accepted accounting prin- tern contains the names of parties debarred, ciples, except where restricted or pro- suspended, or otherwise excluded by agen- hibited by law. Agencies are not ex- cies, as well as parties declared ineligible pected to place additional restrictions under statutory or regulatory authority on individual items of cost. The suc- other than E.O.12549. cessful application of cost accounting [69 FR 26281, May 11, 2004, as amended at 70 principles requires development of mu- FR 51879,Aug.31,20051 tual understanding between represent- atives of educational institutions and PARTS 216-219 [RESERVED] of the Federal Government as to their scope, implementation, and interpreta- PART 220—COST PRINCIPLES FOR tion. EDUCATIONAL INSTITUTIONS §220.20 Applicability. (OMB CIRCULAR A-21) (a) All Federal agencies that sponsor research and development, training, Sec. and other work at educational institu- 220.5 Purpose. tions shall apply the provisions of Ap- 220.10 Scope. pendix A to this part in determining 220.15 Policy. the costs incurred for such work. The 220.20 Applicability. principles shall also be used as a guide 220.25 OMB responsibilities, in the pricing of fixed price or lump 220.30 Federal agency responsibilities. sum agreements. 220.35 Effective date of changes. 220.40 Relationship to previous issuance. (b) Each federal agency that awards 220.45 Information contact. defense-related contracts to a Feder- ally Funded Research and Development _APPENDIX A TO PART 220—PRINCIPLES FOR DE- Center (FFRDC) associated with an TF.RMININC COSTS APPLICABLE TO(}RANTS, educational institution shall require CONTRACTS,AND OTHER AGREEMENTS WITH the FFRDC to comply with the Cost EDUCATIONAL INSTITUTIONS p y Accounting Standards and with the AUTHORITY: 31 U.S.C. 503: 31 U.S.C. 1111; 41 rules and regulations issued by the U.S.C.405;Reorganization Plan No.2 of 1970: Cost Accounting Standards Board and E.O. 11541, 35 FR 10737. 3 CFR, 1966-1970, p. set forth in 47 CFR part 99. 939. SOURCE: 70 FR 51881, Aug. 31, 2005, unless §220.25 OMB responsibilities. otherwise noted. OMB is responsible for: §220.6 Purpose. (a) Issuing and maintaining the guid- ance in this part. This part establishes principles for (b) Interpreting the policy require- determining costs applicable to grants, ments in this part and providing assist- contracts, and other agreements with ance to ensure effective and efficient educational institutions. implementation. 106 1 /bif D MINIMUM STANDARDS FOR REHABILITATION Nebraska Department of Economic Development Updated April 2010 A. MINIMUM STANDARDS FOR BASIC EQUIPMENT AND FACILITIES 1. KITCHENS—Every dwelling shall have a kitchen room or kitchenette equipped with a kitchen sink, properly connected to both hot and cold running water lines,under pressure,and in working order. 2. TOILET ROOM REQUIRED—Every dwelling unit,except as otherwise permitted for rooming houses, shall contain a room that is equipped with a flush water closet and properly installed lavatory. Said lavatory shall be properly connected to both hot and cold running water,under pressure,and shall be in working order.Fixtures shall be properly installed, free of hazards,leaks and defects, and in functional and sanitary order. Said flush water closet shall be properly connected to the water supply,under pressure, and shall be in working order. 3. SHARED TOILET FACILITIES—Shared toilet rooms shall be equipped with a flush water closet and lavatory basin,and shall be connected as provided in Section 2 above. In rooming house type structures,at least 1 toilet and 1 lavatory basin,properly connected as set forth above,shall be supplied for each 8 persons or fractions thereof residing within a rooming house, including members of the operator's family whenever they share the use of said facilities,provided that in rooming houses where rooms are let only to males,flush urinals may be substituted for not more than `/z of the required number of toilets. 4. BATH REQUIRED—Every dwelling unit shall contain a bathtub and/or shower.Fixtures shall be properly installed, free of hazards,leaks and defects,and shall be in functional and sanitary order. Potable water supply piping,water discharge outlets,backflow prevention devices or similar equipment shall not be so located as to make possible their submergence in any contaminated or polluted liquid or substance. Said bathtub and/or shower may be in the same room as the flush water closet and lavatory, or said bathtub and/or shower may be in a separate room. In all cases,these facilities shall be properly connected to both hot and cold running water lines,under pressure, and shall be in working order. In rooming house type structures,at least 1 bathtub and/or shower,properly connected as set forth above, shall be supplied for each 8 persons or fractions thereof,residing within a rooming house, including members of the operator's family whenever they share the use of said facilities. 5. PRIVACY IN ROOM CONTAINING TOILET AND BATH—Every toilet and every bath shall be contained in a room or within separate rooms which affords privacy to a person within said room or rooms. Said rooms shall not be the only passageway to the exterior. Toilets and bathrooms shall have doors with a privacy type lock and such doors, locks and hardware shall be in working order. 1 6. LOCATION OF COMMUNAL TOILETS AND BATHS—Every communal bath required to be provided in accordance with other provisions, shall be located within a room or rooms accessible to the occupants of each dwelling unit sharing such facilities,without going through a dwelling unit of another occupant and without going outside of the dwelling. In rooming houses, said room or rooms shall be located on the same floor of the dwelling as, or on the floor immediately above or below, the dwelling unit whose occupants share the use of such facilities. 7. WATER SUPPLY--All fixture water supplies shall be properly connected to public or private water system. All water supply inlet orifices (mouth of an opening from any pipe or faucet supplying water)shall have an air gap(The unobstructed vertical distance through the free atmosphere between the lowest opening from any pipe or faucet supplying water to a tank,plumbing fixture or other device and the floor level rim of the receptacle.) or shall be protected by vacuum breakers(also known as backflow preventers). 8. HOT AND COLD WATER LINES TO BATH AND KITCHEN--Every dwelling shall have supplied water-heating facilities which are properly installed; in working condition and free of leaks; properly connected to hot water lines required; and are capable of supplying hot or tempered water at not less than 110°F to be drawn for every bath,as well as general usage. Hot water storage associated with water heating facilities shall not be less than the following minimum capacities: a. I dwelling unit 30 gallons b. 2 dwelling units 40 gallons c. 3 or more dwelling units 50 gallons or more and rooming houses Sizes and/or number of water heaters are to be based upon the number of units served.No water heaters shall be allowed in bathrooms or bedrooms. All hot water heaters shall be properly vented and sealed and equipped with a pressure relief valve and drip leg a maximum of 6"above the floor. The local rehabilitation division and/or building inspection division may adjust the above-required capacities upward or downward based on the type and recovery time of the hot water system. 9. CONNECTION OF SANITARY FACILITIES TO SEWAGE SYSTEM— Every kitchen sink,toilet, lavatory basin and bathtub/shower shall be in working condition and properly connected to an approved public or private sewage system. All sewers and vents shall function properly and be free of leaks and blockages. 10. EXITS—Every exit from every dwelling and/or dwelling unit shall comply with the following requirements: a. It shall be functional; b. It shall be unobstructed: 7 c. All stairways and steps of 4 or more risers shall have at least 1 handrail, and all stairways and steps that are 5 feet or more in width or open on both sides shall have a handrail on each side where possible; d. Every dwelling unit shall have 2 independent ways of egress; e. All handrails shall be not less than 30"or more than 42"vertically above the nose of the stair treads and not less than 36"above the stairway platform; f. All balconies and platforms that are 30"or more above grade, shall have protective guards not less than 30"in height above the balcony or platform level; g. All multiple dwellings(1 &2 family residences exempted) shall have a second exit stairway or approved fire escape available to all occupants of units located on second or higher stories; h. All stairs and steps shall have a riser height of no more than 8"and a tread depth of no less than 9".This requirement may be waived on the programmatic level if in an existing structure, it would be impossible or cost prohibitive to meet this requirement. In such cases,new stairs could be put in having the same rise and run as the old; i. In basement units where one means of an exit shall be a window, it shall comply with the International Residential Code, Section 310 Emergency Escape and Rescue Openings. 11. FIRE PROTECTION AND SMOKE ALARMS—All fire protection systems and devices shall be in operable condition. When a dwelling is occupied by any hearing impaired person, smoke alarms shall have an alarm system designed for hearing impaired persons in accordance with NFPA 74(or successor standards). Smoke alarms shall be installed: • On each story,including basement and cellar(Alarms are not required in unfinished attics and crawl spaces) • Outside of each bedroom • In each bedroom B. MINIMUM STANDARDS FOR LIGHT,VENTILATION AND HEATING 1. REQUIRED WINDOW AREA—Every habitable room,provided such rooms are adequately lighted, shall have at least one open air space. The minimum total window area, measured between stops, for every habitable room shall be as follows: a. 1/12 of the floor area if two or more separate windows exist or b. 1/10 of the floor area if only one window exists; c. A minimum of 12 square feet of window area is required in habitable rooms other than kitchens; d. A kitchen may pass without a window area,provided there is a mechanical means of ventilation in working order. 3 Whenever the only window in a room is a skylight type window,the total window area of such skylight shall be equal to at least 15% of the total floor area of such room.Skylight type windows, if less than 15% of the total floor area shall be increased to 15% of the total floor area,unless another window is to be installed to provide adequate light and ventilation. 2. ADEQUATE VENTILATION REQUIRED—Every habitable room shall have at least one window or skylight which can easily be opened, or other such device as will adequately ventilate the room. 3. LIGHT AND VENTILATION REQUIREMENTS FOR BATHROOMS,TOILET ROOMS AND KITCHENS —Every bathroom, toilet room, and kitchen shall comply with the light and ventilation requirements for habitable rooms contained above, except that no window shall be required in adequately ventilated bathrooms,toilet rooms, or kitchens equipped with a ventilation system that filters or exhausts to the exterior, 4. ALTERNATIVE LIGHT AND VENTILATION —Artificial light or mechanical ventilation complying with the International Building Code shall be permitted. 5. CLOTHES DRYER VENTING—Clothes dryer exhaust vent shall be a single purpose vent in compliance with the manufacturer's instructions and vent to the exterior. 6. ELECTRIC OUTLETS AND SERVICE REQUIRED—Where there is suitable electricity available from supply lines no more than 300 feet away from a dwelling, including all existing dwellings now supplied with electrical services, every habitable room within such dwelling shall contain a minimum of two separate and remote wall type electric convenience outlets. Habitable rooms measuring more than 120 square feet shall contain a minimum of three separate and remote wall type electric convenience outlets. Temporary wiring, extension,or zip cords shall not be used as permanent wiring. Every habitable room shall have at least one ceiling or wall type electric light fixture, controlled by a wall switch, or a wall type grounded electric convenience outlet controlled by a remote switch. Every toilet room,bathroom, laundry room, furnace room, and hallway(hallway where applicable) shall contain at least 1 supplied ceiling or wall type electric light fixture, controlled by a wall switch, and at least one wall type grounded electric convenience outlet. Convenience outlets used in bathrooms shall be the GF1 type. Each individual kitchen based on its size and layout shall be wired to meet the requirements of the National Electric Code (N.E.C.). Receptacle convenience outlets in or on open porches,breezeways or garages shall be of the GFI type with a weather proof receptacle box. All wall and/or ceiling type lighting fixtures shall be controlled by a wall switch, except porcelain type fixtures used in cellars and/or attics, which may be controlled with a proper pull chain. All electrical equipment, appliances and wiring shall be properly installed and in safe condition. All broken and/or missing switch and receptacle plates shall be replaced. 4 Minimum electrical service for each dwelling and/or dwelling unit's circuit breaker box shall be by a three wire 120/240 volt single phase service rated no less than 100 amps,or as adjusted for size and usage of equipment and appliances in accordance with the ICC Electrical Code and approved, in writing,by the electrical inspector of the local jurisdiction or program. 7. HAZARDOUS ELECTRICAL CONDITIONS—Where any condition of the electrical system in the dwelling or structure is identified as,and constitutes a hazard,the hazardous conditions shall be corrected. 8. HEATING FACILITIES—Heating facilities shall be properly installed,be in working condition and be capable of adequately heating all habitable rooms, and toilet rooms contained therein,or intended for use by the occupants capable of maintaining a room temperature of 68°F(20°C)when the outdoor temperature is within the winter outdoor design temperature for the locality as cited in Appendix D of the International Plumbing Code. Space heaters shall not substitute for a central heating unit. Every installed central heating system shall comply with the following requirements: a. The central heating unit shall be safe and in good working condition; b. Every heat duct, steam pipe and hot water pipe shall be free of leaks and obstructions and deliver an adequate amount of heat where intended; c. Every seal between any and all sections of a hot air furnace shall be air-tight so noxious gases and fumes will not escape into the heat ducts; d. Required clearance from combustible materials shall be maintained; e. All chimneys and vents shall have a flue liner intact and in safe working condition. Every existing space heater shall comply with the following requirements: a. No space heater burning solid, liquid or gaseous fuels shall be of a portable type; b. Every space heater burning solid, liquid or gaseous fuels shall be properly vented to a chimney or duct leading to outdoor space and be installed to provide proper draft; c. Every fuel burning space heater shall have a fire-resistant panel between it and the floor or floor covering as required by the unit's manufacturer; d. Whenever a space heater is located within 2 feet of a wall,said wall shall be protected with insulation sufficient to prevent overheating of the wall as required by the unit's manufacturer; ; e. Every space heater smoke pipe shall be equipped with approved thimbles or guards,properly constructed of non-flammable material,at the point where the pipe goes through any wall, ceiling or partition; f. Each dwelling and/or dwelling unit shall be supplied with its own heating systems. Local option may provide for one central forced air system to serve no more than two separate dwelling units. 5 9. LIGHTING OF PUBLIC HALLS AND STAIRWAYS — a. Public halls and stairways in every dwelling containing 2 to 4 dwelling units shall be provided with convenient wall-mounted light switches controlling an adequate lighting system that will provide at least 2 foot candles of illumination on all parts thereof and be turned on when needed. An emergency circuit is not required for this lighting; b. Public halls and stairways in every dwelling containing 5 or more dwelling units shall be lighted at all times with an artificial lighting system. Said system shall provide at least 2 foot candles of illumination on all parts thereof at all times by means of properly located electric light fixtures, provided that such artificial lighting may be omitted from sunrise to sunset where an adequate natural lighting system is provided; c. Wherever the occupancy of the building exceeds 100 persons, the artificial lighting system as required herein, shall be on an emergency circuit: d. All basements and cellars shall be provided with a lighting system that permits safe occupancy and use of the space and contained equipment as intended,and which may be turned on when needed; e. The required intensity of illumination shall apply to both natural and artificial lighting. 10. SCREENS REQUIRED—For protection against flies, mosquitoes and other insects, every door opening directly from a dwelling unit or rooming unit, to the outdoor space where feasible, shall be supplied with a screen covering at least 50% of the window area of the door, and said door shall be equipped with a self-closing device. Every window or other opening to outdoor space used or intended to be used for ventilation shall likewise be supplied with screens covering the entire window areas required for ventilation. The material used for all such screens shall be no less than 16 mesh per inch,properly installed, and repaired when necessary to prevent the entrance of flies, mosquitoes and other insects. Half-screens on windows may be allowed,provided they are properly installed and are bug and insect proof. 11. SCREENS FOR BASEMENT AND CELLAR WINDOWS—Every dwelling unit having operable basement or cellar windows shall be screened to prevent the entry of insects and rodents. 12. EXISTING HEATING TO DWELLINGS OR PARTS THEREOF..Every dwelling owner or operator who rents, leases or lets for human habitation any unit contained within such dwelling, on terms either expressed or implied, shall supply or furnish heat to the occupants. Whenever a dwelling is heated by means of a furnace,boiler or other heating apparatus under the control of the owner or operator, in the absence of a written contract or agreement to the contrary, said owner and/or operator shall be deemed to have contracted, undertaken,or bound to furnish heat in accordance with the provisions of this section to every unit that contains radiators,furnace heat duct outlets, or other heating apparatus outlets, and to every communal bathroom and communal toilet room located within such unit. 6 a. Every central heating unit, space heater, water heater and cooking appliance shall be located and installed in a safe working manner to protect against involvement of egress facilities or egress routes in the event of uncontrolled fires in the structure; b. Every fuel burning heating unit or water heater shall be effectively vented in a safe manner to a chimney or duct leading to the exterior of the building.The chimney duct and vents shall be designed to assure proper draft, shall be adequately supported,and shall be clean; c. No fuel-burning furnace shall be located in any sleeping room or bathroom unless provided with adequate ducting for air supply from the exterior, and the combustion chamber for such heating unit is sealed from the room in an airtight manner. Water heaters are prohibited in bathrooms and sleeping rooms. d. Every steam or hot water boiler and every water heater shall be protected against overheating by appropriate temperature and pressure limit controls; e. Every gaseous or liquid fuel burning heating unit and water heater shall be equipped with electronic ignition or with a pilot light and an automatic control to interrupt the flow of fuel to the unit in the event of failure of the ignition device. All such heating units with plenum have a limit control to prevent overheating. C. MINIMUM STRUCTURAL STANDARDS 1. SIDEWALKS AND DRIVEWAYS—All sidewalks, driveways, stairs and similar areas shall be free of hazardous conditions and in proper repair. 2. PREMISE IDENTIFICATION NUMBERS—Address numbers easily visible and legible from the street or road shall be installed. Numbers shall contrast in color with their background and be at least 4 inches high with a minimum stroke width of one half inch. 3. FOUNDATIONS,EXTERIOR WALLS,ROOFS, SOFFITS AND FASCIA—Every foundation, exterior wall,roof,soffit, and fascia shall be structurally sound,weather-tight,and rodent/insect- proof. All exterior surface materials shall be protected by lead-free paint or other protective coating in accordance with acceptable standards.The exception is all types of exterior materials acceptable to weatherizing without deterioration. 4. INTERIOR WALLS,FLOORS, CEILINGS, DOORS, AND WINDOWS—Every interior partition, wall floor, ceiling,door and window shall be structurally sound. Holes in walls should be replastered before new paint is applied. All interior doors shall be capable of affording privacy for which they were intended. 5. GRADING AND RAINWATER DRAINAGE FROM ROOF—All rainwater shall be drained and conveyed from every roof so as not to cause dampness within the dwelling.All rainwater drainage devices, such as gutters,downspouts, leaders and splashblocks shall be in safe working order. Ground areas around the habitable unit shall be sloped or drain away from foundation walls to prevent standing water. 7 6. WINDOWS, EXTERIOR DOORS AND BASEMENT OR CELLAR HATCHWAYS—Every front, rear, side and basement or cellar door shall be no less than 2'4" in width and no less than 6' 6" in height. In existing structures, if replacement to meet these requirements would be impossible or cost- prohibitive, said requirement may be waived by the grantee. Every window,exterior door and basement or cellar hatchway shall be substantially tight and rodent- proof. In addition, the following requirements shall be met: a. All exterior doors to the outside or to a common public hall shall be equipped with adequate security locks. Means of egress door locks shall be easily opened from the egress side without a key or special knowledge. All windows accessible from ground level without the aid of mechanical devices shall have a security device. Emergency escape windows shall be openable from the inside without the use of a key, code or tool; b. Every window sash shall be fully equipped with windowpane glazing materials free of cracks or holes, and all panes shall be secured with retaining devices or an adequate amount of putty. Said putty shall not be cracked,broken or missing; c. Every window sash shall be in good condition and fit tightly within its frame; d. Every window, other than a fixed window, shall be easily opened and held in position by window hardware; e. Every exterior and interior door, door hinge,door latch, and/or lock shall be in good working condition; f. Every exterior and interior door,when closed, shall fit well within its frame; g. Every window, door and frame shall be constructed in relation to the adjacent wall construction, to exclude rain and wind as completely as possible from entering the dwelling or structure; 7. STAIRWAYS, DECKS, BALCONIES AND PORCHES—Every interior and exterior stairway, porch, deck,balcony and appurtenance thereto, including hand and guard rails, shall be constructed to be sound and safe to use and capable of supporting the load that normal use may place upon it. 8. SUPPLIED PLUMBING FIXTURES—Every plumbing fixture and water and waste pipe shall be properly installed in safe, sanitary working condition,free from leaks,defects,and obstructions. 9. BATHROOM, TOILET ROOM, KITCHEN AND UTILITY ROOM FLOORS—Every bathroom, toilet room,kitchen, and utility room floor surface shall be constructed to be impervious to water and. to permit such floors to be easily kept clean and sanitary. Indoor-outdoor type carpeting, when properly installed, shall be allowed in bathrooms, toilet rooms, kitchens and utility rooms except when in conflict with required interim controls or standard treatments required to comply with the lead-based paint regulation. 10. CHIMNEYS AND SMOKE PIPES—Every chimney and smoke pipe shall be adequately supported, structurally sound, and clean. 11. TREES AND VEGETATION—Trees and vegetation endangering the unit and/or it occupants shall be eliminated. 8 12. INTERNATIONAL RESIDENTIAL CODE FOR ONE AND TWO-FAMILY DWELLINGS—All rehabilitation work must meet or exceed the requirements of the International Residential Code as promulgated by the International Code Council in its current edition or as adopted in ordinance by the local jurisdiction. a. Work must comply with the permitting and inspection requirements of the local jurisdiction. b. In the absence of local permitting and inspection services,the local recipient program shall engage qualified inspectors and document code inspection and compliance. 13. LEAD-BASED PAINT—As required under 24 CFR Part 35, the Final HUD Regulation on Lead- Based Paint Hazards in Federally Owned Housing and Housing Receiving Federal Assistance, all assisted dwelling units constructed before January 1, 1978,will be evaluated for lead-based paint hazards or presumed to have lead-based paint present throughout the unit when paint is disturbed. a. Evaluation will be done by a qualified, certified or licensed person as required under the regulation. b. All lead-based paint hazards will be identified and reduced or eliminated through paint stabilization, interim controls or abatement with work being done by supervised, trained, qualified, certified or licensed persons as required under the regulation. c. Safe work practices will be followed at all times. d. Occupants shall be protected or temporarily relocated as required by the regulation. With some exceptions, as listed at 24 CFR 35.1345, occupants shall be temporarily relocated before and during hazard reduction activities to a suitable, decent, safe and similarly accessible dwelling unit that does not have lead hazards. e. The dwelling unit and worksite shall be secured. The worksite shall be prepared and warning signs shall be posted as required by the regulation. f. Clearance examinations will be performed by qualified personnel and final clearance shall be achieved as required by the regulations. 14. ENERGY CONSERVATION— a. Equipment, appliances,windows, doors and appurtenances replaced during rehabilitation shall be replaced with Energy Star qualified products. b. If feasible, attics should be insulated to R38 and walls to a minimum of R11. c. Replacement heating and/or cooling systems shall be properly sized as evidenced by completion of ACCA/ANSI Manual J®or an equivalent sizing calculation tool. d. All accessible air ducts shall be tightly sealed. e. Heating or cooling supply running through unconditioned space should be avoided or rerouted, but when present and accessible, shall be insulated. 9 15. INDOOR AIR QUALITY—The scope and conduct of rehabilitation of each dwelling unit shall take into consideration the improvement and maintenance of satisfactory and healthy air quality within the unit. a. A carbon monoxide detector installed per manufacturers' recommendations shall be present in each unit, and receive primary power from the building wiring or battery. If the house is all electric a carbon monoxide detector is not required. b. Devices and appurtenances identified to contain mercury shall be removed or replaced excluding CFL bulbs. c. Materials and methods used in carrying out rehabilitation,shall to the extent feasible, minimize and prevent dust, out gassing,volatile organic compounds and other contaminants within the dwelling unit. 16. UNIVERSAL DESIGN AND ACCESSIBILITY--Rehabilitation of each unit shall be carried out with consideration for the needs of its occupants and to the maximum practical extent in accordance with the principles of universal design. For guidance in implementing universal design features,visit www.design.ncsu.edu/cud. D. MINIMUM SPACE, USE AND LOCATION REQUIREMENTS 1. CEILING HEIGHT—Wherever possible, no habitable room in a dwelling or dwelling unit shall have a ceiling height of less than 7' 6". At least 1/2 of the floor area of every habitable room located above the first floor shall have a ceiling height of 7'6", and the floor area of that part of any room where the ceiling height is less than 5' shall be considered as part of the floor area in computing the total floor area of the room for the purpose of determining maximum floor area. 2. ROOM WIDTH—All rooms, except kitchens and/or kitchenettes and baths, shall have a minimum width of 7'. Kitchens shall have a clear passage dimension of no less than 3'between walls, appliances and cabinets. 3. CELLAR SPACE NOT HABITABLE—No cellar space shall be converted or rehabilitated as habitable room or dwelling unit. 4. REQUIREMENTS FOR HABITABLE BASEMENT SPACE—No basement space shall be used as a habitable room or dwelling unit unless all of the following requirements are met: a. Such required minimum window area is located entirely above the grade of ground adjoining such window area, or an adequate window well of sufficient size as to allow escape of inhabitants residing within such basement apartment, has been constructed; b. Such basement dwelling unit or rooming unit shall be entirely sealed off from the central heating plant with a one hour fire separation. To assist grantees in evaluating existing building components, HUD has published the"Guideline on Fire Ratings of Archaic Materials and Assemblies", February 2000. available at http://www.huduser.org/publications%destech/fire.html; c. Such basement dwelling unit or rooming unit provides two means of exit,with at least one means of opening directly to the outside; 10 • 5. MINIMUM STORAGE AREAS—Each dwelling unit shall have at least one closet with a minimum of 6 square feet of floor area and a minimum height of 6',located within the dwelling unit. Dwelling units with 2 or more bedrooms shall have a storage floor area of at least 4 square feet per bedroom. This storage requirement does not necessarily have to be located in the bedrooms. E. MINIMUM STANDARDS FOR GARAGES,FENCES AND PREMISES 1. PROTECTION OF EXTERIOR WOOD SURFACES—All exterior wood surfaces shall be properly protected from the elements against decay and rot by lead-free paint, or other approved protective coating. 2. FENCES—Every residential fence shall be in a state of maintenance and repair or shall be removed. Wood materials that are not decay resistant shall be protected against decay by use of lead-free paint or by other preservative material. If a fence is removed and replaced, said installation shall conform with all local requirements. 3. CONDITION OF PREMISES—All areas and all parts of the premises upon which any dwelling or dwelling units are located and all areas adjacent thereto and a part of the premises shall be in a clean and sanitary condition. This shall include,but not be limited to, removal of abandoned and junked automobiles, automobile bodies,chassis,parts, and trailers; inoperable machines and appliances; lumber piles and building materials not used in actual construction; tin cans,broken glass,broken furniture,boxes,crates,and other debris,rubbish,junk and garbage. 4. WATER SUPPLY-CONNECT TO WATER MAIN—Every owner of a dwelling situated on property that abuts any street or alley in which a water main is laid,shall be connected to such main to provide water service. 5. ABANDONED WELLS AND CISTERNS—Every owner of a dwelling that contains an abandoned well or cistern on the premises shall permanently seal or fill it in a proper manner. 6. INFESTATION AND EXTERMINATION—Structures shall be free from rodent and insect infestation. 11 DAVIS BACON EXEMPTION CHECKLIST EXHIBIT E Project Name: Urban Homestead Rehabilitation and Resale Program Project Address: 6124 North 36th Street Project No. It is determined that the above project is exempt from Davis-Bacon Prevailing Wage Rate Provisions because: Residential rehabilitation or new construction project is funded in whole or in part with CDBG funds and such residential property contains less than 8 units. Residential rehabilitation or new construction contract, including construction and non- X construction costs, is funded with HOME funds and such residential property contains less than 12 assisted units. Proceeds of award of federal funds are solely for the acquisition of real property(land, pre-existing buildings and improvements). The entire project consists of demolitions and no construction is imminent on site. Funding solely for demolition to be completed by City or its contractor before transfer of land to developer. Funding for on-site improvements only. On-site improvements are completed on land owned by the City and improvements are completed before transfer of land to developer. Funding for off-site improvements that are separately owned. Off-site and on-site construction are provided for in separate construction contracts. Project funding is for infrastructure improvements owned and operated by utility company. The prime construction contract financed in whole or part with CDBG or HOME funds is incidental and the amount is less than$2,000. Funding for professional services only (legal/acct/architecturauengineering). These services are funded under a separate contract from any construction contract. Funding source is Emergency Shelter Grant (ESG) or Supportive Housing Grant (SHP), which are exempt from Davis/Bacon. The project will be done through a force account. There is no federal money in the construction contract. Funding source is Lead Hazard Grant Funds which is exempt from Davis/Bacon. Date: erAM' Signature of Responsible Administrator A description of the scope of the project is attached. Revised and approved 7/12/2011 MEMORANDUM TO FILE RE: SECTION 504 ACCESSIBILITY REQUIREMENTS PROJECT: City of Qmaha Urban Homestead Rehabilitation Resale Program 6124 North 36th Street Omaha,NE 68111 The above names project is exempt from Section 504 Accessibility Requirements. Accessibility modifications required: x The above names project is exempt from Section 504 Accessibility Requirements for the following reason(s): Single Family Property 7 r b fte, Ed Dantzler, Deere Sectio anager Date 1l1(hIt & • OMB Circulars and Guidance Pt. 225 15 months,obtained by combining the period (e) Most financial accounts and sponsored described in subparagraph (f)(1) of this sub- agreement cost records are maintained on section with the next regular cost account- the basis of a fiscal year which ends Novem- ing period.A change in the educational insti- ber 30 each year. However, employee vaca- tution's cost accounting period is a change tion allowances are regularly managed on in accounting practices for which an adjust- the basis of a "vacation year" which ends ment in the sponsored agreement price may September 30 each year. Vacation expenses be required. are estimated uniformly during each"vaca- tion year."Adjustments are made each Octo- ber to adjust the accrued liability to actual, (a)An educational institution allocates in- and the estimating rates are modified to the direct expenses for Organized Research on extent deemed appropriate.This use of a sep- the basis of a modified total direct cost base, arate annual period for determining the In a proposal for a sponsored agreement, it amounts of vacation expense is permitted. estimates the allocable expenses based solely Attachment B to Appendix A—CASB's Dis- on the estimated amount of indirect costs al- closure Statement(DS-2) is available on the located to Organized Research and the OMB Web site at http://www.whitehouse.gov/ amount of the modified total direct cost base omb/grants/a21-appa b.pdf estimated to be incurred during the 8 months Attachment C to Appendix A—Documenta- in which performance is scheduled to be tion Requirements for Facilities and Admin. commenced and completed. Such a proposal istrative (F&A) Rate Proposals is available would be in violation of the requirements of on the OMB Web site at http:// this standard that the calculation of the www.whitehouse.gov/omb/grants/a21- amounts of both the indirect cost pools and apex c.pdf' the allocation bases be based on the edu- cational institution's cost accounting period. 224 PARTS ZZ — (b) An educational institution whose cost [RESERVED] accounting period is the calendar year. in- stalls a computer service center to begin op- PART 225—COST PRINCIPLES FOR erations on May 1.The operating expense re- STATE, LOCAL, AND INDIAN TRIB- lated to the new service center is expected to be material in amount, will be accumulated AL GOVERNMENTS (OMB CIR- in an intermediate cost objective,and will be CULAR A-87) allocated to the benefitting cost objectives on the basis of measured usage.The total op- Sec. erating expenses of the computer service 225.5 Purpose. center for the 8-month part of the cost ac- 225.10 Authority. counting period may be allocated to the ben- efitting cost objectives of that same 8-month period. 225.20 Policy, (c) An educational institution changes its 225.25 Definitions. fiscal year from a calendar year to the 12- 225.30 OMB responsibilities. month period ending May 31. For financial 225.35 Federal agency responsibilities. reporting purposes, it has a 5-month transi- 225.40 Effective date of changes. tional "fiscal year." The same 5-month pe- 225.45 Relationship to previous issuance. riod must be used as the transitional cost ac- 225.50 Policy review date. counting period; it may not be combined,be- 225.55 Information Contact. cause the transitional period would be longer APPENDIX A TO PART 225—GENERAL PRIN- than 15 months.The new fiscal year must be CIPLES FOR DETERMINING ALLOWABLE adopted thereafter as its regular cost ac- CosTs counting period. The change in its cost aC- APPENDIX B TO PART 225—SELECTED ITEMS OF counting period is a change in accounting COST practices; adjustments of the sponsored APPENDIX C TO PART 225—STATE/LOCAL-WIDE agreement prices may thereafter be required. CENTRAL SERVICE COST ALLOCATION (d)Financial reports are prepared on a cal- PLANS ender year basis on a university-wide basis. However, the contracting segment does all APPENDIX D TO PART 225—PUBLIC ASSISTANCE internal financial planning, budgeting, and COST ALLOCATION PLANS internal reporting on the basis of a twelve APPENDIX E TO PART 225—STATE AND LOCAL month period ended June 30.The contracting INDIRECT COST RATE PROPOSALS parties agree to use the period ended June 30 AUTHORITY: 31 U.S.C. 503; 31 U.S.C. 1111; 41 and they agree to overhead rates on the June U.S.C.405:Reorganization Plan No. 2 of 1970; 30 basis. They also agree on a technique for E.O. 11541, 35 FR 10737, 3 CFR, 1966-1970, p. prorating fiscal year assignment of the unl- 939. varsity's central system office expenses be- tween such June 30 periods. This practice is SOURCE: 70 FR 51910, Aug. 31, 2005, unless permitted by the standard, otherwise noted. 153 §225.5 2 CFR Ch. II (1-1-12 Edition) §225.5 Purpose. other increment above cost is outside This part establishes principles and the scope of this part. standards for determining costs for Federal awards carried out through §225.25 Definitions. grants, cost reimbursement contracts, Definitions of key terms used in this and other agreements with State and part are contained in Appendix A to local governments and federally-recog- this part, Section B. nized Indian tribal governments (gov- ernmental units). §225.30 OMB responsibilities. The Office of Management and Budg- §225.10 Authority. et (OMB) will review agency regula- This part is issued under the author- tions and implementation of this part, ity of the Budget and Accounting Act and will provide policy interpretations of 1921, as amended; the Budget and Ac- and assistance to insure effective and counting Procedures Act of 1950, as efficient implementation, Any excep- amended; the Chief Financial Officers tions will be subject to approval by Act of 1990; Reorganization Plan No. 2 OMB. Exceptions will only be made in of 1970; and Executive Order No. 11541 particular cases where adequate jus- ("Prescribing the Duties of the Office tification is presented. of Management and Budget and the Do- mestic Policy Council in the Executive §225.35 Federal agency responsibil- Office of the President"). ities. §225.15 Background. Agencies responsible for admin- istering programs that involve cost re- As part of the government-wide grant imbursement contracts, grants, and streamlining effort under Public Law other agreements with governmental 106-107, Federal Financial Award Man- units shall issue regulations to imple- agement Improvement Act of 1999, ment the provisions of this part and its OMB led an interagency workgroup to appendices. simplify and make consistent, to the extent feasible, the various rules used §225.40 Effective date of changes. to award Federal grants. An inter- agency task force was established in This part is effective August 31, 2005. 2001 to review existing cost principles §225.45 Relationship to previous for Federal awards to State, local, and issuance. Indian tribal governments; colleges and universities; and non-profit organiza- (a) The guidance in this part pre- tions. The task force studied "Selected viously was issued as OMB Circular A- Items of Cost"in each of the three cost 87. Appendix A to this part contains principles to determine which items of the guidance that was in Attachment A costs could be stated consistently and/ (general principles) to the OMB cir- or more clearly. cular; appendix B contains the guid- ance that was in Attachment B (se- §225.20 Policy. lected items of cost); appendix C con- This part establishes principles and tains the information that was in At- standards to provide a uniform ap- tachment C (state/local-wide central proach for determining costs and to service cost allocation plans); appendix promote effective program delivery, ef- D contains the guidance that was in ficiency, and better relationships be- Attachment D (public assistance cost tween governmental units and the Fed- allocation plans); and appendix E con- eral Government.The principles are for tains the guidance that was in Attach- determining allowable costs only.They ment E (state and local indirect cost are not intended to identify the cir- rate proposals). cumstances or to dictate the extent of (b) This part supersedes OMB Cir- Federal and governmental unit partici- cular A-87, as amended May 10, 2004. pation in the financing of a particular which superseded Circular A-87, as Federal award. Provision for profit or amended and issued May 4, 1995. 154 OMB Circulars and Guidance Pt.225,App.A §225.50 Policy review date. A.Purpose and Scope This part will have a policy review 1. Objectives. This Appendix establishes principles for determining the allowable three years from the date of issuance. costs incurred by State, local, and federally- recognized§226.65 Information contact. Indian tribal governments (gov- ernmental units) under grants, cost reim- Further information concerning this bursement contracts, and other agreements part may be obtained by contacting the with the Federal Government (collectively Office of Federal Financial Manage- referred to in this appendix and other appen- dices to 2 CFR part 225 as"Federal awards"). ment, Financial Standards and Report- The principles are for the purpose of cost de- ing Branch, Office of Management and termination and are not intended to identify Budget, Washington, DC 20503, tele- the circumstances or dictate the extent of phone 202-395-3993. Federal or governmental unit participation in the financing of a particular program or APPENDIX A TO PART 225-GENERAL project. The principles are designed to pro- PRINCIPLES FOR DETERMINING AL- vide that Federal awards bear their fair LOWABLE COSTS share of cost recognized under these prin- ciples except where restricted or prohibited TABLE OF CONTENTS by law. Provision for profit or other incre- ment above cost is outside the scope of 2 A.Purpose and Scope CFR part 225. 1.Objectives 2.Policy guides. 2.Policy guides a. The application of these principles is 3.Application based on the fundamental premises that: B.Definitions (1) Governmental units are responsible for 1. Approval or authorization of the award- the efficient and effective administration of ing or cognizant Federal agency Federal awards through the application of 2.Award sound management practices. 3.Awarding agency (2) Governmental units assume responsi- 4.Central service cost allocation plan bility for administering Federal funds in a 5.Claim manner consistent with underlying agree- 6.Cognizant agency ments, program objectives, and the terms 7.Common rule and conditions of the Federal award. 8.Contract 9.Cost (3)Each governmental unit,in recognition 10.Cost allocation plan of its own unique combination of staff,facili- 11.Cost objective ties, and experience, will have the primary 12. Federally-recognized Indian tribal gov- responsibility for employing whatever form ernment of organization and management techniques 13.Governmental unit may be necessary to assure proper and effi- 14.Grantee department or agency cient administration of Federal awards. 15.Indirect cost rate proposal b. Federal agencies should work with H.Local government States or localities which wish to test alter- 17.Public assistance cost allocation plan native mechanisms for paying costs for ad- 18.State ministering Federal programs. The Office of C.Basic Guidelines Management and Budget (OMB) encourages 1.Factors affecting allowability of costs Federal agencies to test fee-for-service alter- 2.Reasonable costs natives as a replacement for current cost-re- 3.Allocable costs imbursement payment methods in response 4.Applicable credits to the National Performance Review's(NPR) D.Composition of Cost recommendation. The NPR recommended 1.Total cost the fee-for-service approach to reduce the 2.Classification of costs burden associated with maintaining systems E.Direct Costs for charging administrative costs to Federal 1.General programs and preparing and approving cost 2.Application allocation plans. This approach should also 3.Minor items increase incentives for administrative effi- F.Indirect Costs ciencies and improve outcomes. 1.General 3.Application. 2. Cost allocation plans and indirect cost a. These principles will be applied by all proposals Federal agencies in determining costs in- 3.Limitation on indirect or administrative curred by governmental units under Federal costs awards (including subawards) except those G.Interagency Services with (1) publicly-financed educational insti- R.Required Certifications tutions subject to,2 CFR part 220,Cost Prin- General Principles for Determining Allow- ciples for Educational Institutions(OMB Cir- able Costs cular A-21), and (2) programs administered 155 Pt. 225,App. A 2 CFR Ch. II (1-1-12 Edition) by publicly-owned hospitals and other pro- Federal sources, Federal agencies may tax. viders of medical care that are subject to re- empt these covered State-administered, non- quirements promulgated by the sponsoring entitlement grant programs from certain Federal agencies. However, 2 CFR part 225 OMB grants management requirements. The does apply to all central service and depart- exemptions would be from all but the ment/agency costs that are allocated or allocability of costs provisions of Appendix A billed to those educational institutions, hos- subsection C.3 of 2 CFR part 225, Cost Prin- pitals,and other providers of medical care or ciples for State, Local, and Indian Tribal services by other State and local government Governments(OMB Circular A-87); Appendix departments and agencies. A, Section CA of 2 CFR 220, Cost Principles b. All subawards are subject to those Fed- for Educational Institutions (Circular A-21); era! cost principles applicable to the par- Appendix A, subsection A.4 of 2 CFR 230 Cost ticular organization concerned. Thus, if a Principles for Non-Profit Organizations (Cir- subaward is to a governmental unit (other cular A-122); and from all of the administra- than a college,university or hospital).2 CFR tive requirements provisions of 2 CFR part part 225 shall apply; if a subaward is to a 215, Uniform Administrative Requirements commercial organization, the cost principles for Grants and Agreements with Institutions applicable to commercial organizations shall of Higher Education, Hospitals, and Other apply;if a subaward is to a college or univer- Non-Profit Organizations (Circular A-110), sity, 2 CFR part 220 (Circular A-21) shall and the agencies' grants management corn- apply;if a subaward is to a hospital,the cost mon rule. principles used by the Federal awarding (3) When a Federal agency provides this agency for awards to hospitals shall apply, flexibility, as a prerequisite to a State's ex- subject to the provisions of subsection A.3.a. ercising this option. a State must adopt its of this Appendix; if a subaward is to some re- other non-profit organization, 2 CFR part own written fiscal and administrative for 230, Cost Principles for Non-Profit Organiza- quirements for expending and accounting - tions(Circular A-122),shall apply. alls funds,which are consistent with the pro- s.These principles shall be used as a guide visions extendo 2 CFR part policies225 COMB Circular A in the pricing of fixed price arrangements eat and such to all re- whereativeci - costs are used in determining the ap eats. These fiscal and administrative propriate price. quirements must be sufficiently specific to d. Where a Federal contract awarded to a ensure that: Funds are used in compliance governmental unit incorporates a Cost Ac- with all applicable Federal statutory and counting Standards (CAS) clause. the re- regulatory provisions, costs are reasonable and necessary for operating these programs, quirements of that clause shall apply. In such cases, the governmental unit and the and funds are not used for general expenses cognizant Federal agency shall establish an required to carry out other responsibilities appropriate advance agreement on how the of a State or Its subrecipients. governmental unit will comply with applica- B.Definitions ble CAS requirements when estimating, ac- 1. "Approval or authorization of the award- cumulating and reporting costs under CAS- ing or cognizant Federal agency"means doc- covered contracts. The agreement shall indi- umentation evidencing consent prior to in- cate that 2 CFR part 225(OMB Circular A-87) curring a specific cost. If such costs are spe- requirements will be applied to other Fed- cifically identified in a Federal award docu- eral awards. In all cases, only one set of ment, approval of the document constitutes records needs to be maintained by the gov- approval of the costs.If the costs are covered ernmental unit. by a State/local-wide cost allocation plan or e.Conditional exemptions, an indirect cost proposal, approval of the (1) OMB authorizes conditional exemption plan constitutes the approval. from OMB administrative requirements and 2. "Award" means grants, cost reimburse- cost principles for certain Federal programs rnent contracts and other agreements be- with statutorily-authorized consolidated tween a State, local and Indian tribal gov- planning and consolidated administrative ernment and the Federal Government, funding, that are identified by a Federal 3. "Awarding agency" means (a) with re- agency and approved by the head of the Ex- spect to a grant, cooperative agreement, or ecutive department or establishment. A Fed- cost reimbursement contract, the Federal eral agency shall consult with OMB during agency, and (b) with respect to a subaward. its consideration of whether to grant such an the party that awarded the subaward. exemption. 4. "Central service cost allocation plan" (2) To promote efficiency in State and means the documentation identifying, accu- local program administration, when Federal mutating, and allocating or developing bill- non-entitlement programs with common pur- ing rates based on the allowable costs of poses have specific statutorily,-authorized services provided by a governmental unit on consolidated planning and consolidated ad- a centralized basis to its departments and ministrative funding and where most of the agencies. The costs of these services may be State agency's resources come from non- allocated or billed to users. 