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RES 2016-0911 - Agmt with Sheltering Tree Inc and James Royer and Julie Stavneak for funding assistance to construct single-story building k �"'� g Department Planning D artment o 2 Omaha/Douglas Civic Center .„*.k 1819 Farnam Street,Suite 1100 `Y ri1.W � 2016 Jl l t �t PT L» i Omaha,Nebraska 68183 •-0 .�zy (402)444-5150 oy I'elefax(402)444-6140 4'47.FD FEBIkk) I (` F_M 'iK James R.Thele City of Omaha ;' i I Director Jean Stothert,Mayor June 21, 2016 Honorable President and Members of the City Council, The attached Resolution approves a Home Investment Partnerships Program (HOME) Repayable Loan Agreement in the amount of $250,000.00 in FY 2013 HOME Program Funds. The Agreement is between the City of Omaha and Sheltering Tree, Inc., a Nebraska 501(c)(3) non- profit corporation (51% owner); J. Development, L.L.C., a Nebraska Limited Liability company (49% owner); 7400 Military Avenue, L.L.C., a Nebraska Limited Liability company; and James Royer and Julie Stavneak, authorized representatives, 7400 Military Avenue, Omaha, Nebraska 68134 (hereinafter known as the "Owner"). The Owner will construct a new single-story building located at 7400 Military Avenue called Sheltering Tree Community Phase Two. The structure will be 24 units consisting of 20 one- bedroom units for developmentally disabled adults and 4 manager units (2 studio part-time manager units and (2) two-bedroom full-time manager units). Occupancy and marketing of the units will be targeted to individuals with developmental disabilities. In addition to the rental units, the building will include a community room with a full kitchen, access to green space with vegetable gardens, a theatre/movie room, a fitness center and on-site laundry facilities. Six (6) of the residential units will be directly assisted with HOME funds. This project will comply with Section 504 Accessibility Requirements. The total cost of the entire project is estimated to be $4,470,308.00, comprised of$250,000.00 in HOME program funds and $4,220,308.00 in other private and public funds. The $250,000.00 in HOME program funds shall be provided to the Owner in the form of a repayable loan at an annual interest rate of one-quarter of one percent (.25%). The principal will become due and payable upon the sale or transfer of any interest prior to the end of the twenty (20) year affordability period, during which the rents must remain affordable in accordance with the HOME program regulations. Loan payments will be deferred during the affordability period. At the end of the affordability period, the loan principal of$250,000.00 and accrued interest of $12,500.00 for a total amount of $262,500.00 will be amortized over thirty (30) years at zero percent (0%) interest with a monthly payment of$729.16. Honorable President and Members of the City Council Page 2 This project is included in the FY 2013 Consolidated Submission for Community Planning Programs ("Consolidated Plan") approved by the City Council on February 5, 2013, Resolution No. 26, as amended. Funds in the amount of $250,000.00 shall be payable from the FY 2013 HOME Investment Partnerships Program Fund No. 12179, Organization No. 128071. The Consolidated Plan identifies that this project provides rental housing that is determined to benefit low- and moderate-income households; therefore, the project is consistent with the Consolidated Plan and is eligible for funding. The Owner 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 for this affordable housing project in the Benson neighborhood and targeted to developmentally disabled individuals will be appreciated. Sincerely, Referred to City Council for Consideration: ames R. Thele Date Mayor's Office Date Planning Director Approved as to Funding: Approved: 6/ 6 L Steph . Curtiss 7 1.4/ ate pe er K. Danne , . Date Finance Director Human Rights and Relations Di ctor 2238 dlh HOME INVESTMENT PARTNERSHIPS PROGRAM (HOME) NEW CONSTRUCTION OF RENTAL UNITS FOR SUPPORTIVE HOUSING BETWEEN THE CITY OF OMAHA AND SHELTERING TREE,INC., a Nebraska 501(c)(3) non-profit corporation, (51% project owner) J. Development Limited Liability Company aNebraska limited liability company, (49% project owner) 7400 Military Avenue, LLC a Nebraska limited liability company New construction of 20 one-bedroom affordable housing units for developmentally disabled individuals and 4 manager units for live-in managers. The Project will be called Sheltering Tree Community Phase Two. $250,000.00 in FY 2013 HOME Funds 5.03 Records 5.04 Financial Status Reports 5.05 Record Retention 5.06 Personnel and Participant Conditions SECTION 6 DEVELOPER'S COMPLIANCE WITH OTHER FEDERAL REGULATIONS 6.01 Environmental Review 6.02 Uniform Relocation Act 6.03 Soil Work Policy 6.04 Federal Sub-award Reporting Syste SECTION 7 RESPONSIBILITIES OF THE CITY 7.01 Performance Monitoring 7.02 Payments 7.03 Progress Payments 7.04 Inspections 7.05 Technical Assistance SECTION 8 MUTUAL AGREEMENTS BETWEEN CITY AND DEVELOPER 8.01 Release of Information Laws 8.02 Applicable Laws 8.03 Interest of the City 8.04 Independent Contractor 8.05 Project Roles 8.06 Captions 8.07 Merger 8.08 Modification 8.09 Assignment 8.10 Strict Compliance 8.11 Termination 8.12 Reversion of Assets 8.13 Indemnification 8.14 Unenforceable Provisions 8.15 Disclosure of Lobbying 8.16 Notices 8.17 Applicability SECTION 9. DEFAULT PROVISIONS 9.01 Remedies 9.02 Non-Recourse Loan SCHEDULE OF EXHIBITS TABLE OF CONTENTS SECTION 1 DEFINITIONS AND ABBREVIATIONS SECTION 2 RESPONSIBILITIES OF DEVELOPER 2.01 Overall Project Performance 2.02 Project Budget 2.03 Term of Agreement SECTION 3 CONDITIONS FOR RECEIPT OF CITY FINANCING 3.01 Documents Required by City 3.01.1 Property Insurance 3.01.2 Contracts 3.01.3 Performance and Labor Material Payment Bond and/or an Irrevocable Letter of Credit 3.01.4 Contractor's Insurance and Workers' Compensation 3.01.5 Plans Submission 3.01.6 Affirmative Marketing Plan 3.01.7 Minority/Women Owned Business Enterprise Plan 3.01.8 Eligible Contractors 3.01.9 Evidence of Leverage/Matching Funds 3.01.10 Section 504 3.01.11 Security for Non-Recourse Repayable Loan 3.01.12 Employment Insurance and Bonding SECTION 4 PROJECT RESPONSIBILITIES OF THE DEVELOPER 4.01 Eligible Use of Funds 4.02 Terms and Conditions 4.03 Breach of Agreement 4.04 Lien Waivers 4.05 Ineligible/Eligible Costs 4.06 Lead-Based Paint Prohibition 4.07 Ongoing Property Restrictions 4.08 Davis-Bacon Labor Standards 4.09 Property Standards (24 C.F.R. 92.251) 4.10 Affirmative Marketing Policy(24 C.F.R. 92.351) 4.11 Preconstruction Meeting 4.12 National Environment Policy Act of 1969 SECTION 5 GENERAL ADMINISTRATION REQUIREMENTS OF DEVELOPER 5.01 Financial Management 5.02 Documentation and Record-Keeping (24 C.F.R. 92.508) HOME PROGRAM LOAN AGREEMENT THIS AGREEMENT is entered into by and between the City of Omaha (hereinafter referred to as "the City") and Sheltering Tree, Inc., a Nebraska 501 (c)(3) non-profit corporation (51% owner); J. Development Limited Liability Company, a Nebraska limited liability company (49% owner); 7400 Military Avenue, LLC, a Nebraska limited liability company; and James Royer and Julie Stavneak, authorized representatives, 7400 Military Avenue, Omaha, Nebraska 68134 (hereafter referred to as the"Owner"). RECITALS: WHEREAS, the City is a municipal corporation located in Douglas County, Nebraska, and is organized and existing under the laws of the State of Nebraska, and is authorized and empowered to exercise all powers conferred by the State constitution, laws, Home Rule Charter of the City of Omaha, 1956, as amended, and local ordinances, including but not limited to, the power to contract; and, WHEREAS, the. City of Omaha has applied for and received Home Investment Partnerships Program (hereinafter referred to as "HOME") funds for the purpose of providing affordable rental housing benefiting low- and moderate-income residents; and, WHEREAS, the City's FY 2013 Consolidated Submission for Community Planning and Development Programs (hereinafter referred to as the "Consolidated Plan"), outlining priorities, programs and funding allocations for the 2013 program year, was approved on February 5, 2013, by Resolution No. 26, and amended on July 15, 2014 by Resolution No. 790; and, WHEREAS, the "Owner" will construct a new single-story building located at 7400 Military Avenue, Omaha, Nebraska with 24 units consisting of 20 one-bedroom units for developmentally disabled adults and 4 manager units (2 studio part-time manager units and (2) two-bedroom full-time manager units), a community room with a full kitchen, access to green space with vegetable gardens, a theatre/movie room, a fitness center and on-site laundry facilities. Six (6) of the one-bedroom units will be directly assisted with HOME funds. A minimum of five percent (5%) of the total units or at least two (2) units shall be made accessible for persons with disabilities. An additional two percent (2%) of the total units or at least one (1) unit shall be accessible for persons with hearing or vision impairment. The above-described construction of the structure is hereinafter referred to as "Project." WHEREAS, the Consolidated Plan identified that this Project provides or improves housing which is determined to benefit low- and moderate-income households; therefore, the Project is consistent with the Consolidated Plan and is eligible for funding; and, WHEREAS, the City wishes to enter into an Agreement with the "Owner" to assist the City in utilizing such HOME funds; and, WHEREAS Sheltering Tree, Inc., a Nebraska 501 (c)(3) non-profit corporation (51 % owner); J. Development Limited Liability Company, a Nebraska limited liability company (49% owner); 7400 Military Avenue, LLC, a Nebraska limited liability company; and James Royer and Julie Stavneak, authorized representatives, 7400 Military Avenue, Omaha, Nebraska 68134 was included in the FY 2013 HOME Program Consolidated Plan, as amended, and $250,000.00 was allocated to the Project; and, WHEREAS, the "Owner" has indicated the total cost of the Project is estimated at $4,470,308.00. In addition to the $250,000.00 in HOME program funds, the Project funding will include $4,220,308.00 in other funding sources, including but not limited to, Low-income Housing Tax Credit Program (LIHTC) funds, Nebraska Department of Economic Development HOME funds, AHP Funds, and capital campaign funds; and, 2 WHEREAS, it is in the best interest of the City and the residents thereof that the City enter into an Agreement with the "Owner" to complete this worthwhile Project. NOW, THEREFORE, IN CONSIDERATION OF THESE MUTUAL COVENANTS, the parties do hereby agree as follows: SECTION 1. DEFINITIONS AND ABBREVIATIONS. The following terms shall have the following meanings for all purposes in this Agreement. 1.01 "City" shall mean—the City of Omaha, a Nebraska Municipal Corporation. 1.02 "Developer" shall 07400 Military avenue, LLC, a Nebraska limited liability company. (See Exhibit"A"). 1.03 "Director" shall mean—the Planning Director of the City of Omaha. 1.04 "Recipient" shall mean—the City of Omaha. 1.05 "Subrecipient" shall mean — a public agency or non-profit organization receiving HOME funds to undertake eligible programs. In this Agreement the Subrecipient is Sheltering Tree, Inc., a Nebraska 501 (c)(3) non-profit corporation (51 % owner); J. Development Limited Liability Company, a Nebraska limited liability company (49% owner); 7400 Military Avenue, LLC, a Nebraska limited liability company; and James Royer and Julie Stavneak, authorized representatives, 7400 Military Avenue, Omaha, Nebraska 68134 1.06 "HUD" shall mean—the U.S. Department of Housing and Urban Development. 1.07 "HOME Funds" shall mean—that portion of the Home Investment Partnerships (HOME) Program Funds awarded to the City, subject to and conditioned upon actual receipt of same by the City of Omaha, as may be available to loan during the FY 2013 program year for the use specified herein in an amount not to exceed $250,000.00. The HOME funds shall be payable from the FY 2013 HOME Program, Fund No. 12179, Organization No. 128071, subject to the terms, conditions and requirements of said Loan Fund Agreement. 1.08 "HOME Program Non-recourse Repayable Loan" shall mean — a HOME Program Repayable Loan in an amount of$250,000.00 shall be allocated to the Project as described in Section 1.13 herein, made subject to the terms, conditions and provisions of the loan agreement under which said loan is made. The $250,000.00 in HOME program funds shall be provided to the LLC in the form of a repayable loan at an annual interest rate of one-quarter of one percent 3 (.25%). The principal will become due and payable upon the sale or transfer of any interest prior to the end of the twenty (20) year affordability period, during which the rents must remain affordable in accordance with the HOME program regulations. Loan payments will be deferred during the affordability period. At the end of the affordability period, the loan principal of $250,000.00 and accrued interest of $12,500.00 for a total amount of $262,500.00 will be amortized over thirty (30) years at zero percent (0%) interest with a monthly payment of$729.16. 1.09 "Construction Financing" shall mean, but is not limited to — billings for construction work, closing costs, profit and overhead, predevelopment and public improvement costs, financing, legal, accounting, architectural or construction supervision costs, costs for materials, labor, utility hookups and site preparation associated with the construction of the Project. 1.09.01 Profit and overhead of the Developer's general contractor shall not exceed 15% of hard construction costs. 1.10 "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 accessibility requirements, where applicable. Universal Physical Condition Standards (UPCS) as established by HUD, the City of Omaha Property Standards. 1.11 "Project Completion" shall mean—the date leveraged funds have been received by the Developer and allocated to the Project, Construction Completion has been certified and approved by the City, all HOME funds have been disbursed, and all HOME-assisted units have been rented by low- and moderate-income households and tenant occupancy reporting requirement have been satisfied. 1.12 "Project Close Out" shall mean — the dates all project HOME funds have been disbursed and City has completed HUD and State close out procedures (24 C.F.R. 570.509 and 2 C.F.R. Part 215) (Exhibit "C"). 1.13 "Affordability Period" (24 C.F.R. 92.252(e)) shall mean — that time period, twenty (20) years after project close out, in which Developer shall keep assisted units affordable. During the Affordability Period, the Developer must ensure that the HOME-assisted units continue to meet rent restrictions, occupancy requirements and property standards as described in Section 4.09 herein. For this Agreement, the Affordability Period shall commence at project close out and continue for twenty (20) years. In the event the term of the Agreement would be extended, the affordability period would be extended for the additional time. Alternately, in the event project close out would be accelerated, the term of the Agreement and Affordability Period shall be moved forward correspondingly. 4 1.14 "Property" or "Project" shall mean — the construction of the single-story building with 24 units consisting of 20 one-bedroom units for developmentally disabled adults and 4 manager units (2 studio part-time manager units and (2) two-bedroom full-time manager units), a community room with a full kitchen, access to green space with vegetable gardens, a theatre/movie room, a fitness center and on-site laundry facilities. Six (6) of the one-bedroom units will be directly assisted with HOME funds. A minimum of five percent (5%) of the total units or at least two (2) units shall be made accessible for persons with disabilities. An additional two percent (2%) of the units or at least one (1) unit shall be accessible for persons with hearing or visual impairment. Twenty percent (20%) of the HOME assisted units in each project containing five (5) or more HOME assisted units must be occupied by very low-income families (i.e., families with incomes that do not exceed 50% of the Area Median Income). For this project two (2) units shall be occupied by a tenant with an income at or below 50% AMI. The project will be located at 7400 Military Avenue, Omaha, Nebraska 68134, together with improvement thereon and legally described as: Marian High Addition Lot 1, Block 0, an addition to the City of Omaha, as surveyed, platted and recorded in Douglas County, Nebraska 1.15 "Low-Income Household or Family" shall mean — a household whose annual household income, as defined in Exhibit "R", does not exceed eighty percent (80%) of the Median Income by Family Size for the Omaha NE-IA Metropolitan Statistical Area as determined by HUD (Exhibit"D"). 1.15.1 "HOME Program Rents" (24 C.F.R. 92.252) shall mean — the maximum rents (including utility allowance) for the Omaha, NE-IA Metropolitan Statistical Area as established by HUD as of the effective date of the lease. Low HOME rent units. Twenty percent (20%) of the HOME- assisted units must be occupied by very low-income families (i.e., families with incomes that do not exceed 50% of the Area Median Income). These units must bear rents no greater than: (1) 30% of the tenant's monthly adjusted income; (2) 30% of the gross income of a family at 50% of Area Median Income, adjusted for family size; and (3) in units receiving Federal or State project-based rental assistance in which the very low-income family pays not more than 30% of the family's adjusted income, the maximum rent allowable under the Federal or State project-based rental assistance subsidy program. This project will have two (2) units occupied by a very low-income family(50%). High HOME rent units. The remaining HOME-assisted units in each project may be occupied by families with incomes up to 80% of the area median and must bear rents no greater than the lesser of: (1) 5 the Section 8 Fair Market Rents (FMRS) (or area-wide exception rents for existing housing) minus tenant-paid utilities; or (2) rents that are 30% of adjusted income for families at 65% of median income minus tenant-paid utilities. This project will have a minimum of four(4) units occupied by a low-income family (80%). The current maximum high HOME rent limit (including utility allowance) for a one-bedroom unit is $642.00 and the maximum low HOME rent is $642.00. If the unit receives Federal or State project-based rental subsidy and the very low-income family pays a contribution toward rent not more than 30 percent (30%) of the family's adjusted income, the maximum rent (i.e. tenant contribution plus project-based rental subsidy) is the rent allowable under the Federal or State project- based subsidy program (24 C.F.R. 92.252(b)(2). 1.16 "HOME" shall mean —that portion of Home Investment Partnership Program funds awarded to the City, subject to and conditioned upon actual receipt of same by the City of Omaha, as may be available to loan during the FY 2013 program year for the use specified herein in an amount not to exceed $250,000.00, subject to the terms, conditions and requirements of said Loan Agreement. 1.17 "Client" shall mean — a qualified participant making application to the Developer to occupy a unit in this Project. 1.18 "Program Income" shall mean — the gross income received by the Recipient or Subrecipient directly generated from the use of HOME Funds (24 C.F.R. 92.503). When such income is generated by an activity that is only partially assisted with HOME Funds, the income shall be prorated to reflect the percentage of HOME Funds used (see Exhibit "E" attached hereto and incorporated herein by this reference as though fully set forth). Any program income fund received during the term of this Agreement shall be returned to the City within thirty (30) days prior to any additional distribution of HOME Funds. For this Project, the Owner/Developer is acting as a Subrecipient. 1.19 "Floating Units" shall mean — the six (6) one-bedroom residential rental units designated as HOME-assisted units. The designated HOME-assisted units may change over time as long as the total number of HOME-assisted units in the Project remains constant; the units are comparable in size, features and number of bedrooms to the non-HOME-assisted units; and at least four (4) of the designated HOME-assisted units is occupied by a qualified low- and moderate- income household whose annual household income is at or below 80% of the Median Income by Family Size (MFI) and at least two (2) of the designated HOME-assisted units is occupied by a qualified low income household whose annual household income is at or below 50% of the Median Income by Family 6 Size (MFI), as defined and periodically adjusted by HUD, at the time of initial occupancy. (Exhibit "D") All HOME-assisted units shall be occupied as the household's principal place of residence throughout the Affordability Period. SECTION 2. RESPONSIBILITIES OF THE DEVELOPER. 2.01 Overall Project Performance 2.01.1 The Developer shall use the $250,000.00 in HOME funds for partial financing for the construction of six (6) one-bedroom units directly assisted with HOME funds and be considered floating units. At least two (2) units shall be made accessible for persons with disabilities. An additional one (1) unit shall be made accessible for persons with hearing or vision impairment. The building will have access to a community room with a full kitchen, access to green space with vegetable gardens, a theatre/movie room, a fitness center and on-site laundry facilities. Each of the HOME-assisted units shall be occupied as their principal place of residence by a qualified household whose annual household income is at or below 80% of the Median Income by Family Size (MFI) (6 units with 2 units 50% at or below the MFI) throughout the Affordability Period. Contract rents, regardless of source of payment, including the utility allowance for tenant paid (Exhibit "K"), for the 80% MFI units must not exceed the high HOME rent limits in effect on the date of the lease agreement for that eligible household and for the 50% MFI unit must not exceed the low HOME rent limits in effect on the date of the lease agreement for that eligible household. (Exhibit "D") The current rent limit for a high HOME one-bedroom unit is $642.00 and $642.00 for a low HOME unit. If the lease converts to a month-to-month lease after the initial 12-month lease, the HOME rent limits and utility allowance in effect for each separate month apply. 2.01.2 Total Total Total Total Low/Moderate Project Units Assisted Units Floating Units Income Units 24 (20 tenant units, 6 6 6 4 manager units) 2.01.3 Number of Maximum Percent of Area Low/Moderate Households Median Income Permitted 4 80% Number of Maximum Percent of Area Low Households Median Income Permitted 2 50% 2.02 Project Budget 7 2.02.1 The Developer asserts that the funding sources and amounts listed below are committed as of this date or will be committed to the Project prior to loan closing with the City. Low Income Housing Tax Credits $3,001,438.00 Neb. Dept. of Economic Dev. HOME funds 550,000.00 AHP Funds 450,000.00 City of Omaha HOME funds 250,000.00 Owners' Equity 218,870.00 Estimated Project Cost $4,470,308.00 2.03 Term of the Agreement 2.03.1 This Agreement shall be in full force and effect and shall end the first day following the end of the 20-year Affordability Period. Project completion as well as services of the Developer will start effective the date of the proceed order issued by the City and Levels of Project Performance stated in Section 2.01 shall be completed within 24 months. This date may be extended by the Planning Director. In the event the Project Completion Date for the Levels of Project Performance would be accelerated, the Term of the Agreement and Affordability Period shall be moved forward correspondingly. SECTION 3. CONDITIONS FOR RECEIPT OF CITY FINANCING. 3.01 Documents Required by City. In no event shall the City assume any obligation to make any or all of the above-referenced funding available, nor shall the City incur any liability hereunder, unless and until the Developer has submitted for and received the prior approval of the Director of all the documents listed below. The Director is deemed to have approved any such document(s) if he has taken no action within fourteen (14) days after Developer's submittal of said documents. 3.01.1 Property Insurance. Developer shall procure and maintain, at a minimum, fire and extended coverage insurance in an amount sufficient to protect the City's interest in the Property during the Term of the Agreement and financing security documents (2 C.F.R. Part 215) (Exhibit "C"). The insurance policy shall include the City of Omaha as an additional insured. Written evidence of such insurance shall be submitted to the City for approval. In the event of damage of the property, any insurance proceeds are to be applied, at the discretion of the Director, to the reconstruction of the property or repayment, in full, of the funding. 8 3.01.2 Contracts. The Developer shall submit duly executed contracts for all Construction Work to the Director for approval prior to the start of construction. 3.01.3 Performance and Labor Material Payment Bond and/or an Irrevocable Letter of Credit. Developer or General Contractor responsible for Project Construction Work shall acquire and maintain a performance and labor material bond and/or a letter of credit in force for one year following the completion of the Construction Work from the Developer/General Contractor and all subcontractors in an aggregate amount of the contract bid. The Bonds and/or Letters of Credit shall be in favor of the City and shall be submitted to the Director for review and approval. The Director reserves the right to reject the Letters of Credit and Choice of Surety of the Bonds. Upon written request by the Developer, the Director may waive this requirement. 3.01.4 Contractors' Insurance and Workers' Compensation. The Developer or its contractors and subcontractors shall submit Certificates of Insurance in favor of the City for review and approval by the Director. The insurance coverage shall include pollutant liability for lead reduction work, if applicable, Workers' Compensation, and, at a minimum, the following amount of coverage: Contractor's Personal Liability $1,000,000.00 Combined Bodily Injury and Property Damage ($1,000,000.00 each occurrence) $2,000,000.00 Product, Including Completed Operations $1,000,000.00 3.01.5 Plan Submissions. Developer shall submit all plans, working drawings and/or specifications necessary or incidental to this Project to the Director for review and approval. 3.01.6 Affirmative Marketing Plan. A copy of the Developer's and its subcontractor's affirmative marketing plan shall be submitted to the City for review and approval. 3.01.7 Minority/Women Owned Business Enterprise Plan. Developer 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 Developer and its subcontractors will make their best efforts to ensure that construction services, contracts and employment opportunities are affirmatively marketed to women and members of minority groups. (Exhibit "P") 9 3.01.8 Eligible Contractors. Developer shall obtain a certificate from each contractor or subcontractor to be used on this Project to the effect that each contractor or subcontractor has not been disbarred or disqualified by HUD (24 C.F.R. Part 5). The Director shall approve all contractors and subcontractors prior to being hired by the Developer. 3.01.9 Evidence of Leverage/Matching Funds. Developer shall provide written evidence that funds detailed in the Project Budget described in Section 2.02 herein have been committed or secured for this Project. 3.01.10 Section 504. Developer shall design and construct the new multi- family units to be readily accessible to and usable by individuals with handicaps. A minimum of five percent (5%) or at least two (2) units shall be made accessible for persons with mobility impairments. There should be a minimum of one (1) accessible unit per floor. An additional two percent (2%) of the units or at least one (1) unit shall be accessible for persons with hearing or vision impairment (Exhibit "F"). 3.01.11 Security for Non-Recourse Repayable Loan. Developer shall execute for the benefit of the City a deed of trust and a non-recourse repayable loan promissory note in an amount not to exceed $250,000.00 secured by no less than a Fourth lien position subordinate to amounts not to exceed an aggregate of$4,502,876.00 or higher amounts approved by the Assistant Planning Director after all contractor/subcontractor bids are received. Upon completion of the construction phase, the City's lien shall be secured by no less than a fourth lien position subordinate to amounts not to exceed an aggregate of $4,502,876.00. A copy of the promissory note in substantial form is attached hereto as Exhibit "B". 3.01.12 Employment Insurance and Bonding. The Developer shall purchase a blanket fidelity bond covering all employees, at a minimum, in an amount equal to cash advances from the City. The Developer shall comply with bonding and insurance requirements of 2 C.F.R. Part 215, Bonding and Insurance (Exhibit"I"). SECTION 4. PROJECT RESPONSIBILITIES OF THE DEVELOPER 4.01 Eligible Use of Funds. The Developer does hereby certify, contract and agree that any and all funding obtained or made available hereunder shall be used solely and exclusively for the purposes described herein. 10 4.02 Terms and Conditions. The Developer shall abide by all terms and conditions of this Agreement and shall be responsible for the security and maintenance of the sites described in Section 1.13 herein. 4.03 Breach of Agreement. If through breach of this Agreement the Developer fails to maintain the occupancy, affordability and use restrictions as described herein, all HOME funds previously provided to the Developer through fulfillment of this Agreement shall promptly be returned to the City. 4.04 Lien Waivers. Developer agrees to obtain the appropriate lien waivers prior to each construction payment. 4.05 Ineligible Costs. The Developer shall not request disbursement of funds under this Agreement until the funds are needed for payment of eligible costs as described in Section 1.08 herein. 4.05.1 Eligible Costs. The Developer shall be responsible for payment of any Project costs that exceed those specified in this Agreement. 4.05.1.1 Luxury Items. Property amenities shall be those amenities reasonably anticipated in comparable properties. Any items reasonably determined by the City as luxury items shall not be considered an eligible cost for construction. 4.06 Lead-Based Paint Prohibition. Developer shall not use lead-based paint in the performance of this Agreement, including the performance of any subcontractor (42 USC 4821 et seq., 24 C.F.R. 92.355 and 24 C.F.R. Part 35). "Lead-based Paint" means any paint containing more than six one-hundredths of one (1) per centum of lead by weight (calculated as lead metal) in the total nonvolatile content of the paint, or the equivalent measure of lead in the dried film of paint already applied. The Developer further agrees to abide by Federal requirements regarding lead-based paint poison prevention. 4.07 Ongoing Property Restrictions. During the construction period of the term of this Agreement and that part of any grant, deed of trust/mortgage, covenant documents, the Developer shall: 4.07.1 maintain the property in a safe and sanitary condition at all times. 4.07.2 ensure that all real estate taxes and special assessments are paid and kept current. 4.07.3 maintain insurance against loss or damage to the Property in an aggregate amount sufficient to protect the City's interest in the Property. Such property insurance policy must be properly endorsed showing the City as an additional insured. In the event of loss or 11 damage, the Developer shall provide immediate written notification to the City of any loss. Proceeds from any claim under this policy may, at the discretion of the Director, be either applied to restore or replace the improvements damaged or be paid to the City to satisfy the Developer's obligation to the City under the terms of this Agreement. 4.08 Davis-Bacon Labor Standards. This Project is exempt from Davis-Bacon Prevailing Wage Rage Provisions because it is a residential construction contract, including construction and non-construction costs, is funded with HOME funds and contains less than 12 assisted units. (Exhibit "G") 4.09 Property Standards (24 C.F.R. 92.251). During the construction period, the Developer 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, Universal Physical Condition Standards (UPCS) as established by HUD, the City of Omaha Property Standards and accessibility requirements, where applicable. 4.09.1 After completion of Construction Work and throughout the term of the Agreement, the Property must comply with all appropriate City codes and ordinances, Universal Physical Condition Standards (UPCS) as established by HUD, fire safety codes (24 C.F.R. 570.02), City of Omaha Property Standards and accessibility requirements, if applicable. 4.09.2 The City may perform periodic inspections at any reasonable time to ensure compliance with this Agreement. The City shall perform final inspection to certify Project completion prior to final disbursement of HOME Program proceeds. 4.10 Affirmative Marketing Policy (24 C.F.R. 92.351). The Developer agrees to comply with the City's Affirmative Marketing Policy, attached hereto as Exhibit "H" and incorporated herein by this reference as though fully set forth. These affirmative marketing procedures must be employed in the advertising and marketing of this Project for the Affordability Period. In marketing, the Developer shall also conform to the nondiscrimination provisions hereinafter set forth in Section 5.06.1.2. 4.11 Preconstruction Meeting. The Developer and its subcontractors shall attend a preconstruction meeting with the City Construction Specialist prior to the start of any Construction Work. 4.12 National Environmental Policy Act of 1969. The Developer shall not begin any rehabilitation or construction of a Property until it receives approval by the City that all provisions of the National Environmental Policy Act of 1969 (NEPA) 12 and related authorities listed in HUD's implementing regulations at 24 C.F.R. Parts 50 and 58 have been met regarding the Property. SECTION 5. GENERAL ADMINISTRATIVE REQUIREMENTS OF DEVELOPER. 5.01 Financial Management. 5.01.1 Accounting Standards. The Developer agrees to comply with 2 C.F.R. Part 215 and agrees to adhere to the accounting principles and procedures required therein, utilize adequate internal controls, and maintain necessary source documentation for all costs incurred. (Exhibit "C", attached hereto and incorporated herein as though fully set forth). 5.01.2 Cost Principles. The Developer shall comply with the requirements and the standards of 2 C.F.R. Part 215 (Exhibit "I"), and with the requirements of 2 C.F.R. Part 215 (Exhibit "C"). Both Exhibits are attached hereto and incorporated herein as though fully set forth. 5.01.3 Audits. The Developer shall comply with all provisions and regulations of .the HOME Program and have an annual audit completed in compliance with 2 C.F.R. Part 200.5, attached hereto as Exhibit "J", and incorporated herein as though fully set forth. A copy of the audit shall be provided to the Director. The auditor shall determine the appropriate type of audit to be conducted; i.e., limited scope or full compliance. A single audit is not an allowable expense unless the Subrecipient/Developer expends total federal funds over $750,000.00 in each fiscal year. A limited-scope audit may be allowable provided the auditor conducts the audit in accordance with generally accepted auditing standards and the recipient expends less than $750,000.00 in each fiscal year. 5.01.3.1 Any deficiencies noted in audit reports must be fully cleared by the Developer within 30 days after receipt of audit by the Developer. Failure of the Developer to comply with the above audit requirements will constitute a violation of this Agreement and may result in the withholding of future payments and may constitute a default subject to default remedies referenced herein in Section 9. 5.02 Documentation and Record-Keeping (24 C.F.R. 92.508). All Developer records with respect to any matters covered in this Agreement shall be made available to the City, its designees or the Federal Government, at any time during normal business hours, as often as the City deems necessary, to audit, examine, and make excerpts or transcripts of all relevant data. Any contract entered into by 13 the Developer with any contractor or subcontractors shall include this Section to ensure said access. 5.03 Records. The Developer shall submit to the City the following reports in accordance with 24 C.F.R. 92.505 with the submission timelines as specified. 5.03.01 Construction Progress Reports. The Developer shall provide reports to the Director (AIA G702 Form or comparable document) describing the progress of construction, and any significant problems and/or delays in construction on this project. Reports will be submitted at the time of each pay request, or by the 15th day of each month if no pay request is made before the 15th day of the month (or upon written request from the Director, but no more frequently than monthly). The progress reports are required until such time as all Construction Work is completed and the City issues the final payment of construction to the Developer. 5.03.2 Occupancy Report. For each HOME-assisted unit, the Developer shall provide to the Director an initial tenant survey, asset/income and computation form and income/asset source documentation which may include subsidy letters, two months consecutive pay stubs, bank statements, tax returns (most current) and notarized City of Omaha Definition of Income Form, copy of the executed lease, utility allowance effective on the date of the lease, citizenship attestation form for public benefit, and race and ethnicity of household members. Attached as Exhibit "K", and incorporated herein by this reference as though fully set forth, are copies of the requisite forms. These forms are due at the time of initial lease execution and annually thereafter for each tenant household occupying a HOME-assisted unit during the Affordability Period. The Developer must also submit evidence of affirmative marketing efforts undertaken during the calendar year reporting period. Annual reports shall be due January 31 and shall include all information for up to and including the end of the previous calendar year. The City will determine the reporting format throughout the Affordability Period. For each household or individual occupying a HOME-assisted unit in the Property, the Developer shall retain the following records for five (5) years after the required Affordability Period as specified in Section 1.13 of this Agreement. In the event the Term of the Agreement would be extended, the timeframe for record retention would be extended correspondingly. 5.03.2.1 name(s) of tenant(s) 5.03.2.2 address of property 14 5.03.2.3 household income as a percent of Median Family Income (MFI) as determined by HUD (Exhibit "D"), income verification forms used in determining MFI including the City's Asset Form (Exhibit"K") 5.03.2.4 household size 5.03.2.5 gender of head of household member 5.03.2.6 name and age of each household member 5.03.2.7 race/ethnicity of each household member 5.03.2.8 disability status of any household member 5.03.2.9 copy of annual lease agreement and utility allowance table used 5.03.2.10 evidence of affirmative marketing efforts 5.03.2.11 citizenship attestation 5.03.2.12 source documentation for income and assets 5.04 Financial Status Reports. Developer shall submit financial status reports (2 C.F.R. Part 215) (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 "L", and incorporated herein by this reference as though fully set forth, is a sample financial status report. 5.05 Record Retention. The Developer, its contractors and subcontractors shall maintain such records and accounts, including property, personnel and financial records, as are deemed necessary by the City to assure a proper accounting for all expenses. The Comptroller General of the United States, or any of their duly authorized representatives, or any duly authorized representatives of the City, as approved by the Director, shall have access to any books, documents, papers, records and accounts of the Developer, Contractor, or subcontractors which are directly pertinent to this Project for the purpose of making audit, examination, excerpts and transcriptions. Such records and accounts shall be retained for five (5) years after expiration of the Affordability Period (2 C.F.R. Part 215) (Exhibit"C"). 5.06 Personnel and Participant Conditions 5.06.1 Contract Compliance Clause 5.06.1.1 Section 10-192 of the Omaha Municipal Code, Equal Employment Opportunity Clause. (Exhibit "S") The Developer and its contractor shall not discriminate against any employee or applicant for employment because of race, religion, color, sex, age, sexual orientation, gender identity, national origin, familial or handicap status. As used herein, the word "treated" shall mean and include, without limitation, the following: 15 recruited, whether by advertising or by other means; compensated; selected for training, including apprenticeship; promoted; upgraded; demoted; downgraded; transferred; laid off; and terminated. The Developer and its contractor agree to and shall post in conspicuous places, available to employees and applicants for employment, notices to be provided by the contracting officers setting forth the provisions of this nondiscrimination clause. 5.06.1.2 The Developer and its contractors shall, in all solicitations or advertisements for employees placed by or on behalf of the contractor, state that all qualified applicants will receive consideration for employment without regard to race, religion, color, sex, age, sexual orientation, gender identity, national origin, familial or handicap status. 5.06.1.3 The Developer and its contractors shall send to each representative of workers with which he has a collective bargaining agreement or other contract or understanding a notice advising the labor union or workers' representative of the contractor's commitments under the equal employment opportunity clause of the city and shall post copies of the notice in conspicuous places available to employees and applicants for employment. 5.06.1.4 The Developer and its contractors shall furnish to the Human Rights and Relations Director all federal forms containing the information and reports required by the federal government for federal contracts under federal rules and regulations, including the information required by sections 10-192 to 10-194, inclusive, of the Omaha Municipal Code and shall permit reasonable access to his records. Records accessible to the Human Rights and Relations Director shall be those which related to Paragraphs 5.06.1.1 through 5.06.1.7 of this subsection and only after reasonable notice is given the contractor. The purpose of this provision is to provide for investigation to ascertain compliance with the program provided herein. 5.06.1.5 The Developer and its contractors shall take such actions with respect to any subcontractor as the City may direct as a means of enforcing the provisions of Paragraphs 5.06.1.1 through 5.06.1.7 herein, including penalties and sanctions for noncompliance; however, in the event the 16 contractor becomes involved in or is threatened with litigation as the result of such directions by the City, the City will enter into such litigation as is necessary to protect the interests of the City and to effectuate the provisions of this division, and, in the case of contracts receiving federal assistance, the contractor or the City may request the United States to enter into such litigation to protect the interests of the United States. 5.06.1.6 The Developer and its contractors shall file and shall cause his subcontractors, if any, to file compliance reports with the Developer's contractor in the same form and to the extent as required by the federal government for federal contracts under federal rules and regulations. Such compliance reports shall be filed with the City's Human Rights and Relations Director. Compliance reports filed at such times as directed shall contain information as to the employment practices, policies, programs and statistics of the Developer, contractor and his subcontractors. 5.06.1.7 The Developer and its contractors or its subcontractors shall include the provisions of Paragraphs 5.06.1.1 through 5.06.1.7 of this section, "Equal Employment Opportunity Clause," and Section 10-193 in every contract, subcontract or purchase order so that such provisions will be binding upon each subcontractor or vendor. (Code 1980, Section 10-192; Ord. No. 35344, Sections 1, 9-26-00) 5.06.2 Workers' Compensation. The Developer shall provide Workers' Compensation Insurance coverage for all employees involved in the performance in this Agreement. 5.06.3 Employment Insurance and Bonding. The Developer shall purchase a blanket fidelity bond covering all employees, at a minimum, in an amount equal to cash advances from the City. The Developer shall comply with bonding and insurance requirements of 2 C.F.R. Part 215 (Exhibit"C"), Bonding and Insurance. 5.06.4 Minority Business/Women Business Enterprise Plan. The Developer shall make its best efforts to ensure that construction services, contracts and employment opportunities are affirmatively marketed to women and members of minority groups. As used in this Agreement, the term "women and members of minority groups" means a business at least fifty-one percent (51%) owned and 17 controlled by minority group members or women. Developer will agree to adopt the City's MBE/WBE Enterprise Plan. (Exhibit"P") 5.06.5 Section 3 —Employment of Low-Income Persons (Section 3 of HUD Act of 68, as amended, 1 U.S.C. 1701u). The Developer shall make its best efforts to comply with Section 3. The purpose of Section 3 is to ensure that employment and other economic opportunities generated by HUD assistance or HUD-assisted projects covered by Section 3 shall, to the greatest extent feasible, be directed to low- and very low-income persons, particularly persons who are recipients of HUD assistance for housing. (Exhibit"Q") 5.06.6 Conflict of Interest. The Developer agrees to abide by the provisions of 24 C.F.R. 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 Developer further covenants that in the performance of this Agreement no person having such a financial interest shall be employed or retained by the Developer hereunder. These conflict of interest provisions apply to any person who is an employee, agent, consultant, officer or elected official or appointed official of the City or any designated public agencies or subrecipients which are receiving funds under the HOME program. 5.06.7 Attestation of Citizenship. To comply with Neb. Rev. Stat. 4-108 through 4-114, the Developer agrees to comply with the requirements of 5.06.7.1 and 5.06.7.2. 5.06.7.1 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: 18 a) The Contractor must complete the United States Citizenship Attestation Form available on the Department of Administrative Services website at www.das.state.ne.us. b) If the Contractor indicates on such attestation form that he or she is a qualified alien, the Contractor agrees to provide the U.S. Citizenship and Immigration Services documentation required to verify the Contractor's lawful presence in the United States using the Systematic Alien Verification for Entitlements(SAVE) Program. c) The Contractor understands and agrees that lawful presence in the United States is required and the Contractor may be disqualified or the contract terminated if such lawful presence cannot be verified as required by Neb. Rev. Stat. 4-108." 5.06.7.2 The Developer shall have each person signing the application for a benefit under this agreement execute a United States Citizenship Attestation Form For Public Benefit (Exhibit "K") verifying eligibility status for the purposes of receiving a public benefit. The Developer shall maintain aggregate 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 15`h each calendar year reflecting this applicant data for such calendar year. 5.06.8 Employee Classification Act. To comply with the Nebraska Employee Classification Act, all general and subcontractors who perform construction or delivery service pursuant to this contract shall submit to the City an Affidavit For Employee Classification Act (Exhibit "M") attesting that (1) each individual performing services for such contractor is properly classified under the Nebraska Employee Classification Act, 2010 LB 563 ("the Act"), (2) such contractor has completed a federal I-9 immigration form and has such form on file for each employee performing services, (3) such contractor has complied with Neb. Rev. Stat. section 4-114 (federal immigration verification system), (4) such contractor has no reasonable basis to believe that any individual performing services 19 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 6. DEVELOPER'S COMPLIANCE WITH OTHER FEDERAL REGULATIONS 6.01 Environmental Review. The Developer agrees to comply with the following regulations insofar as they apply to the performance of this Agreement: 6.01.1 Clean Air Act, 42, U.S.C., 1857, et seq. 6.01.2 Federal Water Pollution Control Act, as amended, 33 U.S.C. 1251, et seq., as amended 1318 relating to inspection, monitoring entry, reports and information as well as other requirements specified in Section 114 and Section 308, and all regulations and guidelines issued thereunder. 6.01.3 Environmental Protection Agency (EPA) regulations pursuant to 40 C.F.R., Part 50, as amended. 6.01.4 National Environmental Policy Act of 1969. 6.01.5 HUD Environmental Review Procedures(24 C.F.R. Part 58). 6.01.6 Flood Disaster Protection Act of 1973 (24 U.S.C. 4106 and P.L. 2234) in regard apply to provisions of this Agreement. 6.01.7 Historic Preservation requirements set forth in the National Historic Preservation Act of 1966, as amended (16 U.S.C. 470) and the procedures set forth in 36 C.F.R., Part 800, Advisory Council on Historic Preservation Procedures for Protection of Historic Properties, insofar as they apply to the performance of this Agreement. In general, this requires concurrence from the State Historic Preservation Office for all rehabilitation and demolition of historic properties that are 45 years old or older or that are included on a Federal, State or local historic property list. 6.02 Uniform Relocation Act. The Developer shall comply with the applicable regulations of the Uniform Relocation Act of 1970, as amended (URA) (42 U.S.C. 4601-4655), or Section 104 (d) of the Housing and Community Development Act of 1974, as amended (Section 104 (d)), which require relocation assistance be provided to resident owners, tenants, businesses and other occupants that are displaced as a result of a federally-assisted project. In the event that the Developer or its agent displaces any tenant-occupant of the 20 property, it shall immediately notify the City in writing of the circumstances surrounding said displacement and comply with 24 C.F.R. 92.353. 6.03 Soil Work Policy. The Developer and its contractors and subcontractors shall comply with the Soil Work Policy, if applicable, see Exhibit "N", which is incorporated herein by this reference as though fully set forth. 6.04 Federal Funding Accountability and Transparency Act. The Developer shall Comply with the applicable regulations of the federal funding Accountability and Transparency Act (FAFTA) (75 Fed Reg SS 664) (September 14, 2010) to be codified at 2 CRG Part 170. Developer shall complete and provide to the City prior to the issuance of the proceed order. (Exhibit "T") SECTION 7. RESPONSIBILITIES OF THE CITY. 7.01 Performance Monitoring. The City will monitor the performance standards of the Developer as stated herein. Substandard performance as determined by the City will constitute non-compliance with this Agreement. If action to correct such substandard performance is not taken by the Developer within a reasonable period of time after being notified by the City, contract suspension or termination procedures may be initiated. 7.02 Payments. It is expressly agreed and understood that the total amount to be paid by the City under this Agreement shall not exceed $250,000.00 of FY 2013 HOME Program funds. The payment of these funds is subject to and conditioned upon actual receipt by the City of the same. Should adequate funding not be available to the City, the City shall notify the Developer as soon as reasonably possible and the Agreement will be terminated. 7.02.1 Funds Allocated to the Developer. Funds allocated to the Developer shall be in the form of a repayable loan for the purposes set forth in this Agreement. Payments will be contingent on Duties and Conditions specified herein. Draw downs for the payment of eligible expenses shall not be made until the funds are needed based upon the value of the construction, administration, or professional services work completed at the time the payment request is made. 7.02.2 Obligation for Payment. In no event shall the City become obligated to make any payments for any work performed, materials furnished, expense incurred, or any other expenditure of any kind whatsoever, unless same is expressly included in this Agreement, nor shall the City incur any liability hereunder, unless and until the Developer has timely and fully complied with its duties and obligations hereunder. No payments shall be made for any work, labor, material or expenses incurred the Director deems to be: 21 8.01 Release of Information Laws. The Developer specifically hereby states, agrees and certifies that it is familiar with the limited purpose set forth in the Federal Laws, Rules and Regulations, and in the laws of the State of Nebraska, for which personal information requested may be used and that the information received will be used solely for those limited purposes and not to harass, degrade or humiliate any person. The information released shall be used for the limited purposes stated, and the Developer further agrees to indemnify and hold harmless the City of Omaha for any liability arising out of the improper use by the Developer of information provided. 8.02 Applicable Laws. Parties to this Agreement shall conform with all existing and applicable City ordinances, resolutions, state laws, federal laws, and all existing and applicable rules and regulations. Nebraska law will govern the term and the performance under this Agreement. 8.03 Interest of the City. Pursuant to Section 8.05 of the Home Rule Charter, no elected official or any officer or employee of the City shall have a financial interest, direct or indirect, in any City agreement. Any violation of this section with the knowledge of the person or corporation contracting with the City shall render the Agreement voidable by the Mayor or Council. 8.04 Independent Contractor. Nothing contained in this Agreement is intended to, or shall be construed in any manner, as creating or establishing the relationship of employer/employee between the parties. The Developer shall at all times remain an independent contractor with respect to the services to be performed under this Agreement. The City shall be exempt from payment of all Unemployment Compensation, FICA, retirement, life and/or medical insurance and Workers' Compensation Insurance as the Developer is an Independent Contractor. 8.05 Project Roles. The Developer shall ensure that the Project meets the objectives stated herein. The City has selected the Developer to assist in the Project since it is consistent with the Consolidated Plan. With respect to this Project, the City is not acting as the Developer's architect or engineer. The City makes no warranties, express or implied, as to the Construction Work. The City owes no duty to the Developer or any other persons that shall arise because of any inspection of the premises by the City's agents or employees. 8.06 Captions. Captions used in this Agreement are for convenience and are not used in the construction of this Agreement. 8.07 Merger. This Agreement shall not be merged into any other oral or written agreement, lease or deed of any type. 8.08 Modification. This Agreement and any related documents securing the financing contain the entire agreement of the parties. No representations were 23 made or relied upon by either party other than those that are expressly set forth herein. No agent, employee, or other representative of either party is empowered to alter any of the terms herein unless done in writing and signed by an authorized officer of the respective parties, pursuant to Section 10-142 of the Omaha Municipal Code. 8.09 Assignment. The Developer may not assign its rights or obligations under this Agreement without the express prior written consent of the City; except that the Mayor may, without City Council approval, approve, in writing, the assignment to a limited partnership or to any other affiliate or lender of Developer, so long as the Developer is and remains a general partner, or a member or borrower of the assignee entity. 8.10 Strict Compliance. All provisions of this Agreement and each and every document that shall be attached shall be strictly complied with as written, and no substitution or change shall be made upon written direction from authorized representatives of the parties. 8.11 Termination. This Agreement may be suspended or terminated in accordance with 24 C.F.R. 85.43, Enforcement or C.F.R. 85.44, Termination for Convenience (Exhibit "0", attached hereto and incorporated herein by this reference as though fully set forth). Upon termination of this Agreement, all funds and interest in any account hereunder shall become the property of the City and shall be returned to the City. 8.12 Reversion of Assets. Upon the expiration of this Agreement, the Developer shall transfer to the City of Omaha any HOME funds on hand at the time of expiration and any accounts receivable attributable to the use of HOME funds (24 C.F.R. 92.504(c)(2)(vii)). 8.13 Indemnification. The Developer shall indemnify and hold the City harmless from and against: (1) any and all claims arising from contracts between the Developer and third parties made to effectuate the purposes of this Agreement; and, (2) any and all claims, liabilities or damages arising from the preparation or presentation of any of the work covered by this Agreement. 8.14 Unenforceable Provisions. Any provision of this Agreement, which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be in effect to the extent of such prohibition or enforceability without invalidating the remaining provisions hereof or affecting the validity or enforceability of such provision in any other jurisdiction. 8.15 Disclosure of Lobbying. The Developer shall certify and disclose, to the best of its knowledge and belief,that: 8.15.1 No Federal appropriated funds have been paid or will be paid, by or on behalf of the Developer, to any person for influencing or attempting to influence an officer or employee of Congress, or an employee of a Member of Congress in connection with the awarding of any Federal contract, the making of any Federal grant, the making of any Federal loan, the entering into of any cooperative agreement, and the extension, continuation, renewal, amendment or modification of any Federal contract, grant, loan, or cooperative agreement. 24 8.15.2 If any funds other than Federal appropriated funds have been paid or will be paid to any person for influencing or attempting to influence an officer or employee of any agency, a Member of Congress, an officer of employee of Congress, or an employee of a Member of Congress in connection with this Federal contract, grant, loan, or cooperative agreement, the Developer shall complete and submit standard Form-LLL, "Disclosure Form to Report Lobbying", in accordance with its instructions. 8.15.3 The language of this certification shall be included in the award documents for all subawards at all tiers, (including subcontracts, subgrants, and contracts under grants, loans, and cooperative agreements) and that all subrecipients and contractors shall certify and disclose accordingly. 8.16 Notices. The City and the Developer hereby expressly agree that for purposes of notice, including legal service or process, during the term of this Agreement, and for the period of any applicable statute of limitations thereafter, the following named individuals shall be authorized representatives of the parties: 1) City: City of Omaha Planning Department 1819 Farnam Street, Room 1111 Omaha, Nebraska 68183 2) Owner: c//o J. Development Limited Liability Company Attn.: James Royer and Julie Stavneak 142 W. Broadway, Suite 140 Council Bluffs, Iowa 51503 In the event the authorized representative changes during the term of this Agreement, prior written notice will be given to the respective party at the address noted above. 8.17 Applicability. This Agreement shall be binding upon the parties hereto and shall run with the Property. SECTION 9. DEFAULT PROVISIONS. 9.01 Remedies. If, through any cause, the Developer shall fail to fulfill in a timely and proper manner any obligations under this Agreement, or violate any of the covenants, representations or agreements hereof, the City may upon written notice terminate this Agreement or such parts thereof as to this Agreement, and may initiate foreclosure proceedings for any damages caused to the City by reasons of such default and termination. 9.02 Non-Recourse Loan. The HOME Program Repayable Loan is a non-recourse loan; therefore, in the event of a default,the City shall rely solely upon the Property which is secured by the deed of trust which is the security for the non-recourse promissory note and will not initiate or participate in any claim or proceedings against the maker of the non-recourse promissory note or its partners (or the members, or officers, or directors, or shareholders of any partner) for payment of any sum due under the non-recourse promissory note or any other sum due under the deed of trust. 25 IN WITNESS WHEREOF. the parties have executed this Agreement as of the date indicated below: WITNESS: 7400 MILITARY AVENUE, LLC, a Nebraska limited liability company 1-7 By: J Development Limited Liability Date Company,a Nebraska limited liability 0144,� . U � company, Managing Member Name Print: Title: A.i -44 By: /7�G J es oyer, Z2er By: ✓G Juli Stavneak, ber WITNESS: SHELTERING "IREE, INC., a Nebraska 501(cj(3}non-profit corporation 16'hp cal,t. Date By: � l r rt--n t Shirley McNaty President Name Print: f t Za. 1 Z Title: Sj_ova, -,r-tt WITNESS: J DEVELOPMENT LIMITED LIABILITY 7-I COMPANY, a Nebraska limited liability company Date �� By: q.. /G Name Print: LU r-) J. Cr'oye anager Title: By: L.['/. Jul' avneak, Manag 26 ATTEST: CITY OF OMAHA: %Ad (�►E P U TYCITY CLERK OF THY OF OMAHA DATE MAYOR OF THE CITY OF OMAHA DATE APPROVED AS TO FORM: C TY ATTORNEY DATE 2238 dlh 27 SCHEDULE OF EXHIBITS Exhibit Agreement Location Description A 1.02 Sheltering Tree, Inc. Articles of Organization, Operating Agreement, Corporate Resolution B 1.07 and 3.01.11 Repayable Loan Non-Recourse Promissory Note C 3.01.1, 5.01.1, 5.01.2, 2 C.F.R. Part 215 5.04, 5.05, and 5.06.3 D 1.14, 1.14.1, 1.18, 2.01.1, Median Family Income Chart, HOME and 5.03.2.3 Program Rents, Utility Allowance for Tenant- paid Utilities E 1.17 Definition—Program Income F 3.01.10 Section 504 G 4.08 Davis-Bacon Exemption Checklist H 4.10 Affirmative Marketing Policy I 3.01.12, and5.01.2 2C.F.R. Part230 J 5.01.3 2 C.F.R. Part 200.5 K 5.03.2, and 5.06.7.2 Occupancy Report (Tenant Survey, Utility Allowance, Computing Annual Income Form, Citizenship Attestations, and Race/Ethnicity Forms, Affidavit-Applicant Income) L 5.04 Financial Status Reports M 5.06.8 Affidavit for Employee Classification Act N 6.03 Soil Work Policy O 8.11 Termination—24 C.F.R. 85.43 — 85.44 P 3.01.7 and 5.06.4 Minority and Women Business Plan Q 5.06.5 Section 3 Clause R 1.14 City of Omaha Definition of Income S 5.06.1.1 Equal Employment Opportunity Clause T 6.04 Federal Sub Award Reporting System 28 •E 11111111111 of 1111111111 1111111hn A Gale 11111111 liii CORP 1000666707 Ns 3 SHELTERING TREE, INC. Filed: 09122/2006 10:15 AM ARTICLES OF INCORPORATION OF SHELTERING TREE, INC. We the undersigned natural persons of the age of majority, acting as incorporators of a corporation under the Nebraska Nonprofit Corporation Act, adopt the following Articles of Incorporation for such Corporation. ARTICLE I. Name The name of the organization is Sheltering Tree, Inc. ARTICLE II. Public Benefit Corporation This corporation is a public benefit corporation. ARTICLE III. Duration. The period of duration of the corporation is perpetual. ARTICLE IV. Purposes The corporation is organized exclusively for charitable, educational and literary purposes, including for such purposes, the making of distributions to organizations that qualify as exempt organizations under section 5010(3) of the Internal Revenue Code of 1954 (or corresponding provision of any future United States Internal Revenue Law). ARTICLE V. Powers The corporation shall have and exercise all powers and rights conferred. upon corporations by the Nebraska Nonprofit Corporation Act and any such enlargements of such powers and rights conferred by subsequent legislative acts or acts of the voters of the State of Nebraska; the corporation shall have.and exercise all powers and rights, not otherwise denied nonprofit corporations by the laws of the state of Nebraska or by the Articles of Incorporation, as are necessary, suitable, proper, convenient or expedient to the attainment of the purposes set forth in Article III. The corporation shall not have nor exercise any powers or rights which conflict with the purposes set forth in Article III. ARTICLE VI. Prohibited Transactions No part of the net earning of the corporation shall inure to the benefit of, or be distributable to its members, directors, officers, or other private persons, except that the corporation shall be authorized and empowered to pay reasonable compensation of services rendered and to make payments and distributions in furtherance of the purposes set forth in Article III hereof. ARTICLE VII. Members The corporation may have one or more classes of members. The designation of the class or classes,the manner of election or appointment and the qualifications and rights of the members shall be as set forth in the by-laws of the corporation. ARTICLE VIII. Disposition of Assets Upon Dissolution Upon the dissolution of the corporation, the Board of Directors shall, after paying or making provision for the payment of all of the liabilities of the corporation, dispose of all of the assets of the corporation exclusively for charitable or educational purposes as shall at the time qualify as an exempt organization or organizations under section 50l©(3) of the Internal Revenue Code of 1954 (or corresponding provision of any future United States Internal Revenue Law), as the Board of Directors shall determine. ARTICLE IX. Indemnification of Officers, Directors, Employees and Agents The corporation shall indemnify and hold harmless any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative other than an action by or in the right of the corporation by reason of the fact that such person is or was a director, officer, employee or agent of another corporation, partnership,joint venture, trust or other enterprise, against expenses including attorneys' fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by such person in connection with such action, suit or proceeding if such person acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interest of the corporation, and, with respect to any criminal action proceeding, had no reasonable cause to believe his or her conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he or she reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his or her conduct was unlawful. ARTICLE X. Initial Board of Directors The initial Board of Directors of the Corporation shall consist of the following individuals: Thomas P. McNally, 1323 William St. Omaha NE 68108 Shirley McNally, 1323 William St. Omaha,NE 68108 Michael Carlson, 844 N. 68 St. Omaha,NE 68108 ARTICLE XI. Initial Registered Office and Initial Registered Agent The initial registered agent is Thomas McNally. The mailing address of the initial registered office of the corporation is 1323 William St. Omaha NE 68108. The telephone number of the registered agent is 402-344-3010. ARTICLE XII. Name and Address of Incorporators The names and addresses of the Incorporators are: Thomas P. McNally 1323 William St. Omaha NE 68108 Shirley McNally 1323 William St. Omaha NE 68108 Michael Carlson, 844 N. 68 St.Omaha,NE 68108 DATED: September 20, 2006 (Thomas P. McNally, Incorporator,Dir ,,tar r) tuSShirley Mc l Incorparato it for mi/1X/dite OLK49,t, ichael Carlson, Incorporator, Director BYLAWS OF SHELTERING TREE, INC. These Bylaws, as amended from time to time in accordance with their terms, shall serve as the Bylaws of Sheltering Tree, Inc. (the "Corporation"), a corporation organized under the Nebraska Nonprofit Corporations Act according to Articles of Incorporation filed with the Secretary of State's office on the 22nd day of September 2006. 1. GENERAL PROVISIONS 1.1 Name. The name of the Corporation is Sheltering Tree, Inc. Sheltering Tree is a ministry project of the Orthodox Christian Communities of Omaha and Lincoln. Orthodox Christianity is defined as Churches within SCOBA (SCOBA-Standing Conference of the Canonical Orthodox Bishops in the Americas). 1.2 Registered Office. The registered office of this Corporation shall be located at 1323 William Street, Omaha, Nebraska 68108. 1.3 Registered Agent. The name and address of the Corporation's registered agent in this state is Shirley McNally, 1323 William Street, Omaha, Nebraska 68108. 1.4 Term. The term for which this Corporation is to exist is perpetual. 1.5 Fiscal Year. The fiscal year of the Corporation shall be January 1 to December 31 of each year. 1.6 Rules and Regulations. The Directors may adopt and compile rules and regulations for the effective conduct of its business, and such rules shall have the force and effect of bylaws. 2. PURPOSE 2.1 Nonprofit. This Corporation is organized not for profit and shall have no authority to issue capital stock. 2.2 Mission, Objectives and Purpose. The mission of Sheltering Tree, Inc. is to create an affordable, quality, home-like environment, inspired by Christian values, empowering persons with developmental disabilities to: 1 • achieve maximum independence, • lead productive and fulfilling lives, • build friendships, • contribute and belong to the greater Omaha, NE community. Sheltering Tree, Inc.'s purpose is to provide safe, affordable housing for persons with mild and moderate developmental disabilities. These persons must be at least 18 years of age and should have a 90 percent capacity toward independence in caring for their own needs under the supervision of qualified loving managers who live onsite with the residents. The residents are to have no antisocial or self-inflicted drug or alcohol abuse, mental instability, sexually deviant, aggressive or violent behavior. Sheltering Tree will comply with: a. Civil Rights Laws, including the Americans with Disabilities Act of 1990 (42 U.S.C. 1201 et seq), the Age Discrimination Act of 1974 (42 U.S.C. 6101 et seq.), and Title IX of the Education Amendments Act of 1972 (20 U.S.C. 1681 et seq.). b. Affirmatively Furthering Fair Housing. Under Section 808(e)(5) of the Fair Housing Act for protected classes including race, color, national origin, religion, sex, disability and familial status. c. Economic Opportunities for Low-and Very Low-Income Persons (Section 3). d. Participation of Small Businesses, Small Disadvantaged Businesses, and Women-Owned Businesses. The environment of Sheltering Tree, Inc. shall be one of caring support of the residents looking after their spiritual, physical, health, social, educational and work-related needs. The Guiding Principles of Sheltering Tree, Inc.: • Respect the dignity and uniqueness of each person as created in the image of God • Practice hospitality • Realize the fruits of the Holy Spirit: love, joy, peace, patience, kindness, goodness, faithfulness, gentleness and self control • Improve upon industry best practices • Foster and encourage the development of talents and interests. Spiritual Each resident shall be provided an opportunity to grow spiritually through weekly church services of his or her choice, Bible study, Christian education, confession, singing and prayer. 2 Physical. In recognition of the body fitness and mental alertness afforded by physical exercise, residents will have daily opportunity for walks, exercise routines, as well as frequent classes with skilled professionals, ball teams and exercise events of their choice. Health. As much as possible, Sheltering Tree, Inc. will provide a selection of organic fresh eggs, meats, cheeses, fruits and vegetables at each meal, encouraging a health promoting diet and lifestyle. This lifestyle may include gardening, animal care and sharing responsibilities for food selection, preparation and eating together, family style. Social. In addition to holiday, birthday and other celebrations at Sheltering Tree, inc., each resident with family or guardians may choose social events in the community to be scheduled for him or herself. These may be group or single activities and transportation to and from these activities will be arranged with the approval of Sheltering Tree, Inc. staff. Educational. Each resident with family or guardians may select classes that are provided at Sheltering Tree, Inc. and outside community resources to aid them in personal growth and interests; life, recreational, occupational or social skills. Transportation to and from these activities will be arranged with the approval of Sheltering Tree, Inc. staff. Work. A suitable shared work environment will be created within the common areas of Sheltering Tree, Inc. for resident participation, including cleaning, kitchen and yard work assignments. Each individual will also be encouraged to spend suitable time working in the job of their choice with assistance of Sheltering Tree, Inc., state, local and school resources. Transportation to and from outside work sites will arranged with the approval of Sheltering Tree, Inc. staff. Each family or guardian will submit a letter of intent for each resident indicating in detail their preferences and desires for the lifetime care of the resident, as well as expressing the resident's likes, dislikes and dreams. These letters of intent may be updated on a regular basis and will be kept on file and studied carefully by those working with the residents to see that these wishes are carried out and needs met to the best of the ability of Sheltering Tree, Inc. staff and Board of Directors. The purpose of the Board of Directors of Sheltering Tree, Inc. is to protect and uphold these directives and bylaws. As an organization based on the love of God, the Father; Jesus Christ, the Savior of mankind and the Holy Spirit, Sheltering Tree, Inc.'s governing board has adopted these core value statements as a guide in all actions and activities of Sheltering Tree, Inc: 3 Passion for our residents—Serving developmentally disabled adults is our highest priority. We see ourselves as partners with families, providers and caregivers to ensure the highest quality care for our residents. Excellence for our residents—We value excellence in our people, in our programs and in our facilities. We have a responsibility to encourage and develop excellence among our staff and residents. Activity for our residents—We strive to provide social and recreational services that will focus on helping our residents learn daily living skills, physical wellness and the development of lifelong interests. Respect for our residents—We pledge to treat our residents and their families with respect, and to honor the dignity and value of each member of our community. Love for our residents—Showing God's love to our residents, their families and the community is the natural attitude of our hearts. Our residents should feel they belong to the Sheltering Tree, Inc. family and the eternal family of God. 2.3 Compensation. Compensation or payment shall never be paid or made to any member, officer, director, creator or organizer of this Corporation, or substantial contributor to it, except as an allowance for actual expenditures or services actually made or rendered to or for this Corporation and neither the whole nor any portion of the assets or net earnings, current or accumulated to this Corporation, shall ever be distributed to or divided among any such persons; provided, further, that neither the whole nor any part or portion of such assets or earnings shall ever be used for, accrued to or inure to the benefit of any member or private individual within the meaning of Section 501(c)(3) of the internal revenue Code, or the corresponding provision of any future United States Internal revenue Law. 2.4 Assets Upon Dissolution. Upon the dissolution of the Corporation, the governing board shall, after paying or making the provision for the payment of all the liabilities of the Corporation, dispose of all of the assets of the Corporation exclusively for the purpose of the organization to a charitable organization which does similar work in the community or communities where the Corporation has performed its charitable function, as determined by the governing board at or near the time of dissolution, and any assets not so disposed shall be conveyed to an organization or organizations organized or operated exclusively for religious, charitable or educational purposes, as shall at the time qualify as an exempt organization or organizations under Section 501(c)(3) of the Internal Revenue Code or the corresponding provision of any 4 future United States law, as the governing board shall determine. Any of such assets not so disposed of shall be disposed of by the District Court in the county in which the principal office of the Corporation is then located, exclusively for such purposes. 2.5 Nonpolitical. The Corporation shall not participate in, or intervene in (including the publishing or distribution of statements) any political campaign on behalf of any candidate for public office. 2.6 Exempt and Charitable Purpose. Notwithstanding any other provision of these Bylaws, the Corporation shall not carry on any other activities not permitted to be carried on: (a) by a corporation exempt from federal income tax under Section 501(c)(3) of the Internal Revenue Code (or the corresponding provision of any future United States Revenue law); or (b) by a corporation, contributions to which are deductible under Section 170(c)(2) of the Internal Revenue Code (or the corresponding provision of any future United States Internal Revenue law). If, for any period of time (and notwithstanding any other provision of the governing instruments of this Corporation) this Corporation is defined as or held to be a private foundation under the provisions of the Internal Revenue Code, as they now exist or are hereafter amended, then during such period said Corporation shall be subject to the below listed limitations, requirements and prohibitions: a. The Corporation shall distribute its income for each taxable year at such time and in such manner as not to become subject to the tax on undistributed income imposed by Section 4942 of the Internal Revenue Code or corresponding provisions of any subsequent federal tax laws, and such provisions shall control over other provisions of these Bylaws, including reinvestment of earnings to corpus. b. The Corporation shall not engage in any act of self-dealing as defined in. Section 4941(d) of the Internal Revenue Code or corresponding provisions of any subsequent federal tax laws. c. The Corporation shall not retain any excess business holdings as defined in Section 4943(c) of the Internal Revenue Code or corresponding provisions of any subsequent federal tax laws. d. The Corporation shall not make any investments in such manner as to subject it to tax under Section 4944 of the Internal Revenue Code or corresponding provisions of any subsequent federal tax laws. 5 e. The Corporation shall not make any taxable expenditures as defined in Section 4945(d) of the Internal revenue Code or corresponding provisions of any subsequent federal tax laws. 3. MEMBERSHIP 3.1 Members. For purposes of these Bylaws, there are no members. 4. DIRECTORS 4.1 Management. Management of the business and affairs of the Corporation shall be vested in and conducted by its Board of Directors and as delegated to its officers. 5. DIRECTORS 5.1 Number. Management of the Corporation shall be vested in a Board of Directors (the "Board") consisting of not less than five (5) nor more than fifteen (15) directors with the number to be at the discretion of the Board. Although the number of directors may be changed from time to time by amendment to these Bylaws, no change shall affect the incumbent directors during the terms for which they were chosen. 5.2 Qualification. Directors shall be persons at least 21 years of age who accept in principle the purposes of this Corporation, are deemed qualified to participate in the attainment of its objectives and the management of its business, and who otherwise represent the requirements provided herein. Two-thirds of the directors shall be members in good standing of any Orthodox Christian (SCUBA) Church. Each Pastor of the Orthodox Churches of Omaha and Lincoln (SCOBA) are declared "ex off cio" members of the Board of Directors. No person nominated as a Director, including Pastors of any Orthodox Church in Omaha and Lincoln (SCOBA), shall be deemed a Director of the Corporation until such person accepts appointment in writing. 5.3 Elections and Terms a. The Board of Directors shall be and is divided into three classes; Class I, Class II and Class III. No one class shall have more than one Director more than any other class. If a fraction is contained in the quotient arriving at by dividing the authorized number of Directors by three, then, if such fraction is one-third, the extra Director shall be a member of Class I, and if such fraction is two- thirds, one of the extra Directors shall be a member of Class I and one of the extra Directors shall be a member of Class II, unless otherwise provided from time to time by resolution adopted by the 6 Board. Elections to the Board of Directors shall be held at the annual meeting of the Corporation. b. Initially Class I Directors will serve for three years, Class II for a two year term, and Class III for a one year term. The second term will be three years for each Class. After serving two (2) consecutive terms, a Director may not be elected to a new term until one year after the completion of two previous terms. c. In the event of any increase or decrease in the authorized number of Directors: (i) each Director then serving as such shall nevertheless continue as a Director of the class of which he or she is a member until the expiration of his or her current term, subject to his or hear earlier death, resignation of removal; and (ii) the newly created or eliminated Directors resulting from such increase or decrease shall be apportioned by the Board of Directors among the three classes of Directors in accordance with the provisions of Section (b) above. To the extent possible, consistent with the provisions of Section (a) above, any newly created Directors shall be added to those classes whose terms of office are to expire at the latest dates following such allocation, and any newly eliminated Directors shall be subtracted from those classes whose terms of offices are to expire at the earliest dates following such allocation, unless otherwise provided from time to time by resolution adopted by the Board of Directors. d. Elections may be conducted by a show of hands or secret ballot as the Board of Directors deems appropriate. In case of dispute, the manner of voting shall be decided by the President of the Board. 5.4 Duties. The Directors shall govern and manage all affairs of the Corporation in accordance with law and its decisions in annual, regular and special meetings. 5.5 Resignation. Any Director of the Corporation may resign upon filing a written resignation with the Secretary of the Corporation, and such resignation shall become effective when so filed unless some subsequent effective date is set forth in the resignation. 5.6 Vacancies. Vacancies in the Board of Directors other than by failure of Directors' successors to be elected and qualified, shall be filled by the remaining Directors. Such Directors shall hold office until the end of their term, and their successors are elected and qualified, or until their term of office is terminated by resignation, death or removal. 7 5.7 Removal. Any elected Director of the Corporation may be removed from the Board of Directors at any time, with or without cause, by a two-thirds vote of the Board of Directors. If a Board member has more than three unexcused absences during a six month period of time, that Board member can be removed from the Board by a two-thirds vote of the Board of Directors. 6. MEETINGS OF DIRECTORS 6.1 Place. All meetings of the Directors shall be held at the principal place of business in this state or at any other location mutually agreed upon. 6.2 Meeting Time. Meetings will be held on the third Thursday of each month unless the Board votes to waive the meeting or change the date. Board members are expected to attend with no further notice. 6.2.1 Annual. The annual meeting of the Directors of this Corporation shall be held during the month of March in each year as set by resolution of the Board of Directors for the purposes of: (1) election of officers; and (2) transaction of other business as may properly be presented and come before the meeting. During the annual meeting, a closed session will be held during which all salaries for employees will be discussed and decided. All salaried employees, including those who may be members of the Board, will be excused from the closed session until discussions concerning salary are concluded. 6.2.2 Regular. Regular meetings shall be held at least semi-annually at such times as are specified by resolution of the Board of Directors. 6.2.3 Special. Special meetings of the Directors may be called by the President as deemed necessary, or upon request by any two Directors. The President shall call a special meeting of the Board within 15 days of the request. Business to be transacted shall be limited to matters specified by the notice given. 6.2.4 Telephone. Members of the Board of Directors, or any committee thereof, may participate in a meeting of such board or committee by means of conference telephone or "Go to Meeting. Corn" or similar communications equipment by means of which all persons participating in the meeting can hear and communicate each other. Participation in a meeting pursuant to this section shall constitute presence in person at such meeting. 6.3 Notice. Notice of any meeting may be given by mailing in writing to the person entitled thereto at the last known address shown on the records of the Corporation. 6.3.1 Waiver. Whenever notice is required to be given by these Bylaws, the Articles of Incorporation or by statute, a written waiver thereof, signed by 8 the persons entitled to notice, whether before or after the times stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting constitutes a waiver of notice except when the person attends for the express purpose of objecting at the beginning of the meeting to the transaction of any business because the meeting is not lawfully called or convened. 6.3.2 Action by Consent. Unless otherwise provided in the Articles of Incorporation, any action required to be taken at any annual or special meeting of the Directors of the Corporation, or any action which may be taken at any annual or special meeting of such Directors, may be taken if a consent in writing, setting forth the action so taken, shall be signed by all Directors entitled to vote thereon. In the event that such action which is consented to is such as would have required the filing of a certificate under the Nebraska General Corporation Code, if such action had been voted upon by Directors at a meeting thereof, the certificates filed under such other section shall state, in lieu of any statement required by such section concerning a vote of Directors, that written consent has been given in accordance with the provisions of this section. 6.4 Pre-agenda. A written agenda of matters to be considered insofar as reasonably ascertainable, should be mailed in advance of any meeting, except in instances when telephone or similar communications methods are used to conduct a meeting or when a waiver of notice may apply. 6.5 Quorum. A majority of the total members of the Board of Directors shall constitute a quorum at all meetings of the Directors for the transaction of business except as otherwise provided by law, or by these Bylaws. In the event such number is not a quorum, the members present in person shall have the power to adjourn the meeting from time to time without notice other than announcement at the meeting, until the requisite number of voting members shall be present at such adjourned meeting, and any business may be transacted at the meeting as originally notified. • 6.6 Voting Procedure. All elections of officers and votes upon any other question, except as otherwise provided by law or unless otherwise provided by resolution of the Board of Directors, may be had by ballot, viva voce or by showing of hands. 7. OFFICERS 7.1 Designated Officers. Officers of the Corporation shall be chosen by the Board of Directors and shall be a President, a Vice President, a Secretary and a Treasurer. The Secretary and Treasurer may or may not be the same person. The officers of the Corporation shall be the same persons as the officers of the Board. 9 7.2 Other Officers and Agents. The Corporation may have such other officers and agents as may from time to time be determined and appointed by the Board of Directors, and for such terms as the Board of Directors may determine. 7.3 Term and Qualification of Officers. The officers of the Corporation shall hold their office for one year or until the next annual meeting of the Board of Directors, or their successors are chosen and qualified, unless their respective terms of office have been terminated by resignation in writing, duly filed with the Secretary of the Corporation. 7.4 Removal of Officers. Any officer elected or appointed by the Board of Directors may be removed from office at any time by the affirmative vote of a majority of the whole Board of Directors. 7.5 President. The President shall be the presiding officer of the Corporation and the Board of Directors, and shall perform such other duties as ordinarily pertain to the office. The President shall be a Director of the Corporation. 7.6 Vice President. The Vice President shall be a Director of the Corporation and shall preside in the absence of the President and assist the President as needed. 7.7 Secretary. The Secretary shall be a Director of the Corporation. The Secretary shall attend all sessions of the Board of Directors and record all votes and the minutes of all proceedings, including rules and regulations and policy decisions, in a book to be kept for that purpose, and shall perform like duties for the standing committees. The Secretary shall give, or cause to be given, notice of all meetings of the Board of Directors and shall perform such other duties as may be prescribed by the Board of Directors or President. 7.8 Treasurer. The Treasurer shall be a Director of the Corporation. The Treasurer shall keep and maintain or cause to be kept and maintained, adequate and correct accounts of the properties and business transactions of the Corporation, deposit all money and other valuables in the name and to the credit of the Corporation with such depositories as may be designated by the Board of Directors, disburse funds as allowed by the Board of Directors, provide accountings of the transactions of the. Corporation, and such other duties as may be prescribed by the Board of Directors and these Bylaws. The Treasurer shall be bonded in such sum, and with such sureties, as may be determined from time to time by the Board of Directors. All invoices over $50 (fifty dollars) submitted to the Corporation for payment need Board approval. Any invoices over $500 (five hundred dollars) need two of three signatures, the President, Treasurer or a Pastor of one of the Orthodox Churches on the Board of Directors. 10 7.8 Executive Manager. The Executive Manager shall be the chief executive officer of the Corporation and shall be responsible for running the day-to-day business of the Corporation and the supervisor of the Corporation's employees and assets. The Executive Director need not be a Director. The Executive Manager may be paid a salary to be determined by the Board of Directors. 8. STANDING COMMITTEES 8.1 Executive Committee. The Executive Committee shall consist of the officers of the Board and the Executive Manager. The Executive Committee may be authorized by the Board of Directors from time to time to make decisions or conduct transactions on behalf of the Board. 8.2 Development Committee. The President may appoint a Development Committee which shall initially consist of at least two persons, one of whom shall be designated as Chairperson, with such appointments to be approved by the Board of Directors. The Board of Directors may increase or decrease the size of the committee as necessary. Members of the Development Committee may or may not be members of the Board but the Chairperson shall be a member of the Board. The committee shall facilitate and encourage actual gifts to the Corporation through various promotional and educational efforts. 8.3 Audit Committee. The Board of Directors may appoint an Audit Committee of at least two persons, one of whom shall be a Director and designated as Chairperson, with such appointments to be approved by the Board of Directors. One member shall not be a Director. The Audit Committee shall supervise the audit of funds of the Corporation, secure an annual audit and supervise accounting methods and procedures, and the furnishing of financial statements. The Treasurer shall serve ex officio as a nonvoting member of the Audit. Committee. The Corporation shall keep correct and complete books and records of account and shall also keep minutes of the proceedings of its Board of Directors and committees having any of the authority of the Board of Directors and shall keep at the registered or principal office a record giving the names and addresses of the directors. All books and records of the Corporation may be inspected by any Director, or his agent or attorney, and by the general public, for any proper purpose at any reasonable time. The books of account shall be audited annually as of the end of its fiscal year by independent certified public accountants retained by the Corporation at its expense. 8.4 Nominating Committee. The Nominating Committee shall consist of the Executive Manager, the President of the Board and two Directors appointed by the President of the Board. The Nominating Committee shall nominate as many candidates as seats to be filled and up to two additional 1.1 candidates. Election to the Board will take place at the annual meeting of the Corporation. Possible candidate names may be recommended from committee persons if presented in writing thirty days before the annual meeting where the elections will take place. The Nominating Committee shall also present in writing a proposed slate of officers for election at the first Board of Directors meeting of the year. 8.5 Other Committees and Organizations. The President may appoint other committees, associations, councils or other groups and designate their specific tasks and duties, with such appointments and designations to be approved by the Board of Directors. 8.6 Rules and Quorum. All committees, unless otherwise provided in these Bylaws or by direction of the Board of Directors from time to time, shall adopt their own rules of procedure. At all meetings of committees a majority shall constitute a quorum and the affirmative vote of a majority of a quorum shall control for the transaction of business. 8.7 Ex Officio Member. The President, ex officio, may attend meetings and engage in the deliberation of all committees and vote on issues as a regular Director. 9. DISTRIBUTION OF FUNDS 9.1 Use of Corpus. All funds, properties and donations of every kind and character received by the Corporation shall be used for the purposes set out in the Articles of Incorporation, unless such funds are designated by a donor for a specific purpose. 9.2 Administrative Expenses. All administrative expenses for the operation, management and conduct of affairs of the Corporation may be paid from income or corpus. 10. CONFLICTS OF INTEREST No contract or transaction between this Corporation and one or more of its Directors or officers, or between this Corporation and any other corporation, partnership, association or other organization in which one or more of its Directors or officers are directors or officers, or have a financial interest, shall be void or voidable solely for this reason, or solely because the Director or officer is present at or participates in the meeting of the Board or committee thereof which authorizes the contract or transaction, or solely because his or her or their votes are counted for such purposes, if either: a. The material facts as to the relationship or interest and as to the contract or transaction are disclosed or are known to the Board of 12 tl Directors or the committee, and the Board or committee in good faith authorized the contract or transaction by the affirmative votes of a majority of the disinterested Directors even though the disinterested Directors be less than a quorum; or b. The contract or transaction is fair as to the Corporation as of the time it is authorized, approved or ratified by the Board of Directors or a committee thereof duly authorized. Common or interested Directors may be counted in determining the presence of a quorum at a meeting of the Board of Directors or of a committee which authorizes the contract or transaction. 11. INDEMNIFICATION AND INSURANCE 11.1 Indemnification. The Corporation shall reimburse and indemnify each Director and each officer of the Corporation for or against all liabilities, losses, fines, costs and expenses (including counsel fees and including amounts reasonably paid, otherwise than to the Corporation, in settlement or to secure the termination of litigation) reasonably incurred by or imposed upon him or her in connection with or resulting from any action, suit or proceeding, civil or criminal (hereinafter called "action"), to which he or she may be made a party by reason of his or her being or having been such Director or officer, whether or not he or she continues to be such Director at the time of incurring or becoming subject to such liabilities, losses, fines, costs or expenses and whether or not the action or omission to act on the part of such Director or officer which is the basis of such action occurred before or after the adoption of this Article or the Bylaws, if he or she acted in good faith and in a manner he or she reasonably believed to be in or not opposed to the best interests of the Corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his or her conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that the person did not act in good faith and in a manner which he or she reasonably believed to be in or not opposed to the best interest of the Corporation, and, with respect to any criminal action or proceeding, had reasonable cause to believe that his or her conduct was unlawful. Each person who shall act as a Director or officer of the Corporation shall be deemed to be doing so in reliance upon such right of reimbursement or indemnification. The foregoing right of reimbursement or indemnification shall not be exclusive of other rights to which any such Director or officer may otherwise be entitled and, in the event of his or her death, shall extend to his or her heirs and legal representatives. 11.2 Insurance. The Corporation may purchase and maintain insurance on behalf of any Director, officer, employee or agent of the 13 Corporation against any liability asserted against such person and incurred in such capacity whether or not the Corporation would have power to indemnify such person against such liability under the provisions of the above section. 12. AMENDMENTS These Bylaws may be altered, repealed or amended in whole or in part by a two-thirds vote of the Board of Directors, with at least 75 percent of the Directors present and counted; provided, however, that notice of any such proposed amendments stating the substance thereof shall first by given to each Director having voting rights at least 30 days before any regular meeting or special meeting duly called for such purpose. ADOPTED by the Board of Directors at the meeting of the Board of Directors held on the a t day of c,c,_7n , 20 10. SHELTERING TREE, INC. By �- . President By 7)1/4 '' ',AAA-16 Secretary 14 NE Sac of S4e*e Jahn A Gale - CORP MO 1IIIllIL ' IIflHIl1�INI�IIi ® 1001292241 Pgs: I 7400 MILITARY AVENUE, LLC Filed: 06/23/2014 02:08 PM CERTIFICATE OF ORGANIZATION kikf Xil OF 7400 MILITARY AVENUE, LLC This Certificate of Organization of 7400 MILITARY AVENUE, LLC (the "Company") is being executed by the undersigned for the purpose of forming a limited liability company pursuant to the Nebraska Uniform Limited Liability Company Act, Neb. Rev. Stat. § 21-101 et seq. 1. Name. The name of the limited liability company is 7400 MILITARY AVENUE, LLC. 2. Registered Agent and Address. The name and address of the Company's registered agent for service of process in the State of Nebraska is Patrick McNally, 1323 William Street, Omaha, NE 68108. 3. Initial Designated Office. The initial designated office of the Company is 1323 William Street, Omaha, NE 68108. IN WITNESS WHEREOF, the undersigned, the Member of the Com any. has caused this Certificate of Organization to be duly executed effective as of the /3ay of March. 2014. SHELTERING BENSON HOUSING CORPORATION, a Nebraska nonprofit corporation By: , ��-Y— — Name: ?if' `�& �✓�G�z�f/� Title: .582U) STATE OF NEBRASKA ♦ SECRETARY OF STATE'S OFFICE 1445 "K" STREET • STATE CAPITOL SUITE 1301 • LINCOLN, NE • 68509 BUSINESS SERVICES DIVISION CORPORATIONS UNIFORM COMMERCIAL CODE NOTARY P.O BOX 94608 P.O.BOX 95104 P.O.BOX 95104 (402)471-4079 (402)471-4080 (402)471-2558 FAX:471-3666 FAX:471-4429 FAX:471-4429 JOHN A.GALE www.sos.state.ne.us Secretary of State WOODS&AITKEN SUITE 500 301 SOUTH 13TH STREET LINCOLN,NE 68508 June 23,2014 ACKNOWLEDGEMENT OF FILING The document(s) listed below were filed with the Nebraska Secretary of State's Office, Corporation Division. A label has been affixed to each filing signifying the filing stamp for the Nebraska Secretary of State's Office,Corporation Division. This filing label indicates the date and time of the filing and also references a document number that can be used to reference this filing in the future. Please remember it is your responsibility to notify the Secretary of State's office of any change(s)in the information you filed. ACKNOWLEDGEMENT OF FILING FEES RECEIVED Action/Service Company/Entity Name Fee Received Certificate of 7400 IbIILITARY AVENUE,LLC 100.00 Organization Per Page Charge 7400 MILITARY AVENUE,LLC 5.00 Certificate 7400 MILITARY AVENUE,LLC 10.00 Total Fees Received $115.00 Travis Wilson Filing Officer STATE OF NEBRASKA United States of America, } ss. Secretary of State State of Nebraska State Capitol Lincoln, Nebraska I, John A. Gale, Secretary of State of the State of Nebraska, do hereby certify that 7400 MILITARY AVENUE, LLC a limited liability company filed a Certificate of Organization on June 23, 2014. I further certify that attached is a true and correct copy of the above mentioned Certificate of Organization. This certificate is not to be construed as an endorsement, recommendation, or notice of approval of the entity's financial condition or business activities and practices. In Testimony Whereof, I have hereunto set my hand and 1 t iJ 1 affixed the Great Seal of the State of Nebraska on this date of _ r ' June 23, 2014 P 1 t "1411 \ ! 4.Secretary of State ti� OPERATING AGREEMENT OF 7400 MILITARY AVENUE, LLC, a Nebraska limited liability company The undersigned, being the sole member of 7400 Military Avenue, LLC, a Nebraska limited liability company (the "Company"), hereby adopts the following Operating Agreement of the Company effective as of the f 3day of Ave G1 , 2014 (the "Operating Agreement"). ARTICLE 1. Management 1.1. Manager. The Members of the Company vest the management of the Company with one or more Managers, who shall have the sole power and authority to conduct the affairs of the Company in accordance with this Operating Agreement or the Nebraska Uniform Limited Liability Company Act ("Act"). The initial Manager, who shall serve until the earlier of the resignation or removal by the Members, shall be Patrick McNally. 1.2 Contracting Authority. The Manager shall have the power and authority on behalf of the Company to: • (a) To acquire property from any person or entity as the Managers may determine. The fact that a Manager or a Member is directly or indirectly affiliated or connected with any such Person shall not prohibit the Managers from dealing with that Person; (b) To borrow money for the Company from banks, other lending institutions, the Managers, Members, or affiliates of the Managers or Members on such terms as the Managers deem appropriate, and in connection therewith, to hypothecate, encumber and grant security interests in Company property to secure repayment of the borrowed sums; (c) To purchase liability and other insurance to protect the Company's property and business; (d) To hold and own any Company real and/or personal properties in the name of the Company; (e) To invest any Company funds (by way of example but not limitation) in • time deposits, short-term governmental obligations, commercial paper, stocks, bonds, marketable securities or other investments; (1) To execute on behalf of the Company all instruments and documents, including, without limitation, checks; drafts; notes and other negotiable instruments; mortgages or deeds of trust; security agreements; financing statements; documents providing for the acquisition, mortgage or disposition of Company property; deeds, assignments; bills of sale; leases; partnership agreements, operating (or limited liability company) agreements of other limited liability companies; and any other instruments or 00582256 documents necessary, in the opinion of the Managers, to the conduct of the business of the Company; (g) To employ accountants, legal counsel,managing agents or other experts to perform services for the Company and to compensate them from Company funds; (h) To enter into any and all other agreements on behalf of the Company, with any other Person for any purpose, in such forms as the Managers may approve; (i) To execute and file such other instruments, documents and certificates which may from time to time be required by the laws of the State or any other jurisdiction in which the Company shall determine to do business, or any political subdivision or agency thereof, to effectuate, implement, continue and defend the valid existence of the Company; (j) To establish the compensation, if any, to be paid to employees of the Company, including to a Member or Manager in exchange for such person's services to the Company which shall be fixed from time to time by the Managers in their sole discretion; (k) To do and perform all other acts as may be necessary or appropriate to the conduct of the Company's business; and (1) Compromise or settle any claim against or inuring to the benefit of the Company. 1.3 Specific Authorization. Patrick McNally is authorized to execute and deliver on behalf of the Company all deeds, instruments, and documents. 1.4 Duties of Members and Managers. No Member or Manager of the Company shall be expected to devote full time and attention to the affairs of the Company, but shall devote the amounts of time and attention reasonable and appropriate in each such Member's or Manager's good faith judgment under the circumstances then prevailing. IN WITNESS WHEREOF, this Operating Agreement is executed as of the date first set forth above SOLE MEMBER: SHELTERING BENSON HOUSING CORPORATION, a Nebraska nonprofit corporation By: Name: Patrick McNally Title: President 00582236 2 Dtkdad- A FIRST AMENDED AND RESTATED OPERATING AGREEMENT OF 7400 MILITARY AVENUE, LLC THIS FIRST AMENDED AND RESTATED OPERATING AGREEMENT ("Agreement") of 7400 Military Avenue, LLC, a Nebraska limited liability company (the "Company"), is entered into and shall be effective as of May ,2016,by and among the undersigned parties. WHEREAS, the Company was formed under the State of Nebraska Uniform Limited Liability Company Act, Nebraska Revised Statute 21-101 et seq. (as amended from time to time or any corresponding provisions of succeeding law, the "Act"), pursuant to a Certificate of Organization filed with the State of Nebraska Secretary of State on June 23,2014; and WHEREAS, the members ("Members") of the Company are J Development Limited Liability Company, a Nebraska limited liability company, which has its principal office at 142 W. Broadway, Suite 140, Council Bluffs, Iowa 51503, and Sheltering Tree, Inc., a Nebraska nonprofit corporation, which has its principal office at 1323 William, Omaha, Nebraska 68108; and WHEREAS, the Members desire to amend and restate the initial Operating Agreement of the Company dated March 13, 2014 (including any amendments, restatements or revisions thereto,whether or not signed) (the"Initial Operating Agreement") as set forth herein. NOW, THEREFORE, the Members hereby adopt this First Amended and Restated Operating Agreement as the "Operating Agreement" of the Company under the Act, which hereby amends and restates (and supersedes in its entirety) the Initial Operating Agreement, to set forth the rules, regulations and provisions regarding the management and business of the Company, the governance of the Company, the conduct of its business, and the rights and privileges of its Members, and in consideration of the premises and the mutual agreements contained herein,the parties hereto agree as follows: ARTICLE I THE COMPANY 1.1 Organization. The Members have organized the Company as a limited liability company pursuant to the provisions of the Act and upon the terms and conditions set forth in this Agreement. 1.2 Company Name. The name of the Company shall be "7400 Military Avenue, LLC", and all business of the Company shall be conducted in such name. The Company shall hold all of its property in the name of the Company and not in the name of any Member. 1.3 Purpose. The purpose of the Company is to acquire, rehabilitate, improve, develop, lease, operate, finance and manage certain real property located in Omaha, Nebraska comprising the Project (as defined below), and to engage in any and all activities permitted by law that are related or incidental thereto. The Company shall engage in no other business. 1.4 Principal Place of Business. The initial principal place of business of the Company shall be 1323 William,Omaha, Nebraska 68108. 1 681510.3 1.5 Registered Office and Agent. The Company shall maintain in the State of Nebraska a registered office and a registered agent. The registered agent of the Company in Nebraska shall be Michael D. Matejka. The address of the registered agent in Nebraska is, and the address of the Company's registered office shall be 10250 Regency Circle, Suite 525, Omaha, Nebraska 68114. 1.6 Term. The term of the Company commenced on the date the Certificate of Organization was filed with the Secretary of State of Nebraska and shall continue until the winding up and liquidation of the Company and its business is completed following a Liquidating Event,as provided in Article IX hereof. 1.7 Independent Activities. Each Member and the members, partners, stockholders, officers and directors of each Member may, notwithstanding this Agreement, directly or indirectly,independently or with others, engage in or possess any interest in whatever activities it or they may choose, whether the same or competitive with the Company or otherwise, without having or incurring any obligation to offer any interest in or opportunity with respect to such activities to the Company or any Member or to account in any way to any such Person. Neither this Agreement nor any activity undertaken pursuant hereto shall prevent any Member or any member, partner, stockholder, officer or director of any Member from engaging in such activities, or require any Member to permit the Company or any Member to participate in any such activities, and as a material part of the consideration for the execution of this Agreement by each Member, each Member hereby waives, relinquishes, and renounces any such right or claim of participation. 1.8 No Payments of Individual Obligations. The Members shall use the Company's credit and assets solely for the benefit of the Company. No asset of the Company shall be transferred or encumbered for or in payment of any individual obligation of a Member except as expressly approved upon Consent of the Members (as defined below). 1.9 Definitions. Capitalized words and phrases used in this Agreement have the following meanings: "Adjusted Capital Account Deficit" means the deficit balance, if any, in a Member's Capital Account as of the end of the relevant Fiscal Year, after giving effect to the following adjustments: (i) Credit to such Capital Account any amounts which such Member is obligated to restore pursuant to any provision of this Agreement or pursuant to Regulations Section 1.704-1(b)(2)(ii)(c) or is deemed to be obligated to restore pursuant to the penultimate sentences of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5); (ii) Debit to such Capital Account the items described in Sections 1.704-1(b)(2)(ii)(d)(4), 1.704-1(b)(2)(ii)(d)(5), and 1.704-1(b)(2)(ii)(d)(6) of the Regulations. The foregoing definition of Adjusted Capital Account Deficit is intended to comply with the provisions of Section 1.704-1(b)(2)(ii)(d) of the Regulations and shall be interpreted consistently therewith. "Affiliate" means, with respect to any Person, (i) any Person directly or indirectly controlling,controlled by or under common control with such Person, (ii) any Person owning or controlling 10% or more of the outstanding voting interests of such Person, (iii) any officer, 2 681510.3 director, or general partner of such Person, (iv) any member of any Person formed as a limited liability company, or (v) any Person who is an officer, director, general partner, trustee, or holder of 10% or more of the voting interests of any Person described in clauses (i) through (iv) of this sentence. "Agreement" or "Operating Agreement" means this Operating Agreement, as amended from time to time. Words such as "herein," "hereinafter," "hereof," and "hereunder" refer to this Agreement as a whole,unless the context otherwise requires. "Capital Account" means the Capital Account maintained for each Member in accordance with the following provisions: (i) To such Member's Capital Account there shall be credited such Member's Capital Contributions, such Member's distributive share of Profits and any items in the nature of income or gain which are specially allocated pursuant to Section 3.3 or Section 3.4 hereof, and the amount of any Company liabilities assumed by such Member or which are secured by any Property distributed to such Member. (ii) To such Member's Capital Account there shall be debited the amount of cash and the Gross Asset Value of any Property distributed to such Member pursuant to any provision of this Agreement, such Member's distributive share of Losses and any items in the nature of expenses or losses which are specially allocated pursuant to Section 3.3 of Section 3.4 hereof, and the amount of any liabilities of such Member assumed by the Company or which are secured by any property contributed by such Member to the Company. (iii) In the event all or a portion of an interest in the Company is transferred in accordance with the terms of this Agreement, the transferee shall succeed to the Capital Account of the transferor to the extent it relates to the transferred interest. (iv) In determining the amount of any liability for purposes of the foregoing subparagraphs (i) and (ii) of this definition of "Capital Account," there shall be taken into account Code Section 752(c) and any other applicable provisions of the Code and Regulations. The foregoing provisions and the other provisions of this Agreement relating to the maintenance of Capital Accounts are intended to comply with Regulations Section 1.704-1(b) and shall be interpreted and applied in a manner consistent with such Regulations. "Capital Contributions" means, with respect to any Member, the amount of money and the initial Gross Asset Value of any property other than money contributed to the Company with respect to the interest in the Company held by such Member. "Code" means the Internal Revenue Code of 1986, as amended from time to time (or any corresponding provisions of succeeding law). "Company" means 7400 Military Avenue, LLC,a Nebraska limited liability company. "Consent of the Members" or similar phrase indicating the agreement of or a determination by the Members shall mean and require the unanimous consent of all the Members. 3 681510.3 "Depreciation" means, for each Fiscal Year or other period, an amount equal to the depreciation, amortization, or other cost recovery deduction allowable with respect to an asset for such year or other period, except that if the Gross Asset Value of an asset differs from its adjusted basis for federal income tax purposes at the beginning of such year or other period, Depreciation shall be an amount which bears the same ratio to such beginning Gross Asset Value as the federal income tax depreciation, amortization, or other cost recovery deduction for such year or other period bears to such beginning adjusted tax basis; provided, however, that if the federal income tax depreciation, amortization, or other cost recovery deduction for such year is zero, Depreciation shall be determined with reference to such beginning Gross Asset Value using any reasonable method selected by the Members. "Fiscal Year" for the Company shall mean the calendar year. "Gross Asset Value" means, with respect to any asset, the asset's adjusted basis for federal income tax purposes, except as follows: (i) The initial Gross Asset Value of any asset contributed by a Member to the Company shall be the gross fair market value of said asset, as determined by the contributing Member and the Company; (ii) The Gross Asset Values of all Company assets shall be adjusted by the Members to equal their respective gross fair market values,as of the following times: (a) the acquisition of an additional interest in the Company by any new or existing Member in exchange for more than a de minimis Capital Contribution; (b) the distribution by the Company to a Member of more than a de minimis amount of Property as consideration for an interest in the Company; and (c) the liquidation of the Company within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g); provided, however, that adjustments pursuant to clauses (a) and (b) above shall be made only if the Members reasonably determine that such adjustments are necessary or appropriate to reflect the relative economic interests of the Members in the Company; (iii) The Gross Asset Value of any Company asset distributed to any Member shall be the gross fair market value of such asset on the date of distribution;and (iv) The Gross Asset Values of Company assets shall be increased (or decreased) to reflect any adjustments to the adjusted basis of such assets pursuant to Code Section 734(b) or Code Section 743(b),but only to the extent that such adjustments are taken into account in determining Capital Accounts pursuant to Regulations Section 1.704-1(b)(2)(iv)(m) and the definition of Capital Account hereof; provided, however, that Gross Asset Values shall not be adjusted pursuant to this subparagraph (iv) to the extent the Members determine that an adjustment pursuant to the foregoing subparagraph (ii) of this definition is necessary or appropriate in connection with a transaction that would otherwise result in an adjustment pursuant to this subparagraph (iv). If the Gross Asset Value of an asset has been determined or adjusted pursuant to the foregoing subparagraphs (i), (ii) or (iv), such Gross Asset Value shall thereafter be adjusted by the Depreciation taken into account with respect to such asset for purposes of computing Profits and Losses. "Interest" means a Member's ownership interest in the Company, including any and all benefits to which the holder of such an Interest may be entitled as provided in this Agreement, 4 681510.3 together with all obligations of such Member to comply with the terms and provisions of this Agreement. "Managing Member" means J Development Limited Liability Company, a Nebraska limited liability company. "Member" means any Person (i) whose name is set forth on Exhibit"A" attached hereto or who has become a Member pursuant to the terms of this Agreement, and (ii) who holds an Interest. "Members" mean all such Persons. "Member Minimum Gain" means an amount,with respect to each Member Nonrecourse Debt, equal to the Partnership Minimum Gain that would result if such Member Nonrecourse Debt were treated as a Nonrecourse Liability, determined in accordance with Section 1.704-2(i)(3) of the Regulations. "Member Nonrecourse Debt" has the meaning set forth in Section 1.704-2(b)(4) of the Regulations for Partner Nonrecourse Debt. "Member Nonrecourse Deductions" has the meaning set forth in Section 1.704-2(i)(2) of the Regulations for Partner Nonrecourse Deductions. The amount of Member Nonrecourse Deductions with respect to a Member Nonrecourse Debt for a Company Fiscal Year equals the excess, if any, of the net increase, if any, in the amount of Member Minimum Gain attributable to such Member Nonrecourse Debt during that Fiscal Year over the aggregate amount of any distributions during that Fiscal Year to the Member that bears the economic risk of loss for such Member Nonrecourse Debt to the extent such distributions are from the proceeds of such Member Nonrecourse Debt and are allocable to an increase in Member Minimum Gain attributable to such Member Nonrecourse Debt, determined in accordance with Section 1.704- 2(i)(2) of the Regulations. "Net Cash" means the gross cash proceeds from Company operations and the net cash proceeds from all sales and other dispositions (other than in the ordinary course of business) and all refinancings of Property, less the portion thereof used to pay or establish reserves for all Company expenses, debt payments, capital improvements, replacements, contingencies and distributions to the Members of developer fees. "Net Cash" shall not be reduced by depreciation, amortization, cost recovery deductions, or similar allowances, but shall be increased by any reductions of reserves previously established. "Non-Managing Member" means Sheltering Tree, Inc., a Nebraska nonprofit corporation. "Nonrecourse Deductions" has the meaning set forth in Section 1.704-2(b)(1) of the Regulations. The amount of Nonrecourse Deductions for a Company Fiscal Year equals the excess, if any, of the net increase, if any, in the amount of Partnership Minimum Gain during that Fiscal Year over the aggregate amount of any distributions during that Fiscal Year of proceeds of a Nonrecourse Liability that are allocable to an increase in Partnership Minimum Gain,determined according to the provisions of Section 1.704-2(c). "Nonrecourse Liability" has the meaning set forth in Section 1.752-1(a)(2) of the Regulations. "Partnership Minimum Gain" has the meaning set forth in Section 1.704-2(d) of the Regulations. 5 681510.3 "Percentage Interest" means the percentage of Interest set forth for the Members on Exhibit"A". "Person" means any individual, partnership, corporation, trust, limited liability company or other entity. "Profits" and "Losses" means, for each Fiscal Year or other period, an amount equal to the Company's taxable income or loss for such year or period, determined in accordance with Code Section 703(a) (for this purpose,all items of income, gain, loss, or deduction required to be stated separately pursuant to Code Section 703(a)(1) shall be included in taxable income or loss), with the following adjustments: (i) Any income of the Company that is exempt from federal income tax and not otherwise taken into account in computing Profits or Losses pursuant to this definition shall be added to such taxable income or loss; (ii) Any expenditures of the Company described in Code Section 705(a)(2)(B) or treated as Code Section 705(a)(2)(B) expenditures pursuant to Regulations Section 1.7041(b)(2)(iv)(i), and not otherwise taken into account in computing Profits or Losses pursuant to this definition shall be subtracted from such taxable income or loss; (iii) In the event the Gross Asset Value of any Company asset is adjusted pursuant to subparagraph (ii) or (iv) of the.definition of Gross Asset Value hereof, the amount of such adjustment shall be taken into account as gain or loss from the disposition of such asset for purposes of computing Profits or Losses; (iv) Gain or loss resulting from any disposition of Property with respect to which gain or loss is recognized for federal income tax purposes shall be computed by reference to the Gross Asset Value of the property disposed of notwithstanding that the adjusted tax basis of such property differs from its Gross Asset Value; (v) In lieu of the depreciation, amortization, and other cost recovery deductions taken into account in computing such taxable income or loss, there shall be taken into account Depreciation for such Fiscal Year or other period, computed in accordance with the definition of Depreciation hereof; and (vi) Notwithstanding any other provision of this definition of "Profits and Losses," any items which are specially allocated pursuant to Section 3.3 or Section 3.4 hereof shall not be taken into account in computing Profits or Losses. "Project" shall mean the 24-unit multi-family residential real estate project planned in Omaha, Nebraska, consisting of 20 one-bedroom units for developmentally disabled adults and 4 manager units,to further the purposes of the Company,as set forth in Section 1.3 hereof. "Property" means all real and personal property acquired by the Company and any improvements thereto,and shall include both tangible and intangible property. "Regulations" means the Income Tax Regulations, including Temporary Regulations, promulgated under the Code, as such Regulations may be amended from time to time (including corresponding provisions of succeeding Regulations). 6 681510.3 "Transfer" means, as a noun, any voluntary or involuntary transfer, sale, pledge, hypothecation, grant of security interest, or other disposition and, as a verb, voluntarily or involuntarily to transfer,sell,pledge,hypothecate, grant a security interest or otherwise dispose of. ARTICLE II MEMBERS'CAPITAL CONTRIBUTIONS;REPRESENTATIONS AND WARRANTIES, AND COVENANTS 2.1 Members' Capital Contributions. The names, addresses, initial Capital Contributions, and Percentage Interests of the Members are set forth on Exhibit "A" attached hereto. 2.2 Other Matters Relating to Company Capital. (a) Except as otherwise provided in this Agreement, no Member shall demand or receive a return of its Capital Contributions or withdraw from the Company without the Consent of the Members. If a Member withdraws in violation of this Section 2.2(a), its Interest shall not be liquidated and it shall forfeit all rights as a Member except the rights to allocations and distributions as provided in Article III as if it were still a Member. Under circumstances requiring a return of any Capital Contributions, no Member shall have the right to receive property other than cash except as may be specifically provided herein. (b) No Member shall receive any interest, salary or drawing with respect to its Capital Contributions or its Capital Account or for services rendered on behalf of the Company or otherwise in its capacity as a Member, except as otherwise provided in this Agreement or upon Consent of the Members. (c) Except as otherwise provided by this Agreement, no Member shall be liable for the debts, liabilities, contracts or any other obligations of the Company. Except as otherwise provided by this Agreement, any other agreements among the Members, or applicable state law,a Member shall be liable only to make its initial Capital Contribution as set forth on Exhibit "A" and shall not be required to lend any funds to the Company or, after its Capital Contributions have been paid, to make any additional contributions to the Company. Without limiting the generality of the foregoing,no Member shall have any personal liability for the repayment of any Capital Contributions to any other Member. Any member may make additional Capital Contributions from time to time. (d) Notwithstanding anything in this Section 2.2 to the contrary, Non- Managing Member shall be obligated to make any capital contributions to the Company that are required in order to allow the Company to reimburse and indemnify Managing Member and/or its principals for any amounts expended by said parties with respect to any guaranty made by such parties to lenders and/or investors in connection with the financing for the Project pursuant to Section 2.4 below. 2.3 Member Representations and Warranties. As of the date hereof, each of the statements contained in this Section 2.3 shall be true, accurate, and constitute full disclosure of all facts relevant to the matters contained therein, and such warranties and representations shall survive the execution of the Agreement. 7 681510.3 (a) The Managing Member represents and warrants that it is a limited liability company organized and validly existing under the laws of the State of Nebraska and has the requisite power and authority to enter into and carry out the terms of this Agreement; (b) The Non-Managing Member represents and warrants that it is a nonprofit corporation duly organized and validly existing under the laws of the State of Nebraska, has the requisite power and authority to enter into and carry out the terms of this Agreement, and has the development of affordable housing as one of its stated purposes in its organization documents; (c) Each Member hereby represents and warrants that such Member has taken all corporate action required to be taken by such Member to consummate this Agreement and no further approval of any board, court, or other body is necessary in order to permit such Member to consummate this Agreement; (d) Each Member hereby represents and warrants to the best of such Member's knowledge, neither the execution and delivery of this Agreement, nor the performance of or the compliance with this Agreement, has resulted (or will result) in any violation of, or be in conflict with, or invalidate, cancel, or make inoperative, or interfere with, or constitute a default under, or result in the creation of any lien, encumbrance, or any other charge upon the Property pursuant to any charter or bylaw provision, partnership agreement, operating agreement, trust agreement, mortgage, deed of trust, indenture, contract, agreement, permit,judgment, decree,or order to which such Member is a party or by which any Property is bound,and there is no default and no event or omission has occurred which,but for the passing of time or the giving of notice, or both, would constitute a default on the part of such Member under this Agreement;and (e) Each Member hereby represents and warrants to the best of such Member's knowledge, there is no action, proceeding, or investigation, pending or threatened (nor any basis therefore) which questions, directly or indirectly, the validity or enforceability of this Agreement as to such Member or which would materially and adversely affect any of the Property or such Member's ability to enter into and comply with the terms of this Agreement and to fulfill all of such Member's obligations thereunder. 2.4 Risks&Liability. The Managing Member and/or its principals shall be obligated to provide any and all guarantees that may be required by lenders and/or investors in connection with the financing for the Project; provided, however, that Managing Member and its principals shall be entitled to reimbursement from Net Cash pursuant to Section 4.1(a) below, and if necessary,from additional capital contributions made by Non-Managing Member pursuant to Section 2.2(d) above. Each Member acknowledges the risks inherent in real estate development transactions that could result in unlimited losses including the loss of all scheduled profits, invested equity and personal or corporate assets used as collateral. 2.5. Non-Managing Member's Supportive Services. The Non-Managing Member covenants to provide, at its sole cost and expense, supportive services to the developmentally disabled residents of the Project in order to allow such residents to live independently within their respective residential units. 8 681510.3 ARTICLE III ALLOCATIONS 3.1 Profits. After giving effect to the special allocations set forth in Sections 3.3 and 3.4 hereof,Profits for any Fiscal Year shall be allocated to the Members as follows: (a) 51.00% to the Non-Managing Member;and (b) 49.00% to the Managing Member. 3.2 Losses. After giving effect to the special allocations set forth in Sections 3.3 and 3.4 hereof, Losses for any Fiscal Year shall be allocated as set forth in Section 3.2(a) below, subject to the limitation in Section 3.2(b)below. (a) Losses for any Fiscal Year shall be allocated to the Members in the same proportions as Profits are allocated to the Members pursuant to Section 3.1 above. (b) The Losses allocated pursuant to Section 3.2(a)hereof shall not exceed the maximum amount of Losses that can be so allocated without causing any Member to have an Adjusted Capital Account Deficit at the end of any Fiscal Year. All Losses in excess of the limitations set forth in this Section 3.2(b) shall be allocated to those Members for whom such allocations would not create or increase the amount of an Adjusted Capital Account Deficit. 