158 OMB Circulars and Guidance Pt. 225,App. A 5. "Claim" means a written demand or by the Secretary of the Interior as eligible written assertion by the governmental unit for the special programs and services pro- or grantor seeking, as a matter of right, the vided through the Bureau of Indian Affairs. payment of money in a sum certain,the ad- 13. "Governmental unit" means the entire justment or interpretation of award terms, State, local, or federally-recognized Indian or other relief arising under or relating to tribal government, including any component the award. A. voucher, invoice or other rou- thereof. Components of governmental units tine request for payment that is not a dis- may function independently of the govern- pute when submitted is not a claim.Appeals, mental unit in accordance with the term of such as those filed by a governmental unit in the award. response to questioned audit costs, are not 14. "Grantee department or agency"means considered claims until a final management the component of a State,local,or federally- decision is made by the Federal awarding recognized Indian tribal government which is agency. responsible for the performance or adminis- 6. "Cognizant agency" means the Federal tration of all or some part of a Federal agency responsible for reviewing, negoti- award. ating,and approving cost allocation plans or 15. "Indirect cost rate proposal"means the indirect cost proposals developed under 2 documentation prepared by a governmental CFR part 225 on behalf of all Federal agen- unit or component thereof to substantiate dies. OMB publishes a listing of cognizant its request for the establishment of an indi- agencies. rect cost rate as described in Appendix E of 7. "Common Rule" means the "Uniform 2 CFR part 225. Administrative Requirements for Grants and 16. "Local government" means a county, Cooperative Agreements to State and Local municipality, city, town, township, local Governments; Final Rule" originally issued public authority,school district, special dis- at 53 FR 8034-8103 (March 11, 1988), Other trict, intrastate district, council of govern- common rules will be referred to by their ments(whether or not incorporated as a non- specific titles, profit corporation under State law), any 8. "Contract" means a mutually binding other regional or interstate government en- legal relationship obligating the seller to tity, or any agency or instrumentality of a furnish the supplies or services (including local government. construction)and the buyer to pay for them. 17. "Public assistance cost allocation plan" It includes all types of commitments that means a narrative description of the proce- obligate the government to an expenditure of dures that will be used in identifying, meas- appropriated funds and that,except as other- uring and allocating all administrative costs wise authorized, are in writing. In addition to all of the programs administered or super- to bilateral instruments, contracts include vised by State public assistance agencies as (but are not limited to): Awards and notices described in Appendix D of 2 CFR part 225. of awards; job orders or task orders issued 18. "State" means any of the several under basic ordering agreements;letter con- States of the United States, the District of tracts;orders,such as purchase orders,under Columbia, the Commonwealth of Puerto which the contract becomes effective by Rico, any territory or possession of the written acceptance or performance; and, bi- United States, or any agency or instrumen- lateral contract modifications. Contracts do tality of a State exclusive of local govern- not include grants and cooperative agree- ments. ments covered by 31 U.S.C.6301 et seq. C.Basic Guidelines 9. "Cost" means an amount as determined 1. Factors affecting allowability of costs. on a cash, accrual, or other basis acceptable To be allowable under Federal awards, costs to the Federal awarding or cognizant agency. must meet the following general criteria: It does not include transfers to a general or a. Be necessary and reasonable for proper similar fund_ and efficient performance and administra- 10. "Cost allocation plan" means central tion of Federal awards. service coat allocation plan, public assist- b.Be allocable to Federal awards under the ance cost allocation plan, and indirect cost provisions of 2 CFR part 225. rate proposal. Each of these terms is further c. Be authorized or not prohibited under defined in this section. State or local laws or regulations. 11. "Cost objective" means a function, or- d. Conform to any limitations or exclu- ganizational subdivision, contract, grant, or sions set forth in these principles, Federal other activity for which cost data are needed laws, terms and conditions of the Federal and for which costs are incurred. award, or other governing regulations as to 12. "Federally-recognized Indian tribal types or amounts of cost items. government"means the governing body or a e. Be consistent with policies, regulations. governmental agency of any Indian tribe, and procedures that apply uniformly to both band, nation, or other organized group or Federal awards and other activities of the community (including any native village as governmental unit. defined in Section 3 of the Alaska Native f.Be accorded consistent treatment.A cost Claims Settlement Act,$5 Stat.688)certified may not be assigned to a Federal award as a 157 Pt. 225, App. A 2 CFR Ch. it (1-1-12 Edition) direct cost if any other cost incurred for the award,a cost allocation plan will be required same purpose in like circumstances has been as described 1n Appendices C, D, and E to allocated to the Federal award as an indirect this part. cost. 4.Applicable credits, g. Except as otherwise provided for in 2 a.Applicable credits refer to those receipts CFR part 225, be determined in accordance et reduction of expenditure-type trans- with generally accepted accounting prin- actions that offset or reduce expense items eiples. allocable to Federal awards as direct or indi- h.Not be included as a cost or used to meet rect costs. Examples of such transactions cost sharing or matching requirements of are: Purchase discounts, rebates or allow- any other Federal award in either the cur- antes, recoveries or indemnities on losses, rent or a prior period, except as specifically insurance refunds or rebates, and adjust- provided by Federal law or regulation. ments of overpayments or erroneous charges. i. Be the net of all applicable credits. To the extent that such credits accruing to j. Be adequately documented. or received by the governmental unit relate 2.Reasonable costs.A cost is reasonable if, to allowable costs, they shall be credited to in its nature and amount, it does not exceed the Federal award either as a cost reduction that which would be incurred by a prudent or cash refund,as appropriate. person under the circumstances prevailing at b.In some instances,the amounts received the time the decision was made to incur the from the Federal Government to finance ac- cost. The question of reasonableness is par- tivities or service operations of the govern- ticularly important when governmental mental unit should be treated as applicable units or components are predominately fed- credits. Specifically, the concept of netting erally-funded.In determining reasonableness such credit items (including any amounts of a given cost, consideration shall be given used to meet cost sharing or matching re- to: quirements) should be recognized in deter- a. Whether the cost is of a type generally mining the rates or amounts to be charged recognized as ordinary and necessary for the to Federal awards. (See Appendix B to this operation of the governmental unit or the part, item 11, "Depreciation and use allow- performance of the Federal award. antes," for areas of potential application in b. The restraints or requirements imposed the matter of Federal financing of activi- by such factors as: Sound business practices; ties.) arm's-length bargaining; Federal, State and D.Composition of Cost other laws and regulations; and, terms and 1. Total cost. The total cost of Federal conditions of the Federal award. awards is comprised of the allowable direct c. Market prices for comparable goods us cost of the program, plus its allocable por- services. tion of allowable indirect costs, less applica- d.Whether the individuals concerned acted ble credits. with prudence in the circumstances consid- 2. Classification of costs. There is no uni- ering their responsibilities to the govern- versal rule for classifying certain costs as ei- mental unit, its employees, the public at ther direct or indirect under every account- large,and the Federal Government. ing system. A cost may be direct with re- e. Significant deviations from the estab- spect to some specific service or function, lished practices of the governmental unit but indirect with respect to the Federal which may unjustifiably increase the Fed- award or other final cost objective. There- eral award's cost. fore, it is essential that each item of cost be 3.Allocable costs. treated consistently in like circumstances a. A cost is allocable to a particular cost either as a direct or an indirect cost. Guide- objective if the goods or services involved lines for determining direct and indirect are chargeable or assignable to such cost ob- costs charged to Federal awards are provided jective in accordance with relative benefits in the sections that follow. received. E.Direct Costs b. All activities which benefit from the 1. General. Direct costs are those that can governmental unit's indirect cost, including be identified specifically with a particular unallowable activities and services donated final cost objective. to the governmental unit by third parties, 2.Application.Typical direct costs charge- will receive an appropriate allocation of in- able to Federal awards are: direct costs. a. Compensation of employees for the time c. Any cost allocable to a particular Fed- devoted and identified specifically to the eral award or cost objective under the prin- performance of those awards. ciples provided for in 2 CFR part 225 may not b.Cost of materials acquired,consumed,or be charged to other Federal awards to over- expended specifically for the purpose of come fund deficiencies, to avoid restrictions those awards. imposed by law or terms of the Federal c. Equipment and other approved capital awards,or for other reasons. expenditures. d. Where an accumulation of indirect costs d. Travel expenses incurred specifically to will ultimately result in charges to a Federal carry out the award. 158 OMB Circulars and Guidance Pt. 225, App. B 3. Minor items.Any direct cost of a minor using the Certificate of Cost Allocation Plan amount may be treated as an indirect cost or Certificate of Indirect Costs as set forth in for reasons of practicality where such ac- Appendices C and E to this part. The certifi- counting treatment for that item of cost is Cate must be signed on behalf of the govern- consistently applied to all cost objectives. mental unit by an individual at a level no F.Indirect Costs lower than chief financial officer of the gov- 1. General. Indirect costs are those: In- ernmental unit that submits the proposal or curred for a common or joint purpose bene- component covered by the proposal. fiting more than one cost objective, and not 2. No cost allocation plan or indirect cost readily assignable to the cost objectives spe- rate shall be approved by the Federal Gov- cifically benefitted,without effort dispropor- ernment unless the plan or rate proposal has tionate to the results achieved. The term been certified. Where it is necessary to es- "indirect costs," as used herein, applies to tablish a cost allocation plan or an indirect costs of this type originating in the grantee cost rate and the governmental unit has not department, as well as those incurred by submitted a certified proposal for estab- other departments in supplying goods, serv- lishing such a plan or rate in accordance ices, and facilities. To facilitate equitable with the requirements, the Federal Govern- distribution of indirect expenses to the cost ment may either disallow all indirect costs objectives served,it may be necessary to es- or unilaterally establish such a plan or rate. tablish a number of pools of indirect costs Such a plan or rate may be based upon au- within a governmental unit department or in dited historical data or such other data that other agencies providing services to a gov- have been furnished to the cognizant Federal ernmental unit department. Indirect cost agency and for which it can be demonstrated pools should be distributed to benefitted cost that all unallowable costs have been ex- objectives on bases that will produce an eq- eluded. When a cost allocation plan or indi- uitable result in consideration of relative rect cost rate is unilaterally established by benefits derived. the Federal Government because of failure of 2. Cost allocation plans and indirect cost the governmental unit to submit a certified proposals. Requirements for development proposal, the plan or rate established will be and submission of cost allocation plans and set to ensure that potentially unallowable indirect cost rate proposals are contained in costs will not be reimbursed. Appendices C,D,and E to this part. 3.Limitation on indirect or administrative APPENDIX B TO PART 225—SELECTED costs. a. In addition to restrictions contained in ITEMS OF COST 2 CFR part 225, there may be laws that fur- TABLE OF CONTENTS ther limit the amount of administrative or indirect cost allowed. 1.Advertising and public relations costs b. Amounts not recoverable as indirect 2.Advisory councils costs or administrative costs under one Fed- 3.Alcoholic beverages eral award may not be shifted to another 4.Audit costs and related services Federal award,unless specifically authorized 5.Bad debts by Federal legislation or regulation, 6.Bonding costs G.Interagency Services.The cost of services 7.Communication costs provided by one agency to another within 8.Compensation for personal services the governmental unit may include allow- 9.Contingency provisions able direct costs of the service plus a pro 10. Defense and prosecution of criminal and rate share of indirect costs.A standard indi- civil proceedings,and claims rect cost allowance equal to ten percent of 11.Depreciation and use allowances the direct salary and wage cost of providing 12.Donations and contributions the service (excluding overtime, shift pre- 13. Employee morale, health, and welfare miums, and fringe benefits) may be used in costs lieu of determining the actual indirect costs 14.Entertainment costs of the service. These services do not include 15.Equipment and other capital expenditures centralized services included in central serv- 16.Fines and penalties ice cost allocation plans as described in Ap- 17. Fund raising and investment mnnage- pendix C to this part. ment costs H. Required Certifications. Each cost alloca- 18 Gains and losses on disposition of depre- tion plan or indirect cost rate proposal re- ciable property and other capital assets quired by Appendices C and E to this part and substantial relocation of Federal must comply with the following: programs 1. No proposal to establish a cost alloca- 19.General government expenses tion plan or an indirect cost rate, whether 20.Goods or services for personal use submitted to a Federal cognizant agency or 21.Idle facilities and idle capacity maintained on file by the governmental unit, 22.Insurance and indemnification shall be acceptable unless such costs have 23.Interest been certified by the governmental unit 24.Lobbying 159 Pt. 225,App. B 2 CFR Ch. II (1-1-12 Edition) 25.Maintenance,operations,and repairs d.The only allowable public relations costs 26.Materials and supplies costs are. 27.Meetings and conferences (1) Costs specifically required by the Fed- 28. Memberships, subscriptions, and profes- eral award: sionai activity costs (2)Costs of communicating with the public 29. Patent costs and press pertaining to specific activities or 30. Plant and homeland security costs accomplishments which result from perform- 31.Pre-award costs ance of Federal awards(these costs are con- 32.Professional service costs sidered necessary as part of the outreach ef- 33.Proposal costs fort for the Federal award);or 34.Publication and printing costs (3)Costs of conducting general liaison with 35.Rearrangement and alteration costs news media and government public relations 36.Reconversion costs officers, to the extent that such activities 37.Rental costs of building and equipment are limited to communication and liaison 38. Royalties and other costs for the use of necessary keep the public informed on mat- patents ters of public concern, such as notices of 39.Selling and marketing Federal contract/grant awards, financial 40.Taxes matters,etc. 41. Termination costs applicable to spun- e.Costs identified in subsections c and d if sored agreements incurred for more than one Federal award or 42.Training costs for both sponsored work and other work of 43.Travel costs the governmental unit, are allowable to the Sections 1 through 43 provide principles to extent that the principles in Appendix A to be applied in establishing the allowability or this part,sections E.("Direct Costs")and F. unallowability of certain items of cost, ("Indirect Costs")are observed. These principles apply whether a cost is f. Unallowable advertising and public rela- treated as direct or indirect.A cost is allow- tions costs include the following: able for Federal reimbursement only to the (1) All advertising and public relations extent of benefits received by Federal awards costs other than as specified in subsections and its conformance with the general poll- l.c,d,and e of this appendix; cies and principles stated in Appendix A to (2) Costs of meetings, conventions, con- this part. Failure to mention a particular vocations, or other events related to other item of cost in these sections is not intended activities of the governmental unit, includ- to imply that it is either allowable or unal- ing: towable; rather, determination of allow- (a) Costs of displays, demonstrations, and ability in each case should be based on the exhibits; treatment or standards provided for similar (b) Costs of meeting rooms, hospitality or related items of cost. suites, and other special facilities used in 1.Advertising and public relations costs, conjunction with shows and other special a. The term advertising costs means the events;and costs of advertising media and corollary ad- (c) Salaries and wages of employees en- ministrative costs. Advertising media in- gaged in setting up and displaying exhibits, elude magazines, newspapers, radio and tele- making demonstrations,and providing brief- vision, direct mail, exhibits, electronic or ings; computer transmittals,and the like. (3) Costs of promotional items and memo- b. The term public relations includes corn- rabilia, including models, gifts, and sou- munity relations and means those activities venirs; dedicated to maintaining the image of the (4)Costs of advertising and public relations governmental unit or maintaining or pro- designed solely to promote the governmental rooting understanding and favorable rela- unit. Lions with the community or public at large 2. Advisory councils.Costs incurred by advi- or any segment of the public. sory councils or committees are allowable as c. The only allowable advertising costs are a direct cost where authorized by the Fed- those which are solely for: eral awarding agency or as an indirect cost (1) The recruitment of personnel required where allocable to Federal awards. for the performance by the governmental 3. Alcoholic beverages. Costs of alcoholic unit of obligations arising under a Federal beverages are unallowable. award; 4.Audit costs and related services. (2) The procurement of goods and services a.The costs of audits required by,and per- for the performance of a Federal award; formed in accordance with, the Single Audit (3) The disposal of scrap or surplus mate- Act,as implemented by Circular A-133."Au- rials acquired in the performance of a Fed- dits of States, Local Governments, and Non- oral award except when governmental units Profit Organizations"are allowable.Also see are reimbursed for disposal costs at a pre- 31 U.S.C. 7505(b) and section 230 ("Audit determined amount;or Costs")of Circular A-133. (4) Other specific purposes necessary to b. Other audit costs are allowable if in- meet the requirements of the Federal award. eluded in a cost allocation plan or indirect 1$Q OMB Circulars and Guidance Pt. 225, App. B cost proposal, or if specifically approved by found in the other activities of the govern- the awarding agency as a direct cost to an mental unit, compensation will be consid- award, ered reasonable to the extent that it is com- e. The cost of agreed-upon procedures en- parable to that paid for similar work in the gagements to monitor subrecipients who are labor market in which the employing gov- exempted from A-133 under section 200(d)are ernment competes for the kind of employees allowable,subject to the conditions listed in involved. Compensation surveys providing A-133,section 230(b)(2). data representative of the labor market in- 5. Bad debts. Bad debts, including losses volved will be an acceptable basis for evalu- (whether actual or estimated) arising from ating reasonableness. uncollectible accounts and other claims, re- c.Unallowable costs.Costs which are unal- lated collection costs, and related legal lowable under other sections of these prin- costs,are unallowable. ciples shall not be allowable under this sec- 6.Bonding costs, tion solely on the basis that they constitute a. Bonding costs arise when the Federal personnel compensation. Government requires assurance against fi- d.Fringe benefits. nancial loss to itself or others by reason of (1)Fringe benefits are allowances and serv- the act or default of the governmental unit. ices provided by employers to their employ- They arise also in instances where the ees as compensation in addition to regular ernmental unit requires similar assurannce,ce. salaries are such bonds as bid,performance, and wages. Fringe benefits include, payment, advance payment, infringement, but are not limited to,the costs of leave,err- and fidelity bonds, ployee insurance, pensions, and unemploy- b. Costs of bonding required pursuant to ment benefit plans. Except as provided else the terms of the award are allowable. where in these principles, the costs of fringe c.Costs of bonding required by the govern- benefits are allowable to the extent that the mental unit in the general conduct of its op- benefits are reasonable and are required by erations are allowable to the extent that law, governmental unit-employee agree- such bonding is in accordance with sound ment, or an established policy of the govern- business practice and the rates and pre- mental unit. miums are reasonable under the cir- (2)The cost of fringe benefits in the form cumetances. of regular compensation paid to employees 7. Communication costs. Costs incurred for during periods of authorized absences from telephone services, local and long distance the job, such as for annual leave,sick leave, telephone calls, telegrams, postage, mes- holidays, court leave, military leave, and senger, electronic or computer transmittal other similar benefits, are allowable if:They services and the like are allowable. are provided under established written leave 8.Compensation for personal services. policies; the costs are equitably allocated to a. General. Compensation for personnel all related activities, including Federal services includes all remuneration,paid cur- awards: and, the accounting basis (cash or rently or accrued, for services rendered dur- accrual) selected for costing each type of ing the period of performance under Federal leave is consistently followed by the govern- awards,including but net necessarily limited mental unit. to wages, salaries, and fringe benefits. The (3)When a governmental unit uses the cash costs of such compensation are allowable to basis of accounting, the cost of leave is rec- the extent that they satisfy the specific re- ognized in the period that the leave is taken quirements of this and other appendices and paid for. Payments for unused leave under 2 CFR Part 225, and that the total when an employee retires or terminates em- compensation for individual employees: ployment are allowable in the year of pay- (1) Is reasonable for the services rendered merit provided they are allocated as a gen- and conforms to the established policy of the eral administrative expense to all activities governmental unit consistently applied to of the governmental unit or component. both Federal and non-Federal activities; (4)The accrual basis may be only used for (2) Follows an appointment made in ac- those types of leave for which a liability as cordance with a governmental unit's laws defined by Generally Accepted Accounting and rules and meets merit system or other Principles (GAAP) exists when the leave is requirements required by Federal law,where earned. When a governmental unit uses the applicable;and accrual basis of accounting, in accordance (3)Is determined and supported as provided with GAAP, allowable leave costs are the in subsection h. lesser of the amount accrued or funded, b. Reasonableness. Compensation for em- (5) The cost of fringe benefits in the form ployees engaged in work on Federal awards of employer contributions or expenses for so- will be considered reasonable to the extent cial security; employee life, health, unem- that it is consistent with that paid for simi- ployment, and worker's compensation insur- lar work in other activities of the govern- ance(except as indicated in section 22,Insur- mental unit. In cases where the kinds of em- ance and indemnification); pension plan ployees required for Federal awards are not costs (see subsection e.); and other similar 161 Pt. 225,App. B 2 CPR Ch. II (1-1-12 Edition) benefits are allowable, provided such bene- (1) For PRHB financed on a pay as-you-go fits are granted under established written method, allowable costs will be limited to policies. Such benefits, whether treated as those representing actual payments to retir- indirect costs or as direct costs, shall be al- ees or their beneficiaries. located to Federal awards and all other ac- (2) PRHB costs calculated using an actu- tivities in a manner consistent with the pat- aria] cost method recognized by GAAP are tern of benefits attributable to the individ- allowable if they are funded for that year uals or group(s) of employees whose salaries within six months after the end of that year. and wages are chargeable to such Federal Costs funded after the six month period(or a awards and other activities. later period agreed to by the cognizant agen- e. Pension plan costs. Pension plan costs cy) are allowable in the year funded. The may be computed using a pay-as-you-go cognizant agency may agree to an extension method or an acceptable actuarial cost of the six month period if an appropriate ad- method in accordance with established writ- justment is made to compensate for the tim- ten policies of the governmental unit. ing of the charges to the Federal Govern- (1)For pension plans financed on a pay-as- ment and related Federal reimbursements you-go method, allowable costs will be lim- and the governmental unit's contributions to ited to those representing actual payments the PRHB fund. Adjustments may be made to retirees or their beneficiaries by cash refund, reduction in current year's (2)Pension costs calculated using an actu- PRHB costs, or other equitable procedures to axial cost-based method recognized by GAAP compensate the Federal Government for the are allowable for a given fiscal year if they time value of Federal reimbursements in ex- are funded for that year within six months cess of contributions to the PRHB fund. after the end of that year.Costs funded after (3) Amounts funded in excess of the actu- the six month period (or a later period arially determined amount for a fiscal year agreed to by the cognizant agency) are al- may be used as the government's contribu- lowable in the year funded. The cognizant tion in a future period. agency may agree to an extension of the six (4) When a governmental unit converts to month period if an appropriate adjustment is an acceptable actuarial cost method and made to compensate for the timing of the funds PRHB costs in accordance with this charges to the Federal Government and re- method,the initial unfunded liability attrib- lated Federal reimbursement and the goy- utable to prior years shall be allowable if ernmental unit's contribution to the pension amortized over a period of years in accord- fund. Adjustments may be made by cash re- ance with GAAP, or,if no such GAAP period fund or other equitable procedures to corn- exists,over a period negotiated with the cog- pensate the Federal Government for the time nizant agency. value of Federal reimbursements in excess of (5)To be allowable in the current year, the contributions to the pension fund. PRHB costs must be paid either to: (3) Amounts funded by the governmental (a) An insurer or other benefit provider as unit in excess of the actuarially determined current year costs or premiums,or amount for a fiscal year may be used as the (b) An Insurer or trustee to maintain a governmental unit's contribution in future trust fund or reserve for the sole purpose of periods. providing post-retirement benefits to retir- (4) When a governmental unit converts to ees and other beneficiaries. an acceptable actuarial cost method, as de- (6) The Federal Government shall receive fined by GAAP, and funds pension costs in an equitable share of any amounts of pre- accordance with this method, the unfunded viously allowed post-retirement benefit costs liability at the time of conversion shall be (including earnings thereon)which revert or allowable if amortized over a period of years inure to the governmental unit in the form in accordance with GAAP. of a refund,withdrawal,or other credit, (5) The Federal Government shall receive g.Severance pay. an equitable share of any previously allowed (1) Payments in addition to regular sala- pension costs (including earnings thereon) ries and wages made to workers whose em- which revert or inure to the governmental ployment is being terminated are allowable unit in the form of a refund, withdrawal, or to the extent that, in each case, they are re- other credit. quired by law, employer-employee agree- f. Post-retirement health benefits. Post-re- ment,or established written policy. tirement health benefits (PRHB) refers to (2) Severance payments (but not accruals) costs of health insurance or health services associated with normal turnover are allow- not, included in a pension plan covered by able. Such payments shall be allocated to all subsection B.e. of this appendix for retirees activities of the governmental unit as an in- and their spouses,dependents,and survivors, direct cost. PRHB costs may be computed using a pay- (3)Abnormal or mass severance pay will be as-you-go method or an acceptable actuarial considered on a case-by-case basis and is al- cost method in accordance with established lowable only if approved by the cognizant written polices of the governmental unit. Federal agency. 162 OMB Circulars and Guidance Pt. 225, App. B h. Support of salaries and wages. These approximations of the activity actually per- standards regarding time distribution are in formed; addition to the standards for payroll docu- (Hi At least quarterly, comparisons of ac- mentation. tual costs to budgeted distributions based on (1) Charges to Federal awards for salaries the monthly activity reports are made.Costs and wages,whether treated as direct or indi- charged to Federal awards to reflect adjust- rect costs, will be based on payrolls docu- ments made as a result of the activity actu- mented in accordance with generally accept- ally performed may be recorded annually if ed practice of the governmental unit and ap- the quarterly comparisons show the dif- proved by a responsible official(s)of the gay- ferences between budgeted and actual costs ernmental unit. are less than ten percent;and (2) No further documentation is required (iii) The budget estimates or other dis- for the salaries and wages of employees who tribution percentages are revised at least work in a single indirect cost activity. quarterly, if necessary, to reflect changed (3)Where employees are expected to work circumstances. solely on a single Federal award or cost ob- (6) Substitute systems for allocating sala- jective, charges for their salaries and wages ries and wages to Federal awards may be will be supported by periodic certifications used in place of activity reports. These sys- that the employees worked solely on that terns are subject to approval if required by program for the period covered by the cer- the cognizant agency.Such systems may in- tification. These certifications will be pre- elude, but are not limited to, random mo- pared at least semi-annually and will be ment sampling, case counts, or other quan- signed by the employee or supervisory offi- tillable measures of employee effort, cial having first hand knowledge of the work (a) Substitute systems which use sampling performed by the employee. methods (primarily for Temporary Assist- (4)Where employees work on multiple ac- ance to Needy Families (TANF), Medicaid, tivities or cost objectives, a distribution of and other public assistance programs) must their salaries or wages will be supported by meet acceptable statistical sampling stand- personnel activity reports or equivalent doe- ards including: umentation which meets the standards in (1)The sampling universe must include all subsection 8.h.(5) of this appendix unless a of the employees whose salaries and wages statistical sampling system (see subsection are to be allocated based on sample results 8.h.(6) of this appendix) or other substitute except as provided in subsection 8.h.(6)(c) of system has been approved by the cognizant this appendix; Federal agency. Such documentary support (ii) The entire time period involved must will be required where employees work on: be covered by the sample;and (a)More than one Federal award, (iii)The results must be statistically valid (b) A Federal award and a non-Federal and applied to the period being sampled. award, (b)Allocating charges for the sampled em- (c) An indirect cost activity and a direct ployees' supervisors, clerical and support cost activity, staffs, based on the results of the sampled (d) Two or more indirect activities which employees,will be acceptable. are allocated using different allocation (c)Less than full compliance with the sta- bases,or tistical sampling standards noted in sub- (e)An unallowable activity and a direct or section 8.h.(6)(a)of this appendix may be ac- indirect cost activity. cepted by the cognizant agency if it con- (5)Personnel activity reports or equivalent eludes that the amounts to be allocated to documentation must meet the following Federal awards will be minimal, or if it con- standards: eludes that the system proposed by the gov- (a)They must reflect an after-the-fact dis- ernmental unit will result in lower costs to tribution of the actual activity of each em- Federal awards than a system which corn- ployee, plies with the standards. (b)They must account for the total activ- (7)Salaries and wages of employees used in ity for which each employee is compensated, meeting cost sharing or matching require- (c)They must be prepared at least monthly ments of Federal awards must be supported and must coincide with one or more pay pert- in the same manner as those claimed as al- ode,and lowable costs under Federal awards. (d) They must be signed by the employee. i.Donated services. (e) Budget estimates or other distribution (1) Donated or volunteer services may be percentages determined before the services furnished to a governmental unit by profes- are performed do not qualify as support for sional and technical personnel, consultants, charges to Federal awards but may be used and other skilled and unskilled labor. The for interim accounting purposes, provided value of these services is not reimbursable that: either as a direct or indirect cost. However, (i)The governmental unit's system for es- the value of donated services may be used to tablishing the estimates produces reasonable meet cost sharing or matching requirements 163 Pt. 225,App. B 2 CFR Ch. II (1-1-12 Edition) in accordance wall the provisions of the cost records have not been maintained, a Common Rule. reasonable estimate of the original acquisi- (2)The value of donated services utilized in tion cost may be used. The value of an asset the performance of a direct cost activity donated to the governmental unit by an un- shall, when material in amount, be consid- related third party shall be its fair market ered in the determination of the govern- value at the time of donation.Governmental mental unit's indirect costs or rate(s) and, or quasi-governmental organizations located accordingly, shall be allocated a propor- within the same State shall not be consid- tionate share of applicable indirect costs. ered unrelated third parties for this purpose. (3)To the extent feasible, donated services c. The computation of depreciation or use will be supported by the same methods used allowances will exclude: by the governmental unit to support the (1)The cost of land: allocability of regular personnel services. (2)Any portion of the cost of buildings and 9. Contingency provisions. Contributions to equipment borne by or donated by the Fed- a contingency reserve or any similar provi- eral Government irrespective of where title lion made for events the occurrence of which was originally vested or where it presently cannot be foretold with certainty as to time, resides;and intensity, or with an assurance of their hap- (3)Any portion of the cost of buildings and pening, are unallowable. The term "contin- equipment contributed by or for the govern- gency reserve" excludes self-insurance re- mental unit, or a related donor organization, serves (see section 22.c. of this appendix), in satisfaction of a matching requirement. pension plan reserves (see section 8.e.). and d. Where the depreciation method is fol- post-retirement health and other benefit re- lowed,the following general criteria apply: serves (section 8.f.) computed using accept- (1)The period of useful service (useful life) able actuarial cost methods. established in each case for usable capital 10. Defense and prosecution of criminal e,ted assets must take into consideration such fac- civil proceedings,and claims. tors as type of construction, nature of the a. The following costs are unallowable for equipment used, historical usage patterns, contracts covered by 10 U.S.C. 2324(k), "Al- technological developments,and the renewal lowable costs under defense contracts." and replacement policies of the govern- (1)Costs incurred in defense of any civil or mental unit followed for the individual items criminal fraud proceeding or similar pro- or classes of assets involved. In the absence ceeding (including filing of false certifi- of clear evidence indicating that the ex- cation brought by the United States where pected consumption of the asset will be sig- the contractor is found liable or has pleaded nificantly greater in the early portions than nob contendere to a charge of fraud or simi- in the later portions of its useful life, the lar proceeding(including filing of a false cer- straight line method of depreciation shall be tification). used. (2) Costs incurred by a contractor in con- (2) Depreciation methods once used shall nection with any criminal, civil or adminis- not be changed unless approved by the Fed- trative proceedings commenced by the eral cognizant or awarding agency, When the United States or a State to the extent pro- depreciation method is introduced for appli- vided in 10 U.S.C.2324(k). cation to an asset previously subject to a use b. Legal expenses required in the adminis- allowance, the annual depreciation charge tration of Federal programs are allowable. thereon may not exceed the amount that Legal expenses for prosecution of claims would have resulted had the depreciation against the Federal Government are anal- method been in effect from the date of acqui- lowable. sition of the asset. The combination of use 11.Depreciation and use allowances allowances and depreciation applicable to a. Depreciation and use allowances are the asset shall not exceed the total acquisi- means of allocating the cost of fixed assets tion cost of the asset or fair market value at to periods benefiting from asset use. Com- time of donation. pensation for the use of fixed assets on hand e. When the depreciation method is used may be made through depreciation or use al- for buildings, a building's shell may be seg- lowances.A combination of the two methods regaled from the major component of the may not be used in connection with a single building(e.g., plumbing system.heating,and class of fixed assets (e.g., buildings, office air conditioning system, etc.) and each equipment,computer equipment,etc.)except major component depreciated over its esti- as provided for in subsection g. Except for mated useful life, or the entire building(i.e.. enterprise funds and internal service funds the shell and all components)may be treated that are included as part of a State/local cost as a single asset and depreciated over a sin- allocation plan, classes of assets shall be de- gle useful life. termined on the same basis used for the gov- f. Where the use allowance method is fol- ernment-wide financial statements. lowed,the following general criteria apply: b. The computation of depreciation or use (1)The use allowance for buildings and im- allowances shall be based on the acquisition provements (including land improvements. cost of the assets involved. Where actual such as paved parking areas, fences, and 164 OMB Circulars and Guidance Pt. 225, App. B sidewalks) will be computed at an annual in accordance with the Federal Grants Man- rate not exceeding two percent of acquisition agement Common Rule, costs. (2)The value of donated services utilized in (2)The use allowance for equipment will be the performance of a direct cost activity computed at an annual rate not exceeding shall, when material in amount, be consid- 6%percent of acquisition cost. ered in the determination of the govern- (3)When the use allowance method is used mental unit's indirect costs or rate(s) and, for buildings, the entire building must be accordingly, shall be allocated a propor- treated as a single asset;the building's corn- tionate share of applicable indirect costs. ponents (e.g., plumbing system, heating and (3)To the extent feasible, donated services air condition, etc.) cannot be segregated will be supported by the same methods used from the building's shell. The two percent by the governmental unit to support the limitation, however, need not be applied to allocability of regular personnel services. equipment which is merely attached or fas- 13. Employee morale, health, and welfare tened to the building but not permanently costs. fixed to it and which is used as furnishings a. The costs of employee information pub- or decorations or for specialized purposes lications, health or first-aid clinics and/or (e.g., dentist chairs and dental treatment infirmaries, recreational activities, em- units,counters,laboratory benches bolted to ployee counseling services,and any other ex- the floor, dishwashers, modular furniture, penses incurred in accordance with the gov- carpeting,etc.). Such equipment will be con- ernmental unit's established practice or cue- sidered as not being permanently fixed to the torn for the improvement of working condi- building if it can be removed without the de- tions, employer-employee relations, em- struction of, or need for costly or extensive ployee morale, and employee performance alterations or repairs, to the building or the are allowable. equipment. Equipment that meets these cri- b.Such costs will be equitably apportioned teria will be subject to the 6%percent equip- to all activities of the governmental unit.In- ment use allowance limitation, come generated from any of these activities g. A reasonable use allowance may be ne- will be offset against expenses. gotiated for any assets that are considered 14. Entertainment. Costs of entertainment, to be fully depreciated, after taking into including amusement, diversion, and social consideration the amount of depreciation activities and any costs directly associated previously charged to the government, the with such costs(such as tickets to shows or estimated useful life remaining at the time sports events, meals,lodging,rentals, trans- of negotiation, the effect of any increased portation,and gratuities)are unallowable. maintenance charges, decreased efficiency 15.Equipment and other capital expenditures. due to age, and any other factors pertinent a. For purposes of this subsection 15, the to the utilization of the asset for the purpose following definitions apply: contemplated. (1) "Capital Expenditures" means expendi- h. Charges for use allowances or deprecia- tures for the acquisition cost of capital as- tion must be supported by adequate property sets(equipment,buildings,land),or expendi- records. Physical inventories must be taken tures to make improvements to capital as- at least once every two years (a statistical sets that materially increase their value or sampling approach is acceptable) to ensure useful life. Acquisition cost means the cost that assets exist, and are in use. Govern- of the asset including the cost to put it in mental units will manage equipment in ac- place.Acquisition cost for equipment,for ex- cordance with State laws and procedures. ample, means the net invoice price of the When the depreciation method is followed, equipment, including the cost of any modi- depreciation records indicating the amount fications,attachments, accessories, or auxil- of depreciation taken each period must also lacy apparatus necessary to make it usable be maintained, for the purpose for which it is acquired. An- 12.Donations and contributions. ciliary charges, such as taxes, duty, protec- a. Contributions or donations rendered. tive in transit insurance,freight, and instal- Contributions or donations, including cash, lation may be included in, or excluded from property, and services, made by the govern- the acquisition cost in accordance with the mental unit, regardless of the recipient, are governmental unit's regular accounting unallowable practices. b.Donated services received: (2) "Equipment" means an article of non- (1) Donated or volunteer services may be expendable, tangible personal property hay- furnished to a governmental unit by profes- ing a useful life of more than one year and sional and technical personnel, consultants, an acquisition cost which equals or exceeds and other skilled and unskilled labor. The the lesser of the capitalization level estab- value of these services is not reimbursable lished by the governmental unit for financial either as a direct or indirect cost. However, statement purposes,or$5000. the value of donated services may be used to (3) "Special purpose equipment" means meet cost sharing or matching requirements equipment which is used only for research, 165 Pt. 225,App. B 2 CFR Ch. II (1-1-12 Edition) medical,scientific, or other technical activi- with, Federal, State, local, or Indian tribal ties. Examples of special purpose equipment laws and regulations are unallowable except include microscopes, x-ray machines, sur- when incurred as a result of compliance with gical instruments,and spectrometers. specific provisions of the Federal award or (4) "General purpose equipment" means written instructions by the awarding agency equipment, which is not limited to research, authorizing in advance such payments. medical, scientific or other technical activi- 17. Fund raising and investment management ties. Examples include office equipment and costs. furnishings, modular offices, telephone net- a. Costs of organized fund raising, includ- works, information technology equipment ing financial campaigns, solicitation of gifts and systems, air conditioning equipment, re- and bequests, and similar expenses incurred production and printing equipment, and to raise capital or obtain contributions are motor vehicles. unallowable, regardless of the purpose for b.The following rules of allowability shall which the funds will be used. apply to equipment and other capital ex- b. Costs of investment counsel and staff penditures: and similar expenses incurred to enhance in- (1) Capital expenditures for general pur- come from investments are unallowable. pose equipment,buildings,and land are unal- However, such costs associated with invest- lowable as direct charges, except where ap- ments covering pension, self-insurance, or proved in advance by the awarding agency. other funds which include Federal participa- (2)Capital expenditures for special purpose tion allowed by this and other appendices of equipment are allowable as direct costs,pro- 2 CFR part 225 are allowable. vided that items with a unit cost of$5000 or c. Fund raising and investment activities more have the prior approval of the awarding shall be allocated an appropriate share of in- agency. direct costs under the conditions described (3) Capital expenditures for improvements in subsection C.3.b. of Appendix A to this to land,buildings,or equipment which mate- part. rially increase their value or useful life are 18. Gains and losses on disposition of depre- unallowable as a direct cost except with the viable property and other capital assets and prior approval of the awarding agency. substantial relocation of Federal programs. (4)When approved as a direct charge pursu- a. (1) Gains and losses on the sale, retire- ant to section 15.b(1), (2), and (3)of this ap- ment, or other disposition of depreciable pendix, capital expenditures will be charged property shall be included in the year in in the period in which the expenditure is in- which they occur as credits or charges to the curred, or as otherwise determined appro- asset cost grouping(s) in which the property priate and negotiated with the awarding was included.The amount of the gain or loss agency. In addition, Federal awarding agen- to be included as a credit or charge to the vies are authorized at their option to waive appropriate asset cost grouping(s) shall be or delegate the prior approval requirement. the difference between the amount realized (5) Equipment and other capital expends- on the property and the undepreciated basis tures are unallowable as indirect costs.How- of the property. ever, see section 11 of this appendix, Depre- (2) Gains and losses on the disposition of ciation and use allowance, for rules on the depreciable property shall not be recognized allowability of use allowances or deprecia- as a separate credit or charge under the fol- tion on buildings,capital improvements, and lowing conditions: equipment.Also,see section 37 of this appen- (a)The gain or loss is processed through a dix, Rental costs, concerning the allow- depreciation account and is reflected in the ability of rental costs for land, buildings, depreciation allowable under sections 11 and and equipment. 15 of this appendix, (6) The unamortized portion of any equip- (b) The property is given in exchange as ment written off as a result of a change in part of the purchase price of a similar item capitalization levels may be recovered by and the gain or loss is taken into account in continuing to claim the otherwise allowable determining the depreciation cost basis of use allowances or depreciation on the equip- the new item. ment, or by amortizing the amount to be (c)A loss results from the failure to main- written off over a period of years negotiated tam permissible insurance, except as other- with the cognizant agency. wise provided in subsection 22.d of this ap- (7)When replacing equipment purchased in pendix. whole or in part with Federal funds, the gov- (d) Compensation for the use of the prop- ernmental unit may use the equipment to be erty was provided through use allowances in replaced as a trade-in or sell the property lieu of depreciation. and use the proceeds to offset the cost of the b. Substantial relocation of Federal awards replacement property. from a facility where the Federal Govern- 16. Fines and penalties. Fines, penalties, ment participated in the financing to an- damages, and other settlements resulting other facility prior to the expiration of the from violations(or alleged violations) of, or useful life of the financed facility requires failure of the governmental unit to comply Federal agency approval. The extent of the 16 OMB Circulars and Guidance P1. 225, App. B relocation, the amount of the Federal par- interruptions resulting from time lost for re- ticipation in the financing, and the deprecia- pairs, setups, unsatisfactory materials, and tion charged to date may require negotiation other normal delays;and the extent to which of space charges for Federal awards. the facility was actually used to meet de- c. Gains or losses of any nature arising manns during the accounting period. A from the sale or exchange of property other multi-shift basis should be used if it can be than the property covered in subsection 18.a. shown that this amount of usage would nor- of this appendix,e.g.,land or included in the mally be expected for the type of facility in- fair market value used in any adjustment re- volved. suiting from a relocation of Federal awards (4) "Cost of idle facilities or idle capacity" covered in subsection b. shall be excluded in means costs such as maintenance, repair, computing Federal award costs. housing, rent, and other related costs, e.g., 19.General government expenses. insurance, interest, property taxes and de- a.The general costs of government are un- preciation or use allowances, allowable(except as provided in section 43 of b. The costs of idle facilities are unallow- this appendix,Travel costs).These include: able except to the extent that: (1) Salaries and expenses of the Office of (1)They are necessary to meet fluctuations the Governor of a State or the chief execu- in workload;or tive of a political subdivision or the chief ex- (2) Although not necessary to meet fluc- ecutive of federally-recognized Indian tribal tuations in workload, they were necessary government; when acquired and are now idle because of (2) Salaries and other expenses of a State changes in program requirements, efforts to legislature, tribal council, or similar local achieve more economical operations, reorga- governmental body, such as a county super- nization, termination, or other causes which visor,city council,school board,eta., wheth- could not have been reasonably foreseen. er incurred for purposes of legislation or ex- Under the exception stated in this sub- ecutive direction; section, costs of idle facilities are allowable (3)Costs of the judiciary branch of a gov- for a reasonable period of time, ordinarily ernment; not to exceed one year,depending on the ini- (4) Costs of prosecutorial activities unless tiative taken to use,lease, or dispose of such treated as a direct cost to a specific program facilities. if authorized by program statute or regula- c. The costs of idle capacity are normal tion(however, this does not preclude the al- costs of doing business and are a factor in lowability of other legal activities of the At- the normal fluctuations of usage or indirect torney General);and cost rates from period to period. Such costs (5) Costs of other general types of govern- are allowable, provided that the capacity is ment services normally provided to the gen- reasonably anticipated to be necessary or eral public, such as fire and police, unless was originally reasonable and is not subject provided for as a direct cost under a program to reduction or elimination by use on other statute or regulation. Federal awards, subletting, renting, or sale, b. For federally-recognized Indian tribal in accordance with sound business, eco- governments and Councils Of Governments nomic,or security practices.Widespread idle (COGS), the portion of salaries and expenses capacity throughout an entire facility or directly attributable to managing and oper- among a group of assets having substantially ating Federal programs by the chief execu- the same function may be considered idle fa- tive and his staff is allowable. cilities. 20. Goods or services for personal use. Costs 22.Insurance and indemnification. of goods or services for personal use of the a. Costs of insurance required or approved governmental unit's employees are unallow- and maintained, pursuant to the Federal able regardless of whether the cost is re- award,are allowable. ported as taxable income to the employees. b. Costs of other insurance in connection 21.Idle facilities and idle capacity, with the general conduct of activities are al- As used in this section the following terms lowable subject to the following limitations: have the meanings set forth below: (1) Types and extent and cost of coverage (1) "Facilities" means land and buildings are in accordance with the governmental or any portion thereof, equipment individ- unit's policy and sound business practice. ually or collectively, or any other tangible (2) Costs of insurance or of contributions capital asset, wherever located, and whether to any reserve covering the risk of loss of,or owned or leased by the governmental unit, damage to,Federal Government property are (2) "Idle facilities" means completely un- unallowable except to the extent that the used facilities that are excess to the govern- awarding agency has specifically required or mental unit's current needs, approved such costs. (3) "Idle capacity" means the unused ca- a.Actual losses which could have been cov- pacity of partially used facilities. It is the ered by permissible insurance (through a difference between: that which a facility self-insurance program or otherwise)are un- could achieve under 100 percent operating allowable, unless expressly provided for in time on a one-shift basis less operating the Federal award or as described below. 167 Pt. 225,App. B 2 CFR Ch. II (1-1-12 Edition) However, the Federal Government will par- compensation,unemployment compensation, ticipate in actual losses of a self insurance severance pay,and similar employee benefits fund that are in excess of reserves. Costs in- (e.g., subsection 8.f. for post retirement curred because of losses not covered under health benefits),are allowable in the year of nominal deductible insurance coverage pro- payment provided the governmental unit fol- vided in keeping with sound management lows a consistent costing policy and they are practice,and minor losses not covered by in- allocated as a general administrative ex- surance, such as spoilage, breakage,and dis- pence to all activities of the governmental appearance of small hand tools, which occur unit. in the ordinary course of operations, are al- f. Insurance refunds shall be credited lowable against insurance costs in the year the re- d. Contributions to a reserve for certain fund is received, self-insurance programs including workers g. Indemnification includes securing the compensation,unemployment compensation, governmental unit against liabilities to and severance pay are allowable subject to third persons and other losses not corn- the following provisions: pensated by insurance or otherwise.The Fed- (1)The type of coverage and the extent of eral Government is obligated to indemnify coverage and the rates and premiums would the governmental unit only to the extent ex- have been allowed had insurance (including pressly provided for in the Federal award,ex- reinsurance) been purchased to cover the cept as provided in subsection 22.d of this ap- risks. However, provision for known or rea- pendix. sonably estimated self-insured liabilities, h. Costs of commercial insurance that pro- which do not become payable for more than tests against the costs of the contractor for one year after the provision is made, shall correction of the contractor's own defects in not exceed the discounted present value of materials or workmanship are unallowable. the liability. The rate used for discounting 23.Interest. the liability must be determined by giving a. Costs incurred for interest on borrowed consideration to such factors as the govern- capital or the use of a governmental unit's mental unit's settlement rate for those 1i- own funds, however represented, are unal- abilities and its investment rate of return. Towable except as specifically provided in (2) Earnings or investment income on re- subsection b. or authorized by Federal legis- serves must be credited to those reserves. lation. (3)Contributions to reserves must be based b. Financing costs(including interest)paid on sound actuarial principles using histor- or incurred which are associated with the ical experience and reasonable assumptions, otherwise allowable costs of building acqui- Reserve levels must be analyzed and updated sition, construction, or fabrication, recon- at least biennially for each major risk being struction or remodeling completed on or insured and take into account any reinsur- after October 1, 1980 is allowable subject to ance,coinsurance,etc. Reserve levels related the conditions in section 23.b.(1) through (4) to employee-related coverages will normally of this appendix. Financing costs (including be limited to the value of claims submitted interest) paid or incurred on or after Sep- and adjudicated but not paid, submitted but tember 1, 1995 for land or associated with not adjudicated, and incurred but not sub- otherwise allowable costs of equipment is al- mitted. Reserve levels in excess of the lowable, subject to the conditions in section amounts based on the above must be identi- 23.b.(1)through(4)of this appendix. fled and justified in the cost allocation plan (1) The financing is provided (from other or indirect cost rate proposal. than tax or user fee sources) by a bona fide (4) Accounting records, actuarial studies, third party external to the governmental and cost allocations(or billings)must recog- unit; nize any significant differences due to types (2) The assets are used in support of Fed- of insured risk and losses generated by the eral awards; various insured activities or agencies of the (3) Earnings on debt service reserve funds governmental unit. If individual depart- or interest earned on borrowed funds pending ments or agencies of the governmental unit payment of the construction or acquisition experience significantly different levels of costs are used to offset the current period's claims for a particular risk,those differences cost or the capitalized interest, as appro- are to be recognized by the use of separate priate. Earnings subject to being reported to allocations or other techniques resulting in the Federal Internal Revenue Service under an equitable allocation. arbitrage requirements are excludable. (5) Whenever funds are transferred from a (4) For debt arrangements over $1 million, self-insurance reserve to other accounts unless the governmental unit makes an ini- (e.g., general fund), refunds shall be made to tial equity contribution to the asset pur- the Federal Government for its share of chase of 25 percent or more. the govern- funds transferred, including earned or im- mental unit shall reduce claims for interest puted interest from the date of transfer. cost by an amount equal to imputed interest e.Actual claims paid to or on behalf of em- earnings on excess cash flow, which is to be ployees or former employees for workers' calculated as follows. Annually, non-Federal 168 OMB Circulars and Guidance Pt. 225, App. B entities shall prepare a cumulative(from the permanent value of property or appreciably inception of the project) report of monthly prolong its intended life shall be treated as cash flows that includes inflows and out- capital expenditures(see sections 11 and 15 of flows, regardless of the funding source. this appendix). Inflows consist of depreciation expense, am- 28.Materials and supplies costs. ortization of capitalized construction inter- a. Costs incurred for materials, supplies, est, and annual interest cost. For cash flow and fabricated parts necessary to carry out a calculations, the annual inflow figures shall Federal award are allowable. be divided by the number of months in the b. Purchased materials and supplies shall year(i.e., usually 12) that the building is in be charged at their actual prices, net of ap- service for monthly amounts. Outflows con- plicable credits. Withdrawals from general sist of initial equity contributions, debt stores or stockrooms should be charged at principal payments (less the pro rata share their actual net cost under any recognized attributable to the unallowable costs of method of pricing inventory withdrawals, land) and interest payments. Where cumu- consistently applied. Incoming transpor- lative inflows exceed cumulative outflows, tation charges are a proper part of materials interest shall be calculated on the excess and supplies costs. inflows for that period and be treated as a re- c. Only materials and supplies actually duction to allowable interest cost. The rate used for the performance of a Federal award of interest to be used to compute earnings on may be charged as direct costs. excess cash flows shall be the three-month d. Where federally-donated or furnished Treasury bill closing rate as of the last busi- materials are used in performing the Federal ness day of that month. award, such materials will be used without (5) Interest attributable to fully depre- charge. dated assets is unallowable. 24.Lobbying, 27. Meetings and conferences. Costs of meet- a. General. The cost of certain influencing ings and conferences, the primary purpose of activities associated with obtaining grants, which is the dissemination of technical in- contracts, cooperative agreements, or loans formation,are allowable.This includes costs is an unallowable cost. Lobbying with re- of meals, transportation, rental of facilities, spect to certain grants, contracts, coopers- speakers'fees, and other items incidental to tive agreements,and loans shall be governed such meetings or conferences. But see sec- by the common rule, "New Restrictions on tion 14, Entertainment costs, of this appen- Lobbying"(see Section J.24 of Appendix A to dix• 2 CFR part 220), including definitions. and 28. Memberships, subscriptions, and profes- the Office of Management and Budget"Gov- sional activity costs. eminent-wide Guidance for New Restrictions a. Costs of the governmental unit's mem- on Lobbying"and notices published at 54 FR berships in business, technical, and profes- 52306 (December 20, 1989), 55 FR 24540 (June sional organizations are allowable. 15,1990),and 57 FR 1772(January 15,1992),re- b. Costs of the governmental unit's sub- spectively. scriptions to business, professional, and b.Executive lobbying costs. Costs incurred technical periodicals are allowable. in attempting to improperly influence either c. Costs of membership in civic and corn- directly or indirectly,an employee or officer munity,social organizations are allowable as of the Executive Branch of the Federal Gov- a direct cost with the approval of the Fed- ernment to give consideration or to act re- eral awarding agency. garding a sponsored agreement or a regu- d. Costs of membership in organizations latory matter are unallowable. Improper in- substantially engaged in lobbying are unal- fluence means any influence that induces or Towable, tends to induce a Federal employee or officer 29.Patent costs. to give consideration or to act regarding a a. The following costs relating to patent federally-sponsored agreement or regulatory and copyright matters are allowable: cost of matter on any basis other than the merits of preparing disclosures,reports,and other doc- the matter. uments required by the Federal award and of 25.Maintenance. operations, and repairs. Un- searching the art to the extent necessary to less prohibited by law, the cost of utilities, make such disclosures;cost of preparing doe. insurance, security, janitorial services, ele- uments and any other patent costs in con- vator service, upkeep of grounds, necessary nection with the filing and prosecution of a maintenance, normal repairs and alter- United States patent application where title ations, and the like are allowable to the ex- or royalty-free license is required by the tent that they:keep property(including Fed- Federal Government to be conveyed to the eral property, unless otherwise provided for) Federal Government;and general counseling in an efficient operating condition, do not services relating to patent and copyright add to the permanent value of property or matters, such as advice on patent and copy- appreciably prolong its intended life,and are right laws, regulations, clauses, and em- not otherwise included in rental or other ployee agreements (but see sections 32, Pro- charges for space. Costs which add to the fessional service costs, and 38,Royalties and 169 Pt. 225, App. B 2 CFR Ch. II (1-1-12 Edition) other costs for use of patents and copyrights, such as to influence the governmental unit of this appendix). in favor of incurring the cost. particularly b. The following costs related to patent where the services rendered are not of a con- and copyright matter are unallowable: Cost tinning nature and have little relationship of preparing disclosures, reports, and other to work under Federal grants and contracts. documents and of searching the art to the (6) Whether the service can be performed extent necessary to make disclosures not re- more economically by direct employment quired by the award; costs in connection rather than contracting. with filing and prosecuting any foreign pat- (7) The qualifications of the individual or ent application; or any United States patent concern rendering the service and the cus- application, where the Federal award does tomary fees charged, especially on non-Fed- not require conveying title or a royalty-free eral awards. license to the Federal Government (but see (8)Adequacy of the contractual agreement section 38, Royalties and other costs for use for the service (e.g., description of the serv- of patents and copyrights, of this appendix). ice, estimate of time required, rate of com- 30. Plant and homeland security costs. Nec- pensation,and termination provisions). essary and reasonable expenses incurred for c. In addition to the factors in subpara- routine and homeland security to protect fa- graph b, retainer fees to be allowable must cilities, personnel, and work products are al- be supported by available or rendered evi- lowable. Such costs include,but are not lira- deuce of bona fide services available or ren- ited to, wages and uniforms of personnel en- dered, gaged in security activities; equipment; bar- 33. Proposal costs. Costs of preparing pro- viers; contractual security services; consult- posals for potential Federal awards are al- ants;etc. Capital expenditures for homeland lowable, Proposal costs should normally be and plant security purposes are subject to treated as indirect costs and should be allo- section 15, Equipment and other capital ex- cated to all activities of the governmental penditures,of this appendix. unit utilizing the cost allocation plan and in- 31. Pre-award costs. Pre-award costs are direct cost rate proposal. However, proposal those incurred prior to the effective date of costs may be charged directly to Federal the award directly pursuant to the negotia- awards with the prior approval of the Fed- tion and in anticipation of the award where eral awarding agency, such costs are necessary to comply with the 34.Publication and printing costs. proposed delivery schedule or period of per- a. Publication costs include the costs of formance. Such costs are allowable only to printing(including the processes of compost- the extent that they would have been allow- tiers, plate-making, press work, binding, and able if incurred after the date of the award the end products produced by such proc- and only with the written approval of the eases), distribution, promotion, mailing, and awarding agency. general handling. Publication costs also in- 32.Professional service costs. elude page charges in professional publica- a. Costs of professional and consultant tions. services rendered by persons who are mem- b. If these costs are not identifiable with a bers of a particular profession or possess a particular cost objective, they should be al- special skill,and who are not officers or ern- located as indirect costs to all benefiting ac- ployees of the governmental unit, are allow- tivities of the governmental unit. able, subject to subparagraphs b and c when c. Page charges for professional journal reasonable in relation to the services ren- publications are allowable as a necessary dered and when not contingent upon recov- part of research costs where: cry of the costs from the Federal Govern- (1) The research papers report work sup- ment. In addition, legal and related services ported by the Federal Government;and are limited under section 10 of this appendix. (2) The charges are levied impartially on b. In determining the allowability of costs all research papers published by the journal, in a particular case, no single factor or any whether or not by federally-sponsored au- special combination of factors is necessarily thoss. determinative. However, the following fac- 35.Rearrangement and alteration costs, Costs tors are relevant: incurred for ordinary and normal rearrange- (1)The nature and scope of the service ren- ment and alteration of facilities are allow- dered in relation to the service required. able. Special arrangements and alterations (2) The necessity of contracting for the costs incurred specifically for a Federal service, considering the governmental unit's award are allowable with the prior approval capability in the particular area. of the Federal awarding agency. (3)The past pattern of such costs, particu- 36.Reconversion costs. Costs incurred in the larly in the years prior to Federal awards, restoration or rehabilitation of the govern- (4) The impact of Federal awards on the mental unit's facilities to approximately the governmental unit's business (i.e., what new same condition existing immediately prior problems have arisen). to commencement of Federal awards, less (5)Whether the proportion of Federal work costs related to normal wear and tear.are al- to the governmental unit's total business is lowable. 170 OMB Circulars and Guidance Pt. 225, App. B 37.Rental costs of buildings and equipment. necessary for the proper performance of the a. Subject to the limitations described in award are allowable unless: subsections b. through d. of this section, (1) The Federal Government has a license rental costs are allowable to the extent that or the right to free use of the patent or copy- the rates are reasonable in light of such fac- right. tors as: rental costs of comparable property, (2)The patent or copyright has been adju- if any; market conditions in the area; alter- dicated to be invalid,or has been administra- natives available; and the type, life expect- tively determined to be invalid. ancy, condition, and value of the property (3)The patent or copyright is considered to leased. Rental arrangements should be re- be unenforceable. viewed periodically to determine if cir- (4)The patent or copyright is expired. cumstances have changed and other options b. Special care should be exercised in de- are available. termining reasonableness where the royal- b.Rental costs under"sale and lease back" ties may have been arrived at as a result of arrangements are allowable only up to the less-than-arm's-length bargaining,e.g.: amount that would be allowed had the gov- (1) Royalties paid to persons, including ernmental unit continued to own the prop - erty. This amount would include expenses mental unit. such as depreciation or use allowance, main- (2) Royalties paid to unaffiliated parties, tenance,taxes,and insurance. including corporations, under an agreement c. Rental costs under "less-than-arms entered into in contemplation that a Federal length" leases are allowable only up to the award would be made. en- amount (as explained in section 37.b of this (3) Royalties paid under an agreement gov- appendix)that would be allowed had title to erred into after an award is made to a the property vested in the governmental a. I ernmentalnunit unit. For this purpose, a less-than-arm's- c. In any rase involving thea governmentalvt or eal length lease is one under which one party to right theemmo owned y y the lease agreement is able to control or sub- unit, amount of royalty allowed shouldn stantially influence the actions of the other. not ed hada the costg which would have fined Such leases include, but are not limited to allowed the governmental unit retained those between divisions of a governmental title thereto. unit;governmental units under common con- 39. Selling marketinganany marketing.ouCosts servicesf ing trol through common officers, directors, or and governmental products ( of members; and a governmental unit and a di- the llowudeunit are unallowablehis appendix rector, trustee, officer, or key employee of less allowableowed under section 1. of thisur as public relations costs or under the governmental unit or his immediate section 33. of this appendix as allowable pro- family, either directly or through corpora- posed costs. tions, trusts, or similar arrangements in 40.Taxes. which they hold a controlling interest, For a. Taxes that a governmental unit is le- example, a governmental unit may establish gaily required to pay are allowable, except a separate corporation for the sole purpose of for self-assessed taxes that disproportion- owning property and leasing it back to the ately affect Federal programs or changes in governmental unit, tax policies that disproportionately affect d. Rental costs under leases which are re- Federal programs. This provision is applica- quired to be treated as capital leases under ble to taxes paid during the governmental GAAP are allowable only up to the amount unit's first fiscal year that begins on or after (as explained in subsection 37.b of this appen- January 1,1998,and applies thereafter. dix) that would be allowed had the govern- b. Gasoline taxes, motor vehicle fees, and mental unit purchased the property on the other taxes that are in effect user fees for date the lease agreement was executed. The benefits provided to the Federal Government provisions of Financial Accounting Stand- are allowable. ards Board Statement 13, Accounting for c. This provision does not restrict the au- Leases,shall be used to determine whether a thority of Federal agencies to identify taxes lease is a capital lease.Interest costs related where Federal participation is inappropriate. to capital leases are allowable to the extent Where the identification of the amount of they meet the criteria in section 23 of this unallowable taxes would require an inordi- appendix. Unallowable costs include nate amount of effort, the cognizant agency amounts paid for profit, management fees, may accept a reasonable approximation and taxes that would not have been incurred thereof. had the governmental unit purchased the fa- 41. Termination costs applicable to sponsored cility, agreements. Termination of awards generally 38. Royalties and other costs for the use of gives rise to the incurrence of costs, or the patents. need for special treatment of costs, which a. Royalties on a patent or copyright or would not have arisen had the Federal award amortization of the cost of acquiring by pur- not been terminated. Cost principles cov- chase a copyright, patent, or rights thereto, ering these items are set forth below. They 171 Pt. 225, App. B 2 CFR Ch. II (1-1-12 Edition) are to be used in conjunction with the other or otherwise reduce the cost of such lease. provisions of this appendix in termination There also may be included the cost of alter- situations. ations of such leased property,provided such a. The cost of items reasonably usable on alterations were necessary for the perform- the governmental unit's other work shall not ance of the Federal award,and of reasonable be allowable unless the governmental unit restoration required by the provisions of the submits evidence that it would not retain lease. such items at cost without sustaining a lots. e. Settlement expenses including the fol- In deciding whether such items are reason- lowing are generally allowable: ably usable on other work of the govern- mental unit, the awarding agency should (1) Accounting, legas clerical, and similar consider the governmental unit's plans and costs reasonably necessary for: orders for current and scheduled activity. (a) The preparation and presentation to Contemporaneous purchases of common the awarding agency of settlement claims items by the governmental unit shall be re- and supporting data with respect to the ter- garded as evidence that such items are rea- mfnated portion of the Federal award,unless sonably usable on the governmental unit's the termination is for default (see Subpart other work. Any acceptance of common .44 of the Grants Management Common items as allocable to the terminated portion Rule(see§215.5)implementing OMB Circular of the Federal award shall be limited to the A-102);and extent that the quantities of such items on (b)The termination and settlement of sub- hand,in transit,and on order are in excess of awards. the reasonable quantitative requirements of (2)Reasonable costs for the storage,trans- other work. portation, protection, and disposition of b. If in a particular case, despite all rea- property provided by the Federal Govern- sonable efforts by the governmental unit, ment or acquired or produced for the Federal certain costs cannot be discontinued imme- award, except when grantees or contractors diately after the effective date of termi- are reimbursed for disposals at a predeter- nation, such costs are generally allowable mined amount in accordance with Subparts within the limitations set forth in this and _.31 and _.32 of the Grants Management other appendices of 2 CFR part 225, except Common Rule (see §215.5) implementing that any such costs continuing after termi- OMB Circular A-102. nation due to the negligent or willful failure f. Claims under subawards, including the of the governmental unit to discontinue such allocable portion of claims which are corn- costs shall be unallowable. mon to the Federal award,and to other work c. Loss of useful value of special tooling, of the governmental unit are generally al- machinery, and equipment is generally al- lowable. An appropriate share of the govern- lowable if: mental unit's indirect expense may be allo- (1)Such special tooling,special machinery, cated to the amount of settlements with sub- or equipment is not reasonably capable of contractors and/or subgrantees, provided use in the other work of the governmental that the amount allocated is otherwise con- unit. sistent with the basic (2)The interest of the Federal Government guidelines contained is protected by transfer of title or by other in Appendix A to this part. The indirect ex- means deemed appropriate by the awarding pense so allocated shall exclude the same agency,and and similar costs claimed directly or indi- (3)The loss of useful value for any one ter- rectly as settlement expenses. minated Federal award is limited to that 42. Training costs. The cost of training pro- portion of the acquisition cost which bears vided for employee development is allowable. the same ratio to the total acquisition cost 43. Travel costs. as the terminated portion of the Federal a. General. Travel costs are the expenses award bears to the entire terminated Federal for transportation, lodging, subsistence, and award and other Federal awards for which related items incurred by employees who are the special tooling,machinery, or equipment in travel status on official business of the was acquired. governmental unit. Such costs may be d. Rental costs under unexpired leases are charged on an actual cost basis, on a per generally allowable where clearly shown to diem or mileage basis in lieu of actual costs have been reasonably necessary for the per- incurred, or on a combination of the two, formance of the terminated Federal award provided the method used is applied to an en- less the residual value of such leases,if: tire trip and not to selected days of the trip, (1)The amount of such rental claimed does and results in charges consistent with those not exceed the reasonable use value of the normally allowed in like circumstances in property leased for the period of the Federal the governmental unit's non-federally-spon- award and such further period as may be rea- Bored activities. Notwithstanding the provi- sonable,and sinus of section 19 of this appendix, General (2) The governmental unit makes all rea- government expenses, travel costs of offi- sonable efforts to terminate, assign, settle, cials covered by that section are allowable 172 OMB Circulars and Guidance Pt.225,App.C with the prior approval of an awarding agen- travel has received prior approval of the cy when they are specifically related to Fed- awarding agency. Each separate foreign trip eral awards. must receive such approval. For purposes of b. Lodging and subsistence. Costs incurred this provision, "foreign travel"includes any by employees and officers for travel, includ- travel outside Canada, Mexico, the United ing costs of lodging, other subsistence, and States,and any United States territories and incidental expenses, shall be considered rea- possessions. However, the term "foreign sonable and allowable only to the extent travel" for a governmental unit located in a such costs do not exceed charges normally foreign country means travel outside that allowed by the governmental unit in its reg- country. ular operations as the result of the govern- mental unit's written travel policy. In the APPENDIX C TO PART 225—STATE/LOCAL- absence of an acceptable, written govern- WIDE CENTRAL SERVICE COST A.LLO- mental unit polioy regarding travel costs, CATION PLANS the rates and amounts established under sub- chapter I of Chapter 57, Title 5, United TABLE OF CONTENTS States Code ("Travel and Subsistence Ex- penses; Mileage Allowances"), or by the Ad- A.General ministrator of General Services, or by the B.Definitions President (or his or her designee) pursuant 1.Billed central services to any provisions of such subchapter shall 2.Allocated central services apply to travel under Federal awards(48 CFR 3.Agency or operating agency 31.205-46(a)). C. Scope of the Central Service Cost Alloca- c.Commercial air travel. tion Plans (1)Airfare costs in excess of the customary D.Submission Requirements standard commercial airfare(coach or equiv- E. Documentation Requirements for Sub- alent), Federal Government contract airfare mitted Plans (where authorized and available), or the low- 1.General est commercial discount airfare are unallow- 2.Allocated central services able except when such accommodations 3.Billed services would: a.General (a)Require circuitous routing; b.Internal service funds (b) Require travel during unreasonable c.Self-insurance funds hours; d.Fringe benefits (c)Excessively prolong travel; 4.Required certification (d) Result in additional costs that would F.Negotiation and Approval of Central Serv- offset the transportation savings;or ice Plans (e) Offer accommodations not reasonably G.Other Policies adequate for the traveler's medical needs. 1.Billed central service activities The governmental unit must justify and doe- 2.Working capital reserves ument these conditions on a case-by-case 3. Carry-forward adjustments of allocated basis in order for the use of first-class airfare central service costs to be allowable in such cases. 4.Adjustments of billed central services (2) Unless a pattern of avoidance is de- 5.Records retention tected, the Federal Government will gen- 6.Appeals erally not question a governmental unit's de- 7. OMB assistance State/Local-Wide Cen- terminations that customary standard air- tral Service Cost Allocation Plans fare or other discount airfare is unavailable A,General. for specific trips if the governmental unit 1.Most governmental units provide certain can demonstrate either of the following; services,such as motor pools, computer cen- (aa)That such airfare was not available in ters, purchasing, accounting, etc., to oper- the specific case;or ating agencies on a centralized basis. Since (b)That it is the governmental unit's over- federally-supported awards are performed all practice to make routine use of such air- within the individual operating agencies, fare, there needs to be a process whereby these d. Air travel by other than commercial central service costs can be identified and carrier. Costs of travel by governmental assigned to benefitted activities on a reason- unit-owned, -leased, or -chartered aircraft able and consistent basis.The central service include the cost of lease, charter, operation cost allocation plan provides that process. (including personnel costs),maintenance,de- All costs and other data used to distribute preciation, insurance, and other related the costs included in the plan should be sup- costs.The portion of such costs that exceeds ported by formal accounting and other the cost of allowable commercial air travel, records that will support the propriety of the as provided for in subsection 43.c. of this ap- costs assigned to Federal awards. pendix,is unallowable. 2. Guidelines and illustrations of central e. Foreign travel. Direct charges for for- service cost allocation plans are provided in eign travel costs are allowable only when the a brochure published by the Department of 173 Pt. 225,App. C 2 CFR Ch. II (1-1-12 Edition) Health and Human Services entitled "A by the cognizant agency. Where a local gov- Guide for State and Local Government Agen- ernment only receives funds as a sub-recipi- cies: Cost Principles and Procedures for Es- ent,the primary recipient will be responsible tablishing Cost Allocation Plans and Indi- for negotiating indirect cost rates and/or rect Cost Rates for Grants and Contracts monitoring the sub-recipient's plan. with the Federal Government." A copy of 4. All central service cost allocation plans this brochure may be obtained from the Su- will be prepared and, when required, sub- perintendent of Documents, U.S. Govern- mitted within six months prior to the begin- ment Printing Office, Washington, DC 20401. ping of each of the governmental unit's fis- B.Definitions. cal years in which it proposes to claim cen- 1. "Billed central services" means central tral service costs. Extensions may be grant- services that are billed to benefitted agen- ed by the cognizant agency on a case-by-case cies and/or programs on an individual fee- basis. for-service or similar basis. Typical exam- E. Documentation Requirements for Submitted pies of billed central services include corn- Plans. The documentation requirements de- puter services, transportation services, in- scribed in this section may be modified, ex- surance,and fringe benefits. panded, or reduced by the cognizant agency 2. "Allocated central services" means cen- on a case-by-case basis. For example, the re- tral services that benefit operating agencies quirements may be reduced for those central but are not billed to the agencies on a fee- services which have little or no impact on for-service or similar basis. These costs are Federal awards. Conversely, if a review of a allocated to benefitted agencies on some rea- plan indicates that certain additional infor- sonable basis. Examples of such services mation is needed, and will likely be needed might include general accounting, personnel in future years, it may be routinely re- administration,purchasing,etc. quested in future plan submissions. Items 3. "Agency or operating agency" means an marked with an asterisk (*) should be sub- organizational unit or sub-division within a mitted only once: subsequent plans should governmental unit that is responsible for the merely indicate any changes since the last performance or administration of awards or plan. activities of the governmental unit. 1. General. All proposed plans must be ac- C. Scope of the Central Service Cost Alloca- companied by the following: An organization lion Plans. The central service cost alloca- chart sufficiently detailed to show oper- tion plan will include all central service ations including the central service activi- costs that will be claimed(either as a billed ties of the State/local government whether or an allocated cost) under Federal awards or not they are shown as benefiting from and will be documented as described in sec- central service functions; a copy of the Com- tion E. Costs of central services omitted prehensive Annual Financial Report (or a from the plan will not be reimbursed. copy of the Executive Budget if budgeted D.Submission Requirements. costs are being proposed) to support the al- l.Each State will submit a plan to the De- lowable costs of each central service activity partment of Health and Human Services for included in the plan;and, a certification(see each year in which it claims central service subsection 4.) that the plan was prepared in costs under Federal awards. The plan should accordance with this and other appendices to include a projection of the next year's allo- this part,contains only allowable costs, and Bated central service cost (based either on was prepared in a manner that treated simi- actual costs for the most recently completed lar costs consistently among the various year or the budget projection for the coming Federal awards and between Federal and year), and a reconciliation of actual allo- non-Federal awards/activities. sated central service costs to the estimated 2.Allocated central services.For each allo- costs used for either the most recently corn- cated central service, the plan must also in- pleted year or the year immediately pre- elude the following: A brief description of ceding the most recently completed year. the service*, an identification of the unit 2. Each local government that has been rendering the service and the operating designated as a"major local government"by agencies receiving the service, the items of the Office of Management and Budget(OMB) expense included in the cost of the service, is also required to submit a plan to its cog- the method used to distribute the cost of the nizant agency annually. OMB periodically service to benefitted agencies, and a sum- lists major local governments in the FED- mary schedule showing the allocation of ERAL REGISTER. each service to the specific benefitted agen- 3. All other local governments claiming cies. If any self-insurance funds or fringe central service costs must develop a plan in benefits costs are treated as allocated(rath- accordance with the requirements described er than billed) central services, documenta- in this appendix and maintain the plan and ton discussed in subsections 3.b.and c. shall related supporting documentation for audit. also be included. These local governments are not required to 3.Billed services. submit their plans for Federal approval un- a. General. The information described less they are specifically requested to do so below shall be provided for all billed central 174 OMB Circulars and Guidance Pt. 225, App.C services, including internal service funds, tribution rules, if different from actuarially self-insurance funds, and fringe benefit determined rates; the.pension plan's costs funds. accrued for the year:the amount funded,and b.Internal service funds. date(s) of funding; a copy of the current ac- (1) For each internal service fund or simi- tuarial report (including the actuarial as- lar activity with an operating budget of$5 sumptions); the plan trustee's report; and, a million or more, the plan shall include: A schedule from the activity showing the value brief description of each service; a balance of the interest cost associated with late sheet for each fund based on individual ac- funding. counts contained in the governmental unit's 4. Required certification. Each central accounting system:a revenue/expenses state- service cost allocation plan will be accom- ment, with revenues broken out by source, panied by a certification in the following e.g., regular billings, interest earned, etc.;a form: listing of all non-operating transfers (as de- fined by Generally Accepted Accounting CERTIFICATE OF COST ALLOCATION PLAN Principles(GAAP))into and out of the fund; This is to certify that I have reviewed the a description of the procedures (method- cost allocation plan submitted herewith and ology) used to charge the costs of each serv- to the best of my knowledge and belief: ice to users, including how billing rates are to the All t my knell in this and belief: determined;a schedule of current rates;and, (1) costs included in proposal or ide- a schedule comparing total revenues(includ- tify date]to establish cost allocations bil- e imputed revenues)generated by the serv- linos ablfor inntity period covered theby plan]are ice to the allowable costs of the service, as allowable accordance with rags for determined under this and other appendices manes Local,of 2 and Part Indian Cost PrGovernmentsinciples for of this part, with an explanation of how State, Tribal Fa variances will be handled. (OMB Circular A they and the Federal (2) Revenues shall consist of all revenues costs award(s) to which apply. Unallowable generated by the service, including unbilled costs have been adjusted for in allocating and uncollected revenues.If some users were costs as indicated in the cost allocation plan. not billed for the services(or were not billed (2) All Costs included in this proposal are at the full rate for that class of users), a properly allocable to Federal awards on the schedule showing the full imputed revenues basis of a beneficial or causal relationship associated with these users shall be provided. between the expenses incurred and the Expenses shall be broken out by object cost awards to which they are allocated in ur- categories(e.g.,salaries,supplies,etc.). cordance with applicable requirements. F - s. Self-insurance funds. For each self-in- then, the same costs that have been treated surance fund, the plan shall include: The as indirect costs have not been claimed as di- fund balance sheet: a statement of revenue rect costs. Similar types of costs have been and expenses including a summary of bil- accounted for consistently. lings and claims paid by agency; a listing of I declare that the foregoing is true and cor- all non-operating transfers into and out of rect. the fund;the type(s)of risk(s)covered by the Governmental Unit: fund (e.g., automobile liability, workers' Signature: compensation, etc.); an explanation of how Name of Official: the level of fund contributions are deter- mined,including a copy of the current actu- Titles axial report (with the actuarial assumptions Date of Execution: used)if the contributions are determined on F. Negotiation and Approval of Central Serv- an actuarial basis; and, a description of the ice Plans. procedures used to charge or allocate fund 1. All proposed central service cost alloca- contributions to benefitted activities. Re- tion plans that are required to be submitted serve levels in excess of claims submitted will be reviewed, negotiated, and approved and adjudicated but not paid, submitted but by the Federal cognizant agency on a timely not adjudicated, and incurred but not sub- basis. The cognizant agency will review the mitted must be identified and explained, proposal within six months of receipt of the d. Fringe benefits. For fringe benefit costs, proposal and either negotiate/approve the the plan shall include: A listing of fringe proposal or advise the governmental unit of benefits provided to covered employees, and the additional documentation needed to sup- the overall annual cost of each type of ben- port/evaluate the proposed plan or the efit;current fringe benefit policies*;and pro- changes required to make the proposal ac- cedures used to charge or allocate the costs ceptable. Once an agreement with the gov- of the benefits to benefitted activities.In ad- ernmental unit has been reached, the agree- dition, for pension and post-retirement ment will be accepted and used by all Fed- health insurance plans, the following infor- eral agencies,unless prohibited or limited by mation shall be provided: the governmental statute. Where a Federal funding agency has unit's funding policies, e.g., legislative bills, reason to believe that special operating fac- trust agreements, or State-mandated con- tors affecting its awards necessitate special 175 Pt. 225,App. D 2 CFR Ch. II (1-1-12 Edition) consideration,the funding agency will,prior was not included in the approved plan,or for to the time the plans are negotiated, notify unallowable costs that must be reimbursed the cognizant agency. immediately. 2. The results of each negotiation shall be 4. Adjustments of billed central services, formalized in a written agreement between Billing rates used to charge Federal awards the cognizant agency and the governmental shall be based on the estimated costs of pro- unit. This agreement will be subject to re- viding the services, including an estimate of opening if the agreement is subsequently the allocable central service costs. A com- found to violate a statute or the information parison of the revenue generated by each upon which the plan was negotiated is later billed service (including total revenues found to be materially incomplete or inac- whether or not billed or collected)to the ac- curate. The results of the negotiation shall tual allowable costs of the service will be be made available to all Federal agencies for made at least annually, and an adjustment their use. will be made for the difference between the 3. Negotiated cost allocation plans based revenue and the allowable costs. These ad- on a proposal later found to have included justments will be made through one of the costs that: Are unallowable as specified by following adjustment methods:A cash refund law or regulation, as identified in Appendix to the Federal Government for the Federal B of this part,or by the terms and conditions share of the adjustment, credits to the of Federal awards, or are unallowable be- amounts charged to the individual programs, cause they are clearly not allocable to Fed- adjustments to future billing rates, or ad- eral awards, shall be adjusted, or a refund justments to allocated central service costs. shall be made at the option of the Federal Adjustments to allocated central services cognizant agency. These adjustments or re- will not be permitted where the total funds are designed to correct the plans and amount of the adjustment for a particular do not constitute a reopening of the negotia- service (Federal share and non-Federal) tion. share exceeds$500,000_ G.Other Policies. 5. Records retention. All central service 1. Billed central service activities. Each cost allocation plans and related documenta- bilied central service activity must sepa- tion used as a basis for claiming costs under rately account for all revenues (including Federal awards must be retained for audit in imputed revenues) generated by the service, expenses incurred to furnish the service.and accordance with the records retention re- profit/loss. quirements contained in the Common Rule. 2. Working capital reserves. Internal serv- 6. Appeals. If a dispute arises in the nego- ice funds are dependent upon a reasonable tiation of a plan between the cognizant agen- level of working capital reserve to operate cy and the governmental unit, the dispute from one billing cycle to the next. Charges shall be resolved in accordance with the ap- by an internal service activity to provide for peals procedures of the cognizant agency. the establishment and maintenance of a rea- 7.OMB assistance.To the extent that prob- sonable level of working capital reserve, in lems are encountered among the Federal addition to the full recovery of costs, are al- agencies and/or governmental units in con- lowable.A working capital reserve as part of nection with the negotiation and approval retained earnings of up to 60 days cash ex- process, OMB will lend assistance, as re- penses for normal operating purposes is eon- quired, to resolve such problems in a timely sidered reasonable. A working capital re- rman.hOr. serve exceeding 60 days may be approved by the cognizant Federal agency in exceptional APPENDIX D TO PART 225—PUBLIC cases ASSISTANCE COST ALLOCATION PLANS 3. Carry-forward adjustments of allocated central service costs. Allocated central serv- TABLE OF CONTENTS ice costs are usually negotiated and ap- A.General proved for a future fiscal year on a "fixed B.Definitions with carry-forward" basis. Under this proce- dure, the fixed amounts for the future year I.State public assistance agency covered by agreement are not subject to ad- 2.State public assistance agency costs justment for that year. However, when the C.Policy actual costs of the year involved become D. Submission, Documentation, and Ap- known, the differences between the fixed proval of Public Assistance Cost Alloca- amounts previously approved and the actual tion Plans costs will be carried forward and used as an R. Review of Implementation of Approved adjustment to the fixed amounts established Plans for a later year.This "carry-forward"proce- F.Unallowable Costs dure applies to all central services whose A. General. Federally-financed programs costs were fixed in the approved plan. How- administered by State public assistance ever, a carry-forward adjustment is not per- agencies are funded predominately by the matted, for a central service activity that Department of Health and Human Services 176 OMB Circulars and Guidance Pt.225,App. E (HHS). In support of its stewardship require- conduct negotiations with the State public ments, HHS has published requirements for assistance agency and will inform the State the development, documentation, submis- agency of the action taken on the plan or sion, negotiation, and approval of public as- plan amendment. sistance cost allocation plans in Subpart E E. Review of Implementation of Approved of 45 CFR part 95. All administrative costs Plans. (direct and indirect)are normally charged to 1. Since public assistance cost allocation Federal awards by implementing the public plans are of a narrative nature, the review assistance cost allocation plan. This appen- during the plan approval process consists of dix extends these requirements to all Fed- evaluating the appropriateness of the pro- eral agencies whose programs are adminis- posed groupings of costs (cost centers) and tered by a State public assistance agency, the related allocation bases. As such, the Major federally-financed programs typically Federal Government needs some assurance administered by State public assistance that the cost allocation plan has been imple- agencies include: Temporary Assistance to mented as approved. This is accomplished by Needy Families (TANF), Medicaid, Food reviews by the funding agencies, single au- Stamps, Child Support Enforcement, Adop- dits, or audits conducted by the cognizant tion Assistance and Foster Care, and Social audit agency. Services Block Grant. 