3.3 Special Allocations. The following special allocations shall be made in the following order: (a) Minimum Gain Chargeback. Notwithstanding any other provision of this Article III, if there is a net decrease in Partnership Minimum Gain attributable to Nonrecourse Liabilities during any taxable year, each Member shall be specially allocated a pro rata portion of each of the Company's items of income and gain for such year (and, if necessary for subsequent years) in proportion to, and to the extent of, an amount equal to each Member's share of the net decrease in Partnership Minimum Gain during such taxable year as determined in accordance with the provisions of Regulations Section 1.704-2(g)(2). In the event that the net decrease in the Partnership Minimum Gain occurs in connection with the disposition of all or any portion of the Property securing a Nonrecourse Liability, then any items of Company income or gain allocated in accordance with the previous sentence shall first consist of gain recognized by the Company as a result of such disposition. It is the intent that the allocations provided in this Section 3.3(a) shall be determined in accordance with and only to the extent required by Regulations Sections 1.704-2(f)and 1.704-2(j)(2)(i). (b) Member Minimum Gain Chargeback. Notwithstanding any other provision of this Article III except Section 3.3(a), if there is a net decrease in Member Minimum Gain during any taxable year attributable to a Member Nonrecourse Debt, the Member(s) bearing the economic risk of loss with respect to such Member Nonrecourse Debt shall be specially allocated a pro rata portion of each of the Company's items of income and gain for such taxable year (and, if necessary, for subsequent years) in proportion to, and to the extent of, the amount of each Member's share of the net decrease in Member Minimum Gain during such taxable year as determined in accordance with the provisions of Treasury Regulation Section 1.704-2(i)(4). In the event that such net decrease in Member Minimum Gain occurs in connection with the disposition of all or any portion of the Property securing a Member Nonrecourse Debt, then any items of Company income or gain allocated in accordance with the previous sentence shall first consist of gain recognized by the Company as a result of such 9 681510.3 disposition. It is the intent that the allocations provided in this Section 3.3(b) shall be determined in accordance with and only to the extent required by Treasury Regulation Sections 1.704-2(i) and 1.7042(j)(2)(ii). (c) Qualified Income Offset. In the event any Member unexpectedly receives any adjustments, allocations, or distributions described in Section 1.704 -1(b)(2)(ii)(d)(4), 1.7041(b)(2)(ii)(d)(5), or 1.704-1(b)(2)(ii)(d)(6) of the Regulations,items of Company income and gain shall be specially allocated to each such Member in an amount and manner sufficient to eliminate, to the extent required by the Regulations, the Adjusted Capital Account Deficit of such Member as quickly as possible, provided that an allocation pursuant to this Section 3.3(c) shall be made only if and to the extent that such Member would have an Adjusted Capital Account Deficit after all other allocations provided for in this Article III have been tentatively made as if this Section 3.3(c) were not in the Agreement. (d) Gross Income Allocation. In the event any Member has a deficit Capital Account at the end of any Company Fiscal Year which is in excess of the sum of (i) the amount such Member is obligated to restore pursuant to any provision of this Agreement and (ii) the amount such Member is deemed to be obligated to restore pursuant to the penultimate sentences of Regulations Sections 1.704-2(g)(1) and 1.704-2(i)(5), each such Member shall be specially allocated items of Company income and gain in the amount of such excess as quickly as possible, provided that an allocation pursuant to this Section 3.3(d) shall be made only if and to the extent that such Member would have a deficit Capital Account in excess of such sum after all other allocations provided for in this Article III have been made as if Section 3.3(c) hereof and this Section 3.3(d) were not in the Agreement. (e) Nonrecourse Deductions. Nonrecourse Deductions for any Fiscal Year or other period shall be specially allocated to the Members in accordance with their Percentage Interests. (f) Member Nonrecourse Deductions. Any Member Nonrecourse Deductions for any Fiscal Year or other period shall be specially allocated to the Member who bears the economic risk of loss with respect to the Member Nonrecourse Debt to which such Member Nonrecourse Deductions are attributable in accordance with Regulations Sections 1.704-2(i)(1) and 1.704-2(i)(2). (g) Section 754 Adjustments. To the extent an adjustment of the adjusted tax basis of any Company asset pursuant to Code Section 734(b) or Code Section 743(b) is required, pursuant to Regulations Section 1.704-1(b)(2)(iv)(m), to be taken into account in determining Capital Accounts, the amount of such adjustment to the Capital Accounts shall be treated as an item of gain (if the adjustment increases the basis of the asset) or loss (if the adjustment decreases such basis) and such gain or loss shall be specially allocated to the Members in a manner consistent with the manner in which their Capital Accounts are required to be adjusted pursuant to such section of the Regulations. 3.4 Target Final Capital Account Balances. The allocations of Profits and Losses under this Agreement are intended to produce final Capital Account balances (Capital Account balances immediately prior to the liquidation of the Company or of a Member's Interest, after taking into account all allocations for fiscal periods through such point in time) that are at levels ("Target Final Balances") which permit liquidating distributions made in accordance with final Capital Account balances to equal the distributions which would occur if such liquidating proceeds were distributed in accordance with Section 4.1. To the extent that the tax allocation provisions of this Agreement would not produce the Target Final Balances, the Members agree 10 681510.3 to take such actions as are necessary to amend such tax allocation provisions to produce such Target Final Balances. Notwithstanding the other provisions of this Agreement, allocations of income, gain, loss and deduction (including items of gross income, gain, loss and deduction) shall be made prospectively as necessary to produce such Target Final Balances, and, to the extent such prospective allocations would not effect such result, the prior tax returns of the Company shall be amended to reallocate items of gross income, gain, loss and deductions to produce such Target Final Balances. 3.5 Other Allocation Rules. (a) For purposes of determining the Profits, Losses, or any other items allocable to any period,Profits, Losses,and any such other items shall be determined on a daily, monthly, or other basis, as determined by the Members, using any permissible method under Code Section 706 and the Regulations thereunder. (b) Except as otherwise provided in this Agreement, all items of Company income, gain, loss, deduction, and any other allocations, including credits, not otherwise provided for shall be divided among the Members in the same proportions as they share Profits or Losses,as the case may be,for the year. (c) The Members are aware of the income tax consequences of the allocations made by this Article III and hereby agree to be bound by the provisions of this Article III in reporting their shares of.Company income and loss for income tax purposes. (d) Solely for purposes of determining a Member's proportionate share of the "excess nonrecourse liabilities" of the Company within the meaning of Regulations Section 1.752-3(a)(3), the Members' interests in Company profits are in accordance with their Percentage Interests. (e) To the extent permitted by Section 1.704-2(h)(3) of the Regulations, the Members shall endeavor to treat distributions of Net Cash as having been made from the proceeds of a Nonrecourse Liability or a Member Nonrecourse Debt only to the extent that such distributions would cause or increase an Adjusted Capital Account Deficit for any Member. 3.6 Tax Allocations: Code Section 704(c). (a) In accordance with Code Section 704(c) and the Regulations thereunder, income, gain, loss, and deduction with respect to any property contributed to the capital of the Company shall,solely for tax purposes,be allocated among the Members to take account of any variation between the adjusted basis of such property to the Company for federal income tax purposes and its initial Gross Asset Value (computed in accordance with the definition of same under Section 1.8 of this Agreement). (b) In the event the Gross Asset Value of any Company asset is adjusted pursuant to subparagraph (ii) of the definition of Gross Asset Value hereof, subsequent allocations of income, gain, loss, and deduction with respect to such asset shall take account of any variation between the adjusted basis of such asset for federal income tax purposes and its Gross Asset Value in the same manner as under Code Section 704(c) and the Regulations thereunder. (c) Any elections or other decisions relating to such allocations shall be made by the Members in any manner that reasonably reflects the purpose and intention of this 11 681510.3 Agreement. Allocations pursuant to this Section 3.6 are solely for purposes of federal, state, and local taxes and shall not affect, or in any way be taken into account in computing, any Member's Capital Account or share of Profits, Losses, other items, or distributions pursuant to any provision of this Agreement. ARTICLE IV DISTRIBUTIONS 4.1 Net Cash. Except as otherwise provided in Article IX hereof, Net Cash, if any, shall be distributed to the Members, at such times as the Members may determine by Consent of the Members,but not less than annually,as follows: (a) Net Cash resulting from Company operations shall be distributed (i) first, to repay any debts owed by the Company to its Members or their respective principals; and (ii) second, to the Non-Managing Member. (b) Net Cash resulting from all sales and other dispositions (other than in the ordinary course of business) and all refinancings of Property shall be distributed (i) first, to the Non-Managing Member to refund any capital contributions made to the Company pursuant to Section 2.2(d); (ii) second, to repay any debts owed by the Company to its Members or their respective principals; (iii) third, to the Members in repayment of their respective positive capital account balances;and (iv)fourth, to the Members in accordance with their Percentage Interests. 4.2 Amounts Withheld. All amounts withheld pursuant to the Code or any provisions of any state or local tax law with respect to any payment or distribution to the Company or the Members shall be treated as amounts distributed to the Members pursuant to this Article IV for all purposes under this Agreement. The Company is authorized to withhold from distributions, or with respect to allocations, to the Members and to pay over to any federal, state, or local government any amounts required to be so withheld pursuant to the Code or any provisions of any other federal, state, or local law and shall allocate such amounts to the Members with respect to which such amount was withheld. ARTICLE V MANAGEMENT 5.1 Management of Company Affairs/Member Representatives. (a) The management of the Company shall be vested in the Managing Member, which shall have management authority on behalf of the Company, subject to those matters that have been expressly delegated to the Non-Managing Member pursuant to Section 5.3 below. Notwithstanding the foregoing, the Managing Member shall not, without the prior written approval of the Non-Managing Member, (a) take any action that could reasonably be foreseen to cause a recapture of any state or federal tax credits that may be awarded to the Project or (b) take any action that could be reasonably be foreseen to jeopardize the Non- Managing Member's or any of the Non-Managing Member's Affiliate's recognition of exemption under Section 501(c)(3) or 501(c)(4) of the Code. James Royer, Julie Stavneak, or any other officer of the Managing Member, shall be an authorized signatory of the Managing Member. (b) The Managing Member shall appoint one or more project managers for the Project (such individual(s) are referred to herein as the "Project Manager"), and the Non- 12 681510.3 Managing Member shall appoint a single point of contract for communication with the Project Manager (the "Non-Managing Member Representative"). The initial Non-Managing Member Representative shall be Shirley McNally. The Project Manager shall maintain regular communication with the Non-Managing Member Representative, meet with the Non-Managing Member Representative in person from time to time,and shall seek the Non-Managing Member Representative's input on decisions related to the development and operation of the Project; provided, however, except as otherwise expressly provided in this Agreement, the Managing Member, as the managing member of the Company, shall not be required to obtain the consent of either the Non-Managing Member Representative or the Non-Managing Member prior to undertaking any action or making any decision which the Managing Member is authorized to make or decide pursuant to this Agreement or the Act. 5.2 Compensation/Reimbursement of Members. A Member shall not be entitled to any fees or other compensation for the performance of its duties hereunder. 5.3 Initial Delegations of Authority. The Members hereby agree to the delegation of certain areas of primary responsibility as more fully set forth in this Section 5.3. The delegation of primary responsibility to a Member in accordance with this Agreement and this Section 5.3 does not eliminate the duty of such responsible Member to the other Members in accordance with this Agreement and applicable law. Each Member, in performing any actions within its area of primary responsibility, shall endeavor on behalf of the Company to serve the best interests of the Company and the Project. Except as otherwise provided: (a) Managing Member will be responsible for all of the development, financing,legal,operational,administrative and other related activities for the Project; (b) Managing Member will serve as the managing member for the Company; (c) Non-Managing Member will, through its Non-Managing Member Representative only and at the request of Managing Member: (i) assist in the design of the Project, and (ii) assist with public relations, community engagement and political engagement for the Project;and (d) Non-Managing Member will, at its sole cost and expense to the extent income from Company operations is insufficient, provide one or more employees or independent contractors of the Non-Managing Member who will serve as resident (i.e., on-site) manager(s) of the agreed upon program related services that will be provided by the Non- Managing Member to the Project. 5.4 Compensation and Loans. (a) Compensation and Reimbursement. Except as otherwise provided in this Agreement, or as determined upon the Consent of the Members, no Member shall receive any salary, fee, or draw for services rendered to or on behalf of the Company. Unless specifically provided for herein or otherwise determined upon the Consent of the Members, no Member shall receive any fee from the Company or any other entity in connection with any loan or equity financing obtained by the Company in connection with the conduct of its business, and in the event of any such fees otherwise payable to a Member by a Person other than the Company, such Member shall assign its rights to such fees to the Company and such fees shall be paid directly to the Company. 13 681510.3 (b) Expenses. A Member may charge the Company for any direct expense reasonably incurred in connection with the Company's business. (c) Loans. Any person may, with the Consent of the Members, lend or advance money to the Company. If any Member shall make any loan or loans to the Company or advance money on its behalf, the amount of any such loan or advance shall not be treated as a Capital Contribution but shall be a debt due from the Company. The amount of any such loan or advance by a lending Member shall be repayable upon such terms as the Members shall determine (upon the Consent of the Members). (d) Predevelopment Expenses. All costs and expenses in connection with the formation of this Company and all Project predevelopment costs and expenses, including, but not limited to, legal, development,consultant and accounting fees, costs of inspections,surveys, studies and other like expenses shall be incurred by the Non-Managing Member, and the payment thereof (i) shall be considered an advance of money to the Company by the Non- Managing Member under Section 5.4(c) above, (ii) shall be deemed made as of the date incurred whether prior or subsequent to the date hereof,and (iii) shall be repaid out of Company funds. 5.5 Tax Matters Partner. For the purposes of Subchapter C of Chapter 63 of the Code, the Managing Member shall serve as the "Tax Matters Partner" of the Company and, as such, shall have all of the rights and obligations given to a Tax Matters Partner under said Subchapter. 5.6 Failure to Agree. In the event the Members fail to agree on any matter requiring the Consent of the Members, then the Members shall meet within 3 days of written request of the other Member (provided that such notice may be reduced to 24 hours if the lack of agreement will have an adverse effect on the Company or the Members unless acted upon immediately), and shall use good faith efforts to attempt to resolve such disagreement, first taking into account the furtherance of the charitable purpose of the Non-Managing Member or any of its Affiliates, then taking into account best interests of the Members and any guarantees they may have delivered in connection with the Project. In the event that the Members, despite good faith efforts to resolve the disagreement, fail to reach agreement by the end of the second full business day after the meeting, the decision of the Managing Member shall control absent such decision resulting in a violation of applicable law, regulation or a breach of any documents to which the Company is a party; provided, however, that Managing Member's decision shall not control with respect to the following matters requiring Consent of the Members: (a) amendments of the Operating Agreement pursuant to Article VII, and (b) transfers of membership interests pursuant to Section 8.1. 5.7 Engagements by the Company. The Managing Member may engage, on behalf and at the expense of the Company, such persons, firms or corporations as the Managing Member in its reasonable judgment shall deem advisable for the conduct and operation of the business of the Company, including managers, leasing, rental and sales agents and brokers, mortgage bankers, lawyers, accountants, architects, engineers, consultants, contractors, subcontractors and purveyors of other services or materials for the Company on such terms and for such compensation or costs as the Managing Member in its reasonable judgment shall 14 681510.3 determine. 5.8 Employment of Affiliates. The Managing Member may, on behalf and at the expense of the Company, engage any Member, any member, partner, or shareholder of either a Member or an Affiliate of any Member to render services or provide goods to the Company, provided that the fees or other amounts payable for such services or goods are comparable to those prevailing in arm s-length transactions for similar services or goods in connection with projects similar to the Project. 5.9 Liability of the Members. The Members and their respective Affiliates, agents and employees shall not be liable, responsible or accountable in damages or otherwise to the Company or any of the Members or their successors or assigns for any acts performed or omitted within the scope of its authority as a Member, or otherwise conferred on the Members and such Affiliates, agents and employees by this Agreement, provided that the Members or such Affiliates, agents or employees shall act in good faith and shall not be guilty of willful misconduct or gross negligence. 5.10 Company Indemnification of Members. The Company shall indemnify, defend, and hold harmless the Members and their respective principals, Affiliates, employees and agents, or their respective successors, executors, administrators or personal representatives from and against any loss, liability, damage, cost, or expense (including reasonable attorneys' fees) sustained or incurred (i) as a result of any act or omission concerning the business or activities of the Company or (ii) pursuant to any guaranty provided to a lender or investor in connection with the Project, provided that such Member or any principal, Affiliate, employee, or agent thereof is not guilty of gross negligence, willful misconduct or violation of fiduciary duty and was acting in good faith within what he, she, or it reasonably believed to be the scope of his, her, or its authority for a purpose which he, she, or it reasonably believed to be not opposed to the best interests of the Company. Except as expressly set forth in Sections 2.2(d) and 2.4 above, the foregoing indemnity shall not be enforceable against any Member personally but solely from such Member's interest in the Company. ARTICLE VI BOOKS AND RECORDS 6.1 Books and Records. The Company shall keep adequate books and records at the office of the Managing Member, setting forth a true and accurate account of all business transactions arising out of and in connection with the conduct of the Company. Any Member or its designated representative shall have the right, at any reasonable time, to have access to and inspect and copy the contents of such books or records. 6.2 Reports. The Managing Member shall be responsible for preparing such reports of the Company that it deems appropriate, as required by law, or as may reasonably be requested by the Members. 6.3 Tax Information. Necessary tax information shall be delivered to each Member after the end of each Fiscal Year of the Company. Every effort shall be made to furnish such information within 75 days after the end of each Fiscal Year. 15 681510.3 ARTICLE VII AMENDMENTS;MEETINGS 7.1 Amendments. Amendments to this Agreement may be proposed by any Member and shall be adopted only upon the Consent of the Members. 7.2 Special Meetings. Special meetings of the Members, for any purpose or purposes, shall be called by the Managing Member at the request of any Member. ARTICLE VIII TRANSFERS OF INTERESTS 8.1 Restriction on Transfers. (a) Except as provided in Section 8.1(c), no Member shall Transfer all or any portion of its Interest except upon the Consent of the Members. For purposes of this Agreement, the Transfer of an interest in either Member which results in a change in the control of such Member, as such control exists as of the date of this Agreement, shall constitute and be deemed a Transfer of an Interest in the Company subject to the foregoing restriction. Any transferee of an Interest or any proportion thereof shall agree to be bound by the terms of this Agreement. (b) Restrictions on Withdrawal. No Member shall withdraw from the Company without the Consent of the Members except pursuant to Section 2.2(a). (c) Permitted Transferees. Notwithstanding the provisions of Section 8.1(a) hereof, any Member shall be entitled to transfer all, but not less than all, of its Interest in the Company to (i) any for-profit corporation,partnership,trust, or limited liability company which is owned and controlled 100% by such Member or the Member's members, (ii) any not-for- profit corporation which is controlled 100% by such Member, or (iii) any for-profit corporation, partnership, trust, or limited liability company, or not for-profit corporation owning and controlling such Member or under common ownership and control with such Member (herein a "Permitted Transferee"),and to delegate its responsibilities hereunder to such transferee. In the event of a transfer under this Section 8.1(c), the transferor Member shall guaranty the performance by the Permitted Transferee of all of the transferor Member's obligations hereunder. All Permitted Transferees shall be obligated to enter into an assignment and assumption agreement with the Members and the Company in form and substance acceptable to all of the Members. Notwithstanding anything herein to the contrary, a Member shall not make a transfer to a Permitted Transferee, although allowed under this Agreement, if the same would cause the Company to be in breach of any obligation in any agreement binding upon the Company. 8.2 Legend. Each Member hereby agrees that the following legend shall be placed upon any ownership certificate or any other document or instrument evidencing ownership of Interests: The Interest represented by this document is subject to restrictions as to its sale, transfer, hypothecation, or assignment as set forth in the Operating Agreement and agreed to by each Member. Said restrictions provide, among other things, that no Interest may be transferred without the consent of all Members in compliance with the terms of the Operating Agreement. 16 681510.3 Notwithstanding the foregoing, no such instrument or certificate evidencing ownership of Interest shall be issued except with the Consent of the Members. 8.3 Distributions and Allocations in Respect to Transferred Interests. If any Interest is sold, assigned, or transferred during any accounting period in compliance with the provisions of this Article VIII, Profits, Losses, each item thereof, and all other items attributable to the transferred Interest for such period shall be divided and allocated between the transferor and the transferee by taking into account their varying interests during the period in accordance with Code Section 706(d), using any conventions permitted by law and selected by the Members. All distributions on or before the date of such transfer shall be made to the transferor, and all distributions thereafter shall be made to the transferee. 8.4 Waiver of Partition. No Member shall, either directly or indirectly, take any action to require partition or appraisement of the Company or of any of its assets or properties or cause the sale of any Property, and notwithstanding any provisions of applicable law to the contrary, each Member (and its legal representatives, successors, or assigns) hereby irrevocably waives any and all rights to maintain any action for partition or to compel any sale with respect to its Company Interest, or with respect to any Property of the Company, except as expressly provided in this Agreement. 8.5 Members' Put and Call Options. At any time after completion of the Project's 15th year of operation, (a) Managing Member shall have the right to require Non-Managing Member to purchase its Interest in the Company,and(b) Non-Managing Member shall have the right to purchase Managing Member's Interest in the Company. In either event either such right is exercised, the purchase price paid by Non-Managing Member to Managing Member shall be an amount equal to the following: (i) the sum of all then outstanding operating advances made by Managing Member to the Company and any other amounts then owed by the Company to Managing Member and/or its principals; (ii) any and all exit taxes incurred by Managing Member as a result of the sale of its Interest to Non-Managing Member; and (iii) all closing cost incurred by Managing Member in connection with the closing of the sale of its Interest in the Company to Non-Managing Member. In the event Managing Member or Non- Managing Member exercises its foregoing option, Non-Managing Member shall indemnify, defend and hold harmless the Managing Member and its principals from and against any and all loss and liability associated with the Project and incurred by the Managing Member or its principals subsequent to the date that its Interest is acquired by the Non-Managing Member. ARTICLE IX DISSOLUTION AND WINDING UP 9.1 Liquidating Events. The Company shall dissolve and commence winding up and liquidating upon the first to occur of any of the following ("Liquidating Events"): (a) The Consent of the Members to dissolve, wind up, and liquidate the Company; (b) The sale of all or substantially all of the Property;or (c) The happening of any other event that makes it unlawful, impossible, or unfeasible according to the Managing Member's judgment to carry on the business of the Company. 17 681510.3 The Members hereby agree that, notwithstanding any provision of the Act, the Company shall not dissolve prior to the occurrence of a Liquidating Event. If it is determined, by a court of competent jurisdiction, that the Company has dissolved prior to the occurrence of a Liquidating Event, the Members hereby agree to continue the business of the Company without a winding up or liquidation. 9.2 Winding Up; General Rule. Upon the occurrence of a Liquidating Event, the Company shall continue solely for the purpose of winding up its affairs in an orderly manner, liquidating its assets, and satisfying the claims of its creditors and Members. No Member shall take any action that is inconsistent with, or not necessary to or appropriate for, the winding up of the Company's business and affairs. The Members shall appoint a Person that can be one of the Members ("Liquidation Manager") to be responsible for overseeing the winding up and dissolution of the Company. The Liquidation Manager shall take full account of the Company's liabilities and assets, and the Company's non-case assets shall be liquidated as promptly as is consistent with obtaining the fair value thereof. The proceeds realised from the liquidation of the Property, to the extent sufficient thereof, shall be applied and distributed in the following order: (a) First, to the payment and discharge of all of the Company's debts and liabilities to creditors, including Members; (b) Second, to the establishment of any reserves (to be held by the Liquidation Manager in an interest-bearing account) which the Liquidation Manager may deem necessary or appropriate for any contingent or unforeseen liabilities or obligations of the Company; provided however, that at the expiration of such time as the Liquidation Manager deems necessary or appropriate, the balance of such reserves remaining after payment of such liabilities or obligation shall be distributed by the Liquidation Manager in the manner hereinafter set forth in Section 9.2(c);and (c) Third, to the Members in accordance with the distribution of Net Cash under Section 4.1 hereof. 9.3 Compliance With Timing Requirements Regulations; Deficit Capital Account Balance. In the event the Company is "liquidated" within the meaning of Regulation Section 1.704-1(b)(2)(ii)(g), distributions shall be made pursuant to this Article IX to the Members who have positive Capital Accounts in compliance with Regulations Section 1.704-1(b)(2)(ii)(b)(2). If any Member has a deficit balance in its Capital Account (after giving effect to all contributions, distributions and allocations for all taxable years, including the year during which such liquidation occurs), such Member shall have no obligation to make any contribution to the capital of the Company with respect to such deficit, and such deficit shall not be considered a debt owed to the Company or to any other Person for any purpose whatsoever. If the Members so determine, a pro rata portion of the distributions that would otherwise be made to the Members pursuant to this Article IX may be: (a) distributed to a trust established for the benefit of the Members for the purpose of liquidating Company assets, collecting amounts owed to the Company, and paying any contingent or unforeseen liabilities or obligations of the Company or of the Members arising out of or in connection with the Company. The assets of any such trust shall be distributed to the Members from time to time as they may determine, in the same proportions as the amount distributed to such trust by the Company would otherwise have been distributed to the Members pursuant to this Agreement;or 18 681510.3 (b) withheld to provide a reasonable reserve for Company liabilities (contingent or otherwise) and to reflect the unrealised portion of any installment obligations owed to the Company, provided that such withheld amounts shall be distributed to the Members as soon as practicable. 9.4 Deemed Distribution and Recontribution. Notwithstanding any other provision of this Article IX, in the event the Company is liquidated within the meaning of Regulations Section 1.704-1(b)(2)(ii)(g) but no Liquidating Event has occurred, the Property shall not be liquidated, the Company's liabilities shall not be paid or discharged, and the Company's affairs shall not be wound up. Instead,the Company shall be deemed to have distributed the Property in kind to the Members, who shall be deemed to have assumed and taken subject to all Company liabilities, all in accordance with their respective Capital Accounts. Immediately thereafter, the Members shall be deemed to have recontributed the Property in kind to the Company,which shall be deemed to have assumed and taken subject to all such liabilities. 9.5 Rights of the Members. Except as otherwise provided in this Agreement, (a) each Member shall look solely to the assets of the Company for the return of its Capital Contribution and shall have no right or power to demand or receive property other than cash from the Company in accordance with the terms hereof, and (b) no Member shall have priority over any other Member as to the return of its Capital Contributions, distributions, or allocations. ARTICLE X MISCELLANEOUS 10.1 Notices. Any notice, payment, demand, or communication required or permitted to be given by any provision of this Agreement shall be in writing and shall be delivered personally to the Person or to an officer of the Person to whom the same is directed, or sent by registered or certified mail, or by overnight courier, addressed as follows, or to such other address as such Person may from time to time specify by notice to the Members: (a) If to the Company, to the Company at the address set forth in Section 1.4 hereof with a copy to each Member;and (b) If to a Member,to the address set forth on Exhibit"A" attached hereto. Any such notice shall be deemed to be delivered, given, and received for all purposes as of the date so delivered, if delivered personally or by overnight courier, or as of five business days after the date on which the same was deposited in a regularly maintained receptacle for the deposit of United States mail, if sent by registered or certified mail, postage and charges prepaid. Any Person may from time to time specify a different address by notice to the Company and the Members. 10.2 Binding Effect. Except as otherwise provided in this Agreement,every covenant, term, and provision of this Agreement shall be binding upon and inure to the benefit of the Members and their respective heirs, legatees, legal representatives, successors, transferees, and assigns. 10.3 Construction. Every covenant, term, and provision of this Agreement shall be construed simply according to its fair meaning and not strictly for or against any Member. 10.4 Time. Time is of the essence with respect to this Agreement. 19 681510.3 10.5 Headings. Section and other headings contained in this Agreement are for reference purposes only and are not intended to describe, interpret, define, or limit the scope, extent, or intent of this Agreement or any provision hereof. 10.6 Severability. Every provision of this Agreement is intended to be severable. If any term or provision hereof is illegal or invalid for any reason whatsoever, such illegality or invalidity shall not affect the validity or legality of the remainder of this Agreement. 10.7 Incorporation by Reference. Every exhibit, schedule, and other appendix attached to this Agreement and referred to herein is hereby incorporated in this Agreement by reference. 10.8 Further Action. Each Member, upon the request of any other Member, agrees to perform all further acts and execute, acknowledge, and deliver any documents which may be reasonably necessary,appropriate, or desirable to carry out the provisions of this Agreement. 10.9 Variation of Pronouns. All pronouns and any variations thereof shall be deemed to refer to masculine, feminine, or neuter, singular or plural, as the identity of the Person or Persons may require. 10.10 Governing Law. The laws of the State of Nebraska shall govern the validity of this Agreement, the construction of its terms, and the interpretation of the rights and duties of the Members. 10.11 Counterpart Execution. This Agreement may be executed in any number of counterparts with the same effect as if all of the Members had signed the same document. All counterparts shall be construed together and shall constitute one agreement. 10.12 Entire Agreement. This Agreement constitutes the entire agreement and understanding among the Members hereof and supersedes any prior understandings or written or oral agreements among them respecting the subject matter hereof. 10.13 Creditors. No provision of this Agreement shall be construed for the benefit of or be enforceable by any creditor of the Company. [SIGNATURE PAGE TO FOLLOW 20 681510.3 IN WITNESS WHEREOF, the parties have entered into this Agreement as of the day first above set forth above. MEMBERS: J DEVELOPMENT LIMITED LIABILITY COMPANY,a Nebraska limited liability company By: Julie Stavneak,Manager SHELTERING TREE, INC.,a Nebraska nonprofit corporation By: Shirley McNally,President 21 681510.3 EXHIBIT "A" Members and Percentage Interests Percentage Initial Capital Name Address Interests Contributions J Development Limited 142 W. Broadway,Suite 140 49.00% $0 Liability Company Council Bluffs,Iowa 51503 Sheltering Tree,Inc. 1323 William 51.00% $250,000 Omaha,Nebraska 68108 22 681510.3 Example HOME PROGRAM NON-RECOURSE REPAYABLE LOAN PROMISSORY NOTE PROJECT: Sheltering Tree DEVELOPER: Sheltering Tree, Inc.J. development Limited Liability Company, 7400 Military Avenue, LLC PLACE: 7400 Military Ave. Omaha, Nebraska LOAN NO.: DATE: LOAN AMOUNT: 250,000 ASSISTED UNITS: 6 LEGAL DESCRIPTIONS: (commonly known as ) FOR VALUE RECEIVED, the Undersigned jointly and severally promises to pay to the order of the CITY OF OMAHA (hereinafter referred to as the "City"), acting by and through the Director of the Planning Department or its successors, the Principal sum of Two Hundred Fifty Thousand ($250,000.00). Payment shall be deferred for twenty (20) years beginning and ending ("Deferred Period"). During the Deferral Period, interest shall accrue at one- quarter of one percent (.25%) per annum. Following the Deferral Period, interest rate shall be Zero (0%); and the Principal Loan amount of Two Hundred Fifty thousand dollars ($250,000) plus interest accrued during the Deferral Period in the amount of Twelve Thousand Five Hundred dollars ($12,500.00) shall begin to amortize monthly over thirty (30) years (360 months) in equal monthly payments of $729.16. All unpaid principal and accrued and unpaid interest shall be due and payable December 1, 2066. Except as provided in the Affordable Housing Program Rider attached hereto and incorporated herein, this Non-recourse Repayable Loan shall become due and payable upon the sale, conveyance, grant, mortgage, assignment or other transfer of interest by the Undersigned in said property during the term of this Non-recourse Repayable Loan Promissory Note. All payments on this Note shall be made in lawful money of the United States at the principal office of the City of Omaha, Planning Department, 1819 Farnam Street, Suite 1100, Omaha, Nebraska, or at such other place or places the City shall designate in writing for such purposes. 1 Approved 4/5/2010 The Undersigned reserve(s) the right to prepay at any time all or any part of the principal amount of this Note without the payment of penalties or premiums. In the event that the Undersigned shall fail to pay any installment of principal amount when due, and such default in payment continues for a period of fifteen (15) days after written notice thereof has been given by the City to the Undersigned, the City may at any time thereafter, at its option, declare the entire unpaid balance of principal, plus accrued interest, at once due and owing, without further notice. Failure of the City to exercise such option shall not constitute a waiver of such default. No default shall exist by reason of nonpayment of any required installment of the principal amount of this Note so long as the amount of any optional prepayments already made pursuant hereto equals or exceeds the amount of the required installments. If the principal amount is not paid during the calendar month which includes the due date, the Undersigned shall pay to the City a late charge of 4% per calendar month, or fraction thereof, on the amount past due and remaining unpaid. This note is secured by no less than a Fourth Deed of Trust subordinate to superior liens in an aggregate amount not to exceed Four Million Five Hundred Two, Eight Hundred Seventy- Six Thousand ($4,502,876.00) or a higher amount approved by the Assistant Planning Director after all contractor and subcontractor bids have been received, duly filed in the Office of the Douglas County Register of Deeds. In the event that this Note should be reduced to judgment, such judgment shall bear interest thereon at the statutory rate, but not to exceed 9%per annum. If suit is instituted by the City to recover upon this Note, the Undersigned agrees to pay all costs of such collection, including reasonable attorneys' fees and court costs. This loan is a non-recourse loan; therefore, in the event of a default, the City shall rely solely upon the Property which is secured by the deed of trust which is the security for the non- recourse repayable loan promissory note and will not initiate or participate in any claim or proceedings against the maker of the non-recourse repayable loan promissory note members or its partners (or the officers, directors or shareholders of any partner) for payment of any sum due under this non-recourse repayable loan promissory note or any other sum due under the deed of trust. DEMAND, protest and notice of demand and protest are hereby waived, and the Undersigned hereby waives, to the extent authorized by law, any and all homestead and other exemption rights which otherwise would apply to the debt evidenced by this Note. 2 Approved 4/5/2010 IN WITNESS WHEREOF, this Note has been duly executed by the Undersigned, as of the day and year set forth below. BY: BY: BY: APPROVED AS TO FORM: CITY ATTORNEY DATE 3 Approved 4/5/2010 Pt. 220 2 CFR Ch. II (1-1-12 Edition) member of Congress in connection with ob- §220.10 Scope. taining 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- tem 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 petted 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.31,2005) 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 2220.15 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 TERMINING COSTS APPLICABLE TO GRANTS, educational institution shall require CONTRACTS.AND OTHER AGREEMENTS WITH the FFRDC to comply with the Cost EDUCATIONAL INSTITUTIONS 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: $220.5 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 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. 339), 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." piicable 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, hagardous 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 from the United for the performance of experimental, devel- for States"). The Act provides that each con- theop rights, or research work shalleprovide and tractor or subrecipient shall be prohibited tthe of the Federal Government in from inducing, by any means, any person accordancece recipient in7 any resulting ppart 4 invention, Rigtto with 37 CFR 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 be 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 canoed and Assisted Construction"). Under the Federal awarding agency and the Re- this Act,contractors shall be required to pay gional 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 See- 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 §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 responsib;litlec. (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 prose- agency to disallow costs and recover dares 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) Propertyudit requirementsmanagement in§t15.26. formance, and other reports as required ments roquire by the terms and conditions of the ai o§ds retention.31 through as2 required. award. The Federal awarding agency (5) Records in §215.53. may approve extensions when re- quested by the recipient. (b)After closeout of an award, a rela- (b)Unless the Federal awarding agen- tionship created under an award may cy authorizes an extension, a recipient be modified or ended in whole or in 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 flogs. considered and provisions made for (c) The Federal awarding agency continuing responsibilities of the re- shall make prompt payments to are- 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- §216.78 Collection of amounts due: fund any balances of unobligated cash 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. 0MB 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 1.04. OMB Circulars and Guidance g 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 putation 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- §215.60 Purpose of termination and ments pending correction of the defi- 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 §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 a agency appeals. In taking an (2) By the Federal awarding g Y 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 fled 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 mination, are noncanoellable. 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- pension. The enforcement remedies cipient materially fails to comply with identified in this section, including 1113 §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, ing. 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- merits 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 tamed. 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 sion 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 merit 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 §215.52 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 section; size and complexity of the particular (B) If, in the Federal awarding agen- project or program. However, the re- cy's opinion, the recipient's accounting port shall not be required more fre- quently than quarterly or less fre- controls are adequate to minimize ex- quently than annually. A final report cessive Federal advances;or, shall be required at the completion of (C) When the electronic payment the agreement. mechanisms provide adequate data, (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 ap- 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 rem 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 nee- 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 §215.50 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 coin- 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 chiding, 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 grain performance. ability to meet the objectives of the (a) Recipients are responsible for award. This notification shall include a con- managing and monitoring each project, statement of the action taken or program, subaward, function or activ- to resolve the situation.d any assistance needed ity supported by the award. Recipients (gto resolve the shall monitor subawards to ensure sub- Federal awardingagencies may make site visitss,, 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 100 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- Lion 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 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 tions of the contract. required within the time specified. §215.48 Contract provisions. (2)A performance bond on the part of the contractor for 100 percent of the The recipient shall include, in addi- contract price. A "performance bond" tion 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 §215.45 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- Lions 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, Bible. 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 busi- 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. (3) Consider in the contract process (2) The procurement is expected to whether firms competing for larger fxceed the small purchase thresholdn contracts intend to subcontract with fixed$25,000)a and41 U.S.C. 403awarded(currently small businesses, minority-owned omp is to be one b withoutfer i firms, and women's business enter- received or only bid or offer is prises. received in response to a solicitation. (4) Encourage contracting with con- (3) The procurement, which is ex- sortius of small businesses,minority- pected to exceed the small purchase m owned firms and women's business en- terprises specifies a brand name" terprises when a contract is too large product. for one of these firms to handle individ- (4) The proposed award over the ually. small purchase threshold is to be (5)Use the services and assistance,as awarded to other than the apparent appropriate, of such organizations as low bidder under a sealed bid procure the Small Business Administration and merit. the Department of Commerce's Minor- (5) A proposed contract modification ity Business Development Agency in changes the scope of a contract or in- the solicitation and utilization of creases the contract amount by more small businesses,minority-owned firms than the amount of the small purchase and women's business enterprises. threshold. • (c)The type of procuring instruments §215.45 Cost and price analysis. used(e.g., fixed price contracts, cost re- imbursable contracts, purchase orders, Some form of cost or price analysis and incentive contracts) shall be deter- shall be made and documented in the mined by the recipient but shall be ap- procurement files in connection with 9$ 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. flicts of interest as well as noncompeti- §215.41 Recipient responsibilities. tive practices among contractors that The standards contained in this sec- may restrict or eliminate competition Lion do not relievedsthe recipient o the or otherwise restrain trade. In order to iondoperform- contractual the reciespi arisingf ensure objective contractor under its contract(s).on The recipient is awe and eliminate unfair competitive responsible authority, without re- advantage, contractors that develop or courseh to the Federal awardingy, widraft specifications, requirements, agency, statements of work, invitations for regarding the settlement and satisfac- bids and/or requests for proposals shall Lion of all contractual and administra- be excluded from competing for such five 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- §215.42 Codes of conduct. 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 imam, 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 (1) 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 com- Lions 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 offs- (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 §215.37 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 facially 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- vide, within a reasonable time, the re- (e) Title to intangible property and debt instruments acquired under an search data so that they can be made available to the public through the pro- award or subaward vests upon acquisi- cedures established under the FOIA. If tion in the recipient. The recipient the Federal awarding agency obtains shall use that 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- fleet 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 7o (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: (I)Research data is defined as the re- Real property, equipment, intangible corded factual material commonly ac- property and debt instruments that are cepted in the scientific community as acquired or improved with Federal funds necessary to validate research findings, shall be held in trust by the re- but not any of the following: Prelimi- cipient as trustee for the beneficiaries nary analyses, drafts of scientific pa of the project or program under which 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- cludes physical objects(e.g.,laboratory tioes 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 §215.40 Purpose of procurement (B) Personnel and medical informa- standards tion and similar information the dis- closure 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 an a peer-reviewed scientific or tech- are obtained in an effective manner nical journal; or and an compliance with the provisions 96 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 plies are not needed for any other fed the proceeds, whichever is less, for the 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 curred. 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. (i) The equipment shall be appro- ocable right to reproduce, publish, or otherwise use the work for Federal pur- priately identified in the award oth- poses, and to authorize others to do so. erwise made known to the recipient in (b) Recipients are subject to applica- writing. (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 inven- 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- (111) When the Federal awarding erwise use the data first produced agency exercises its right to take title, under an award. 95 §215.34 2 CFR Ch. II (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 ceecls 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 tamed accurately and shall include the or required to sell the equipment, prop- following information. er sales procedures shall be established (i)A description of the equipment. which provide for competition to the (ii) 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 coin- 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 94 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 §215.34 Equipment. sible return. (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 to federally-owned property remains interest in the equipment. vested in the Federal Government. Re- (c) The recipient shall use the equip- cipients shall submit annually an in- meat in the project or program for listing of federally-owned which it was acquired as long as need- ventorypro- property in their custody to the Fed- ed,rcontinueshether not the project byr ed- eral awarding agency. Upon completion gram nad hto llb not encumbertd the of'the award or when the property is no eral funds and shall the Fed- longer needed, the recipient shall re- property ding agency.ut approvalWhenof not le ngdr port the property to the Federal award- eral awarding y longer pro- ing agency for further Federal agency neededram, for ecith original project ore utilization. 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 §215.30 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 property and equipment ac- provisions of part 215(OMB Circular A- quired with Federal funds as provided L10, "Uniform Administrative Require- 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. tiona,");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. eral 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 went whose cost was charged to a agency or its successor Federal award- 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 property attrib- provided it observes the provisions of utable to the Federal participation in §215.31 through§215.37. the project. 92 OMB Circulars and Guidance §215.29 Circular A-133, "Audits of States, visions of the Federal Acquisition Reg- Local Governments, and Non-Profit Or- elation(FAR)at 48 CFR part 31. ganizations." (b)State and local governments shall [70 FR 51880,Aug.31,20051 be subject to the audit requirements §215.28 Period of availability of funds. contained in the Single Audit Act Where a Amendments of 1996 (31 U.S.C. 7501- 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 ized 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 quirements 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 merits (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 ance 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. §215.26 2 CFR Ch. it (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 (I) When a Federal awarding agency prohibit the extension. makes an award that provides support (li)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 ents shall request prior written ap- FR 51880,Aug.31,2005] proval promptly from Federal awarding §216.26 Non-Federal audits. agencies for budget revisions whenever 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 i 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." §21525 Revision of hodget and pro. (7) The transfer of funds allotted for gram 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. nation purposes whenever appropriate. (d) No other prior approval require- (b) Recipients are required to report ments for specific items may 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 sec- (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- ing 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 §215.24 2 CFR Ch. II (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. program allowable cost in determining (1) The value of donated land and 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 the recipient as established by an inde- disposition When of agencyprogramincomeaucizes the de- pendent appraiser (e.g., certified real scribedr inn ar hs (b)(1) as of property appraiser or General Services his i paragraphsincomeo exc)(2)ess s Administration representative) and ofhis section, program in excess in certified by a responsible official of the any limitsc stipulateda shall be of 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 grain 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 §215.23 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 integral and necessary part of an ap- §215.23 Cost sharing or matching. proved project or program. Rates for (a) All contributions, including Bash 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 Mg 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 §215.22 2 CFR Ch. It (1-1-12 Edition) agency shall advance cash to the re- (2)Advances of Federal funds shall be eipient to cover its estimated disburse- deposited and maintained in insured ment needs for an initial period gen- accounts whenever possible, erally geared to the awardee's dis- (j) Consistent with the national goal burring cycle. Thereafter, the Federal of expanding the opportunities for awarding agenoy 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 CMVIIA 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 §215.22 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 trance 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- yment. eluded 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- dent 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 §215.16 2 CFR Ch. I1(1-1-12 Edition) §215.16 Resource Conservation and data to performance data and develop Recovery Act. unit cost information whenever prat- 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 lug 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 ment 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. taining to Federal awards, authoriza- Unless prohibited by statute or codi- tions, obligations, unobligated bal- fled regulation, each Federal awarding ances, 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 oer- 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 Pu rpose 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) ment 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 financial man, (6) Written procedures for deter- agement systems. mining the reasonableness, allocability (a) Federal awarding agencies shall and allowability of costs in accordance require recipients to relate financial with the provisions of the applicable 84 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 tame 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 eon- established by Federal statute. part, has not f formed to the termseandc conditions of §215.12 Forms for applying for Fed. a previous award, or is not otherwise eral assistance. responsible, Federal awarding agencies (a) Federal awarding agencies shall may impose additional requirements as needed,provided that such applicant or comply with the applicable report recipient is notified in writing as to: clearance requirements of 5 CFR part the nature of the additional requmre- 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., eipients shall comply with Federal p. 343). 83 §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 Snbawards. 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 ari 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, 1234,and 2015,and 49 CFR part 18. For awards subject to this part, all administrative requirements of codi- [69 FR 26281,May 11, 2004, as amended at 70 fied program regulations, program FR 51880,Aug.31,2005] manuals, handbooks and other non- Subpart B-Pre-Award regulatory materials which are incon- A sistent with the requirements of this Requirements part shall be superseded, except to the extent they are required by statute, or §215.10 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 §215.4 Deviations. pre-award matters to be used in apply- 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 §215.2 (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 lie and private non-profit organizations "award"in g 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 cies 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 §215.2 2 CFR Ch. 11(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 organic'ation 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 centage 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 tions made by third parties in accom- or accrual basis. For reports prepared pushing 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 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, (3) Other amounts becoming owed the award have been completed by the under programs for which no current recipient and Federal awarding agency. 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 from the unit acquisition cost in ac- cordance (1) Equipment means tangible non- 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 §215.1 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"a (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 by this part.However, this part applies (e) Relationship to previous issuance. to subawards made by State and local The guidance in this part previously Sub- governments to organizations covered was issuedA oa OMB oCf this part co Lain by this part. parts A through D of this contain the guidance that was in the attach- (4) Federal agencies may apply the ment to the OMB circular. Appendix A provisions of subparts A through D of this part to commercial organizations, wast this in part containsappendixoths guidance that foreign governments, organizations (f)in the Information Ctot. Furthere tahment- under the jurisdiction of foreign gov- at Infconce n g thist. a or- ernments, and international organiza- oration concerning this part may be ed- tamed by contacting the Office of Fed- tions.(c) OMB responsibilities. OMB is re- eral Financial Management, Office of spons OMble for: Management and Budget, Washington, (1)Issuing and maintaining the guid- DC 20503,telephone(202)395-3993. ante in this part. (g) Termination Review Date. 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- §215.1 Purpose. tions implementing the guidance in 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 tions. Federal awarding agencies shall not impose additional or inconsistent L See 5 CFR 1310.9 for availability of OMB requirements, except as provided in circulars. §§215.4, and 215.14 or unless specifically 78 {:J4TN,,.tt`IT INF 11M,,TeN- L PC: 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, 215.42 Codes of conduct. HOSPITALS, AND OTHER NON- 215.93 competition. ement PROFIT ORGANIZATIONS (OMB 215.45 Cost and price analysis.s CIRCULAR A-110) 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 216.60 Purpose of termination and enforce- ment, 215.10 Pu rpose. 215.61 Termination. 215.11 Pre-award policies. 215.62 Enforcement. 215.12 Forms for applying for Federal assist- MAC. Subpart D-After-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. tinuing responsibilities, 215.17 Certifications and representations. 215.73 Collection of amounts due, Subpart C-Post-Award Requirements APPENDIX A TO PART 215-CONTRACT PROVI- sroNs FINANCIAL AND PROGRAM MANAGEMENT AUTRORrry: 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 939. 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 prof 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, meats. 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 7 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 #Y20.15 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.31,2005] 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 Sec. research and development, training, 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. 220.35 Effective date of changes. sum agreements. 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 TERMINING COSTS APPLICABLE TO GRANTS, educational institution shall require CONTRACTS,AND OTHER AGREEMENTS WITH the FFRDC to comply with the Cost EDUCATIONAL INSTITUTIONS Accounting Standards and with the AuTHORrrr: 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: §220.5 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 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 mo- ment Opportunity" (30 FR 12319, 12935, 3 chanic and laborer on the basis of a standard CFR, 1964-1965 Comp., p. 339), 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 Ph 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 by Loans or Grants the United for the performance of experimental, devel- PartP States The Act provides fromtha each con- opmental, or research work shall provide for tractor or subrecipient shall be prohibited the rightsipiof the Federal Government in from inducing, by any means, any person theac recipient in37 any resulting invention, Rigtto employed in the construction,completion,or Inventions with by CFR part 401, "Rights is repair of public work, to give upanyand Made Nonprofit Organizations Govern- the 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 gional 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 §215.70 2 CFR Ch. 11 (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 regale- allowed costs resulting from the final tions(see§215.13). audit. Subpart D—After-the-Award §215.72 Subsequent adjustments and Requirements continuing respons1bisities. (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) Propudit requirementsge in§t15.26. require- formance,and other reports as required en4) Property 215. management by the terms and conditions of the ments o§ds5.31 throughntionas2 required. award. The Federal awarding agency (5) Records retention in may approve extensions when re- §215.53. quested by the recipient. (b)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 incy 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 prep or in agency implementing instruc- erty management as applicable, are Lions. 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- §215.73 Collection of amounts due. fund any balances of unobligated cash 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. oral 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 §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 putation 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 compute- 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- §215.60 Purpose of termination and 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 §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 coin- (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 Pied 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 mination,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- pension. The enforcement remedies cipient materially fails to comply with identified in this section, including IU3 §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. ing. have the right of timely and unre- stricted access to any books, docu- §215.53 Retention and access require- manta, 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 ex- 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 doe- lated to such documents. The rights of uments, statistical records, and all access in this paragraph are not lun- 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 tamed. 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 sion 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 §215.52 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 q„ire 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 section; size and complexity of the particular (B) If, in the Federal awarding agen- project or program. However, the re- cy's opinion, the recipient's accounting port shall not be required more fre- controls are adequate to minimize ex- quently than 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 clays quirements, Federal awarding agencies for annual and final reports. Exten- shall issue Instructions to require re- sions of reporting due dates may be ap- 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 §215.50 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 trap- 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 linen- (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 con- managing and monitoring each project, statement of the action taken or program, subaward, function or aotiv- to resolve the sdituation. any assistance needed 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 100 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 §216.46 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- Lion 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 de- §215.47 Contract administration. 