2. Where inappropriate charges affecting B.Definitions. more than one funding agency are identified, 1. "State public assistance agency" means the cognizant HHS cost negotiation office a State agency administering or supervising will be advised and will take the lead in re- the administration of one or more public as- solving the issue(s) as provided for in Sub- sistance programs operated by the State as part E of 45 CFR part 95. identified in Subpart E of 45 CFR part 95.For 3. If a dispute arises in the negotiation of the purpose of this appendix, these-programs a plan or from a disallowance involving two include all programs administered by the or more funding agencies, the dispute shall State public assistance agency. be resolved in accordance with the appeals 2. "State public assistance agency costs" procedures set out in 45 CFR part 75. Dis- means all costs incurred by, or allocable to, putes involving only one funding agency will the State public assistance agency, except be resolved in accordance with the funding expenditures for financial assistance, med- agency's appeal process. ical vendor payments,food stamps, and pay- 4.To the extent that problems are encoun- ments for services and goods provided di- tered among the Federal agencies and/or gov- rectly to program recipients. ernmental units in connection with the ne- C. Policy. State public assistance agencies gotiation and approval process, the Office of will develop, document and implement, and Management and Budget will lend assist- the Federal Government will review, nego- ance, as required, to resolve such problems tiate, and approve, public assistance cost al- in a timely manner. location plans in accordance with Subpart E F. Unallowable Costs. Claims developed of 45 CFR part 95. The plan will include all under approved cost allocation plans will be programs administered by the State public based on allowable costs as identified in 2 assistance agency.Where a letter of approval CFR part 225. Where unallowable costs have or disapproval is transmitted to a State pub- been claimed and reimbursed, they will be lic assistance agency in accordance with refunded to the program that reimbursed the Subpart E, the letter will apply to all Fed- unallowable cost using one of the following eral agencies and programs. The remaining methods: a cash refund, offset to a subse- sections of this appendix (except for the re- quent claim, or credits to the amounts quirement for certification) summarize the charged to individual awards. provisions of Subpart E of 95 CFR part 95. D. Submission, Documentation, and Approval APPENDIX E TO PART 225—STATE AND of Public Assistance Cost Allocation Plans: LOCAL INDIRECT COST RATE PROPOSALS 1. State public assistance agencies are re- quired to promptly submit amendments to TABLE OF CONTENT$ the cost allocation plan to NHS for review A.General and approval. B.Definitions 2. Under the coordination process outlined 1.Indirect cost rate proposal in subsection E, affected Federal agencies 2.Indirect cost rate will review all new plans and plan amend- 3.Indirect cost pool ments and provide comments, as appro- 4.Base priate,to HHS.The effective date of the plan 5.Predetermined rate or plan amendment will be the first day of 6.Fixed rate the quarter following the submission of the 7.Provisional rate plan or amendment, unless another date is 8.Final rate specifically approved by HHS. HHS, as the 9.Base period cognizant agency acting on behalf of all af- C. Allocation of Indirect Costs and Deter- fected Federal agencies, will, as necessary, mination of Indirect Cost Rates 177 Pt. 225,App. E 2 CFR Ch. II (1-1-12 Edition) 1.General indirect costs may include certain State! 2.Simplified method local-wide central service costs, general ad- 3.Multiple allocation base method ministration of the grantee department or 4.Special indirect cost rates agency, accounting and personnel services D. Submission and Documentation of Pro- performed within the grantee department or posals agency, depreciation or use allowances on 1. Submission of indirect cost rate pro- buildings and equipment, the costs of oper- posals ating and maintaining facilities,etc. 2.Documentation of proposals 5. This appendix does not apply to State 3.Required certification public assistance agencies. These agencies E.Negotiation and Approval of Rates should refer instead to Appendix D to this F.Other Policies part. 1.Fringe benefit rates B.Definitions, 2. Billed services provided by the grantee I. `Indirect cost rate proposal" means the agency 3. Indirect cost allocations not using rates documentation prepared by a governmental 4.Appeals unit or subdivision thereof to substantiate 5. Collections of unallowable costs and er- its request for the establishment of an indi- roneous payments rent cost rate. 6.OMB assistance 2."Indirect cost rate"is a device for deter- A.General. mining in a reasonable manner the propor- 1. Indirect costs are those that have been tion of indirect costs each program should incurred for common or joint purposes. bear. It is the ratio (expressed as a percent- These costs benefit more than one cost ob- age) of the indirect costs to a direct cost jective and cannot be readily identified with base. a particular final cost objective without ef- 3. "Indirect cost pool" is the accumulated fort disproportionate to the results achieved. costs that jointly benefit two or more pro- After direct costs have been determined and grams or other cost objectives. assigned directly to Federal awards and 4. "Base" means the accumulated direct other activities as appropriate,indirect costs costs (normally either total direct salaries are those remaining to be allocated to bene- and wages or total direct costs exclusive of fitted cost objectives. A cost may not be al- any extraordinary or distorting expendi- located to a Federal award as an indirect tures)used to distribute indirect costs to in- cost if any other cost incurred for the same dividual Federal awards.The direct cost base purpose, in like circumstances, has been as- selected should result in each award bearing signed to a Federal award as a direct cost, a fair share of the indirect costs in reason- 2. Indirect costs include the indirect costs able relation to the benefits received from originating in each department or agency of the costs. the governmental unit carrying out Federal 5. "Predetermined rate"means an indirect awards and the costs of central govern- cost rate,applicable to a specified current or mental services distributed through the cen- future period, usually the governmental tral service cost allocation plan(as described unit's fiscal year.This rate is based on an es- in Appendix C to this part)and not otherwise timate of the costs to be incurred during the treated as direct costs, period. Except under very unusual cir- 3. Indirect costs are normally charged to cumstances,a predetermined rate is not sub- Federal awards by the use of an indirect cost ject to adjustment. (Because of legal con- rate. A separate indirect cost rate(s) is usu- straints, predetermined rates are not per- ally necessary for each department or agen- mitted for Federal contracts;they may,how- cy of the governmental unit claiming indi- ever,be used for grants or cooperative agree- rect costs under Federal awards. Guidelines ments.) Predetermined rates may not be and illustrations of indirect cost proposals used by governmental units that have not are provided in a brochure published by the submitted and negotiated the rate with the Department of Health and Human Services cognizant agency. In view of the potential entitled "A Guide for State and Local Gov- advantages offered by this procedure, nego- ernment Agencies: Cost Principles and Pro- tiation of predetermined rates for indirect cedures for Establishing Cost Allocation costs for a period of two to four years should Plans and Indirect Cost Rates for Grants and be the norm in those situations where the Contracts with the Federal Government." A cost experience and other pertinent facts copy of this brochure may be obtained from available are deemed sufficient to enable the the Superintendent of Documents, U.S. Gov- parties involved to reach an informed judg- ernment Printing Office, Washington, DC ment as to the probable level of indirect 20401. costs during the ensuing accounting periods. 4. Because of the diverse characteristics 6. "Fixed rate"means an indirect cost rate and accounting practices of governmental which has the same characteristics as a pre- units,the types of costs which may be classi- determined rate, except that the difference fied as indirect costs cannot be specified in between the estimated costs and the actual. all situations. However, typical examples of allowable costs of the period covered by the 178 OMB Circulars and Guidance Pt. 225,App. E rate is carried forward as an adjustment to used where a governmental unit's depart- the rate computation of a subsequent period. ment or agency has only one major function 7. "Provisional rate" means a temporary encompassing a number of individual indirect cost rate applicable to a specified projects or activities,and may be used where period which is used for funding, interim re- the level of Federal awards to that depart- imbursement,and reporting indirect costs on ment or agency is relatively small. Federal awards pending the establishment of b. Both the direct costs and the indirect a"final"rate for that period, costs shall exclude capital expenditures and 8. "Final rate"means an indirect cost rate unallowable costs. However, unallowable applicable to a specified past period which is costs must be included in the direct costs if based on the actual allowable costs of the pe- they represent activities to which indirect Mod, A final audited rate is not subject to costs are properly allocable. adjustment. c. The distribution base may be total di- 9. "Base period"for the allocation of indi- rect costs (excluding capital expenditures rect costs is the period in which such costs and other distorting Items, such as pass- are incurred and accumulated for allocation through funds, major subcontracts, etc.), di- to activities performed in that period. The rect salaries and wages, or another base base period normally should coincide with which results in an equitable distribution. the governmental unit's fiscal year, but in 3.Multiple allocation base method. any event,shall be so selected as to avoid in- a. Where a grantee agency's indirect costs equities in the allocation of costs. benefit its major functions in varying de- C.Allocation of Indirect Costs and Determina- grees, such costs shall be accumulated into tion of Indirect Cost Rates. separate cost groupings.Each grouping shall 1.General. then be allocated individually to benefitted a. Where a governmental unit's depart- functions by means of a base which best ment or agency has only one major function, measures the relative benefits. or where all its major functions benefit from b.The cost groupings should be established the indirect costs to approximately the same so as to permit the allocation of each group- degree, the allocation of indirect coats and ing on the basis of benefits provided to the the computation of an indirect cost rate may major functions. Each grouping should con- be accomplished through simplified alloca- stitute a pool of expenses that are of like tion procedures as described in subsection 2 character in terms of the functions they ben- of this appendix, efit and in terms of the allocation base b. Where a governmental unit's depart- which best measures the relative benefits ment or agency has several major functions provided to each function. The number of which benefit from its indirect costs in vary- separate groupings should be held within ing degrees, the allocation of indirect costs practical limits, taking into consideration may require the accumulation of such costs the materiality of the amounts involved and into separate cost groupings which then are the degree of precision needed. allocated individually to benefitted func- c.Actual conditions must be taken into ac- tions by means of a base which best mess- count in selecting the base to be used in allo- urea the relative degree of benefit. The indi- eating the expenses in each grouping to ben- rect costs allocated to each function are efitted functions. When an allocation can be then distributed to individual awards and made by assignment of a cost grouping di- other activities included in that function by rectly to the function benefitted, the alloca- means of an indirect cost rate(s). tion shall be made in that manner.When the c. Specific methods for allocating indirect expenses in a grouping are more general in costs and computing indirect cost rates nature, the allocation should be made along with the conditions under which each through the use of a selected base which pro- method should be used are described in sub- duces results that are equitable to both the sections 2,3 and 4 of this appendix. Federal Government and the governmental 2.Simplified method. unit.In general,any cost element or related a. Where a grantee agency's major func- factor associated with the governmental tions benefit from its indirect costs to ap- unit's activities is potentially adaptable for proximately the same degree, the allocation use as an allocation base provided that: it of indirect costs may be accomplished by can readily be expressed in terms of dollars classifying the grantee agency's total costs or other quantitative measures (total direct for the base period as either direct or indi- costs, direct salaries and wages, staff hours rect, and dividing the total allowable indi- applied, square feet used, hours of usage, rect costs (net of applicable credits) by an number of documents processed, population equitable distribution base. The result of served, and the like), and it is common to this process is an indirect cost rate which is the benefitted functions during the base pe- used to distribute indirect costs to indi- riod. vidual Federal awards. The rate should be d. Except where a special indirect cost expressed as the percentage which the total rate(s) is required in accordance with sub- amount of allowable indirect costs bears to section 4, the separate groupings of indirect the base selected.This method should also be costs allocated to each major function shall 179 Pt. 225, App. E 2 CFR Ch. I1 (1-1-12 Edition) be aggregated and treated as a common pool posal and related documentation must be re- for that function. The costs in the common tamed for audit in accordance with the pool shall then be distributed to individual records retention requirements contained in Federal awards included in that function by the Common Rule. use of a single indirect cost rate. b. A governmental unit for which a cog- e.The distribution base used in computing nizant agency assignment has been specifi- the indirect cost rate for each function may cally designated must submit its indirect be total direct costs (excluding capital ex- cost rate proposal to its cognizant agency. penditures and other distorting items such The Office of Management and Budget(OMB) as pass-through funds, major subcontracts. will periodically publish lists of govern- etc.), direct salaries and wages, or another mental units identifying the appropriate base which results in an equitable distribu- Federal cognizant agencies. The cognizant tion. An indirect cost rate should be devel- agency for all governmental units or agen- oped for each separate indirect cost pool de- cies not identified by OMB will be deter- veloped.The rate in each case should be stat- mined based on the Federal agency providing ed as the percentage relationship between the largest amount of Federal funds.In these the particular indirect cost pool and the dis- cases, a governmental unit must develop an tribution base identified with that pool. indirect cost proposal in accordance with the 4.Special indirect cost rates. requirements of 2 CFR 225 and maintain the a. In some instances,a single indirect cost proposal and related supporting documenta- rate for all activities of a grantee depart- tion for audit.These governmental units are ment or agency or for each major function of not required to submit their proposals unless the agency may not be appropriate. It may they are specifically requested to do so by not take into account those different factors the cognizant agency. Where a local govern- which may substantially affect the indirect ment only receives funds as a sub-recipient, costs applicable to a particular program or the primary recipient will be responsible for group of programs. The factors may include negotiating and/or monitoring the sub-re- the physical location of the work, the level cipient's plan. of administrative support required, the na- o Each Indian tribal government desiring ture of the facilities or other resources em- reimbursement of indirect costs must submit ployed, the organizational arrangements its indirect cost proposal to the Department used, or any combination thereof. When a of the Interior (its cognizant Federal aptm particular award is carried out in an envi- ronment which appears to generate a signifi- cantly different level of indirect costs,'provi- d. Indirect cost proposals must be devel- sions should be made for a separate indirect oped (and, when required, submitted) within cost pool applicable to that award.The sepa- six months after the close of the govern- rate indirect cost pool should be developed mental unit's fiscal year,unless an exception during the course of the regular allocation is approved by the cognizant Federal agency. process, and the separate indirect cost rate If the proposed central service cost alloca- resulting therefrom should be used, provided tion plan for the same period has not been that: the rate differs significantly from the approved by that time, the indirect cost pro- rate which would have been developed under posal may be prepared including an amount subsections 2.and 3.of this appendix,and the for central services that is based on the lat- award to which the rate would apply is mate- est federally-approved central service cost rial in amount. allocation plan.The difference between these b. Although 2 CFR part 225 adopts the con- central service amounts and the amounts ul- cept of the full allocation of indirect costs, timately approved will be compensated for there are some Federal statutes which re- by an adjustment in a subsequent period. strict the reimbursement of certain indirect 2. Documentation of proposals. The fol- costs. Where such restrictions exist, it may lowing shall be included with each indirect be necessary to develop a special rate for the cost proposal: affected award. Where a "restricted rate" is a. The rates proposed, including subsidiary required, the procedure for developing a non- work sheets and other relevant data, cross restricted rate will be used except for the ad- referenced and reconciled to the financial ditional step of the elimination from the in- data noted in subsection b of this appendix. direct cost pool those costs for which the law Allocated central service costs will be sup- prohibits reimbursement. ported by the summary table included in the D. Submission and Documentation of Pro- approved central service cost allocation posals. plan. This summary table is not required to 1. Submission of indirect cost rate pro- be submitted with the indirect cost proposal posals. if the central service cost allocation plan for a. All departments or agencies of the gov- the same fiscal year has been approved by ernmental unit desiring to claim indirect the cognizant agency and is available to the costs under Federal awards must prepare an funding agency. indirect cost rate proposal and related docu- b. A copy of the financial data (financial mentation to support those costs. The pro- statements, comprehensive annual financial 180 OMB Circulars and Guidance Pt.225,App.E report, executive budgets, accounting re- funding agency has reason to believe that ports,etc.)upon which the rate is based.Ad- special operating factors affecting its awards jastments resulting from the use of necessitate special indirect cost rates, the unaudited data will be recognized,where ap- funding agency will, prior to the time the propriate, by the Federal cognizant agency rates are negotiated, notify the cognizant in a subsequent proposal. Federal agency. c. The approximate amount of direct base 2. The use of predetermined rates, if al- costs incurred under Federal awards. These lowed, is encouraged where the cognizant costs should be broken out between salaries agency has reasonable assurance based on and wages and other direct costs. past experience and reliable projection of the d. A chart showing the organizational grantee agency's costs, that the rate is not structure of the agency during the period for likely to exceed a rate based on actual costs. which the proposal applies, along with a Long-term agreements utilizing predeter- functional statement(s) noting the duties mined rates extending over two or more and/or responsibilities of all units that corn- years are encouraged,where appropriate, prise the agency. (Once this is submitted, 3. The results of each negotiation shall be only revisions need be submitted with subse- formalized in a written agreement between quent proposals.) the cognizant agency and the governmental 3. Required certification. Each indirect unit. This agreement will be subject to re- cost rate proposal shall be accompanied by a opening if the agreement is subsequently certification in the following form: found to violate a statute, or the informa- CERTIFICATE OF INDIRECT COSTS tion upon which the plan was negotiated is later found to be materially incomplete or This is to certify that I have reviewed the inaccurate. The agreed upon rates shall be indirect cost rate proposal submitted here- made available to all Federal agencies for with and to the best of my knowledge and their use. belief: 4. Refunds shall be made if proposals are (1)All costs included in this proposal[iden- later found to have included costs that are tify date] to establish billing or final indi- unallowable as specified by law or regula- rect costs rates for [identify period covered tion,as identified in Appendix B to this part, by rate]are allowable in accordance with the or by the terms and conditions of Federal requirements of the Federal award(s) to awards, or are unallowable because they are which they apply and 2 CFR part 225, Cost clearly not allocable to Federal awards. Principles for State,Local,and Indian Tribal These adjustments or refunds will be made Governments (OMB Circular A-87). Unallow- regardless of the type of rate negotiated able costs have been adjusted for in allo- (predetermined,final,fixed,or provisional), eating costs as indicated in the cost alloca- F.Other Policies. tion plan. 1. Fringe benefit rates. If overall fringe (2) All costs included in this proposal are benefit rates are not approved for the gov- properly allocable to Federal awards on the ernmental unit as part of the central service basis of a beneficial or causal relationship cost allocation plan, these rates will be re- between the expenses incurred and the agree- viewed, negotiated and approved for indi- meats to which they are allocated in accord- vidual grantee agencies during the indirect ance with applicable requirements. Further, cost negotiation the same costs that have been treated as in- g process.rateIn these cases, n direct costs have not been claimed as direct proposed fringe benefit computationa costa. Similar typesshouldf accompany thet indirect arnot cost used at the of costs have been ac- If fringe benefit rates are at the counted for consistently and the Federal grantee agency level(i.e., the agency specifi- Government will be notified of any account- tally identifies fringe benefit costs to indi- ing changes that would affect the predeter- vidual employees), the governmental unit mined rate. should so advise the cognizant agency. reII declare that the foregoing is true and cor- 2. Billed services provided by the grantee Governmental Unit: agency. In some cases, governmental units provide and bill for services similar to those Signature: covered by central service cost allocation Name of Official: plans(e.g.,computer centers). Where this oc- Title: curs,the governmental unit should be guided Date of Execution: by the requirements in Appendix C to this - I part relating to the development of billing E.Negotiation and A , and 1. Indirect cost rates willlbe reviewed, ne- should advise herates andntation cogn cognizant agenmcy of any gotiated,and approved by the cognizant Fed- billed services. Reviews of these types of eral agency on a timely basis. Once a rate services (including reviews of costing/billing has been agreed upon,it will be accepted and methodology, profits or losses, etc.) will be used by all Federal agencies unless prohib- made on a case-by-case basis as warranted by ited or limited by statute. Where a Federal the circumstances involved. 181 t- 24 CFR 85.43 ENFORCEMENT (a) Remedies for non-compliance. If a grantee or sub-grantee materially fails to comply with any term of an award,whether stated in a federal statute or regulation, an assurance, in a State plan or application, a notice of award, or elsewhere, the awarding agency may take one or more of the following actions, as appropriate in the circumstances: (1) Temporarily withhold cash payments pending correction of the deficiency by the grantee or sub-grantee or more severe enforcement action by the awarding agency, (2) Disallow(that is, deny both use of funds and matching credit for) all or part of the cost of the activity or action not in compliance, (3) Wholly or partly suspend or terminate the current award for the grantee's or sub-grantee's program, (4) Withhold further awards for the program, or, (5) Take other remedies that may be legally available. (b) Hearings, appeals. In taking an enforcement action, the awarding agency will provide the grantee or sub-grantee an opportunity for such hearing, appeal or other administrative proceeding to which the grantee or sub-grantee is entitles under any statute or regulation applicable to the action involved. (c) Effects of suspension and termination. Costs of grantee or sub-grantee resulting from obligations incurred by the grantee or sub-grantee during a suspension or after termination of an award are not allowable unless the awarding agency expressly authorizes them in the notice of suspension or termination or subsequently. Other grantee or sub-grantee costs during suspension or after termination which are necessary and not reasonably avoidable are allowable if: (1) The costs result from obligations which were properly incurred by the grantee or sub- grantee before the effective date of suspension or termination, are not in anticipation of it, and, in the case of a termination, are non-cancelable,and, (2) The costs would be allowable if the award were not suspended or expired normally at the end of the funding period in which the termination takes effect. (d) Relationship to Debarment and Suspension. The enforcement remedies identified in this section, including suspension and termination, do not preclude grantee or sub-grantee from being subject to "Debarment and Suspension"under EO 12549 (see § 85.35). 24 CFR 85.44 TERMINATION FOR CONVENIENCE Except as provided in § 85.43 awards may be terminated in whole or in part only as follows: (a) By the awarding agency with the consent of the grantee or sub-grantee in which case the two parties shall agree upon the termination conditions, including the effective date and in the case of partial termination,the portion to be terminated, or (b) By the grantee or sub-grantee upon written notification to the awarding agency, setting forth the reasons for such termination, the effective date, and in the case of partial termination, the portion to be terminated. However, if, in the case of a partial termination,the awarding agency determines that the remaining portion of the award will not accomplish the purposes for which the award was made, the awarding agency may terminate the award in its entirety under either § 85.43 or Paragraph (a) of this section. O EQUAL H SING Rev. 5/7/08 OPPOR NITY OMB Guidance §200.501 5701-11, ("Travel and Subsistence Ex- Subpart F—Audit Requirements pauses; Mileage Allowances"), or by the Administrator of General Services, 01•114224, or by the President(or his or her des- ignee) pursuant to any provisions of §°•500 Parpose• such subchapter must apply to travel This part sets forth standards for ob- under Federal awards (48 CFR 31.205- taming consistency and uniformity 46(a)). among Federal agencies for the audit (d) Commercial air travel. (1) Airfare of non-Federal entities expending Fed- costs in excess of the basic)least expen- eral awards. sive unrestricted accommodations class offered by commercial airlines Au Ts are unallowable except when such ac- §200,501 Audit requirements. commodations would: (i)Require circuitous routing; (a)Audit required.A non-Federal enti- (ii) Require travel during unreason- ty that expends$750,000 or more during able hours; the non-Federal entity's fiscal year in (iii)Eaoessively prolong travel; Federal awards must have a single or (iv) Result in additional costs that program-specific audit conducted for would offset the transportation•say- that year in accordance with the provi- ings;or alone of this part, (v)Offer accommodations not reason- (b)Single audit.A non-Federal entity ably adequate for the traveler's mad- that expends $750,000 or more during ical needs. The non-Federal entity the non-Federal entity's fiscal year in must justify and document these condi- Federal awads must have a single tions on a case-by-case basis in order §200audit conducted in accordancecp with for the use of first-class or business- elects Scopea of ograudit -spec when it class airfare to be allowable m such ondu to have a co dace with audit conducted in accordance with pare,- oases. graph(o)of this section. (2) Unless a pattern of avoidance is (o) Program-specific audit election, detected, the Federal government will When an auditee expends Federal generally not question a non-Federal awards under only one Federal pro- entity's determinations that ens- gram (excluding R&D) and the Federal ternary standard airfare or other die- program's statutes, regulations, or the count airfare is unavailable for specific terms and conditions of the Federal tripe if the non-Federal entity can award do not require a financial state- demonstrate that such airfare was not ment audit of the auditee, the auditee available in the specific ease. may elect to have a program-specific (e)Air travel by other than commercial audit conducted in accordance with carrier. Costs of travel by non-Federal §200.507 Program-specific audits.A pro- entity-owned, -leased, or -chartered gram-specific audit may not be elected aircraft include the cost of lease,char- for R&D unless all of the Federal tar, operation (including personnel awards expended were received from costs), maintenance, depreciation, in- the same Federal agency, or the same surance, and other related costs. The Federal agency and the same pass- portion of such costs that exceeds the through entity,and that Federal agen- cost of airfare as provided for in para- cy, or pass-through entity in the case graph (d) of this section, is unallow- of a subreoipient, approves in advance able. a program-specific audit (d)Exemption when Federal awards ex- §200.475 Trustees. pended are less than$750,000.A non-Fed- eral entity that expends less than Travel and subsistence costs of trust- $750,000 during the non-Federal entity's see(or directors)at IREs and nonprofit fiscal year in Federal awards is exempt organizations are allowable. See also from Federal audit requirements for §200.474 Travel costs. that year, except as noted in §200.503 Relation to other audit requirements, 171 §200.502 2 CFR Ch.II(1-1-14 Edition) but records must be available for re- sponsibility.Methods to ensure oomph- view or audit by appropriate officials ance for Federal awards made to for- of the Federal agency,pass-through en- profit subrecipients may include pre- tity, and Government Accountability award audits, monitoring during the Office(GAO). agreement, and post-award audits. See (e)Federally Funded Research and De- also §200.331 Requirements for pass- velopment Centers (FFRDC). Manage- through entities. ment of an auditee that owns or oper- ates a FFRDC may elect to treat the §200.502 Basis ' delesasiniag rad- FFRDC as a separate entity for pur- eral awards avoided. poses of this part. (a) Determining Federal awards ex- (f) Subrecipients and Contractors. An pended. The determination of when a auditee may simultaneously be a re- Federal award is expended should be cipient, a. subreeipient, and a con- based on when the activity related to tractor. Federal awards expended as a the Federal award occurs. Generally, recipient or a subreeipient are subject the activity pertains to events that re- to audit under this part.The payments quire the non-Federal entity to comply received for goods or services provided with Federal statutes,regulations, and as a contractor are not Federal awards. the terms and conditions of Federal Section §200.330 subreeipient and eon- awards, such as: expenditure/expense tractor determinations should be con- transactions associated with awards in- sidered in determining whether pay- eluding grants, cost-reimbursement meats oonstitute a Federal award or a contracts under the FAR, compacts payment for goods or services provided with Indian Tribes, cooperative agree- as a oontraotor, ments, and direct appropriations; the (g) Compliance responsibility for con- disbursement of funds to subrecipients; tractors. In most oases, the auditee's the use of loan proceeds under loan and compliance responsibility for contrac- loan guarantee programs;the receipt of tors is only to ensure that the procure- property; the receipt of surplus prop- ment, receipt, and payment for goods erty; the receipt or use of program in- and services comply with Federal stat- come; the distribution or use of food utes, regulations, and the terms and commodities; the disbursement of conditions of Federal awards. Federal amounts entitling the non-Federal en- award compliance requirements nor- tity to an interest subsidy;and the pe- mally do not pass through to contras- riod when insurance is in force. tors. However, the auditee is respon- (b) Loan and loan guarantees (loans). Bible for ensuring compliance for pro- Since the Federal government is at cerement transactions which are strno- risk for loans until the debt is repaid, tared such that the contractor is re- the following guidelines must be used sponeible for program compliance or to calculate the value of Federal the contractor's records must be re- awards expended under loan programs, viewed to determine program oomph- except as noted in paragraphs (a) and ance. Also, when these procurement (d)of this section: transactions relate to a major pro- (1) Value of new loans made or re- gram, the scope of the audit nlnst in- calved during the audit period;plus elude determining whether these trans- (2)Beginning of the audit period bal- actions are in compliance with Federal ance of loans from previous years for statutes, regulations, and the terms which the Federal government imposes and conditions of Federal awards, continuing compliance requirements; (h) For-profit subreeipient. Since this plus part does not apply to for-profit sub- (3)Any interest subsidy, cash, or ad- recipients, the pass-through entity is ministrative cost allowance received. responsible for establishing require- (o)Loan and loan guarantees(loans)at ments, as necessary, to ensure oomph- IHEs.When loans are made to students ance by for-profit subrecipients. The of an 1RF but the DIE does not make agreement with the for-profit sub- the loans, then only the value of loans recipient should describe applicable made during the audit period must be compliance requirements and the for- considered Federal awards expended in profit subrecipient's compliance re- that audit period. The balance of loans 17i OMB Guidance §200.503 for previous audit periods is not in- {1200503 Relation to other audit re. eluded as Federal awards expended be- quiremente, cause the Iender accounts for the prior (a)An audit conducted in accordance balances. with this part must be in lieu of any fi- (d) Prior loan and loan guarantees nanoial audit of Federal awards which (loans). Loans, the prooeexpended de of which a non-Federal entity is required to un- years,were received and expended inF priorra dergo under any other Federal statute are notd consideredr Federal or regulation. To the extent that such awards expended Hader this part when the Federal statutes, regulations, and auditprovides a Federal agency with the terms and conditions of Federal the information it requires to carry awards pertaining to such loans impose out its responsibilities under Federal no continuing compliance require- statute or regulation,a Federal agency ments other than to repay the loans. must rely upon and use that informs- (e)Endowment funds. The cumulative tion. balance of Federal awards for endow- (b)Notwithstanding subsection(a), a ment funds that are federally re- Federal agency,Inspectors General, or striated are considered Federal awards GAO may conduct or arrange for addi- expended in each audit period in which tional audits which are necessary to the funds are still restricted. carry out its responsibilities under (f) Free rent. Free rent received by Federal statute or regulation. The pro- itself is not considered a Federal award visions of this part do not authorize expended under this part.However,free any non-Federal entity to constrain,in rent received as part of a Federal any manner,such Federal agency from award to carry out a Federal program carrying out or arranging for such ad- must be included in determining Fed- ditional audits,except that the Federal eral awards expended and subject to agency must plan such audits to not be audit under this part, duplicative of other audits of Federal (g) Valuing non-cash assistance. Fed- awards.Prior to commencing such an oral non-cash assistance, such as free audit, the Federal agency or pass- rent, food commodities, donated prop- through entity must review the PAC erty,or donated surplus property,must for recent audits submitted by the non- be valued at fair market value at the Federal entity, and to the extent such time of receipt or the assessed value audits meet a Federal agency or pass- provided by the Federal agency. through entity's needs, the Federal (h)Medicare.Medicare payments to a agency or pass-through entity must non-Federal entity for providing pa- rely upon and use such audits.Any ad- tient care services to Medicare-eligible ditional audits must be planned and individuals are not considered Federal performed in such a way as to build awards expended under this part. upon work performed, including the (I)Medicaid. Medicaid payments to a audit documentation, sampling, and subrecipient for providing patient care testing already performed, by other services to Medicaid-eligible individ- auditors. uals are not considered Federal awards (o)The provisions of this part do not expended under this part unless a state limit the authority of Federal agencies requires the funds to be treated as Fed- to conduct, or arrange for the conduct oral awards expended because reim- of, audits and evaluations of Federal bursement is on a cost-reimbursement awards,nor limit the authority of any basis. Federal agency Inspector General or (j) Certain loans provided by the Na- other Federal official.For example,re- tional Credit Union Administration. For nuirements that may be applicable purposes of this part,loans made from under the FAR or CAS and the terms the National Credit Union Share Insur- and conditions of a cost-reimbursement ante Fund and the Central Liquidity contract may include additional appli- Facility that are funded by contribu- cable audits to be conducted or ar- tions from insured non-Federal entities ranged for by Federal agencies. are not considered Federal awards ex- (d) Federal agency to pay for addi- pended. tional audits. A Federal agency that 173 §200.504 2 CFR Ch.1I(1-1-14 Edition) conducts or arranges for additional au- go its audits pursuant to this part bi- dits must, consistent with other appli- ennially, cable Federal statutes and regulations, arrange for funding the full cost of §200.505 Sanctions. such additional audits. In oases of continued inability or un- (e) Request for a program to be au- willingness to have an audit conducted dited as a major program. A Federal in, accordance with this part, Federal awarding agency may request that an agencies and pass-through entities auditee have a particular Federal pro- must take appropriate action as pro- gram audited as a major program in vided in §200.338 Remedies for non- lieu of the Federal awarding agency compliance. conducting or arranging for the addi- tional audits. To allow for planning, §200.508 Audit costs. such requests should be made at least See§200.425 Audit services. 180 calendar days prior to the end of the fiscal year to be audited. The §200.507 Program-specific audits. auditee, after consultation with its auditor, should promptly respond to (a) Program-specific audit guide avail- such a request by informing the Fed- able.In many cases,a program-specific eral awarding agency whether the pro- audit guide will be available to provide gram would otherwise be audited as a specific guidance to the auditor with major program using the risk-based respect to internal controls, compli- audit approach described in §200.518 anee requirements, suggested audit Major program determination and, if procedures, and audit reporting re- not, the estimated incremental cost. quirements. A listing of currant pro- The Federal awarding agency must gram-specific audit guides can be found then promptly confirm to the auditee in the compliance supplement begin- whether it wants the program audited ring with the 2014 supplement includ- as a major program. If the program is ing Federal awarding agency contact to be audited as a major program based information and a Web site where a upon this Federal awarding agency re- copy of the guide can be obtained. quest, and the Federal awarding agen- When a current program-specific audit cy agrees to pay the full incremental guide is available, the auditor must costs, then the auditee must have the follow GAGAS and the guide when per- program audited as a major program.A forming a program-specific audit. pass-through entity may use the provi- (b) Program-specific audit guide not sions of this paragraph for a sub- available. (1) When a program-specific recipient. audit guide is not available, the auditee and auditor must have basi- §200.504 Frequency of audits. cally the same responsibilities for the Except for the provisions for biennial Federal program as they would have audits provided in paragraphs (a) and for an audit of a major program in a (b) of this section, audits required by single audit. this part must be performed annually. (2) The auditee must prepare the fi- Any biennial audit must cover both nanoial statement(s) for the Federal years within the biennial period. program that includes, at a minimum, (a) A state, local government, or In- a schedule of expenditures of Federal dian tribe that is required by conatitu- awards for the program and notes that tion or statute,in effect on January 1, describe the significant accounting 1987, to undergo its audits less fee- policies used in preparing the schedule, quently than annually,is permitted to a summary schedule of prior audit find- undergo its audits pursuant to this lags consistent with the requirements part biennially.This requirement must of §200.511 Audit findings follow-up, still be in effect for the biennial period- paragraph (b), and a corrective action (b) Any nonprofit organization that plan consistent with the requirements had biennial audits for all biennial pe- of §200.511 Audit findings follow-up, clods ending between July 1, 1992, and paragraph(a). January 1, 1995, is permitted to under- (3)The auditor must: 174 OMB Guidance §200.507 (1) Perform an audit of the financial material effect on the Federal pre- statement(s) for the Federal program gram;and in a000rdance with GAGAS; (iv)A schedule of findings and ques- (11)Obtain an understanding of inter- tioned costs for the Federal program nal controls and perform tests of inter- that includes a summary of the aadi- nal controls over the Federal program tor's results relative to the Federal consistent with the requirements of program in a format consistent with §200.514 Scope of audit, paragraph (c) §200.515 Audit reporting, paragraph for a major program; (d)(1)and findings and questioned costs (iii)Perform procedures to determine consistent with the requirements of whether the auditee has complied with §200.515 Audit reporting, paragraph Federal statutes, regulations, and the (d)(3). terms and conditions of Federal awards (c) Report submission for program-spa- that could have a direct and material cific audits. (1)The audit must be corn- effect on the Federal program con- pleted and the reporting required by sisten.t with the requirements of paragraph(cX2)or(c)(3)of this section §200.514 Scope of audit, paragraph (d) submitted within the earlier of 90 cal- for a major program; ender days after receipt of the audi- (iv)Follow up on prior audit findings, tor's report(s), or nine months after perform procedures to assess the rea- the end of the audit period, unless a sonableness of the summary schedule different period Is speoified in a pro- of prior audit findings prepared by the gram-specific audit guide. Unless re- auditee in accordance with the require- striated by Federal law or regulation, ments of§200.511 Audit findings follow- the auditee must make report copies up,and report,as a current year audit available for public inspection. finding, when the auditor concludes Auditees and auditors must ensure that the summary schedule of prior that their respective parts of the re- audit findings materially misrepre- porting package do not include pro- sents the status of any prior audit find- tooted personally identifiable informa- ing;and tion. (v) Report any audit findings con- (2) When a program-specific audit distant with the requirements of guide is available, the auditee must §200.518 Audit findings, electronically submit to the FAC the (4) The auditor's report(s)may be in data collection form prepared in ac- the form of either combined or sepa- oordance with §200.612 Report submis- rate reports and may be organized dif- sion, paragraph (b), as applicable to a ferently from the manner presented in program-specific audit,and the report- this section. The auditor's report(s) ing required by the program-specific must state that the audit was con- audit guide. ducted in accordance with this part (3) When a program-specific audit and include the following: guide is not available, the reporting (i)An opinion(or disclaimer of opin- package for a program-specific audit ion)as to whether the financial state- must consist of the financial state- ment(s)of the Federal program is pre- ment(s)of the Federal program,a sum- sented fairly in all material respects in mart' schedule of prior audit findings, accordance with the stated accounting and a corrective action plan as de- policies; scribed in paragraph (b)(2) of this sec- ail A report on internal control re- tion, and the auditor's report(s)`Be- lated to the Federal program, which scribed in paragraph (b)(4) of this sec- must describe the scope of testing of tion.The data collection form prepared internal control and the results of the in accordance with§200.512 Report sub- tests; mission,paragraph (b),as applicable to (11l)A report on compliance which in- a program-specific audit, and one copy eludes an opinion (or disclaimer of of this reporting package must be elec- opinion) as to whether the anditee ironically submitted to the FAC. complied with laws, regulations, and (d) Other sections of this part may the terms and conditions of Federal apply. Program-specific audits are sub- awards which could have a direct and jest to: 175 §200,508 2 CFR Ch.II(1-1-14 Edition) (1)200.500 Purpose through 200.503 Re- Subpart D- Poet Federal Award Re- lation to other audit requirements, quirements of this part or the FAR(48 paragraph(d); CFR part 42), as applicable. When pro- (2) 200.504 Frequency of audits curing audit services, the objective is through 200.606 Audit costs; to obtain high-quality audits. In re- (3) 200.608 Auditee responsibilities questing proposals for audit services, through 200.509 Auditor selection; the objectives and soope of the audit (4)200.511 Audit findings follow-up; must be made clear and the non-Fed- (5) 200.512 Report submission, para- eral entity must request a copy of the graphs(e)through(h); audit organization's peer review report (6)200.513 Responsibilities; which the auditor is required to pro- (7) 200.516 Audit findings through vide under GAGAS. Factors to be con- 200.517 Audit documentation; sidered in evaluating each proposal for (8)200.521 Management decision,and audit services include the responsive- (9)Other referenced provisions of this nese to the request for proposal, rel- part unless contrary to the provisions event experience, availability of staff of this section, a program-specific with professional qualifications and audit guide, or program statutes and technical abilities, the results of peer regulations. and external quality control reviews, and price. Whenever possible, the rOPTsYrSa auditee must make positive efforts to §800.608 Auditee responsibilities. utilize small businesses, minority- owned fume,and women's business en- The auditee must: terprises,in procuring audit services as (a) Procure or otherwise arrange for stated in §200.32I Contracting with the audit required by this part in ac- small and minority businesses, worn- oordance with §200.509 Auditor selec- en's business enterprises, and labor tion, and ensure it is properly per- surplus area firms, or the FAR(48 CFR formed and submitted when duo in ao- part 42),as applicable. cordance with §200.512 Report submis- (b)Restriction on auditor preparing in- elan. direct cost proposals. An auditor who (b) Prepare appropriate financial prepares the indirect cost proposal or statements, including the schedule of cost allocation plan may not also be se- expenditures of Federal awards in ac- leoted to perform the audit required by oordance with§200.510 Financial state- this part when the indirect costs recov- mente. ered by the auditee during the prior (c)Promptly follow up and take cor- year exceeded$1 million. This restrio- reotive action on audit findings, in- tion applies to the base year used in eluding preparation of a summary the preparation of the indirect cost schedule of prior audit findings and a proposal or cost allocation plan and corrective action plan in accordance any subsequent years in which the re- with §200.511 Audit findings follow-up, salting indirect cost agreement or cost paragraph (b) and §200,611 Audit find- allocation plan is used to recover costs. ings follow-up, paragraph (c), respeo- (0) Use of Federal auditors. Federal tively. auditors may perform all or part of the (d)Provide the auditor with access to work required under this part if they personnel, accounts, books, records, comply fully with the requirements of supporting documentation, and other this part. information as needed for the auditor to perform the audit required by this §200.510 Financial statements. part. (a) Financial statements. The auditee §200.509 Auditor selection must prepare financial statements that reflect its financial position, results of (a) Auditor procurement. In procuring operations or changes in net assets, audit services, the auditee must follow and, where appropriate, cash flows for the procurement standards prescribed the fiscal year audited. The financial by the Procurement Standards in statements must be for the same orga- §§200.317 Procurement by states nizational unit and fiscal year that is through 20.326 Contract provisions of chosen to meet the requirements of 176 OMB Guidance §200.511 this part.However,non-Federal entity- the schedule the balances outstanding wide financial statements may also in- at the end of the audit period. This is elude departments, agencies, and other in addition to including the total Fed- organizational units that have separate oral awards expended for loan or loan audits in accordance with §200.514 guarantee programs in the schedule. Scope of audit, paragraph (a) and pre- (6) Include notes that describe that pare separate financial statements, significant accounting policies used in (b)Schedule of expenditures of Federal preparing the schedule, and note awards. The auditee must also prepare whether or not the non-Federal entity a schedule of expenditures of Federal elected to use the 10%de minimis cost awards for the period covered by the rate as covered in 1200.414 Indirect audttee's financial statements which (F&A)costs. must include the total Federal awards expended as determined in accordance 1200.511 Audit findings follow-up. with 1200.502 Basis "for determining (a)General.The auditee is responsible Federal awards expended.While not re- for follow-up and corrective action on quired, the auditee may choose to pro- all audit findings. As part of this re- vide information requested by Federal sponsibility, the auditee must prepare awarding agencies and pass-through a summary schedule of prior audit find- entities to make the schedule easier to inge:The auditee must also prepare a use. For example, when a Federal pro- corrective action plan for current year gram has multiple Federal award audit findings. The summary schedule years,the auditee may list the amount of prior audit findings and the correc- of Federal awards expended for each tive action plan must include the ref- Federal award year separately. At a erence numbers the auditor assigns to minimum,the schedule must: audit findings under §200.516 Audit (1) List individual Federal programs findings,paragraph(c). Since the sum- by Federal agency.For a cluster of pro- mary schedule may include audit find- grams, provide the cluster name, Iist tags from multiple years, it must in- individual Federal programs within the elude the fiscal year in which the find- cluster of programs, and provide the ing initially occurred. The corrective applicable Federal agency name. For action plan and summary schedule of R&D, total Federal awards expended prior audit findings must include find- muet be shown either by individual ings relating to the financial state- Federal award or by Federal agency ments which are required to be re- and major subdivision within the Fed- ported in accordance with GAGAS. eral agency. For example,the National (b) Summary schedule of prior audit Institutes of Health is a major subdivi- findings. The summary schedule of eion in the Department of Health and prior audit findings must report the Human Services. status of all audit findings included in (2) For Federal awards received as a the prior audit's schedule of findings eubrecipient, the name of the pass- and questioned costs. The summary through entity and identifying number schedule must also include audit find- assigned by the pass-through entity lugs reported in the prior audit's sum- must be included. mary schedule of prior audit findings (3) Provide total Federal awards ex- exoept audit findings listed as oor- pended for each individual Federal pro- rected in accordance with paragraph gram and the CFDA number or other (bX1)of this seotion,or no longer valid identifying number when the CFDA in- or not warranting further action in ao- formation is not available. For a clus- cordanee with paragraph (b)(3) of this ter of programs also provide the total section. for the cluster. (1) When audit findings were fully (4)Include the total amount provided corrected, the summary schedule need to subrecipients from each Federal pro- only list the audit findings and state gram. that corrective action was taken. (5) For loan or loan guarantee pro- (2) When audit findings were not cor- grams described in §200.502 Basis for rected or were only partially corrected, determining Federal awards expended, the summary schedule must describe paragraph (b), identify in the notes to the reasons for the finding's recurrence 177 §200.512 2 CFR Ch.11(1-1-14 Edition) and planned corrective action,and any make copies available for public in- partial corrective action taken. When speotion. Auditees and auditors must corrective action taken is significantly ensure that their respective parts of different from corrective action pre- the reporting package do not include vionsly reported in a corrective action protected personally identifiable infor- plan or in the Federal agency's or pass- mation. through entity's management decision, (b)Data Collection.The FAC is the re- the summary schedule must provide an pository of record for Subpart F—Audit explanation. Requirements of this part reporting (3) When the auditee believes the packages and the data collection form. audit findings are no longer valid or do All Federal agencies, pass-through en- not warrant further action,the reasons titles and others interested in a report- for this position must be described in ing package and data collection form the summary schedule. A valid reason must obtain it by accessing the FAC. for considering an audit finding as not (1)The auditee must submit required warranting farther action is that all of data elements described in Appendix X the following have occurred: to Part 200—Data Collection Form (1) Two years have passed since the (Form SF-SAC), which state whether audit report in which the finding oo- the audit was completed in accordance curred was submitted to the FAC; with this part and provides informa- (11) The Federal agency or pass- tion about the auditee,its Federal pro- through entity is not currently fol- grams, and the results of the audit. lowing up with the auditee on the audit The data must include information finding;and available from the audit required by (iii)A management decision was not this part that is necessary for Federal issued. agencies to use the audit to ensure in- (c)Corrective action plan.At the corn- tegrity for Federal programs.The data pletion of the audit, the auditee must elements and format must be approved prepare, in a document separate from by OMB, available from the FAC, and the auditor's findings described in include collections of information from §200.b16 Audit findings,a corrective ac- the reporting paokage described in tion plan to address each audit finding paragraph (c) of this section. A senior included in the current year auditor's level representative of the auditee reports. The corrective action plan (e.g., state controller, director of fi- must provide the name(s) of the con- nanoe,chief executive officer, or chief tact person(s) responsible for correc- financial officer) must sign a state- tive action, the corrective action ment to be included as part of the data planned, and the anticipated comple- collection that says that the auditee tion date.If the auditee does not agree complied with the requirements of this with the audit findings or believes cor- part,the data were prepared in accord- rective action is not required,then the ance with this part (and the instruc- corrective action plan must include an tions accompanying the form), the re- explanation and specific reasons. porting package does not include pro- tected personally identifiable informa- 3200.512 Report submission. tion, the information included in its (a) General. (1) The audit must be entirety is accurate and complete, and completed and the data collection form that the FAC is authorized to make the described in paragraph (b) of this.sec- reporting package and the form pub- tion and reporting package described in lioly available on a Web site. paragraph (e) of this section must be (2) Exception for Indian Tribes. An submitted within the earlier of 30 cal- auditee that is an Indian tribe may opt endar days after receipt of the audi- not to authorize the FAC to make the tor's report(s), or nine months after reporting package publicly available the end of the audit period.If the due on a Web site,by excluding the author- date falls on a Saturday, Sunday, or itiation for the FAC publication in the Federal holiday,the reporting package statement described in paragraph(b)(1) is due the next business day. of this section. If this option is exer- (2) Unless restricted by Federal stat- cised, the auditee becomes responsible utes or regulations, the auditee must for submitting the reporting package l78 • OMB Guidance §200.513 directly to any pass-through entities graph(b)of this section and one copy through which it has received a Fed- of the reporting package described in eral award and to pass-through entities paragraph(c)of this section on file for for which the summary schedule of three years from the date of submis- prior audit findings reported the status Sion to the FAC. of any findings related to Federal (g)FAC responsibilities.The FAC must awards that the pass-through entity make available the reporting packages provided. Unless restricted by Federal received in accordance with paragraph statute or regulation, if the auditee (c) of this section and §200.507 Pro- opts not to authorize publication, it gram-specific audits, paragraph (o) to must make copies of the reporting the public, except for Indian tribes ex- package available for public inspec- Braising the option in(b)(2)of this sec- tion. tion,and maintain a data base of corn- (3)Using the information included in pleted audits, provide appropriate in- the reporting package described in formation to Federal agencies,and fol- paragraph (o)of this section, the audi- low up with known auditees that have tor must complete the applicable data not submitted the required data oollec- elements of the data collection form. tion forms and reporting packages. The auditor must sign a statement to (h) Electronic filing. Nothing in this be included as part of the data collet- part must preclude electronic submis- tion form that indicates, at a min- alone to the FAC in such manner as imam, the source of the information may be approved by OMB. included in the form, the auditor's re- sponsibility for the information, that FEDERAL AGENCIES the form is not a substitute for the re- porting package described in paragraph §200 61S Reeponafbilities. (o)of this section,and that the content (a)(1) Cognizant agency for audit re- of the form is limited to the collection sponsibilities.A non-Federal entity ex- of information prescribed by OMB. pending more than$60 million a year in (o) Reporting package. The reporting Federal awards must have a cognizant package must include the: agency for audit. The designated cog- (1) Financial statements and ached- nizant agency for audit must be the ule of expenditures of Federal awards Federal awarding agency that provides discussed in §200.510 Financial state- the predominant amount of direct ments, paragraphs (a) and (b), respec- funding to a non-Federal entity unless tively; OMB designates a specific cognizant (2) Summary schedule of prior audit agency for audit. findings discussed in §200.611 Audit (2) To provide for continuity of cog- findings follow-up,paragraph(b); nizance, the determination of the pre- (3) Auditor's reports) discussed in dominant amount of direct funding §200.615 Audit reporting;and must be based upon direct Federal (4) Corrective action plan discussed awards expended in the non-Federal en- in §200.611 Audit findings follow-up, tity's fiscal years ending in 2009, 2014, paragraph(o). 2019 and every fifth year thereafter. (d) Submission to FAC. The auditee For example,audit cognisance for pert- must electronically submit to the FAC ode ending in 2011 through 2016 will be the data collection form described in determined based on Federal awards paragraph (b) of this section and the expended in 2009. reporting package described in para- (3) Notwithstanding the manner in graph(c)of this section. which audit cognizance is determined, (e) Requests for management letters a Federal awarding agency with cog- issued by the auditor. In response to re- nuance for an auditee may reassign quests by a Federal agency or pass- cognizance to another Federal award- through entity,auditees must submit a ing agency that provides substantial copy of any management letters issued funding and agrees to be the cognizant by the auditor. agency for audit. Within 30 calendar (f) Report retention requirements. days after any reassignment, both the Auditees must keep one copy of the old and the new cognizant agency for data collection form described in para- audit must provide notice of the 179 §200.513 2 CFR Ch.11(1-1-14 Edtion) change to the FAC, the auditee,and,if standard performance by auditors must known, the auditor. The cognizant be referred to appropriate state lioens- agency for audit must: ing agencies and professional bodies for (i)Provide teohnical audit advice and disciplinary action. liaison assistance to auditees and audi- (vi) Coordinate, to the extent prae- tors. tical, audits or reviews made by or for (11)Obtain or conduct quality control Federal agencies that are in addition reviews on selected audits made by to the audits made pursuant to this non-Federal auditors, and provide the part, so that the additional audits or results to other interested organize- reviews build upon rather than dupii- tions.Cooperate and provide support to Cate audits performed in accordance the Federal agency designated by OMB with this part, to lead a governmentwide project to (vii) Coordinate a management deci- determine the quality of single audits sion for cross-cutting audit findings(as by providing a statistically reliable es- defined in §200.30 Cross-cutting audit timate of the extent that single audits finding) that affect the Federal pro- conform to applicable requirements, grams of more than one agency when standards,and procedures;and to make requested by any Federal awarding recommendations to address noted agency whose awards are included in audit quality issues, including rec- the audit finding of the auditee. ommendations for any changes to ap- (viii)Coordinate the audit work and placable requirements, standards and reporting responsibilities among audi- procedures indicated by the results of tors to achieve the most cost-effective the project.This governmentwide audit audit, quality project must be performed once (ix)Provide advice to auditees as to every 6 years beginning in 2018 or at such other interval as determined by how to handle changes in fiscal years. OMB,and the results must be public. (b) Oversight agency for audit re- (iii) Promptly inform other affected sponsibilities.An auditee who does not Federal agencies and appropriate Fed- have a designated cognizant agency for oral law enforcement officials of any audit will be under the general over- direct reporting by the auditee or its sight of the Federal agency determined auditor required by GAGAS or statutes in accordance with §200.73 Oversight and regulations. agency for audit. A Federal agency (iv) Advise the community of inde- with oversight for an auditee may reas- pendent auditors of any noteworthy or sign oversight to another Federal agen- important factual trends related to the oy that agrees to be the oversight quality of audits stemming from qual- agency for audit. Within 30 calendar ity control reviews. Significant prob- days after any reassignment, both the loins or quality issues consistently old and the new oversight agency for identified through quality control re- audit must provide notice of the views of audit reports must be referred change to the FAC, the auditee,and,if to appropriate state licensing agencies known, the auditor. The oversight and professional bodies. agency for audit: (v) Advise the auditor, Federal (1) Must provide technical advice to awarding agencies, and, where appro- auditees and auditors as requested. priate, the auditee of any deficiencies (2)May assume all or some of the re- found in the audits when the deli- sponsibilities normally performed by a ciencies require corrective action by cognizant agency for audit. the auditor. When advised of deli- (c) Federal awarding agency respon- ciencies, the auditee must work with abilities.The Federal awarding agency the auditor to take corrective action. must perform the following for the If corrective action is not taken, the Federal awards it makes (See also the cognizant agency for audit must notify requirements of §200.210 Information the auditor, the auditee,and applicable contained in a Federal award): Federal awarding agencies and pass- (1) Ensure that audits are completed through entities of the facts and make and reports are received in a timely recommendations for follow-up action. manner and in accordance with the re- Major inadequacies or repetitive sub- quirements of this part. 1E10 OMB Guidance §Z00,5 i4 (2) Provide technical advice and for the single audit process both within counsel to auditees and auditors as re- and outside the Federal government. quested. (ii) Promote interagency coordina- (3)Follow-up on audit findings to en- tion, consistency, and sharing in areas sure that the recipient takes appro- such as coordinating audit follow-up; priate and timely corrective action.As identifying higher-risk non-Federal en- part of audit follow-up, the Federal titles; providing input on single audit awarding agency must: and follow-up policy; enhancing the (1) Issue a management decision as utility of the FAC; and studying ways prescribed in §200.521 Management de- to use single audit results to improve oision; Federal award accountability and best (ii) Monitor the recipient taking ap- practices. propriate and timely corrective action; (iii) Oversee training for the Federal (ill)Use cooperative audit resolution awarding agency's program manage- meohenisms (see §200.25 Cooperative meat personnel related to the single audit resolution) to improve Federal audit process. program outcomes through better (iv) Promote the Federal awarding audit resolution, follow-up,and correc- agency's ase of cooperative audit reso- tive action;and lution mealuapisms. (iv) Develop a baseline, metrics, and (v) Coordinate the Federal awarding targets to track, over time, the effec- agency's activities to ensure appro- tivenees of the Federal agency's proo- priate and timely follow-up and correo- ess to follow-up on audit findings and tive action on audit findings. on the effectiveness of Single Audits in (vi) Organise the Federal cognizant improving non-Federal entity account- agency for audit's follow-up on cross- ability and their use by Federal award- cutting audit findings that affect the ing agencies in making award deei- Federal programs' of more than one alone. Federal awarding agency. (4) Provide OMB annual updates to (vii) Ensure the Federal awarding the compliance supplement and work agency provides annual updates of the with OMB to ensure that the compli- compliance supplement to OMB. once supplement focuses the auditor to (viii) Support the Federal awarding test the compliance requirements most agency's single audit accountable offi- likely to cause improper payments, clal's mission, fraud, waste, abuse or generate audit finding for which the Federal awarding AQDITDP.b agency will take sanctions. (5) Provide OMB with the name of a §200.514 Scope of audit. single audit accountable official from (a) General. The audit must be con- among the senior policy officials of the ducted in accordance with GAGAS.The Federal awarding agency who must be: audit must cover the entire operations (i)Responsible for ensuring that the of the auditee, or, at the option of the agency fulfills all the requirement of auditee, such audit must include a se- §200.513 Responsibilities and effectively riea of audits that cover departments, uses the single audit process to reduce agencies, and other organizational improper payments and improve Fed- units that expended or otherwise ad- eral program outcomes. ministered Federal awards during such (ii) Held accountable to improve the audit period, provided that each such effectiveness of the single audit process audit must encompass the financial based upon metrics as described in statements and schedule of expendi- paragraph(c)(3)(iv)of this section. tures of Federal awards for each such (iii) Responsible for designating the department, agency,and other organi- Federal agency's key management sin- zational unit, which must be consid- gle audit liaison. ered to be a non-Federal entity.The fi- (0)Provide OMB with the name of a naneial statements and schedule of ex- key management single audit liaison penditures of Federal awards must be who must: for the same audit period. (i) Serve as the Federal awarding (b) Financial statements. The auditor agency's management point of contact must determine whether the financial 181 §200.515 2 CFR Ch. II(1-1-14 Edition) statements of the auditee are presented bons of Federal awards that may have fairly in all material respects in ac- a direct and material effeot on each of cordance with generally accepted so- its major programs. counting principles. The auditor must (2)The principal compliance require- also determine whether the schedule of meats applicable to most Federal pro- expenditures of Federal awards is stat- grams and the compliance require- ed fairly in all material respects in re- manta of the largest Federal programs lation to the auditee's financial state- are included in the compliance supple- ments as a whole, ment. (e) Internal control. (1) The oompli- (3) For the compliance requirements anoe supplement provides guidance on related to Federal programs contained internal controls over Federal pro- in the compliance supplement,an audit grams based upon the guidance in of these compliance requirements will Standards for Internal Control in the meet the requirements of this part. Federal Government issued by the Where there have been changes to the Comptroller General of the United compliance requirements 'and the States and the Internal Control—Inte- changes are not reflected in the corn- grated Framework,issued by the Corn- pliance supplement, the auditor must mittee of Sponsoring Organizations of determine the current compliance re- the Treadway Commission(COSO). quirements and modify the audit proce- (2)In addition to the requirements of dures accordingly. For those Federal GALAS,the auditor must perform pro- programs not covered in the oompli- cedures to obtain an understanding of anoe supplement, the auditor should internal control over Federal programs follow the compliance supplement's sufficient to plan the audit to support guidance for programs not included in a low assessed level of control risk of the supplement. noncompliance for major programs. (4) The compliance testing must in- (3) Except as provided in paragraph elude tests of transactions and such (e)(4)of this section, the auditor must: other auditing procedures necessary to (i) Plan the testing of internal con- trol over compliance for major pro- Provide the auditor sufficient appro- grams to support a low assessed level priate audit evidencee. to support an of control risk for the assertions rel- opinion on compliance. (e)Audit follow-up. The auditor must evant to the compliance requirements for each major program;and follow-up on prior audit findings, per- (ii) Perform testing of internal con- form procedures to assess the reason- trol as planned in paragraph(c)(3)(i)of ablenees of the summary schedule of this section. prior audit findings prepared by the (4) When internal control over some auditee in accordance with §200.511 or all of the compliance requirements Audit findings follow-up paragraph(b), for a major program are likely to be in- and report, as a current year audit effective in preventing or detecting finding, when the auditor concludes noncompliance, the planning and per- that the summary schedule of prior forming of testing described in para- audit findings materially udit i re- graph (c)(3) of this section are not re- sents the status of any prior audit fnd- quired for those compliance require- ing. The auditor must perform audit ments. However, the auditor must re- follow-up procedures regardless of port a significant deficiency or mate- whether a prior audit finding relates to rial weakness in accordance with a major program in the current year. §200.516 Audit findings, assess the re- (f) Data Collection Form. As required lated control risk at the maximum, in §200.512 Report submission para- and consider whether additional corn- graph(b)(3),the auditor must complete pliance tests are required because of' and sign specified sections of the data Ineffective internal control. collection form. (d) Compliance. (1)In addition to the §200.515 Audit reporting. requirements of GAGAS, the auditor must determine whether the anditee The auditor's report(s)may be in the has complied with Federal statutes, form of either combined or separate re- regulations, and the terms and condi- ports and may be organized differently OMB Guidance §200.515 from the manner presented in this sec- (iii) A statement as to whether the tion.The auditor's report(s)must state audit disclosed any noncompliance that the audit was conducted in ac- that is material to the financial state- oordance with this part and include the ments of the auditee; following: (iv) Where applicable, a statement (a)An opinion(or disclaimer of opin- about whether significant deficiencies ion)as to whether the financial state- or material weaknesses in internal oon- ments are presented fairly in all mate- trot over major programs were dis- rial respects in accordance with gen- closed by the audit; orally accepted accounting principles (v) The type of report the auditor and an opinion(or disclaimer of opin- issued on compliance for major pro- ton) as to whether the schedule of ex- grams (i.e., unmodified opinion, quail- penditures of Federal awards is fairly fled opinion, adverse opinion, or dis- stated in all material respects in rela- claimer of opinion); tion to the financial statements as a (vi) A statement as to whether the whole. audit disclosed any audit findings that (b)A report on internal control over the auditor is required to report under financial reporting and compliance §200.518 Audit findings paragraph(a); with Federal statutes,regulations,and the terms and conditions of the Federal (vii)An identification of major pro award, noncompliance with which grams by listing each individual major could have a material effect on the fl- program;however in the case of a clus- nanoial statements. This report must ter of programs only the cluster name describe the scope of testing of internalas shown on the Schedule of Eapendi- control and compliance and the results lures of Federal Awards is required; of the tests, and, where applicable, it (viii) The dollar threshold used to will refer to the separate schedule of distinguish between Type A and Type B findings and questioned costs described programs, as described in §200.518 iu paragraph(d)of this section. Major program determination pare- (c) A report on compliance for each graph(b)(1),or(b)(3)when a recalcula- major program and report and internal tion of the Type A threshold is re- control over compliance. This report quired for large loan or loan guaran- must describe the scope of testing of tees;and internal control over compliance, in- (ix) A statement as to whether the elude an opinion or modified opinion as auditee qualified as a low-risk auditee to whether the auditee complied with under §200.520 Criteria for a low-risk Federal statutes, regulations, and the auditee. terms and conditions of Federal awards (2)Findings relating to the financial which could have a direct and material statements which are required to be re- effect on each major program and refer ported in accordance with(l•AGAS. to the separate schedule of findings and (3) Findings and questioned costs for questioned costs described in pars- Federal awards which must include graph(d)of this section. audit findings as defined in §200.516 (d) A schedule of findings and clues- Audit findings,paragraph(a). tioned costs whioh must include the (i)Audit findings (e.g., internal con- following three components: trol findings, compliance findings, (1) A summary of the auditor's re- questioned costs, or fraud) that relate sults,which must include: to the same issue should be presented (1) The type of report the auditor as a single audit finding. Where prac- issued on whether the financial state- tical, audit findings should be orga- mente audited were prepared in accord- nized by Federal agency or pass- ance with GAAP(i.e.,unmodified opin- through entity. ion, qualified opinion, adverse opinion, (ii)Audit findings that relate to both or disclaimer of opinion); the financial statements and Federal (ii) Where applicable, a statement awards, as reported under paragraphs about whether significant deficiencies (d)(2) and (d)(3) of this section, respec- or material weaknesses in internal eon- tively, should be reported in both sec. trol were disclosed by the audit of the tions of the schedule.However,the re- financial statements; porting in one section of the schedule 183 §200.516 2 CFR Ch.11(1-1-14 EdItion) may be 1u summary Corm whit rot• the auditor must include information ratence to a detailed reporting to the to provide proper perspective for Judg- other motion of the schedule. ing the prevalence and consequences of (al Nothing fro this part fr'eoludes the Questioned costa. eiambining of the audit reporting re- (4) Known questioned coma that are attired by this seatioe With rt auL is he rolsOrt- greater than gild. ij for a Federal pro- Mg required by 4800. 2 paa'a<grapla (b) Data aallasatdan program aarh is not audited as l assjer When finely"b9 GAGAd rfui di= the Amara. Except for audit fellow-up, rrthis X to Part Date Collection Form auditor is not required order this r►rtYl l3F�l5At7}, part to perform audit procedures for §200.616 Audit findings. soh a Federal Vim: therefore. the auditor will normally riot find ques- tioned omits for a program that is not: Gar must adpoct the following>ae audit audited as a major prararaam. 13ocrevor, findings in a schedule of findings sod If the auditor does become aware of questioned costa: questiated oasts for a Federal program (I)Significant defiaienoiea and mate- duct 13 ItOt anditoal aas a major program rial weaakneesea in internal control ie-g,.as nut of audit fallow-ra or otter aver major programs end auditp instances of abase relating ma boned x are and the known quer- a Planter than i .tin% programs. The auditor's determination then the aeadItcr mast report three as ad Of whether s deCie many in internal con- 4tud1G ttudit44. tall is a significant deficiency or mate- (a) The sir vial wealcnese far the pnrpoae of report- why the leditar'aa Mart on pomp pllanne Mg an audit (lading is In relation to a far each major prograru is other than type of compliance requirement for a an unmodified aniniern, unless each ofr- major program identified In the Corn- miniatures ere otherwise reported as Pitapat,Supplement, (2/ Material aroneomplience with the audit findings in the costs for of find- (2/ of Valiant' Statutes. Inge send QQe6�Oned Federal Omni, or the �- a�'�• taime and conditions of ($t Known or likely fraud affecting a Federal awards related to a metdcr pro- Pe deraal award, itninwg such fraud is gran u. me auditor's determination of otherwise reported whether a nontwrnaiianee with tea lam- In cite of findi audit findinngs and :7Ofoete of raderal atatute'a. r©gnia- uqusd costa for Federal awards, Thole Cam or the terms and conditions of Federal awards is material for the our- t put not tnibr require the asu hi or pose of reporting an audit finding is in so report publicly ialil�r'mti an wlaiex slat iv>, ri) a typal of calnpllarsoc re- legal proceedings o IpvCstj ative cir yulremeent for a major program idend- legal prodoedin or tc rnekaa an aelffi (led u)the oamplisesare supplement. fitwined reporting whoa the auditor con• fit Known questioned coats that are that the fraud was reported out- greater than I25.00ai for :a type of nom- Ids the auditor's reports under th di- plianeae rortnlrrsruetnt for err major pro sect men regnl-rwn►envs of GAGAS. Krs.rri Shown gosstiena emu are. (1) instances whore the results of those ePecifcally identified by ter audit follow-ul, Procedurnr disclosed auditor. In avealuatine- the effect of Lhat the summary scholiule of prior claestfaned coats an the opinion on audit findinge preppwsd by the auditae; t-0mpliaaaae, the auditor eor Idera the in aaoordance with 11200.511 Audit find- h est estimate of total cosh questioned drags follow-up, paragraph (bi metarl- ilikuly queeitiaued cuts), not lust the ally misrepresents the sta-uus Cl any 41Mletiuneal costs epncifisaliy identified prior audit finding_ mown questioned caste). The auditor (b) Audit finding dead and donne, must aim report known questioned Audit findings most be priueeted to costs when likely questioned roots are sufficient detail and ctarito for the greater than MOM for a type of cow- euditoe Gn prepare a corrective action Ounce io uiremant for a major pro- plan and take comic-Vim action, sail gram in reportins +luestiontai costa, for riidorai at',aucics and pass-through 181 OMB Guidance 1200.517 entities to arrive at a management de- resent an isolated instance or a sys- cision. The following speoifio informa- temic problem. Where appropriate, in- tion must be included,as applicable,in stances identified must be related to audit findings: the universe and the number of cases (1)Federal program and specific Fed- examined and be quantified in terms of eral award identification including the dollar value.The auditor should report CFDA title and number,Federal award whether the sampling was a etatis- identification number and year, name tically valid sample. of Federal agency,and name of the ap- (8) Identification of whether the plioable pass-through entity. When 111- audit finding was a repeat of a finding formation, such as the CFDA title and in the immediately prior audit and if number or Federal award identification so any applicable prior year audit find- number, is not available, the auditor ing numbers. must provide the best information (9) Recommendations to prevent fir- available to describe the Federal tore ocourrences of the deficiency iden- award. tified in the audit finding. (2) The criteria or specific require- (10) Views of responsible officials of ment upon which the audit finding is the auditee. based, including the Federal statutes, (c) Reference numbers. Each audit regulations, or the terms and oondi- finding in the schedule of findings and tions of the Federal awards. Criteria questioned costs must include a ref- generally identify the required or de- erenoe number in the format meeting sired state or expectation with respect the requirements of the data collection to the program or operation. Criteria form submission required by ;200.512 provide a context for evaluating evi- Report submission, paragraph (b) to dance and understanding findings. allow for easy referencing of the audit (3) The condition found, including findings during follow-up. facts that support the deficiency iden- f 800.617 Audit documentation tified in the audit finding. (4)A statement of cause that identi- (a) Retention of audit documentation. flea the reason or explanation for the The auditor must retain audit docu- condition or the factors responsible for mentation and reports for a minimum the difference between the situation of three years after the date of that exists(condition)and the required issuance of the auditor's report(s) to or desired state (criteria), which may the auditee, unless the auditor is noti- also serve as a basis for recomrnenda- fled in writing by the cognizant agency tions for corrective action, for audit, oversight agency for audit, (5) The possible asserted effect to cognizant agency for indirect costs, or provide sufficient information to the pass-through entity to extend the re- auditee and Federal agency, or pass- tention period. When the auditor is through entity in the case of a sub- aware that the Federal agency, pass- recipient, to permit them to determine through entity, or auditee is con- the cause and effect to facilitate testing an audit finding, the auditor prompt and proper corrective action.A must oontaot the parties contesting statement of the effect or potential ef- the audit finding for guidance prior to feet should provide a clear,logical link destruction of the audit documentation to establish the impact or potential and reports. impact of the difference between the (b) Access to audit documentation. condition and the criteria. Audit documentation must be made (6) Identification of questioned costs available upon request to the cognizant and how they were computed. Known or oversight agency for audit or its des- questioned costs must be identified by ignee, cognizant agency for indirect applicable CFDA number(s) and appli- cost, a Federal agency, or GAO at the cable Federal award identification completion of the audit, as part of a number(s), quality review, to resolve audit find- (7)Information to provide proper per- ings, or to carry out oversight respon- spective for judging the prevalence and sibilities consistent with the purposes consequences of the audit findings, of this part. Access to audit docu- such as whether the audit findings rep- mentation includes the right of Federal 185 §200.518 2 CFR Ch.lI(1-1-14 Edition) agencies to obtain copies of audit docu- loans if the value of Federal awards ex- mentation, as is reasonable and nec- pended for loans within the program essary. comprises fifty percent or more of the total Federal awards expended for the §200.518 Major programa program. A cluster of programs is treated as one program and the value (a) General. The auditor must use a of Federal awards expended under a risk-based approach to determine loan program is determined as de- which Federal programs are major pro- scribed in §200.502 Basis for deter- grams. This risk-based approach must mining Federal awards expended. include consideration of: current and (4) For biennial audits permitted prior audit experience, oversight by under§200.501 Frequency of audits, the Federal agencies and pass-through en- determination of Type A and Type B titles,and the inherent risk of the Fed- programs must be based upon the Fed- eral program. The process in para- eral awards expended during the two- graphs (b) through (1) of this section year period. must be followed. (o) Step two. (1) The auditor must (b) Step one.(1) The auditor must identify Type A programs which are identify the larger Federal programs, low-risk. In making this determina- which must be labeled Type A pro- tion, the auditor must consider wheth- grams.Type A programs are defined as er the requirements in§200.519 Criteria Federal programs with Federal awards for Federal program risk paragraph(c), expended during the audit period ex- the results of audit follow-up, or any seeding the levels outlined in the table changes in personnel or systems affect- in this paragraph(b)(1): ing the program indicate significantly increased risk and preclude the pro- Total Federal award&ex- Type NB threshold gram from being low risk. For a Type A program to be considered low-risk,it Equal to$750,000 but less $750,000. must have been audited as a major ro- man or squat to 25 million. ram in at least one of the two mostbut Exceed$25 million but lees Total Federal awards ex- g than or equel to$100 mil- pended times.03. recent audit periods (in the most re- IVx cent audit period in the case of a bien- Exceed$100 million but less $3 million. nial audit), and, in the most recent then or equal to$1 billion, Exceed$1 billion but leas Total Federal awards ex- audit period, the program must have then or equal to$10 billion.. pended gores.003. not had: Exceed$10 billion but thee $30 million. (i) Internal control deficiencies than or equal to$20 billion which were identified as material Exceed$20 billion Total Federal awards ex- pended times.001s. weaknesses in the auditor's report on internal control for major programs as (2) Federal programs not labeled required under §200.615 Audit report- Type A under paragraph (b)(1) of' this ing,paragraph(c); section must be labeled Type B pro- (ii) A modified opinion on the pro- grams. gram in the auditor's report on major (3) The inclusion of large loan and programs as required under §200.515 loan guarantees (loans) should not re- Audit reporting,paragraph(c);or suit in the exclusion of other programs (iii)Known or likely questioned poets as Type A programs. When a Federal that exceed five percent of the total program providing loans exceeds four Federal awards expended for the pro- times the largest non-loan program it gram. is considered a large loan program,and (2) Notwithstanding paragraph (c)(1) the auditor must consider this Federal of this section, OMB may approve a program as a Type A program and ex- Federal awarding agency's request that elude its values in determining other a Type A program may not be oonsid- Type A programs.This recalculation of ered low risk for a certain recipient. the Type A program is performed after For example,it may be necessary for a removing the total of all large loan large Type A program to be audited as programs. For the purposes of this a major program each year at a par- paragraph a program is only considered tioular recipient to allow the Federal to be a Federal program providing awarding agency to comply with 31 1$H OMB Guidance §200.519 U.B.C. 3515. The Federal awarding additional Federal programs with Fed- agency must notify the recipient and, eral awards expended that, in aggre- if known, the auditor of OMB's ap- gate, all major programs encompass at proval at least 180 calendar days prior least 20 percent (0.20) of total Federal to the end of the fiscal year to be au- awards expended. Otherwise, the audi- dited. tor must audit the major programs (d) Step three. (1) The auditor must identified in Step 4 (paragraphs (e)(1) identify Type B programs which are and(2) of this section) and such addi- high-risk using professional judgment tional Federal programs with Federal and the criteria in §200.519 Criteria for awards expended that,in aggregate,all Federal program risk. However, the major programs encompass at least 40 auditor is not required to identify more percent (0.40) of total Federal awards high-risk Type 13 programs than at expended. least one fourth the number of low-risk (g)Documentation of risk. The auditor Type A programs identified as low-risk must include in the audit documenta- under Step 2(paragraph(o)of this sec- lion the risk analysis process used in tion).Except for known material weak- determining major programs. ness in internal control or compliance (h) Auditor's judgment. When the problems as discussed in §200.519 Cri- teria for Federal program risk para- fomajor program documented in determination was per- anoe graphs (b)(1), (b)(2), and (c)(1), a single with andSubpart, the u taor's judg- criteria in risk would seldom cause a meat this applying auditor's juap- Type B program to be considered high- prow in the risk based ap- Type risk. When identifying which Type B must to presumeddeterm c major programs programs to risk assess, the auditor is must be a correct. Challenges encouraged to use an approach Which byentitie Federal agencies and pass-througharlym- provides an opportunity for different proper must only be for clt in thiss high-risk Type B programs to be au- art. use vo€the requirementsdra s and dited as major over a period of time. part. However, Federal agencies and (2)The auditor is not expected to per- pass-through entities may provide form risk assessments on relatively auditors guidance about the risk of a small Federal programs.Therefore,the particular Federal program and the auditor is only required to perform risk auditor must consider this guidance in assessments on Type B programs that determining major programs in audits exceed twenty-five percent(0.25)of the not yet completed. Type A threshold determined in Step 1 §200.519 Criteria for Federal program (paragraph(b)of this section). risk. (e) Step four. At a minimum, the auditor must audit all of the following (a) General. The auditor's determina- as major programs: tion should be based on an overall eval- (1) All Type A programs not identi- nation of the risk of noncompliance oo- fied as low risk under step two (pars- curing that could be material to the graph(c)(1)of this section). Federal program. The auditor must (2)All Type B programs identified as consider criteria, such as described in high-risk under step three (paragraph Paragraphs (b), (c), and(d) of this sec- (d)of this section). tion, to identify risk in Federal pro- (3)Such additional programs as may grams. Also, as part of the risk anal- be necessary to comply with the per- ysis, the auditor may wish to discuss a tentage of coverage rule discussed in particular Federal program with paragraph(f) of this section. This may auditee management and the Federal require the auditor to audit more pro- agency or pass-through entity, grams as major programs than the (b) Current and prior audit experience. number of Type A programs. (1)Weaknesses in internal control over (f) Percentage of coverage rule. If the Federal programs would indicate high- auditee meets the criteria in §200.520 er risk. Consideration should be given Criteria for a low-risk auditee, the to the control environment over Fed- auditor need only audit the major pro- oral programs and such factors as the grams identified in Step 4 (paragraph expectation of management's adher- (e)(1) and (2) of this section) and such once to Federal statutes, regulations, lR7 §200'520 2 CFR Ch.II(1-1-14 Edition) and the terms and conditions of Fed- personal services, but otherwise be at era] awards and the competence and low risk. experience of personnel who administer (a}The pilaw of a pedeii i pregr'am m the Federal programs. its life cycle at the Federal egezwy(1) A Federal program administered may, Indicate risk For example, a new under multiple internal oontrol ethic- Federal progrern with new or interim tore$ may have higher risk. When as- r seating reek in a ���may have higher rick than auditor must considerlarge weak- ed ortregul regulations_ programwith ignin est- noises are isolated in a single o Beni` Also, 5fst tutes, acing unit(e.g., one doll l?er regulations, In Fedarial.prorme e d c ndi- pervasive throughout the enti >T�)Or time of , or the tertnti sad cease- el) When s time of Federal awards may Increase itfaticaat part$ of a Fed- rll;<kk, oral program are peened through to (3)The phase of a Federal program in enbrecipients,a weak system for moue- Its Life week at the auditee may ladi- coring subreciplents would Indicate Cate risk.For ewnple,during the first higher risk. Led last years that an audites (2) Prior audit findings would indi- pates in a Federal he ink oats higher risk,particularly when the May be bights'due t ebtprogram. � ' or close- situations identified in the audit find- ors ofP staff. ings could have a significant impact on program 1 pr g'sjyiaetleitiw this lamer a Federal program or have not been (4)Typq&expended would l 'r - correoted. ICI'muds expoadnd be of 6lgh- er rink than programs with aubetaui- (3)Federal programs not recently au- tally smaller Federal award$ ex- dited as major programs may be of pended. higher risk than Federal programs re- cently audited as major programs with- §200.520 Criteria for a low- iiak out audit findings. auditee, tc)Oversighd exercised dy Pesach mom- An auditee that meets all of the fol- ctes end pacer-thaouQh aatitdes (1) over- lowing oonditions for each of the pre- sight exernised by Federal agencies or ceding two audit periods must qualify pass-through entities could be used to as a low-risk auditee and be eligible for assess risk For ex reple, recent mini- reduced audit coverage in accordance taring or other reviews performed by with §200.518 Major program deter- aa eversieht entity that disclosed no mention. eignlficant problems would indkatte (al Single audits wale, performed on lower risk. whereas monitoring that an annual halls In auoortiance with the disclosed significant. problems would provisioner of this Subpar:, including lndleat.te higher risk. submitting the data collection form (2)Federal agencies,with the concur- and the reporting peokago to the FAO ranee of OMB, may identify Federal wit to the timefram€ specified in programs that are higher risk. OMB §200.$12 Report sebrnleslosi, A ern]-Feel, will provide this identification in the Chas misty that has biennial audits compliance supplement. does riot qualify an e•lens-risk auditee [dl fni*ertiti risk uF Olt Federal pro- (Ii)The auditor's opinion cm whether /rrmx, f1)The nature of a Federal pro- the rinap,utal Statements were prepared grails may it ikrn,c rt$k. Gonaideration Ln a.;car+3snoe with GAA.P,or a balls of should be given to the compieaity of anroountliig i gtitred by stair law, and- tile program and the extent to which the auditor's in relation to opinion nu the Federal Program cxentraate rur the schedule of expenditures of Federal goods and servlotul, For example. Yed- awards were unmodified; oral pregrarna that disburse funds (e) There were no deficiencies in in- through Third party ea itrac a or bare her ai central which were identified as i ligIbUlty oriterla may be of higher material weaknesese tinder the require, risk. Federal programs primarily in- meats of CUAGAS. y'olving staff pavre l waste may have (d)The auditor did not report a sub- high risk far noncompliance with re- stantial doubt about the auditee's abil- rrsiiremente of 1200,490 Compeeneatean— ity to continue as a going concern. 1811 OMB Guidance Pt.200,App.I (e)None of the Federal programs had cision for findings that relate to Fed- audit findings from any of the fo1- eraI awards it makes to non-Federal lowing in either of the preceding two entities. audit periods in which they were classi- (o)Pass-through entity.As provided in fled as Type A programs: §200.331 Requirements for pass-through (1) Internal control deficiencies that entities, paragraph (d), the pass- were identified as material weaknesses through entity must be responsible for in the auditor's report on internal con- issuing a management decision for trol for major programs as required audit findings that relate to Federal under §200.515 Audit reporting, para- awards it makes to subrecipients. graph(a); (d) Thee requirements. The Federal (2) A modified opinion on a major awarding agency or pass-thj'ough anti- program in the auditor's report on ty responsible for issuing a manage- major programs as required under mint decision must do so within six §200.515 Audit reporting, paragraph(c); months of acceptance of the audit re- ar port by the FAC.The auditee must ini- (3)Known or likely questioned costs tiate and proceed with corrective ac- that exceeded five percent of the total tion as rapidly as possible and oorrec- Federal awards expended for a Type A tine action should begin no later than program during the audit period. upon receipt of the audit report. (e) Reference numbers. Management MANAGNMENT DECISIONS decisions must include the reference numbers the auditor assigned to each §200.521 Management decision. audit finding in accordance with (a) General. The management deaf- §200.516 Audit findings paragraph(c). lion mast clearly state whether or not the audit finding is sustained, the res.,- APPENDI%I To PAni 200—FULL TEXT of sons for the decision, and the expected NOTION OF FUNDING OPPORTUNITY auditee action to repay disallowed The full text of the notice of funding op- costs, make financial adjustments, or portunity is organised in sections. The re- take other action. If the auditee has gaited format outlined in this appendix indi- not completed corrective action, a Oates immediately following the title of each section whether that section is required in timetable for follow-up should be every announcement or is a Federal award- given. Prior to issuing the manage- ment decision, the Federal ing agency option.The format is designed so agency or that similar types of information will appear pass-through entity may request addi- in the same sections in announcements of tional information or documentation different Federal funding opportunities. To- from the auditee, including a request ward that end, there Is text in each of the for auditor assurance related to the following sections to describe the types of In- tin formation that a Federal awarding agency documentation,as a way of miffnat de- would include in that section of an actual disallowed coats. The management cision should describe anyappeal announcement. proc- A Federal awarding agency that wlehee to oss available to the auditee. While not include information that the format does not required, the Federal agency or pass- speot lcally discuss may address that subject through entity may also issue a man- in whatever section(s) is most appropriate. agement decision on findings relating For example, if a Federal awarding agency to the financial statements which are chooses to address performance goals in the announcement,it might do so in the funding required to be reported in accordance with GALAS, opportunity description,the application con- (b) agency. As provided tent,or the reporting requirements. 