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 tions of the contract. required within the time specified. (2)A performance bond on the part of §215.48 Contract provisions. the contractor for 100 percent of the The recipient shall include, in addi- contract price. A "performance bond" tion 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 §215.45 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 sue- 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, Bible. 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 purchase threshold whether firms competing for larger fixed at 41 U.S.C. 403 (11) (currently contracts intend to subcontract with $25,000) and is to be awarded without small businesses, minority-owned competition or only one bid or offer is firms, and women's business enter- received in response to a solicitation. prises. (4) Encourage contracting with con- (3) The procurement, which is ex- sortiums of small businesses,minority- pected 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 §215.4li 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 98 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. flicts 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 anoe 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 concerninF, 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- §215.42 Codes of conduct. 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 art- 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- tons in which the financial interest is petition. not substantial or the gift is an unso- (II) Requirements which the bidder/ licitecl 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 §215.37 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- vide, within a reasonable time, the re- (e) Title to intangible property and debt instruments acquired under an search data so that they can be made available to the public through the pro- award or subaward vests upon acquisi- cedures established under the FOIA. If tion in the recipient. The recipient the Federal awarding agency obtains shall use that 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- fleet 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: (i)Research data is defined as the re- Real property, equipment, intangible corded factual material commonly ac- property and debt instruments that are cepted in the scientific community as acquired or improved with Federal necessary to validate research findings, funds shall be held in trust by the re- but not any of the following: Prelimi- cipient as trustee for the beneficiaries nary analyses, drafts of scientific pa- of the project or program under which 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- cludes 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 §215.40 Purpose of procurement (B) Personnel and medical informa- standards. tion and similar information the dis- closure 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 §215.36 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 plies are not needed for any other the proceeds, whichever is less, for the fed- recipient's selling and handling ex- erally-sponsored project or program, penes. 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 curred. 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 inven- 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 meets." 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. §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 (i)A description of the equipment. which provide for competition to the (ii) 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 chiding 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 9l 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 to federally-owned property remains interest in the equipment. 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 ora nottrth as long aso pro- property in their custody to the Fed- ed,rwhethercontinues the project byr ed- eral awarding agency.Upon completion ral ad hto llb supportedtencumber the of the award or when the property is no eral funds and shall not the Fed- longer needed, the recipient shall re- property dwing agency.ut approvalWhenof the nger port the property to the Federal award- eral awarding y no longer ing agency for further Federal agency g for ecith original project ore uip- utilization. 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 §215.30 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 property and equipment ac- provisions of part 215(OMB Circular A- quired with Federal funds as provided 110, "Uniform Administrative Require- to rwith ownede funds as recipient. i nt. ments for Grants and Agreements with Federally-owned property r by the recipient. 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, meats, 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. eral statutory and regulatory provi- (b)The recipient shall obtain written sions, costs are reasonable and net- 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 [69 FR 26281, May 11, 2004, as amended at 70 projects shall be limited to those under FR 51881,Aug.31,2005] federally-sponsored projects (i.e., 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 pars 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- ment whose cost was charged to a agency or its successor Federal award- project supported by a Federal award. ing agency. The Federal awarding Federalagencyshall o observe one oru more. the 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 provided it observes the provisions of market value of the property attrib- provided to the Federal participationon in §215.31 through§215.37. the project. 92 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 [70 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 oblige. and Non-Profit Organizations." tions incurred during the funding pe riod and any pre-award costs author- (c) For-profit hospitals not covered ized by the Federal awarding agency. by the audit provisions of revised OMB Circular A-133 shall be subject to the §215.29 Conditional exemptions. audit requirements of the Federal (a) OMB authorizes conditional ex- awarding agencies. (d) Commercial organizations shall emption from OMB administrative re- be subject to the audit requirements of quirements and cost principles circa 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 nice 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 §215.26 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 sped.- 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- wines. 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. ton 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 hal- 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 ants 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 §215.25 (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- perimental, developmental, or research (iv) 48 CFR part 31, "Contract Cost award. Principles and Procedures." (7) The transfer of funds allotted for§215.25 Revision of budget and per. gram 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. (d) No other prior approval require- (b) Recipients are required to report ments for specific items may 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- big 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 §215.24 2 CFR Ch. II (i-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. program allowable cost in determining (1) The value of donated land and 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 accordance with paragraph (b)(3) of recipient. 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 §21524 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 §215.23 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 §21b.23 Cost sharing or matching, integral and necessary part of an ap- proved project or program. Rates for (a) All contributions, including cn b 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 §215.22 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. erally geared to the awardee's dis- (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 disbursement& vances of Federal funds in interest (g) To the extent available, recipi- bearing accounts, unless paragraphs eats 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 §215.22 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- dude, 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 vane 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- yment. eluded 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 Trees- (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- dent 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 §215.16 2 CFR Ch. I1(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 ment 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- Lions. taining to Federal awards, authoriza- Unless prohibited by statute or codi- tions, obligations, unobligated bal- lied regulation, each Federal awarding ances, 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 ents 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§215.20 Purpose of financial and of checks, warrants or payments urP 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) ment 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 financial man- (6) Written procedures for deter- agement systems. mining the reasonableness, allocability (a) Federal awarding agencies shall and allowability of costs in accordance require recipients to relate financial with the provisions of the applicable 84 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 tarn 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 190 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- cially 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 part, has not con- established by Federal statute. formed to the terms and conditions of §215.12 Forms for applying fear Fed. a previous award, or is not otherwise eral assistance. responsible, Federal awarding agencies (a) Federal awarding agencies shall may impose additional requirements as needed, provided that such applicant or comply with the applicable report recipient is notified in writing as to: clearance requirements of 5 CFR part the nature of 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- Glares that the metric system is the plieation 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)e 83 §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 CFB.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, 1234,and 2015,and 49 CFR part 18. For awards subject to this part, all administrative requirements of codi- [69 FR 26281, May 11, 2004, as amended at 70 fled program regulations, programFR 51880,Aug.31,2005] manuals, handbooks and other non- Subpart B-Pre-Award regulatory materials which are incon- p sistent with the requirements of this Requirements part shall be superseded, except to the extent they are required by statute, or §216.10 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 §215.4 Deviations. pre-award matters to be used in apply- ing for Federal awards, The Office of Management and Budg- et (OMB) may grant exceptions for p 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 62 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 lie 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 orga.nirations (such as agen- national organizations (such as agen- cies of the United Nations) which are cies of the United Nations) at the dis- recipients, subrecipients, or contrac- cretion of the Federal awarding men- 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 §215.2 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 obit- 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 §216.24(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 tions made by third parties in accom- or accrual basis. For reports prepared plishing 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- meats. 80 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; de- (2) Services performed by employees, which a Federal awarding agency contractors, subrecipients, and other terminesratve that all applicable work s- payees; and, trative actions and all required work of (3) Other amounts becoming owed the award have been completed by the under programs for which no current recipient and Federal awarding agency. 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 placable 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 the unit acquisition cost in ac- (1) Equipment means tangible non from fromcord e 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 §215.1 2 CFR Ch. 11(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 Ei-102, the guidance in subparts A through D "Grants and Cooperative Agreements of this part. with State and Local Governments"i (3) Requesting approvalfrom and the Federal agencies' grants man- OMB 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 (e) Relationship to previous issuance. by this part.However, this part applies to subawards made by State and local was guidance this partpreviously was issued as OMB Circularr A-110. Sub- governments to organizations covered parts A. through D of this part contain by this part. the guidance that was in the attach- (4) Federal agencies may apply the 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 (1) Information Contact. Further ihfor- under the jurisdiction of foreign gov- mation concerning this part may be ob- ernments, and international organiza- tained by contacting the Office of Fed- tions. eral Financial Management, Office of (c) OMB responsibilities. OMB. is re- Management and Budget, Washington, sponsible for: DC 20503,telephone(202)395-3993. (1) Issuing and maintaining the guid- ance in this part. (g) Termination Review Date.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 §215.1 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 tions. 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 U J.ti 01Z3114h1 EMT INFi1«,v,,F'?J' Cl Pr 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, 215.42 Codes of conduct. HOSPITALS, AND OTHER NON- 215.43 Competition, 215.44 Procurement procedures. PROFIT ORGANIZATIONS (OMB 215.45 Cost and price analysis. CIRCULAR A-110) 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-After-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 nun- 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. E3.0. 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. 215.33 Federally-owned and exempt prop- (b)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 txb{ °.-A- 2015 HOME Maximum Per-Unit Subsidy Limits as of 11/18/2015 Below are the new HOME Maximum Per-Unit Subsidy Limits for all locations in Iowa and Nebraska based upon the recently revised Section 234—Condominium Housing limits published in the Federal Register on November 18,2015. The limits are effective November 18,2015,and remain effective until further notice.These figures,used for the HOME Program,are based upon the guidance in CPD Notice 15-03 and the HOMEFires Vol.12 No 1. Section 234Limit Maximum HOME (Elevator) Per-Unit Subsidy Bedrooms as of 11/18/2015 High Cost% Limit 0 Bedroom 5 58,178.00 240% 5 140,107.20 1 Bedroom 5 66,923.00 240% 5 . 160,615.20 2 Bedroom 5 81,377.00 240% 5 195,304.30 3 Bedroom 5 105.276.00 240% 5 252,662.40 4 3edroom 5 115,560.00 240% 5 277,344.00 9 fD r ID 0 "� U7 C° W Sn y • a n n a r• 1 y • of ai (1 0 r• ii H SI i 0. ] 0 0. Yt Cl. - 0 O 0 Z to 0n C C 11 in 0 Zx n 0 b17 n 0 t� 0 0 0 ct H C 0 rt 0 K 1 N bi x ,•C t tz�1 H A M Z rt m A 8 to 0 x C' ` „ C.q1 C co u' m (B D O H0 a Al RI fi 11 m • 0 � 0 rt Wt+ Q111W H OlLW H CA W (i t, C W 0 t-Y Cl c w t-Y al C W rf t-I rn < 44ni O0o OoO Ooom Ootno Ootno OotsoO Ootn xf v d° xf d° E do xf dP X do x1 dP a X of, xf dP Z de) Z dP . oa x1 dO E do 0 OP 0 N H H H H H K t H H H H.Y H H (B H H H H H H f3�1, H t to H H H H Z H H (B Z H Z H H H Z H H Z H H ',D Z H ( n Z o X m n X O Z C1 H L Z H H n x o X n Z o X 9. n X o (B11 O X O H HD 0\ X n X O Z a 003 H F.. 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WW 0 WW 0 cn o 9 Z h] Z A E tlh >4 g !� 4., a 41 i� •.4 o H >. 7 4 4 MIEtG 4) 0 - 4I 0 C >4 t01 • U 0 A. 0 m 1 a o N I1 W 10 'CI X to to H 4) 0 0 4 Igd 0 0 i44 4-5 G. ^0N C1 40 m 4 R Allowances for Tenant- U.S.Department of Housing OMB Approval No.2577-0169 and Urban Development (exp.4/30/2014) Furnished Utilities and Office of Public and Indian Housing Other Services See Public Reporting Statement and Instructions on back Expiration Date 12/31/16 Locality Unit Type Date(mm/ddfyyyy) Omaha Housing Authority Multi Family 01/01/16 Utility or Service Monthly Dollar Allowances O BR 1 BR 2 BR 3 BR 4 BR 5 BR Heating a. Natural Gas 27 35 47 58 69 80 b. Bottle Gas 46 61 81 100 120 138 c. Oil/Electric 31 40 53 66 79 91 , d. Coal/Other 78 103 137 169 204 234 Cooking a. Natural Gas 4 5 7 9 11 12 b. Bottle Gas 7 9 12 15 19 _ 20 c. Electric 6 8 11 14 17 18 d. Other Electric 22 28 37 46 57 62 Air Conditioning 5 6 8 10 12 14 Water Heating a. Natural Gas 5 7 9 11 13 15 b. Bottle Gas 9 11 15 19 23 25 c. Electric 8 11 14 18 22 24 d. Coal/Other Water &Sewer 31 36 39 44 47 51 Trash Collection 13 13 13 13 13 13 Range/Microwave 4 4 5 5 6 6 Refrigerator 4 4 4 5 5 7 Other—specify Actual Family Allowances To be used by the family to compute allowance. Utility or Service per month cost Complete below for the actual unit rented. Heating $ Name of Family Cooking Other Electric Air Conditioning Address of Unit Water Heating Water Sewer Trash Collection Range/Microwave Refrigerator Number of Bedrooms Other ' Total $ • form HUD-52667(12/97) Previous editions are obsolete Page Intl ref.Handbook 7420.5 EXHIBIT E DEFINITION OF PROGRAM INCOME "Program income" means gross income received by the Recipient or a Subrecipient directly generated from the uses of CDBG/HOME/NSP and other federal funds. When such income is generated by an activity that is only partially assisted with CDBG/HOME/NSP and other federal funds, the income shall be prorated to reflect the percentage of CDBG/HOME/NSP and other federal funds used. (1) Program income includes, but is not limited to the following: (i) Proceeds from the disposition by sale or long term lease of real property purchased or improved with CDBG/HOME/NSP and other federal funds; (ii) Proceeds from the disposition of equipment purchased with CDBG/HOME/NSP and other federal funds; (iii) Gross income from the use or rental of real or personal property acquired by the Recipient or a Subrecipient with CDBG/HOME/NSP and other federal funds, less the costs incidental to the generation of such income; (iv) Gross income from the use or rental of real property owned by the Recipient or a Subrecipient that was constructed or improved with CDBG/HOME/NSP and other federal funds, less the costs incidental to the generation of such income; (v) Payments of principal and interest on loans made using CDBG/HOME/NSP and other federal funds; (vi) Proceeds from the sale of loans made with CDBG/HOME/NSP and other federal funds; (vii) Proceeds from the sale of obligations secured by loans made with CDBG/HOME/NSP and other federal funds; (viii) Interest earned on funds held in a revolving fund account; (ix) Interest earned on program income pending disposition of such income; and (x) Funds collected through special assessments made against properties owned and occupied by households not of low- and moderate-income, where such assessments are used to recover all or part of the CDBG/HOME/NSP and other federal portion of a public improvement. (2) Program income does not include interest earned (except for interest described in §570.513) on cash advances from the US Treasury. Such interest shall be remitted to HUD for transmittal to the US Treasury and will not be reallocated under Section 106(c) or (d) of the Act. Examples of other receipts that are not considered program income are proceeds from fundraising activities carried out by Subrecipients receiving CDBG/HOME/NSP and other federal assistance; funds collected through special assessments used to recover the non-CDBG/HOME/NSP and other federal portion of a public improvement; and proceeds from the disposition of real property acquired or improved with CDBG/HOME/NSP and other federal funds when such disposition occurs after the applicable time period specified in §570.503(b)(8) for Subrecipient-controlled property or §570.505 for Recipient-controlled property for CDBG program funds and §92.503 for HOME/NSP program funds. (3) Any program income generated by NSP funds through March 31, 2013 shall be used to construct housing units east of 72' Street affordable to low-, moderate-, and middle-income(LMMI) households. After March 31, 2013, all program income generated by NSP funds will be limited to eligible CDBG activities, including the benefit to low- and moderate-income (LMI) (not LMMI) households during the term of this Agreement, the program income shall be returned to the City within thirty(30)days. VIVO LAITY Revised and approved 12/3/2009 ' tittt;t1- F MEMORANDUM TO FILE RE: SECTION 504 ACCESSIBILITY REQUIREMENTS PROJECT: Shelter Tree LLC 7400 Military Avenue Omaha,Ne 68134 X The above named project is not exempt from Section 504 Accessibility Requirements. Accessibility modifications required: New multifamily units shall be designed and constructed to be readily accessible to and usable by individuals with handicaps per the Uniform Federal Accessibility Standards(UFAS). A minimum of five percent of the total dwelling units or at least 1 units shall be made accessible for persons with disabilities. An additional two percent of the units or at least 1 unit shall be made accessible for persons with hearing or vision impairments. The above named project is exempt from Section 504 Accessibility Requirements for the following reason(s): Single family property /04-41 Ed Dantzler, Deve o ment S ion Manager Dafe Robert Manners, Section 504 Officer Date EXHIBIT - DAVIS BACON EXEMPTION CHECKLIST Project Name: . itt fiii V ji Project Address: '7 400 T J airs 1,LJ ? k— Q)ni, M- 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- 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/architectural/engineering). 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. Other—Explain: -77 - 1,tkitcc -"b.)altd Date: 5 P4I1(o Signature of Responsible Administrator A description of the scope of the project is attached. Revised and approved 7/12/2011 CITY OF OMAHA } 'i ft 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. � 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 j 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 j Omaha, NE 68124 League of Human Dignity Heartland Family Service 5513 Center Street 11212 Davenport Street Omaha, NE 68106 1 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 J 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 ' Reviewed and revised 4,1/2015 y • 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 Foul', 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 Pt. 230 2 CFR Ch. II (1-1-12 Edition) 3.Indirect cost allocations not using rates. §230.5 purpose. In certain situations, a governmental unit, because of the nature of its awards, may be This part establishes principles for required to develop a cost allocation plan determining costs of grants, contracts that distributes indirect(and,in some cases, and other agreements with non-profit direct) costs to the specific funding sources. organizations. In these cases, a narrative cost allocation methodology should be developed, docu- §230.10 Scope. mented,maintained for audit, or submitted, as appropriate, to the cognizant agency for (a) This part does not apply to col- review,negotiation,and approval. leges and universities which are cov- 4.Appeals.If a dispute arises in a negotia- ered by 2 CFR part 220 Cost Principles tion of an indirect cost rate (or other rate) for Educational Institutions (OMB Cir- between. the cognizant agency and the gov- cular A-21); State, local, and federally- ernmental unit,the dispute shall be resolved recognized Indian tribal governments in accordance with the appeals procedures of which are covered by 2 CFR part 225 the cognizant agency. Cost Principles for State, Local, and 5.Collection of unallowable costs and erro-• Indian Tribal Governments (OMB Cir- neous payments.Costs specifically identified as unallowable and charged to Federal cular A-87);or hospitals. awards either directly or indirectly will be (b) The principles deal with the sub- refunded (including interest chargeable in ject of cost determination, and make accordance with applicable Federal agency no attempt to identify the air- regulations). oumstances or dictate the extent of 6.OMB assistance.To the extent that prob- agency and non-profit organization lems are encountered among the Federal par- agencies and/or governmental units in con- ticulariparojetion in. ro financing profitof a r nection with the negotiation and approval project. Provision for or • process, 01V1B will lend assistance, as re- other increment above cost is outside quired, to resolve such problems in a timely the scope of this part. manner. §230.15 Policy. PARTS 226-229 [RESERVED] The principles are designed to pro- vide that the Federal Government bear PART 230—COST PRINCIPLES FOR its fair share of costs except where re- NON-PROFIT ORGANIZATIONS striated or prohibited by law. The prin- (OMB CIRCULAR A-122) ciples do not attempt to prescribe the extent of cost sharing or matching on grants, contracts, or other agreements. Sec. However, such cost sharing or match-. 230.5 Purpose. ing shall not be accomplished through 230.10 Scope. arbitrary limitations on individual 230.15 Policy. cost elements by Federal agencies. 230.20 Applicability. 230.25 Definitions §230.20 Applicability. 230.30 OMB responsibilities. 230.35 Federal agency responsibilities. (a) These principles shall be used by 230.40 Effective date of nhanses. all Federal agencies in determining the 230.45 Relationship to previous issuance. costs of work performed by non-profit 230.50 Information Contact. organizations under grants; coopera- APPENDIX A To PART 230—antra .AL PnIN- tive agreements, cost reimbursement CIPLES contracts,and other contracts in which APPENDIX B TO PART 230—SELECTED ITEMS OF costs are used in pricing, atiministra- COST tion, or settlement.'All of these instru-. APPENDIX C To PART 230—NON-PROFIT ORGA- .ments are hereafter referred to as NIZATIONs NOT SUBJECT TO THIS PART awards. The principles do not apply to AUTHORITY: 31 U.S.C. 503; 31 U.S.C. 1111; 41 awards under which an organization is U.S.C.405;Reorganization Plan No.2 of 1970; not required to account to the Federal E.O.11541,35 FR 10737,3 CFR,1966-1970,p.939 Government for actual costs incurred. SouRCE: 70 FR 51927, Aug. 31, 2005, unless (b) All cost reimbursement sub- otherwise noted. awards (subgrants, subcontracts, etc.) 182 OMB Circulars and Guidance §230.50 are subject to those Federal cost prin- §230.30 OMB responsibilities. ciples applicable to the particular or- OMB may grant exceptions to the re- ganization concerned. Thus, if a quirements of this part when permis- subaward is to a non-profit organiza- sible under existing law. However, in tion, this part shall apply; if a the interest of achieving maximum subaward is to a commercial orga.niza- uniformity, exceptions will be per- tion, the cost principles applicable to mitted only in highly unusual cir- commercial concerns shall apply; if a cumstances. subaward is to a college or university, 2 CFR part 220 shall apply; if a §230.35 Federal agency responsibil- subaward is to a State, local, or feder- ities. ally-recognized Indian tribal govern- The head of each Federal agency that went,2 CFR part 225 shall apply. awards and administers grants and (c) Exclusion of some non-profit or- agreements subject to this part is re- ganizations. Some non-profit organiza- sponsible for requesting approval from tions, because of their size and nature and/or consulting.with OMB (as appli- of operations, can be considered to be cable)for deviations from the guidance similar to commercial concerns for in the appendices to this part and per- purpose of applicability of cost prin- forming the applicable functions speci- ciples. Such non-profit organizations fled in the appendices to this part. Shall operate under Federal cost prin- ciples applicable to commercial con- §230.40 Effective date of changes. terns. A listing of these organizations The provisions of this part are effec- is contained in appendix C to this part. tive August 31, 2005. Implementation Other organizations may be added from shall be phased in by incorporating the time to time. provisions into new awards made after §230 25 Definitions. the start of the orga.ni zation's next fis- cal year. For existing awards, the new (a) Non-profit organization means principles may be applied if an organi- any corporation, trust, association, co- zation and the cognizant Federal agen- operative, or other organization which: cy agree. Earlier implementation, or a (1) Is operated primarily for sci- delay in implementation of individual entific, educational, service, chari- provisions, is also permitted by mutual table, or similar purposes in the public agreement between an organization interest; and the cognizant Federal agency. (2) Is not organized primarily for profit; and §230.45 Relationship to previous (3)Uses its net proceeds to maintain, issuance. improve, and/or expand its operations. (a) The guidance in this part pre- For this purpose, the term "non-profit viously was issued as OMB Circular A- organization" excludes colleges and 122. Appendix A to this part contains universities; hospitals; State, local, the guidance that was in Attachment A and federally-recognized Indian tribal (general principles) to the OMB cir- governments; and those non-profit or- cular; Appendix B contains the guid- ganizations which are excluded from ance that was in Attachment B (se- coverage of this part in accordance lected items of cost) to the OMB cir- with§230.20(c). cular; and Appendix C contains the in- (b)Prior approval means securing the formation that was in Attachment C awarding agency's permission in ad- (non-profit organizations not subject to vance to incur cost for those items .the Circular)to the OMB circular. that are designated as requiring prior (b) Historically, OMB Circular A-122 approval by the part and its appen- superseded cost principles issued by in- dices. Generally this permission will be dividual agencies for non-profit organi- in writing. Where an item of cost re- zations. quiring prior approval is specified in 230.50 Information contact. the budget of an award, approval of the budget constitutes approval of that Further information concerning this cost. part may be obtained by contacting the 183 Pt.230,App. A 2 CFR Ch. 1I (1-1-12 Edition) Office of Federal Financial Manage- costs. The question of the reasonableness of ment, OMB, Washington, DC 20503, specific costs must be scrutinized with par- telephone(202)395-3993. titular care in connection with organizations or separate divisions thereof which receive APPENDIX A To PART 230—GENERAL the preponderance of their support from PRINCIPLES awards made by Federal agencies. In deter- mining the reasonableness of a given cost, GENERAL T.PRINCIPLES consideration shall be given to: a. Whether the cost is of a type generally TABLE of CONTENTS recognized as'ordinary and necessary for the A.Basic Considerations operation of the organization or the perform- 1.Composition of total costs ance of the award. 2.Factors affecting allowability of costs b. The restraints or requirements imposed 3.Reasonable costs by such factors as generally accepted sound 4.Allocable costs business practices, arms length bargaining, 5.Applicable credits Federal and State laws and regulations,and 6.Advance understandings , terms and conditions of the award. 7.Conditional exemptions o.Whether the individuals concerned acted B.Direct Costs with prudence in the circumstances, consid- C.Indirect Costs ering their responsibilities to the organize- D. Allocation of Indirect Costs and Deter- tion, its members, employees, and clients, urination of Indirect Cost Rates the public at large, and the Federal Govern- 1.General ment. 2.Simplified allocation method d. Significant deviations from the estab- 3.Multiple allocation base method lished practices of the organization which 4.Direct allocation method may unjustifiably increase the award costs. 5.Special indirect cost rates 4.Allocable costs.a: A cost is allocable to E.Negotiation and Approval of Indirect Cost a particular cost objective, such as a grant, Rates contract, project, service, or other activity, 1.Definitions in accordance with the relative benefits re- 2.Negotiation and approval of rates ceived.A cost is allocable to a Federal award if it is treated consistently with other costs GENERAL PRINCIPLES incurred for the same purpose in like cir- cumstancesA.Basic Considerations and if it: (1)Is incurred specifically for the award. 1. Composition of total costs. The total (2)Benefits both the award and other work cost of an award is the sum of the allowable and can be distributed in reasonable propor- direct and allocable indirect costs less any tion to the benefits received,or applicable credits. (3)Is necessary to the overall operation of 2. Factors affecting allowability of costs. the organization,although a direct relation- To be allowable under an award, costs must ship to any particular cost objective cannot meet the following general criteria: be shown. a.Be reasonable for the performance of the b.Any cost allocable to a particular award award and be allocable thereto under these or other cost objective under these principles principles. may not be shifted to other Federal awards b. Conform to any limitations or exclu- to overcome funding deficiencies,or to avoid sions set forth in these principles or in the restrictions imposed by law or by the terms award as to types or amount of coat items. of the award. c. Be consistent with policies and proce- 5.Applicable credits. a. The term applies- duxes that apply uniformly to both federally- ble credits refers to those receipts, or reduc- financed and other activities of the organize- tion of expenditures which operate to offset tion. or reduce expense items that are allocable to d.Be accorded consistent treatment. awards as direct or indirect costs. Typical e. Be determined in accordance with gen- examples of such transactions are: Purchase orally accepted accounting principles discounts, rebates or allowances, recoveries (GAAP). • or indemnities on losses, insurance refunds, f.Not be included as a cost or used to meet and adjustments of overpayments or erro- cost sharing or matching requirements of neous charges.To the extent that such cred- any other federally-financed program in ei- its accruing or received by the organization ther the current or a prior period. relate to allowable cost, they shall be cred- g.Be adequately documented. ited to the Federal Government either as a 3.Reasonable costs.A cost is reasonable if, cost reduction or cash refund, as appro- in its nature or amount, it does not exceed priate. that which would be incurred by a prudent b.In some instances,the amounts received person under the circumstances prevailing at from the Federal Government to finance or- the time the decision was made to incur the ganizational activities or service operations 184 OMB Circulars and Guidance Pt. 230, App.A should be treated as applicable credits. Spe- own written fiscal and administrative re- cifically, the concept of netting such credit quirements for expending and accounting for items against related expenditures should be all funds,which are consistent with the pro- applied by the organization in determining visions of 2 CFR part 225 (OMB Circular A- the rates or amounts to be charged to Fed- 87),and extend such policies to all subrecipi- eral awards for services rendered whenever ents. These fiscal and arministrative re- the facilities or other resources used in pro- quirements must be sufficiently specific to viding such services have been financed di- ensure that: Funds are used in compliance rectly,in whole or in part,by Federal funds. with all applicable Federal statutory and c.For rules covering program income(i.e., regulatory provisions, costs are reasonable gross income earned from federally-sup- and necessary for operating these programs, ported activities) see §215.24 of 2 CFR part and funds are not to be used for general ex- 215 Uniform Administrative Requirements penes required to carry out other respon- for Grants and Agreements with Institutions sibilities of a State or its subrecipients. of Higher Education, Hospitals, and Other Non-Profit Organizations (OMB Circular A- B.Direct Costs 110). 1.Direct costs are those that can be identi- 6. Advance understandings. Under any fled specifically with a particular final cost given award, the reasonableness and objective, i.e., a particular award, project, allocabilityof certain items of costs may be service,or other direct activity of an organi- diffic difricult to determine. This is particularly true in connection with organisation that nation. However, a cost may not be assigned receive a preponderance of their support to an award as a direct cost if any other cost from Federal agencies.In order to avoid sub- incurred for the same purpose, in like cir- sequent disallowance or dispute based on cumetance, has been allocated to an award unreasonableness or nonallocability, it is as an indirect cost. Costs identified specifi- often desirable to seek a written agreement cally with awards are direct costs of the with the cognizant or awarding agency in ad- vance of the incurrence of special or unusual to. Costs identified specifically with other costs. The absence of an advance agreement final cost objectives of the organization are on any element of cost will not,in itself, af- direct costs of those cost objectives and are feet the reasonableness or allocability of not to be assigned to other awards directly that element. or indirectly. 7. Conditional exemption.a. OMB author- 2. Any direct cost of a minor amount may izes conditional exemption from OMB ad*nin- be treated as an indirect cost for reasons of istrative requirements and cost principles practicality where the accounting treatment for certain Federal programs with statu- for such cost is consistently applied to all torily-authorized consolidated planning and final cost objectives. consolidated administrative funding, that 3.The cost of certain activities are not al- are identified by a Federal agency and ap- lowable as charges to Federal awards (see, proved by the head of the Executive depart- for example, fundraising costs in paragraph ment or establishment. A Federal agency 17 of Appendix B to this part).However,even shall consult with OMB during its consider- though these costs are unallowable for pur- ation of whether to grant such an exemption. poses of computing charges to Federal b.To promote efficiency in State and local awards, they nonetheless must be treated as program administration, when Federal non- direct costs for purposes of determining indi- entitlement programs with common pur- rect cost rates and be allocated their share poses have specific statutorily-authorized of the organization's indirect costs if they consolidated planning and consolidated ad- represent activities which include the sale- ministrative funding and where most of the ries of personnel, occupy space, and benefit State agency's resources come from non- from the organization's indirect costs. Federal sources, Federal agencies may ex- 4. The costs of activities performed pri- empt these covered State-administered,non- manly as a service to members, clients,.or entitlement grant programs from certain the general public when significant and nec- OMB grants management requirements. The essary to the organization's mission must be exemptions would be from all but the treated as direct costs whether or not allow- allocability of costs provisions of Appendix able and be allocated an equitable share of A, subsection C.e. of 2 CFR part 225 (OMB indirect costs. Some examples of these types Circular A-87);Appendix A, Section C.4. of'2 of activities include: CFR part 220 (OMB Circular A-21); Section a. Maintenance of membership rolls, sub- A.4. of this appendix;and from all of the ad- scriptions, publications, and related func- ministrative requirements provisions of 2 tions. CFR part 215 (OMB Circular A-110) and the b. Providing services and information to agencies'grants management common rule. members, legislative or administrative bod- e. When a Federal agency provides this ies,or the public. flexibility, as a prerequisite to a State's ex- c. Promotion, lobbying,and other forms of ercising this option, a State must adopt its public relations. 185 Pt. 230,App.A 2 CFR Ch.1I (1-1-12 Edition) d. Meetings and conferences except those putation of an indirect cost rate may be ac- held to conduct the general administration complished through simplified allocation of the organization. procedures,as described in subparagraph D.2 e. Maintenance, protection, and invest- of this appendix. meat of special funds not used in operation b.Where an organization has several major of the organization. functions which benefit from its indirect f. Ariministration of group benefits on be- costs in varying degrees, allocation of indi- half of members or clients,including life and rect costs may require the accumulation of hospital insurance, annuity or retirement such costs into separate cost groupings plans,financial aid,etc. which then are allocated individually to ben- efiting functions by means of a base which C.Indirect Costs best measures the relative degree of benefit. 1. Indirect costs are those that have been The indirect costs allocated to each function incurred for common or joint objectives and are then distributed to individual awards and cannot be readily identified with a par- other activities included in that function by • titular final cost objective. Direct cost of means of an indirect cost rate(s). minor amounts may be treated as indirect anc. The determination of what constitutes de- costs under the conditions described in sub pe oron its pureon's major functions will paragraph B.2 of this appendix. After direct peed es its purpose in being; the types of costs have been determined and assigned di- and it renders to the public, its clients, rattly.to awards or other work as appro- and its members;and the amount of effort it priate,indirect costs are those remaining to devotes to such activities as fundraising, be allocated to benefiting cost objectives. A public information and membership activi- cost may not be allocated to an award as an ties. indirect cost if any other cost incurred for d. anSpecific computingmethod for indallirect t rates the same purpose,in like circumstances,has alongos and h indirect cost rates been assigned to an award as a direct cost. method with the be used are under which each sub- 2. Because of the diverse characteristics shouldD. through usgh this appendix.described and accounting practices of non-profit orga- pa The ba e 2 rifor 5 theof this o in- nizations, it is not possible to specify the e.di The base period period allocationchscc costs types of cost which may be classified as indi- axe ct costs is the sua edwh for alto costs rect cost in all situations. However, typical to work perd and accumulated allocation aba e examples of indirect cost for many non-prof- period normallyperformed should in that c de withd. The base or- it organizations may include depreciation or gani in's fiscalyear coincide an the event, use allowances on buildings and equipment, shall be ion's but, in any event, the costs of operating and maintaining fa- shall to atso onselected as to avoid inequities in cilities,and general administration and gen- thealim Simplified of the costs. eral expenses, such as the salaries and ex- 2. rganizati allocation'smajor method. a.ben Where penes of executive officers, personnel ad- from orts indirect costs functions e its indirect to approximately the ministration,and accounting. same degree, the allocation of indirect costs 3. Indirect costs shall be classified within may be accomplished by separating the orga- two broad categories: "Facilities" and"Ad- nization's total costs for the base period as ministration." "Facilities" is defined as de- either direct.or indirect, and dividing the preciation and use allowances on buildings, total allowable indirect costs(net of applica- equipment and capital improvement, inter- ble credits) by an equitable distribution eat on debt associated with certain buildings, base.The result of this process is an indirect equipment and capital improvements, and cost rate which is used to distribute indirect operations and maintenance expenses. "Ad- costs to individual awards. The rate should ministration" is defined as general adminis- be expressed as the percentage which the tration and general expenses such as the di- total amount of allowable indirect costs rector's office,accounting,personnel,library bears to the base selected. This method expenses and all other types of expenditures should also be used where an organization not listed specifically under one of the sub- has only one major function encompassing a categories of"Facilities"(including cross al- number of individual projects or activities, locations from other pools, where applica- and may be used where the level of Federal ble).See indirect cost rate reporting require- awards to an organization is relatively meats in subparagraphs D:2.e and D.3.g of smait. this appendix. b. Both the direct costs and the indirect D.Allocation of Indirect Costs and costs shall exclude capital expenditures and Determination of Indirect Cost Rates unallowable costs. However, unallowable costs which represent activities must be in- 1. General. a.Where a non-profit organza- eluded in the direct costs under the condi- tion has only one major function, or where tions described in subparagraph B.3 of this all its major functions benefit from its indi- appendix. rect costs to approximately the same degree, o. The distribution base may be total di- the allocation of indirect costs and the cam- rect costs (excluding capital expenditures 186 OMB Circulars and Guidance Pt. 230,App.A and other distorting items, such as major that have been incurred for the administra- subcontracts or subgrants), direct salaries tion, operation, maintenance, preservation, and wages, or other base which results in an and protection of the organization's physical equitable distribution. The distribution base plant. They include expenses normally in- shall generally exclude participant support curred for such items as:Janitorial and util- costs as defined in paragraph 32 of Appendix ity services; repairs and ordinary or normal B. alterations of buildings,furniture and equip- d. Except where a special rate(s) is re- ment; care of grounds;maintenance and op- quired in accordance with subparagraph 5 of eration of buildings and other plant facili- this appendix, the indirect cost rate devel- ties; security; earthquake and disaster pre- oped under the above principles is applicable paredness; environmental safety; hazardous to all awards at the organization.If a special waste disposal; property, liability and other rate(s)is required,appropriate modifications insurance relating to property; space and shall be made in order to develop the special capital leasing; facility planning and man- rate(s). agement; and, central receiving. The oper- e. For an organization that receives more ation and maintenance expenses category than$10 million in Federal funding of direct shall also include its allocable share of costs in a fiscal year,a breakout of the indi- fringe benefit costs, depreciation and use al- rect cost component into two broad cat- lowances,and interest costs. egories,Facilities and Administration as de- (4)General administration and general ex- fined in subparagraph C.3 of this appendix,is penses. (a) The expenses under this heading required.The rate in each case shall be stat- are those that have been incurred for the ed as the percentage which the amount of overall general executive and administrative the particular indirect cost category (i.e., offices of the organization and other ex- Facilities or Administration) is of the dis- penses of a general nature which do not re- tribution base identified with that category. late solely to any major function of the orga- 3.Multiple allocation base method. nization.This category shall also include its a. General. Where an organization's indi- allocable share of fringe benefit costs, oper- rect costs benefit its major functions in ation and maintenance expense, depreciation varying degrees,indirect costs shall be accu- and use allowances, and interest costs. Ex- mulated into separate cost groupings, as de- amples of this category include central of- scribed in subparagraph D.3.b of this appen- fives, such as the director's office, the office dix. Each grouping shall then be.allocated of finance, business services, budget and individually to benefiting functions by planning,personnel,safety and risk manage- means of a base which best measures the rel- ment, general counsel, management infor- ative benefits. The default allocation bases mation systems,and library costs. by cost pool are described in subparagraph (b) In developing this cost pool, special D.3.c of this appendix. care should be exercised to ensure that costs b. Identification of indirect costs. Cost incurred for the same purpose in like cir- groupings shall be established so as to per- cumstances are treated consistently as ei- mit the allocation of each grouping on the ther direct or indirect costs. For example, basis of benefits provided to the major func- salaries of technical staff, project supplies. tions. Each grouping shall constitute a pool project publication, telephone toll charges, of expenses that are of like character in computer costs, travel costs,and specialized terms of functions they benefit and in terms services costs shall be treated as direct costs of the allocation base which best measures wherever identifiable to a particular pro- the relative benefits provided to each func- gram. The salaries and wages of administra- tion. The groupings are classified within the tive and pooled clerical staff should nor- two broad categories: "Facilities" and "Ad- mally be treated as indirect costs. Direct ministration," as described in subparagraph charging of these costs may be appropriate C.3 of this appendix. The indirect cost pools where'a major project or activity explicitly are defined as follows: requires and budgets for administrative or (1) Depreciation and use allowances. The clerical services and other individuals in- expenses under this heading are the portion volved can be identified with the program or of the costs of the organization's buildings, activity. Items such as office supplies, post- capital improvements to land and buildings, age, local telephone costs, periodicals and and equipment which are computed in ac- memberships should normally be treated as cordance with paragraph 11 of Appendix B to indirect costs. this part ("Depreciation and use allow- c.Allocation bases.Actual Conditions shall antes"). be taken into account in selecting the base (2) Interest. Interest on debt associated to be used in allocating the expenses in each with certain buildings, equipment and cap- grouping to benefiting functions. The essen- ital improvements are computed in accord- tial consideration in selecting a method or a ance with paragraph 23 of Appendix B to this base is that it is the one,best suited for as- part("Interest"). signing the pool of costs to cost objectives in (3) Operation and maintenance expenses. accordance with benefits derived;a traceable The expenses under this heading are those cause and effect relationship; or logic and 187 Pt. 230,App.A 2 CFR Ch. II (1-1-12 Edition) reason, where neither the cause nor the ef- allocated in the same manner as the depre- feet of the relationship is determinable. ciation and use allowances. When an allocation can be made by assign- (4)General administration and general ex- ment of a cost grouping directly to the km- penses. General administration and general tion benefited, the allocation shall be made expenses shall be allocated to benefiting in that manner.When the expenses in a cost functions based on modified total direct grouping are more general in nature, the al- costs (MTDC), as described in subparagraph location shall be made through the use of a D.3.f of this appendix.The expenses included selected base which produces results that are in this category could be grouped first ac- equitable to both the Federal Government cording to major functions of the organize- and the organization. The distribution shall tion to which they render services or provide be made in accordance with the bases de- benefits. The aggregate expenses of each scribed herein unless it can be demonstrated group shall then be allocated to benefiting that the use of a different base would result functions based on MTDC. in a more equitable allocation of the costs,or that a more readily available base would d. Order of distribution. (1) Indirect cost not increase the costs charged to sponsored categories consisting of depreciation and use awards. The results of special cost studies allowances, interest, operation and mainte- (such as an engineering utility study) shall nance, and general administration and gen- not be used to determine and allocate the in- eral expenses.shall be allocated in that order direct costs to sponsored awards. to the r:maining indirect cost categories as (1)Depreciation and use allowances.Depre- well as to the major functions of the organi- ciation and use allowances expenses shall be nation. Other cost categories could be allo- allocated in the following manner: cated in the order determined to be most ap- (a) Depreciation or use allowances on propriate by the organization.When cross al- buildings used exclusively in the conduct of location of costs is made as provided in sub- a single function, and on capital improve- paragraph D.3.d.(2) of this appendix, this meats and equipment used in such buildings, ,order of allocation does not apply. shall be assigned to that function. (2)Normally,an indirect cost category will (13) Depreciation or use allowances on be considered closed once it has been allo- buildings used for more than one function, cated to other cost objectives, and costs and on capital improvements and equipment shall not be subsequently allocated to it. used in such buildings, shall be allocated to However, a cross allocation of costs between the individual functions performed in each two or more indirect costs categories could building on the basis of usable square feet of be used if such allocation will result in a space,excluding common areas,such as hall- more equitable allocation of costs. If a cross ways,stairwells,and restrooms. allocation is used, an appropriate modifica- (c) Depreciation or use allowances on tion to the composition of the indirect cost buildings, capital improvements and equip- categories is required. ment related space (e.g., individual rooms, e. Application of indirect cost rate or and laboratories) used jointly by more than rates. Except where a special indirect cost one function(as determined by.the users of rate(s) is required in accordance with sub- the space) shall be treated as follows. The paragraph D.5 of this appendix, the separate cost of each jointly used unit of space shall be allocated to the benefiting functions on groupings of indirect costs allocated to each the basis of either the employees and other major function shall be aggregated and users on a full-time equivalent (PM) basis treated as a common pool for that function. or salaries and wages of those individual The costs in the common pool shall then be functions benefiting from the use of that distributed to individual awards included in space; or organization-wide employee FTEs that function by use of a single indirect cost or salaries and wages applicable to the bene- rate. fiting functions of the organization. f.Distribution basis.Indirect costs shall be (d) Depreciation or use allowances on cer- distributed to applicable sponsored awards tarn capital improvements to land, such as and other benefiting activities within each paved parking areas, fences, sidewalks, and major function on the basis of MTDC.MTDC the like, not included in the cost of build- consists of all salaries and wages,fringe ben- ings,shall be allocated to user categories on efits,materials and supplies,services,travel, a l!^t's basis and distributed to major func- and subgrants and subcontracts up to the tiona in proportion to the salaries and wages first $25,000 of each subgrant or subcontract of all employees applicable to the functions. (regardless of the period covered by the (2) Interest. Interest costs shall be allo- subgrant or subcontract).Equipment,capital cated in the same manner as the deprecia- expenditures,charges for patient care,rental tion or use allowances on the buildings, ,costs and.the portion in excess of $25,000 equipment and capital equipments to which shall be excluded from MTDC. Participant the interest relates. support costs shall generally be excluded (3) Operation and maintenance expenses. from MTDC. Other items may only be ex- Operation and maintenance expenses shall be eluded when the Federal cost cognizant 188 OMB Circulars and Guidance Pt.230, App.A agency determines that an exclusion is nec- resources employed,the scientific disciplines essary to avoid a serious inequity in the dis- or technical skills involved, the organiza- tribution of indirect costs. tional arrangements used, or any combin- g. Individual Rate Components. An inch- tion thereof. When a particular segment of rect cost rate shall be determined for each work is performed in an environment which separate indirect cost pool developed. The appears to generate a significantly different rate in each case shall be stated as the per- level of indirect costs, provisions should be tentage which the amount of the particular made for a separate indirect cost pool appli- indirect cost pool is of the distribution base cable to such work. The separate indirect identified with that pool. Each indirect cost cost pool should be developed during the rate negotiation or determination agreement coarse of the regular allocation process,and shall include development of the rate for the separate indirect cost rate resulting each indirect cost pool as well as the overall therefrom should be used, provided it is de- indirect cost rate. The indirect cost pools termined that the rate differs significantly shall be classified within two broad cat- from that which would have been obtained egories: "Facilities" and "Administration," under subparagraphs D.2, 3, and 4 of this ap- as described in subparagraph C.3 of this ap- pendix,and the volume of work to which the pendix. rate would apply is material. 4. Direct allocation method. a. Some non- profit organizations treat all costs as direct E.Negotiation and,Approval of Indirect Cost costs except general administration and gen- Rates eral expenses. These organizations generally separate their costs into three basic cat- 1. Definitions. As used in this section, the egories: General administration and general following terms have the meanings set forth expenses, fundraising,and other direct franc- below: tions (including projects performed under a. Cognizant agency means the Federal Federal awards). Joint costs, such as depre- agency responsible for negotiating and ap- elation,rental costs, operation and mainte- proving indirect'cost rates for non-profit nance of facilities, telephone expenses, and organization on behalf of all Federal agen- the like are prorated individnally as direct ales. costs to each category and to each award or b. Predetermined rate means an indirect other activity using a base most appropriate cost rate,applicable to a specified current or to the particular cost being prorated. future period, usually the organization's fis- b.This method is acceptable,provided each cal year.The rate is based on an estimate of joint cost is prorated using a base which ac- the costs to be incurred during the period.A curately measures the benefits provided to predetermined rate is not subject to adjust- each award or other activity.The bases must ment. be established in accordance with reasonable c. Fixed rate means an indirect cost rate criteria, and be supported by current data. which has the same characteristics as a pre- This method is compatible with the Stand- determined rate, except that the difference ards of Accounting and Financial Reporting between the estimated costs and the actual for Voluntary Health and Welfare Organize- costs of the period covered by the rate is car- tions issued jointly by the National Health ried forward as an adjustment to the rate Council, Inc., the National Assembly of Vol- computation of a subsequent period. untary Health and Social Welfare Organiza- d. Final rate means an indirect cost rate tions,and the United Way of America. applicable to a specified past period which is c. Under this method; indirect costs con- based on the actual costs of the period. A sist exclusively of general administration final rate is not subject to adjustment. and general expenses. In all other respects, e. Provisional rate or billing rate means a the organization's indirect cost rates shall temporary indirect cost rate applicable to a be computed in the same manner as that de- specified period which is used for funding,in- scribed in subparagraph D.2 of this appendix. terim reimbursement,and reporting indirect 5. Special indirect cost rates. In some in- costs on awards pending the establishment of stances,a single indirect cost rate for all ac- a final rate for the period. tivities of an organization or for each major f. Indirect cost proposal means the docu- function of the organization may not be ap- mentation prepared by an organization to propriate, since it would not take into ac- substantiate its claim for the reimbursement count those different factors which may sub- of indirect costs. This proposal provides the stantially affect the indirect costs applicable basis for the review and negotiation leading to a particular segment of work. For this to the establishment of an organization's in- purpose, a particular segment of work may direct cost rate. be that performed under a single award or it g.Cost objective means a function, organi- may consist of work under a group of awards zational subdivision, contract, grant, or performed in a common environment. These other work unit for which cost data are de- factors may include the physical location of sired and for which provision is made to ac- the work,the level of administrative support cumulate and measure the cost of processes, required,the nature of the facilities or other projects,jobs and capitalized projects. 189 Pt. 230,App. B 2 CFR Ch. II (1-1-12 Edition) 2.Negotiation and approval of rates.a.Un- dispute shall be resolved in accordance with less different arrangements are agreed to by the appeals procedures of the cognizant the agencies concerned, the Federal agency agency. with the largest dollar value of awards with i.To the extent that problems are encoun- • an organization will be designated as the tered among the Federal agencies in connec- cognizant agency for the negotiation and ap- tion with the negotiation and approval proc- proval of the indirect cost rates and, where ess, OMB will lend assistance as required to necessary, other rates such as fringe benefit resolve such problems in a timely manner. and computer charge-out rates. Once an agency is assigned cognizance for a par- APPENDIX B TO PART 230-SELECTED titular non-profit organization, the assign- ITEMS OF COST ment will not be changed unless there is a major long-term shift in the dollar volume of SELECTED ITEMS of COST the Federal awards to the organization. All concerned Federal agencies shall be given TABLE OF CONTENTS the opportunity to participate in the nego- 1.Advertising and public relations costs tiation process but, after a rate has been 2.Advisory councils agreed upon, it will be accepted by all Fed- 3.Alcoholic beverages eral agencies. When a Federal agency has 4.Audit costs and related services reason to believe that special operating fao- 5.Bad debts tors affecting its awards necessitate special 6.Bonding costs indirect cost rates in accordance with sub- 7.Communication costs paragraph D.5.of this appendix, it will,prior 8.Compensation for personal services to the time the rates are negotiated, notify 9.Contingency provisions the cognizant agency. 10.Defense and prosecution of criminal and b. A non-profit organization which has not previously established an indirect cost rate pvil infringement claims, appeals and with a Federal agency shall submit its iai- patent u tial indirect cost 12.Depreciationto and use allowances proposal immediately after 12.Donations and contributions the organization is.advised that an award 13. Employee morale, health, and welfare will be made and, in no event, later than costs three months after the effective date of the 14.Entertainment costs award. 15. Equipment and other capital e c. Organizations that have previously es- p xPendi- tablished indirect cost rates must submit atunes new indirect cost proposal to the cognizant 16.Fines and penalties 17. Fund raising and investment manage- agency within six months after the close of each fiscal year. meat costs d.A predetermined rate may be negotiated 18.Gains and losses on depreciable assets for use on awards where there is reasonable 19.Goodsi go andser personals for livingpersonalexpensespe assurance,based onpast experience20.housing ndid ca and eels-• 21.Idle facilities and idle capacity able projection of the organization's costs, 22.Insurance and indemnification that the rate is not likely to exceed a rate 23.Interest based on the organization's actual costs. 24.Labor relations costs e. Fixed rates may be negotiated where 25.Lobbying predetermined rates are not considered ap- 26. Losses on other sponsored agreements propriate.A fixed rate,however,shall not be or contracts negotiated if all or a substantial portion of 27.Maintenance and repair costs the organization's awards are expected to ex- 28.Materials and supplies costs pire before the carry forward adjustment can 29.Meetings and conferences be made;the mix of Federal and non-Federal 30.Memberships,subscriptions, and profes- work at the organization is too erratic to sional activity costs permit an equitable carry-forward adjust- 31.Organization costs ment; or the organization's operations flue- 32.Page charges in professional journals tuate significantly from year to year. 33.Participant f.Provisional and final rates shall be nego- support costs tinted where neither predetermined nor fixed 35.Patent costs 35.Plant and homeland security costs rates are appropriate. - 36.Pre-agreement costs g. The results of each negotiation shah be 37.Professional services costs formalized in a written agreement between 38.Publication and printing costs the cognizant agency and the non-profit or- 39.Rearrangement and alteration costs ganization. The cognizant agency shall dis- 40.Reconversion costs tribute copies of the agreement to all con- 41.Recruiting costs cerned Federal agencies. 42.Relocation costs h.If a dispute arises in a negotiation of an 43.Rental costs of buildings and equipment indirect cost rate between the cognizant 44.Royalties and other costs for use of pat- agency and the non-profit organization, the ants and copyrights 190 OMB Circulars and Guidance Pt. 230, App. B 45.Selling and marketing are limited to communication and liaison 46.Specinlived service facilities necessary keep the public informed on mat- 47.Taxes ters of public concern, such as notices of 48. Termination costs applicable to Spon- Federal contract/grant awards, finanria.l cored agreements matters,etc. 49.Training costs e.Costs identified in subparagraphs c and d 50.Transportation costs if incurred for more than one Federal award 51.Travel costs or for both sponsored work and other work of 52.Trustees the non-profit organization,are allowable to APPENDIX B TO PART 230--SFLFCTID ITEMS OFe extent that the principles in Appendix A COST to this part, paragraphs B. ("Direct Costs") and C.("Indirect Costs")are observed. Paragraphs 1 through 52 of this appendix f. Unallowable advertising and public rela- provide principles to be applied in estab- tions costs include the following: lishing the allowability of certain items of (1) All advertising and public relations cost.These principles apply whether a cost is costs other than as specified in subpara- treated as direct or indirect.Failure to men- graphs a,d,and e; tion a particular item of cost is not intended (2) Costs of meetings, conventions, con- to imply that it is unallowable; rather, de- vocations, or other events related to other termination as to allowability in each case activities of the non-profit organization, in- should be based on the treatment or prin- chiding: ciples provided for similar or related items (a) Costs of displays, demonstrations, and of cost. exhibits; 1.Advertising and public relations costs.a. (b) Costs of meeting rooms, hospitality The term advertising costs means the costs suites, and other special facilities used in of advertising media and corollary adminis- conjunction with shows and other special trative costs. Advertising media include events;and magazines,newspapers,radio and television, (c) Salaries and wages of employees en- direct mail,exhibits,electronic or computer gaged in setting up and displaying exhibits, transmittals,and the like. making demonstrations,and i b. The term public relations includes corn- providing brief- munity relations and means those activities ems' dedicated to maintaining the image of the (3) Costs of promotional items and memo- rabilia, sou- non-profit organization or maintaining or including models, gifts, and promoting understanding and favorable rela- venire; tions with the community or public at large (4)Costs of advertising and public relations or any segment of the public. designed solely to promote the non-profit or- c.The only allowable advertising costs are g ation. those which are solely for: 2.Advisory Councils.Costs incurred by ad- (1) The recruitment of personnel required visory councils or committees are allowable for the performance by the non-profit organ- as a direct cost where authorized by the Fed- zation of obligations arising under a Federal eral awarding agency or as an indirect cost award (See also paragraph 41, Recruiting where allocable to Federal awards. costs, and paragraph 42,Relocation costs, of 3. Alcoholic beverages. Costs of alcoholic this appendix); beverages are unallowable. (2)The procurement of goods and services 4. Audit costs and related services. a. The for the performance of a Federal award; costs of audits required by,and performed in (3)The disposal of scrap or surplus mate- accordance with, the Single Audit Act, as rials acquired in the performance of a Fed- implemented by Circular A-133, "Audits of eral award except when non-profit organi7a- States, Local-Governments, and Non-Profit tions are reimbursed for disposal costs at a Organizations" are allowable. Also see 31 predetermined amount;or U.S.C.7505(b)and section 230("Audit Costs") (4) Other specific purposes necessary to of Circular A-133. meet the requirements of the Federal award. b. Other audit costs are allowable if in- d.The only allowable public relations costs eluded in an indirect cost rate proposal,or if are: specifically approved by the awarding agen- (1) Costs specifically required by the Fed- cy as a direct cost to an award. eral award; c. The cost of agreed-upon procedures en- (2)Costs of communicating with the public gagements to monitor subrecipients who are and press pertaining to specific activities or exempted from A-133 under section 200(d)are accomplishments which result from perform- allowable,subject to the conditions listed in ance of Federal awards(these-costs are con- A-133,section 230(b)(2). sidered necessary as part of the outreach ef- 5. Bad debts. Bad debts, including losses fort for the Federal award);or (whether actual or estimated) arising from (3)Costs of conducting general liaison with unoollectible accounts and other claims, re- news media and government public relations lated collection costs; and related legal officers, to the extent that such activities costs,are unallowable. 191 • Pt.230,App. I3 2 CFR Ch.II (1-1-12 Edition) 6. Bonding costs. a. Bonding costs arise d. Special considerations in determining when the Federal Government requires as- allowability. Certain conditions require spe- surance against financial loss to itself or cial consideration and possible limitations in others by reason of the act or default of the determining non-profit organization. They arise also in wher amonts costs undere Federal ion ap- instances where the non-profit organization , Among compensation requires similar assurance.Included are such pear��ello�gle. such conditions bonds as bid,performance,payment,advance (1)Compensation to members of non-profit payment,infringement,and fidelity bonds. organizations,trustees,directors,associates, b. Costs of bonding required pursuant to officers, or the immediate families thereof. the terms of the award are allowable. Determination should be made that such c. Costs of bonding required by the non- compensation is reasonable for the actual profit organization in the general conduct of personal services rendered rather than a dis- its operations are allowable to the extent tribution of earnings in excess of costs. that such bonding is in accordance with (2) Any change in an organization's com- sound business practice and the rates and pensation policy resulting in a substantial premiums are reasonable under the cir- increase in the organization's level of com- cumatances. cularly when it was concur- ?.Communication costs.Costs incurred for rent with an iinncrease in the ratio of Federal telephone services, local and long distance awards to other activities of the organza- telephone calls, telegrams, postage, mes- tion or any change in the treatment of al- senger, electronic or computer transmittal lowability of specific types of compensation services and the like are allowable. due to changes policy. 8. Compensation for personal services. a. e.Unallowable costs.r Costs which are unal- Definition. Compensation for personal serv- Iowable under other paragraphs of this ap- ices includes all compensation paid cur- pendix shall not be allowable under this rently or accrued by the organization for paragraph solely on the basis that they con- services of employees rendered during the stitute personal compensation. period of the award(except as otherwise pro- f. Overtime, extra-pay shift, and multi- vided in subparagraph 8.h of this appendix). shift premiums, Premiums for overtime, It includes, but is not limited to, salaries, extra-pay shifts,and multi-shift work are al- wages, director's and executive committee lowable only with the prior approval of the member's fees,incentive awards,fringe bene- awarding agency except: fits, pension plan costs, allowances for off, (1) When necessary to cope with emer- site pay, incentive pay, Iocation allowances, gencies, such as those resulting from acci- hardship pay,and cost of living differential& dents, natural disasters, breakdowns of b. Allowability. Except as otherwise ape- equipment, or occasional operational bottle- cifically provided in this paragraph, the necks of a sporadic nature. costs of such compensation are allowable to (2) When employees are performing indi- the extent that: • rect functions,such as administration,main- (1) Total compensation to individual em- tenance,or accounting. ployees is reasonable for the services ren- (3)In the performance of tests, laboratory dered and conforms to the established policy procedures, or other similar operations of the organization consistently applied to which are continuous in nature and cannot both Federal and non-Federal activities; and reasonably be interrupted or otherwise com- (2) Charges to awards whether treated as pleted. direct or indirect costs are determined and (4)When lower overall cost to the Federal supported as required in this paragraph. Government will result. c. Reasonableness. (1) When the organize, g. Fringe benefits. (1) Fringe benefits in tion is predominantly engaged in activities the form of regular compensation paid to other than those sponsored by the Federal employees during periods of authorized ab- Government,compensation for employees on sencea from t b, such as vacation leave, federally-sponsored work will be considered sick leave, military leave, and the like, are reasonable to the extent that it is consistent allowable, provided such costs are absorbed with that paid for similar work in the orga- by all organization activities in proportion nizaticn's other activities. to the relative amount of time or effort actu- (2)When the organization is predominantly ally devoted to each. engaged in federally-sponsored activities and (2)Fringe benefits in the form of employer in cases where the kind of employees re- contributions or expenses for social security, quired for the Federal activities are not employee insurance, workmen's compensa- found in the organization's other activities, tion insurance, pension plan costs (see sub- compensation for employees on.federally- paragraph 8.h of this appendix),and the like, sponsored work will be considered reasonable are allowable, provided such benefits are to the extent that it is comparable to that granted in accordance with established writ- paid for similar work in the labor markets in ten organization policies. Such benefits which the organization competes for the whether treated as indirect costs or as direct kind of employees involved, costs, shall be distributed to particular 192 OMB Circulars and Guidance Pt. 230,App. B awards and other activities in a manner con- each quarter of the year to which such costs sistent with the pattern of benefits accruing are assignable are unallowable. to the individuals or group of employees (2) Pension plan termination insurance whose salaries and wages are chargeable to premiums paid pursuant to the Employee such awards and other activities. Retirement Income Security Act(ERISA) of (3)(a)Provisions for a reserve under a self- 1974(Pub. L. 93-406)are allowable. Late pay- insurance program for unemployment com- ment charges on such premiums are mallow- pensation or workers' compensation are al- able. lowable to the extent that the provisions (3) Excise taxes on accumulated funding represent reasonable estimates of the liabil- deficiencies and other penalties imposed ities for such compensation,and the types of under ERISA are unallowable. coverage, extent of coverage, and rates and j. Incentive compensation. Incentive com- premiums would have been allowable had in- pensation to employees based on cost reduc- surance been purchased to cover the risks. tion, or efficient performance, suggestion However, provisions for self-insured liabil- awards, safety awards, etc., are allowable to ities which do not become payable for more the extent that the overall compensation is than one year after the provision is made determined to be reasonable and such costs shall not exceed the present value of the li- are paid or accrued pursuant to an agree- ability, ment entered into in good faith between the (b) Where an organisation follows.a con- organization and the employees before the sistent policy of expensing actual payments services were rendered, or pursuant to an es- to, or on behalf of, employees or former em- tablished plan followed by the organization ployees for unemployment compensation or so consistently as to imply, in,effect, an workers' compensation, such payments are agreement to make such payment. allowable in the year of payment with the k. Severance pay. (1) Severance pay, also prior approval of the awarding agency, pro- commonly referred to as dismissal wages, is vided they are allocated to all activities of a payment in addition to regular salaries and the organization. wages, by organizations to workers whose (4)Costs of insurance on the lives of trust- employment is being terminated. Costs of ees, officers, or other employees holding po- severance pay are allowable only to the ex- sitions of similar responsibility are allow- tent that in each case,it is required by: able only to the extent that the insurance (a)Law represents additional compensation. The (b)Employer-employee agreement costs of such insurance when the organza- (c)Established policy that constitutes,in ef- tion is named as beneficiary are unallowable. feet, an implied agreement on the organi- h. Organization-furnished automobiles, zation's part,or That portion of the cost of organization-fur- (d) Circumstances of the particular employ- nished automobiles that relates to personal ment. use by employees (including transportation (2)Costs of severance payments are divided to and from work) is unallowable as fringe into two categories as follows: benefit or indirect costs regardless of wheth- (a)Actual normal turnover severance pay- er the cost is reported as taxable income to ments shall be allocated to all activities; or, the employees. These costs are allowable as where the organisation provides for a reserve direct costs to sponsored award when nec- for normal severances, such method will be essary for the performance of the sponsored acceptable if the charge to current oper- award and approved by awarding agencies. ations is reasonable in light of payments ac- i. Pension plan costs. (1)Costs of the orga- tually made for normal severances over a nization's pension plan which are incurred in representative past period, and if amounts accordance with the established policies of charged are allocated to all activities of the the organization are allowable,provided: organization. (a) Such policies meet the test of reason- (b) Abnormal or mass severance pay is of ableness; such a conjectural nature that measurement (b)The methods of cost allocation are not of costs by means of an accrual will not discriminatory; achieve equity to both parties. Thus, acorn- (c)The cost assigned to each fiscal year is als for this purpose are not allowable. How- determined in accordance with generally ac- ever, the Federal Government recognizes its cepted accounting principles(GAAP),as pre- obligation to participate,to the extent of its scribed in Accounting Principles Board Opin- fair share,in any specific payment.Thus,al- ion No.8 issued by the American Institute of lowability will be considered on a case-by- Certified Public Accountants;and case basis in the event or occurrence. (d)The costs assigned to a given fiscal year (c)Costs incurred in certain severance pay are funded for all plan participants within packages (commonly known as "a golden six months after the end of that year. How- parachute" payment) which are in an ever, increases to normal and past service amount in excess of the normal severance pension costs caused by a delay in funding pay paid by the organization to an employee the actuarial liability beyond 30 days after upon termination of employment and are 193 Pt. 230, App. B 2 CFR Ch. 1I (1-1-12 Edition) paid to the employee contingent upon a of the activities performed by the employee, change in management control over,or own- that the distribution of activity represents a ership of, the organization's assets are unal- reasonable estimate of the actual work per- lowable. formed by the employee during the periods (d) Severance payments to foreign nation- covered by the reports. als employed by the organization outside the (d) The reports must be prepared at least United States,to the extent that the amount monthly and must coincide with one or more exceeds the customary or prevailing prac- pay periods. titer for the organization in the United (3) Charges for the salaries and wages of States are unallowable,unless they are nec- nonprofessional employees, in addition to essary for the performance of Federal pro- the supporting documentation described in grams and approved by awarding agencies. subparagraphs (1) and (2), must also be sup- (e) Severance payments to foreign nation- ported by records indicating the total num- als employed by the organization outside the her of hours worked each day maintained in United States due to the termination of the conformance with Department of Labor reg- foreign national as a result of the closing of, ulations implementing the Fair Labor or curtailment of activities by,the organiza- Standards Act(FLSA)(29 CFR part 518).For tion in that country,are unallowable,unless this purpose, the term"nonprofessional em- they are necessary for the performance of ployee" shall have the same meaning as Federal programs and approved by awarding "nonexempt employee,"under FLSA. agencies. (4)Salaries and wages of employees used in 1. Training costs. See paragraph 49 of this meeting cost sharing or matching require- appendix. meats on awards must be supported in the m.Support of salaries and wages. same manner as salaries and wages claimed (1) Charges to awards for salaries and for reimbursement from awarding agencies. wages,whether treated as direct costs or in- 9. Contingency provisions. Contributions direct costs, will be based .on documented to a contingency reserve or any similar pro- payrolls approved by a responsible official(s) vision made for events the occurrence of of the organization.The distribution of sale- which cannot be foretold with certainty as ries and wages to awards must be supported to time, intensity, or with an assurance of by personnel activity reports, as prescribed their happening, are unallowable. The term in subparagraph 8.m.(2) of this appendix,ex- "contingency reserve" excludes self-insur- cept when a substitute system has been ap- ance reserves (see Appendix B to this part, proved in writing by the cognizant agency. paragraphs 8.g.(3) and 22.a(2)(d)); pension (See subparagraph E.2 of Appendix A to this 'funds (see paragraph 8.i): and reserves for part.) normal severance pay(see paragraph 8.k.) (2) Reports reflecting the distribution of 10.Defense and prosecution of criminal and activity of each employee must be main- civil proceedings, claims,appeals and patent tamed for all staff members (professionals infringement. and nonprofessionals)whose compensation is a.Definitions. (1)Conviction,as used here- rharged, in whole or in part, directly to in, means a judgment or a conviction of a awards. In addition, in order to support the criminal offense by any court of competent allocation of indirect costs, such reports jurisdiction, whether entered upon as a ver- must also be maintained for other employees diet or a plea,including a conviction due to whose work involves two or more functions a plea of nolo contendere. or activities if a distribution of their corn- (2) Costs include, but are not limited to, pensation between such functions or activi- administrative and clerical expenses; the ties is needed in the determination of the or- cost of legal services, whether performed by ganization's indirect cost rate(s)(e.g.,an em- in-house or private counsel; and the costs of ployee engaged part-time in indirect cost ac- the services of accountants, consultants, or tivities and part-time in a direct function). others retained by the organization to assist Reports maintained by non-profit organizes- it; costs of employees, officers and trustees, tions to satisfy these requirements must and any similar costs incurred before, dur- meet the following standards: ing,and after commencement of a judicial or (a) The reports must reflect an after-the- administrative proceeding that bears a di- fact determination of the actual activity of rect relationship to the proceedings. each employee. Budget estimates (i.e., esti- (3) Fraud, as used herein, means acts of mates determined before the services are fraud corruption or attempts to defraud the performed) do not qualify as support for Federal Government or to corrupt its agents, charges to awards. acts that constitute a cause for debarment (b)Each report must account for the total or suspension(as specified in agency regula- activity for which employees are corn- tions), and acts which violate the False pensated and which is required in fulfillment Claims Act, 31 U.S.C., sections 3729-3731, or of their obligations to the organization. the Anti-Kickback Act,41 U.S.C.,sections 51 (c)The reports must be signed by the indi- and 54. vidual employee, or by a responsible super- (4)Penalty does not include restitution,re- visory official having first hand knowledge imbursement,or compensatory damages. 194 OMB Circulars and Guidance Pt. 230,App. B (5)Proceeding includes an investigation. (1) The costs are reasonable in relation to b. (1)Except as otherwise described herein, the activities required to deal with the pro- costs incurred in connection'with any crimi- ceeding and the underlying cause of action; nal, civil or administrative proceeding (in- (2)Payment of the costs incurred,as allow- eluding filing of a false certification) corn- able and allocable costs,is not prohibited by mended by the Federal Government, or a any other provision(s) of the sponsored State, local or foreign government, are not award; allowable if the proceeding:Relates to a vio- (3) The costs are not otherwise recovered lation of, or failure to comply with, a Fed- from the Federal Government or a third eral, State, local or foreign statute or rege- party, either directly as a result of the pro- lation by the. organization (including its seeding or otherwise;and, agents and employees),and results in any of (4) The percentage of costs allowed does the following dispositions: not exceed the percentage determined by an (a) In a criminal proceeding, a conviction. authorized Federal official to be appropriate, (b) In a civil or administrative proceeding considering the complexity of the litigation, involving an allegation of fraud or similar generally accepted principles governingg the award of legal fees in civil actions involving misconduct, a determination of organize- tional liability, the United States as a party,and such other (c) In the case of any civil or administra- factors as may be appropriate. Such percent- tive proceeding, the imposition of a mone age shall not exceed 80 percent. However, if tary penalty. an agreement reached under subparagraph (d)A final decision by an appropriate Fed- 10.c of this appendix has explicitly consid- ered official to debar or suspend the organ- Bred this 80 percent limitation and permitted zation,to rescind or void an award,or to ter a higher percentage, then the full amount of urinate an award for default by reason of a costs resulting from that agreement shallbe violation or failure to comply with a law or allowable. regulation. f. Costs incurred by the organization in (e) A disposition by consent or corn- connection with the defense of suits broughtby . promise, if the action could have resulted in tion its2 of the Major or ex-employees Act 1988(Puder sec. any of the dispositions described in subpara- 2), including Fraud Act of relief(Pub.nee- graphs 10.b.(1)(a),(b),(c)or(d)of this a essary 0) the cost a all le, he e peen- essar to make such employee whole, where dix. (2) If more than one procee ding inPOlveS the organization was found liable or settled, are unallowable. the same alleged misconduct,the costs of all g. Costs of legal, accounting,and consult- such proceedings shall be unallowable if any ant services, and related costs, incurred in one of them results in one of the dispositions connection with defense against Federal shown in subparagraph 10.b.(1)of this appen- Government claims or appeals, antitrust dix' suits,or the prosecution of claims or appeals c. If a proceeding referred to in subparts against the Federal G unal- graph 10.b of this appendix is commenced byGovernment, are un the Federal Government and is resolved bylowable. h. Costs of legal, accounting, and consult- consent or compromise pursuant to an agree- ant services, and related costs, incurred in meat entered into by the organization and connection with patent infringement litiga- the Federal Government, then the costs in- tion, are unallowable unless otherwise pro- curred by the organization in connection vided for in the sponsored awards. with such proceedings that are otherwise not i. Costs which may be unallowable under allowable under subparagraph 10.b of this ap- this paragraph,including directly associated pendix may be allowed to the extent specifi- costs, shill be.segregated and accounted for tally provided in such agreement. by the organization separately. During the d. If a proceeding referred to in subpara- pendency of any proceeding covered by sub- graph 10.b of this appendix is commenced by paragraphs 10.b and f of this appendix, the a State,local or foreign government,the an-. Federal Government ehail generally with- thorized Federal official may allow the costs hold payment of such costs. However, if in incurred by the organization for such pro- the best interests of the Federal Govern- ceedings, if such authorized official deter- ment, the Federal Government may provide mines that the costs were incurred as a re- for conditional payment upon provision of suit of a specific term or condition of a fed- adequate security, or other adequate assur- erally-sponsored award, or specific written ance,and agreements by the organization to direction of an authorized official of the repay all unallowable costs, plus interest, if sponsoring agency. the costs are subsequently determined to be e. Costs incurred in connection with pro- unallowable. ceedings described in subparagraph 10.b of 11. Depreciation and use allowances. a. this appendix, but which are not made unal- Compensation for the use of buildings, other lowable by that subparagraph, may be al- capital improvements, and equipment on lowed by the Federal Government,but only hand may be made through use allowance or to the extent that: depreciation. However, except as provided in 195 Pt. 230,App. B 2 CFR Ch. 1I (1-1-12 Edition) paragraph 111 of this appendix, a combina- under subparagraph 11.d of this appendix, tion of the two methods may not be used in would be viewed as fully depreciated. How- connection with.a single class of fixed assets ever, a reasonable use allowance may be ne- (e.g., buildings, office equipment, computer gotiated for such assets if warranted after equipment,etc.). taking into consideration the amount of de- b. The computation of use allowances or preciation previously charged to the Federal depreciation shall be based on the acquisi- Government, the estimated useful life re- tion cost of the assets involved.The acquisi- Training at time of negotiation, the effect of tion cost of an asset donated to the non-prof- any increased maintenance charges or de- it organization by a third party shall be its creased efficiency due to age, and any other fair market value at the time of the dona- factors pertinent to the utilization of the tion. asset for the purpose contemplated. •c. The computation of use allowances or g.Criteria where the use allowance method depreciation will exclude: is followed: (1)The cost of land; (1)The use allowance for buildings and im- (2)Any portion of the cost of buildings and provement (including land improvements, equipment borne by or donated by the Fed- such as paved parking areas, fences, and eral Government irrespective of where title sidewalks) will be computed at an annual was originally vested or where it presently rate not exceeding two percent of acquisition resides;and cost. (3)Any portion of the cost of buildings and (2)The use allowance for equipment will be equipment contributed by or for the non- computed at an annual rate not exceeding profit organization in satisfaction of a statu- six and two-thirds percent of acquisition tory matching requirement. cost.When the use allowance method is used d. General criteria where depreciation for buildings, the entire building must be method is followed: treated as a single asset;the building's com- (1)The period of useful service (useful life) ponents (e.g., plumbing system, heating and established in each case for usable capital air conditioning, etc.) cannot be segregated assets must take into consideration such fac- from the building's shell. tors as type of construction, nature of the (3) The two percent limitation, however, equipment used, technological developments need not be applied to equipment which is in the particular program area, and the re- . merely attached or fastened to the building newel and replacement policies followed for but not permanently fixed to it and which is the individual items or classes of assets in- used as furnishings or decorations or for spe- volved. The method of depreciation used to cialized purposes (e.g., dentist chairs and assign the cost of an asset.(or group of as- dental treatment units,counters, laboratory sets)to accounting periods shall reflect the benches bolted to the floor, dishwashers, pattern of consumption of the asset during modular furniture, carpeting, etc.). Such its useful life. equipment will be considered as not being (2) In the absence of clear evidence indi- permanently fixed to the building if it can be eating that the expected consumption of the removed without the need for costly or ex- asset will be significantly greater or lesser in tensive alterations or repairs to the building the early portions of its useful life than in or the equipment. Equipment that meets the later portions, the straight-line method these criteria will be subject to the 6%per- shall be presumed to be the appropriate cent equipment use allowance limitation. method. h.Charges for use allowances or depreoia- (3) Depreciation methods once used shall• tion must be supported by adequate property not be changed unless approved in advance records and physical inventories must be by the cognizant Federal agency..When the taken at least once every two years(a statis- depreciation method is introduced for appli- tical sampling basis is acceptable)to ensure cation to assets previously subject to a use that assets exist and are usable and needed. allowance, the combination of use allow- When the depreciation method is followed, ances and-depreciation applicable to such as- adequate depreciation records indicating the sets must not exceed the total acquisition amount of depreciation taken each period .cost of the assets. must also be maintained. e. When the depreciation method is used 12.Donations and contributions. for buildings, a building's shell may be seg- a. Contributions or donations rendered. regated from each building component (e.g., Contributions or donations, including cash, plumbing system, heating, and air condi- property, and services, made by the organi- tioning system, etc.) and each item depre- zation, regardless of the recipient, are unal- elated over its estimated useful life; or the lowable. entire building(i.e.,the shell and all compo- b.Donated services received: nents) may be treated as a single asset and (1) Donated or volunteer services may be depreciated over a single useful life. furnished to an organization by professional f.When the depreciation method is used for and technical personnel, consultants, and a particular class of assets, no depreciation other skilled and unskilled labor. The value may be allowed on any such assets that, of these services is not reimbursable either 196 OMB Circulars and Guidance Pt.230,App. B 1 as a direct or indirect cost. However, the b. Such costs will be equitably apportioned value of donated services may be used to to all activities of the non-profit organi�a- meet cost sharing or matching requirements tion.Income generated from any of these ac- in accordance with the Common Rule. tivities will be credited to the cost thereof (2)The value of donated services utilized in unless such income has been irrevocably set the performance of a direct cost activity over to employee welfare organizations. shall, when material in amount, be consid- 14. Entertainment costs. Costs of enter- ered in the determination of the non-profit tainment, including amusement, diversion, organization's indirect costs or rate(s) and, and social activities and any costs directly accordingly, shall be allocated a propor- associated with such costs (such as tickets tionate share of applicable indirect costs to shows or sports events, meals, lodging, when theh following exist: rentals, transportation, and gratuities) are (a) aggregate value of the services is unallowable. material; (b)The services are supported by a signifi- 15. Equipment and other capital expendi- cant amount of the indirect costs incurred tures. by the non-profit organization;and a. For purposes of this subparagraph, the (c)The direct cost activity is not pursued following definitions apply: primarily for the benefit of the Federal Gov- (1) "Capital Expenditures"means expendi- ernment. tures for the acquisition cost of capital as- (3) In those instances where there is no sets(equipment,buildings,land),or expendi- basis for determining the fair market value tures to make improvements to capital as- of the services rendered, the recipient and sets that materially increase their value or the cognizant agency shall negotiate an ap- useful life. Acquisition cost means the cost propriate allocation of indirect cost to the of the asset including the cost to put it in services. place.Acquisition cost for equipment,for ex- (4)Where donated services directly benefit ample, means the net invoice price of the a project supported by an award,the indirect equipment, including the cost of any modi- costs:allocated to the services will be consid- fications,attachments,accessories,or auxil- ered as a part of the total costs of the iary apparatus necessary to make it usable project. Such indirect costs may be rein- for the purpose for which it is acquired.An- bnrsed under the award or used to meet cost ciliary charges, such as taxes, duty, protec- sharing or matching requirements. tive in transit insurance,freight,and instal- (5) The value of the donated services may lation may be included in, or excluded from be used to meet cost sharing or matching re- the acquisition cost in accordance with the quirements under conditions described in non-profit organization's regular accounting Section 215.23 of 2 CFR part 215 (OMB Cir- practices. cular A-ll0). Where donated services are (2) "Equipment" means an article of non- treated as indirect costs, indirect cost rates expendable, tangible personal property hay- will separate the value of the donations so ing a useful life of more ham one year and that reimbursement will not be made. an acquisition cost which equals or exceeds c. Donated goods or space. (1) Donated goods;i.e.,expendable personal property/sup the lesser of the capitalization level forfi- plies, and donated use of.space may be fur- liahed by the non-profit es,or organization00 . for fi- nished to a non-profit organization. The nancial statement purposes,or 55000. value of the goods and space is not reimburs- (3) "Special purpose equipment" means able either as a direct or indirect cost. equipment which is used only for research, (2)The value of the donations may be used medical,scientific,or other technical activi- to meet cost sharing or matching share re- ties. Examples of special purpose equipment quirements under the conditions described in include microscopes, x-ray machines, sur- 2 CFR part 215 (OMB Circular A-110). Where gical instruments,and spectrometers. donations are treated as indirect costs,indi- (4) "General purpose equipment" means rect cost rates will separate the value of the equipment, which is not limited to research, donations so that reimbursement will not be medical, scientific or other technical activi- made. ties. Examples include office equipment and 13. Employee morale, health, and welfare furn1shings,,modular offices, telephone net- costs, works, information technology equipment a. The costs of employee information pub- and systems,air conditioning equipment,re- lications, health or first-aid clinics and/or production and printing equipment, and infirmaries, recreational activities, em- motor vehicles. ployee counseling services,and any other ex- b.The following rules of allowability shall penses incurred in accordance with the non- apply to equipment and other capital ex- profit organization's established practice or penditures: custom for the improvement of working con- (1) Capital expenditures for general pur- ditions, employer-employee relations, em- pose equipment,buildings,and land are unal- ployee morale, and employee performance lowable as direct charges, except where ap- are allowable. proved in advance by the awarding agency. 197 Pt. 230,App. B 2 CFR Ch.II (1-1-12 Edition) (2)Capital expenditures for special purpose shall be the difference between the amount equipment are allowable as direct costs,pro- realized on the property and the vided that items with a unit cost of$5000 or undepreciated basis of the property. more have the prior approval of the awarding (2) Gains and losses on the disposition of agency. (3) Capital a depreciable property shall not be recognized to land,Capital expenditures for improvements as a separate credit or charge under the fol- dings,or equipment which mate- lowing conditions: rially increase their value or useful life are (a)The gain or loss is processed through a unallowable as a direct cost except with the depreciation account and is reflected in the prior approval of the awarding agency. depreciation allowable under paragraph 11 of ant)Wh n approved as a direct charge pursu- this appendix. to paragraph 15.b.(1), (2), and (3) above, (b) The property is given in exchange as capital i expenditures h e will be charged in the part of the purchase price of a similar item or periodas otherwise deter red am is incurred, and the gain or loss is taken into account in and negotiated with the awardingng agency. gent, by thdetermining new ethe depreciation cost basis of (5) Equipment and other capital expendi- the new oss r tures are unallowable as indirect costs.How- tamp(c)permissible loss results from the failure as main_ other- ever,see paragraph 11.,Depreciation and use p ovi ed in paragraphinsurance, except ipp allowance, of this a wise provided in paragraph 22 of this appen- allowabiIi appendix for rules on the dix. ty of use allowances or deprecia- (d) Compensation for the use of the prop- tion on buildings,capital improvements,and erty was provided through use allowances in equipment. Also, see paragraph 43., Rental lieu of depreciation in accordance with para- costs of buildings and equipment, of this ap- graph 9 of this appendix. pendix for rules on the allowability of rental (e) Gains and losses arising from mass or costs for land,buildings,and equipment extraordinary ` (6) The unamortized portion of any equip- dispositions s be,considered case-by- meatby written off as a result of a change in cas asi shall be considered on a capitalization Ievels may be recovered by b. Gains or losses of any nature arising continuing to claim the otherwise allowable from the sale or exchange of property other use allowances or depreciation on the equip- than the property covered is subparagraph meat, or by amortizing the amount to be shall be excluded in computing a written off over a period of years negotiated 19. Goods or servicespforr award costs. with the cognizant agency. erronaal use. 16. Fines and penalties. Costs of fines and Costs of nizgoo tion's or services for peployees rsonal u use - penalties resulting from violations of, or able regardless of whether the cost xis re- failure of'the organization to comply with ported as taxable income to the employees. Federal, State, and local laws and regula- 20.Housing and personal living expenses.a. tions are unallowable except when incurred Costs of housing (e.g., depreciation, mainte- as a result of compliance with specific provi- nance, utilities, furnishings, sions of an award or instructions in writing housing rent,t etc.), from the awarding agency. sallowances and personal living re 17. Fund raising and investment manage- penes for/of the fringe nation's officers are meat costs. a. Costs of organized find rais- unallowable as ofwhether benefit or indirect isr e- lug, including financial cam costs regardless of the cost is es. meat drives, solicitation of , endow- ported as taxable income to the employees. quests, and similaro expensesgifts and be- These costs are allowable as direct costs to incurred solely sponsored award when necessary for the per- to raise capital or obtain contributions are formance of the sponsored award and ap- unallowable. b. Costs of investment counsel and staff Proved by awarding agencies. and similar expenses incurred solely to en- b'The term"officers"includes current and hand()income from investments are unallow- past officersand employees. able. 21. Idle facilities and idle capacity. a. As e. Fund raising and investment activities used in this section the following terms have shall be allocated an appropriate share of in- the "Facilities" set forthina below: direct costs under the conditions described or any1) portionFpos' means equipmentqu and buildings in subparagraph B.3 of Appendix A to this llc vely,thereof, anyoche is Bible part. capita wally or collectively, or any other tangible 18. Gains and losses on depreciable assets. owned lor leased by the asset,wherever lnon-p fiat o whether aan ear a.(1)Gains and losses on sale,retirement,or other disposition of depreciable tion. s the included in theproperty (2) "Idle facilities" means completely un- hallbe creditsludeorin chargeseyear to etch they used facilities that are excess to the non- occuring(s)in which the depreciation applicable to profit odly capacity" s currentma needs. such property was included. The amount of (3) "Idle used facilities.the unused he the gain or loss to be included as a credit or pacityfer co partially w It is the charge to the appropriate costdifference between: That which a facilityat grouping(s) could achieve under 100 percent operating 198 OMB Circulars and Guidance Pt. 230,App. B time on a one-shift basis less operating the rates and premiums shall be reasonable interruptions resulting from time lost for re- under the circumstances. pairs, setups, unsatisfactory materials, and (b) Costs allowed for business interruption other normal delays;and the extent to which or other similar insurance shall be limited to the facility was actually used to meet de- exclude coverage of management fees. multi-shift wands during the accounting period. A (e) Costs of insurance or of any provisions shown that this amountof usage wo be used if rld note for a reserve'covering the risk of loss or madly be expected'for the type of facilitydamageto Federal property are allowable volved. in- only too the extent that the organisation is (4)"Cost of idle facilities or idle cad aci liable for such loss or damage. means costs such as P ty (d)Provisions. for a reserve under a self-in- mai-ntenance, repair, surance program are allowable to the extent housing, rent, and other related costs, e.g., that types of coverage, extent of coverage, insurance,.interest, property taxes and de- rates, and premiums would have been al- preciation or use allowances. b. The costs of idle facilities are lowed had insurance been purchased to cover unallow the risks. However, provision for known or able except to the extent that: (1)They are recess reasonably estimated self-insured liabilities, in workload;or to meet fluctuations which do not become payable for more than (2) Although not recce one year after the provision is made, shall nary to meet flue- not exceed the present value of the liability. tuations in workload, they were necessary (e)Costs of insurance on the lives of trust- when acquired and are now idle because of ees, officers, or other employees holding po- changes in program requirements, efforts to sitions of similar responsibilities are allow- achieve more economical operations,reorga- able only to the extent that the insurance nization, termination, or other causes which represents additional compensation(see sub- could not have been reasonably foreseen. paragraph 8.g(4) of,this appendix). The cost Under the exception stated in this subpara- of such insurance when the organization is graph, costs of idle facilities are.allowable identified as the beneficiary is unallowable. for a reasonable period of time, ordinarily (f) Insurance against defects. Costs of in- not to exceed one year,depending on the ini- surance with respect to any costs incurred to tiative taken to use,lease,or dispose of such correct -defects in the organization's mate- facilities• rials or workmanship are c. The costs of idle capacity are normal (g) Medical liabilityunallowable. e) costs of doing business and'are a factor inMedicalliability insurance ranee ii an Men- the normal fluctuations of usage or indirect able costf F Federal research rots n allow- the cost rates from period to period. Such costs to the extent that the Federal researcha pro- are allowable, provided that the capacity is grams involve human subjects or training of reasonably anticipated to be necessary or participants in research techniques. Medical was originally reasonable and is not subject liability insurance costs shall be treated as a to reduction or elimination by use on other direct cost and shall be assigned to indi- Federal awards, subletting, renting, or sale, vidual projects based on the manner in which in accordance with sound business, eco- the insurer allocates the risk to the popu- nomic,or security practices.Widespread idle lation covered bythe insurance. capacity throughout_an entire facility or cou among a group of assets having substantially covered ad l s which could have been the same function may be considered idle fa- by permissiblen or a self (through cilities. the purchase of insurance or aself-insurance 22.Insurance and indemnification.a.Insur- program) are unallowable unless expressly once includesc insurance which the o provided for in the award,except: tionarc is requiredin to organize- (a) Costs incurred because of losses not carry, or which is ap- covered under nominal deductible insurance proved, under the terms of the award and coverage provided in keeping with sound any other insurance which the organization business practice are allowable. maintains in connectibn with the general conduct of its operations. This (b) Minor losseslag , note covered and disappear- does not apply to insurance which represents paragraph such as spoilage,which cce, disappear- 1 fringe benefits for employees (see subpara- once of of supplies, occur in thee. ordinary P course operations,are allowable. 1 graphs B.g and 8.i(2)of this appendix). b. Indemnification includes securing the (1)Costs of insurance required or approved, organization against liabilities to third per- allowable. pursuant to the award are sons and any other loss or damage,not com- (2)Costs of other insurance maintained bypensated by insurance or otherwise.The Fed- the organization in connection with the gen- eral organization oganiz Government is obligated to indemnify era conduct of its operations are allowable provided in theen onlyr to the extent expressly subject to the following limitations: 23. Interest. a. CosProvided in award. a (a)Types and extent of coverage shall be in -on orrowed capital t t mporrar for of ten- accordance with sound business practice and dowment funds, or the use of the usenon-profit 199 S i f I f Pt. 230,App. B 2 CFR Ch.II (1-1-12 Edition) organization's own funds, however rep- bargain purchase option, operating and resented, are unallowable.However,interest maintenance costs,and taxes not included in on debt incurred after September 29, 1995 to the capital leasing arrangement,less arty es- acquire or replace capital assets (including timated credits due under the lease at the renovations, alterations, equipment, land, end of the period defined above. Projected and capital assets acquired through capital operating lease costs shall be based on the leases),acquired after September 29,1995 and anticipated cost of leasing comparable facili- used in support of Federal awards is allow- ties at fair market rates under rental agree- able,provided that: ments that would be renewed or reestab- (1) For facilities acquisitions (excluding lished over the period defined above,and any renovations and alterations)costing over$10 expected maintenance costs and allowable million where the Federal Government's re- property taxes to be borne by the non-profit imbursement is expected to equal or exceed organization directly or as part of the lease 40 percent of an asset's cost, the non-profit arrangement. organization prepares, prior to the acquisi- (3) The actual interest cost claimed is tion or replacement of the capital asset(s),a predicated upon interest rates that are no justification that demonstrates the need for higher than the fair market rate available to the facility in the conduct of federally-spon- the non-profit organization from an unre- cored activities.Upon request,the needs jus- lated("arm's length")third party. tification must be provided to the Federal (4)Investment earnings,including interest agency with cost cognizance authority as a income, on bond or loan principal, pending prerequisite to the continued allowability of payment of the construction or acquisition interest on debt and depreciation related to costs, are used to offset allowable interest the facility. The needs justification for the cost..Arbitrage earnings reportable to the In- acquisition of a facility should include, at a ternal Revenue Service are not required to minimum,the following: be offset against allowable interest costs. (a) A statement of purpose and justifica- (5) Reimbursements are limited to the tion for facility acquisition or replacement. least costly alternative based on the total (b) A statement as to why current !mill- cost analysis required under subparagraph ties are not adequate. 23.b.of this appendix.For example,if an op- (c) A statement of planned future use of erating lease is determined to be less costly the facility. - than purchasing through debt financing, (d) A description of the financing agree- then reimbursement is limited to the ment to be arranged for the facility. amount determined if leasing had been used. (e) A summary of the building contract In all cases where a lease/purchase analysis with estimated cost information and state- is performed, Federal reimbursement shall ment of source and use of funds. be based upon the least expensive alter- (f)A schedule of planned occupancy dates. native. (2) For facilities costing over$500,000, the (6) Non-profit organizations are also sub- non-profit organization prepares,prior to the ject to the following conditions: acquisition or replacement of the facility, a (a) Interest on debt incurred to finance or lease/purchase analysis in accordance with refinance assets acquired before or reac- the provisions of§§215.30 through 215.37 of 2 quired after September 29,1995,is not allow- CFR 215 (OMB Circular A-120), which shows able. that a financed purchase or capital lease is (b) Interest attributable to fully depre- Iess costly to the organization than other dated assets is unallowable. leasing alternatives, on a net present value (c) For debt arrangements over$1 million, basis.Discount rates used should be equal to unless the non-profit organization makes an the non-profit organization's anticipated in- initial equity contribution to the asset pur- terest rates and should be no higher than the chase of 25 percent or more,non-profit orga- fair market rate available to the non-profit nizations shall reduce claims for interest ex- organization from an unrelated ("arm's pense by an amount equal to imputed inter- length") third-party. The lease/purchase est earnings on excess cash flow,which is to analysis shall include a comparison of the be calculated as follows.Annually,non-prof- net present value of the projected total cost it organizations shall prepare a cumulative comparisons of both alternatives over the pe- (from the inception of the project)report of rind the asset is expected to be used by the monthly cash flows that includes inflows and non-profit organization. The cost compari- outflows, regardless of the funding source. sons associated with purchasing the facility Inflows consist of depreciation expense, am- shall include the estimated purchase price, ortization of capitalized construction inter- anticipated operating and maintenance costs -est, and annual interest expense. For cash (including property taxes, if applicable) not flow calculations, the annual inflow figures included in the debt financing,less any esti- shall be divided by-the number of months in mated asset salvage.value at the end of the the year (usually 12) that the building is in period defined above. The cost comparison service for monthly amounts. Outflows con- for a capital lease shall include the esti- silt of initial equity contributions, debt mated total lease payments, any estimated principal payments(less the pro rata share 200 OMB Circulars and Guidance Pt. 230,App. B attributable to the unallowable costs of (1) Attempts to influence the outcomes of land) and interest payments. Where cumu- any Federal, State, or local election, ref- lative inflows exceed cumulative outflows, erendum, initiative, or similar procedure, interest shall be calculated on the excess through in kind or cash contributions, en- inflows for that period and be treated as a re- dorsements,publicity,or similar activity; duction to allowable interest expense. The (2) Establishing, administering, contrib- rate of interest to be used to compute earn- uting to, or paying the expenses of a polit- ings on excess cash flows shall be the three ical,party, campaign, political action com- month Treasury Bill closing rate as of the mittee, or other organization established for last business day of that month. the purpose of influencing the outcomes of (d) Substantial relocation of federally- elections; sponsored activities from a facility financed (3)Any attempt to influence:The introduc- by indebtedness, the cost of which was fund- tion of Federal or State legislation; or the ed in whole or part through Federal reim- enactment or modification of any pending bursements, to another facility prior to the Federal or State legislation through commu- expiration of a period of 20 years requires no- nioation with any member or employee of tice to the Federal cognizant agency.The ex- the Congress or State legislature (including tent of the relocation, the amount of the efforts to influence State or local officials to Federal participation in the financing, and engage in similar lobbying activity), or with the depreciation and interest charged to date any Government official or employee in con- may require negotiation and/or downward nection with a decision to sign or veto.en- adjustments of replacement space charged to rolled legislation; Federal programs in the future. (4)Any attempt to influence:The introduc- e)The allowable costs to acquire facilities tion of Federal or State legislation; or the and equipment are limited to a fair market enactment or modification of any pending value available to the non-profit organize- Federal or State legislation by preparing, tion from an unrelated ("arm's length") distributing or using publicity or propa- third party, ganda, or by urging members of the general b. For non-profit organizations subject to ptiblic or any segment thereof to contribute "full coverage" under the Cost Accounting to or participate in any mass demonstration, Standards (CAS) as defined at 48 CFR march, rally, fundraising drive, lobbying 9903.201, the interest allowability provisions campaign or letter writing or telephone cam- of subparagraph a do not apply. Instead, paign;or these organizations' sponsored agreements (5)Legislative liaison activities, including atare subject to CAS 414(48 CFR 9903.414),cost mittee e hearings,at legislativetheisessions or core- of money as an element of the cost of facili- garding legislation, and an information ere- ffect ties capital, and CAS 417 (48 CFR 9903.417), wheand activities the efca- cost of money as an element of the cost of of d legislation, when such activities are are- capital assets under construction. trion on in an effort toof engageo in knowing prepare- capital c. The following definitions are to be used lobo for an effort to in unallowable for purposes of this paragraph: lobbying. b. The following activities are excepted (1)Re-acquired assets means assets held by from the coverage of subparagraph 25.a of the non-profit organization prior to Sep- this appendix: tember 29, 1995 that have again come to be (1)Providing a technical and factual pres- held by the organization, whether through entation of information on a topic directly repurchase or refinancing. It does not in- related to the performance of a grant, con- clude assets acquired to replace older assets. tract or other agreement through hearing (2) Initial equity contribution means the testimony, statements or letters to the Con- amount or value of contributions made by gress or a State legislature, or subdivision, non-profit organizations for the acquisition member, or cognizant staff member thereof, of the asset or prior to occupancy of facili- in response to a documented request(includ- ties. ing a Congressional Record notice requesting (3) Asset costs means the capitalizable testimony or statements for the record at a costs of an asset, including construction regularly scheduled hearing)made by the re- costs,acquisition costs,and other such costs cipient member, legislative body or subdivi- capitalized in accordance with GAAP. sion, or a cognizant staff member thereof; 24.Labor relations costs. Costs incurred in provided such information is readily obtain- maintaining satisfactory relations between able and can be readily put in deliverable the organization and its employees, includ- form; and further provided that costs under ing costs of labor management committees, this section for travel, lodging or meals are employee publications,and other related ac- unallowable unless incurred to offer testi- tivities are allowable. mony at a regularly scheduled Congressional 25. Lobbying. a. Notwithstanding other hearing pursuant to a written request for provisions of this appendix, costs associated such presentation made by the Chairman or with the following activities are unallow- Ranking Minority Member of the Committee able: or Subcommittee conducting such hearing. 201 Pt. 230,App.B 2 CFR Ch. 1I (1-1-12 Edition) (2)Any lobbying made unallowable by sub- of the Executive Branch of the Federal Gov- paragraph 25.a.(3) of this appendix to influ- ernment to give consideration or to act re- ence State legislation in order to directly re- garding a sponsored agreement or a regu- duce the cost, or to avoid material impair- latory matter are unallowable. Improper la- ment of the organization's authority to per- flnence means any influence that induces or form the grant, contract, or other agree- tends to induce a Federal employee or officer meat. to give consideration or to act regarding a (3)Any activity specifically authorized by federally-sponsored agreement or regulatory statute to be undertaken with funds from matter on any basis other than the merits of the grant,contract,or other agreement, the matter. c. (1) When an organization seeks reim- 26. Losses on other sponsored agreements bursement for indirect costs, total lobbying or contracts. Any excess of costs over in- costs shall be separately identified in the in- come on any award is unallowable as a cost direct cost rate proposal, and thereafter of any other award.This includes,but is not treated as other unallowable activity costs limited to, the organization's contributed in accordance with the procedures of sub- portion by reason of cost sharing agreements paragraph B.3 of Appendix A to this part. or any under-recoveries through negotiation (2) Orga indironsect shall , as part of of lump sums for, or ceilings on, indirect the annual indirect cost rate proposal,a cer- tification that the requirements and stand- Oosts. ards of this paragraph have been complied 27.Maintenance and repair costs. Costs,in- with. curred for necessary mainteiiance,repair, or (3) Organizations shad maintain adequate upkeep of buildings and equipment (includ- records to demonstrate that the determine- mg Federal property unless otherwise pro- tion of costs as being allowable or unallow- vided for) which neither.add to the perme- able pursuant to paragraph 25 complies with neat value of the property nor appreciably the requirements of this Appendix, prolong its intended life,but keep it in an ef- (4)Time logs,calendars,or similar records ficient operating condition, are allowable. shall not be required to be created for pur- Costs incurred for improvements which add poses of complying with this paragraph dur- to the permanent value of the buildings and ing any particular calendar month when:the equipment or appreciably prolong their in- employee engages in lobbying(as defined in tended life shall be treated as capital ex- subparagraphs 25.a. and b. of this appendix) penditures (see paragraph 15 of this appen- 25 percent or less of the employee's corn- dix). pensated hours of employment during that 28. Materials and supplies costs. a. Costs calendar month, and within the preceding incurred for materials, supplies, and fab- five-year period, the organization has not ricated parts necessary to carry out a Fed- materially misstated allowable or uaallow- eral award are allowable. able costs of any nature, including legiala- b. Purchased materials and supplies shall tive lobbying costs. When the conditions de- be charged at their actual rices, net of ap- scribed in this subparagraph are met,organ- plicabp al nations are not required to establish records storesle credits.sckWithdrawals from charged at to support the allowability of claimed costs stores or actual netooma should be eat d in addition to records already required or their cost under any recognized method of pricing inventory withdrawals, maintained. Also, when the conditions de- scribed in this subparagraph are met,the ab- consistently applied. Incoming transpor- sence of time logs, calendars, or similar tation charges are a proper part of materials records will not serve as a basis for die- and supplies costs. allowing costs by contesting estimates of c. Only materials and supplies actually lobbying time spent by employees during a used for the performance of a Federal award calendar month. may be charged as direct costs. (5) Agencies shall establish procedures for d. Where federally-donated or furnished resolving in advance, in consultation with materials are used in performing the Federal OMB; any significant questions or disagree- award, such materials will be used without masts concerning the interpretation or ap- ni' rge. plication of paragraph 25. Any such advance 29. Meetings and conferences. Costs of resolution shall be binding in any subsequent meetings and conferences, the primary pur- settlements, audits or investigations with pose of which is the dissemination of tech- respect to that grant or contract for pur- nical information, are allowable. This in- poses of interpretation of this Appendix; pro- eludes costs of meals, transportation,rental vided, however, that this shall not be con- of facilities, speakers' fees, and other items strued to prevent a contractor or grantee incidental to such meetings or conferences. from contesting the lawfulness of such a de- But see paragraphs 14.,Entertainment costs, termination. and 33.,Participant support costs of this ap- d.Executive lobbying costs.Costs incurred pendix. in attempting to improperly influence either 30.Memberships, subscriptions,and profes- directly or indirectly,an employee or officer sional activity costs. a. Costs of the non- 202 OMB Circulars and Guidance Pt.230, App. B profit organization's membership in busi- or any United States patent application, ness, technical, and professional organi7a- where the Federal award does not require tions are allowable. conveying title or a royalty-free license to b. Costs of the non-profit orga.nization's the Federal Government (but see paragraph subscriptions to business, professional, and 45., Royalties and other costs for use of pat- te bnical periodicals are allowable. ents and copyrights,of this appendix). c. Costs of membership in any civic or 35. Plant and homeland security costs. community organization are allowable with Necessary and reasonable expenses incurred prior approval by Federal cognizant agency. for routine and homeland security to protect d.Costs of membership in any country club facilities, personnel, and work products are or social or dining club or organization are allowable. Such costs include, but are not unallowable. limited to, wages and uniforms of personnel 31. Organization costs. Expenditures, such engaged in security activities; equipment; as incorporation fees, brokers' fees, fees to barriers; contractual security services; con- promoters, organizers or management con- sultants;etc.Capital expenditures for home- sultants, attorneys, accountants, or.invest- land and plant security purposes are subject ment counselors, whether or not employees to paragraph 15., Equipment and other cap- of the organization, in connection with es- ital expenditures,of this appendix. tablishment or reorganization of an organi- 36. Pre-agreement costs. Pre-award costs zation,are unallowable except with prior ap- are those incurred prior to the effective date proval of the awarding agency. of the award directly pursuant to the nego- 32. Page charges in professional journals. tiation and in anticipation of the award Page charges for professional journal publi- where such costs are necessary to comply cations are allowable as a necessary part of with the proposed delivery schedule or period research costs,where: of performance. Such costs are allowable a. The research papers report work sup- only to the extent that they would have been ported by the Federal Government;and allowable if incurred after the date of the b.The charges are levied impartially on all award and only with the written approval of research papers published by the journal, the awarding agency. whether or not by federally-sponsored au- 37. Professional services costs. a. Costs of thors. professional and consultant services ren- 33. Participant support costs. Participant dered by persons who are members of a par- support costs are direct costs for items such ticular profession or possess a special skill, as stipends or,subsistence allowances, travel and who are not officers or employees of the allowances, and registration fees paid to or non-profit organization, are allowable, sub- on behalf of participants or trainees(but not ject to subparagraphs b and c when reason- employees) in connection with meetings, able in relation to the services rendered and conferences, symposia, or training projects. when not contingent upon recovery of the These costs are allowable with the prior ap- costs from the Federal Government.In addi- proval of the awarding agency. tion, legal and related services are limited 34. Patent costs. a.The following costs re- under paragraph 10 of this appendix. lating to patent and copyright matters are b.In determining the allowability of costs allowable: cost of preparing disclosures, re- in a particular case,no single factor or any ports, and other documents required by the special combination of factors is necessarily Federal award and of searching the art to determinative. However, the following fac- the extent necessary to make such discio- tors are relevant: sures; cost of preparing documents and any (1)The nature and scope of the service ren- other patent costs in connection with the fil- dered in relation to the service required. ing and prosecution of a United States pat- (2) The necessity of contracting for the ent application where title or royalty-free li- service, considering the non-profit organize- cense is required by the Federal Government tion's capability in the particular area. to be conveyed to the Federal Government; (3)The past pattern of such costs,particu- and general counseling services relating to larly in the years prior to Federal awards. patent and copyright matters,such as advice (4) The impact of Federal awards on the on patent and copyright laws, regulations, non-profit organization's business (i.e., what clauses, and employee agreements (but see new problems have arisen). paragraphs 37., Professional services costs, (5)Whether the proportion of Federal work and 44., Royalties and other costs for use of to the non-profit organization's total busi- patents and copyrights,of this appendix). ness is such as to influence the non-profit or- b. The following costs related to patent ganization in favor of incurring the cost, and copyright matter are unallowable: particularly where the services rendered are (1) Cost of preparing disclosures, reports, not of a continuing nature and have little re- and other documents and of searching the lationship to work under Federal grants and art to the extent necessary to make disclo- contracts. sures not required by the award. (6) Whether the service can be performed (2) Costs in connection with filing and more economically by direct employment prosecuting any foreign patent application, rather than contracting. 