2(b)513 Federal agency. Responsibilities, Similarly, when this format oalls for a paragraph type of information to be in a particular sec- (a)(7), the cognizant agency for audit tion, a Federal awarding agency wishing to must be responsible for coordinating a address that subject in other sections may management decision for audit find- elect to repeat the information in those sec- Ton:that affect the programs of more bona or sae cross references between the see- than one Federal agency. As provided refelions(there should be hyperlinke for cross- in §200.513 Responsibilities, paragraph announces in any Forrctexam versions ed the (c)(3),a Federal awardingagency is re- awarding agency. example, includea Federal sponsible for issuinga man g Sectiongin non want tt ype in of management de- Section I information about the types of 189 Pt.200,App.I 2 CFR Ch.11(1-1-14 Edition) non-Federal entities who are eligible to quired or Federal award administration in- apply.The format specifies a standard lona- formation in section D.Application and Sub- thin for that information in Section ffi.l but mission Information). If procurement con- that does not preclude repeating the infor- tracts also may be awarded, this must be oration in Section.I or creating a oross ref- stated. ermine between Sections I and III.1, as long as a potential applicant can find the infer- C.ELIGIBILITY INFORMATION mation quickly and easily from the standard This section addresses the considerations location, or factors that determine applicant or appli- The sections of the dill text of the an- cation eligibility. This includes the eligi- nouncement are described in the following bility of particular types of applicant organi- pa`agraph& zations,any factors affecting the eligibility A.PROGRAM DESORIPTION--P.EQuIRED of the principal investigator or project direc- tor, and any criteria that make particular This section contains the fill program de- projects ineligible. Federal agencies should scription of the funding opportunity.It may make clear whether an applicant's failure to be as long as needed to adequately comma- meet an eligibility criterion by the time of nicate to potential appiicQnts the areas in an application deadline will result in the which funding may be provided.It desoribes Federal awarding agency returning the ap- the Federal awarding agency's funding prior- piioation without review or,even though an hies or the technical or focus areas in which application may be reviewed, will preclude the Federal awarding agency intends to pro- the Federal awarding agency from making a vide assistance. As appropriate, it may in- Federal award.Key elements to be addressed elude any program history(e.g.,whether this arc is a new program or a new or changed area of 1. Eligible Applicants—Required. Announce- program emphasis). This section may COM- ments must clearly identify the types of en- municate indicators of successful projects titles that are eligible to apply.If there are (e.g., if the program encourages oollabo- no restrictions on eligibility, this section rative efforts) and may include examples of may simply indicate that all potential appli- projects that have been funded previously. cants are eligible.If there are restrictions on This section also may include other infomma- eligibility,it is Important to be clear about tion the Federal awarding agency deems nec- the specific types of entities that are eligi- essary,and must at a minimum include offs- ble, not just the types that are ineligible. tions for authorizing statutes and regale- For example, if the program Is limited to tions for the funding opportunity. nonprofit organizations subject to 26 U.S.C. B.FEDERAL AWARD INFORMATION—REQUIRED 601(0)(3)of the tax code(26 U.S.C.601(c)(9)), the announcement should say so.Similarly, This section provides sufficient inforrna- it is better to state explicitly that Native lion to help an applicant make an informed American tribal organizations are eligible decision about whether to submit a proposal. than to assume that they can unambiguously Relevant information could include the total infer that from a statement that nonprofit amount of funding that the Federal awarding organisations may apply.Eligibility also can agency expects to award through the an- be expressed by exception, (e.g., open to ail nouncement;the anticipated number of Fed- types of domestic applicants other than indi- eral awards; the expected amounts of indi- viduels). This section should refer to any vidual Federal awards (which may be a portion of Section IV specifying doonmenta- range); the amount of funding per Federal tion that must be submitted to support an award, on average, experienced in previous eligibility determination (e.g., proof of years; and the anticipated start dates and 501(0)(3)status as determined by the Internal periods of performance for new Federal Revenue Service or an authorizing tribal res- awards. This section also should address (nation).To the extent that any funding re- whether applications for renewal or sup- striction in Section IV.5 could affect the eli- plementatlon of existing projects are eligible gibility of an applicant or project, the an- to compete with applications for new Fed- nouncement must either restate that restrio- oral awards. tion in this section or provide a cross-ref- This section also must indicate the type(s) erence to its description in Section IV.5. of assistance instrument(e.g.,grant,cooper- 2. Cost Sharing or Matching—Required. An- ative agreement)that may be awarded if ap- nounoements must state whether there is re- plioatione We successful. If cooperative quired oost sharing, matching, or cost par- agreements may be awarded,this section ei- ticipation without which an application ther should describe the "substantial in- would be ineligible(if cost sharing is not re- volvement"that the Federal awarding agen- quired, the announcement must explicitly ay expects to have or should reference where say so).Required cost sharing may be a car- the potential applicant can find that infor- thin percentage or amount,or may be in the mation(e.g.,In the funding opportunity de- form of contributions of specified items or scription in A. Program Description—Re- activities(e.g.,provision of equipment).It is 190 OMB Guidance Pt.200,App.I important that the announoement be clear quired forms or formats as part of the an- about any restrictions on the types of cost nouncement or state where the applicant (e.g.,in-kind contributions)that are accept- may obtain them. able as cost sharing.Cost sharing as an ellgi- This section should specifically address bitty criterion includes requirements based content and form or format requirements in statute or regulation, as described in for: g200.306 Cost sharing or matching of this 1. Pre-applications, letters of intent, or Part.This section should refer to the appro- white papers required or encouraged (see priate portion(s) of section D. Application Section I1r.3),including any limitations on and Submission Information stating any pre- the number of pages or other formatting re- award requirements for submission of letters quiremente similar to those for full anima- or other documentation to verify commit- tions. manta to meet cost-sharing requirements if a 11.The application as a whole.For all sub- Federal award Is made. missions,this would include any limitations 3.Other—Required,If applicable.If there are on the number of pages,font size and type- other eligibility criteria (i.e., criteria that face,moraine,paper size,number of copies, have the effect of making an application or and sequence or assembly requirements. If project ineligible for Federal awards,wheth- electronic submission is permitted or re- ar referred to as "responsiveness" criteria. quired, this could include special require- "go-no go" criteria, "threshold"criteria,or ments for formatting or signatures. in other ways), must be clearly stated and Ili. Component pieces of the application must include a reference to the regulation of (e.g., if all copies of the application must requirement that describes the restriction, bear original signatures on the face page or as applicable. For example, if entities that the program narrative may not exceed 10 have been found to be in violation of a par- pages).This includes any pieces that may be ticular Federal statute are ineligible, It is submitted separately by third parties (e.g., important to say so.This section must also references or letters confirming commit- state any limit on the number of applioa- manta from third parties that will be con- tinue an applicant may submit under the an- tributipg a portion of any required cost shar- nounoement and make clear whether the mg). limitation is on the submitting organization, iv. information that successful applicants individual investigator/program director,.or must submit after notification of intent to both. This section should also address any make a Federal award,but prior to a Federal eligibility 'criteria for beneficiaries or for award. This could include evidence of com,- program participants other than Federal pllance with requirements relating to human award recipients. subjects or information needed to comply D.APPLIOATION AND SUBMISSION INFORMATIONwith the National Environmental Policy Act (NFPA)(42II.S.C.4321-9370h). 1. Address to Request Application Package— 3. Dun and Bradstreet Universal Numbering Required. Potential applicants must be told System(DUNS)Number and System for Award how to get application forms,kits, or other Management(SAM)—Required. materials needed to apply(if this announce- This paragraph mast state clearly that went contains everything needed, this sec- each applicant(unless the applicant is an in- tion need only say so). An Internet address dividnal or Federal awarding agency that is where the materials can be accessed is ac- excepted from those requirements under 2 ceptable.however,since high-speed Internet CFR§25.110(b)or(a), or has an exception ap- access is not yet universally available for proved by the Federal awarding agency downloading documents,and applicants may under 2 CFR 125.110(1))is required to: (I)Be have additional accessibility requirements, registered in SAM before submitting its ap- there also should be a way for potential ap- pllcation;(11)provide a valid DUNS number piioante to request paper copies of materials, in its application;and(ill)continue to main- such as a 'U.S. Postal Service mailing ad- taro an active SAM registration with current dress,telephone or FAX number,Telephone information at all times during which it has Device for the Deaf(TDD), Text Telephone an active Federal award or an application or (ITV) number, and/or Federal Information plan under consideration by a Federal award- Relay Service(FIRS)number. lug agency.It also must state that the Fed- 2. Content and Farm of Application Submis- eral awarding agency may not make a Fed- Mon—Required. This section must identify oral award to an applicant until the appli- the required content of an application and cant has complied with all applicable DUNS the forms or formats that an applicant must and SAM requirements and, if an applicant use to submit it. If any requirements are has not fully complied with the requirements stated elsewhere because they are general re- by the time the Federal awarding agency is quirements that apply to multiple programs ready to make a Federal award,the Federal or funding opportunities,this section should awarding agency may determine that the ap- refer to where those requirements may be Diluent Is not qualified to receive a Federal found. This section also should include re- award and use that determination as a basis 191 Pt.200,App.I 2 CFR Ch.11(1-1-14 Edition) for making a Federal award to another appli- mental Review of Federal Programs," the cant, notice must say so. In alerting applioante 4. Submission Dates and Times—Required. that they must contact their state's Single Announcements must identify due dates and Point of Contact (SPOC) to find out about times for all submissions.This includes not and comply with the state's prooess under only the full applications but also any pre- Executive Order 12872,it may be useful to in- liminary submissions(e.g.,letters of intent, form potential applicants that the names white papers,or pre-applioaations).It also in- and addresses of the SPOCs are listed in the chides any other submissions of information Office of Management and Budget's Web site. before Federal award that are separate from www.whitehouse.gov/omb/gramts/spoc.htmi, the full application. If the funding oppor- 6. Funding Restrictions—Required. Notices tunity is a general announcement that is must include information on funding restric- open for a period of time with no specific due tions in order to allow an applicant to de- dates for applications, this section should velop an application and budget consistent 1sincluded in this section also must ap- say so. Note thatthe information dates with program requirements. Examples are that pear with other overview information in a lo- whether construction is an allowable activ- cation preceding the full text of the an- ity, if there are any limitations on direct nounoement(see§200.203 Notices of funding costs such as foreign travel or equipment opportunities of this Part). purchases,and if there are any limits on in- Eaoh type of submission should be des- direct costa(or facilities and administrative ignated as encouraged or required and,if re- costs).Applicants must be advised if Federal Eldred, any deadline date (or dates, if the awards will not allow reimbursement of pre- Federal awarding agency plans more than Federal award costs. one cycle of application submission, review, 7.Other Submission Requirements—Required., and Federal award under the announcement) This section must address any other submis- should be specified,The announcement must eion requirements not included in the other state(or provide a reference to another docu- paragraphs of this section. This might in- ment that states): elude the format of submission,i.e.,paper or 1.Any deadline in terms of a date and local electronic,for each type of required aubmis- time. If the due date falls on a Saturday, Mon. Applicants should not be required to Sunday, or Federal holiday, the reporting submit in more than one format and this sec- package is due the next business day. Lion should indicate whether they may 11.What the deadline means(e.g.,whether choose whether to submit applications in it is the date and time by which the Federal hard copy or electronically,may submit only awarding agency must receive the applioa- In hard Dopy, or may submit only electroni- tion,the date by which the application must calf be postmarked, or something else) and how This section also must indicate where ap- t depends, if at all, on the submission plications(and any pre-applications)must be method (e.g., mail, electronic, or personal/ pp courier delivery). admitted if sent by postal mail,electronic ill. The effect of missing a deadline (e.g., means, or hand-delivery. For postal mail whether late applications are neither re- submission,this must include the name of an viewed nor considered or are reviewed and office, official, individual or function (e.g., considered under some circumstances). application receipt renter) and a complete iv.Row the receiving Federal office deter- mailing address. For electronic submission, mines whether an application or pre-appiica- this must include the URI,or email address; Lion has been submitted before the deadline, whether a password(s) is required; whether This includes the form of acceptable proof of particular software or other electronic cape- mailing or system-generated documentation bilities are required;what to do in the event of receipt date and time. of system problems and a point of contact This section also may indicate whether, who will be available in the event the appli- when,and in what form the applicant will re- cant experiences technical difficulties.l ceive an acknowledgement of receipt. This information should be displayed in ways that E.APPLICATION REVIIDW INFORMATION will be easy to understand and use.It can be I.Criteria-Required.This section must ad- difficult to extract all needed information dress the criteria that the Federal awarding from narrative paragraphs, even when they agency will use to evaluate applications. are well written. A tabular form for pro- viding a summary of the information may help applicants for some programs and give 'With respect to electronic methods for them what effectively could be a checklist to providing information about funding oppor- verify the completeness of their application tunitise or accepting applicants'submissions package before submission. of information,each Federal awarding agen- 6.Intergovernmental Review—Required,if ap- ey is responsible for compliance with Section pScable.if the funding opportunity is subject 608 of the Rehabilitation Act of 1973 (29 to Executive Order 12372, "Intergovern- II.S.C.794(1). 102 OMB Guidance Pt.200,App.I This includes the merit and other review crl- people on an evaluation panel and how it op- tents that evaluators will use to judge appli- erates, the way reviewers are selected, ro- tations,including any statutory,regulatory, viewer qualifications,and the way that con- or other preferences(e.g.,minority statue or flints of interest are avoided.With respect to Native American tribal preferenoes) that electronic methods for providing informa- will be applied in the review process.These tion about funding opportunities or accept- criteria are distinct from eligibility criteria ing applicants' submissions of information, that are addressed before an application Is each Federal awarding agency is responsible accepted for review and any program policy for compliance with Section 508 of the Reba- or other factors that are applied during the bilitation Act of 1973(29II.S.C.794d). selection process,after the review process is In addition,if the Federal awarding agency completed.The intent is to make the appli- permits applicants to nominate suggested re- cation process transparent so applicants can viewers of their applications or suggest those make informed decisions when preparing they feel may be inappropriate due to a con- their applications to maximize fairness of flirt of interest,that information should be the process.The announcement should clear- inoluded in this section. ly describe all criteria,.including any sub- 3. Anticipated Announcement and Federal criteria.If criteria vary in importance, the Award Dates—Optional. This section is in- announcement should specify the relative tended to provide applicants with informs- percentages,weights,or other means used to Lion they can use for planning purposes. If distinguish among them.For statutory,reg- there ie a single application deadline fol- ulatory,or other preferences,the announce- lowed by the simultaneous review of all ap- ment should provide a detailed explanation plications,the Federal awarding of thoseinformation agency can preferences with an explicit indica- include 1n this section information about the tion of their affect(e.g.,whether they result anticipated dates for announcing or nod- in additional points being assigned). fying successful and unsuccessful applicants If an applicant's proposed cost sharing will and for having Federal awards in place.If ap- be considered in the review process (as op- plicatione are received and evaluated on a posed to being an eligibility criterion de- "rolling" basis at different times during an scribed in Section IIG2), the announcement extended period, it may be appropriate to must specifically address how it will be con- give applicants an estimate of the time need- aidered(e.g., to assign a certain number of ed to process an application and notify the additional points to applicants who offer applicant of the Federal awarding agency's cost sharing,or to break ties among applies, decision. bons with equivalent scores after evaluation against all other factors).If cost sharing will F.FEDERAL AWARD ADMINISTRATION not be considered in the evaluation, the an- INFoRMATloN nounoement should say so,so that there is 1, Federal Award Notices—Required. This no ambiguity for potential applicants.Vague section must address what a sucoessfnl appli- statements that cost sharing is encouraged, cant oan expect to receive following setae- without clarification as to what that means, Lion. If the Federal awarding agency's prac- are unhelpful to applicants.It also ie impor- tics is to provide a separate notice stating teat that the announcement be clear about that an application has been selected before any restrictions on the types of coat(e.g.,in- it actually makes the Federal award, this kind contributioae) that are acceptable as section would be the place to indicate that cost sharing. the letter is not an authorization to begin 2. Review and Selection Process—Required. performance (to the extent that it allows This section may vary in the level of detail charging to Federal awards of pre-award provided. The announcement must list any costs at the non-Federal entity's own risk). program policy or other factors or elements, This section should indicate that the notice other than merit criteria,that the selecting of Federal award signed by the grants officer official may use in selecting applications for (or equivalent)is the authorizing document, Federal award(e.g.,geographical dispersion, and whether it is provided through postal program balance,or diversity). The Federal mail or by electronic means and to whom.It awarding agency may also include other ap- also may address the timing,form,and con- proprfate details. For example, this section tent of notifications to unsuccessful appli- may indioate who is responsible for evalua- cants. Bee also §200.210 Information can- tion against the merit criteria(e.g.,peers ex- tamed in a Federal award. ternal to the Federal awarding agency or 2. Administrative and National Policy Re- Federal awarding agency personnel) and/or quirements—Required.This section must iden- who makes the final seleotlons for Federal tiiy the usual administrative and national awards.If there is a multi-phase review proo- policy requirements the Federal awarding ens(e.g.,an external panel advising internal agency's Federal awards may include. Pro- Federal awarding agency personnel who viding this information lets a potential ap- make final recommendations to the deciding plicant identify any requirements with official),the announcement may describe the which it would have diffionity complying if phases. It also may include: the number of its application is asldoeanful.In those oases, 193 Pt.200,App.II 2 CFR Ch.II(1-1-14 Edition) early notification about the requirements al- IL OTHER INFORMATION—OPTCONAL lows the potential applicant to decide not to Thha section may include apply or to take needed actions before re- any additional ap- ceiving the Federal award. The announce- information that will assist sectiona potight: ap- ment need not include all of the terms and poi. n. ee,the ianewmight: conditions of the Federal award, but ma i.Indicate whether this 1s a program y or a one-time initiative. refer to a document(with information about it. Mention related programs or other up- how to obtain it) or Internet site where en- coming or ongoing Federal awarding agency plioants pan see the terms and conditions,If fnnti ng opportunities for similar activities. this funding opportunity will lead to Federal ire.Include current Internet addresses for awards with some special terms and condi- Federal awarding agency Web sites that may Lions that differ from the Federal awarding be useful to an applicant in understanding agency's usual(sometimes called"general") the program. terms and conditions, this section should iv.Alert applicants to the need to Identify highlight those special terms and conditions. proprietary information and inform them Doing so will alert applicants that have re- about the way the Federal awarding agency calved Federal awards from the Federal Will handle it. awarding agency previously and might not v.Include certain routine notices to appli- cants expect different terms and condi- not (e.g., that the Federal government is Wins. For the same reason, the announce- not obligated to make any Federal award as ment should inform potential applicants gra resultnto of the annbindouncement h Federal or that only about special requirements that could apply marts officers encan uof the d ). govern- about particular Federal awards after the review meat to the expenditure funds). of applications and other information,based APPENDIX II TO PART 200—CONTRACT on the particular circumstances of the effort PROVISIONS FOR NON-FEDERAL ENTI- to be supported(e.g.,if human subjects were Ty CONTRACTS UNDER FEDERAL to be involved or if some situations may ills- AWARDS trey special terms on intellectual property, data sharing or security requirements). In addition to other ptuvlsians required by 3. Reporting—Required. This section must the Attend age or urn-Federal entity, include general information about the type ocntzei ! made by the gorrFedsr l entity (e.g., financial or performance), frequency, under the Federal award must°entain provi- and means of submission (paper or elec- theme ruvesfatg the fuliawimg,as applicable. tronic) of post-Federal award reporting re- fA)Oante'aebe for mere tbartae aim/gifted quirements. Highlight any special reporting itoauleiticm threshold ogre atly sat at requirements for Federal awards under this 318k000. which Is the infl&tloa adjusted funding opportunity that differ(e.g.,by re- emeeelt! tlew and Meth" hew" Anginal- port type, frequency. form/format, or cir- Ace - cumstances for use) from what the Federal Cioa [lsgaiatfana Connell (Ccnnnile) sa ad- awardingso- agency's Federal awards usually ad,41 omen lid,mmat Mime s require. minietrative, contractual, or legal remedies in instances where contractors violate or Cl.FEDERAL AWARDING AGENCY Corrrscr(s}— breach contract terms,and provide for such RIQuinen sanctions and penalties as appropriate. (B)All contracts in excess of$10,000 must The announcement must give potential ap- address termination for cause and for con- plicants a point(s)of contact for answering venienoe by the non-Federal entity including questions or helping with problems while the the manner by which it will be effected and funding opportunity is open. The intent of the basis for settlement. this requirement is to be as helpful as posh (C) Equal Employment Opportunity. Ex- sible to potential applicants,so the Federal cept as otherwise provided under 41 OFR awarding agency should consider approaches t nt of 'feder60, alloally ntracts asaiatedtcoaetruameethtloaeooa- such as giving: 1.Points of contact who may be reached in tract"in 41 CFR Part 60-1.3 must include the multiple ways(e.g.,by telephone, FAX,and/ equal opportunity clause provided under 41 or email,as well as regular mail). CFR 60-1.4(b), in accordance with Executive Order 11246, u tunity"(30. A fax or email address that multiple "Equal Employment ,1964- FR 12319,12935,3 OFR Part,1984- people access, so that someone will respond 1965 Comp.,p.339),as amended by Executive even if others are unexpectedly absent dur- Order 11375, "Amending Executive Order ing critical periods. 11246 Relating to Equal Employment Oppor- iii.Different contacts for distinct kinds of tunity,"and implementing regulations at 41 help(e.g.,one for questions of programmatic CFR part 60, "Office of Federal Contract content and a second for administrative Compliance Programs, Equal Employment questions). Opportunity,Department of Labor." 1Pi OMB Guidance Pt.200,App. II (D)Davis-Bacon Act,as amended(40 U.S.C. materials or articles ordinarily available on 3141-3148).When required by Federal program the open market, or contracts for transpor- legislation,all prime construction contracts tation or transmission of intelligence. in excess of$2,000 awarded by non-Federal (F) Rights to Inventions Made Under a entities must include a provision for oomph- Contract or Agreement,If the Federal award awe with the Davis-Bacon Aot (40 U.S.C. meets the definition of"funding agreement" 3141-3144. and 3148-8148)as supplemented by under 37 CFR§401.2(a)and the recipient or Department of Labor regulations (29 OFR eubrecipient wishes to enter into a contract Part 5, "Labor Standards Provisions Appli- with a small business firm or nonprofit orga- cable to Contracts Covering Federally Pt- ideation regarding the substitution of par- named and Assisted Construction"). In ao- ties, assignment or performance of experf- cordanoe with the statute,contractors must mental, developmental, or research work be required to pay wages to laborers and me- under that"funding agreement,"the reoipi- clanics at a rate not lees than.the prevailing ent or subrecipient must comply with the re- wages specified in a wage determination quirements of 37 CFR Part 401,"Rights to In- made by the Secretary.of Labor.hi addition, ventions Made by Nonprofit Organizations contractors must be required to pay wages and Small Business Firms Under Govern- not lees than once a week. The non-Federal ment Grants, Contracts and Cooperative entity must place a copy of the current pre- Agreements,"and any implementing regale- veiling wage determination issued by the De- tions issued by the awarding agency. partment of Labor in each solicitation.The (G)Clean Air Aot(42 U.S.C.7401-7671q.)and decision to award a contract or subcontract the Federal Water Pollution Control Aot(33 must be conditioned upon the acceptance of U.S.C.1251-1387),as amended—Contracts and the wage determination.The non-Federal en- subgrants of amounts in excess of.$150,000 tity must report all suspected or reported must contain a provision that requires the violations to the Federal awarding agency, non-Federal award to agree to comply with The contracts must also include a provision all applicable standards, orders or regale, for compliance with the Copeland "Anti- Lions issued pursuant to the Glean Air Aot Kickback" Act (40 U.S.C. 3145), as supple- (42 U.S.C.7401-7671q)and the Federal Water mented by Department of Labor regulations Pollution Control Act as amended(93 U.S.C. (29 CFR Part 3, "Contractors and Sub- 1251-1387).Violations must be reported to the contractors on Public Building or Public Federal awarding agency and the Regional Work Financed in Whole or in Part by Loans Office of the Environmental Protection or Grants from the United States").The Act Agency(EPA). provides that each contractor or sub- (H) Mandatory standards and policies re- recipient must be prohibited from inducing, lacing to energy efficiency which are con- by any means, any person employed in the tamed in the state energy conservation plan construction,completion,or repair of public issued in compliance with the Energy Policy work,to give up any part of the compensa- and Conservation Act(42 U.S.C.8201), tion to whioh he or she is otherwise entitled. (1) Debarment and Suspension (Executive The non-Federal entity must report all sus- Orders 12549 and 12889)-A contract award peoted or reported violations to the Federal (see 2 OFR 180.220)must not be made to par- awarding agency. ties listed on the governmentwide Excluded (E) Contract Work Hours and Safety Parties List System in the System for Award Standards Act (40 U.S.C. 3701-3708). Where Management(SAM), in accordance with the applicable,all contracts awarded by the non- OMB guidelines at 2 CFR 180 that implement Federal entity in excess of$100,000 that in- Executive Orders 12549 (3 CFR Part 1986 volve the employment of mechanics or labor- Comp., p. 189) and 12689 (3 OFR Part 1989 ers must include a provision for compliance Comp.,p.235),"Debarment and Suspension." with 40 U.S.C.9702 and 3704,as supplemented The Exchnded Parties List System In SAM by Department of Labor regulations(29 CFR contains the names of parties debarred,sus- Part 5).Under 40 U.S.C.8702 of the Act,each pended,or otherwise excluded by agencies,as contractor must be required to compute the well as parties declared ineligible under stat- wages of every mechanic and laborer on the utory or regulatory authority other than Ea- basis of a standard work week of 40 hours, emotive Order 12549. Work in excess of the standard work week is (J) Byrd Anti-Lobbying Amendment (31 permissible provided that the worker is corn- U.S.C. 1352)-Contractors that apply or bid pensated at a rate of not less than one and a for an award of$190,000 or more must file the half times the basic rate of pay for all hours required certification. Each tier certifies to worked in excess of 40 hours in the work the tier above that it will not and has not week.The requirements of 40 U.S.O.3704 are used Federal appropriated funds to pay any applicable to construction work and provide person or organization for influencing or at- that no laborer or mechanic must be re- tempting to influence an officer or employee quired to work in surrounlinge or under of any agency,a member of Congress,officer working oonditions which are unsanitary, or employee of Congress,or an employee of a hazardous or dangerous.These requirements member of Congress in connection with ob- do not apply to the purchases of supplies or twining any Federal contract, grant or any t95 Pt.200,App.III 2 CR Ch.II(1-1-14 Edition) other award covered by 31 U.S.C, 1352.k)aoh (1) Sponsored research means all research tier must also disclose any lobbying with and development activities that are spon- non-Federal funds that takes place in con- cored by Federal and non-Federal agencies nection with obtaining any Federal award. and organizations.This term includes activi- Such disclosures are forwarded from tier to ties involving the training of Individuals in tier up to the non-Federal award. research techniques (commonly called re- (K)See§200.3222 Procurement of recovered search training)where such activities utilize materials, the same faoflitiea as other research and de- velopment activities and where such activi- APPENDIX III TO PART 200—INDIRECT ties are not included in the Instruction funo- (F&A) COSTS IDENTIFICATION AND tion. ASSIGNMENT,AND RATE DETERA+IINA- (2) University research means all research TION FOR INSTITUTIONS OF RIMIER and development activities that are sepa- EDUCATION(IEES) rately budgeted and accounted for by the in- stitution under an internal application of in- A.Gist-lanai, stitutional funds. University research, for This appendix provides criteria for Went; purposes of this document, must be com- tying and computing indirect (or indirect blned with sponsored research under the (F&A))rates at IHBs(institutions). Indirect flm°tion of organized research (F&A) costs are those that are incurred for c.Outlet sponsored activities means programs common or joint objectives and therefore and projects financed by Federal and non- cannot be identified readily and specifically Federal agencies and organizations which in- with a particular sponsored project, an in- volve the performance of work other than in- struotional activity, or any other institu- struction and organized research. Examples tional activity. See subsection B.1, Defini- of such programs and projects are health tion of Facilities and Administration, for a service projects and community service pro- discussion of the components of indirect grams.however,when any of these activities (F&A)costa. are undertaken by the Institution without outside support, they may be classified as I.Major Functions of an Institution other institutional activities. Refers to instruction, organized research. d.Other institutional activities means all.ex- other sponsored activities and other institu- tivitiea of an institutese except for inatruo- tionai activities as defined in this section: tion, departmental research, organized re- a. Instruction means the teaching and search,and other sponsored activities,as de- training activities of an institution.Except fined in this section;indirect(F&A)cost en- for research training as provided in sub- tivftiea identified in this Appendix pera- section b,this term includes all teaching and graph B,Identtffoation and assignment of in- training activities,whether they are offered direct (F&A)costs; and specialized services for credits toward a degree'or certificate or facilities described in 1200.468 Specialized on a non-credit basis,and whether they are service facilities of this Part. offered through regular academia depart Examples of other institutional activities ments or separate divisions,such as a cam- include operation of residence halls, dining mer school division or an extension division. balls, hospitals and clinics, student unions, Also considered part of this major function intercollegiate athletics,bookstores,faculty. are departmental research, and, where housing, student apartments, guest homes, agreed to,university research. chapels,theaters,public museums,and other (1)Sponsored instruction and training means similar auxiliary enterprises.This definition specific instructional or training activity ea- also includes any other categories of aativi- tablished by grant,contract, or cooperative ties, coats of which are "unallowable" to agreement. For purposes of the cost grin- Federal awards, unless otherwise indicated ciplea, this activity may be considered a to an award. major function even though an institution's 2.Criteria for Distribution accounting treatment may include it in the instruction function. a. Bass period. A base period for distribu- (2) Departmental research means research, Mon of indirect (F&A) costs is the period development and scholarly activities that during which the costa are incurred. The are not organized research and, con- base period normally should coincide with sequently, are not deparately budgeted and the fiscal year established by the institution, accounted for. Departmental research, for but in any event the base period should be so purposes of this document,is not considered selected as to avoid inequities in the ells- as a major function,but as a part of the in- tribation of costs. struction function of the institution, b. Need for cost groupings. The overall eb- b. Organized research means all research jeotive of the indirect(F&A)°oat allocation and development activities of an institution process is to distribute the indirect (F&A) that are separately budgeted and accounted costs'described in Section B, Identification for.It includes: and assignment of indirect ($'&A) costs, to lyi OMB Guidance Pt.200,App.HI the major functions of the institution in pro- expenses, or operation and maintenance ex- portions reasonably consistent with the na- penises to such activities should be accom- ture and extent of their use of the inattu- pushed through cost groupings which include tion's resources.In order to achieve this ob- only that portion of central indirect(F&A) jective, it may be necessary to provide for costs (such as for overall management) selective distribution by establishing aepa- which are properly allocable to such acts'', rate groupings of cost within one or more of ties, the indirect (F&A) cost categories referred (5)If the institution elects to treat fringe to in subsection B.l,Definition of Facilities benefits as indirect (F&A) charges, such and Administration. In general, the cost costs should be set aside as a separate cost groupings established within a category grouping for selective distribution to related should constitute, in each ease, a pool of cost objectives. those items of expense that are considered to (6)The number of separate cost groupings be of like nature in terms of their relative within a category should be held within contribution to (or degree of remoteness from)the particular coat objectives to which practical limits, after taking into consider- distribution is appropriate. Cost groupings anon the materiality of the amounts in- should be established considering the general volved and the degree of precision attainable guides provided in subsection c of this sec- tion. through Iasi selective methods of distribu- Bach such pool or cost grouping should tlan, then be distributed individually to the re- d•Selection of distribution method. lated coat objectives, using the distribution (1) Actual conditions must be taken into base or method moat appropriate in light of account in selecting the method or base to the guidelines set forth in subsection d of be used in distributing individual cost this section. groupings.The essential consideration in se- c. General considerations on cost groupings. letting a base is that It be the one best suit- The extent to which separate cost groupings ed for assigning the pool of coats to cost ob- and selective distribution would be appro- jectivee in accordance with benefits derived; priate at an institution le a matter of judg- with a traceable oause-and-effect relation- meet to be determined on a case-by-ease ship;or with Iogic and reason,where neither basis.Typical situations which may warrant benefit nor a cause-and-effect relationship is the establishment of two or more separate determinable. cost groupings(based on account classifies.- (2)If a Cost grouping can be identified di- tion or analysis) within an indirect (F&A) reotly with the oust objective benefitted,it cost category include but are not limited to should be assigned to that cost objective. the following: (1)If certain items or categories of expense (9) If the expenses in a cost grouping are relate solely to one of the major functions of morebe general in nature,cost analysisthi distributionsuwhich may re- the institution or to lees than all functions, su based on a study such expenses should be set aside as a sepa- cosh in equitabley distribution of take rate cost grouping for direct assignment or cosh. 8uoh cost analysts studies may take selective allocation in accordance with the into consideration weighting factors, popu- guides provided in subsections b and d. lesion,or apace occupied if appropriate.Cost (2)If any types of expense ordinarily treat ��studies,however,must(a)be appra ed as general administration or depart priately documented in sufficient detail for mental administration are charged to Fed- subsequent review by the cognizant agency eral awards as direct costs,expenses applica- for indirect costs,(b) distribute the costs to ble to other activities of the institution the related cost objectives In accordance when incurred for the same purposes in like with the relative benefits derived,(o)be eta- circumstances must, through separate coat tistically sound,(d)be performed specifically groupings, be excluded from the indirect at the institution at which the results are to. (F&A) costs allocable to those Federal be used,and(e)be reviewed periodically,but awards and included in the direct cost of not lass frequently than rate negotiations, other activities for cost allocation purposes. updated if necessary, and used consistently. (9)If it is determined that certain expenses Any assumptions made in the study meet be are for the support of a service unit or facil- stated and explained. The use of cost anal- ity whose output is susceptible of measure- ysis studies and periodic changes in the ment on a workload or other quantitative method of cost distribution must be fully basis,such expenses should be set aside as a justified. separate cost grouping for distribution on (4) If a cost analysis study is not per- such basis to organized research, inetruc- formed,or if the study does not result in an tional,and other activities at the institution equitable distribution of the costs, the die- or within the department. tributlon must be made in accordance with (4) If activities provide their own pur- the appropriate base cited in Section B,Iden- chasing, personnel administration, building tincation and assignment of indirect(F&A) maintenance or similar service,the dietribu- costs.unless one of the following conditions Lion of general administration and general is met: 19 Pt.200,App.10 2 CFR Ch.II(1-1-14 Edillon) (a)It can be demonstrated that the use of (1) Depreciation on buildings used exolu- a different base would result in a more equi- sively in the conduct of a single function, table allocation of the costs,or that a more and on capital improvements and equipment readily available base would not increase the used in such buildings, must be assigned to costs charged to Federal awards,or that function. (b)The institution qualifies for,and elects (2)Depreciation on buildings used for more to use,the simplified method for computing than one function, and on capital improve- indirect(F&A) cost rates described in Bee- meats and equipment used ha such buildings, Lion D, Simplified method for small institu- must be allocated to the individual functions Mons, performed in each building on the basis of (5) Notwithstanding subsection (3), effec- usable square feet of space, excluding emo- tive July 1,1998,a poet analysis or base other man areas such as hallways, stairwells, and than that in Section B must not be used to rest rooms. distribute utility or student services costs. (3) Depreciation on buildings, capital Im- Instead, subsections B.4.o Operation and provemente and equipment related to space maintenance expenses, may be used in the (e.g., individual rooms, laboratories) used recovery of utility costa. jointly by more than one function(as deter- s.Order of distribution. mined by the users of the space) must be (1)Indirect(F&A)costs are the broad cat- treated as follows.The cost of each jointly egories of casts discussed in Section B.l, used unit of space must be allocated to bone- Definitions of Facilities and Administration fitting functions on the basis of (2) Depreciation, interest expenses, oper- (a) The employee full-time equivalents ation and maintenance expenses,and general (Frlls)or salaries and wages of those indl- administrative and general expenses should vidual functions benefitting from the use of be allocated in that order to the remaining that space;or indirect(F&A)cost categories as well as to (b)Institution-wide employee FTEs or sal- the major functions and specialized service arias and wages applicable to the benefitting facilities of the institution, Other cost oat- major functions(see Section A.1) of the in- egories may be allocated in the order deter- stitution. mined to be most appropriate by the institu- (4) Depreciation on certain capital 1m- tions.When arose allocation of costs is made provemente to land, such as paved parking as provided in subsection(3),this order of al- areas,fences,sidewalks,and the like,not in- location does not apply. eluded in the cost of buildings,must be allo- (3) Normally an indirect (F&A) cost cat- sated to user categories of students and em- egory will be considered closed once it hes ployees on a full-time equivalent basis.The been allocated to other cost objectives,and amount allocated to the student category costs may not be subsequently allocated to must be assigned to the inetruction function it. However, a cross allocation of costs be- of the institution.The amount allocated to tween two or more indirect(F&A)cost oat- the employee category must be further allo- egories may be used if such allocation will dated to the major functions of the institu- result in a more equitable allocation of tion in proportion to the salaries and wages costs.If a Dross allocation is used,an ammo- of all employees applicable to those fkno- priate modification to the composition of lions. the indirect(F&A)cost categories described in Section B is required. 3.Interest B.IDENTIFICATION AND ASSIGNMENT OF Interest on debt associated with certain IN ICATIOEREOT(F&A)Asss COSTS buildings, equipment and capital Improve- ments, as defined in §200.449 Interest, must I.Definition of Facilities and Administration be olasalfied as an expenditure under the oat- egory Facilities. These costs must be allo- See 2200.414 Indirect (F&A) costs which anted in the same manner as the deprecfa- provides the basis for this indirect cost re- tion on the buildings,equipment and capital quirements. improvements to which the interest relates, 2.Depreciation 4.Operation and Maintenance Expenses a.The expenses under this heading are the a. The expenses under this heading are portion of the costs of the institution's those that have been incurred for the asmin- buildings,capital improvements to land and istration, supervision, operation, mainte- buildings, and equipment which are corn- Hance,preservation,and protection of the in- puted 1n accordance with§200.438 Depreofa- atitution's physical plant. They include ex- tion. penises normally incurred for such items as b. In the absence of the alternatives pro- janitorial and utility services; repairs and vided for in Section A.2.d, Selection of die- ordinary or normal alterations of buildings, tribution method, the expenses inoluded In furniture and equipment; care of grounds; this category must be allocated in the fol- maintenance and operation of buildings and lowing manner: other plant facilities; security; earthquake 198 OMB Guidance Pt.200,App.III and disaster preparedness; environmental 5.General Administration and General Expenses safety; hazardous waste disposal; property, a. The expenses under this heading are liability and all other insurance relating to those that have been incurred for the general property; space and capital leasing; facility executive and administrative offices of edu- planning and management; and central re- cational institutions and other expenses of a celving.The operation and maintenance ex- general character which do not relate solely pease category should also include its alio- to any major function of the institution;i.e., cable share of fringe benefit costs,deprecia- solely to (1) inetruotion, (2) organized re- tion,and interest costs. search, (3)other sponsored activities, or(4) b.In the absence of the alternatives pro- other institutional activities. The general vid.ed for in Section 4.2.d, the expenses in- administration and general expense category eluded in this category must be allocated in should also include its allocable share of the same manner as described in subsection fringe benefit costs, operation and mainte- 2,b for depreciation. nance expense, depreciation, and interest o. A utility cost adjustment of up to 1.3 costs. Examples of general administration percentage points may be included in the ne- and general expenses include:those expenses gotiated indirect coat rate of the ITlE for or- incurred by administrative offices that serve ganized research,per the computation alter- the entire university system of which the in- natives in paragraphs (oxl) and (2) of this etitution is a part;central offices of the in- section: etltutfoa such as the President's or (I)Where space is devoted to a single funo- Chancellor's office, the oftloee for institu- tion and metering allows unambiguous mess- tion-wide financial management, business urement of usage related to that space,costs services, budget and planning, personnel must be assigned to the function located in management, and safety and risk manage- that apace. ment;the office of the General Counsel;and (2) Where apace is allocated to different the operations of the central administrative functions and metering does not allow unam- management information systems. General biguous measurement of usage by function, administration and general expenses must not costs must be allocated as follows: include expenses incurred within non - costa Utilities costs should be apportioned to university-wide deans' offices, academic de- functions in the same manner as deprecia- lar i at o organized units.rts (Seeroh usubs,or on 6, tion, based on the calculated difference be- far organizational subsection 6, s.) tween the site or building actual square foot- Db. In al absenceadmnof theon a alternatives pro- age for monitored research laboratory space d In the of alterexpense(site, building, floor, or room), and a saps- elude for inh Sectioncategory Amu, the expenses in- first rate calculation prepared by the IRE using ard accordingi this mmonmust ube grouped f the the "effective square footage" described in institti to common major renderservicesrtse or subsection(e)(2)(11)of this section. provide bn ofto which aggregatetheye expenses or (f1)"Effeotive benefits. The belloted to se vof - aquare footage"allocated to each group must then be allocated to serv- research laboratory space must be calculated iced or beuefltted functions on the modified as the actual square footage times the rel- total coat basis.Modified total costs consist ative energy utilization index(REUI)posted of the same elements as those in section C.2, on the OMB Web site at the time of a rate When an activity included in this indirect determination. (t'&A) cost category provides a service or A.This index ie the ratio of a laboratory produot to another institution or organize.