203 Pt. 230,App. B 2 CFR Ch. II (1-1-12 Edition) (7) The qualifications of the individual or b.In publications,costs of help wanted ad- concern rendering the service and the cos- vertising that includes color,includes adver- tomary fees charged, especially on non-Fed- Using material for other than recruitment eral awards. purposes, or is excessive in size (taking into (8)Adequacy of the contractual agreement consideration recruitment purposes for for the service (e.g., description of the serv- which intended and normal organizational ice, estimate of time required, rate of corn- practices in this respect),are unallowable. pensation,and termination provisions). c.Costs of help wanted advertising,special c. In addition to the factors in subpara- emoluments, fringe benefits, and salary al- graph 37.b of this appendix, retainer fees to lowances incurred to attract professional be allowable must be supported by evidence personnel from other organizations that do of bona fide services available or rendered not meet the test of reasonableness or do not 38.Publication and printing costs.a.Publi- conform with the established practices of the cation costs include the costs of printing(in- organization,are unallowable. eluding the processes of composition, plate- d.Where relocation costs incurred incident making, press work, binding, and the end to recruitment of a new employee have been products produced by such processes), dis- allowed either as an allocable direct or indi- tribution, promotion, hailing, and general root cost, and the newly hired employee re- handling.Publication costs also include page signs for reasons within his control within charges in professional publications. twelve months after being hired, the organi- b.If these costs are not identifiable with a zation will be required to refund or credit particular cost objective,they should be al- such relocation costs to the Federal Govern- located as indirect costs to all benefiting ac- ment. tivities of the non-profit organization. 42. Relocation costs. a. Relocation costs c. Page charges for professional journal are costs incident to the permanent change publications are allowable as a necessary of duty assignment (for an indefinite period part of research costs where: or for a stated period of not less than 12 (1) The research papers report work sup- months) of an existing employee or upon re- ported by the Federal Government:and ' craitment of a new employee. Relocation (2) The charges are levied impartially on costs are allowable,subject to the limitation all research papers published by the journal, described in subparagraphs 42.b, c, and d of whether or not by federally-sponsored an- this appendix,provided that: thors. (1)The move is for the benefit of the em- 39. Rearrangement and alteration costs. plover. Costs incurred for ordinary or normal rear- (2) Reimbursement to the employee is in rangement and alteration of facilities are al- accordance with an established written poi- lowable. Special arrangement and alteration icy consistently followed by the employer. costs incurred specifically for the project are (3)The reimbursement does not exceed the allowable with the prior approval of the employee's actual(or reasonably estimated) awarding agency. expenses. 40. Reconversion costs. Costs incurred in b. Allowable relocation costs for current the restoration or rehabilitation of the non- employees are limited to the following: profit organization's facilities to approxi- (1)The costs of transportation of the em- mately the same condition existing imme- ployee. members of his in:mediate family diately prior to commencement of Federal and his household, and personal effects to awards, less costs related to normal wear the new location. • and tear,are allowable. (2) The costs of finding a new home, such 41.Recruiting costs:a.Subject to subpara- as advance trips by employees and spouses to graphs 41.b, c, and d of this appendix, and locate living quarters and temporary lodging provided that the size of the staff recruited during the transition period,up to maximum and maintained is in keeping with workload period of 30 days, including advance trip requirements, costs of'`help wanted"•adver- time. tising, operating costs of an employment of- (3)Closing costs, such as brokerage, legal, fine necessary to secure and maintain an and appraisal fees, incident to the disposi- adequate staff,costs of operating an aptitude tion of the employee's former home. These and educational testing program, travel costs, together with those described in sub- costs of employees while engaged in recruit- paragraph 42.b.(4) of this appendix, are lim- ing personnel, travel costs of applicants for ited to 8 percent of the sales price of the em- interviews for prospective employment, and ployee's former home. relocation costs incurred incident to recruit- (4) The continuing costs of ownership of ment of new employees,are allowable to the the vacant former home after the settlement extent that such costs are incurred pursuant or lease date of the employee's new perma- to' a well-managed recruitment program. vent home,such as maintenance of buildings Where the organization uses employment and grounds(exclusive of fixing up expenses), agencies, costs that are not in excess of utilities,taxes,and property insurance. standard commercial rates for such.services (5) Other necessary and reasonable ex- are allowable. penses normally incident to relocation,such 204 Pt. 230,App. B 2 CFR Ch. 1I (1-1-12 Edition) However, these costs are allowable as direct below. They are to be used in conjunction costs,with prior approval by awarding agen- with the other provisions of this appendix in cies, when they are necessary for the per- termination situations. formance of Federal programs. a. The cost of items reasonably usable on 46. Specialized service facilities. a. The the non-profit organization's other work costs of services provided by highly complex shall not be allowable unless the non-profit or specialized facilities operated by the non- organization submits evidence that it would profit organization,such as computers,wind not retain such items at cost without sus- tunnels,and reactors are allowable,provided tanning a loss. In deciding whether such the charges for the services meet the condi- items are reasonably usable on other work of tions of either paragraph 46 b. or c. of this the non-profit organization, the awarding appendix and, in addition,take into account agency should consider the non-profit orga- any items of income or Federal financing nization's plans and orders for current and that qualify as applicable credits under sub- scheduled activity. Contemporaneous pur- paragraph A.5.of Appendix A to this part. chases of common items by the non-profit b. The costs of such services, when mate- organization shall be regarded as evidence rial, must be charged directly to applicable that such items are reasonably usable on the awards based on actual usage of the services non-profit organization's other work. Any on the basis of a schedule of rates or estab- acceptance of common items as allocable to lished methodology that does not discrimi- the terminated portion of the Federal award nate against federally-supported activities of shall be limited to the extent that the quan- the non-profit organization, including usage tities of such items on hand, in transit, and by the non-profit organization for internal on order are in excess of the reasonable purposes,and is designed to recover only the quantitative requirements of other work. aggregate costs of the services. The costs of b. If in a particular case, despite all ma- each service shall.consist normally of both sonable efforts by the non-profit organiza- its direct costs and its allocable share of all tion, certain costs cannot be discontinued indirect costs. Rates shad be adjusted at immediately after the effective date of ter- least biennially, and shall take into consid- ruination,such costs are generally allowable eration over/under applied costs of the pre- within the limitations set forth in this ap- vious period(s). pendix, except that any such costs con- c. Where the costs incurred for a service tinning after termination due to the neg- are not material, they may be allocated as ligent or willful failure of the non-profit or- indirect costs. ganization to discontinue such costs shall be d. Under some extraordinary cir- unallowable. cnmctances, where it is in the best interest .c. Loss of useful value of special tooling, of the Federal Government and the institu- machinery,and is generally allowable if: tion to establish alternative costing arrange- (1)Such special tooling,special machinery, meats, such arrangements may be worked or equipment is not reasonably capable of out with the cognizant Federal agency. use in the other work of the non-profit orga- 47.Taxes.a.In general,taxes which the or- nization, ganization is required to pay and which are (2)The interest of the Federal Government paid or accrued in accordance with GAAP, is protected by transfer of title or by other and payments made to local governments in means deemed appropriate by the awarding lieu of taxes which are commensurate with agency,and the local government services received are (3)The loss of useful value for any one ter- allowable, except for taxes from which ex- urinated Federal award is limited to that emptions are available to the organization portion of the acquisition cost which bears directly or which are available to the organi- the same ratio to the total acquisition cost zation based on an exemption afforded the as the terminated portion of the Federal Federal Government and in the latter case award bears to the entire terminated Federal when the awarding agency makes available award and other Federal awards for which the necessary exemption certificates,special the special tooling, special machinery, or assessments on land which represent capital equipment was acquired. improvements,and Federal income taxes. d. Rental costs under unexpired leases are b.Any refund of taxes,and any payment to generally allowable where clearly shown to the organization of interest thereon, which have been reasonably necessary for the per- were allowed as award costs,will be credited formance of the terminated Federal award either as a cost reduction or cash refund, as less the residual value of such leases,if: appropriate,to the Federal Government. (1)The amount of such rental claimed does 48. Termination costs applicable to soon- not exceed the reasonable use value of the sored agreements. Termination of awards property leased for the period of the Federal generally gives rise to the incurrence of award and such further period as may be rea- costs, or the need for special treatment of sonable,and costs, which would not have arisen had the (2) The non-profit organization makes all Federal award not been terminated. Cost reasonable efforts to terminate, assign, set- principles covering these items are set forth tle, or otherwise reduce the cost of such 206 OMB Circulars and Guidance Pt.230,App. B lease.There also may be included the cost of field in which the employee is now working alterations of such leased property,provided or may reasonably be expected to work,and such alterations were necessary for the per- are limited to: formance of the Federal award, and of rea- (1)Training materials. sonable restoration required by the provi- (2)Textbooks. sions of the lease. (3)Fees charges by the educational institu- e. Settlement expenses including the fol- tion. lowing are generally allowable: (4)Tuition charged by the educational in- (1)Accounting, legal, clerical, and similar stitution or, in lieu of tuition, instructors' costs reasonably necessary for: salaries and the related share of indirect (a) The preparation and presentation to costs of the educational institution to the the awarding agency of settlement claims extent that the sum thereof is not in excess and supporting data with respect to the ter- of the tuition which would have been paid to minated portion of the Federal award,unless the participating educational institution. the termination is for default(see§215.61 of (5)Salaries and related costs of instructors ' 2 CFR part 215(OMB Circular A-110));and who are employees of the organization. (b)The termination and settlement of sub- (6) Straight-time compensation of each awards, employee for time spent attending classes (2)Reasonable costs for the storage, trans- during working hours not in excess of 156 portation, protection, and disposition of hours per year and only to the extent that property provided by the Federal Govern- circumstances do not permit the operation of ment or acquired or produced for the Federal classes or attendance at classes after regular award, except when grantees or contractors working hours; otherwise, such compensa- are reimbursed for disposals at a predeter- tion is unallowable. mined amount in accordance with §215.32 c.Costs of tuition,fees,training materials, through 215.37 of 2 tint part 215 (OMB Cir- and textbooks (but not subsistence, salary, cular A-110). or any other .emoluments) in connection (3) Indirect costs related to salaries and with full-time education,including that pro- wages incurred as settlement expenses in vided at the organization's own facilities,at subparagraphs 48.e.(1) and (2) of this appen- a post-graduate(but not undergraduate)col- dix. Normally, such indirect costs shall be lege level, are allowable only when the limited to fringe benefits, occupancy cost, course or degree pursued is related to the and immediate supervision. field in which the employee is now working f. Claims under sub awards, including the or may reasonably be expected to work, and allocable portion of claims which are cam- only where the costs receive the prior ap- mon to the Federal award,and to other work proval of the awarding agency. Such costs of the non-profit organization are generally are limited to the costs attributable to a allowable. total period not to exceed one school year for An appropriate share of the non-profit or- each employee so trained. In unusual cases ganization's indirect expense may be ally the period may be extended. cated to the amount of settlements with sub- d.Costs of attendance of up to 16 weeks per contractors_ and/or subgrantees, provided employee per year at specialized programs that the amount allocated is otherwise con- specifically designed to enhance the effec- sistent with the basic guidelines contained tiveness of executives or managers or to pre- in Appendix A.The indirect expense so allo- pare employees for such positions are allow- cated shall exclude the same and similar able. Such costs include enrollment fees, costs claimed directly or indirectly as settle- training materials, textbooks and related ment expenses. charges, employees' salaries, subsistence, 49. Training costs. a. Costs of preparation and travel. Costs allowable under this pare- and maintenance of a program of instruction graph do.not include those for courses that including but not limited to on-the-job, are part of a degree-oriented curriculum, classroom, and apprenticeship training, de- which are allowable only to the extent set . signed to increase the vocational effective- forth in subparagraphs b and c. ness of employees, including training mate- e.Maintenance expense,and normal depre- rials,textbooks,salaries or wages of trainees elation or fair rental, on facilities owned or (excluding overtime compensation which leased by the organization for training pur- might arise therefrom),and(i)salaries of the poses are allowable to the extent set forth in director of training and staff when the train- paragraphs 11,27,and 50 of this appendix. ing program is conducted by the organiza- f. Contributions or donations to edu- tion; or (ii) tuition and fees when the train- cational or training institutions, including ing is in an institution not operated by the the donation of facilities or other properties, organization,are allowable. and scholarships or fellowships,are unallow- b. Costs of part-time education, at an un- able. dergraduate or post-graduate college level, g. Training and education costs in excess including that provided at the organization's of those otherwise allowable under subpara- own facilities, are allowable only when the graphs 49.b and c of this appendix may be al- course or degree pursued is relative to the lowed with prior approval of the awarding 207 Pt. 230,App. C 2 CFR Ch. II (1-1-12 Edition) agency. To be considered for approval, the transportation savings; or offer accommoda- organization must demonstrate that such tions not reasonably adequate for the tray- costs are consistently incurred pursuant to eler's medical needs. The non-profit organi- an established training and education pro- zation must justify and document these con- gram, and that the course or degree pursued ditions on a case-by-case basis in order for is relative to the field in which the employee the use of first-class airfare to be allowable is now working or may reasonably be ex- in such cases. petted to work. (2) Unless a pattern of avoidance is de- 50. Transportation costs: Transportation tatted, the Federal Government will gen- costs include freight, express, cartage, and erally not question a non-profit organiza- postage charges relating either to goods pur- tion's determinations that customary stand- chased, in process, or delivered. These costs aid airfare or other discount airfare is un- are allowable. When such costs can readily available for specific trips if the non-profit be identified with the items involved, they organization can demonstrate either of the may be directly charged as transportation following: that such airfare was not avail- costs or added to the cost of such items (see able in the specific case; or that it is the paragraph 28 of this appendix).Where identi- non-profit organization's overall practice to fication with the materials received cannot make routine use of such airfare. readily be made,transportation costs may be d. Air travel by other than commercial charged to the appropriate indirect cost ac- carrier.Costs of travel by non-profit organi- counts if the organization follows a con- zation-owned, -leased, or-chartered aircraft sistent,equitable procedure in this respect. include the cost of lease, charter, operation 51.Travel costs. (including personnel costs),maintenance,de- a. General. Travel costs are the.expenses predation, insurance, and other related for transportation, lodging,subsistence, and costs.The related items incurred by employees who are portion of such costs that exceeds a in travel status on official business of the as cost provided allowable commercial air anal- non-profit organization. Such costa may be for in subparagraph] c., is na charged on an actual cost basis, on a per loveable. diem or mileage basis in lieu of actual costs e. Foreign travel. Direct charges for for- incurred, or on a combination of the two, ergn travel costs are allowable only when the provided the method used is applied to an en- travel has received prior approval of the tire trip and not to selected days of the trip, awarding agency. Each separate foreign trip and results in charges consistent with those must receive such approval. For purposes of normally allowed in like circumstances in this provision, "foreign travel"includes any the non-profit organization's non-federally- travel outside Canada, Mexico, the United sponsored activities. States,and any United States territories and b. Lodging and subsistence. Costs incurred possessions. However, the term "foreign by employees and officers for travel, includ- ing costs of lodging, other subsistence, and in _a foreign country means travel outside incidental expenses, shall be considered rea- that country. sonable and allowable only to the extent 52. Trustees. Travel and subsistence costs such costs do not exceed charges normally of trustees (or directors)are allowable. The allowed by the non-profit organization in its costs are subject to restrictions regarding regular operations as the result of the non- lodging,subsistence and air travel costs pro- profit organization's written travel policy. vided in paragraph 51 of this appendix. In the absence of an acceptable,written non- profit organization policy regarding travel APPENDIX C TO PART 230—NON-PROFIT costs, the rates and amounts established ORGANIZATIONS NOT SUBJECT TO under subchapter I of Chapter 57, Title 5, THIS PART United States Code("Travel and Subsistence Expenses; Mileage Allowances"), or by the 1. Advance Technology Institute (ATI), Administrator of General Services,or by the Charleston, South Carolina President (or his or her designee) pursuant 2. Aerospace Corporation, El Segundo, Cali- to any provisions of such subchapter shall fornia apply to travel under Federal awards(48 CFR 3. American Institutes of Research (AIR), 31.205-46(a)). Washington DC c. Commercial air travel. (1)Airfare costs 4. Argonne National Laboratory, Chicago, U- in excess of the customary standard commer- linois cial airfare (coach or equivalent), Federal 5. Atomic Casualty Commission, Wash- Government contract airfare (where author- ington,DC ized and available),or the lowest commercial 6. Battelle Memorial Institute, discount airfare are nnatlowable except when Headquartered in Columbus,Ohio such accommodations would: require circui- 7. Brookhaven National Laboratory, Upton, tons routing;require travel during unreason- New York able hours;excessively prolong travel;result 8. Charles Stark Draper Laboratory, Incor- in additional costs that would offset the porated,Cambridge,Massachusetts 208 OMB Circulars and Guidance Pt. 230, App.C 9. CNA Corporation(CNAC),Alexandria,Vir- 22. Rand Corporation, Santa Monica, Cali- ginia. fornia 10. Environmental Institute of Michigan, 23. Research Triangle Institute, Research Ann Arbor,Michigan Triangle Park,North Carolina 11. Georgia Institute of Technology/Georgia 24. Riverside Research Institute, New York, Tech Applied Research Corporation/Geor- New York gia Tech Research Institute, Atlanta, 25. South Carolina Research Authority Georgia (SCRA),Charleston,South Carolina 12. Hanford Environmental Health Founda- 26. Southern Research Institute, Bir- tion,Richland,Washington mingham,Alabama 13.IIT Research Institute,Chicago,Illinois 27. Southwest Research Institute, San Anto- 14. Institute of Gas Technology, Chicago,Il- nio,Texas linois 28.SRI International,Menlo Park,California 15. Institute for Defense Analysis, Alexan- 29. Syracuse Research Corporation, Syra- dria,Virginia cuse,New York 16.LMI,McLean,Virginia 30. Universities Research Association, Incor- 17. Mitre Corporation, Bedford, Massachu- porated (National Acceleration Lab), Ar- • setts gonna,Illinois 18. Mitretek Systems, Inc., Falls Church, 31.Urban Institute,Washington DC Virginia 32. Non-profit insurance companies, such as 19.National Radiological Astronomy Observ- Blue Cross and Blue Shield Organi ations story,Green Bank,West Virginia 33. Other non-profit organizations as nego- 20. National Renewable Energy Laboratory, tinted with awarding agencies Golden,Colorado 21. Oak Ridge Associated Universities, Oak Ridge,Tennessee PARTS 231-299 [RESERVED] • 209 I 1_ k i r- i [ i t OMB Guidance 12011501 5701,-11, ("! avel and. Subsistence En- Subpart F—Audit Requirements penses; Mileage Allowances"), or. by the Administrator of General Service or by the president(or his,or her desel tThilliala, ig___n_ti_eLllur__51111nt to any provisions of 1200.500 Purpose. wahaued:e)c.aaaFereraiPtagawnwardeet (ampidymte 32tra206...701 taThieininePar. cotneesitBstenfortlicy satuanddardsfro;ob- uni enmity antrAg Federal agencies for the audit (d) Commercial ai travel. (1) Airfare Fed- costs in excel f thebasicof non-Federal entities expending 5 0 least(omen_ rai I sive unrestricted. acoornmodati ,ons e awards. class offered by commercial. airline ittrntt$ r are unallowable except when such so-e 120(Min Audit requirements. coMmodations would: (i)Reflulre„ oirmlitoue.routing: (a)Audit required,Anon-Federal Li 811 - [ ,EU) Require travel during unreason. tY that expends$750 000 or more during able hours- . the_ _no1?-Foderel_ entity's fiscal year in 1 (il)Zgoessively prolong travel; . . (iv) Result Federal,awards nun°have 5,single or In additional costs that- M gratc-aPeolflo audit'"Conducted for would afftet the trallePortatiOn•say- that. year In accordezeu with the proyi tugs;or eons of this part, " f (v)Offer accommodations not„reason- 03)Single audit.A non-Federal entity ably adequate for the traVeler's med- that expends $180.000 or more during teal needs. Th+3 non...rederal -„tp,.., the non-Yedera tit , at ilia d we` u.3! p der an Y a ages).year in _tify end, own-Lent these con,li e al 8Mards must ha gi blow on a oase.hy.oene basis in „,.s.„..- audit conducted in acoorgyaanoea aiwl'ithe for the use fir - ''' ''''' §200.514 Soave ofundit eSeePt wben-it ciao airfare ofto et-olass or business- elects to have a be anowave in Buck. program-imeoltio audit - . conducted ill accordance with pare.- eales.uniese a pane=of avoidance i Mai(0)of this section detected, the Federal - "1. (5) Prograri-rpeci . 1 . generally -80V03MMent will — lie audit election. y nob question a noiirr_-Federal 'When an auditee expends Federal i eatitY's deterzninatione "wsral awards underonly that 0054 oneFederal tomary eteadera airfare gram(excluding R&D) and the Federal count airfare is_ _ _or for d..10.. programs statutes,regulations or the tripe 14 the nelinin4edIalleraialpie einlies,°°11" terms and conditions'of the Federal. demonstrate,that s oli airfareeen award do not "Gtire a financial available in theu was not ment,audit or the miditee. specificcase. may elect to have , the alidistattee-a; (e)Air trawl'by other thofm commercial audit a program -BPecjift° ...._. conducted in accordance with carrier. Costs of travel by,non-Federal entity-owned, -leased, or _chartered tavu'a°7 Wol(raiii-Recific audits.A Igo.. gram-specific audit may not be elected aircraft Include the cost of char- lease*_ for R&D unless all of , operation (including personnel awards , the Federal tor coats), , expended were received from poororantioono,ot.aesduchobh:oroterediathaetPreetd:I:am:eta:4 he Federal ilt:reedeo:lieeagliFtielti:gaiti!ahanadgdteiniathet4rey, or rainthee sPaaTee- omit of airfare as provided for ih para., F., ex pass- .,Ugh entityeiduerthaleagoesit airit3h.. (d) of this section, is anal- low. Z.proa eaamoildeat. aPProVee in advamoe gram-specific audit, (d/EXentPti0lb when Federal awards §200.475 Trustees. Fended aril-UM then$750,000.Anon-F eefl: Travel and subsistence ousts of trust- yietaix roeno dtiurtYingth:hte neonx/P.7eddgterElilseus uthtyan.e ees(or directors)at IRis and nonprofit fiscal y organisations are allowable See also ilmmF year. except ill Federal'eral an dit requirementsexempt ror §200.474 Travel°oats., ' that Relation toother audit. ept as sne irem treedzoin §o1200.503ta. . , §200.502 2 CFR Ch.Q(1-i-14 Edlhon) but records must be available for re- spcnsibility,Methods to ensure oomph- view or audit by appropriate offlcials eons for Federal awards made to for- of the Federal agency,pass-through en- profit subreoipients may inolude pre- tity, anti Government Accountability award audits, monitoring during the Office(GAO). agreement,and post-award audits. See (e)Federally Funded Research and De- also 1200.331 Requirements for pass- roelopment Centers (FFRDC). Manage- through entities. ment of an audits()that owns or"open- } etas a FFRDO may elect to treat the f Basis for FFI WC an a separate entity for per- eral awards anyesdsd,. poses of this part. (a) ,Determining Federal awards ex- (f) Subreciptents and Contractors; An fended. The determination of when a auditee may simultaneously be a re- Federal award is expended should be cipient, a `subreoipient, and a con- based on when the activity related to tractor. Federal awards expended,as a the Federal award occurs. Generally, recipient or a subreoipient are subject the activity pertains to events that ra- 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 Subreoipient and oori awards, such as: erneridituretexiPense tractor determinations should be con- transactions associated with awards in- aideed in determining whether pay- eluding grants„ cost-reimbursement ments constitute a Federal award or a ".nontraom under the FA1t, compaots payment for goods or services provided with Indian Tribes, cooperative agree- as a contractor. meats, and direct aPPropriations; the (g) Compliance •reepon$ibtl1tll for con- disbursement of finds to subreoipients; tractors. In moat.oases,, the auditee's the use of loan proceeds under loaf,and oomplianoe responsibility for oontnao loan gttaa antee programs;the receipt of tors is only to ensure that the procure- property; the receipt of sq;pl,;ua prop- meat, receipt, and payment for goods erty; the receipt or use of program in- and services comply with;Federal stet- come; the distribution or use off food atop, regulations, and the terms"and commodities;; the disbursement of conditions of Federal award% Federal amounts entitling'the,non-Federal ea- award compliance requirements nor- tity to an interest subsidy;and,the ne- urally do not pass through to°entree- Mod when insnranoe is in force. tore. However-, the anditee is respon- (b) Loan and loan guarantees (loans). sible for ensuring compliance for pro- Since, the Federal government is at ourement transactions which are etruo- risk for loans until,the debt is repaid, hired such that the contractor is re- the'following guidelines must be used sponsible for program compliance or to oalaulate the value of Federal the contractor's records must be re- awards expended,tinder loan programs, viewed to determine program aompli- except as noted in paragraphs(c) and ante. 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 mast in- oeived during the audit period;plus elude determining whether these tram- (2)Beginning of the audit period hal- actions are in eomplia,n,oe with.Federal sacs of loans from previous years for statutes, regulations, and the terms which the Federal government impdes arid,conditions of Federal awards. continuing compliance requirements; (h) For profit subreciptent. Since this ply part does not apply to for-profit sub- (3)Any interest subsidy,cash,or ad,- recipients, the pass-through entity is ministrativeoostt allowance received. responsible for establishing require (0):Loan and loan guarantees(loans)at ments, as necessary, to ensure oomph- IHEe.When loans are made to students, anoe by for-profit subrecipients. The of an IRE but the BIB 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 requirementa and the for- considered Federal awards expended in profit subxeoipient's compliance re- that audit period.The balance of loans 1 • • • OMB Guidance §.200.503 for previous,audit periods is not in- $200.695 Relation to afar st�dif re eluded as Federal awards expended be- quiemente. cause the lender accounts for the priob. (a):An audit conducted in accordance balances. with this Part mustbe iu lieu oY any fi- (d) Prior Loan and loan ,yuarnstees nanoial.audit of Federal awards which weans). Loans. the proceeds oY which a non-Federal entity is,required.to un- year received and ns dered iF Prior dergo under,any other Federal statute Years, are not crier this Federal or legaiation, To the extent that such awards Qapended milder this pert when the Federal statutes,'regulations, and thaudit provides a Federal agency with. the terms and conditions of Federal out=-il samaoaaib1t res urea Fed awards pertaining to such loans impose. no oontiio iting compliance reairfre= eta eral or�regulatioq t,Fede l agency • mente of etorthan.xo repay.tne Traits. must rely upon and awe that'informs• (a)Endowment funds.The,otiznl�lative balance of Federal-awards..for•endow- (b)14otwithstanding subaiection(a),a mend funds mat are federally re- Federal agency,Inapeotora General; or atrioted are oousldered-Federal,awar•ds GAO may conduct or arrange for add- thefee din each audtt•period'in which tional audits which are necessary 'to the funds are still reenacted, carry out its responsib it ee under (f) Free rent. Free rent received, by Federal statnt&or regulation.The pro- itself is not considered a Federal awatti visions• of this part`do not authorize expended under this Dart.However free any non-Federal'entity to constrain,in rent received as part of a Federal *IVY#naauery such Federal agency from award to oarrtiy out.a Federal pragraro carrying' •out or-arras• g for such ad- must be Included in detsro+ir ing Fed- ditional cuing,except thatthe Federal eral awards expended and subject to agency must.pl such auudits to not>oe do licative,of other audits of Feoerai audit under thte l►art. $, (g) 'Valuing non-each assistance..Feet awards.Frior to commencit .such an eral non-fit assistaance, such as free audit, the Federal agenoyi`..o pass- rent,':food;oomntodittes,.donated prop= through entity must:revier the FAO: erty,or donated tarurplus property,must for recent audits submitted by,;the non• be valued at fails market value at the Federal entity,and to the extent surf, time of receipt or ee a•ssessed vadpe audits meet a Federal agency'or pass propided,by the Federal.agency. through entity's needs, the Federal (h)Ale/atm.alre,Medicare payments to-a agency or pass-through entity must non-Federal entity.for providing pa- y upon and use such audits.Any ad- tient care services to Medioare-eligible ditional, audits must be planned and individuals are not considered_Federal performed in snob'a way as to build, awards expended gndst this part, upon work 'performed, including". the (i)Medicaid:.11fedicaid payments.to a audit. documentation, sampling. and subrecipient for providing patient oars testing already performed, 'by other'• services to Medicaid-eligible individ- auditors. uads are not oonsidered.Federal,awards (0)The provisions of this part do not expended under this pert unless,astets Limit authority of Federal agencies requires the fends to be treated as Fed= to conduct,or arrange for the conduct mu swards expended because rein- of, exalts and evaluations oY Federal basis. nt is on a coat-reimbursement awards,nor limit the authority of any bash:' Federal ageaoy Inspector C eneral or (i) Certain loans provided by the Na- other Federal official.For example,re- 4 tional Credit Union Administration. Far airement s that may be applicable purposes of this part.loans made from_ under the FAIp or (SAS:and;the terms the National Credit Tlrticn Fibers Ins - and onditions of a cost-reimbnrsement. anee'Fund and the Central-1 iquidity contract include additional appli Facility that are funded by oontrib l cable audits to be conducted oy ar- tions from insured non-Federal entities ranged for by Federal agencies. are not considered Federal awards axe! (d) Federal. agency to pay for addi- Pended. tional audits. A Federal agency that 112 . §200.504 2 CFR Ch.II(1-1-14 Edition) conducts or arranges for additional au- go its audits pursuant to this part bi. dits must, consistent with other appll:- ennially. ()able Federal statutes and regulations, arrange for funding the full cost of 1200.505 Sanctions. such addit onal.audits. In oases of continued inability or un- (e) Request for a program to be au- willingness to have as audit conducted dited as a major program. A Federal in accordance with,this part, Federal awarding agenoy may request that an agencies and pass-through entitles auditee have a particular Federal Pro- must take appropriate action as pro-gram audited as a major program hi vided in 0200.338 Remedies for non- lieu. of the Federal awarding agency compliance. conducting or arranging for the addi- tional, audits. To allow for Vann 4 090008 Audit costs. such requests should be made at least 180 calendar days prior to the end of See 0200-4a9 Audit services. the fiscal year to be audited. The 507 t? auditee, after consultation with Its Program-specific audits, auditor, should promptly respond to (a) Program-specific audit guide avail- snob a request by informing the Fed- able.In mapy,oases,a program-epeciflo oral awarding agency whetter the pro- audltgaide 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, compl- audit approach described in §200.518 sane requirements, suggested audit Major program determination and, if Procedures,'and audit reporting re- not, the estimated incremental goat, quirements. A listing of current pro- The Federal awarding agency must gram-specific audit guides can be found then promptly oonfirm to the auditee in the oompiiance supplement begin- whether it wants the program;audited zing with the 2014 supplement includ- es a major.Program.If the program is lag Federal awarding agency` contact to be audited as a major program based information and a Web site where a upon this Federal awardg'agency re- copy of the guide Gan be obtained. quest, and the Federal awarding agen- When,a current program-speoffie audit cy agrees to pay the fill incremental guide is available, the auditor must costs, then the auditee must have the follow GALAS'and the guide when:per- program,audited as a major program.A forming a program-speoifio audit. pass-through entity may use the provi- (b) Program-specific audit guide not moos of this paragraph.-for a sub- available. (1) When. -program-specific reoipient. audit guide is not available, the 0 200 604 Frequency of audits. auditee and auditor mast have basi Daily 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 oopgtitu 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 fre- policies used in preparing the schedule, quently than annually,is permitted to a summary sohedule of prior audit find- undergo its audits pursuant to this Inge consistent with the requirements•. part biennially.This requirement must of`0200.611 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 0200.511. Audit findings follow-up, nods ending between July 1, 1992. and paragraph(o). January 1, 1995, is permitted to under- (3)The auditor must: 174 { t { i1 OMB Guidance §200.607 (I) Perform an audit of the financial material effect o>A"" ; Federal. " �: statement(s) for the;Federal.program granj;&nd in accordance with GAGAS: (iv)A schedule"of findings and toes- (fi)Obtain ape understanding of inter- tinned conic for the Federal program nal`controls and perform tests of later- that includes"a summary of the and nil controls over the Federal program tor's results relative to the Xederel consistent with" the requirementsparagraph for a (o<)' §200.51b Audit repotting, paragraph whether the;agditee_has ions end with §200.515-Audit reporting, meaParagraph Federal statutes, regulations, and the (d)(3)• terms and conditions of redeml a rds. (c) Report r omission far program-sue- that could have a direct and material c�dfic ardptr. (1)The audit must be Qom effect on the federal program con- plated and the reporting required, bg sister* with" the requirements of paragraph"(cX2)or(o ).of tlzls section §200.51¢`$rope of audit, paragraph(d) submitted within the earlier of" "90 cal- for a mayor ptag`ra endar days after receipt of the audi (iv)Follow up on for audit , tor's report(e), or nine months after perform proced--the-'to assess the tea- the end oP the audit period, unless a sonableness of summai r sobedale di rent period is specified`in a pro- of prior audit findings prepared by ibis gran specific audit guide. tlnlees re- auditee im accordance with"the require- striotedby Federal lay' or regulation, meats of§g00.5511 Audit findings follow- the auditee must make report-copies lip,and report, theas a purregt year audit available for public fort onion. flndiing, when motto concludes Auditees and auditors must ensure that`''the stiunamary schedule of'prior that their respective parts of the rep audit findings materially n} prd- par }g package do not. include prb- sents the status of any prior audit find.. teate.peraoiaa1Ty identifiable informa- lag;and ton,.` (y)'Report any nadir findings non- (2) When a program-specific audit informs- Blatant wit,x►. the requirements of guide is available, the auditee must §200 518 Audit findings. ' electronically snbplit tp the FAC the (4)'The auditor's reports)�pnay be in data collection, forth prepared in ao- the form el,either combined or saps- aordanoe with §200.61a Report enbtnis- rate"reports and may be organized d1i lion, paragraph(b), as applicable to a Patently from"tire manner presented In program-specific audit,and the report this "section. The auditor's reports) ins required by the program-specitc' moat state that the audit"was Corr audittguide. ducted In accordance With this part (8) Whop a."progrra In.5poo Yc audit and include the following: guide is not available; rile reporting (i)Au.opinion(or disclaimer.of opin- package for"a program-specif c "audit Pon)as to whether the financial,state- alust consist of the financial state- ment(s)of the Federal program is pre- mont(s)of the Federal program,a sum- seated fairly in all material respects in mart'schedule of prior audit findings, accordance with the stated accounting and a corrective notion plan as de- policies; scribed in.paragraph(b)(2)"of this see- (ii) A report on internal control're- tion, gad",tlee auditor's report(s)'de fated to the Federal program, which scribed in;paragraph(b)(4) of"this sea- must describe the scope of-testing of tion.The data collection form prepared internal control and tile,results of the in'accordance with§200.512:Report sub= testa; mission,pe,}eg�aph(b),as applicable to (lit).A report on compliance which in- a Frogs -epegifio audit,and one copy chides an opinion (or disclaimer of of this reporting package must be elec- Opinion) as to whether the anditee tronicaily submitted to the FAC. complied with laws. regulations, end (d) Other sections of this part- may the terms and conditions of F de a) apply.Program-apecifia audits are sub- awards which could have a direct and loottq 175 §200.508 2 CFR Ch.11(1-1-14 EdIton) (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); OFR part 42),as applicable. When pro- (2) 200.504 Frequency of audits curing audit services, the objective is through 200.506 Audit costs; to obtain high-quality, audits. In re- ' (3) 200.608 Anditeee responsibilities questing proposals for audit services. through 200.500 Auditor selection; the objectives and scope of the audit (4)200.511 Audit findings follow-up; must be made clear and the non-Fed- (5) 200.512 Report submission, pare- oral entity must request,a copy of the greflin(e) ough(h); audit organisation's peer review report (6)200.513 Responsibilities; which,the auditor is required to pro- (7) 200.516 Audit findings through vide under GLG,AB. Pastors to be co11- 200.517 Audit documentation; sidered in evaluating each'proposel 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. W)tenever possible, the auditee must make positive efforts to g 20D608 Auditeeesponeibfiftiee utilise small busi>fesses, minority- The audite must: owned fflrn s,,and Wo�meu,s bnslness en- Y,eryrieee,in Procering audit services as (a)Procure or otherwise arrange for stated in 1200.821, Contracting with the audit required by this part"in ao- small and minority bt{siaesees, worn- oordanoe with 1200.509 Auditor soles- en's business enterprises, and labor lion, and ensure it is properly per- surplus area firms,or the FAR(48 CFR formed and submitted when due in ao- part 42),as applicable. cordance with 1200.512 Report vibrate- (b)Restriction on auditor preparing in- sion. direct coat proposals. An auditor who (b) Prepare appropriate financial prepares the indirect cost proposal or statements, including the schedule of oust;allocation.plan may not also be se- expenditures of Federal awards in ac- looted to perform the audit required by oordanoe with:1200.510 Financial state- this part when the indirect oasts recov. meats. Bred by the auditee-during the prior (o)Promptly follow tip and take oor- year exceeded$1 million. This metric- reotive action on audit findings, in- tion applies to the base year used in aiding preparation of a enmMary 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 1200.511 Audit findings follow-up, suiting indirect cost agreement or cost paragraph (b) and 1200.511 Audit find- allocation plan is usedto recover coets. lugs follow-up, paragraph (o), teepee- (o) rise 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, a000untp,_books, records, comply Hilly 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 4 200.605 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- 4§200.317 Procurement by states nisationai unit and fiscal year that is through 20.328 Contract provisions of 'chosen to meet the requirements of 176 • g�g OMB Guidance $200.511 this part.However,non.Federal entity- the schedule the balances outstanding wide pnancial statements may also in- at the end.of the audit period.This is crude departments,agencies,and other in addition to including the total Fed- organisational units that have separate "al awards gxpsnded for loan or loan audits in accordance with $200.514- guarantee programsIn the schedule. Scope of audit,paragraph (a) and pre- (6) Include notes that describe that. pare separate financial statements. significant accounting policies used ip` • (b)Schedule of e;pendttures of Federal preparing the schedule, and note awards. The auditee must also prepare whether or not the no_q-Federal entity a schedule of expenditures of Federal elected to use the 10%de minions coat awards for the period`covered by the rate as covered in §200.414"Indirect auditee's financial;,statements which (F&A)°tete must include the total:Federal awardg 4 �fI a follow p, expended as determined,in accordanceAUgig with §200.602 Basis 'for determining (a)Cieneeral.The audiLee is responsible Federal awards expended.While not re- for follow-up and corrective action on mitred,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 and- entities to make the sohedale easier to ings.: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 POW audit findings and the Correa- of k'ederal awards expended for each; tive action plan must include the ref- Federal award;year separately..4.t a evince numbers the auditor assigns to minimum,the'sohedulomust: audit findings under 4200.516 Audit, (1)z ist individual Federal programsfinding's,paragraph.(o). Since the sum by Federal agency.For a cluster of pro- wary schedule may include audit find- grams, provide the,cluster name, list jugs from multiple years, it must in individual Federal grams within the olude'the fiscal year in:which the find- . of programs, and. provide the tog initially occurred. The corrective applicable Federal.agency name. For action plan and summary sohedule of R&D, total Federal awards expended prior audit findings must inolude find- must be shown either by individual lugs relating; to the ilnanolal state- Federal award or icy`Federal agency meats which are required to be and major subdivision within the Fed- ported in accordance with C#ACAS. erat agency.For example,the National (b) Summary schedule of prior audit Institutes of Health is a Maier eubd vir findings. The summary schedule of stop.in the Department of Health`-and prior=audit findings;moat report the Human.Services. status of all audit findings included In (2)For Federal awards;peoeived as a the prior audit's schedule of findings subreolpient, the name of the pass- and gunestioned'costs. The summary through entity and identifying number schedule must also include audit find- assigned by the pass-through entity Inge reported,ill the prior audit's sum- meet be included.. inary eobedule of,prior audit findings (3) Provide total Federal awards ex- except audit findings listed as oor- pended for each individual Federal pro- rested in accordance with paragraph gram anal the OFRA number or other (bxl);of this section,or no longer Valid identifying nninher when the GFDA in- or not warranting further action in.so- formation is,not available. For a olua- Cordanoe with paragraph (b)(0) 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 subreoipienta from,each Federal pro- only Iist the audit findings and state. gram. that corrective action was taken. am or loan or loan,guarantee pro- (2)When audit findings were not oor- grams described in ;200.602 Basis for rooted or were only partially corrected, determining Federal awards expended, the summary schedule must describe paragraph(b0, identify in the notes to the reasons for the finding's,recurrence rrt §200.512 2 CFR Ch,11(1-1-14 Edition) and planned corrective action,and any make copies available for public iu- partial corrective action taken. When spection. Anditees and auditors must connotive action taken is significantly ensure that their reepeotive parts of different from corrective action, pre- the reporting package do not include viously reported in a corrective action protected personally identifiable infer- plan or in the Federal agency's or pass- nation. through entity's management decision, Os)Daft Collection.The PAC is the re- the summary schedule must provide an pository of record for Subpart P'—Audit explanation. Requirements of this part reporting 0) 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 furrther action,the reasons titles and others interested in a report- for this position must be described in ing package anal data collection form the summary,schedule.A valid reason must obtain it by accessing the FAO. for considering an audit finding as not (1)The auditee must submit required warranting further motion 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 FAO; with this part and provides informa- (ii) The Federal, agency or pass- tion about the auditee,its Federal pro- through entity is not ourrently 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 (ill)A management decision was not this part that is nementry for Federal issued. agencies to use the audit to ensure in- (o)Corrective action plan.At the corn- tegrityr 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 FAO, and the auditor's findings described in include oolleotions of'informationfrom §200.510 Audit findings,a.corrective se- the reporting package described.' u. tion plan to address each audit finding paragraph (o) 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 eaeoutive ofyine)r or chief tact person(s) responsible for correo- financial officer). must sign a state- tive action, the corrective action meat 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 oor- part,the data were prepared in acoord.* reotive action is not required,then the anoe with this.part(and the instruc- corrective action plan must include an tions accompanying the form), the re- explanation and speoitlo reasons. petting par age does not inolude pro- 9200.813 Report submission. tected personally identifiable;informa- tion, the information included in its (a) General. (1) The audit must be entirety is accurate and oolete, and completed and the data collection form that the PAC Is authorized to make the described,in paragraph (b) of this.sea, reporting package and the form pub- Lion:and reporting package described in holy available on a Web site. paragraph (o) of this section must be (2) Exception for Indian Tribes. An submitted within the earlier of 90 cal-' auditee that is an Indian tribe may opt. ender days after receipt of the audi- not to authorise the FAO 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 Hatton for the FAO 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 in exer- (2)Unless restricted by Federal stet sired, the auditee becomes responsible sites or regulations, the auditee must for submitting the reporting package 17t1 g J I" 1. i 1 i 1 s a e g33 d' OMB Guidance~' 920().513 is 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(o)of this section on file for t for which the summary schedule of three years from. the date of aubmis- _. prior audit findings reported the statue: (don to the FAC. of any finding(' related to Federal (g)FAC responsibilities.The FAC must' awards that the pus-through'entity make available the reportingpackages provided. Unless restricted by Federal received in accordance with paragraph i statute or_regulation, if the auditee (o) of this. section:and 1200.507 Pro- opts not to authorize publication, it gram-specific audits, paragraph (o) to must mate copies of the reporting the public,exoept for Indian,.tribes en- pe cka ge available for public inspec- arcking the option in(b)(2),of this sec- tion,. tion,and maintain a data base of corn- i. (8)Using the information included in plated audits, provide appropriate in the reporting -package described in formation to Federal agencies,and,fol- ; 1 paragraph(o)of this,meotion,the audi- low up with known..auditees that have tor must complete the applicable data not submitted.the required data ooilea- elements of the data collection form. tionforms and reporting packages. it The auditor must sign a statement to (h) Electronic filing. Nothing in this be included at part of the date,.0olleo- part must preclude electronic submis- tion form that indicates, at a min lions to the FAO in ouch manner as ;mum, the source of the information, maybe approved by uMB; included,in the form, the auditor's re- sponsib ility•for the information, that Faomaer.AGENCIES the form.is not a substitute for the re- porting package described in paragraph $H00.61$ ]Etetpansiilities. i' (a)Of tide section,and that the content (a)(1)Cognizant agency for audit ro- ot the form is limited to the oollectiou sponsibilities.A non:Federal;entity ex- of information preaoribed by OMB. pending more than$50 million a year in (o)'Reporting package. The reporting Federal awards must have a cognizant package must tholude the: agengy for audit. The designated cog- (1) Financial'statements and sohed- nizant agency for audit must be the t ale of expenditures of Federal awards Federal awarding agency that provides discussed in,1200.510 Fimanoial state- the. predominant amount of direct mantis,paragraphs (a) end (p), mimeo- funding to at non Federal entity wlees tively, OMB designates a speolfio cognizant 1 12) Bummary schedule of prior audit agency for audit. finding') discussed in 1200.511 Audit (2)To provide for;centinulty of cog- findings follow-up.paragraph(b); aizence,the determination of the pre- 33 (8) Auditor's,report(s) discussed'in dominant amount of direct funding i 200.515 Audit-reporting;and: must be based upon direct Federal (4) Corrective action plan disowned awards expended ss in the non:Federal en- in 1200 511 Audit findings follow-up, tity's fiscal years ending in,2009, 2014, paragraph(o) $019 ,and every fifth year thereafter. (d).,Submission to FAC. The auditee For example,audit cognizance for perm must electronically submit to the F.l 0 ode ending in 2011 trough 2015 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 pars- (3) Notwithstanding the manner in. graph(c)Of this section. which audit cognizance,is determined (e) Requests for management °fetters a Federal awarding agency with cog issued by the auditor.In response to re- nizanoe for an auditee may .reassign. quests by a Federal agency or pass- cognizance to another Federal award- through entity,auditees must submit a lug agency that provides substantial. 4 copy of any management letters issued funding and agrees to be the cognizant 4 by the auditor. agency for audit. Within 80 calendar 'l (I) Report retention requirements. day)after any reassignment, both the + Auditeee .must keep one copy of the old and the new cognizant agency for data collection form described in pare- audit must provide notice of the { 170 A r $2.00.513 2 CFR Ch.II(1-1-14 Edlfton) change to the FAO,the auditee,and,if standard performance by auditors must almgeonvrit„ny fotrb:ott must: anditor. The cognizant be referred to appropriate state Scene- ins agencies and professional bodies for (I)Provide technical audit advise and disciplinary action. liaison assistance to auditees and.audi- (vi) poordinate, to the extent Fac- tors. tioal,audits reviewsby or for 01)Obtain or conduct quality control Federal a-gen°e1e madeare iaddition n - reView0 on selected audits made by to the pursuantadditssnadahe to this non-Federal auditors, and provide the results to other Interested. organize- part, e° that the additional audits or reviews build upon rather than duo.- tions.Cooperate and provide support to °at° audi the Federal agency designated W wit OMB faisliziP°11°rilied In amuditlice to lead a governmentufide project to h - determine the quality of single audits (vil)Coordinate a managements deci- hY Providing a statistically reliable es- a a I C n for"1113"114n ann tting audit finding°(as timate of the extent that single audits omv.110 Cross-Gutting audit finding)conform to applicable requirementsirement‘ that affect the Federal Pro- standards,and procedures;and tomakeof more than one agency when requested by any Federal awarding recommendations to address noted in audit qualjty issues, Including roe- alleacY whose awards are includedommondati,.;..8 foraP- the audit finding of the auditee. to Nimble re ;Lireine;;; changes and (viii)Coordinate the audit work and procedures ftdicated by ttlic results of rePorting resPonSibilities aMOng audi- theprojeot. Soya/meaty/1de andit tors to aohieve the most ooist-effeotive audit. quality project must be performed once everY Tears beginning in 2M8 or at (ix)Provide advice-to auditees as to such other Interval as determined by hOW handle changes In fiscal years. OMB,and the results must be publics. (b) Oversight agency for audit re- (III) Promptly inform other affected, sPonsibillinee.An auditee who does not Federal agencies and appropriate Fed- have a designated cognizant agency for eral law enforcement officials of any 'Wit will be °aim' the general over sightthe Federal.agency determined over- direct reporting by the auditee or Its of - auditor required by GAMIS or statutes In accordance with §200.73 Overflight and regulations agency for audit. A Federal agency (iv) Advise the community of inde- with oversight for an auditee znnyeaa- pendant auditors of any noteworthy or eigu oversight to another Federal wen- important factual trends related to the oy that agrees to be the oversight quality of audits stemming from qua. agency for audit. Within'30 calendar ity control reviews. Signifiosnt prob.. days after any reassignment,both the lents or quality issues consistently old and the new oversight agency for identified through quality-controrre, audit must provide notice of the views of audit reports must be referred, change to the FAO,the anditee,and,if to appropriate state licensing agencies hnOwn, the auditor. The oversight and professional bodies. agency for au,dit: (v) Advise the auditor, Federal (1) Must provide technical advice to awarding agencies, and, where appro- auditese and auditors as requested. priate, the auditee of any deficiencies (8)May assume all or someof the re- found, it the audits when the deft- sPonsibilltlee normally performed b cienotes require gorrect,ive action by cognizant agency for audit. the auditor. When advised of deft. (c) Federal awarding denotes, the auditee musttiszvork with sibilities.The Federal awagardineneYfreageelen; the auditor to take oo e action, mustperform thefolio the If corrective action itt not taken, the Federal awards it makeewroe silkoro the cognizant agency for audit must notify reqi4rements of 1200.MO Information the auditor,the auditee,and applicable contained in a Federal .award). Federal awarding agencies and pass- (1)dre Ensure that audits are completed, through entitles of the facts and make an in a recommendations for follow-up action. MannerPein and inaresoroceeredienveode thtnneerlie, Major inadequacies or repetitive sub- cfairemente of this part. 180 yppgg: OMB Guidance 200.514 (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. (it,) Promote interagency coordina- (3)Follow-up on audit findings to en- tion, consistency,and sharing in areas sere that the recipient takes appro- such as coordinating audit follow up priate and timely corrective action.As identifying bigher-risk non-Federal en- Part of audit follow-up, the Federal titles; providing'input on single audit awarding agency must: and.to1l0W-up policy; enhancing the (i) Issue a management decision as utility of the FAO; and studying ways Prescribed in;200.521 Management de- to use single audit results to improve oision; Federal award a000untability and beet (it),Monitor the recipient taking ap- practices. Propriate and timely corrective aotdon; (Ui)Oversee training for the Federal (11i)Use cooperative audit resolution awarding agenoy's program manage- menhapdema (pee 4200.25 Cooperative ment personnel related to the single audit resolution) to Ipaprave Federal audit;process. Program outcomes through better.' (iv) Promote the Federal awarding` atide action;a resolution,udit ibilow up,a 8 oorreo- l -ution's use or oRQoporative'audit rests (iv)Develop a baseline, metrics and � (v) Coordinate the Federal awarding targets to track, over time, the dims- armors activities to ensure appro- tiveness of the Federal agency's pros- psleie and timely follow-up and oorrao- ess to follow-up on,audit rindinBe and. t ive Action on audit findings. on the effectiveness of Single Audits in (vi) Orsini* the Federal cognizant improving non Federal entity account- agency for audit's follow-up on cross- ability and their use by Federal award- Putting audit-findings that affect the ing agencies_An making award deoi= Federal prams- of more than one: along. Federal awarding,agency: (4) Provide OMB annual updates to (vii) insure the Federal awarding the compliance supplement and work agency provides annual updates of the with 0MB to ensure that the oomph- compliance supplement tto OMB. ance supplement focuses the auditor t. (viii) Support the Federal awarding test the compliance requirements most agency's single audit accountable offs- likely to cause improper paymuents, clam mission,;: • fraud,-waste, abuse Or generate audit finding for which the Federal'awarding AUDITORS agency will take sanctions. 5)Provide 0MB with the name ct a 4200.514 Scope of audit, single audit accountable official from (a) General The au[d!t mt4at be con- aaioog the senioy policy officials of the ducted in accordance with GAGAS.Tie Federal awarding,agezioy who must be: audit must cover the entire operations (i)Responsible for ensuring that the of the auditee, or, at the option of the annoy fulfills a?1 the requirement of. auditee,such audit must include a se- i 200.513 llesponsibilities and effectively ries 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 swards during such (ii) Held accountable to improve the audit period,'provided that eaoh,on effectiveness of the single audit process audit must encompass the financial based upon metrics as described in statements and Schedule .of ea synth- paragraph(0)(3)(iv)of this section. tares of3 Federal awards for each such Responsible for designating the department. agency,.and other organi- Federal agency's key'Management sin: national unit, which'must be oonsid- gle audit liaison, ered to be a m}pn-Federal entity:The fi (0)Provide OMB with the name of a nanolal statements and schedule of ex- key management single audit liaison penditures of Federal swards 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 §200.515 2 CFR Ch.11(1-1-14 Edition) statements of the auditee are presented tione of Federal awards that may have fairly in all material respects in act- a direct and material effect on each of cordauoe with. generally aooepted so- its major programs. counting principles. 'the auditor must (2)The principal compliance requite- also determine whether the schedule of manta applicable to most Federal pro- eapeuditures of Federal awards Is*tat- grams and the compliance require- ed.:fairly In.all material respects in re- meats of the largest Federal programs lation to the auditoe's financial state- are included in the compliance supple- merits as a whole. meat. (c) /Sternal control: (1) The oomph- (3) For the compliance requirements awe supplement provides guidance on related,to Federal programs contained internal controls over Feder pro- in the oomplianee supplement,an audit Brame based apoe, the guidance in- of these compliance requirententa.will Standards for Internal Control.in the meet the requirements'of this part. Federal Government lashed by the Where there have boon changes nges to the Comptroller General of the United compliance requirements Lou` the; States and the Internal Control—Iute- ohasiges are not reflected in the emi- grated Framework.issued ay the Corn- nuance supplement, the auditor.must muted of Sponsoring Organtr ytions of determine the current compliance re- the Treadway to the sion"(Ceme). quirements and modify the audit p;ore- (2)In addition to th requirements of dunce accordingly. For those Federal 4AAS,the auditor mustperform pro- programs not'coverer) in tha oomph- oedures to obtain ngdsratanging of awe supplement, the auditor, should internal oontrol l over Tederal.p supportplan guidance forprograms not Included in k: a low assessed level of oonikol risk of the supplement. noncompliance for major programs. (4) The compliance testing must in- (3) of eptthis as provided in paragmu t: elude tests of transactions and snob (0)(4)of this section, the auditor must. (i)Pram the testing of 1{}ternasl non: other auditing procedures necessary to provide the trol over compliance for major pro- auditor sufficient appro- grams to support a low,assessed,level priate audit: evidence to support an opinion on compliance. of control risk for the assertions rel- avant to the compliance regtatren4ente (e)Audit follow-up.The auditor must for follow-up esd)hpiajor program:and an prior audit fin digs. per- (ii) Perform testing of internal con- form'procedures to assess the reason .paragraph(ox3(i)'of ablenees-of the summary schedule of trol as planned in this section. Prior audit Andtge"prepared by the me anditee in accordance with g200.511 (4)When internal control over So or all of the compliance requirements Auditlindings follow-up paragraph•(b), for a major program.are likely to be in- and o a current Y audit effective in preventing or detecting d when the auditor ccnoluQes noncompliance, the Planning and per- that•the summary schedule of i prior forming of testing described in parer audit findings materially miarepre- graph (c)(3). of this section are not re- stints the status of any prior audit for those compliance require- m• Tbe'auditor must perform audit manta. ftowever, followup procedures, r the;auditor,must.re- regardless of port a significant deficiency or mate- whether a prior audit finding relates to dal weakness accordance. with a major program in:the ourrent year. 1200.616 Audit findings assess the re- ( Collection Form. Ari required fated control risk.at the maximum;. in 1200.512 Report sabrni,w on parer and consider whether additional.oorn- pare- ph(W(s),the auditor must complete pliance teats are required because of and sign specified sections of the data ineffective Internal centre/ collection form. (d) Compliance. (1)In addition to the requirements of G&QAS, the auditor 5200.515 Audit repor tiny, must determine whether the auditee The auditor's report(s)may be in the has complied with Federal statutes, form of either combined or separate re- regulations. arid.;the terms'and oondi- ports and may be organized differently 1 1 .,, I 1 , f t ... F i 1 1 = / 1 OMB Guidance i 200.515 1 from the manner presented in this seo- (lil) A statement as to whether the I thin.The auditor's report(s)must state audit disclosed any nontiomplianne, I that the audit was conducted in so- that is material to the financial tat • S iii- oordance with this part and inolude the meats of the auditee• , fallowing: (iv) Where applicable, a statement. (a)An 0144013(or disclaimer of opin- about whether pia deficiencies , P. ion)as to whether the financial state- or material weaknesses in internal con- meats are presented fairly In all mate- trol ever major programs were die- rial reePecte t accordance with gen- closed bie the audit, orally acoepted accounting PillUoiln.ee The .type of report the auditor and an. opin-opinion(or disclaimer of ' fr) - belled-on compliance for major pro- ion) as to whether the schedule of el,- prams a unmdized e penclitures of Federal awards le fairly fled opinion, opinion,adverse opinion, or die- stated in all material respects In relit.