- energy use index (lab BUD to the oor- tion, an appropriate adjustment must be responding index for overall average college made to either the expenses or the baste of or university space(college BUI), allocation or both,to assure a proper althea- B.In July 2012.values for these two indices tion of Goats. (taken respectively from the Lawrence Berkeley Laboratory"Labs for the list Cen- B.Departmental Administration Expenses tury" benobmarking tool http:// a. The expenses under this heading are labs2lbenchmarking.l61.gov/CompareData.php those that have been incurred for adminia- and the US Department of Energy "Build- trative and supporting services that benefit lugs Energy Databook" and http:// common or joint departmental activities or buildingsdatabook.eren.doe.gou/CBECS.aspx) objectives in academic deans' offices, scn- were 310 kBtuisq ft-yr.and 156 kBtu/sq ft-yr., demic departments and divisions, and orga- so that the adjustment ratio is 2.0 by this nixed research units. Organized research methodology, To retain currency, OMB will units include such unite as institutes,study adjust the EUI numbers from time to time centers,and research centers.Departmental (no more often than annually nor lees often administration expenses are subject to the than every 6 years), using reliable and pub- following limitations. holy disclosed data. Current values of both (1) Academic deans' offices. Salaries and the EWe and the REUI will be posted on the operating expenses are limited to those at- OMB Web site. tributable to administrative functions. Pl.200,App.IN 2 CFR Ch.II (1-1-14 Ecfllon) (2)Academic departments: c. In the absence of the alternatives pro- (a) Salaries and fringe benefits attrib- aided for in.Section A.2.d, the expenses in- utabie to the administrative work(including eluded in this category must be allocated as bid and proposal preparation)of faculty,(in- follows: eluding department heads)and other prafee- (1) The administrative expenses of the atonal personnel conducting research and/or dean's office of each college and school must instruction,must be allowed at a rate of 3.6 be allocated to the academia departments percent of modified total direct posts. This within that college or school on the modified category does not include professional buss- total cost basis. pees or professional administrative officers. (2) The administrative expenses of each This allowance must be added to the con- academia department, and the department's ,potation of the indirect(F&A)cost rate for share of the expenses allocated in subsection major functions in Section C,Determination (1)must be allocated to the appropriate funs- and application of indirect(F&A)cost rate tions of the department on the modified or rates;the expenses covered by the allow- total cost basis. sues must be excluded from the depart- mental administration cost pool. No docu- 7.Sponsored Projects Administration mentation is required to support this allow- a.The expenses under this heading are tim- *ace; iced to those Incurred by a separate organi- (b) Other administrative and supporting zation(s)established primarily to administer expenses inourred within academic depart- sponsored projects,including such functions ments are allowable provided they are treat- as grant and contract administration (Fed- ed consistently in like circumstances. This eral and non-Federal),special security, par- would include expenses snob as the salaries chasing,personnel,pdminiatration,and edit- of seorstsa'ial and eletfra shaft%the salaries ing and publishing of research and other re- ef administrative officers and assistants, ports.They include the salaries and expenses travel, office supplies, stockrooms, and the of the head of such organization,assistants, like. and immediate staff,together with the sala- (3)Other fringe benefit costs applicable to rise and expenses of personnel engaged in the salaries and wages included in sub- supporting activities maintained by the or- sections(1) and(2)are allowable,as well as ganizaticn,such as stock rooms,print shops. an appropriate share of general administra- and the like.This category also includes an lion and general expenses, operation and allocable share of fringe benefit costs, gen- maintenance expenses,and depreciation. eral administration and general ex penses, (4) Federal agencies may authorize relic- operation and maintenance expenses,and de- bursement of additional costs for department predation. Appropriate adjustments will be heads and faculty only in exceptional oases made for services provided to other functions where an institution can demonstrate undue or organizations. hardship or detriment to project perform- b. In the absence of the alternatives pro- auto. vided for in Section A.2.d, the expenses in- b.The following guidelines apply to the de- eluded in this category must be allocated to termination of departmental administrative the major functions of the institution under costs as direct or indirect(F&A)costs. which the sponsored projects are conducted (1)In developing the departmental admtn- on the basis of the modified total cost of istration coat pool,special care should be ex- sponsored projects, ercised to ensure that costs incurred for the c. An appropriate adjustment must be same purpose in like circumstances are made to eliminate any duplicate charges to treated consistently as either direct or indi- Federal awards when this category includes rest (F&A) costs. For example, salaries of similar or identical activities as those in- technical staff, laboratory supplies (e.g„ eluded in the general administration and ohemicale), telephone toll charges, animals, general expense category or other indirect animal oars coats, computer costs, travel (F&A) poet items, suoh as accounting, arc- oasts, and specialized shop costs must be casement,or personnel administration. treated as direct costs wherever identifiable B.Library Expenses to a particular cost objective.Direct charg- ing of these costs may be accomplished a. The expenses under this heading are through specific identification of individual those that have been incurred for the oper- oosts to benefitting cost objectives, or atfon of the library, including the coat of through recharge centers or specialized serv- books and library materials purchased for ice facilities,as appropriate under the sir- the library,less any items of library income oumstances. See§§200.413 Direct costs,pare- that qualify as applicable credits under graph (o) and 200.488 Specialized service fa- §200.406 Applicable credits. The library ex- cilities. pease category should also include the fringe (2) Items such as office supplies, postage, benefits applicable to the salaries and wages local telephone oosts,and memberships must included therein, an appropriate share of normally be treated as indirect(F&A)costs. general administration and general expense, 200 OMB Guidance Pt.200,App.III operation and maintenance expense,and de- struotion function,and subsequently to Fed- predation. Costs incurred in the purchases eral awards in that function, of rare books(museum-type books)with no value to Federal awards should not be allo- 10. Offset for Indirect (F&A) Expenses Other- cated to them, wise Provided for by the Federal Govern- b. In the absence of the alternatives pro- meats vided for in Section A.2.d, the expenses in- a.The items to be accumulated under this eluded in this category must be allocated heading are the reimbursements and other first on the basis of primary categories of payments from the Federal government users, including students, professional em- which are made to the institution to support ployees,and other users, solely,specifically,and directly,in whole or (1)The student category must consist of in part,any of the administrative or service full-time equivalent students enrolled at the activities described in subsections 2 through institution,regardless of whether they earn g, credits toward a degree or certificate. b.The items in this group must be treated (2) The professional employee category as a credit to the affected individual indirect must consist of all faculty members and (F&A)cost category before that category is other professional employees of the inatltu- allocated to benefltting functions. tion, on a full-time equivalent basis. This category may also include post-doctorate C.DL7&RMINATION AND APPLICATION OF fellows and graduate students. INDIIt8OT(F&A)OM RATE OR RATES (3)The other users category must consist 1.Indirect(F&A)Cost Pools of a reasonable factor as determined by insti- tutional records to account for all other a.(1)Subject to subsection b,the separate users of library facilities. categories of indirect (F&A) costs allocated c.Amount allocated in paragraph b of this to each major function of the institution as section must be assigned farther as follows: prescribed in paragraph B of this paragraph (1) The amount in the student category 0.1 Identification and assignment of indirect must be assigned to the instruction function (F&A)costs,must be aggregated and treated of the institution, as a common pool for that function. The (2) The amount in the professional em- amount is each pool must be divided by the ployee category must be assigned to the distribution base described in subsection 2 to major functions of the institution in propor- arrive at a single indirect(F&A)cost rate for tion to the salaries and wages of all faculty each function. members and other professional employees (2) The rate for each Emotion is used to applicable to those functions. distribute indirect(F&A)costs to individual (3)The amount in the other users category Federal awards of that function. Since a must be assigned to the other institutional common pool is established for each major activities function of the institution. function of the institution, a separate indi- rect(F&A)cost rate would be established for 9.Student Administration and Services each of the major functions described in Sec- a. The expenses under this heading are tion A.l under which Federal awards are car- tied out, those that have been incurred for the sdmin- (3) Each institution's indirect (F&A) cost nitration of student affairs and for services rate process must be appropriately designed to students, including expenses of such as to ensure that Federal sponsors do not in tivities as deans of students,admissions,reg- any way subsidise the indirect(F&A)costs of istrar, counseling and placement services, other sponsors, specifically activities spon- student advisers, student health and infir- Bored by industry and foreign governments. mary services, catalogs, and commence- Accordingly,each allocation method used to meats and convocations. The salaries of identify and allocate the indirect(F&A)cost members of the academia staff whose tampon- pools, as described in Sections A.2, Criteria sibilities to the institution require adminis- for distribution, and B2 through 13.9, must trative work that benefits sponsored projects contain the fall amount of the institution's may also be included to the extent that the modified total costs or other appropriate portion charged to student administration is units of measurement used to make the corn- determined in accordance with Subpart F putatione, In addition, the final rate dis- Cost Principles of this Part. This expense tribution base(as defined in subsection 2)for category also includes the fringe benefit each major function(organised research,in- costs applicable to the salaries and wages in- struction, etc., as described in Section Al, eluded therein, an appropriate share of gen- Major functions of an institution)must con- eral administration and general expenses, fain all the programs or activities which uti- operation and maintenance, interest ex- line the indirect (F&A) costs allocated to pease,and depreciation. that major function.At the time an indirect b.In the absence of the alternatives pro- (F&A) cost proposal Is submitted to a cog- vided for in Section A.2.d, the expenses in nizant agency for indirect costs, each insti- this category must be allocated to the in- tation must describe the process it uses to 201 Pt.200,App.III 2 CFR Ch.II(1-1-14 Edition) ensure that Federal funds are not used to 3.Negotiated Lump Sum for Indirect(F&A) subsidize industry and foreign government Costs funded programs. A negotiated fixed amount in lieu of Judi- b.In some instances a single rate beats for rect(F&A)coats may be appropriate for self- use across the board on all work within a contained,off-campus, or primarily suboon- major function at an institution may not be treated activities where the benefits derived appropriate. A single rate for research, for from an institution's indirect(F&A)services example,might not take into account those cannot be readily determined. Such nego- different environmental factors and other tinted indirect(F&A)oosts will be treated as conditions which may affect substantially an offset before allocation to instruction,or- the indirect(F&A)costs applicable to a par- ganized research,.other sponsored activities, tioular segment of research at the institu- and other institutional activities. The base tion. A particular segment of research may on which such remaining expenses are alio- be that performed ander a single sponsored cated should be appropriately adjusted. agreement or it may consist of research q Predetermined Rates for Indirect(F&A)Costs under a group of Federal awards performed in a common environment. The environ- Public law 87-638(76 Stat.437)as amended mental factors are not limited to the phys- (41 U.S.C. 9708) authorizes the use of pre- foal location of the work. Other important determined rates in determining the "Indi- factors are the level of the administrative rect oosts" (indirect(F&A)costs)applicable support required, the nature of the facilities under research agreements with educational or other resources employed, the scientific institutions.The stated objectives of the law disciplines or technical skills involved, the are to simplify the administration of cost- organizational arrangements used, or any type research and development contracts(in- thereof.If a particular segment cloning grants) with preparationpar install- combinationtheir of a sponsored agreement is performed with- tiona,udgto, faoi tote permitth e of their in an environment which appears to generate budgets,ut and sucht more the work is a significantly different level of indirect closeout d.o contractswfh whee work is completed. In view of the potential advan- (F&A)coats,provisions should be made for a tagea offered by this procedure,negotiation separate indirect(F&A)cost pool applicable of predetermined rates for indirect (F&A) to such work. The separate indirect (F&A) costs for a period of two to four years should cost pool should be developed during the rag- be the norm In those situations where the ular course of the rate determination process coat experience and other pertinent facts and the separate indirect(F&A)cost rate re- available are deemed sufficient to enable the suiting therefrom should be utilized; pro- parties involved to reach an informed judg- vided it is determined that(1)such indirect meat as to the probable level of indirect (F&A) cost rate differs significantly from (F&A) costs during the ensuing accounting that which would have been obtained under periods. subsection a,and(2) the volume of work to 5.Negotiated Fixed Rates and Carry-Forward which such rate would apply is material in Provisions relation to other Federal awards at the insti- tution. When a fixed rate is negotiated in advance for a fiscal year(or other time period), the 2.The Distribution Basis over-or under-recovery for that year may be indirect(F&A)coats must be distributed to included as an adjustment to the indirect applicable Federal awards and other benefit- When cost for negotiatedth next rate netheiatiry- tang activities within each major function wa the rate is ntis before the carry- forward adjustment is determined,the carry- (see section A.1,Major functions of an insti- forward amount may be applied to the next tution)on the basis of modified total direct subsequent rate negotiation.When such ad- coats(MTDO), consisting of all salaries and juatments are to be made,each fixed rate ne- wages, fringe benefits, materials and sup- gotiated in advance for a given period will be plies,services,travel,and subgranta and sub- computed by applying the expected indirect contracts up to the first $28,00D of each (F&A)costa allocable to Federal awards for subaward (regardless of the period covered the forecast period plus or minus the carry- by the subaward).MTDC is defined in 1200.68 forward adjustment(over-or under-recovery) Modified Total Direct Cost(MTDC).For this from the prior period, to the forecast die- purpose, an indirect(F&A) cost rate should tribution base. Unrecovered amounts under be determined for each of the separate indi- lump-sum agreements or cost-sharing provi- rect(F&A)cost pools developed pursuant to stone of prior years must not be carried for- subsection 1.The rate in each case should be ward for consideration in the new rate nego- stated as the percentage which the amount tiation.There must,however,be an advance of the particular indirect(F&A)cost pool is understanding in each case between the in- of the modified total direct costs identified stitutlon and the cognizant agency for trial- with such pool, rest oasts as to whether these differences 202 OMB Guidance Pt.200,App.III will be considered in the rate negotiation Federal government at the time of an award rather than making the determination after (beoauee the educational institution is a new the differences are known. Further.inetitu- recipient or the parties cannot reach agree- None electing to use this carry-forward pro- meat on a rate),the provisional rate used at vision may not subsequently change without the time of the award must be adjusted once prior approval of the cognizant agency for a rate is negotiated and approved by the cog- indirect costs.In the event that an inetitu- nizant agency for indirect coats. tion returns to a post-determined rate, any over-or under-recovery during the period in 8.Limitation on Reimbursement of which negotiated fixed rates and carry-for- Administrative Costs ward provisions were followed will be in- cluded in the subsequent poet-determined a. Notwithstanding the provisions of sub- rates. Where multiple rates are used, the section 0.1.a, the administrative costs same procedure will be applicable for deter- charged to Federal awards awarded or mining each rate, amended (including continuation and re- newal awards)with effective dates beginning 6.Provisional and Final Rates for Indirect on or after the start of the institution's first (F&A)Costs fiscal year which begins on or after October Where the cognizant agency for indirect 1,1991,must be limited to 28% of modified costs determines that cost experienoe and total direct costs(as defined in subsection 2) other pertinent facts do not justify the use for the total of General Administration and of predetermined rates,or a fixed rate with General Expenses, Departmental Adminis- a carry-forward, or if the parties cannot tration,Sponsored Projects Administration, agree on an equitable rate,a provisional rate and Student Administration and Services must be established.To prevent substantial (inclwilne thaIr allocable share of deprecfa- overpayment or underpayment, the provi- tion, interest costs, operation and malnte- atonal rate may be adjusted by the cognizant nonce expenses,and fringe benefits oasts,as agency for indirect costs during the institu- provided.by Section B,Identification and as- tion's fiscal year. Predetermined or fixed signment of indirect (F&A) costs, and all rates may replace provisional rates at any other types of expenditures not listed ape- time prior to the close of the institution's cigoally under one of the subcategories of fa- fiscal year. If a provisional rate is not re- dillies in Section B. placed by a predetermined or fixed rate prior to the end of the institution's fiscal year, a b.Institutions should not change their ac- tinal rate will be established and upward or counting or cost allocation methods if the ef- downward adjustments will be made based on feet is to change the charging of a particular the actual allowable costs incurred for the type of coat from F&A to direct,or to moles- period involved, sitar costs, or increase allocations from the 7.Fixed hates for the Life of the Sponsored administrative pools identified in paragraph Agreement B.1 of this Appendix to the other F&A cost pools or fringe benefits. Cognizant agencies Federal agencies must use the negotiated for indirect cost are authorized to allow rates except as provided in paragraph(e) of changes where an institution's charging §200.414 Indirect (F&A) costs, must para- practices are at variance with acceptable graph(b)(1)for indirect(F&A)costs in effect practices followed by a substantial majority at the time of the initial award throughout of other institutions. the life of the Federal award. Award levels 9.Alternative Method for Administrative Costs for Federal awards may not be adjusted in future years as a result of changes in nego- a. Notwithstanding b- tinted rates."Negotiated rates"per the rate theprovisions of ca section La,,an Institutionon may elect to claim agreement include final,fixed,and predeter- a fixed allowance for the "Administration" mined rates and exclude provisional rates. "Life" for the purpose of this subseotion portion of indirect (F&A) costs. The allow- means each competitive segment of a ante could be either 24%of modified total di- project.A competitive segment is a period of rebt costs or a percentage equal to 96%of the years approved by the Federal awarding most recently negotiated fixed or predeter- agency at the time of the Federal award.If mined rate for the cost pools included under negotiated rate agreements do not extend "Administration" as defined in Section B1, through the life of the Federal award at the whichever is lees.Under this alternative,no time of the initial award, then the nego- cost proposal need be prepared for the "Ad- tiated rate for the last year of the Federal ministration"portion of the indirect(F&A) award must be extended through the end of cost rate nor is further identification or doc- the life of the Federal award. umentation of these costs required(see sub- b. Except as provided in §200.414 Indirect section c). Where a negotiated indirect (F&A)costs,when an eduoational institution (F&A) cost agreement includes this alter- does not have a negotiated rate with the native,an institution must make no farther Pt.200,App.III 2 CFR Ch.II(1-1-14 Edition) charges for the expenditure categories de- aided based on mutual agreement between soribed in, Section B.6, General adminlstra- BITS and DOD. tier and general aspenems,Section E.d, De- (2)After anipasnaa is uetabliahed,it must partmautal admiaietratioz espenaae,Seatieh continue for a five-gear period. D.7.Sponsored projects rdmtnfetsatlmn, and b, Aopepteape of mass, See.1200.ti4 Jr.#t. Section 8.9, Student adrelmietratioa and root(Atalanta, serer. c. Curraetiag dsfiatenalea. The cognizant b.In negatlatione of rates far subsequent agency hn• iedireat acids emit negotiate pariods. an institution that has elected the neodad to carried systems dad- optton of eubaection a may odttinae to Isar- denotes relating in armelat dlit3'for Fed- Mae it at the sara rate without fmtber!den- eral awards, tlagaiz it agendas for indirect ttfioatioh or docameatabioa of ooeta, oasts moat adidrese the concerns of of si- c. If an 9natitatlmi electe to accept a feated spades,ea appropriate,and must ne- threhold rate al dtiiflnad in eubeeetlam a of gradate special rates for Federal agencies this nation,It Is not rmtnlrsd to perform a that are rewired. to limit recovery of Ind- detailed analyaia of Its adminle astivs coats. rat wags by statute. However,in order to eamputa the factitides d, feaglving queetiolied caste. The cog- cOnilromavte at its 11014"(FdsA)neat rate, frieunt agency for indirect caste most con- the Inetitet1OJ roast reconcile its bedireat duct any necessary aegwtiatidare with an oda-. (post) ooet neonatal to its Muscatel state- f atidraat taetitatlan regarding amounts gees manta and mare 4pproprtata M4,1}met5I s tinned by audit that are due the Federal goy- and reclaselikattocs to identity the caste of enamel related to Ovate domed by a nego- each. motor function es defined in Section dieted A,;,as well an to Identity and allow the fa- e,Lteleandrradradent.asirsbismrsiacit to cog- thatuara Ina ellek by the t,o"ni. Mast agenda fee'What aceda far Work tutioa"a a unting system(Ina as Shade in= rs inbarse thin Part r be made by cdrssed in academie departments) will be Am.sauaememt holing coder the i4cemrmty classified AS renal oasts for purposes Af. 1 .Lfd6. of teooncflimg itrdtreat(F&)anat propaesla f.proceduretivfar a be staali she and sa f nancial statement,and alloca ing ixotlt- one of administrative range must be established by ties oasts, one of r>fe fofloadmg rriethoda (1) Formal negntpatton, The oogairaut 10.Individual Rate Components agency for indirect costs is responsible for negotiating and approving rates for an edu- In order to provide mutually agreed-upon rational institution on behalf of all Federal information for management purposes,each agencies,Non-cognizant Federal agencies for indirect (F&A) cost rate negotiation or de- indirect oasts,which make Federal awards termination shall include development of a to an educational institution, must notify rate for each indirect(F&A)coot pool as well the cognizant agency for indirect costs of as the overall indirect(F&A)cost rate. specific concerns (i.e., a need to establish II.Negotiation and Approval of Indirect(F&A) special cost rates)which could affect the ne- gotiation process.The cognizant agency for Rate indirect coats must address the concerns of a. Cognizant agency for indirect costs is all interested agenoies, as appropriate. A defined in Subpart A--Acronyms and Perini- pre-negotiation conference may be scheduled bone. among all interested agencies, if necessary. (1)Coat negotiation cognizance is assigned The cognizant agency for indirect costa must to the Department of Health and Human then arrange a negotiation conference with Services (1m6) or the Department of De- the educational institution. tense's Office of Naval Research(DOD),nor- (2)Other than formal negotiation.The cog- maly depending on which of the two agen- nitwit agency for indirect costs and edu- cies (HIS or DOD)provides more funds to national institution may reach an agreement the educational institution for the most re- on rates without a formal negotiation con- cent three years. Information on funding Terence; for example, through correspond- must be derived from relevant data gathered once or use of the simplified method de- by the National Science Foundation.In cases scribed in this section D of this Appendix. where neither HES nor DOD provides Fed- g. Formalizing determinations and agree- eral funding to an educational institution, rnents. The cognizant agency for indirect the cognizant agency for indirect costs as- costs must formalize all determinations or signment must default to HES. Notwith- agreements reaohed with an educational in- standing the method for cognizance deter- stitution and provide copies to other agen- mination described in this section,other or- cies having an interest. Determinations rangements for cognizance of a particular should include a description of any adjust- educational institution may also be based in meats, the actual amount, both dollar and part on the types of research performed at percentage adjusted,and the reason for mak- the educational institution and must be de- ing adjustments. j4 OMB Guidance Pt.200,App.III h.Disputes and disagreements. Where the are classified under the following titles or cognizant agency for indirect costs is unable their equivalents: to reach agreement with an educational in- (I)General administration and general ex- stitutlon with regard to rates or audit rim- pewee(exclusive of costs of student adnrfnie- lutlon, the appeal system of the oognizant tratton and services,student activities,atu- agency for indirect costs must be followed dent aid,and scholarships). for resolution of the disagreement. (2)Operation and maintenance of physical plant and depreciation(after appropriate ad- 12.Standard Format for Submission justment for costs applicable to other insti- tutionalFor facilities and administrative(indirect )Lib cry.activities). (F&A)) rate proposals, educational inatitu- (4)iDerart Lions must use the standard format, shown (4)iwill be computedc admi ast20 percenten expenses,f the in section E of this appendix,to submit their which salaries e bepenso an ad the indirect (F&A) rate proposal to the cog- dertand expenses of deans and heads of nizant agency for indirect costs. The cog- departments. si- nizant agency for indirect costs may,on an Id those cribs where expendituresre airily institution-by-institution basis, fled under subsection tocothe (1)n have previously ao ivi- grant eaoeg- been allocated other institutional aotivi- tiona from all or portions of Part II of the ties, they may be Included in the indirect standard format requirement. This require- (F ) cost pool.The total amount of sala- ment does not apply to educational inetitn- ries and wages included in the indirect(F&A) Mons that use the simplified method for cal- poet pool must be separately identified, culating indirect(F&A)rates,as described in c.Establish a salary and wage distribution Section D of this Appendix, base,determined by deducting from the total In order to provide mutually agreed upon of salaries and wages as established in sub- information for management purposes,each section a from the amount of salaries and F&A cost rate negotiation or determination wages included under subsection b. must include development of a rate for each d. Establish the indirect(F&A)oast rate, F&A cost pool as well as the overall F&A determined by dividing the amount in the in- rate, direct(F&A)poet pool,Subsection b,by the amount of the distribution base, subsection D.SIMPLIFIED METHOD FOR SMALL O. INSTITo'IIONS H.Apply the indirect(F&A)cost rate to di- rect salaries and wages for Individual agree- 1.General manta to determine the amount of indirect a.Where the total direst cost of work coy- (T&A)costa allocable to such agreements. ered by.this Part at an institution does not 3.Simplified Procedure—Modified Total Direct exceed$10 million in a fiscal year, the elm- Cost Base piffled procedure described in subsections 2 or 3 may be used in determining allowable a.Establish the total costs incurred by the indirect (F&A) costs. Under this simplified institution for the base period. procedure, the institution's most recent an- b. Establish an indirect (F&A) cost pool nual financial report and immediately avail- consisting of the expenditures(exclusive of able supporting information must be utilized capital items and other costs specifically as a basis for determining the indirect(F&A) identified as unallowable)which customarily cost rate applicable to all Federal awards. are olassified under the following titles or The institution may use either the salaries their equivalents: and wages (see subsection 2) or modified (1)General administration and general ex- total direct costs (see subsection 3) as the penses(exclusive of costs of student adminis- distribution basis. tration and services, student activities,stu- b.The simplified procedure should not be dent aid,and scholarships). used where it produces results which appear (2)Operation and maintenance of physical inequitable to the Federal government or the plant and depreciation(after appropriate ad- institution.In any such case,indirect(F&A) lustment for costs applicable to other inati- coste should be determined through use of tutloLib activltlea), the regular procedure. (3) ibrsry. (4) Department administration expenses, 2.Simplified Procedure—Salaries and Wages which will be computed as 20 percent of the Base salaries and expenses of deans and heads of departments. In those oases where expendl- a. Establish the total amount of salaries tures classified under subsection (1) have 'and wages paid to all employees of the instl- previously been allocated to other institu- tution. tional activities,they may be included in the b. Establish an indirect (F&A) cost pool indirect(F&A)coat pool.The modified total consisting of the expenditures (exclusive of direct costs amount included in the indirect capital items and other costs specifically (F&A) cost pool must be separately identi- identified as unallowable)which customarily fled. Pt.200,App.IV 2 CFR Ch.II(1-1-14 Edition) a Establish a modified total direct cost rates in accordance with the requirements of distribution base, as defined in Section C.2, this section, the Federal government must The distribution basis, that consists of all unilaterally establish snob rates.Snob rates institution's direct functions. may be based upon audited historical data or d. Establish the indirect(F&A) cost rate, such other data that have been furnished to determined by dividing the amount in the in- the cognisant agency for indirect costs and direct(F&A) cost pool,subsection b,by the for which it can be demonstrated that all un- amount of the distribution base, subsection allowable costa have been excluded.When in- direct(F&A)cost rates are unilaterally es- a Apply the indirect (F&A) cost rate to tablished by the Federal government beoause the modified total direct costs for individual of failure of the institution to submit a car- agreements to determine the amount of indi- titled proposal for establishing such rates in rect (F&A) costs allocable to such agree- accordance with this section, the rates es- mente. tablished will be set at a level low enough to E.DOCUMENTATION REQUIREMENTS will that potentially unallowable costs will not be reimbursed. The standard format for documentation re- c. Certificate. The certificate required by quiremente for 1 direct(indirect(F&A))rate this section must be in the following form: proposals for claiming costs under the reg- ular method is available on the OMB Web CERTIFICATE OF INDIRECT(F&A)Cos'r site here: http:/fwww.whitehouse.gov/ombi This is to certify that to the beet of my grants_forms. knowledge and belief: F.CERTIFICATION (1)I have reviewed the indirect(F&A)cost proposal submitted herewith; 1.Certification of Charges (2)All costs included in this proposal[iden- tify date]to establish billing or final indi- To assure that expenditures for Federal rest (F&A) costs rate for [identify period awards are proper and in accordance with covered by rate]are allowable in accordance the agreement documents and approved with the requirements of the Federal agree- project budgets, the annual and/or final fie- ment(s) to which they apply and with the cal reports or vouchers requesting payment cost principles applicable to those agree- under the agreements will include a certifi- manta. cation, signed by an authorized official of (3)This proposal does not include any costs the university,which reads"By signing this which are unallowable under applicable cost report,I certify to the best of my knowledge principles such as(without limitation):pub- and belief that the report is true,complete, lie relations costs, contributions and done- and accurate,and the expenditures,disburse- bons, entertainment costs, fines and pen- meats and cash receipts are for the purposes slues, lobbying costs, and defense of fraud and intent set forth in the award documents. proceedings;and I am aware.that any false, fictitious, or (4)All costs included in this proposal are fraudulent information, or the omission of properly allocable to Federal agreements on any material fact,may subject me to orlmi- the basis of a beneficial or causal relation- al, civil or administrative penalties for ship between the expenses incurred and the fraud,false statements,false claims or oth- agreements to which they are allocated in erwise.(U.S.Code,Title 18,Section 1001 and accordance with applicable requirements. Title 31,Sections 3729-3733 and 3801-3812)", I declare that the foregoing is true and cor- 2.Certification of Indirect(F&A)Costs rect, a.Policy.Cognisant agencies must not ac- Institution of Higher Education; cept a proposed indirect cost rate must un- Name of me of o Name lees such coats have been certified by the ffic'iar educational institution using the Certificate Title: of Execution: of indirect (F&A) Costs set forth in aub• seotion F.2.c APPENDIX IV TO PART 200-..-INDIR OT b.The certificate must be signed on behalf (F&A) COSTS IDENTIFICATION AND of the institution by the chief financial offi- ASSIGNMENT,AND RATE DETERMINA- cer or an individual designated by an indi- vidual at a level no lower than vice president TION FOR NONI'RGFTl ORGANIZA- or chief financial officer. TIONS (1) No indirect (F&A) cost rate must be A GENERAL binding upon the Federal government if the most recent required proposal from the insti- 1.Indirect costs are those that have been tution has not been certified. Where it is incurred for common or joint objectives and necessary to establish indirect (F&A) cost cannot be readily identified with a par- rates,and the institution has not submitted titular final cost objective. Direct cost of a certified proposal for establishing such minor amounts may be treated as indirect 20€ OMB Guidance Pt.200,App.IV costs under the conditions described in rating the organization's total costs for the 1200.419 Direct coots paragraph (d) of this base period as either direct or indirect,and Part. After direct costs have been deter- (ii) dividing the total allowable indirect mined and assigned directly to awards or costs(net of applicable credits) by an aqui- other work as appropriate,indirect costs are table distribution base. The result of this those remaining to be allocated to benefit- process is an indirect cost rate which is used ting cost objectives.A coat may not be allo- to distribute indirect coats to individual cated to a Federal award as an indirect cost Federal awards.The rate should be expressed if any other coat incurred for the same pur- as the percentage which the total amount of pose, in like oiroumstanoes, has been as- allowable indirect costs bears to the base re- signed to a Federal award as a direct cost. looted. This method should also be used "Major nonprofit organisations" are de- where an organization has only one major fined in 1200.411 Indireot(F&A)coats.See in- function enoompaseing a number of indi- direct post rate reporting requirements in vidual projects or activities, and may be sections B.2.e and B.3.g of this Appendix. , used where the level of Federal awards to an B,ALLOCATION OF INDIRECT CORTE AND organization is relatively small. DETERMINATION OF INDIRECT COST llAT88 b. Both the direct Costa and the indirect oasts meet exclude capital expenditures and Z.General unallowable costs. However, unallowable a.If a nonprofit costs which represent activities must be in- p organization has only one eluded in the direct coats under the condi- major function,or where all its major funs- Mona described in 1200.419 Direct costs,pars- Mons benefit from its Indirect oasts to ap- graph(e)of this Part. proximately the same degree,the allocation a. The distribution base may be total di- of indirect coats and the computation of an reef costs (excluding capital expenditures indirect cost rate may be accomplished and other distorting through simplified allocation procedures, as items,more),res cirectoBa or described in section B.2 of this Appendix. riga and wages,wards for$or other or as'which direct Bs in b. If an organization has several major rise and other base t results In functions which benefit from its indirect b'a equitable dire pution. The distribution costs costs in varying degrees, allocation of indi- base mast exclude participant enpport costa root coats may require the accumulation of as defined is 4200.75 Participant support such costs into separate cost groupings coats. which then are allocated individually to ben- d Except where a special rate(s) is re- efitting functions by means of a base which gnired in accordance with section 13.5 of this best measures the relative degree of benefit. Appendix, the indirect cost rate developed The indirect casts allocated to each function under the above principles is applicable to are. then distributed to individual Federal all Federal awards of the organization. If a awards and other activities included in that special rate(s)is required,appropriate modi- function by means of an indirect cost rate(s)_ fi°atiom must be made in order to develop c. The determination of what oonstitutes the speoial rate(a), an organization's major funotions will de- e.For an organization that receives more pend on its purpose in being; the types of than$10 million in Federal funding of direct services it renders to the public, its clients. costs in a fiscal year,a breakout of the Jodi- and its members;and the amount of effort it rest coat component into two broad oat- devotes to such activities as fundraising, egories,Facilities and Administration as de- public information and membership aotivi- fined in section All of this Appendix,is re- ties. gnired.The rate in each case mast be stated d.Specific methods for allocating indirect as the percentage which the amount of the costs and computing indirect oast rates particular indirect wet category(i.e.,Facili- along with the conditions under which each ties or Administration)is of the distribution method should be used are described in sec- base identified with that category. tion 3.2 through B.6 of this Appendix. e.The base period for the allocation of in. 1•Multiple Allocation Base Method direct costs is the period in which such costs a. General, Where an organization's indi- are incurred and accumulated for allocation rent costs benefit its major functions in to work performed in that period.The base varying degrees,indirect costs must be emu- period normally should coincide with the or- mooted into separate cost groupings,as de- ganization's fiscal year but, in any event, scribed in subparagraph b. Each grouping must be so selected as to avoid inequities in must then be allocated individually to bens- the allocation of the costa, fitting functions' by means of a base which 2.Simplified Allocation Method best measures the relative benefits.The de- fault allocation bases by coat pool are de- e.Where an organization's major functions scribed in section 13.3.43 of this Appendix. benefit from its indirect costs to approxi- b. Identification of indirect costs. Cost mately the same degree,the allocation of in- groupings must be established so as to per- direct costs may be accomplished by(i)sepa- mit the allocation of each grouping on the 207 Pt.200,App. IV 2 CFR Ch.II(1-1-14 Edition) baste mi beeente pmvlded lu the rcejur fine- services costa most be treated as direct mete tines, Each gm'oalptag meet oodulllitute 4 pool Wherevee identifiable to a particular pro- d expenses that are of like ukarartei to cram.The mimics and wigee of adminlatra- r.dine of fanntlwsv they benefit and in Walla Live and pooled darted staff should nor- of the allocation bale which been neegauras matt,? be treated as indirect eaets. Direct the releetee to me me provided to each flow charging of these pores may be appropriate Lean.The groopiagn are aleIldHed within the where a major project ar activity expliaili3 two breed cattegeries:'Fealilties'anti"hd- regoiros and budgets for administrative or tnsstmatieu," as dsarfbed in motion ht of clerical services and other ledividaale La- tins Appends.Thi indirect coot pools are do. volved can be identified with the program ar fined as follows; activity.Item each as office supplis,nest- (1)Depreciation. The expenses under this age, local heading are the portion of the costa of the a periodicals treateda and organization's buildings, capital improve- ink eu ttaeelwold ahtmelny se rents to land and buildings, and equipment a. Allocation beast actual Oonditfone which are computed in accordance with must be.Casten into account in selecting the §200.416 Depreciation. bass to be used in allecating the expenses in (2) Interest. Interest on debt associated each grouping to benentting ftmatiorr.The with certain buildings, equipment and cap- sanaptial ormairionalan In selecting a method ltel improvements are computed in accord- or a Wise Is that it is the one beet sunny for ante with 1200.449 Interest. emaigniag the pool of mots to cost objeolivee (B) Operation and males once songs, In aaecudaow with baoe[lta deriveelt a trace- The exp.asu under thee heeding arc chase able came aid Meet rwlatioantlpc or logic that have lees inallriwd for tbo adleiateltira- and ream.where needier the comae not the Lich, operation, maintenance, preservation, affect of the reiatloameblp la determinable and protective of the argenteetiatea Ph.Yelcal When can allunithem can be mode by M igss. plant, They include erpeiis annually In- meat of a coat gtoeping dipeot&y ul the[Ann- veered for snob items as:jamteriej end utii= flan benelitted, the unmeant moat be matte sty Denims; riiea1Nl and ordinary or norinah Lu that tinnier.When the expenses In a meat al,erstlene of buildings:fnntltilte and maim- grouping are more general in moue,the al- meat; cam of grounds; mainbenaaee and op- location must be*utde throegh nen use of e oration of be tidin% and other plant hapiii- qulee3ad tees which prafngee mourn that sea teak security-, eelthgsalte and disaster pre. equitable to both the Federal govsrameat medium envirenmectal safety: braardeeas and the ormutleatioa.The distribution meat waste dnpoeai; property, liability and other be reads in acoordluce with the bases de- lma�'auce relating to property; apace pail mulled herein miles ft can be demonstrated (Metal teasing: facility *Pining and moan- that the me of a different Wee would remit egmnent; and central inoeavim. The epee- in a more equitable allocation of the caste, sties and malatenanoe Menace category or that a more readily available base would must also Matilde its allrweble share of net lncreuae the moats charged Co Federal fringe benefit costs, depredation,and inter- awards. The resulte of special cost stapes set ccets, (snob as in angi nearing utility study)moat (4)General administration and general ex- not be used to determine and alieeat,the in- peapa.The expenses under this heading are dh of mobs to Federal awarhe. those that have been incurred for the overall (1) Depreciation. Depsaclaunn expeemeee general executive and administrative allege mast be allocated in the following granaur.. of the organisetion and other expenses of a (a) Dsiaseiation on beldihye used omlu- general nature which do not relate solely to etvely in the conduct of a tingle fEntfan, any major function of the areammtloa.This and an capital improvements and equipment category must also include ate allocable uaee in each buildings, must be eseigned to snare of fringe benefit cats, operantra and that function maintenance expense, depredation, and in- (b)Depreciation on buildings used for more tercet poste. ltxwmmples of this category ln- than one function,and on capital improve- clads central offices, such se lea director's manta and equipment used in snob buildings, office, the ranee of finance, bndnese sere- must be allocated to the individual functions lose, budget end planning, personnel safety performed in each building on the basis of and rink management`general counsel,man- usable square feet of space, excluding cor- egemeet information materna and library mon areas,such ae hallways,stairwells,and costs. restrooms. In developing this cost pool, special care (c) Depreciation on buildings, capital (in- should be exercised to ensure that ousts in- provemente and equipment related space curred for the same purpose in like oir- (e.g., individual rooms, and laboratories) cumstancee are treated consistently es el- used jointly by more than one function(as ther direct or indirect costs. For example, determined by the users of the space) moat salaries of technical staff, project supplies, be treated as follows.The cost of each joint- project publication, telephone toll charges, ly used unit of space must be allocated to computer costs, travel costa,and specialized the benefitting functions on the basis of: OMB Guidance Pt.200,App.IV (I)the employees and other users on a full- common pool for that function.The costs in time equivalent(FTE) basis or salaries and the common pool must then be distributed to wages of those Individual functions benefit- individual Federal awards included In that Ling from the use of that space;or function by use of a single indirect coat rate. (ii)salaries and wages applicable tion-wide ltoethe benefit- Indirect be distributed to applicable Federal awards ting functions of the organization. and other benefitting activities within each (d) Depreciation on certain capital im- major function on the basis of MTDC (see provemente to land, such as paved parking definition in 5200.58 Modified Total Direct areas,fences,sidewalks,and the like,not in- Cost(MTDO)of Part 200. eluded in the cost of buildings,must be cello- g. Individual Rate Components. An indi- cated to user categories on a ME basis and root oast rate must be determined for each distributed to major functions in proportion separate indirect coat pool developed. The to the salaries and wages of all employees rate in each case must be stated as the per- applicable to the functions. tentage which the amount of the particular (2) Interest. interest coats must be silo- indirect cost pool is of the distribution base sated in the same manner as the deprecia- identified with that pool.Each indirect cost Lion on the buildings,equipment and capital rate negotiation or determination agreement equipment to which the interest relates. must inolude development of the rate for (3) Operation and maintenance expenses. each indirect coat pool as well as the overall Operation and maintenance expenses must indirect cost rate. The indirect cost pools be allocated in the same manner as the de- must be classified within two broad cat- predation, egories: "Facilities" and "Administration," (4)General administration and general ex- as described in section A.3 of this Appendix. pones. General administration and general expenses must be allocated to benefitting 4.Direct Allocation Method functions based on modified total costs (MTC).The MTC is the modified total direct a. Some nonprofit organizations treat all oasts (MTDC), as described in Subpart A— costs as direct costs except general aduiinis- Acronyms and Definilioise of Part 200;plus tration and general expenses.These organi- the allocated indirect cost proportion. The aatioce generally separate their costs into expenses included in this category could be three halo categories: (i) General adminia- grouped first according to major functions of tratlon and general expenses, (ii) fund- the organization to which they render serv- raising, and(ill) other direct functions (in- ices or provide benefits. The aggregate ex- eluding projects performed under Federal penes of each group must then be allocated awards). Joint costs, such as depreciation, to benefitting functions based on MTC. rental costs, operation and maintenance of d.Order of distribution. facilities, telephone expenses, and the like (1) Indirect cost categories consisting of are prorated individually as direct costs to depreciation,interest,operation and mainte- each category and to each Federal award or nanoe, and general administration and gen- other activity using a base most appropriate eral expenses must be allocated in that order to the particular cost being prorated. to the remaining indirect coat categories as b.This method to acceptable,provided each well as to the major functions of the organ- joint oust is prorated using a base which ao- zation.Other coat categories should be allo- onrately measures the benefits provided to cated in the order determined to be most ap- each Federal award or other activity. The propriate by the organization.This order of bases must be established in accordance with allocation does not apply if cross allocation reasonable criteria,and be supported by Cur- of costa is made as provided in section B.3.d.2 rent data. This method is compatible with ofthie Appendix. the Standards of Accounting and Financial (2)Normally,an indirect cost category win Reporting for Voluntary Health and Welfare be considered closed once it has been cello- Organizations issued jointly by the National sated to other coat objectives, and coats Health Council,Inc., the National Assembly must not be subsequently allocated to it, of Voluntary Health and Social Welfare Or- However,a cross allocation of costs between ganizations,and the United Way of America. two or more indirect costa categories could c. Under this method, indirect costs con- be used If such allocation will result in a slat exclusively of general administration more equitable allocation of oasts.If a cross and general expenses. In all other respects, allocation is used, an appropriate modifioa- the organization's indirect coat rates must Lion to the composition of the indirect cost be computed In the same manner as that de- categories is required. scribed in section B.2 Simplified allocation e. Application of indirect cost rate or method of this Appendix. rates. Except where a special indirect coat rate(e)is required in accordance with section 5.Special Indirect Cost Rates B.5 of this Appendix,the separate groupings In some instances, a single indirect cost of Indirect coats allocated to each major rate for all activities of an organization or function must be aggregated and treated as a for each major function of the organization Pt.200,App.IV 2 CFR Ch.II(1-1-14 Edition) may not be appropriate,since it would not f. indirect cost proposal means the doou- take into account those different factors mentation prepared by an organization to which may substantially affect the indirect substantiate its claim for the reimbursement costs applicable to a particular segment of of indirect costs.This proposal provides the work.For this purpose,a particular segment basis for the review and negotiation leading of work may be that performed under a sin- to the establishment of an organization's in- gie Federal award or it may consist of work direct cost rate. under a group of Federal awards performed g.Cost objective means a function,organize: in a common environment. These factors tional subdivision, contract,Federal award. may include the physical location of the or other work unit for which post data are work,the level of administrative support re- desired and for wbioh provision is made to quired, the nature of the facilities or other accumulate and measure the cost of pros- resources employed,the scientific disciplines eases,projects,jobs and capitalized projects, or technical skills involved, the organiza- tional arrangements used, or any combine- 2.Negotiation and Approval of Rates bloc thereof. When a particular segment of a. Unlees different arrangements are work is performed in an environment which agreed to by the Federal agencies concerned, appears to generate a significantly different the Federal agency with the largest dollar level of Indirect costs, provisions should be value of Federal awards with an organization made for a separate indirect poet pool appl- will be designated as the cognizant agency cable to such work. The separate Indirect for indirect costs for the negotiation and ap- coat pool should be developed during the proval of the indirect cost rates and,where course of the regular allocation process,and necessary,other rates such as fringe benefit the separate indirect cost rate resulting and computer charge-out rates. Once an therefrom should be used,provided it is de- agency is assigned cognizance for a par- termined that (i) the rate differs signifi- titular nonprofit organization, the assign- oantly from that which would have been ob- ment will not be changed unless there is a twined under sections B.2,B.3,and B.4 of this shift in-the dollar volume of the Federal Appendix, and (11) the volume of work to awards to the organization for at least three which the rate would apply is material. years. All concerned Federal agencies must C.NEGOTIATION AND APPROVAL OP INDIRECT be given the opportunity to participate In 00sF RATES the negotiation process but,after a rate has been agreed upon,it will be accepted by all 1.Definitions Federal agencies.When a Federal agency has reason to believe that special operating fac- Ae used in this section,the following terms tors affecting its Federal awards necessitate have the meanings set forth in this section: special indirect cost rates in accordance a. Cognizant agency for indirect costs means with section B.6 of this Appendix, it will, the Federal agency responsible for negoti- prior to the time the rates are negotiated, ating and approving indirect cost rates for a notify the cognizant agency for indirect nonprofit organization on behalf of all Fed- costs.