- niaimnr opinion); MGM to the financial statements-es a -——of whole. (vi) A statement as to whether the audit disclosed arkr audit findings that (b)A report oninternal control over ...A.I. financial reporting and compliance the'4uukuor is required to report under I514 t 200. Anal andg8 paragraph(a); With-Federal statutes,regulations,and (Vil)AO 1.dOatifteitt1013,,Of maior tho -pro terms andconditions of thel'ederal i- award, noinionionnee with which grams by listing each indiVidttal major could have a nutwa effect on the 0... wolfram however in the Can 4 a eine- 'imolai statements. This report must ter Of'Prognnie,only ths cluster name i desorthe the Rope of testing ofint a as&wen Oil the Schedule of Expendi control and complianne and*'vaults tures of Federal Awards is required of the tests and, where applicable;-it (TM %he dollar threshold need to will refer to the separate lohedule of distinguish between,between'TirSe A and Type fi findings and questioned caste described rzcaralcs' a'S described in 121"18 I in paragraph(d)of tits section. l'ile,jor program. determination pare- 1 (0) A report on oomPliatioe or each graph(hX1.);or(b)(3)when a recalcula- tion of Cie Type A threshold Is-re- major program and report and Internal oontroi neer ooramience, This report Waxed. fox large leen or loan guarau- a 4„..... must describe the scope of testing of ""'''and internal control over compliance, ill_ (ix) A statement as to whether the chide an opinion or modified rani=en, auditee qualified as a low-risk auditee 4 to whether the auditee complied with under Pee•SZS Criteria for a low-risk ._ .... Federal statutes, regulations, and the aunitee. terms and conditions ofl'edera award (2)Findings relating to the financial which could have a*get and material statements which are requiretto be re- effect on each,major program and refer ported,In accordance with CIAGAS. to the separate achecluis'Of findings and (3)Finings and,questioned costs for p,ra- questioned costs described in a Federal'awards which Must, include graph(d)of this section. audit fielpgs as defined in $200.518 (d)-A schedule of findings and ques- Audit findings,•paragraph(a). tinned costs which meet 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 laud) that relate sults,which must include: to the same Issue should be presented (1) The type of report the auditor as a single eilidit.finding. Where Prao- issued on whether,the financial state- tical, audit findings should be orga- meats audited were prepared In accord.- Juiced, by Federal agency or pass- ance with GAAI"(i.e.,unmodified opin-; through entity. ion,qualified opinion,adverse opinion, (I1)Audit findings that relate to both or disclaimer of opinion); the Anemia statements and. Federal I (ii) Where applicable, a statement awards, as reported under paragraphs 1 about whether significant deficiencies (d)(2)end(d)(3) of this section, ranee- oP or material weaknesseeininternal con- tivey, should be reported in both sec-. trol Were disclosed by the audit or the tiona of the ached, ule.However,the re- financial statements; porting in one,section of the schedule lit C §200.5 T6 2 CFR Chit(1-1-t4 Edition) Intr be to s***'10 m II I*A.rot- the •auditor moat Chide in# orreetien Qollea*thtr p e to provide proper perepeciive for judg- ( , < ing the Prevalence and ooneegneaoee of itzitit ro-• the gneetfoued coete I "_ lattoomailittottat4,firthologo..‘ '� . ; :tee �. , Warta:• @`-� ` r ' .6 Audit findings 4 .rr� 'Ail* . z *AW ,z _# -' �� �d , il�,lY� aex w sag 2 4 ( '`FS v "'1" 4 +'A" V ' .: fi3 i. ,* a - ; � 'to o ► f �ti S. 40� . fi d s44,�/ + am � i ie,-.. a S' k , ..1 t + �,'' pgpi, stt '�' , ,, . _ '1 ,.��y O` , N / t i' ` . t R 5 . ' '., ,; ',-4 , s t y ..04,,0**:, :lint , i ilait m d n; gram .: " o e t 1�. tugh : 1B4 1 ,¢ 4 , 1 OMB Guidanep; §200.517 entities to arrive at a management de- xesen4t an isolated inetaaoe or a eye- olsio . The following speoico informs- tomic problem. Where appropriate, Into- audit must be included,as applicable,In stances identified must be related to audit findings: the umiverae and the number of cases, (I)Federal program and.speoifio Fed examined and be quantified in terms of oral,award identification including the dollar value.The auditor should report CSFDA title and number,F oral.award whether the sampling was a static- identl#ioation,number and year;name ticallyvalidsample. of Federal agency,and name of the ap- (8) Identhioation of whether the for aale pass-through entity. When iq- and t finding was a repeat of a finding formation, suoli as the dFDA title lu tbe"Immediately`prior`audit and if natttber or Federal award identification so any appiicable prior year audit find' number, is not available,' the,auditor leg numbers. must provide the best infonphatio i. (9)Recommendations.to prevent ft- G; available to describe the Federal tare occurrences of the deficiencyiden- award. ' tilled in the audit firdiug. (2) The criteria or specific require- (l0) Views of responsible official of meat upon which, the audit finding is the;auditee. based. including the Federal.statutes, (a) Reference numbers. Each audit regulations, or the terms and mind- finding in the schedule of findings and • tions of the Federal awards_ criteria questioned costs must include a ref- generally identify the required or de- erence number in the format meeting sired state or expectation with respect the requirements of the data r,olleotion, to the program or operation. Criteria form submission required bar 1200.512 provide a context for evaiva;;ting evil- Report submission, paragraph (b) ,to denoe and understanding findings 1'+ga.' allow for easy'referencing of the audit (2) The condition found, Including find Bs during follow-up. facts that support the defioienoy idea'- titied:In the audit finding, 1200E817 Audit documentation. (4)A statement of cause that identi- (a) Retention of audit documentation. flea the reason or.,esplanationt for the The auditor must retain, audit doc�u- condition o the factorsresponsible to mentation,and reports fora minimum the difference between the situation of. three years after thee-date of that exists(condition)and the required issuance of`'the auditor's reports) to or serve state (°rites ), Which may the auditee,_onleee the auditor-is noti- also serve ae.a basis for reoonimenda- fled in writing by the cognizant agency' dons for,00rreotive a asserted . for audit, oversight agency;'for,.audit. (5) `The possible asserted effeot to cogni it agency t oasts, or for indirec provide sufficient Information to the pees-through entity to extend the rem auditee and Federal agency, or pass- tention period. When the auditor is through entity in the.ease of a sub., aware that the Federal agency, pass- recipient,to permit them to determine through,.entity, or mates, is con- the cause and effect to facilitate testing an audit ceding, the auditor prompt.and proper_aorrective action.A must aentact the parties contesting statement of the effect or potential et the audit finding to guidance,prior to... foot shot provide a clear,logical link destruction,of`the auci%gdocumentation` to establish 'the impact or potential and reports. Impact of the differe ioe between the (b) Access to ciudit, dpoumentatiorr. condition sod t e criteria. Audit documentation must be made (8)Identification`of questioned cosh available,upon request to the cognisant and how they were computed. $ip�o , or oversight agency for auditor its des questioned costa m'at be identified by ignee, cognisant agency for indirect applicable OFDA tom 'rss) and vat. post. a A'oderal agency, or GAO at the °able 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 Derry out-oversight reepon� speotive for judging the prevalence and abilities consistent with the purposes consequences of the audit findings, of this ,part. Access to audit doon.- such>en whetter the audit findings rep- mentation includes the right of Federal fi i 200.518 2 CFRCh.11(1-1-14 EdIMon) agencies to obtain copies of audit docu- loans if the value of Federal awards ex- mentation, as is reasonable and nee- paraded fop loses within the program. essary comprises fifty percent or more of`the $200 8 total'Federal:awards expended for the Miler 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 ie determined as de- which Federal programs are major pro- soribed in 4200.802 ,Basis for deter- grams. This risk--based approach must mining Federal awards erpended. include consideration of: current and (4) For biennial audits permitted prior audit experience, oversight by Maier 4200.501Frequenoy of audits, the Federal agenoree and pass-through en- determination of Type A and Type,B titles,and the inherent Fisk of the Fed- programs must be based upon the Fed- eral program. The process iR pare- 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 ene.(1) The auditor Must identify Type A programa which are identify the larger Federal programs, low-risk. In "making this determine. which must be labeled Type 8'pro- tioa,the auditors must consider wheth- grams.Type A programs are defined as er .the requirements in 1200.518 Criteria Federal programs with Federal awards for Federal program risk paragraph(c), expended, during the aught period ex- the results of°audit follow°-up, or any ceeding the levels outlined in the,table:' obanges in personnel or systems affeat- in this Paragraph(b)(1): ing the program indicate aigni ioaptlY -" 1,noreased risk end Preclude the" pro- Taw Featrat awaods el- winded Type AA threshold grand fro!O t being low ripk For a Type A program to be considered low-risk,it Equal to$750,000 but teem $750,005. must have been audited as a major pro- Iliad Or equal to 125 Beaton, Exceed$25 mANodtPA Pm TotalFederal amnia ex- Gram In at least one of the two most than or equet to$100 m0- waded times.03. recent audit periods(in the moot re- Baled$100 mggoa out rasa > melon. centaudit period in,the vase of a bier- tan or squat to p1 t lea trial audit). and, in the most recent Excrred'31 bflembutteas Total rota*masa ea- audit period, the program must have mrda.dr=aau$l b etc son pesos lines,Boa not had; Extatad"$10 hag '"^$30 (i) Internal oontrol deficiencies was od.quat to$20 Won- .. Exceed trio bass Toatatowat&mid,ex. wkioh were identified as materialpealed limee.04is. weaknesses.in the auditoria report on internal control for major programs as (2) Federal, programs not labeled required under 200.615 Audit reports Type A under paragraph (b)(l) of this tug,paragraph(off); 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 4200.515 loan guarantees (loans) should not re- Audit reporting,paragraph(e);or suit'in the exclusion of other programs (iii),Rnown or likely queetioned goats 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 oonsld- Type A programs.This recalculation of eyed`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 & major program each year at a par- Paragraph a program is only considered tiopiar recipient to allow,the Federal to be a Federal program providing awarding agency to comply. with 81 I88 1 1 i F t I a C k 1 OMB GuWance: §200.519 U.B.C. 3518. T11e. Federal awarding additional Federal programs with Fads agency must notify the recipient and oral awards expanded that, in aggro- if known, the auditor of OMB'a ap- gate,,all major programs encompass at proval at least 180 calendar days prior least 20 percent(0.24),of total Federal to the end of the fisoal year to be au- awards expended. Otherwise, the andi- 1 diced. tor must audit the major program* ; (d) Step three. (I) The auditor must, identified.in`Step 4,(paragraphs"(e)(1)' .. identify Type'H programs which are and(2)of this section)and.such addi and high-risk using le 1200ional judgment tioaal';Federal programs-with'Federal and the orftetia in§200 Sl8 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-ris$ Type EH programs than at expended. least one fourth,.the,number of loyr risk (g)Doaanentoton of risk.The auditor Type A programs identified as loW=risk diet include'In the audit documents,- under Step 2-(paragraph;(a)or this sea- tion the risk analysis process used in y; tion).Except forknaown Material weak- deteripg major pprograms. nose in interna�l.control or compliance" �) eiuditor's judgment. When the problems as discussed in 1200.b1.8 Cri- ; teria,for Federal rogram,rick pesa. major program determination was per: p formed and,documented in accordance graphs (b)(1),(bx2). and (a)(1).a single with'this Subpart, the auditor's jndg- Tycriteria,in-riek would seldom cause a meat in applying the risk-based ap- e H program to be;considered high- Mee to determine'major programs ris$. When identifying which Type"B mast be presumed ooiireot. Challenges ' Programs to risk assess, the auditor is by Federal agencies and pass through encouraged to use an appra$o)i: : entitles must only be for clearly im, a Provides s opportunity for different proper_use o> the requirements in this , high-risk Type H programs to be au- part. However, Federal, agencies and. d3(2)Th major over a.perlpe ck Of d to pat througle 'entities_ may progid'e (2)The auditor is not expected to very "'ere gcideynoe altos the risk of a form risk assessments on relatively Featienier.Fe oral Program and the small Federal proacaTna.TfieretEire the auditor must.consider this g4�idanoe fn auditor is only required.to perfne zisld / assessments on Type H programs that determining major programs in audit s Type t tr'-nPercent (0.25)or the not yet.eamplet`ed. rnt4on)in Step.1 it 200.619 Criteria:for Federal program (Daia6raph(b)ofthis 8e4tUn)._ (e)i Step four. At a mthefom, the (a)Coal To auditor's determine- aumtor mustg audit ail of the following tion should be based on au overall oval 1 as major programs: uation of the_risk,of noncompliance oo- (1) All Type�,A,programs not ideatl fled as low risk.Under step two (pare,- ourring that could be material to the u graph'(o)(I)of,this section). = Federal programs. The auditor must (2)All Type it programs identified as oonatder criteria, such as described in 6 high-risk under step three (paragraph paragraphs (b). (o). and(d) of,this seer (d)of this section). Lion, to identify risk in federal moo. 1 (3)Such additional:programs as may grams. Also, as part of the risk anal1 be necessary to comply with the per- ysia,the auditor may wish,,to discuss a oentage of caberage rule discussed in particular Federal program with. paragraph(f)of this section.This,may: auditee management and 1 the Federal I require the auditor-to- audit more pro- agency or pass-through entity. II grams as major programs than the (b)Current and,prior audit experience. II number of Type A programs. (1)Weaknesses in internal!control.over (f) Percentage of coverage rule.If the Federal programs would indicate hlgh- anditee meets the: criteria in /200,520 er risk. Consideration should be given / Criteria ,tor'a low-risk agditee, the to the control environment over Fed- i' auditor need only audit the major pro- eralprngrams and such factors as the grams identified in..Step 4 (paaragraph expectation of management's ad tier- s. (e)(>)'and(2)'of,this motion) and,such once to Federal statutes, regulations. 187 i §200.520 2 CFR Ch.1I(I-1-14 Edition) and the terms and conditions of Fed- personal services, but otherwise be at- eral awards and the competence and low risk. experience of personnel who administer the riencel programs itis U l Ct t oy m o 'gtp� P Pre.. �y ` i1 .'.4**04,t,lrostook.,*;:ii:.,,,.:,*. t.-1044410.4*1.:::,:-..- :**** klognitiAfk: '10.4iiiel..), SiC:-"` ,. :.,:*****Itai; ' „'''' - ` ,!per,. . �y!y� .## y' �e ...y . ','^F-' 1� .yet h k. . ' r, k ' (2) Prior`'audit findings would-Judi- ` '-• ' Date higher risk,parts '` lY when the , situations identified in the audit find- ings could have a significant impact on i q04105110W i a Federal program or have not been corrected. a*St , (8)Federal:.L►rograms not recently an- � � dated as major program' may be of higher risk than Federal Programs Gently audited as ort programs with re- 1200420 Criteria_ .. out audit findings. , 'ar, a i - An auditee that: meets all of the foi- lowing conditions for'eeo of`the pre_ ( : oeding two audit periods must qualify � � . as a low risk auditee and be eligible for. -' - reduced audit coverage in accordance or o 1 with $2�bib Major program deter- 14 mination r;-tom ��, *� e ranee of OMB, may.identify(2)Pecumit*ode%with the Fedora- programs that rI Federal are higher'risk. OMB ` will provide this identification in theis, compliance supplement (d:�t. 'i 1 `' .: , 34' rad .. 440 -o e vi (d)two auditor did not report a sub-. .! ra' stantial doubt about the auditee's abil-z e _ ittiy to continue as a going concern. 188 • .. . , ! r i [ r 1 [ f ova Guidance (e)None or the Federal programs had Pt.20%App.I v r audit finding" to . otlion for findingsthat relate to M any of the 'foi. ' lowing in either 6t-..ta. ,„,„,,...A....... .- oral awards it — — Fed- audit periods in which f-T,',._4---uoulnu- two entities. makes 'to non-Federal fled as Type A program's': were°lead' 12000:0.3Psta4/7481foutreugh entafitY.As provided,in I (I) Internal control , defiotennes that ,. • men. for ' in the=tutees teitertterclailnWeatenriinieeenc,_ta,.. ithroUsstente:PaML....44tfest he(d)reSPOtanlielibleefetr were ideatinsits , saitim4 - pass-through 1 R t trol for maim ' [ under imp programs as required audit --..--"'Inent doOlsion for , .510 Audit reporting, - a that relate ' graph(0); - pars,- awards%rink to Federal es to subreelpients (2) A modified opinion on . (ti) Timetcgui p-ass-unrough. ant awardingmien"' The Federal program in,`14,...., ____tor,s..„. a major agency or:. Major programs. ''.. m. report 011 ty responsible for igg 'tug i- d° so wiM1147:.hilialg: §200, ,61:0 Audit reporting,paragraphquirdlUl(cToej; IllIrlittbff. deoftgelaolepnitanuct' 11 ' a".-17- -- I Questioned In,by the FAQ.11,11eseaUolithteee must lid"- i (0)Known or likely1 that exceeded Aire percent -'"Ste- l'iale and proceed with - Federal award() of thhtetal tion as rapidly, possible aarPotiva an- olalended for a opyp id as and oorie program(Write theajzom . e-4 va action shnehl begin, e- no later then decisions(e) iefermenuese. numbers,ailattreMPoanrtigement Period nP011 recoil*of the . hatinfinaiggr Dismsi ONR,,, f ___...._ . -. auditor assigned to each numbersthen include the reference isi2("ko(en)m524Guenstel*r:/ageoliarTI:113157anienegetedev:OSt- dad- rr°°111614nAnadi$74324' iniMaaccal.ciParagaraarh Ccwi)with the udtt and or a .- ing le sustain ' 'not AF.FBND . eardisfe°:theactituaialtoaa.x:7171coleapi§eil 'd '14°7341121.014:PulWAIVr114(12141°PPon-r7ATTIC;1 00fits, make financial- disallowed The fen tart adjustments, of the notice of pasha other llotion. If the °P; P3rtunitg is organized g°1 tuls :121111(.1 ;13.:170:toagettria!lit si*:134111msitiallgiig54:218.4;1 re- take1111. given. prior, so, Issuing should be otion wheel er meg:newt=18 r o,each meet d.,„,,,,„,,,.... tate the manage_ every announcement or Is a FederaleP="red in 1 ............'ku...4 the "federal agenr,e. n lug agency option. he award, pass-enrough entity -., -AT that-.........__ '',---formatis designed so may request similar-types of information tional ingormation d Ada- In the same a ' will appear or. downentatiort Riff.... ' 6° in annnOnoomont'o of from the auditee, inotoding -'' -' different funding oPPortinitlea.To. for auditor assurance related a retluest- wilvitmlin that 'end' there lt-teX" —___ .4. _el;an . awd to the -----Wiataaatiells to"deboribe typesZeeacil ofthine, If:ittrowetecelooste Ttr way el illiti".ting- fwmjiti911 tb"-9;Felleral.awarding of -- olden should . 4 management.a0- "44,Include in that.sectionagency describe any appeal re announcement of an actual required, the to the-.twits();whil-'P noba A Federal. ., awarding agency that wishes to through entity -,i agency orvp:ee. speina=ermatten that the format does 11 ti' I may also discuss may that' - 9 08elnent dada' ' Issue a man.- In whatever °14 address imbject to on on fiedbags relating For " "(13) 18 mostappropriate. 1 the anfoggial gtagerunnee which f example, if,a Federalawarding agency recourocv to be --- are aeons;to address ea° -•.'--..reported _ __ _ .„.„„ _ ., R Mance goals in the with GAGAS ILI'lul'emanUfs -- 411213.3nom'la mist d-, , t o so in the funding !a200(:(7ce.,.,,,,Pthed:rtenaoidagenbell4tine___Ae,Pr°14agclecrispill-h. tent, °IllbetZ"descifiFtbiltr'ziniquiv4refe:maniPilirtsoan'ithelfecr-na: managmustb:mrenespotonsanetsoagrecncocrYofewt coordinating talteressda 141:44dirlrtibtia:we:aidine°14be inagtiPoyar4wierhingar 9et°0- info that affect decision for audit find- swot to re -- : other sections may eot the peat the information in. thalV One Federal programsA °I'Mare- tics."use cross reibreaoee betweental°89 156°- in 1200.518 Bag ori:giell". , provided tknis(there emit be hYierunirs the lie°' u Wales references.in ' --for onset (o)(3),a Federal awarding . paragraph any electronic versions ' Awarding awe,inn.I. gne, example,7 of the sponsible for fleeing a ------- •."ro- awarding,announcement). --- a Federal management de- Section I °Y may want to include in Information about the types of • =10, • Pt.200,App.1 2 CFR Ch,it(1-1-14 Edition) non-Federal entitles who 'are eligible to (mired or Federal award administration in apply.The format specifies a standard loos, formation in section D.Application and Sub- tion for that information in Section ELI but mission Information). If procurement eon- that does not preclude repeating the infer= tracts also they be awarded, this must be mation,in Section I or creating a arose ref-, etated. erenoe between Sections I an&zE.1,as lone, as a potential,applicant can find the infer.- O.Emann.r1'Y INFORMATION nation quickly and easily from the standard 'This section addresses the considerations location, or factors that determine applicant or appy The sections of the,am. teat of the an- cation eligibility. Tbie ZAoiudea the eiigi nouncement are described in the following bility of particular types cif applioant or ants paxa 'pbn rations,any factors atfe4 :0e'eligtbility A.PROGRAM DRsotttPTION-tiFXQumnn of the principal investigator or Fleet direr,- tor,and any criteria that make particular. This settier contains the fUllprogram de- probate ineligible. Federal agencies should soription of the funding opportunity.at may make clear whether an applicant's failure to be as long as needed to adequately domino. meet en eligibility criterion by the time of moats to potcn till applyan the areas.in an applialitlon deadline will result fa the which funding may ba provided.It describes Federal awarding agency returning the ap.: the Federal awarding agency's funding prior- plioation without.MOW orb eventbpugh an !ties or the tepbniosl or focus areas in which application may:be reviewed, will preclude the Federal awarding agency Intends topro- the Federal awarding agency from making d, vide assistance. As appropriate,it Imay in- Federal award.Key elements to be addressed elude any program history(e.g.,whether this . is a new program or a new or changed agea of I`Eligible Applicants Reyulred• Announce- program emphasis).-This section may'cern- manta must clearly identify the types of en- mwgcaate indicators of successful protects titles that are eligible.to apply.Ifthere are (e.g., If the program encourages oollabo- no restrictions on eligiibility. this;section relive efforts)and.may nclude example.of may sjmp y indicate thatall potentia&applf- projects that have been funded previously. rands are eiigibts if there are restriettona on. Tina section also may include ether informs- eligibility,it is important to-be clear about lion the Federal awarding agency deems nee- the specific types of entities that are eligi- esmery,and'moat at a minimum include Oita- bie, not just,the ie a that are ineligible. Mons for authorising statutes and regale- For example, it the.program is limited to Mons for the funding opportunity. nonprofit organizations subjeot to 26 B.FRDERAL AWARD INFORWAT N—Rm sunup 601(cX9)of the. tax code OS i1.B.G. the ,601(a)(9)). announcement should say so.Similarly, This section provides sufficient informa- it is better to state-expliettly,'that Native bloc to help an applicant make as informed American tribal-organisations are eligible decision about whether to submit aproposal. than to assume that,they can una nblgoousiy .Relevant information could include the total. infer that from,a statement that nonprofit amount of fundingtha,t the Federal awarding organisations may apply.-Eligibility also can agency expects to award through the en- be expressed by exception,(e.g.,.open to all nounoement;the antirated number of Fed- types of domestic applicants other than Judi- eral awards; the expected aruonnt a of indi- vidusla). This section should refer to any vidual Federal s,wards (which may be a portion of Section IV'epeeVying documenta- 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 60i(o)(3)status as determined by the Internal periods of performance-for new Federal Revenue Service or an authorising tribal Ana- awards. This section also should address olution).To the extent'that aubriunding re whether applications for renewal or atrlotlon in Section 1V.5 could affect the elf- plementatioa of existing projects are eligible eibility of,an applicant or,project, the on- to compete with applications for new Fed- nounoement must either restate that nutria, oral awards. lion in this.ligation or provide a orose-ref This section also must indicate the type(s), erenoe to its description in Section IV.6. of assistance lnetrnment(e.g,grant,cooper- 2. Cost Sharing R lifatehing--Required. An alive agreement)that may be awarded if ap- nou noementn must state whether there is re- plications are suooessttl. If cooperative quired cost sharing,matching, or cost par agreements may be awarded,this section ei- tiyipation without which an application tsar should describe the "sue.in- would-be ineligible(if cost sharing is not re- volvement"that:the Federal awarding agen- quired„ the annonncemeat must explicitly oy expect.to have or ghoul reference where say so).Required cost sharing may be a oar- the potential applicant can find that.ardor- twin percentage or amount,or may be in the oration(e.g.,in the funding opportunity de- fore of contributions of specified items Cr scription in A. Program Description,-ge, activities(e.g.,provision of equipment).It is i r t ,, 1 i a'r 1' OMB Gendarme Pt.200,App.I tant that- the announcement be clear itpurred ioFns or formats as part of the an- about any restrictions on the types of cost nounoement or state where the applicant z (e.g..in-kind contributions)that are accept- may obtain them. able as cost sharing.Clost;sharing as an eligi- Mils section should specifically addrase bility.criterion'includes requirements based content and form or format requirement* In statute or regulation, as described is for: 9700.506 post sharing-or matching of tide i. Pre-applications, letters of intent, or t Part.This section shouldrefer to the appro= white papers required or encouraged (see prlete portions) of section D. Application Section IV,3),including'any limitations on ; end Submission Information stating any pre- the-number of pages or other formatting re '- award regquiremealte fo sgbmisston of letters quiremante similar to those for full applica or other;documentation to verify ooIPspit- tone. manta to meet Wet"sbarmAW requirements if a U.The application as a whole.For all subs Federal award la made. "' missions,this would Latitude any lbaltationer' S.9ther—Require4 if appl cable.IL there are on the number of pager,foot sire and type other eligibility criteria(Le., criteria,'that face,margins,..paper size.number of copier, have the effect of nicking'an,application or and sequence or assembly requirements. If project ineligible for Federal awards,whetti- electronic submission is permitted or re er referred to as "responsiveness" criteria;. (mired, this meld include special require- go-no go"criteria,"threshold" criteria,or month for formfitting or signatures. in other ways), must be clearly stated and iti. component pieces'of the application must include a reference to the regulation of (e.g., if ell."copies of the application meet I requirement-'that describes the restriction, bear original signatures on the lace page or as applicable. For example,if entities that the program narrative may not exceed 10 have been found to be in violation Ora par-- pages),ewe ineladee any pieces that,may be ocular Federal statute are ineligible, it Is submitted separately by third parties (e.g., i important to say so.This emotion must also references or-letters oonflrming commit- stale any limit on the number of apptica- meats from third parties that will be mu- ttons an applloaut me.y submit`under the an- tributing&portion of any required cost shirr- nouncement and, make clear whether the tq 3 limitation le en the submitting organization, lv.Intonation that successful:applicants individual investigator/P*1ram director;.or" must submit attar nutifbiatdon of intent to both.This section should also address any make a Federal award,but prior to a Federal eligibility teria for beueflolaries or for award,This could include evidence of cor program participants other than Federal plignge with requirements relating,to human. $ award recipients. subjects or information needed, to.comply D.Aprr canon AND 9treeussiasi INFORMATIONwith the National Environmental Policy Art (NEPA).OS U.S.O.021 70h). I" .l.Address to Request Application,Package— 3. ,pun and BradstreetUniversal Numbering Required. Potential applicants must be told System(DUNS)Manlier and System for'Award how to Pb.application forme.kits,or other" Mana�ent:(wed. e. materials needed to apply(if this announce- This paragraph must state clearly that 1' meat contains everltrhiu ;needed.this MO- aeon applicant(unless the applicant le an in- tiou need only ear pq),.An intent*address divirtual or Federal awarding agency that is where the materials can be accessed,is ac- excepted,irom=,those requirements under:2 ceptable.However.since high-speed Internet ()I;§25.110(b)or"(c),Or has an exception ap- access'_is not yet universally available for, proved by the Federal awarding, sgenoy i'' downloading documents,and applicants may under 2 CFR 325.110(d))is required to:(1)Be have additions/aoceesibility requuiremente, registered in before submitting tie ap• $' there sled-should ha a way for potential aP- plioatsion;gi).-provide a valid EMIR-number' d piioante to requeet paper copies of materials, in its'application;and(ii)continue to main- d such as a TES. peeled.Service mailing ad- _twin imitative SAM registration with current drese,telephone or FAX number,Telephone information at all during which it has: Device for the Deaf,(TDD), Text Telephone an active.Federal award or an application or (Ti'!);number, and/or:Federal Information plan under consideration by a Federal award Relay Service(PISS)number.' lug agency.It aleeo must state that the Fed f 2.Content and Pone of Application Subsets- eral*warding agency may not make a Fed- slon-Required. This section must identity seal"award to an applicant until the apply- the repaired content of an application and cant has complied with all applicable DUNS the forms or formats that an"applicant must and S AM requirement&and,if an applicant use to submit it. It any requirements are bar not folly complied with the requirements stated elsewhere because they are general re- by the time the Federal awarding_agency is quirements that apply to multiple.programer ready to make a.Federal award,the'F!ederal or funding-opporturotles,',this section should awarding agency may determine that the ap- refer to where those requirements may be piioant le not qualified to.receive a Federal found. This section also should include re- award and use that determination ad a basis 1;91; • I Pi,200,App.I 2 CFR Ch.II(1-1-14 ECAHonl for making a Federal sward:to another appli- mental Review of Federal Programs," the cant notice must say so. In,alerting applicants 4. Sutmisriom Dater and Times—Required. that they must oontaot their states Single Announcements must tdentifTdue dates and Point of Contact (SF00)to find out about times far all submissions.This includes not and comply with the state's propose under only the full applications bat also any pre- Ereoutive Order12372,it,may be useful to in- liminary submissions(e.g.,letters of intent, form potential applicants that the names white papers,or pro-sppdiw"tione).;t'also is and addresses of the SPOOs are listed in the eludes any other submissions of information Office°Management and.8udget's Web Bite. before Federal award that are separate from lasso.whiiehous goubmbiyraniahrpoahust, the !till applgeneral announcement thacation. if the fee4thif t 8 'Funding need ttona-Rezdred. t34tiees Gerdy lea mast ol inade iat open for a period of time with no'Teethe due at oA i g dates for appi oattoas, this section should lions is order to allow an applicant to de- say so.gote that the information on.dates „bagan spplioetioa and budget consistent • that la included in this section also must ap- with program"requirements. Examples are pear with other overview tion in a lo- whether oongtrcation is an allowable acthr- cation=preceding the full text' of the-any ttY, if there are any limit+ttions on direct nounoement(see Imo Notices or landing its sent as t<ireitin travel or equipment opportunities of this Part). purchases,and if there are any limits on in- Mach type of submission should be des- direst costs(or facilities and administrative ignited as encourage&or required.and if re- oasts) Applicants must be advised if Federal qulsed, any deadline date (or dates, if the awards wilt not allow reimbursement of pre- Federal awarding agencw plans more than Federal award costs. one cycle of application submission,review, 7.Other gat n ieston Requtreraente-Rewired., and Federal award under the`ernouncement) This section mast address any other submie- should be specified.The announcement must eton.requirements not included in the other state(or provide a reference to another doom+ paragraphs of this section. This might-in- ment that states): elude the format of submission,1.e.,paper or 1.,Any deaddline in terms of a dare and,looal electronic,for each type of regnired entails- time. If the due date falls on a Saturday, atoa. Applicants should not b4.required to Sunday, or Federal holiday; the reporting submit is more than,one format and this sec package la due the next business day. um should indicate whether, they may 11.What the deadline means(eg,whether ohoaee whether to submit applioktieme is it ie the date arid titae,by which the Federal hard copy or eleotronioa ly,may suboiit only awarding'agency_must receive the appligsri: m hard'Dopy,or May submit only eleot Toni lion,the date by wbialt the applioatdon must; be postmarked,or something else)and'hop off' that depends, if at all, on the submission This section elsemust indicate where cap- method (e.g., mail, electronio, or personal/ olosaless(and ant pre'ppitoatioae)must be* courier delivery), eulun tied if sent by postal mail,electronic. 'Phu effect of missing a dead!ne(e g, means, or hand-delivery. For postal mail whether late applications are neither re- s ssion,this must Include the name ofan viewed nor considered or are reviewed and office, official, individual or f action (e.g., considered under some circumstances). si�i!latiea receipt Walter) and a complete iv.How the receiving.Federal Mace metes- maillnc addrem. For electronic submission, mines whether an application oe pre-applies- this meat include the UBL or-email addre tion has been submitted before the deadline. whether a pawword(s)1s required;whether This includes the form of acceptable proof of .particular software op other electronic papa- mailing or system generated-documentation titles are required;'what to do in the avant:. 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 technictl-difficultiee x naive an acknowledgement of receipt. This information should be displayed in ways that /E•AeeileAnoN Ithexaw ngeeemATION will be easy to understand-and rise.it can.be 1.Criteria—Required.This section must ad- dlfficult 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 progran)e and give *With respect to electronic methods for them what effectively could be a oheokllat to providing information about funding oppor- verify the completeness of their application tunities or aooepting applicants'submissions package before submission. „off information,each Federal,awarding,agen- 5.Intergovernmental Reuter)-,Required,if op- of is responsible for compliance with Section plicdhle.If the funding opportunity is subject 508 of the Rehabilitation Act of 1978 (29 to itreoutive Order 12872, "ILtergpvern- 11.8.0.991d). 192 i I 11 # 1 ## ft .,. i I ..,, ,.. I OMB.Guldance N.200,App.I This includes the Merit and other review Ori-• people on an evaluation panel anti,how it op- teria that evaluators Will use to Judge asPPlip states the way reviewersselected, 3 aati°nal Including any statutory,,regu tor/. viewer qualifications,and the way that con.or other other preference*(air.,minority status or filets 0.fintersit are avoided.With respect to s- .., „ Native American.tribal preferences) that eleotrthie methods tor providing informs, . . will be applied in the review,process.Mires° ttnt about fundin opportunities or i accept- criteria are distinct from eligibility criteria ins ackdiciantai-Inig litprn4ine of 1 ti n.' 1 that are addressed before an application is each Federal awarding agency is responsible # accepted for review and any program Policy for compliance with Section'BOB of the Reber , or other_fagtore that are applied during the. bilitalian hot of Iva(2e'u a-c 794d) selection process,after the realert,Pkwaess is In iiirdiiielii,itt-beFederal dire ,LiVar Agency completed.'The'The Intent is to make the appli- permits applicants to nominate suggested ' k cation process transparent so applicants tan viewers of their'applications or suggest those , make-informed decisions when litePariali thettael may be Inappropriate due to a 0011.-- . their applications to maximize fairness of suet of interest,that Information should be F the process.The ehheeeeemeht should.clear- included in this section. 1. ly mambo all criteria.,Inoleffing any sub- ..-3.-Antkipated Announcement and Federal' 1 critsria,If criteria vary iMportancei the Arrant/)citer—optistroL,-This section is In- announcement should epthifir the relative tended to provide applicants with informs- i PercentaPe,weights.or other lamina used"tri- tie*they-can use tee planning purposes. If i dl$Inglsh aelellirthem.For statotory,reg- there is a single application deadline fel- . i of , .alatarlr:-ar utlierftreferenuee the announce- lowed by the reviewsimultaneous all ay- Merit aliOuld.:.Provide,-a detailed,eXidenittion plications,the.Federal awarding agency can. :. of those preferences with an elicitindicia- include inthis section infuriation about the # # tion.of their effect(e.g.,whether-they result anticipated dates fbr ainistAring or nett- Y in additional points being ateigned). tying strocesehrl and:unsuccessful.applicants • I . . • If an,applicant's proposed.Ocist eliarteglvill and for having-fe.der.a.l Awards in place.If tp- be i considered.in,thereview process (as op- plicat.ione are received and evaluated.00.a posed to being an eligibility criterion de- "relling4L.basis at different Egos.doriiig an eorthed In Beetiet312).tile announcement extended period, it may he appropriate to 1 must al?aal#PallY address how it will 14t,904.--T give 1004etate an estimate of the time need- 5 eldest"'(e.g.. to assign a oertairr-nunber of ad to process an application and notify'the 1 additional points to-.8Pplicanta who offer' applicant of the.Federal awarding agency's .11. • coat sharing.0'040 break ties among applicni,. decision. . ' atra.1,2insilivtiathueoetheruiva4envorst soorvstistaft,06:nswingovaluativeat F.PartiliSi,ANA.11,0 ApItawitrisNrion- ,.. ., not be considered in the evaluation,rthe an o' INFORIEWEION pounce:mint should say se so.that.there'la 1. Federal Award Noti ' no ikelbisuily,f3f outenugu'imauointi.Vague _,_. cer—itepared.:,This statements that cost sharing is encouraged, cant oar sec°411.must address Whet aenocoenflit eppli- without olarifiCat4on as to what that.means, lion,lithe!xf,tu„„bto , blowing islee- I are unhelpful to applicants.It also#hiimpor,, tacsiii ,:"A„.„,,uur*I'aWarthnirageners.Pra4* tent that the announcement he clear aboat#. -----a separate notice stating Illy restrictions on the types of coat i that an wliostion has been selected. , ke.ff-t in- it aatual4 maks'as• sectionthe Federal award this. kind contributions)- that are acceptable ' •• ' to indicate that t sharing,.- -', ' - would be the place to 2...-#.11eview-and Selection proeew.Reguered, t'll,letter 12° ant authorization to begin This section Tars In . ,..,,..„, „ performance (to the extent that it-allows may Te.zaT fzi the level of detail. to Federal Aw 0 •pee-award provided. The announcement-must list any charging arde , r- #uei or eutofactors elements, costs at the non.41federal•entity's own risk)program s section should indicate that the notice other than merit criteria,that the eAlifoting:' orystued award. .1......1 3.1,.‘..,...4., ,,,,` ...r.,official may use In aeleetiugAllpg04tionaor ( ,__. -1,—;eblr,..rair--0"--- Feihullateucui ... goortigthibaim41idon arequATeawit)illthe dommoent. (eau . . ,, . and:whether#it la proirided,Wang- h postal program halenoli or diversity).The Federal. mall or by electronic Means arict to whom,it awarding agency mar.also include ether Bit'. also May-Address the timing,-; ea( M.M...- 9011- PruPrIula thiaaila• For example, this section tent of notifications to mien cuessini appli- alas inSdirsaaLrrhala,XesPuu responsible-Tor eaalueo' cants.- See also.140o Information non- lion against the merit oriteria.(e.g.,,peers ex4-- tamed in Yederal award. ternal,to the Federal awarding.agency or L AdiniAstrattos-and National Poifcy r ' - Re- Federal awarding agency an&or prment—Required.This section, idea. who makes the final,,selections for Federal thy the usual-administrative- and national awards.If there is a multi-phase rewlerr:Foa policy requirements the Federal awarding see(e.g.,an external,panel advising-internal agency's Federal awards may Imo nd Federal awarding agency personnel,. who ogling,this information lets a potential ap- 1 meke final recommendations to the deciding pliant identify any requirements .withI official),the announcement may describe the which it wouirtiumpi: •' • complyingif I Phases. It also may•Include: the number of its application iii-isainii"ithifet##.:'-'11-those oases, # , 1#83#'' i # Pt.200,App.II 2 CFR Ch.It(1-1-14 Edition) early notification about the requirements al. R.OTHER INFORMATWN—OPTIONAL lows the potential applicant to tlitoide not to This section may include any additional apply or to take needed actions before re- Information that will assist a potential ap- ceiving the Federal award. The announce- plicant.For ezamplq,the section Doiat. anent need not include all of the terms and I.indicate whether this is a new program condition of,the Federal award, but may or a one-time initiative refer to a document(with information about R.Mention related programs or other up- how to obtain it) or Internet site where ap- coming or ongoing Federal awarding agency pli°ante-can see the terms and conditions.,If fuading'opportonit).ss ibr'similar activities. this funding opportunity will lead to Federal lit Include ourrent Internet addresses for awards with Rome special terms and oondi- Federal awarding agency Web sites that may tions that differ,from the Federal awarding be useful to an applicant in understanding agency's usual(sometimes called"general") the p terms and conditions, this section should iv.alert aPPlicant,to the need to identify highlight those speolal 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 preciously and,might not n.(alas oeataia routine aotioe a to. nt jai- otherwise expect different terms and condl- not obligated that the Fan F de a award lions. For the same reason, the,.announce- not t. the to nno any ent hat only meat should Inform. potential applicants grants result.of s•announcement t or a.go only .about speolel requirements that could apply m theeers can ture naderal govern- . particular Federal awarde after the review inent't° ezpeupditnre of funds). of applications and other informatlonchased AzTERDDE,, II TO Pam, 2O —CONTRACT on the particular oircunistanoes of the effort PROVISIONS PO&NOti PED to be supported(e g.,If human enbiaots were $ ` to be involved or if some situations may rue- W� RdOTE 'UNDER FEDERAL tify special terms on Intellectual property, data sharing or security requirements). In 3. Reporting—Requfr : This eeetlon must fieedl include general information about the`type;I + (e.g., financial or performance), frequency, Oi l' and means of submission (paper or eleo- F as tronic) of poet-Federal award reporting re- ��, quirements.Rlghlight ease special reporting , i aE requirements for Federal awards under this ' '! leaf funding opportunity that differ(e.g.,by ref .• a, ,,, 'r port type, frequency. form/tormat, or cir. riir oumetances for use)from,what the Federal '' ° awarding agency's Federal awards usually minietrat a contract . require, ant ctorsr l' edior is instances where contractors tan violate or l .FEOEpiA,AWARDINGcsrtcr Oorrrear(e)— breach contract terms,and provide for such sanctions and pentium'sa appropriate. The announcement (B)All contracts in excess of i10,000 must must give potential an- address termination for cause and for con- plicants a point(e)of contact for augwering Genie nos 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 oven. The intent Of the be*for settlement.: this requirement I.to be as helpful as pats- (0) Equal Employment Oppportunity. Liz- aible`to potential,appllgatits,eo the Federal rapt as otherwise provided under 41 OFR awarding agency should consider apprga hea iaart'60,elf aoatraota that meet,the deft.-as giving: tin of`'federally assisted,construction eon, 1.palate of contact who maybe reached In tract"in. 41 OFR.Fart 40-1.3 meat include the multiple ways(e.g.,by telephone,FAX and/ eguai opportunity accordance with under 4e or email,as well as regular mail). OFR•oa 4(b),is with Executive ii. A fax or email address that multiple Order 11848, ,.EqualEmployment Oppor- people access,ao that someone will respond' faulty"Comp.,F1i,39),as amended.m6n'8 b l?srt, tiv even if others are unexpectedly absent dur- Order , "Az e Executive ve Orderr Ing critical periods. 1latin "Amending al ployment Iunit Relating to emen 14g revelations a at 41 ill.Different contacts for distinct kinds of faulty,"and implementing revelations et 41 help(e.g.,one for questions of programmapo' CFB. part 60, "Office of Federal Contract content and a second for administrative Compliance programs, Rqnal Employment questions). Opportunity,Department of Labor." U s . OMB Guidance Pt.200,App.II; (D)Davie-Bacon Act.as amended(40 U.S.O. materials or artloleq.ordinarily available on 814L.8/48).When required by Federal program the open market,or contracts for transpor*' legislation..an prime:.constructlon.contracts titian or transmission of intelligence. fn, excess of$2,000 awarded bj non-Federal (II-Nights.to Invsntiioae Wade Under a entitles alustInclu4de:a provision for oomph- Contract or Agreement.If the Federal award once with the"Davis-Bacon Act (40 U.S.Q. meets the definitipa of"finding agreement" 3141-$1"� and 814-8148)assupplemented under 8' aw "p4013(a)and the r'ecipient'or Department of Labor regulations (29 0P� subrecipientwishes to enter into a contract. Part 6, "Labor Standards Provisions Appl- with a small business firm or nonprofit orga cable to Contracts Covering Federally Pt- nisatton regarding the substitution of•par-- nanoed and Assisted Cto�petrructdon'"). In ao- ties aasignmen or.: rmanae of expert oordanoe with the statute. contractors rquat mental, developmental, or research work be required-to pay wages to laborers and me- underthat'"funds agreement,"the reoiyi- , ehanlas ate rate not lees.tllan the prevailing, out or mbreotp a tmust comply with the re- wager( specified in, a wage determination quirements of 87 OFR Part 401.-44llltghtn to In- made by the BeoretarY or Labor._In addition, veation' Made by Nonprofit Organisations contractors must be required,to"pay wages and Small Business Firma Under Govern.. not lase than once a•week.The non-Federal rent.'Greek*. den Contracts and Cooperative- . entity?Meet plaes a.copy of the corre t.Pre- Aggeemnta,"and any i mplementing regula railing wage determination issued.'bp the Ds- bone issued by the awarding agency. pertinent of Labor in each aollcitit on.The• (0);Clean Air Act(42 U.R.C.74Q1-7871q)and t. deolafon to award.a contract or sribcont tr• the Federal Water Pollution Control-Act(88 must be conditioned upon the acceptance.cif U.S.C.1251-1387),as amended-Contrasts an; the waga determination.The non-lrbderal.en- snbgrante,of amount",in excess of'$160,000 tit,y must report all,suspected or reported., must contain a provision that requires the violations to.the Valera),awarding:agency. non-Federall award to agree to comply with The contracts must also include a provision all applicable standards, orders or regulla- for compliance with the Copeland "Anti- tiomi lamed pursuant to tlie Oleaa_Air.Ant Kiokbaok" Aot (40 U.S.C.8146), as supple- (42 U.S.C.7401-7671q)and the.Federal Water :rented by Department of Labor regulations ulations Pollution Control Act as amended(83 U.S.O. (29 Cb`R Part 3, "Contractor and. Sub- 1201-1387).Violations must be reported to the contraotors on: Public Reliant or Public Federal awarding agency and the Regional Work'inanoed•#"Whole,or'in Part by Loins Office of`the Environmental Protection or Grants from the United States").The Act Agency(EPA). Presides that eaoh contractor' or sub- (II) Mandatory standards and polioitre re- recipient must be prohibited from inducting;- lating"to energy of totency which are con by any means,any'person employed in the tallied 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 oompenaa- and denae:Tation Act(42 U.S.0.6201). tion to which he oy she Is otherwise entitled. (1)Debarment and Suspension(fivecutive The non-Federal entity mast report all;sue- Orders 12549-and 12689)-i, contrast award . psoted or reported violations to the Federal, (see 2 OFR 180220)must not be made to par-; awarding agency.- ties listed on.tke governmentwide Excluded- 5 (ID) Contract Work Hours and Safety PartieshlstBysln the SyateukforAerard Standards Act (40 U.S.C. 8701 Q(1). Where heinagsment(SAM),inaccordanoe with the applicable,all contracts awarded by the non, QF�iS guidelines at 2 OFit.180 that Implement Federal_entity in excess of$100.00000 that in- Blxecutive Orders 12649' (8 C3R.Past=198d volve the employ m:Aof meobanics orlabor. Comp., p. 189) and 12889 (8 OFR Part'1889 era meet include a.provision for compliance Comp.,p.-225),44Debarment and Suspension'" with 9011.18.0.8202 and 3704.ss supplemented the rolefled Parties List Systems-"In SAM by Department of Labor regulations(29 CFR,• contains the names of patties debarred,sus: Part 5).Under.90 U.H.O.8702 of the Act,each pended,or otherwise excluded by agencies;as contractor must be required to compute the -well as parties:declaredineligible'enderstat- wages of every mechanic and laborer on the utory or regulatory authority"other than Er- baele of a standard,work week of 40 boors:-' ecative Order,12049. II/akin eibess or the standard.wprk week is (J) nyrt.Af¢Clp Lobbying Amendment (31 permissible provided, hat the Worker Is com- U.S.C. 1852)--Oontraotore-tlatt;apply or bid penented at a rate ofsiot lees than one at(d-n for an award of 3100,000 or more must file the half tlinea the basis rate or pay.for all bonze required certification.Each tier certifies to worked in excess of 40 hours in the work the*at above that it will got and has not week.The requirements of 40 U.S.O.8704 are used`Federek_eppropriated,funds to pay any applicable to contraction work and provide: person or organisation for influencing or at- that no laborer or mechanic must:be be re- tempting to iniluenoe an officer or employee quired to work in surroundings'Cr,under of any agency„a member of Congress,officer working condition which are unsanitary', or employee of Congress,or an employee of a." hazardous or dangerous.These requirements member of Congress in connection with ob do not apply tq the purchases of supplies or taming any Federal contract, grant-or any 19$ Pt.20D,App.,ii1 2 CFR Ch.II(1-1-14 Edition) other award covered.by 81 U.S.C.1352.Each fi) Sponsored'research;means all research tier must aloe disoleee flan/ lobbying With and development activitiea that are Win- non-Federal funds that takes place in con-" scrod by Federal and non-Federal agencies 'section with obtaining any Federal award. and orgaaisagons,Thte,terris includes saw disclosures are forwarded from tier to" ties involving the training of Individuals 1n tier up to the non-Federal award. research techniques (commonly called re-. (E)see 1200.322 Procurement of recovered search training)-where such activities utilize materials, the same faoilities as other research and de- velopment activities!and where such activi- AITENDIX ni TO PART 200-INDIESOT ties are not included in the instruction funo= (F&A) COSTS IIENrIRFIOATION AND;, tion. ASSIGNMENT,Arm BATH DETHREINa- (2) University;research means all research. TiON BD&INsT2J uTioNB OF,> R and deveio� }t activities that are sops- EntroATu)N(Ills) rarely.budg'etedand accounted��halsethe in- stit ution ant an internal application of In- a.oitis; stitut;onal funds. University research,, Per This appendix provides criteria for identi- purposes of this document must be:':com- tying and oompating indirect (or indirect btned'with apoaaored ressu'gh under the (F&A))rates at:Ill7/s(institutions):Indirect 0oon of taieri:edresearo . (F&A) oasts are:timee that are lnourredfar a oenno ofinanc cuufiteaedegas ogrsr. common or Joint objectives and';therefore" and tu'aots financed and',non- oannot be identified readily and specifically' Federal aS and one which in- with a particular sponsored proJeot1 an its- structionany and orgaafzed:research.Examples tional activity. See subsection B1,,Deftni- of such programs and proieote are health tion of Facilities and,Administration, fora service projects and community service,pro: discussion of the components of indirect grams+dlowever,when any of these activities aria)costs. are undertaken by the lnstliumon without outside att9port• may be classified as r.hfalor Functions of an InetttUtton other instititional activities Sefara to instruction, organized research, IL Other institutional activities means all so- other sponsored activities aadother#risNtn} tivitiae of an institution anent far iasitruo- ra- tional activities as defined in this section: eearob,aid tton, departmental rasearoh, oaitiak d instruction t on,apt fl s sect indiredo4t(Fan oat Re- training for research training as i)rovided iri enb- " identigas in thin eignmdnz pare. section b,this term includes all t,�ohfar and graph Ideni cation a specialised of in- section activities,whether tl,,ey'ere offered dirapt()f' p)coated and apeatalised services for credits toward a"degree'or certificate or service lea'described in'I200.488 Specialized on a non-credit basis,and whether they are aervios eilltles of this Part, offered' through regular academic depart- includeoExample,of"otho institutional s.diningties meats or separate divisions,"such'ae a aura operation of r limos halls, mer school division oran extension divislca. balls,hospitals and clinics,student unions, Aleo considered:part oi.this major function intercollegiate athletics.apartments, t s, guree,facuety- u s departmental research, and, where housing;student apartmeate, guest houses, agreed to,udveretty research. medlar theaters,paella museum,and other (I)Sponsored instruction and traiftfr{p means aimilar adiifiay entenpe side definition epeoifio instructional or training activity es also includes any which r categories of aaf ivi- tablished by grant,contract,or cooperative byes, costa of are "unallowable" do agreement. For parpoe a of the cast pain,: Federal awards, unless otherwise indicated alphas, this activity may ,he considered,a, in an ward. major function even though an institution's 2.Ciiteriafor Distribution, accounting treatment may,include it in the instruction function, a, Base period.A base period for distribu- (2) Departmental research means research, tion of'maineot (F&A) costs ie the period development and scholarly activities that during which the eogts are incurred. The are not organised research and, con- base period normally should coicide,with. segnently, use net depssrstely budgeted and the fisoal year established by tbeiaetitution, accounted for. Departmental research, for brit in any event the base period sin tld he die- as a major function,but as a part of the in- tribution of oasts, struction function of the institution, b. Need for coat groupings.The overall oh- b. Organized research means all research Jeoiuve osthe indirect Arita)._ cost allocation and development activities of an institution process is to ute the indirect.(FR;A) that,are separately budgeted anq accounted °oats describednectioa B,Itlsntildoatton for.It includes? and assignment of indirect MOO costa, to 196 li OMB GuIdance Pt.200,App,HI the major functions of the institution in pro- expenses, or,operation and maintenance a:[; portions reasonably'consistent with the na• penes to such activities should be aoeom:• Lure and Watt of their use of:the iustitu, piled through`cost"groupings whichlaglucie: boa's reeonroee.In order-to achieve this ob- only that portion of centre,[indirect(F&A) jective, it may be necessary'to'provide for ooats (such. ea fey. overall, ma0agement)' selective distribution by establishing sew which are properly ai;oogble to enoh eotivl rate groupings or cost within one or Afore Of the indirect (P&A) coat_Categories referred. �(6)It the institution elects to treat fringe to is eubaeatdoa•"�,,De lD1ener;l,Facilities benefits as indirect (F&�A) charges, such and Administration. In general, the cost coats should be set aside se a separate cost, groupings astute, ua8 withta a category grouping for selective distribution to related should constitute, In each,cape, a of those items of expense that are cons ered to cost ohjectives• ooetgroupinge be of like nature in terms•of their relative within a oatbegr o eagara be .helg up go from) in contritheion tos Ar degree of e owhics Practical limits after taking-into consider the Particular cost objectives to w>uioh anon'the nPateriaijty of the amounts ja.diould b b n is sp te. Cast"he general; valved and thedeg ree be est,abl>ah d egzsiderJ,ng the general of preoiston attainable guides provided In subsection 8•of'_tiffs sea through lees selective methods of distribo tion.IDaoh such pool ur cost grouping should then he distributed individually to the re- 3.5eleotdon of distribution method. latad,00st objectives!.using the.dietribntion a) Actual conditions must.be taken into base or method Most appropriate in,light of acooumt in seleoting..the method,or base-to the guidelines set forth in subsection"d of be used in distributing individual cost this section. groupings.The essential consideratioain se. e. Cenral constderaiionu on coat groupings leoting a base is that it be the one beet suit- The extent"to which separate coat groupings e4for:assigning the pool;of costs to cost oh- and selective distribution would be appro- jeotivee in accordance with benefits derived; prints at an institution is a matter of judg- with a traceable oauae-endieffect relation- meat to be determined"on-a case-by-case ship;or with logic and reason,*here neither basis.Typical,situations which may warrant benefit car*Dense-and effect;elationahiy is the establishment of two or more'separate determinable. coat groupings(based on acoouat olaseilioa- (g}If a poet grouping can be.identified di- tioc or analysis) within an indirect(B'&A) reotly with the cost objective benefited,it the f llo Bros taolude but are not limited to abould be aesigse&%o th�et cost objective. (1)If osrt items or eat +ies of more taus e:tyenatu in a.edit grouping are relate solely to one of the=Vac function or general in nature,the distribution may the institution or to less Chap aA;lunations, be bae-sd an a cost:analysis study;which re-: such'expenses should be set asi{ds as a sops- suite Ihran{equitable distribution of the rate cost grouping for°direct assignment or calla'.Shah coat;analyale studies may tape seleotive aides provided ocation b ectiioonsband d la or spacth one into e occnpi on d t appropriate st: CO If.any types of expense ordbiexjjy treat- analysis studies,bpwever,must(a)be a o- ed as general .ad_mniatratloil"or depart- prtataly documented in eugioient deta for mental:administration are oharted to'Fed.. subeequent review by the cognizant agency oral awards as direct costs.expetlaas applies- for in eect costs.(b)distribute the,costs to ble to'other sotdvities of the institution the";elatedat objectives in accordance when immoral for the same purposed in. like with go the relative benefits derived,(o)be eta& oi;pumetanoes must, through separate` ogee tlatically sound,(d)be performed specifically ! be excluded from. the indirect at the Institution at which the results are to (F& mA) costa~ allocable to those Federal be used.and"(a)be reviewed,periodically,but awards and included fn_the direct cost of not bee"frequently than rate negotiations, other activities for costa'llocationprp uoses. updated if necessary, sail used consistently. (e)`If it Ia ds"tezibined t ao certain expenses Any assumptions made in the study must be are for the support of a service unit Vc facia- stated and explained. The use of oust anal- ity whose output is susceptible of measure- Pis: studies and periodic changes in the ment on a workload or other quantitative _method of coat distribution mutt be fully basis,suck expenses should be set aside as.a justified. separate cosh grouping for distribution on (4)„If a post analysis study is not per- euch beats to organized research, inetrud- formed,orlf the study does not result in an tional,and,other activities six the inatitui on equitable distribution of the costs,the din- or within the department, tribution must be made in accordance with (4)'It"activities provide their'own putir-" the appropriate base cited,in,Section B,Idea - chasing,personnel admihiatration. building tifloation and assignment of indirect(F&A) maintenance or eimtlnr service,the distribu- costs,unless one of the following conditions Lion of general administration and,general is met: 19 Pt.200,App.III • 2 CFR Cti.11(1-1 14 Edlllolt) (a)It can be demonstrated that the use of (1) Depreciation on buildings used exoiu- a different base would result in a more equ lively in the conduct of a single function, table allocation of the caste,or t11Rt;a more Nit on capital Improvements and egnipmenb readily available base would not increase the need;in such buildings,must be assigned to costa charged to Federal awards,or that Shalom (b)The institution qualifies for,and elects (8)Depreciation on buildings used for more to use,the simplified method for computing than one function,and on oapital improve- indirect(F&A) cost rates described in Sec- manta and equipment used in,such buildings. Lion D.$implllled method.for small inetitn- must be allocated to the individual ibngtiona tions. performed in each bur ding on the beady of (6) Notwithstanding subsection (3), et(eo- usable square feet of apace excluding:oom- tive July 1.1998,a cost analysis or.base other mon areas such as hallways. stairwells,and than that in Section B must not be need to rest rooma distribute utility or student services costs. (8)Depreciation on buildings, capital im. Instead, subsections 13.4.o Operation and provemente and equipment related-to apace maintenance expenses,clay be used in the (e.g.,, individual_rooms, laboratories) used recovery of utility coats. jointly by more than one function(ace deter- e.Order of distribution. mined by She users of the apace)must be (1)Indirect(F&A)costs are the broad oat- treated as follows.Boost of each jointly egories of costs discussed in Section, al, need unit of apace must be allocated to bone- Definitions of Faoilitiea and Admi iiet>;atinig- fl Ire functions on the}wale cf, (2).Depreciation, interest expenses, oper- (a) The employee full--time equivalents ation and maintenance expenses,and.general. (FTIts)or salaries and wages of those indi- administrative and general expenses shouldd, vidual fanotione 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 empployee.FTBe or eel- the major functions and specialized service arise and wages applicable-to the benefitting facilities of.the Institution.Other coat oat- major functions (see Section A.l):orthe in- egoriee may be allocated in the order deter- stitutlon. mined to be moat appropriate by the iaetitu- (4) Depreciation on certain capital im- 3' stone.When cross allocation of coats is made Provemenite to lend, such,as paved parking as provided subsection(3),this order of at- areas,fences,sidewalks,and.the like,out in- location does not apply, eluded-lathe coot of buildings,must be alio- (8) Normally an indirect(F&A) coat oat.. dated to user categories of students and.eta egory will be considered close$once it has Dloyees 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 aseignectin this;instruotign c notion it. However, a cross allocation of coats be- of the;institution.The amount allocated to Wean-two or more indirect(V&A)-coat-oat- the employee category must be further,aliq.:. egortes may be used if such allocation will Dated.to'the major Qmcttons of the btul result in, a more eabie alocation of don in proportion to the salaries and wages caste.Ira cross allocationiq used,an appro- of all employees applicable to those lluie. prints modification to the gompoeition of Lions the indirect(F&A)cost categories described interest, Section B is required.B. B.IDPNTIFIQATION AND ASSIGNa4ExT or Interest on debt associated with certasin INDttLTXON AND Pons buildings, equipment and capital improve- mente, ae defined in 1200 q49 Interest, must I.Definidon of Facf(ftie;.And Administration be oleeeitied.aa an expenditure-under the opt-. sea 42U0.414 Indirect F egtry`Bacilitlm• These costa fount oe allo ( &A) costs which aided in the name manner,as the doted& provides the basis for this indirect oust re- tion on the buildings,eguipment and capitalquiremeuts. improvements to which the fntereet relates. 2.Depreciation 4.Operation and Maintenance Expenses a.The expenses under this heading are the a. The,expenses under this h are portion of the costs of the institution's those that have:beenincurred,for the - buildings.capital improvements to land and nitration, supervision. operation, if4iin'te,. buildings, and equipment which are corn- nonce,preservation,and protection of the in- noted lit accordance with 1100.934 Dep rooia- etitution's phyeigal plant.They i iolude ex tion. penes 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 included ice furniture and equipment; care.of grounds; this category must be allocated in the fop,- maintenance and operation of buildings.and lowing manner: other plant facilities;security; earthquake 1 i I .,- ',. 1" 1 t t R.