(See also$260.414 Indirect(F&A)costs eral agencies, of Part 200.) b.Predetermined rate means an indirect cost b.Except as otherwise provided in§200.414 rate,applicable to a specified current or fu- Indirect (F&A) costs paragraph (e) of this tore period,usually the organization's fiscal Fart,a nonprofit organization which has not year.The rate is based on an estimate of the previously established an indirect cost rate costs to be inourred during the period.A pre- with a Federal agency must submit its ini- determined rate is not subject to adjust- tial indirect cost proposal immediately after meat. the organization is advised that a Federal e. Fixed rate means an indirect cost rate award will be made and,in no event, later which has the same characteristics as a pre- than three months after the effective date of determined rate, except that the difference the Federal award. between the estimated costs and the actual a.Unless approved by the cognizant agency costs of the period covered by the rate is oar- for indirect poets in accordance with§200.414 Tied forward as an adjustment to the rate Indirect (F&A) costs paragraph (f) of this computation of a subsequent period. Part,organizations that have previously es- d. Final rate means an indirect cost rate tabliahed indirect cost rates must submit a applicable to a specified past period which is new indirect cost proposal to the cognizant based on the actual costs of the period. A agency for indirect coats within six months final rate is not subject to adjustment, after the close of each fiscal year. e. Provisional rate or billing rate means a d.A predetermined rate may be negotiated temporary Indirect cost rate applicable to a for use on Federal awards where there is rea- specified period which is used for funding,in- sonable assurance,based on past experience terim reimbursement,and reporting indirect and reliable projection of the organization's coats on Federal awards pending the estab- costa,that the rate is not likely to exceed a llahment of a final rate for the period. rate based on the organization's actual costa 210 OMB Guidance Pt.200,App.V e. Fixed rates may be negotiated where to which they apply and with Subpart E— predetermined rates are not considered ap- Coat Principles of Part 200. propriate.A fixed rate,however,must not be (3)This proposal does not include any costs negotiated if(i)all or a substantial portion which are unallowable under Subpart E— of the organization's Federal awards are ex- Coat Principles of Part 200 such as(without petted to expire before the parry-forward ad- limitation):public relations costs,contribu- lustment can be made;(ii)the mix of Federal tons and donations, entertainment costa, and non-Federal work at the organization is fines and penalties, lobbying coats, and de- too erratic to permit an equitable carry-for- fens of fraud proceedings;and ward adjustment; or (iii) the organization's (4)All oasts included in this proposal are operations fluctuate significantly from year properly allocable to Federal awards on the to year. basis of a beneficial or causal relationship L Provisional and final rates must be nego- between the expenses incurred and the Fed- Mated where neither predetermined nor fixed eral awards to which they are allocated In rates are appropriate. Predetermined or accordance with applicable requirements. fixed rates may replace provisional rates at I declare that the foregoing any time prior to the close of the organize is true and cor- don's fiscal year. If that event does not rect. occur,a final rate will be established and up- Nonprofit Organization: T...— ward or downward adjustments will be made Signature: based on the actual allowable posts incurred Name of Official: for the period involved. Title: g.The results of each negotiation must be Date of Execution; formalized in a written agreement between the cognizant agency for indirect coats and APPENDIX V TO PART 2OO—STATE/LOCA]a the nonprofit organization. The cognizant GOVERNMENT AND INDIAN TRIBE- agency for indirect coats must make avail- WIDE CENTRAL SERVICE COST ALLO- able copies of the agreement to all concerned CATION PLANS Federal agencies. b.If a dispute arises in a negotiation of an OgemailL indirect cost rate between the cognizant agency for indirect costs and the nonprofit 1.Most governmental units provide certain organization,the dispute must be resolved in services,such as motor pools,computer cen- accordance with the appeals procedures of tars, purchasing, accounting, etc., to oper- the cognizant agency for indirect costs. sting agencies on a centralized basis. Since i.To the extent that problems are encoun- federally-supported awards are performed tared among the Federal agencies in sonnet- within the individual operating agencies, ton with the negotiation and approval prop- there needs to be a process whereby these ens,OMB will lend assistance as required to central service costs can be identified and resolve such problems in a timely manner. assigned to benetitted activities on a reason- ableD.Certification of Indirect(F&A)Coate and consistent basis.The central service cost allocation plan provides that process. Required Certification. No proposal to es- All costs and other data used to distribute tablish indirect(F&A)cost rates must be an- the costs included in the plan should be sup- oeptable unless such costs have been ter- ported by formal accounting and other tifled by the non-profit organization using records that will support the propriety of the the Certificate of Indirect (F&A) Costs set costs assigned to Federal awards. forth in seotion i.of this appendix.The ter- 2. Guidelines and illustrations of central tificate must be signed on behalf of the orga- service cost allocation plans are provided in nization by an individual at a level no lower a brochure published by the Department of than vice president or chief financial officer Health and Human Services entitled "A for the organization. Guide for State, Local and Indian Tribal Gov- j.Each indirect cost rate proposal must be ernments: Cost Principles and Procedures for accompanied by a certification In the fol- Developing Cost Allocation Plans and Indirect lowing form: Cost Rates for Agreements with the Federal Gov ent."A coy of this broche may be Certificate of Indirect(F&A)Costs obtained from the Superintnd nt of Dom- This is to certify that to the beet of my meats,U.S.Government Printing Office. knowledge and belief' B.DEFffiiT[oNs (1)I have reviewed the indirect(F&A)ooet proposal submitted herewith; 1.Agency or operating agency means an or- (2)All costs included in this proposal[lien- ganizational unit or sub-division within a tify date] to establish billing or final indi- governmental unit that is responsible for the root (F&A) costs rate for [identify period performance or administration of Federal covered by rate]are allowable In accordance awards or activities of the governmental with the requirements of the Federal awards unit. 211 NON-HOMEOWNERSHIP FINANCIAL STATUS REPORT FORM ,t J( (Please attach AIA G702 form and other comparable supporting documentation for expenditures) Developer Name: Program: CDBG ❑ ESG ❑ Developer's Contractor: HOME ❑ NAHTF ❑ Project Address: NSP ❑ SHP ❑ Project Type: Acquisition ❑ Loan#: New Constr ❑ Rehab ❑ Reporting Period: From: to DEVELOPMENT PROJECT % BUDGET COSTS BUDGET COMPLETE REMAINING Hard costs $ % $ Soft costs(list): $ % $ $ % $ $ % $ $ % $ $ % $ $ % $ $ % $ $ % $ $ % $ $ % $ $ % $ $ % $ $ % $ $ % $ $ % $ TOTALS $ % $ TOTAL PAY REQUEST: $ Amount Amount City Funds Other Funds $ $ FUNDING SOURCES PROJECT % BUDGET BUDGET COMPLETE REMAINING $ % $ $ % $ $ % $ Other: $ % $ Other: $ % $ Other: $ % $ TOTALS: $ % $ I certify to the best of my knowledge that the above information is correct and complete and is for the purpose set forth in the award documents. Financial records are available for audit or review. Authorized Certifying Officer Title Date Printed Name: O OPPORTUNITY Revised and approved 6/18/2010 L1b1 /- L, AFFIDAVIT FOR EMPLOYEE CLASSIFICATION ACT STATE OF Nebraska ) )§ COUNTY OF Douglas ) I,Thomas F.Lamb ,being first duly sworn under oath,state and depose as follows: 1. I am competent to testify to,and have personal knowledge of,the matters stated in this affidavit. 2. I am(a contractor)(the authorized agent of the contractor Lamb's Remodeling). I attest to the following: (a) each individual performing services for such contractor is properly classified under the Nebraska Employee Classification Act, 2010 LB 563 ("the Act"), (b) such contractor has completed a federal I-9 immigration form and has such form on file for each employee performing services, (c) such contractor has complied with Neb. Rev. Stat. section 4-114 (federal immigration verification system), (d) such contractor has no reasonable basis to believe that any individual performing services for such contractor is an undocumented worker, and(e) as of the time of the contract, such contractor is not barred from contracting with the state or any political subdivision pursuant to the Act. FURTHER AFFIANT SAYETH NAUGHT. — L— — - Affiant SUBSCRIBED AND SWORN TO before me this Ill."day of A IAC. ,20 i le . • a")%4it---)2(/(1,e:-66-edvidP1) GENERAL NOTARY-State of Nebraska Notary Public CHRISTINA S.WILLIAMSON it•, '. My Comm.Exp.September 8,2018 0 DAM N Approved 6/1/10 OPPORTUNITY GKlit t UNITED STATES CITIZENSHIP ATTESTATION FORM FOR PUBLIC BENEFIT For the purposes of complying with Neb. Rev. Stat. §§ 4-108 through 4-114, I attest as follows: xI am a citizen of the United States. OR ❑ I am a qualified alien under the Federal Immigration and Nationality Act. My immigration status and alien number as follows: , and I agree to provide a copy of my USCIS (United States Citizenship and Immigration Services) documentation upon request. I hereby attest that my response and the information provided on this form and any related application for public benefits are true, complete and accurate and I understand that this information may be used to verify my lawful presence in the United States. Thomas F. Lamb, Sole Proprietor Lamb's Remodeling PRINT NAME: f )11 6c/y klq.04 By: SIGNATURE: DATE: 7/7/ 7/7� O `�oR"$urs+i"r°v Q:Library/HCD Forms/Citizenship-Attestation Form for Public Benefit 10/26/2009 Attachment 1 EQUAL EMPLOYMENT OPPORTUNITY CLAUSE During the performance of this Contract,the Contractor agrees as follows: (1) The Contractor and its subcontractors shall not discriminate against any employee or applicant for employment because of race, religion, color, sex, age, sexual orientation, gender identity, national origin, disability or familial status. As used herein, the work "treated" shall mean and include, without limitation, the following: Recruited, whether by advertising or by other means; compensated; selected for training, including apprenticeship; promoted; upgraded; demoted; downgraded; transferred; laid off; and terminated. The Contractor agrees to and shall post in conspicuous places, available to employees and applicants for employment, notices to be provided by the contracting officers setting forth the provisions of this nondiscrimination clause. (2) The Contractor and its subcontractors shall, in all solicitations or advertisements for employees placed by or on behalf of the Contractor, state that all qualified applicants will receive consideration for employment without regard to race, religion, color, sexual orientation, gender identity, sex, national origin, age, disability or familial status. (3) The Contractor and its subcontractors shall send to each representative of workers with which he has a collective bargaining agreement or other contract or understanding a notice advising the labor union or worker's representative of the Contractor's commitments under the equal employment opportunity clause of the City and shall post copies of the notice in conspicuous places available to employees and applicants for employment. (4) The Contractor and its subcontractors shall furnish to the City's Human Rights and Relations Contract Compliance Officer all federal forms containing the information and reports required by the federal government for federal contracts under federal rules and regulations, including the information required by Omaha Municipal Code Sections 10-192 to 10-194, inclusive, and shall permit reasonable access to his records. Records accessible to the Human Rights and Relations Contract Compliance Officer shall be those which are related to Paragraphs (1) through (7) of this Exhibit and only after reasonable notice is given to the Contractor. The purpose for this provision is to provide for investigation to ascertain compliance with the program provided for herein. (5) The Contractor and its subcontractors shall take such actions with respect to any subcontractor as the City may direct as a means of enforcing the provisions of Paragraphs (1) through (7) herein, including penalties and sanctions for noncompliance; however, in the event the Contractor becomes involved in or is threatened with litigation as the result of such directions by the City, the City will enter into such litigation as is necessary to protect the interests of the City and to Revised and approved 5/23/2012 effectuate the provisions of this division; and in the case of contracts receiving federal assistance, the Contractor or the City may request the United States to enter into such litigation to protect the interests of the United States. (6) The Contractor shall file and shall cause his subcontractors, if any, to file compliance reports with the Contractor in the same form and to the same extent as required by the federal government for federal contracts under federal rules and regulations. Such compliance reports shall be filed with the Human Rights and Relations Contract Compliance Officer. Compliance reports filed at such times as directed shall contain information as to the employment practices, policies, programs and statistics of the Contractor and his subcontractors. (7) The Contractor shall include the provisions of Paragraphs (1) through (7) of this Section, "Equal Employment Opportunity Clause", and Omaha Municipal Code Section 10-193 in every contract, subcontract or purchase order so that such provisions will be binding upon each subcontractor or vendor. (Code 1980, Section 10-192; Ordinance No. 35344, Sections 1, 9-26-00) Revised and approved 5/23/2012 SECTION 3 CLAUSE Attachment 2 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 no6t 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. G. With respect to work performed in connection with Section 3 covered Indian housing assistance, Section 7(b) of the Indian Self-Determination and Education Assistance Act (25 U.S.C. 450e) also applies to the work to be performed under this contract. Section 7(b) requires that to the greatest extent feasible (i) preference and opportunities for training and employment shall be given to Indians, and (ii) preference in the award of contracts and subcontracts shall be given to Indian organizations and Indian-owned Economic Enterprises. Parties to this contract that are subject to the provisions of Section 8 and Section 7(b) agree to comply with Section 3 to the maximum extent feasible, but not in derogation of compliance with Section 87 (b). Providing Other Economic Opportunities. (a) General. In accordance with the findings of the Congress, as stated in Section 3, that other economic opportunities offer an effective means of empowering low- income persons, a recipient is encouraged to undertake efforts to provide to low- income persons economic opportunities other than training, employment and contract awards, in connection with Section 3 covered assistance. (b) Other training and employment-related opportunities. Other economic opportunities to train and employ Section 3 residents include, but need not be limited to, use of "upward mobility", "bridge" and trainee positions to fill vacancies; and hiring Section 3 residents in part-time positions. (c) Other business-related economic opportunities: (1) A recipient or contractor may provide economic opportunities to establish, stabilize or expand Section 3 business concerns, including micro-enterprises. Such opportunities include, but are not limited to formation of Section 3 joint ventures, financial support for affiliating with franchise development, use of labor only contracts for building trades, purchase of supplies and materials from housing authority resident-owned businesses, purchase of materials and supplies from PHA resident-owned businesses and use of procedures under 24 CFR part 963 regarding HA contracts to HA resident-owned businesses. A recipient or contractor may employ these methods directly or may provide incentives to non-Section 3 businesses to utilize such methods to provide other economic opportunities to low-income persons. (2) A Section 3 joint venture means an association of business concerns, one of which qualifies as a Section 3 business concern, formed by written joint venture agreement to engage in and carry out a specific business venture for which purpose the business concerns combine their efforts, resources and skills for joint profit, but not necessarily on a continuing or permanent basis for conducting business generally, and for which the Section 3 business concern: (i) Is responsible for a clearly defined portion of the work to be performed and holds management responsibilities in the joint venture; and (ii) Performs at least 25 percent of the work and is contractually entitled to compensation proportionate to its work. Attachment 3 MINORITY BUSINESS & WOMEN BUSINESS ENTERPRISE PLAN October 2014 pMNHA, A' ot Impr 4+ s Nit, ■ ■ D FSBR PLANNING • OMAHA Jean Stothert,MayorPLANNING DEPARTMENT James R.Thele City of Omaha CITY OF OMAHA City of Omaha Planning Department Omaha/Douglas Civic Center 1819 Farnam Street Omaha,Nebraska 68183 1 Reviewed and approved 10/3/2014 MINORITY BUSINESSWOMEN BUSINESS ENTERPRISE PLAN INTRODUCTION Minority and women business sectors play an important part in Omaha's overall plans for future growth, progress, and prosperity. It is vital to the City's economic condition and well-being that minority and women businesses expand, thrive and prosper, generating economic stability and increased job opportunities. Towards the fulfillment and accomplishment of these important objectives, the City of Omaha remains committed to minority and women business development. The City of Omaha's approach to minority/women business development is embedded in its policy of non- discrimination in the conduct of City business including the procurement of goods, materials and services, construction and community and economic development projects. The City recognizes its obligations to each segment of the various communities it serves. It is in recognition of these responsibilities that the City established the City's Contract Compliance Ordinance. The Ordinance commits the City to: 1. Require contractors and/or vendors to provide employment opportunities without regard to race, color, sex, religion, or national origin; 2. Monitor contractor and vendor equal opportunity performance; and 3. Increase the total number and total dollar volume of City contracts awarded to minority-owned and women-owned firms. GOALS AND OBJECTIVES The following represents a summary of the goals and objectives of the Planning Department as they relate to minority and women-owned businesses: 1. Encourage, increase and promote business and procurement opportunities for women-owned businesses: 2. Increase and expand the awareness and understanding regarding the concerns, obstacles, and hindrances preventing increased MBE/WBE participation in Planning Department activities; 3. Assist MBE's/WBE's through the revitalization of business districts; 4. Assist minority and female entrepreneurs in the formation and growth of new small businesses; and 5. Provide technical assistance to neighborhood organizations, MBE's and WBE's to increase their participation in the Planning Department programs and activities at all levels. SCOPE OF WORK In order to accomplish these objectives, the Planning Department will: 1. Require that recipients of grant awards, consulting contracts, or loans to adopt the City's MBE/WBE Enterprise Plan. The Minority Business/Women Business Enterprise and Fair Housing plan must be filled out by contractors, developers, corporations, partnerships and/or sole proprietors. 2. Ensure that Requests for Proposals have the MBE/WBE Enterprise Plan. 3. Ensure that the programs of the Planning Department are advertised in the appropriate new media whose markets are targeted toward MBE/WBE. 2 Reviewed and approved 10 3 201,4 4. Implement an outreach effort informing MBE and WBE firms and capture information on these firms doing business with the Planning Department. 5. Implement a system to identify MBE and WBE firms and capture information on these firms doing business with the Planning Department. 6. Require developers, corporations, partnerships and/or sole proprietors to register with the Human Rights & Relations Department. In addition, require these entities to complete CC-1 (Human Relations Department). The following information has been developed to assist you in complying with the MBE/WBE requirements in the agreement with the City of Omaha. If you have any questions, please contact Edward Dantzler at(402) 444-5150 Ext. 2009. 3 Reviewed and approved 10/3/2014 MBE/WBE FOR GOODS AND SERVICES Your company must make vendors aware of equal opportunity utilization of minority, disabled and women-owned businesses. To accomplish this goal, you must provide a copy of the approved MBE/WBE Participation Plan to all businesses providing goods and/or services to the project. Your company must provide the opportunity for Minority Business Enterprises and Women Business Enterprises to provide goods and services through all phases of the project. A concerted effort must be made to allow these businesses to actively compete for project contracts. This effort will include utilization of the following resources and documentation of your actions to achieve these objectives. City of Omaha Housing and Community Development Division 1819 Farnam Street Room 1 11 1 Omaha, NE 68183 Edward. Dantzler, Development Section Manager ed.dantzler@cityofomaha.org (402) 444-5150 Ext. 2009 Fax: (402) 444-5201 City of Omaha Human Rights & Relations Contract Compliance 1819 Famam Street Room 502 Omaha, NE 6818 3 Maria Partida, Contract Compliance maria.partida@cityofomaha.org (402) 444-5050 Fax: (402) 444-5058 Minority Economic Development Greater Omaha Chamber of Commerce 1301 Harney Street Omaha, NE 68102 Winsley Durand, Senior Director-Business Attraction wdurand@selectgreateromaha.com (402) 233-7144 Fax: (402) 346-7050 4 Reviewed and approved 10 3 2014 MBE/WBE FOR GOODS AND SERVICES North Omaha Contractor Alliance 2505 North 24th Street Suite 409A Omaha,NE 68110 Houston McKell, III, Executive Director houstonmckell@yahoo.com (402) 991-3420 Omaha Small Business Network, Inc. 2505 North 24th Street Omaha, NE 68110 Julie Parker, Executive Director info@osbnbtc.org (402) 453-5336 Fax: (402) 451-2876 Small Business Administration 10675 Bedford Avenue Suite 100 Omaha,NE 68134 Dwight Johnson dwightjohnson@sba.gov (402) 221-7206 Fax: (402) 221-3680 Urban League of Nebraska, Inc. 3040 Lake Street Omaha, NE 68110 Thomas H. Warren, President/CEO thomas.warren@urbanleagueneb.org (402) 451-1066 5 Reviewed and approved 10/3/2014 CITY OF OMAHA CONTRACTOR INFORMATION FORM Date: Project Address: Owner Information Name: ------'—�------- --Address: City, "City,8,_Zip: Phone: General Contractor Information Name: Address: City,St.,Zip: Pbnoc: Federal Tax K0orS8N Contract Amount — Woman Owned Business 0Yca [] Nv BR0(BnuinewuOwued Ruoo/0tboio)Codo: (8KCCode: | White American: 2 Black American: 3-Native American: 4 Hispanic American 5 Asian/Pacific American: ^Uaxidic1e"u Subcontractor Information ^Com^|otc for each subcontractor for the .ro*eo, Name/Address ��d Tas ' Contract � ��omon ��vv------R0 I0/SSN Amt. Code N - ---- [� [� 1 amu�/ � Y�� ��» | Address: ' City St.,Zip: Pm Name: S �-] Yes El �o Address: City,8t.,Zip: Pbnoo: | | | | � Name: __ ____ S ElYcs No Address: City,St_Zip: Pbvuo: Name: �� Yes �------------ �� [— No / | � _ o Address: City,St.,Zip: � | Phone: | _ Name: $__ F- yco El No Address: City,0t',Zip: Phone: | Name: ________� __ - �_ El Yes No ' Address: City,St.,Zip: Phone: | | | Name: [I Yes El No Address: City,8c^Zip: | Phone: 6 Ropie wed and approved /a3 20/4 Date: Project Address: Owner Information Name: General Contractor Information Name: (BRE Code: I White American; 2 Black American; 3 Native American; 4 Hispanic American 5 Asian/Pacific American; 6 Hasidic Jews Name/Address Fed Tax Contract Woman Own BRE ID/SSN Amt. Name: $ ❑ Yes ❑No Address: City,St.,Zip: Phone: Name: $ ❑ Yes ❑No Address: City,St.,Zip: Phone: Name: $ ❑ Yes ❑No Address: City,St.,Zip: Phone: Name: $ ❑ Yes ❑No Address: City,St.,Zip: Phone: Name: $ ❑Yes ❑No Address: City,St.,Zip: Phone: Name: $ ❑ Yes ❑No Address: City,St.,Zip: Phone: Name: $ ❑ Yes ❑No Address: City,St.,Zip: Phone: Name: $ ❑Yes ❑No Address: City,St.,Zip: Phone: Name: $ ❑ Yes ❑No Address: City,St.,Zip: Phone: 7 Reviewed and approved 10/3/2014 DEFINITIONS: 1. American Indian or Alaska Native. A person having origins in any of the original peoples of North and South America (including Central America), and who maintains tribal affiliation or community attachment. 2. Asian. A person having origins in any of the original peoples of the Far East, Southeast Asia, or the Indian subcontinent including, for example, Cambodia, China, India, Japan, Korea, Malaysia, Pakistan, the Philippine Islands, Thailand and Vietnam. 3. Black or African American. A person having origins in any of the black racial groups of Africa. Terms such as "Haitian" or"Negro' can be used in addition to "Black" or``African American". 4. Native Hawaiian or Other Pacific Islander. A person having origins in any of the original peoples of Hawaii, Guam, Samoa or other Pacific Islands. 5. White. A person having origins in any of the original peoples of Europe, the Middle East or North Africa. 8 Reviewed and approved 10%3 2014 MINORITY BUSINESS/WOMEN BUSINESS ENTERPRISE AND FAIR HOUSING PLAN As Owner(s), , I/we agree that my/our contractors and subcontractors will make our best efforts to ensure the construction services, contracts and employment opportunities are affirmatively marketed to women and members of minority groups as outlined in the City of Omaha's Policy for Minority Business/Women Business Enterprise and to further Fair Housing, where applicable, in the following manner. 1. Provide employment opportunities without regard to race, color, sex, age, religion, national origin, familial or handicap status; 2. Encourage, increase and promote business and procurement opportunities for women-owned businesses; 3. Award contracts to eligible minority-owned and women-owned firms; 4. Monitor contractor and vendor equal opportunity performance. As Owner(s), , I/we agree that our contractors and subcontractors will not discriminate against any employee or applicant for employment because of race, color, sex, age, religion, national origin, familial or handicap status. As Owner(s), , I/we agree that my/our contractors and subcontractors shall in all solicitations or advertisements for employment give all qualified applicants consideration for employment without regard to race, color, sex, age, religion, national origin, familial or handicap status. As Owner(s), , I/we certify that I/we support the furtherance of fair housing choice and that I/we will not discriminate on the basis of race, color, religion, sex, national origin, familial status, marital or handicap status in the rental or sale of the assisted property nor in any activities related to the sale, rental, and operation of the assisted property in accordance with the applicable laws and regulations. Dated this day of , 20 Business or Corporation(if applicable) By: Signature of Owner/Authorized Representative Name Print Owner/Authorized Representative Name A EOUAL HOUSING OPPORTUNITY 9 Reviewed and approved 10/3/2014 kl a rPn 7 SOIL WORK POLICY For Housing Development Programs (January 2011) The City of Omaha operates several federally funded housing development programs. These programs may involve the removal of structures, installation of public infrastructure, and site preparation work prior to the construction of new residential structures. The United States Environmental Protection Agency("EPA")has identified a prominent lead hazard in Omaha: soil contamination attributed to emissions from the former ASARCO plant which was located in the former Union Pacific Railroad yards along the Missouri River. The Omaha Lead Superfund Site is generally bound by Florence to the north,the Missouri River to the east,the Douglas-Sarpy County line to the south,and 50in Street to the west. Only residential use properties are included in the Omaha Lead Superfund Site. Policy: The objectives of the soil work policy are to ensure site soils are safe for the property's intended use and to remove project sites from the Omaha Lead Superfund Site before they are conveyed to another party. The following steps are the preferred means of achieving these objectives while the EPA is conducting soil clean-up in Omaha: 1. The City will first determine the soil clean up status of the project site according to the EPA. a. If the EPA has not tested the project site, then the City will request the EPA test soil prior to any soil work at the project site. The City will facilitate and/or expedite the sampling process when possible. 2. If the soil has been tested by the EPA and does not require clean up,then site work may proceed. 3. If the soil has been tested by the EPA and requires clean up,then: a. Site work involving soil may not occur until soil clean-up is completed. The City will facilitate and/or expedite the clean-up process when possible. Other options are permissible,as necessary,as long as the process is documented. Regardless of the method of addressing potential soil contamination, the City is required to test site soil at the end of a project before the property is sold or otherwise conveyed to another party. If the lead concentration exceeds 400 parts per million then further mitigation work and follow up testing is required. The Environmental Review for each project site will describe the steps taken to address lead contamination in soil. City of Omaha, Housing and Community Development Division COST ESTIMATE & CERTIFICATION: Target Area El Exterior Project El Special Needs El 2015 CDBG Homestead Redevelopment Area: East of 72nd Street Address: 6124 North 36th Street Owner(s): City of Omaha The estimated cost for the above project is as follows: Preliminary Revised Electrical Cost $ 7,815.00 $ 7,815.00 Plumbing Cost $ 6,825.00 $ 6,825.00 HVAC $ 6,600.00 $ 6,600.00 Overhead/Profit/ NE. Contractor Tax(15%) $ 15,805.78 $ 14,651.53 Lead Liability Fee Total Construction Cost Estimate $ 121,177.63 $ 112,328.38 Add Alternate#1 (cost plus overhead &profit) $ 8,849.25 The source for the estimate data is the current addition of Repair & Remodeling Cost Data by R. S. Means, recent competitive bid pricing for similar work and product and material research. The Rehabilitation Division has reviewed the project cost estimate, work write-up or plans and specifications. In our opinion the project cost estimate is accurate. This estimate is for the use of the City of Omaha, Housing and Community Development Division, Rehabilitation Section only. The actual cost may vary. Signed, Construction Specialist i '7C Date 4 - Initial Inspection Date: 5 77 cm ,,\4lork Write-up Date: �= j4 Approved, Development Section Mgr. ) Date / C: Cheryl File Rev. 8/29/08 Attachment 6 Lead Based Paint Procedures The City of Omaha Planning Department Community Development section will implement the HUD lead-based paint regulation requirements as follows: 1. Notification • Distribution of Lead hazard information pamphlets • Disclosure of lead-based paint and lead-based paint hazards • Notices of lead hazard evaluation or presumption • Notice of lead hazard reduction activity 2. Lead Evaluation • Visual assessment • Paint testing or risk assessment • Note: Lead evaluation will be performed by the City of Omaha rehabilitation inspectors who are certified risk assessors. 3. Review Lead Hazard Control Plan • Will be performed by the City of Omaha rehabilitation inspectors who are certified risk assessors. 4. Monitor Lead Reduction Work • Will be performed by the City of Omaha rehabilitation inspectors who are certified risk assessors. 5. Perform Clearance Testing • Will be performed by the City of Omaha rehabilitation inspectors who are certified risk assessors. 6. Provide Notice of Completion • Will be performed by the City of Omaha rehabilitation inspectors who are certified risk assessors. Contractors, Risk Assessors, and Clearance Testers will be available to the program as follows: • A list of certified contractors, risk assessors, and lead inspectors are available through the State of Nebraska. • The City of Omaha has a list of trained and certified contractors/risk assessors. • Risk assessments and clearance testing will be performed by the City of Omaha rehabilitation inspectors, who are certified risk assessors. ar 3/16/06 Planning Department Housing and Community Development Procurement Policy & Procedures The following policies and procedures will be adhered to as required to as pursuant to 24 C.F.R. 85.36, 24 C.F.R. Part 92, 24 C.F.R. Part 570, OMB Circular A-110, & OMB Circular A-122. A. Code of Conduct: 1. The City of Omaha provides various public services which require City employees to investigate and regulate activities. Also, the City, by and through various City employees, is the purchaser of goods and services. These activities include, but are not limited to, inspections, contracts, eminent domain proceedings, and federal grants. It is the City's expectation that all City employees should be completely free from any conflict of interest or bias based on an individual's work, personal, or business relationship with any person, business, or other entity. All City employees should avoid any activity which could be perceived as, or develop into, a conflict of interest. All decisions made by City employees should be made objectively, considering the City's best interests, and must be free from any competing personal interests. To avoid potential conflict of interest, City employees are expected to disclose, in writing, any such facts or circumstances to their supervisor and the City will determine, on a case-by-case basis, the appropriate course of action to regulate such conflicts. 2. HCD employees shall neither solicit nor accept gratuities, favors or anything of monetary value from suppliers, contractors, potential contractors, or parties to sub- agreements. 3. HCD will conduct a cost analysis and document such analysis in the procurement files in conjunction with every procurement action. 4. If a contract is competitively bid, HCD will enter into a contract with the winning bidder that specifies the services to be completed and payment terms. 5. Positive efforts shall be made by recipients to utilize small businesses, minority- owned firms, and women's business enterprises, whenever possible and to comply with Section 3 of the Housing and Urban Development Act of 1968: ensure that employment and other economic opportunities shall to the greatest extent feasible, be directed to low income persons and/or business. B. Procurement Procedures 1. The following procurement applies to construction contracts. Employees will conduct all procurement transactions in a manner that maximizes free and competition. Awards should be made to the bidder or offerer whose bid or offer is responsive to the solicitation. HCD reserves the right to reject any or all bids. a. HCD may select from the following methods of procurement: 1. Procurement by small purchase procedures. Small purchase procedures are those relatively simple and informal procurement methods for securing services, supplies, or other property that do not cost more than the simplified acquisition threshold fixed at 41 U.S.C. 403(11) (Currently set at $100,000). If small purchase procurements are used, price or rate quotations will be obtained from at least two (2) qualified contractors. 2. Procurement by competitive bids. Bids are publicly solicited and a firm- fixed-price contract (lump sum or unit price) is awarded to the responsible bidder whose bid, conforming to all the material terms and conditions of the invitations for bids, is the lowest price. b. Consideration will be given to obtain a more economical purchase. Solicitations for services provided for all of the following: 1. A clear and accurate description of the technical requirements of the material, project or service to be procured. 2. Requirements which the bidder or offerer must fulfill and all other factors to be used in evaluating bids or proposals. 3. A description, whenever practicable, of technical requirements in terms of functions to be performed or performance required, including the range of acceptable characteristics or minimum acceptable standards. 4. The specific features of "brand name or equal" descriptions that bidders are required to meet when such items are included in the solicitation. 5. Preference, to the extent practicable and economically feasible, for products and services that conserve natural resources and protect the environment and are energy efficient. c. HCD shall perform some form of cost analysis or cost estimate using R.S. Means cost data or other historical cost data from past projects bids. This will be done to evaluate if the cost of the bid is reasonable. C. Contract Provisions: 1. When required, all construction contracts in excess of $2,000.00 awarded by HCD shall include a provision for compliance with the Davis-Bacon Act which requires workers to be paid prevailing wage rates. All contracts and subcontracts for Davis- Bacon projects shall include a copy of the final working wage decision and HUD 4010 form. 2. Contracts shall recognize mandatory standards and policies relating to energy efficiency which are contained in the State energy conservation plan. 3. Contracts shall include the requirements that contractors make best efforts to utilize small businesses, minority-owned firms and women business enterprise and shall document those efforts. Contracts shall also contain Section 3 language that ensures that contractors shall, to the greatest extent feasible, hire low and very low-income (80% of median family income) persons and businesses. 4. HCD shall not contract with any debarred/ ineligible contractors. CITY OF OMAHA Attachment 8 AFFIRMATIVE MARKETING POLICY AND MONITORING PROCEDURES Effective: October 1, 1999 Revised: April 1,2015 Affirmative Marketing Policy In furtherance of the City of Omaha's commitment to non-discrimination and equal opportunity in housing, the City of Omaha establishes procedures to affirmatively market units constructed or rehabilitated under any City- assisted program or project. These procedures are intended to further the objectives of Title VIII of the Civil Rights Act of 1968 and Executive Order 11063. It is the affirmative marketing goal of the City of Omaha to assure that individuals who normally might not apply for vacant rehabilitated or constructed units because of their race or ethnicity: • know about the vacancies • feel welcome to apply • have the opportunity to rent or purchase the units This policy will be carried out through the following procedures: 1. Informing the public, potential tenants and owners about federal fair housing laws and affirmative marketing policies • The City of Omaha will inform the public, potential tenants, purchasers and owners about its affirmative marketing policy, Title VIII and Executive Order 11063. • The City will place public notices in the Omaha World Herald and the community media serving minority groups to inform owners of the program. • City representatives will meet with property owners and assist them in preparing program applications as requested and necessary. • Owners selected for a rehabilitation program shall notify in-place tenants in writing of their involvement in the program and provide them with the following options in accordance with provisions of the Uniform Relocation Act; 1. Remain in the present unit during rehabilitation. 2. Move temporarily to another unit within the project while his/her unit is being rehabilitated. 3. Permanently relocate or voluntarily abandon the unit during the rehabilitation. • Owners shall post the HUD Equal Housing Opportunity Logo in the project building and display the Fair Housing Poster in their rental office and on all application and documents/forms. • Owners shall use media accessible to minorities when advertising the availability of units. • Owners shall use the Equal Housing Opportunity logo, slogan or statement in all advertising. • Owners shall maintain a non-discriminatory hiring policy. 1 Reviewed and revised 4/1/2015 • Owners shall adopt a fair housing policy. 2. Informing low- and moderate-income persons about available units If the property is not listed with OHA when rehabilitated or constructed units are available for initial occupancy, the owner shall inform the following outreach agencies and/or other agencies of this fact in writing and submit a copy of the letters to the City of Omaha, Planning Department, Housing and Community Development Division, Loan Section, 1819 Farnam Street, Room 1111, Omaha, Nebraska, 68183. Chicano Awareness Center, Inc. Urban League of Nebraska 4821 South 24th Street 3022 North 24th Street Omaha,NE 68107 Omaha,NE 68111 Family Housing Advisory Services Community Alliance 2401 Lake Street 4001 Leavenworth Street Omaha,NE 68111 Omaha,NE 68105 Eastern Nebraska Human Services Heartland Family Service 900 South 74th Plaza, Suite 200 2101 South 42nd Street Omaha,NE 68114 Omaha,NE 68105 Greater Omaha Community Action Heartland Family Service 2406 Fowler Avenue 6720 North 30th Street Omaha,NE 68111 Omaha,NE 68112 Greater Omaha Community Action Heartland Family Service 5002 South 24th Street, Suite 203 2580 South 90th Street Omaha,NE 68111 Omaha,NE 68124 League of Human Dignity Heartland Family Service 5513 Center Street 11212 Davenport Street Omaha,NE 68106 Omaha,NE 68154 Heartland Family Service Nebraska Commission for the Deaf 116 E. Mission Avenue 1313 Farnam on the Mall Bellevue,NE 68005 Omaha,NE 68102 Heartland Family Service Omaha Association for the Blind 302 American Parkway 1024 South 32nd Street Papillion,NE 68046 Omaha,NE 68105 Holy Name Housing Corporation Great Plains Chapter 3014 North 45th Street Paralyzed Veterans of America Omaha,NE 68104 7612 Maple Street Omaha,NE 68134 Mayor's Commission for Citizens with Disabilities 1819 Farnam Street, Room 304 Omaha,NE 68183 3. Record Keeping The Owner shall keep records of the following: • Local media advertisements of the vacant unit • Contact dates with outreach agencies and Omaha Housing Authority 2 Reviewed and revised 4/1/2015 • Correspondence informing outreach agencies of vacancies • Race and other demographic data of occupants and persons inquiring about availability of units • Tenant Survey, utility allowance and income determination forms signed and dated by Owner • Name and age of all household members • Verified income for each household • Copy of lease • U.S. Citizenship Attestation Form for Public Benefit 4. Assessment of Actions The Owner's affirmative marketing efforts will be assessed by the City to: • determine whether Owners have affirmatively marketed vacant units to individuals who normally might not apply; and, • determine whether a sufficient number of racial and ethnic families have applied for vacant units The City will take corrective action if it is found that property owners are not carrying out established procedures of the City's Affirmative Marketing Policy and Monitoring Procedures. Affirmative Marketing Policy Monitoring Procedures 1. Duties and Responsibilities of the Owner a) The Owner shall post the HUD Equal Housing Opportunity Logo in the project building and in the rental or sales office. b) The Owner shall submit to the City a copy of all letters notifying the outreach agencies of vacancies. Outreach agencies may include, but are not limited to, the agencies listed in Item 2, Page 2. c) The Owner shall submit to the City a copy of all advertisements placed in the local newspapers. All advertisements must include the Equal Housing Opportunity Logo, Slogan or Statement. d) The Owner shall submit to the City a Demographics Form for Applicants, attached as Exhibit 1, which includes the name, racial/ethnic characteristics, income and family size for each person responding to the advertisement. e) Prior to the start of the project, the Owner shall meet with each in-place tenants of the occupied units and complete a Tenant Survey, utility allowance, City of Omaha Definition of Income Affidavit, computing annual income form, and U.S. Citizenship Attestation for Public Benefit form. Owner shall submit these properly completed forms to the City, as well as a copy of the dated and signed lease agreement, and retain the original lease for proper record keeping. Forms must be updated on lease anniversary date and submitted to the City during the period of affordability. A copy of each form is attached and marked Exhibit 2. f) The Owner shall provide each in-place tenant in the project with a copy of the City of Omaha's written Tenant Assistance Policy (TAP) and shall advise said tenant(s) of the impact of the project on him or her. The Owner shall provide the TAP to the tenant immediately after submission of the Owner's application for participation in the City's program. 3 Reviewed and revised 4/1/2015 g) After completion of the project, the Owner shall submit a Tenant Survey Form, utility allowance, Computing Annual Income Form, U.S. Attestation of Citizenship for Public Benefit, and other reporting forms as required by the terms of the Agreement, for each occupied unit, as well as a copy of the lease agreement. All documents must be properly executed and dated. h) Owner shall insure that the rents, including utilities and Median Family Income, are consistent with the terms and conditions in the approved Agreement between the Owner and the City of Omaha 2. Duties and Responsibilities of the City a) The City shall assess the affirmative marketing procedures to determine whether the Owner has affirmatively marketed the vacant units by monitoring the Owner's performance in carrying out the Duties and Responsibilities of the Owner as outlined in Section 1. b) The City shall assess the affirmative marketing efforts of the Owner to determine whether a sufficient number of racial and ethnic families have applied for vacant units. This determination will be made by reviewing the information provided on the Demographics Form for Applicant and Tenant Survey Form to determine the proportion of racial/gender participation versus overall participation. c) The City shall take the following corrective action if it is found that the Owner is not carrying out established procedures of affirmatively marketing units: • Notify the Owner in writing of any violations of the Owner's Duties and Responsibilities. • The Owner will be given thirty(30) days upon receipt of written notification to provide evidence of compliance. Upon the Owner's request, the City will provide technical assistance. • If the Owner fails to comply with the Affirmative Marketing Policy and Monitoring Procedures, the City may declare the loan/grant in default. 4 Reviewed and revised 4/1/2015 EXHIBIT 1 CITY OF OMAHA DEMOGRAPHICS FORM FOR APPLICANTS Loan No. Date No. of Vacant Units Owner Project Address Person Completing Person's Phone No. This Report Home: Work Race/Ethnicity Family Monthly Of Head of Applicant Size Income Household $ $ $ $ $ $ $ $ $ $ $ $ $ $ $ NOTE: This form is a list of everyone who inquired about renting or purchasing the unit(s). 5 Reviewed and revised 4/1/2015 AFFIRMATIVE MARKETING POLICY PLAN The Undersigned does/do hereby agree to comply with all terms and conditions of and adopt the City of Omaha's Affirmative Marketing Policy (attached hereto and incorporated herein by this reference as though fully set forth) for the Project located at as approved by on Date: Name of Business or Corporation: (if applicable) By: Signature Printed Name: 6 Reviewed and revised 4/1/2015 G25A CITY OF OMAHA LEGISLATIVE CHAMBER Omaha,Nebraska RESOLVED BY THE CITY COUNCIL OF THE CITY OF OMAHA: WHEREAS, the City of Omaha has applied for and received Urban Homestead program and HOME Funds for implementing the Omaha-Council Bluffs Consortium Consolidated Submission for Community Planning and Development Programs Action Plan for Fiscal Year 2015, for the creation of affordable housing opportunities for renters and owners, among other objectives; and, WHEREAS, the Mayor recommended various projects in the 2015 Consolidated Submission for Community Planning and Development Programs(Consolidated Plan); and, WHEREAS, the City Council approved the 2015 Consolidated Plan on February 24, 2015 by Resolution No. 127, and the 2015 HOME Consolidated Plan approved November 17, 2015, Resolution No. 1462,as amended,which included the 2014 Urban Homestead Program; and, WHEREAS, the lowest and best bid was received in an amount of $94,780.00 from Thomas F. Lamb, Sole Proprietor, Lamb's Remodeling, 21210 Welsh Road, Elkhorn, NE 68022 to perform rehabilitation work and lead reduction work when applicable, at the property located at 6124 North 36th Street,Omaha,Nebraska 68111 WHEREAS,the project cost is$94,780.00; and, WHEREAS,this project is in the best interest of the City and the residents thereof. NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF OMAHA: THAT, the attached Agreement between the City of Omaha and Thomas F. Lamb, Sole Proprietor, Lamb's Remodeling, 21210 Welsh Road,Elkhorn,NE 68022, as recommended by the Mayor, to provide Urban Homestead Program and HOME Funds in the amount of $94,780.00 for the rehabilitation and lead hazard reduction work when applicable, on the property located at 6124 N 36th Street, Omaha,Nebraska, 68111 is hereby approved. Funds in the amount of$94,780.00.00 shall be paid from 2015 HOME Funds, Fund No. 12179, Org. No. 128071 and NAHTF Fund No. 12141, Organization No. 128101. APPROVED AS TO FORM: < � /( fr (-6 CITY ATTORNEY DATE Jfj-P1n2420-res L . By � ..�• ouncilmember Adopted .UG...3... 6 1- 2 • City Clerk ApP rove .. . Mayor I 2-e No Resolution by Res. that, the attached Agreement between the City of Omaha and Thomas F. Lamb, Sole Proprietor, Lamb's Remodeling, 21210 Welsh Road, Elkhorn, NE 68022, as recommended by the Mayor, to provide Urban Homestead Program and HOME Funds in the amount of $94,780.00 for the rehabilitation and lead hazard reduction work when applicable, on the property located at 6124 North 361h Street, Omaha, NE 68111 is hereby approved. Funds in the amount of $94,780.00 shall be paid from FY 2015 HOME Funds, Fund No. 12179, Org. No. 128071 and NAHTF Fund No. 12141, Organization No. 128101. Jf-P1n2420-backing Presented to City Council AUG 3 0 2016 Adopted - et[3�e� elY)WIL City' Clerk