-. , 1 OM&GUIdafice Pt.200,API".lit wandetyd-t;sae_ tardoar, preparedness;,wt environniatital 5.General Administration,and General Expenses has 110, 0 disposal; property. liability and alLother Insurance relating atlas.to 1/. The expenses under this heading'are property;apace and capital leasing; facility those that have beezinourred for the al pv.443nain. g and managamant; and central „4,_, executive and administrative cifficie of ode , 4h.s. nal told and tiler espouses of a calving-The operation and elainheosiios /r" °alio' -liati ana 0 - Dense category should also Include its silo- `, ganaZal character which do not relate solelY cable share of fringe benefit costa,,,,,,,,,,,Inna_ to any major funothien.Of the Institution.i tioncend Mtereefoosts - ' "71e... soleLY.to (1) blgtiilbt1°31 (I) organised .13.. • b.In the absence of the;alternatives pro- 61/3 illetker sponsoredacti/iitlee' or(43 „ 4 for„ Section. , _ _ „ other Institutional activities, The 3 °1°°°; In .40.at.the expenses in. adinizistxebv,,,endgeneral 3 eluded in this(140831r3r must be allocated should'administration end general expense category the same manner as described In. j, - • al00 include its allocable share of 3 an sedg°4- fringe benefit oast% operation and isiiiint- 2.b for;doprectatien. c.A.litiiity,coat ad„instroentof 111463 expense, depreciation. and Interest up to 1.8 costa. Stemple" of general administys tien Percentage points may be included in the ire- and .-in . ' satiated Judi:sot coat rate of she mirm f 9°-°r-. Incurred expenses clade3 those.by administrative offices thatiery expenses garkbied.research,•per the • •. computation. /alter- tile entire"lusiver-iiitr''-systeni-Of which theIna- natives In ParagraPhs (01(1) and.:(2) of this stithtion-i13.4 P it:central officesof the iii' 3 E1000 M 0ai apace U 4!uah as the President's or 1 (1)Where ,100 ill devoted to a single Juno- ChanoeUor'e office, the offices fbr institu- tion and metering allows unambiguous tiree-wide financial " • urement of rei • meals-- - management, business beusage &Pak totliet.bilace oasts Services, budget' and planning,' assigned to thefisli-- '-‘ 3 ' - meet ; (Mina-bigoted hi ManageMent and 0ifetY and.1.1ePP.1.1...anael that apace. " - ' -Mont.the()thee of , .4._ ,__._ . • the meneratiGounsel;and, .(2.)Vlore space la allOaktetl tO 41,1fferaai the ei/e 'I:Slane:3k the central 114/e/ iatistlee functions and,metering does not allow tram- ineneleMent iSformatical aYsteme. General. ;;• ..- goons measurement nf usage..by Luau admitistrati and„- • - General tion not .ou 'general erIuMeet nruat I 1:11111' coataninat be allocated aefellovre; • ' Include Menses ineurrect`within non- coats ftinuoltiorksutilitinisithoinits.shOulOS apportioned.to partmanivalai/4/34°Ide deans- •' offices,academic 4e: e same manlier as depreoia- _ 0%3 organized.research unite or slut. based on the calculated-differTCs;be- lar organizational units. (gen alibi/13° ea° site or building aotue.i.acmare foot,. ._Departmental adsziniatrationexpenees,) age for monitored:resoiroli.lieboratery 14•In;the absence.of the alternatives (site.1,12111111:g floor, ' •• '92a"' °Iged farin g bI 1133241'. . . ,. or room),.ad a•-sepa. -. Vo. 00 the expenses In- rate.naleulation prepared lit.the; TEtk.aai;i• cluded In this category muatbe grouped,grit; the 3.sfroottre slows•fbota...,, described i„..4-' _according._ to common major functions of the subsection(0)(2)0i)ogliliia e/MITiliori. ." lust/Sutton to Ivilicill they render services or provide benefits.The aggregate• (it)"Effective spier"footage" reeee.reh _. allocated . each group must thenbe expenses of 3 laboratory space must he-eawanted, ancloatecr to eery- ., 3 as the actual aquilwroottimes theiced ol/beillailtte"iniatiqiii on.th4 411°dille 0,1#' . re,- total ' - .. - d. ative energy ntilleation4sdealitstay ;3; coat bite.iividixlifieii tbtal'anet'consist the obox Web eibe.it the.time of apostedrats When. the sameaptoiti elements as-thoseip_Bet:tidal .00,. determination. .an ,.., Included in this indireot, i 3 4.This index la the ratio of a laboratory Org34.3).cos_t oategoryStatidea a service or i energy use- index ciabintio. to the 00-3.n_ mproduct;i19,allotpOrratelila, lAtatt4011.or organize-. "AN an'appropriate adjustment mist be reePRng 1448g fc4"Pveralkaverg°.nallalle made to either the expenses or the baste of or university space(college El). - allocation or both,to.asamiS B.InJuly 20114;valises for these two indices tionaf costs. a' lL)r°Per allau- 3 (taken reepeetivell. from the 40,wreeo . I Berkeley Laboratory ; for the:21et Con- g•Pelsuimealuf Administration Sipeniss tur73 beriehiniirlrliig 'toot 'stip. ''. • -- `--- - - "'.- . , , ...... a. _ .._ ./1 a.:The expenses under this heading „„,//w4u4e,4,„minnlanalaulg"1°44161020/fiPrwfif)ata•Ph3P these ' ' are that • ..,"''""`"`3 '''' DOPartnient."of:-12liergy-vsidi-A, in..4.4..,and have'been Incurred,. for 04/01148- -P Energy Xialmhoo)r. and 1....:4,- ,- 1R.", suPP9rtius,....servioes.that benefit were 320,........3,._-_*-4,..._.and ...: •ati),I;I ' objectives in academia deami3 Offices acsee.or biaktillgaatabOOk efelLt108 6O/C.4e$C,S ''''r.' common or joint departmental activities 4. 33 ,4,.t4.ta-7,,..niturtrf,...r..465 iuktuitgLit-34-., denitodepart„„enti,and dii,,,...,.and,,,,...._ so ....4 - licki ratio is 2 0 by this ; • -••••-- methodology,To retain currency,of413 will units include unite. • teen'research -.. adjust the zur numbers from .3 ' such...43.33.ea Institutes, (no more often than.2,640411y .,; center.,and.reeearsairOentoris Departmental time to time t ee/study than every 6 years),eetnir,reliable eleanctes oftenu) administration expenses are.isibiect to the 3 liclr disOloesid date. Current val... of bothP following 1/1/Illetle4e. the zuranna,tha.REV!w1U.e posted 11 on . (1)..he...adarcd,. .„.0 deans offices. Salaries and r, 0111:13 Web site. 0_ the operating expenses are.limited to those tributable to administrative gincitions. at- .. , 3 1.023 3 . i• i Pt.200.App,fit 2 CFR Ch.it(1-1-14 Edition) (2)Academic departments: o. In the absence of the alternatives pro- (a) Salaries and fringe benefits attrib- aided for is Section A$.d bhe expenses in, utable to the administrative work(including. °laded in this category'must;be allocated as bid and proposal preparation)of faoulPf.(hi- follows: eluding department heads)and.Other yrofee- (1) The administrative expenses of the atonal personnel conducting research afidlgp` dean's omoe ofeaoh college and sobool.must instruction,.must be,allowed at a rate of Si be allocated to the academic departments percent of modified total direct caste.This within that college or school the modified category does not include professional bust_ total,coat basis. news on professional administrative officers. (Pi'The administrative expenses of each This allowance must be added to the Dom- academic department,and the department's .ygtatioa,of the indirect(F8{(1)000k rate for share of the expeneta allocated in'eubeeotion major functions in Section Of Determination (1)must be allocated,to the appropriate:fano- and application of Indirect(Fd&A)poet,rate tione-of the department on the modified d or rates;the expenses covered by the allow- total cost basis... ' anoe must be- excluded,frum the depart- mental admiaistratton cost pool :No darn, t.Sponsored'Prplecil ddneir�iatradO l mentaation is required to support this allow- a.The expenees under this beading are lira- 4 ited"Io those incurred by a separate cogent- (b) Other administrative and supporting zation(s)established primarily to administer expenses incurred within academic depart- spansoradproleots,Including such functions mente are allowable provided they are Vest- as, �(Fad- ed consistently n like circumstances.This oral and non-Federal),,epeoial security,pa` '� 'Abe salafle$ chasing,personnel.admilnistratlos.and editr o ae ti �#fie salaarie leg and pebifebing of research and other i - ' :ode 'o ex`uibr'assistants, Aorta,They Inqiude the salaries and expenses travel, office;supplies,stookrooms,and the ofthe head of such organisation;assistants, like. and immediate staff,together with Lhe Bala- (0)Other fringe benefit coals applicable to mina,and expenses of personnel engaged to the salaries and wages included.",in sub- supporting aotivttlee maintained by the or- sections(1)and(2)are allowable,as well as genisatiun,such as stook rooms,print shops, an appropriate ebare of general aAwinistta- and the like.This•category else includes an tion and general expenses, operation and allocable share of fringe benefit costts,gen maintenance expenses,and depreciation. era administration. and general,expenses. CO Federal agencies may'authorize rein- operation and maintenance expenses,and de- bursement of additional costs for department predation.Appropriate adjustments will be heads and faculty only in exceptional canes made-foreervioeeiprovidedto other functions where an institution can demonstrate undue or organisations. hardship or detriment to project perform- b. In the absence of the alternatives pro- - vide&fur in Section L2.d,the expenses in- b.The following guidelines apply to the de- Chided in this category be allocated to termination of departmental administrative the major functions of the institution under costa as direct or Indirect(Faso)cattle. which the sponsored projects are conducted (1)In developing the departmental admix on the bass of the modified total coat of istration cost pool,special care-should be ea aponeoredproieote, eroised to ensure that incurred'AI-tali e. An apprio�priate adjustment, must be same purpose in like circumstances) are made to eliminate any duplicate°barges to treated consistently as either,digeot(*Judi- Federal awards when We category includes reef (Each) costa. For example.'salaries of similar or identical activities as those in- technical staff, laboratory supplies (km, chided in the general administration and chemicals). telephone toll charges, animals, general expense category or Other Indirect; animal care oosts, er comfit Duets, travel (F6cA) Doers items,each as acoonntbrg,pro- mats, and specialised shop costs must"be ourenient,or personnel administration, treated as direct.reeds wherever identifiable to a particular cost objective.Direct°berg- B.latbrary Expenses, lag of these poste may be accomplished a. The expenses under this heading are through specific identification of individual those that hive been incurred for the.oiler- costs to benefiting cost objectives, or atlon of shalibliMy, !aoludtm%the poet of through recharge centers or specialized sexy-- books and library materials parohaaed for ice facilities,as appropriate under the air- the library,lea any theme of library income ounietanoes. See fi200.413 Direct caste,pare- that gratify ae applicable credits under graph (a) and 200.499 Specialised service fa;. ssee.gig.Applicable credits. The library ex- oil ties. pens category should alsoude the fringe (2) Items such as office supplies, postage, benefits applicable to the salaries and wages local telephone costs,and memberahjps must included therein, an appropriate share of normally be treated as indirect(PEA)costs. general administration and general expense. 200 i 1 r k I t 1 3 t QMB Guidance Pt.200,App.lii t' t operation and maintenance expense,and de- struotion function,and subsequently to Fed 1 ;excitation. Costs incurred in the purchases oral awards In that function." of rare books(museum-type books)with,nor l.awards s value to Federal. not be alio- 10. Offset for Indirect (PdrA) lsxpeeses Other- eatedt4 them. wise Provided ter by the Federal govern b.in the absenoe of the alternatives pro- ineltf. vide(i for li)Section A.t d. the expenses in a.The items to be aeottmula under this - Fr eluded in this category must be-allocated beading are the reimbursements and other first on the basis of primary categories of payments from the Federal government users, including students,'professional enkt wbioh are made to the�institution to support �.' ployeee.and other users, solely,speoiffcally,and directly,3n whole or (1)The student category,must consist of .in part,any of the administrative or service Hill-time equivalent students enrolled at the activities described 4 subsections 2 throughLI igsiitntdon,"regardless of whether they earn -pi'. credits toward a degree or certificate. b.The items in this group must be treated, (t.) The professional employee category as a oredip to the affected individual Indirect' must consist of all faculty members-.end (M1A);cost category.before that category is i other professionalthe employees of iaetitu allocated to banefitting functions. tion, on a foil-time equivalent basis. We Dan! lOtctATiox AND l�prldcnT[ox or category may also'ino1ui e'lbet-doo o ate. 0.Dn1 M&'dc6lSfOsxRA oa, �... fellows'end graduate students. RATsa° (3)The other users category must consist L.Indirect(F&A) Pools. • ofareasonable teeter as`determined by insti tutional records"to account for all other 4.(1)Subject to subesation b.the separate users of_library aollitiee. categories of indirect(B'&A)costs allocated 1 c.Amount allocated 1n paragraph it of this to each maior function of the institution as.: section must be. eeigned"further as"follows: prescribed,in"paragrapla of`this-paragraph (1) The amount-in the student category 01 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 oommon pool,for",that fUnction..-The (2,) The amount In `t a,professional em- in amount each pool meet be divided by the ployee category"mast be`assigned to the. distribution base described In subsection 2 to major functions of t"iustitutign in proper- arrive at a single indirect(Pap goat rate for tion to the salaries and wages of all,faculty eeobkllmotifon• members and other profassional employees (2)The rate foe each,function le used to applicable to those funoticne- -distribute indirect(FAA,)costs to individual (S)The amount Lathe otherr nee*category Federal awards of that function. Since a is must be assigned to,the Other institutional common pool le established for'eaoh maior i activities function of the institution. function of the institution, Bowe*Ind- ) not(VITA)cost rate would be"establiehed.for ¥ O."Student"Administraton and Sat'vdce5 each of the major functions described in Sew s The expanses under this heading are tics A launder which Federal awards are oar- three that have been tied ant 1Acutredfort "min- (t) Bub inetitnidon',e indirect(Para)oast 3 ist�ration of student affairs end for-meralose rate"process must be appropriately designed to students, including eXPenaes of-sngli-tm to ensure that.Federal'sponsors do not in tivitfes as deans of students,admissions,rag- any way subsidies the indirect(F&A)costs of 1 istrar, counseling and placement services, other sponsors, speoiilisily activities span € student advisers, student health and I.nflr- Bored ky industry and foreign governments. E mart' services, catalogs,' and "commence- Acoordtngly,each allocation,method used to • f meats and convocations. The salaries of identify end allocate,the*great(P&_C,A)-cast members of the academia staff w to e-reapon. pools,as described,in-"peotlone A.2.Criteria t sibillties tro the institution require admtnis distribution.and B.2 through 8.9.must tratdve work that benefits sponsored prcie is contain the lull amount of•the"institution's. may also be included to the extent that"Q a modified total costs or other-appropriate; portion cbtarged,to student administration is Milts of measurement used to make the corn determined in accordance with Bubpart'Er potations. In addition. the final rata dlw Cost 1 rinciples;of thie,#'art. This,expense tributfon bane(as'defined to subsection 2)for category also includes the,fringe benefit each major function(organized reeeemh,in- i costs applleable"to t easlar es and,wages in- etruotion,eta, as described in Section A.1, t eluded therein,anepproDriate shore of gen: Major:Rmctions.of,an institution)must con- eral administration end general'expenses, tarn all the programs or activitifes which ltti- t operation and maintenance, interest en lose the indirect(FdA)costs allocated to Dense.and depreciation, that major function.AlAt the time an indirect ( b.In the absence of the alternatives pre, (F&GA)coat proposal Is submitted to a cog- E: vided for in Section A.2.d, the expenses in Meant agency for indirect costs;each instil- ; this category mast be allocated to the in. tution must describe the process..it uses.to EE L t . Pt.200.App.III 2 CFR Ch.1I(1-1-14 Edition) ensure that Federal funds are not used to 3.Negotiated Lump Sum for Indirect(P&A) subsidize industry and foreign government Costs funded programs. A negotiated fixed amount in lieu of indi- b.In acme instances a single rate basis for rent(pa)costs may be appropriate for Belt- use across the board on all work within;a conMinelt,off-campus,or primarily Baboon- major function at an institution may not be tracte[d'activities wheretjre benefits derived- appropriate. A single rate for research, for from an institution's indirect(P'&A)services example,might not take into account those cannot be reedily determined. Such nego, different environmental factors and other tiated indirect(Faoa)costs'Will be treated as omnditiom which ffect may a eubetaatiaily� as°Met before allocation to instruottoria.or- the indirect(FdsA)goats applicable to 4 par. paired reeearoh 1other sponsored totivities. tioular segment of research at the lustitn- and other institutional activities.The base Lion.A particular segment of research may cat which audit remalaing_expenses are ono-: be that performed,under a single sponsored dated should be appropriately adjusted• agreement or it may consist of rgsgg* 4 PreetetennlrsedeRatea for Indirect(k'drA)Costa under a group of Federal awards performed in a common environment, The;environ. i b)j9I6w 87-de(76 Stat,437)as amended mental footers are not limited io the phis. (4t t1.aa, 4709) authorizes the use of pre- Mai location of the work. Other Important determined.=tee in determining the"Jodi- factors are the level of the administrative wet coats"(indirect(F&A)cosh)applicable support repaired the nature of the faclltthis audit Groh a(ireemants with ednoationpl or other resources employed, the aoientifio inetitatilone.TheF st,4ted of jeotfv�of thq fat. dieoiplinee or tsohnioai skill.involved, the are t0,amPUiy'Me ration oL cost organisational aora ngements used, or any wading is with e�ducattnnntr� (tu- combination thereof.If a particular.segment. tione,to faoilitate the preparation of their of a sponsored agreement isperformed with- mudgEits, and to permit more expeditious in en environment which appears to generate ork is a significantly' different level. of indirect c y e. In view 00a of the potential cas when the Wfalcon ((Faa)costa rovisions,should be made fora twee offered by this, procedure,negotiation separateindirect V&A)oast pool applicable of,predetermined rates fq>< indirect (F&A) to each work. The separate indirect(Flea); costs for a.period of two to four years should cos poo'should.be developed.during bile rag- be the:norm In those situations where the ular coined of the rate determination process cost Modem* and other pertinent facts and the separate Wilfred(F&A)most rate rue- available are deemed sufficient to enable the suiting therefrom should be utilized; pro- parties involved to reach an informed jgdg vided it is determined that.(1)such indirect met as to the probable level of indirect (F&A) coat rate differs significantly from (F&A)mete during the ensuing accounting that which would have been obtained under periods. subsection a,and-(t)the volume of work to 6.Negotiated Fixed Rates and Forward which such rate would apply is material in Provfaiotes: Carry relation to other Federal awards at the insti- tution. When a fixed rate is negotiated in advance 2,The Distribution Basis for a faecal year:(or other time period), the over*or under-recovery for that year may be Indirect(F&A)costs Mint be dietrbbntBtlp E included as an adjustment' to the indirect applicable Federal awards and other benefit Me art ion'negotiated tin a rate nethe ation- brag activities within each major function Menthe a rate m;n t is determined,ter the carry- (see motion Al,Major functions of an dnatfa 'byword ustnienty bpthe eat union)on the basis of modified total direct cr u subsequent rateamount'may is applied When n the cad costs(MTDo).consisting of all salaries and 1201 are to bne made,each. filed rate ne-. wages,fringe benefits, materials and sup. 'f� a be fods,; v periodo. nee plies,services,travel,and subgrente and sub- vitiated-incomputed by app for a the expectedxp will indirect, contracts up to the first $26,00D of each applyingeral ands forort suborned(regardless.of.the period covered the(NA).ecastosta period pl sto Federal awards carry- by the eubaward). Qis defined in.1200.68 the t period ove or or under-recovery)nde the _ forward adjustment(oven- Modified Total Direct Coat(=C).For this from the,prior period, to the forecast:dia- Purpose, an indirect(V&A)coat rate should tribution base. Unrectivered amounts under be determined for each of:the separate m di, lusnp-sum,agreements or cost-sharing prowl- root(Nut)ooet;pools developed to alone 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(I )omit pool la: understanding in each case between the in- of the modified total direct costs identified siltation and_the cognizant agency for indl- with such pool. rent omits as to whether these differences 202 1, i „v. ,„.. , t 1 t 1 OMB Guidance Pt.200,App.III will be considered in the rate negotiation Federal government at the time of an award I rather than making the date risiinetioa after (because the educational institution is a new the differences are known. Farther:inetitll- recipient or the Part/es cannot reach agree- tions Bleating to use this.carry-forward pro- snout on a rate),the provisional rate used at vision/nay net subsequently change without the hires of the sweelt most be adjusted once prier approval of the cognizant agenoy fey eimete„te negotiated AndtnProved by the cog- indireot costa Li the event that an Itatith- nizant agency for ltdirt0q114/744 . tion returns to a post-determined rate. any ; t over-or under-recovery daring.theAleried,in 8.Limitation on Beimbiorsernent of which negotiated fixed rates and carry-for- AdMintstratiee Costs ward provisions were followed will be in- - - eluded in the subsequent poetsdetermined a. Notwithstanding the provisions of sub- rates. Where multiple rates are used, the section—0.1.a. the' administrative COO* same procedure will be applicable for deter- charged to, Federal awards awarded or 'plaint each rate, ;- ' - amended, (including continuation and re-, . ..._ newal„awards)with effective dates beginning 6.Provisional and Sinai Rates for indirect on or after the start of the.institution's first (Fte.4)COW* , .._ fiscal,year which begins on or after October Where the cognizant agency for indirect 1,;MM.must be limited to 28% of modified costs determines that cost experience and, total,direot omits(as defined in subsection 2) other pertinent facts do not justify the use,_ for the Vital of.General.Administration and or predetermined rates,or a fixed,rate with, General Expenses.'pepertmeastal Adminis-• a oarti-forward.,or if the parties Cannot tration.-SPeneoredProjeota Administration. agree on an equitable rate.aprovleional rate and, Student Adminiatistidi aid.:Services must be established.To 1 prevent.substantial, (Including their allocable share of.deprecla- , overpayment or anderiatIrneak, the provi- tion, interest theta, operation and modiste- i Menai rate may be adjusted by the cognizant mance expense.,and binge'benefits oasts,as agency,for 1.14d1r8(4,costs during:the'Matitn- provided by Section II.Identifioation and na- tion% fiscal year.,Predetermined;or fixed eigraw,wh oi indh,e„t ,vdtA) • t and au rates may replace at soy ,.,_ time prior to the ol'ose of previsional rates the instiflatjeive 'loam types of expenditures not listed spa- doom year. If a,provisional rate Is not re- oifioally'under-one-of theStIbeatOgOdes of fa, placed by a predetermined or fixed rate prior oliltiellin 8eot4m1I. to end of the.beubieloo.e flood year.a b.Inititutions should not change their so, final rate will be established end,upward,or counting or cost allocation methods lithe et- downward adjustments will:be ma&based on foot Is to Oltenia the charging of a Partioular the actual allowable costs incurred for the type of cost front FtrA,to dltoot,cm to reolae. .. period involved. - sit/coda,or Increase allocations from the administrative pools identified,in paragraph , 7.tired Rates for the We'of the A'prmsored B.1 of this Appendix to the other F&A oust , AgresMent psalm or pings benefits. Cognizant agencies , _ ,.....,_ • Federal agencies must use the negotiated, for indirect- cost are authorized,tel.allow , , . , rates except-as provided In parerestph(e)of changes 1/N9re an inetit141011% charging, i 200.414 Indirect (T&A)'posts, mosk,para,.. praistions are at variant's With acceptablegraph(b)(l)for.Indireot(F&A)costa in effect practices followed by a substantial majority at the time of the initial award throughout of other institutions. the life at the Federal award. Award levels for Federal awards may not be aoljusted in O.Alternative Afethod for Adrninisitative Costs fato,re Fears as&result of changes In.nego4 Notwithstanding the provisions of sub- Elated rates."Negotiated rates"per the rate a'4.Ai--- agreement Misled°final gne4,..,ateL peedebee, seo..oll....-.an institution may elect to claim mined rates and provisional rates. tWelride„ a fixed allowance for the "adlMnistration" 'life" for the purpose of thlis erabeeotden e`'''''un etrindire°1 RIO) 00114...1,28 6410Vb" means each ooiroettavo negment, of ,n snots could be either 24%of modittedtots.1 di- project A CionmetItlie segment is a period Of re0 costa or a percentage Kula to 9814 of the , years approved by the Federal awarding most recently negotiated fixed or predator- agency at the time of votierfa.award.If mined,rate for the 0014,R901w11341Wded under negotiated rate egreemetate-do'not extend ady'llTd"tratIoll".as defined in Seddon B.1; through the life of the Federal award at the lelliolleasr la less.Under this alternative,no time of the initial anardt then the'nage,. cost iiroPegal,need be prepared for the"Ad- tinted rate for the last year of the Federal. nlintatiletion"portion of the indirect(FA,tA) award must be a:libel:11*d through the end of OVA rate nor is further identification or deo- the life of the Federal award. - umentation of these coats required(see sub- b. Ftreept as provided In 9200.414 Indirect section a). Where a negotiated indirect (F&A)costs,when,an eduentionallnatitution (F&A) cost.agreement:includes this alter, does not have a negotiated rate with the native,an institution must make no further 208' • Pt.200,App.III 2 CPR Ch.1I(1-1-14 EdIton) oharges fbr the expenditure categories de- tided based on mutual agreement between earned is Section BA General adbinisizer HIM 1W tFis it mm`dt **** • .. iligi .:� IXAD4Ld-# t-. 13.9. SJWdWet sdmdal `ii and; r �e ;, ' ' ,", � a , +[i1 wit-. . tR� • . arcs s I a .. i ds f1 �; tort* rf r, ~ AatAFl : .. 10.individual Rate Components agency ot�coati+.ii r ble for order to provide mutuallynegotiating and approving rates for an edu- In information for:management agreed:upon cations,'Institution on behalf of all Federal indirect ion J poet ra otia tiown or d each am'trats,w nt;gnm Feie Federal a e for termination shall t rats'devel to anoe oasts! which mike Fe era! awards. opmen 4:k. to educational institution,,mast notify_ rate for each indirect(F&&A)coat ponies well theoognbawt agency for Indirect costs of as the overallindirect(F&A)cost rate. specific concern. (i.e.,,.4 need to establish 11.Negotiation and Appravat of Indirect(PEA) special ooat rates)which could affect the ne- ltaro gotiation process.The cognizant agency fore indirect obits meet addteas the"concerns of a. Cognizant agency for indirect ooete is all interested agenoiee, as appropriate. A. defined in Subpart A Acronyms and Aefini--, pre negotiation conference may be scheduled . time. -- among all interested agencies if necessary. (1)Cost negotiation cognizance Is assigned The cognizant agency for indirect°oats meet to the Department of Health and Hunan then arrange a negotiation conference with Services (1SS) or the Department of De- the educational institution. fence's Office of Naval Research(DOD),nor- (2)Other than formal negotiation.The cog- Maily depending on which of the two agen, nitwit agency for indirect costa and edit- cies (1313S or DOD),provides more fande to national institution may reach an agreement the educational institation for the most re- on"rates without a formal-negotiation con- cent three years. Information on funding ferenoe for example, through correspond- must be derived flrom relevant data gathered enoe or use of the"simplified method de- by.theNational Science Foundation.In caper" scribed in this sectionA1.of this Appendix. where neither.li1:18 nor DOD:provide. Fed- g. Formalizing determinations and agree- eral funding'to an educational institution. meats. The cognisant agency for indirect the cognizant agency for:indirect ocets as- -posts must:formalize all determinations or signment must default to lam. )iiotwlth- agreements reached with°.an educational in,- standing the method for cognizance deter;:. provide copies to other agen- raination described in tnie section,other ar- oiea having an interest. Determinations rangemente for cognizeocs 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 entage adjusted,and the reason for mak- the educational tostitutlpn and'must be de- adjustnenta. S i 3 i t ? 8 i p�p 4 OMB Guidance Pt.200,APP.III h.Disputes and disagreements.Where the are classified,under the following titles or s cognizant agenoyr for indirect costs le unable their eluivalente:- to'reaoh agreement with;:an educational in- (1)General administration and general ea- 1 etltution with regard to rates or audit pee- pauses(exclusive of costs of student,,admtnls- halo; the appeal system of the oogaisant tration and services,student activities,eta agency for indirect costs must be followed dent aid,and sohglarehipp). for resolution of the disagreement. (2)Operation and maintenance of physical s plant and depreciation(alter appropriate ad 12.StandardRatrnat for Submission uatmw$for costs applicable to other Meta- For iacWties and administrative(indirect Utianalaotivlties)' (F&A)) rate proposals, educational inatitu- a"rt ttose must use the standard format, shown (' Depa computed as eon expenses. in eeotioa>Q ofthls appendix,to submit tlielr which will be as 20 percent of the . indirect (F&A) rats proposal to the cog; embattle see of deans and heads of nisant agency for= ct costs.The cog- In those asses where expenditures „1 3- . nisant.agency for indirect costs may.on an tied under eubseottort (1) have'previously ;' institution by-inptttutrion basis,grant exoe- been.allocated to other institutional aotivi- tione falm 941-OP portions*Part II of the .ties. they may be included in the indirect al. standard format requirement. This require- (pea)cost pool.The total amount of Sala- I meat does not apply to educational institu- ries and,wages Included In the indirect(F&A) none that use the simplified method for cal- boat pool must.be separately identified,: y: misting indirect(Paula rates,as deeoripediy o.Detablish a salary and wage distribution ideation D of this Appendix, base;determined by deduotleg'from the total In order to provide mutually agreed upon of,salaries and wages as established in.sub-i information for management each section a from the amount of salaries and f NIA cost rate negotiation or termination b rmination wages included under subsection must include development of a rate for each d.'Llatabliell,the indirect(F&A) coat rate, F&J,Cost pool as well as the overall rim determined by dividing'the amount in the in- F rate.. direct'(F&A)coat pool.Subseotion b,by the amount of the distribution base,subsection D.OnMPiarroD tthrraop rQn RIMAXIL. n s nvSSSTUPtoNe e.Apply the indirect(Fria,)Goat rate to di re I.General manta tale-ries and wages for Individual agree- anta to determine the amount of indireatt 5 a.Where the total direct,cost of wor*oov- (g'a)goats allocable to such agreements, erect by pia Past at in Institution does not exceed 8'10 million In a fiscal year,the elm- 3"Slrzpl(fisd procedure,Modified iedTotpf DkBCf 3 Aged Procedure described,in subseationsl Cost Bass or 8 may be used in determining allowable a.Establish the total costs incurred.by the indirect(F&A)coats. 'Gander this simplified institution for the base period. procedure.the institution's most recent an- b. Establish an indirect(FM) goat pool nualflnancial report and immediately avail- consisting of the expenditures(exclusive of able eupportiarr infronnation.must be ubiliied capital items and other costs specifically as a basis for determining the indirect(F&A) Identified as unallowable)which customarily cost rate appplioablq to all, F�awards. are.classified under the following titles or The institution May use"either 'solarise their equivalents: and wages (see sabseotion 2) or modified (1.)General administration and general ex- total direct coats(Bee subsection 3)ae the panties.(exclusive of nests of student adminis- E' distribution►basis. tration and cervices,student activities.atu- E! b.The simplified procedure should not be dent aid,and.snhulere ). used where it produces results Which appear Operation ands teneuoe of physical Inequitable to the Federal government or the plant and depreoiatfon.(after eppraprlate ad- institution.In any such case,indirect(FAA) tuatmentional )applicable to other inati- omits should,be determined,tbrough use of (8)Library. the regular uruggdute. "_ (4) Department administration expenses, 2._slmpailed Procedure-salaries and wages which will be computed as 20 percent of the Bare: salaries and expenses of deans and heads of departments.In those Pages where expendi- a,Establish the total amount of salaries tures classified under 1subsection (1) haver and wages paid to all employees of the Matt- previously been allocated to other inetitu- tution. Lionel aotivitiea,they may be lnoludedin.the b. Establish an indirect (F&A) cost pool indirect(F&A)oast pool.The modified total consisting of the expenditures (exclusive of direct mete anlount.inablded,in the indirect capital items and other oasts specifically (V&A)cost pool must be separately identi- identified as unallowable)which customarily iced. 2 W,200,App.IV 2 CFR Ch.II(1-1-14 Edition) o. Establish a modified total direct coat rates in accordance with the requirements of distribution base, as defined in Section(.2, this section;the Federal government must The distribution basis, that oonalats of all unilaterally establish such rates.Snob.rates institution's direct functions. may be based upon audited historical data or d Phtablish the indirect(lydr.A)cost..rate, such other data that have been furnished:tµ determined by dividing;the amount the in- the cognisant seamy for indirect oasts and' direst(Find) cost pool,subsection b,by the for which it can be demonatrated that all un- amount of the distribution base, subsection allowable costa ave been ezoluded.When in direct(FEW coat rates are unilaterally se- e. Apply the indirect(Fool) ooet Bate to tablfsped by'the Federal government because the modified total direot costs for individual of failure of the Institution to submit a car- agreements to determine:the amount of fail- ,.load proposal for establishing such rates in rest(F&A) °oats allocable to such agree- acogrdanee with.this section, the rates es- ments. tablished will be set aAa level low enough to E.POgut�rtrAmfONRagtrlmmsfilirrs' ensure that potentially unallowable costs will not be reimbursed. The standard format for documentation re.. o. Certificate: The certificate required by qulreMents for indirect(indirect(Fdr;A))rate this section must be in the following form: proposals fodr°fillies sorts under the rpg. available;on the OMR Web C711RRJ}IOATP,or Runner(F )COSTS site here: litko://iuurw.ruhitehouse,goviomb/ This is knowledge sisto and that to the best of my grants. ones. F.C1IIILrII IOA�oN (1)I have reviewed the'indirect cost proposal submitted herewith; i.Certification of Charges ((2) IttctuQed in this proposal(idea- date)to establish billing or final Judi- To assure that expenditurest11,'f for Federal root (F&>rA) poste Pete for jidentify'period awards are proper and in aocordanoe with covered by rate]are'allowable in accordance the agreement documents and approved witln.the requirements of the Federal agree protect budgets,.the annual and/or.fund AS- mantis) 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 gertlfi- monte. oatdon, signed by an authorised: official of (8)This.propceal does not include any costs the university,which rends"By signing:this which are unallowable under applicable cost report,I certify to tilt hest of my knowledge principles such as(without limitation):pub- and belief that the report IS true,complete, tic relations costs, contributions and dons- and.accurate,and the expenditure&disburse- thins, entertainment coats, fines and pen- mente and cash receipts are for the purposes :allies, 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 enbfeat me to orimi- the basis of a beneftaiaivr causal relation nal, civil or administrative penalties for" ship between the avenges ingurred,and the fraud,false statements,Wee_dolma or nth- agreements to Which they are allocated in erwlse.(U.S.Code,Title 18,Section 1001 and accordance with applicable requirements. Title 81,Section 9720-2188'and 88%-8812)". I declare that the foregoing is true and nor 2.Certification of Indirect(PICA)Coats rest. Institution of Higher Iducat ion; a.Policy.Cognisant agencies must not ac- urc cept a proposed Indirect cost rate.mast un- less each coats have been certified by the Tame;oft>fSalal: Title: educational institution using tlre'Pert(>ICabe Date of Exeont[on: of indirect (F&A) Costs sat forth in sub- section F.2.0 APellowilf 1V TO PART 200-INAJB,itOT b.The certificate must be signed on behalf (play) COSTS ID OATION AND of the institution by the chief financial oat- ASSIGNM8Ni',AND RATE D1 RMINA,- cer or an individual designated by'-an indi- vidual at a level no lower than vine president 'LION FOR NON]!IiOF1T ()itliANIZA- or chief financial officer. TIONS (1) No indirect:(Alta) cost.rate must be A.binding upon the Federal government if the most recent required proposal from the ineti- 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 (Fora) 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 snob minor amounts may be treated as indirect 1 OMB Guldance Pt.200,App,IV Goats under the conditions described in ratings the organisgtion's total costs for the 8200.418 Direct coats paragraph (d) of this base period.as either direct or indirect.and Part. After direot costs have been deter (id) dividing the total allowable indirect F, mined and assigned directly to awards or coats(net of applicable credits)by are equi- other work as appropriate,indirect coats are table distribution. . The result of this those remaining to be allocated.to benefit- prooeas is an indirect aoet,rate which,Is used tins cot objectives.A coet-maa not be alto- to,distribute,In irect; coati to individual cited tit a Federal award•ae an indirect geati= Federal awards.The,rate eh ould tie espreased !f any other cost incurred for the same bur ea the percentage which the total amount of po , in ke circumstances, bee been as- allowable Indirect costs bears to`the base ee- signed to e:Federal award ea a di;geot cost. United. This method should also be used. "Major nonprofit organizations" are de where an orgaanisation ties only one major fined in 1200.414"Indireot(P&L)costa.See in-, whereoe enoomyaming a number of lath- direct.past rate"reporting requirements in vidual protects or activities, and,orgy be eeottons B.2.e and B.8 g oft is Appendix. used where the level of tfederal awards to an B.ALLOCATION OF IIauumar COSTS erfo organization is relatively'small. DemeanmaeTrow try taxmen co $ATgB b. Both the direct Costa and the indireot ousts Must exclude capital expenditures and.. 1.General unallowable Costa However° unallowable a.If s uonp b:oigauiaation has 00sth which represent activities must be in- eluded,iu the direct,costs under.the 000di- maloe funatigp,or where out,major funo� lions described in f200418 Direct costs,:pare gone benefit tioin Sig iadi sot coats to all-- 14?aph(e)C tl is Part. prodnately the same degree,the allocation., c The distribution base may be total di- et di- indirect ob coats and the Clie a at on,Of as raft.cow, (exaludiag',aapltgt expenditures indirect poet rate may "be aaoompushed and other distorting;t nra,'snob contracts or • through nth l led,allocation prop t�ee,ae, described inaction B.t of this sub wards fo1;d25.000 cr acre)..great Bala. A l ppe . and w b. :If en organization hie several major: an b eBs or ether base which remits is fnnottpns which benefit frond-its indirect" b l die t The uppo;� t o oasis osts/ying degrees,allocation of indi as defined inn,1800.7g ;Partiofpant� support mete rant costa may require the accumulation of ovate which they are*notated t individually bona- d• 4ept where a special rates) is ri,. efitng'functions by meads of a base which cm/relict accordance with section BA of Mk beet measur i the relative degree of benefit e the indirsot,cost rate developed The Indirect coats allocated to each-fitdon =fader the above principles le applicable to are then a riblttgu to individyal Federal all,If`ederal awards of the organisation.If d awards end-othee•activities Inoltided in that special retails)is required,appropdate Modl- function by means of an.indirect cost rate(.). .fioatioas Must be made in order.to develop p.The determination of what oonetitutee the special-rate(e), an orgaaisation'a major functions will de- e.For•an organization that receives More pend on its pauyose In being; the types of than-g10 million=inFedere,L funding of dlreot eervioee it renders to the public,its clients. Coate in a decal year.a brealucut of the,indi and its lnembere and the ainuunt of effortSt: rent coat component into two broad.oat devotee to aeon activities es fundralaing, egorle8.Faoilttias and Administration as de- public information and'membership totter:' feed in section A.8 of this Appendix.ice re- tie�. centred-The rate is each case noel be stated d.Specific methods for allocating indirect as the percentage which the amount of the costs and computing, indirect:coat rates particular Indirect coat category(i.e.,Faotli-. along with the conditions under which each tiesor Administration.);:is of the attribution< method,shoud.be used are described in net. base,identified with that category- lion 3.2 through B.6 of this Appanet=• ;i.¢fut a Allocation.Base hfstiaod e.The'base period for.the'allocation of in.;: direct costa is tJie-period in-which such costa a. General Where,an cr nization 4 indf- are Incurred and aoo4mulated for allocation root costs benefit its major functions is to work performed In tha -pe>rod-The b e- varying degree Indirect coats must be seaax Period:normally should coincide with the or- mutated to to eepaeebe cost gronpinga,as de- must decal year�. in.any event. scribe¢�sutiparagrapll b: >OaoTi`�ouping must be se selected,qs to avoid inequities in must then be allocated individually to bens the allocation of the coats. fitting'Attrition's by means of a base which 8.Simalthea Aitocatioa Method best measures the relative benefits.The de- fault allocation bases by coat pool are de,;, a.Mere an organisation's major functions scribed in'Nation b e.o of this Appendix. benefit from its indirect costs to appro4. b. Identification of indirect costa. Cost, mately the same degree,the a locationtof in- groupings must be established so as.to per- direct costs may be accomplished by(i)sea- mit the allocation of each grouping on the Pt.200,App.IV 2 CFR Ch.II(i-1—I4Mon) tettc �. n x ,' j ,,i'.. ," s ;' a t'n ,X.' i jte , 41* l)IeprgQmaWpA The menses unde>.bis r4 • ' r>�r, _heading are the portion of the out*of the ems, m organisation's'bui manta to land and buildings,and equipment , which are computed in accordance withr. :"� QOb •th t" A�O.¢9Q1)epreciatlon. bill br1 t (3);Interest. Interests on debt associated , ,gip with certain buildings, equipment and cap- ,' computed in accord ate.. ' 1, lance wittal h f 200.449 ra - r,s fee - ' *r t Y r, tothe#D 1 t general` c r r of of ., w h 6p ? *, �0� i tint.- �l*Okkin. a (b)Depreciation on buildings steed for more ' , entiritoe, than one function,And on capital Improve- 60410. st tb"and equipment used buildings,� must be allocated t4a the iadiyidnal;pungtionelcas. performed in eecb building`on the holds of usable square feet of space, excluding oom-billrined ._., U mon areas,such as hallways,stairwells,and Souse. restrpoma In developing this cost pool,special care (o)Depreciation on buildings,capital im- should be exercised to ensure that cede in- prevent.* and equipment related space curred for the same purpose in like of - fen, individual rooms, and laboratories) cumetanoes are treated consistently as el- used Jointly by more than one function(as , ther direct or indirect'costs. For example, determined by the users of the space)must salaries of technical staff, project supplies, he treated as follows.The coat of each Joint- project publication, telephone toll,changes, ly used,unit oft apace.must be allocated to computer ousts,travel costs,and specialized thebenefitttng functions on the battle of: i• { g OMB Guidance PL 200,App IV (i)the employees andother users on a full- common pool for that function.T.he dQets iz i time equivalent(P'T14) beats or salaries and the common pool must then be distributed to wages of those individual functions.benefit- individnel,p'ederal awards Included in that tang from the use of that space;or thnntoa by use of a,single indirect cost rate. Si) organization-hide employee FTEe or f. Distribution beais.Indirect costs must salaries and wages applicable to the benefit- be distributed to applicable Federal awards ting functions of the organization and other benefitting activities within each (d) Depreciation ou-certain capital im- Major function on the basis of MTDO (see prevenaenta to land,`snob'sa;paved perking dgffnftion In,4200.68 Modified Total Direct areas,lenges,sidewalks,and the.like,not ter Oest( O)ofFettl d eluded in thescoat of buildings,mast be silo- g. individual late Qomponents. An fndi- Dated to user categorize qn a'FTE basis and reot oast rate must.-he determined for each distributed to mejor'functions in.proportion separate indirect cost pool developed. Thee' to the salaries and wages of all employees rate la each ogee must-be stated •ae'the per- applicable to the functions. tentage Which the amount of the particular (2) Interest. interest costs meet be alto- indirect cost,posit Ia Ot the distribution base gated in the game"manner as the dsprnreoia. identified with thatpool.Each indirect cost tion on the building!,equipment and oapital rate negotiation m or determinaIiou soreement, i g equipment to which theInterest relates, •ust'Include development of the rate for (3) Operation and maintenance expenses. each Indirect coat pool aq"wallas the overall, Operation and"maintenance expenses must indlreot coat rate, The indirect coat pools be allocated in:the same manner as the de- must be classified within ,broad,;oat- preaiation. egoriesc "Facilities" and"Administration," (4)tl'enerai adminielguticn cad general az- as described in section A.8 of this llppeady Pewee (general administration and general expenses must be allocated t"•benefiting 4.Direct Allocation Method functions"based on modified, total. costs • t3ome n4nymiit`orgaalaaWons treat all coa s).The O)Ta 1s the modified total_direct ;aale ael2oosts general treat l costs(Mrixn, as described in Subpart"A exOBpt Acronyms and Definitiona of wart`200,tp1us tration and general expenses.These organs the allocated indirect colt proportion--The era general*�e their'costa".into expenses included in this category Gould be_ three basic catego es. (i) General adminis- grouped first to majoriim_otuone of tratign and general expenses, (ii) fund,- the "arganizatloaowidob they render sere, raistng,and(U)other direct functions (Ju- ices ov".provide:benefits. The aggregate.ex eluding projects performed under Federal penles of each group,must then be allocated awards). Joint costs, such as depreciations to benefitt)*InnOtigne based on BdTO: rental..costs, operation and maintenance of d.Order of distribution, Moilitlee,telephone expenses. and the like (1) Indirect cost categories consisting of are.prorated Individually as direct costs to depreciation,Interest,operation and mai:Fte eagb category and to each Federal!.ward or none, and general administration and:gen- other activity using a base most appropriate; oral expenses must be allocated in that order t the 1'blar Particular omit-being prorated. to the remaining,indirect coot categories as acceptable.provided each wall as to the major,functions"of the orgeai= Joint coat is prorated using a bees which ao- sation.Other cost.categories should be ally curate':measures the benefits provided to; Dated in thaorderFdetermbied,to be moat sy. eaoD,Federal award or other activity. The propriate by"the organization.Thin order of bases must be established inacco dance with allocation does not apply if arose%l aise-tioe reasonable criteria,and he supported by our- of costs is made as provided in section B.e.d 2 rent data. This method is compatible with of this;Appemdjs. the Standards of Accounting and Flnaoolai (2).NQrnlaUy;.an indirect.cost category will Reporting for Voluntary'Heelth.and Welfare be ooneldered closed once It has been silo+ Organisations feat jointly by the National rated to other oos(t-objectives, and colts Heald►Oonaall,In c.,the rlational,Assembly meet not be enbeequently allocated to it" of Voluntary Health and Social Welfare Or, However,a°roes allocation of°oste between 'ItemisatiOns.and the United:Way of America. two or more indirect ocste;categories amid, G.Under this method, indirect costa con- be used If.such allocation wiz,-result Ina slat exclusively of general.administration more equitable allocation of.oasts.It a creel, and general expenses. In all other respect e allocation Is used,-en appropriate modifies, the organization's indirect.cost rates"must tion to the composition of the indirect post be oomputedjm the saame eaamner as that de- categories ie requited, scribed in section 3.2 Simplified allocation e. Application-'qf indirect cost rate or method of thisAppendlr. rated lexcepl°where a special indirect cost S.Spacial IsdireoE Lbat Rctea rate(!)is requirediun.aocordance with section [ B.5 of this Appendix,the<separate•.:groupings In some instances, a single;indirect cost of indirect costs allocated to each major rate for all activities of ay„organization or function must be aggregated.and treated as a for each major function of the'orgi ntsation Pt.200,App.IV 2 CFR Ch.II(1-1-14 Edition) may not be appropriate,since it would not f. Indirect coat proposal means the doom- take into account those different ihotora 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 negotistlon leading of work,.may be that performed,under a sin- to the establishment of an organisation's in gee Federal award or it may,consist of work direct cost rate. under a group of Federal,awards performed g,Cost objective means a function,organiza- in a common environment. These factors tional subdivision,contract_Federal award, may include the;phyaioat location of the or other work unit for,which cost data are work,the level of etrMhdetSeattee support re- desired aid for which"provision is made to (Fired,the nature of the facilities or other accumulate and measure the (oat of pr(o- resources employed the scientific dldaip;ynea asses,pi oleotq,lobs and capitalised pro d or technical skills involved,the organise,- timed arrangements used, or any combine- 2.Negotiation and Approval of Rates lion thereof When a particular segment of a. Unless different arrangements are work is whi performed in an environment which agreed to by the Fe4Atalagencies concerned, appears to'generate a significantly different the Federal agency with the largest dollar level of indirect costs,provisions should be va/1ue ofFederal awards with an organization made for separate indirect nook pool apple Ida be degihnated as tbeecc t agency cable to such wont. The separate indirect tea indirect costa:for the at ion and ap.- cost pool should be developed daring the pr(ypl or the indirect castrates end,where course of the regular allocation proceed,and. necessary,other rates snob as fringe benefit the separate indirect coat rate resulting and commuter. charge-out rates. Once an therefrom should be used,provided%ik is de- agency is assigned cognizance - termined that (i) the rate differs eignife organization, for a- pan" cantly.from that which would have been ob- alar nonprofit ednl the re i tamed under sections B.2,B.S,and B..4 of this meat will not be rhaolume. of I there is Appendix,. and i) the volume of work to. awffi m the the dollar vaiume of the.attest which the rate would apply he material,. Years. to oerne organisation for at lodes meet years.All oonoermed Federal aggpoi�scaly C.NEGOTIATION Ass APPROVAL of IND EOT be given the oppgrtlynib to partiolpate 1n COST Balms the negotdatloa process but,alter I.rate.he$ been agreed upon,it will be accepted by all 1.Definitions. Federaiagentelee.When a Federal agency leas !►e used in this section,the followingtceaeon to believe operating.flag that especial.operatin _terms tore affecting its Federal awards necessitate have the meanings set-forth:in this section: speolsi thereat cost rates in accordance a.Cognisant aped.for indirect costs means with salon B.6 of thin A.ppeAdia it will, the Federal agency-responsible for negate- prior to the time the rates are negotiated, cling and approving indirect(pet rates for a notify the cognizant agency for indirect nonprofit organization on behalf of all Fed. Costs.(flee also 1200.414 Indirect(F&A)coats oral agencies. oZ par.ti00,) b.Predetermined rate means an Indirect coat; b.Except,as otherwise provided in 1200.414 rate,applicable to a specified ourrent or fie- Indirect (PBcA) costs paragraph (e) of this tore period,usually the organization's fiscal Farb,a:nonprofit organhsxlon Which Ma not year.The rate is based on an estimate of the previously established an indirect cost rate coats to be incurred during the period.A pre- with a Federal agency must submit its ini- determined rate is not subject to edited", tial indirect coat proposal immediately after meat. the organization is advised that a Federal o.Fixed rate means an indirect coat rate award will be made and,in no event, later which has the same charaoteristies aa 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 (.Unless approved by the cognizant agency costa of the period covered erg the rate is oar- for indirect edits in accordance with 1200.414 lied forward as en e.dluatment.to the rate Indirect (ache.)costs:paragraph (f) of this computation of a subsequent Period. Part,organisation&that haver previously Ga- d. Final rate means as indirect cost vete tabliehed.indirect,oost rates must submit a applicable to a specified past period;whloh is new fn4$ eot"MO proposal to the ant based on the actual costs of the period. A. agency for indirect emits within six months final rate Is not subject to ad justnment, after the clone of each fiscal year. e. Provisional rate or billing rate meanie a, d.A predetermined rate may b negotiated temporary indirect cost rate applicable to a for use on Federal awards where there is rea- specified period which is used for fending,In- sonasble assurance,based on past experience terim reimbursement,and,reporting Indirect. and reliable protection of`the organisation's coats on Federal awards pending the estate- costa,that the rate is not likely to exceeds., !lament of a final rate for the period, rate based on the organisation's actual coats. 210 , ( a T t- I 1 t I t OMS Guidance Pt.200,App.V e. Plied rates may be,negotiated where to which they apply and with Subpart E— predetermined rates are not considered ap- Cost Principles of Part 200. I propriate.A fixed rate,however,must not be (0)Thisproposel does not Include any oasts negotiated if(1)all or a substantial portion which are unallowable under Subpart El— of the organization%Federal awards are ex- Cost Principles of Part 200 such as(without petted to expire before the carry-forward ad- limitation):Publics relations octets,oontrihu- S hutment can be made;(i1)the mix of Federal tione and donations, entertainment costa. ; ; and non-Federal work at the organization is fines and penalties,lobbying COO and de, 4 toe erratic to permit an equitable carry-for- fence Offend proceedings;and ward adjustment; or(iii)the orgenizationn (4)AO:coats included In this proposal are I; 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 rains must be nego- between the expenses incurred,and the Ini,- ; tiated,Where neither medetermined nor fixed oral.awards to whiola they are allocated in rates are appropriate. Predetermined or accordance with applicable retr-amermarta, t fixed rates may rePlene provisional rates at /de a1.ara that the foregoing is true and oor- any time prior to the dose ef the organism- red. tion's Tenet year. It that event does not 000nr,a final rate will be established and up- goalmaltOrganization; ward or downward adjustments will be made, Stputture: , based on the actual allowable costa incurred Name of.Official: for the perloclinvolved. Title: g.The results of each uegodeidon must be Date of likeoutions ; formalized in a written agreement between . the cognizant agency for indirect costs and APPENDIX V TO rAAT 200—STATE/LOOLls the nonprofit organization. The cognizant GqvIlinatitNT AND INDIAN TRIBE- agency fbr Indirect cote must make avail- WIDE,CENTRAL SERVICE COST ALLO- , able 401itee of tlie agreement to all oonsierned ; Federal Remotes. O CATIN PLANA ... h.If a dispute glass in a negotiation of an Ak0310010100' indirect cost rate between the cognizant agency for indirect costs and.the nonprofit 1.Most governmental unite provide certain organization,the dispute must be resolved in services,such as motor pools,computer Den- ; s accordance with the appeals prooedures of tare,purchasing, accounting, etc., to oper- the cognizant agency ioriadireOt coats. sting agencies on a centralized basis. Since 1.To the extent that problems are enoonn- federally-supported awards are performed i tared among the Federal agencies in counins. within the individual operating agencies. tiou with the negotiation and approval Proo- there needs to be a,..process whereby these ... ese,OMB will lend assistance as required to central service COW* can ha identified-and f resolve such problems in a timely manner, assigned to beneflthed activities on a reason- able and consistent baths.The central service D.°ortillcableti of Indirect(F&A)Costs oast allocation plan provides that process. ,.. Required Certification. Ito proposal to es- All coats and other data used to distribute tablish indirect.(path)cost rates must be(tor the costs included in the plan should be sup- oeptable unless such costa have been car- Ported by format accounting Mill other tined by the non-profit,organization using records that will support the propriety of the the Certificate of Indirect (Fifth) Costs set costs assigned to.Federal awards. forth In seoldoe j.of this appendix.The car- I. Guidelines and =nitrations or central (silicate roust be signed on behalf of the orga- service cost allbcation plans are provided in ideation by an individual at a.level no lower a brochure published by the Department of than vice president or chief financial officer Health and, Unman Bervices entitled "A for the organization. Guide for State.Local and Indian Tribal Gov- j;„taaimoirsot coat rate proposal most be ernments: Cost Principles and Procedures for aczlempanied,by a certification In the idi- Deceiving Cost Allocation Plans and indirect lowing form: Cost Rates for Agreements with, the Federal Gavernment."A copy of this brochure may be Certificate of Indirect.(RM.)Coate obtaiued from the Superintendent of Dom- , _ This Is to ontuy,that to the beat of my meats,U.S.Government Printing Office. knowledge and belien,- B.Deentrrions (1)I have reviewed the Indirect(Filth)cost proposal submitted herewith; 1.Agency ar operating agency merino en or- (2)Allossete included in this proposal Udell- gaiiisetlanal unit or sub-division within a Nig date] to estabUsh billing or final indi- governmental unit that,is responsible for the reot (FAA) costa rate for (identify period performance or administration of Federal covered by vital are allowable in accordance awards or activities of the government,ai with the requirements of the Federal awards unit. , 211, , Race and Ethnic Data U.S.Department of Housing OMB Approval No.2502-0204 Reporting Form and Urban Development (exp.03/31/2011) Office of Housing ^' likja-tH Name of Property Project No. Address of Property Name of Owner/Managing Agent Type of Assistance or Program Title Name of Head of Household Name of Household Member Date(mm/dd/yyyy): Select Ethnic Categories One Hispanic or Latino ❑ Not-Hispanic or Latino ❑ Select Racial Categories* all that Apply American Indian or Alaska Native ❑ Asian ❑ Black or African American ❑ Native Hawaiian or Other Pacific Islander ❑ White ❑ Other ❑ *Definitions of these categories may be found on the reverse side. There is no penalty for persons who do not complete the form. Signature Date Public reporting burden for this collection is estimated to average 10 minutes per response, including the time for reviewing instructions, searching existing data sources, gathering and maintaining the data needed,and completing and reviewing the collection of information. This information is required to obtain benefits and voluntary. HUD may not collect this information,and you are not required to complete this form, unless it displays a currently valid OMB control number. This information is authorized by the U.S.Housing Act of 1937,as amended,the Housing and Urban Rural Recovery Act of 1983 and Housing and Community Development Technical Amendments of 1984. This information is needed to be in compliance with OMB-mandated changes to Ethnicity and Race categories for recording the 50059 Data Requirements to HUD. Owners/agents must offer the opportunity to the head and co- head of each household to"self certify"during the application interview or lease signing. In-place tenants must complete the format as part of their next interim or annual re-certification. This process will allow the owner/agent to collect the needed information on all members of the household. Completed documents should be stapled together for each household and placed in the household's file. Parents or guardians are to complete the self-certification for children under the age of 18. Once system development funds are provided and the appropriate system upgrades have been implemented,owners/agents will be required to report the race and ethnicity data electronically to the TRACS(Tenant Rental Assistance Certification System). This information is considered non-sensitive and does not require any special protection. OPPORTUNITY Q:Library/HCD Forms/Race and Ethnic Data Reporting Form 7/7/2010 Instructions for the Race and Ethnic Data Reporting(Form HUD-27061-H) A. General Instructions: This form is to be completed by the head of household for those wishing to be served (applicants) and those that are currently served (tenants/owner-occupants) in housing assisted by the Department of Housing and Urban Development. If the assisted property is a rental unit, the owner or agent is required to offer the applicant/tenant the option to complete the form. The form is to be completed at initial application or at lease signing. In-place tenants must also be offered the opportunity to complete the form as part of the next interim or annual recertification. Once the form is completed, it need not be completed again unless the head of household changes. There is no penalty for persons who do not complete the form. However, the owner or agent may place a note in the tenant file stating the applicant/tenant refused to complete the form. Completed documents should be placed in the household's file. The Office of Housing has been given permission to use this form for gathering race and ethnic data in assisted housing programs. I. The two ethnic categories you should from are defined below. You should check one of the two categories. A. Hispanic or Latino. A person of Cuban, Mexican, Puerto Rican, South or Central American or other Spanish culture or origin, regardless of race. The term of"Spanish origin" can be used in addition to "Hispanic" or"Latino". B. Not Hispanic or Latino. A person not of Cuban, Mexican, Puerto Rican, South or Central American, or other Spanish culture or origin, regardless of race. 2. The five racial categories to choose from are defined below: You should check as many as apply to you. A. American Indian or Alaska Native. A person having origins in any of the original peoples of North and South America (including Central America), and who maintains tribal affiliation or community attachment. B. Asian. A person having origins in any of the original peoples of the Far East, Southeast Asia, or the Indian subcontinent including, for example, Cambodia, China, India, Japan, Korea, Malaysia, Pakistan, the Philippine Islands, Thailand and Vietnam. C. Black or African American. A person having origins in any of the black racial groups of Africa. Terms such as "Hatian" or "Negro" can be used in addition to "Black" or "African American". D. Native Hawaiian or Other Pacific Islander. A person having origins in any of the original peoples of Hawaii, Guam, Samoa, or other Pacific Islands. E. White. A person having origins in any of the original peoples of Europe, the Middle East or North Africa. OWN R UNITY Q:Library/HCD Forms/Race and Ethnic Data Reporting Form 7/7/2010 PLEASE COMPLETE THE ENTIRE FORM. Choose Funding Program: (Circle all applicable) CDBG HOME ESG SHP Other CITY OF OMAHA-TENANT SURVEY FORM 20 A. GENERAL INFORMATION Tenant Name(s) Telephone Address Apt.No. Initial Date of Lease Recertification Lease Date DEMOGRAPHICS& ANTICIPATED INCOME OF ALL HOUSEHOLD MEMBERS Head of Household is: Male ❑ Female ❑ Elderly ❑ Number of Occupants: Total No. Adults No. Children Under 18 Please enter ethnicity and race for each household member in accordance with the attached definitions. Ethnicity—Choose either H or NH. Enter H for Hispanic or Latino. Enter NH for Not Hispanic or Latino. Race Categories—Choose all that apply for each household member. Enter one or more of the following abbreviations: W, B, A, Al, PI,O. White(W); Black or African American(B); Asian(A); American Indian or Alaska Native(AI); Native Hawaiian or Other Pacific Islander(PI) Other(0)(Please specify) Anticipated Anticipated Name of Household Member (H or NH) (See Above) Monthly Annual Age Ethnicity Race Handicap Income Income $ $ $ $ $ $ $ $ $ $ $ $ TOTAL $ $ 100%MEDIAN FAMILY INCOME(MFI)FOR HH SIZE $ %OF MFI FOR HH SIZE B. HOUSING CHARACTERISTICS Housing Costs HUD Rent Limits Monthly Housing Cost: Actual Contract Rent $ Average Monthly Utility Cost $ Total Monthly Housing Cost $ $ Subsidized Rent Assistance Received (Please list source and amount): Section 8: $ Other Assistance: Source Amount $ No Assistance Unit Type: Efficiency ❑ 1 BR❑ 2 BR❑ 3 BR❑ Other❑ Handicap Accessible Unit: Yes❑ No ❑ Check one: 50% Unit❑ 60% Unit❑ 80% Unit ❑ C. TENANTS IN-PLACE AT TIME OF LOAN CLOSING -Non-disclosure Form Required D. REMARKS: Owner or Authorized Representative Phone Date Please attach utility allowance determination form, City of Omaha Computing Annual Income Form and current lease agreement with each Tenant Survey. Q:Library/HCD Forms/Tenant Survey Form 9/24/2015 Page 1 of 3 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. Q:Library/HCD Forms/Tenant Survey Form 9/24/2015 Page 3 of 3 § _ \ k ) - \ § < / www 2 \ � � q , _ SC.J § # \ .. d � 2 $ t § d \ o _ ) § d \ Z < 7 E @ c 1. 0 S 0 / U \ — I.» ? \ \ . 4 \ \ a) _ ¢ ¢ Q a CO Z Z t § m 2 2 C H ix / R \ 2 @ @ w % © g \ / \ % / . / 22 » { g = _ El \ � ¢ < § / 0 §;,14 C. � E 5w » : \ \ 0 o i . a / ■ _# _ & 7 $ u o \ / ���-'�� % ® S \ / \ ©a C., < CA ® z m H G - * a) _ \ \ wwwwww / / � Ei � K o H a> Q z 7) 0 ® » - ) \ C.) E o 01. k ( \ % 0 . ? 3 / � . _ < . 3 § 0 0 e bli 2 - / e E b a T ® _ n ) +/ u E 2 § ) f ƒ - 0 / = \ \ \ / \ c ,-5,-o o _ _ aa � „--, 15 E a \ k ) 2 m d \ b 2 .E 3 \ ,_ . / p4 / C § \ ° k � � / / / ( ) \ \ \ ) / } k k \ § \ ® / « c § < _ o _ > g g * e ( / I / \ \ / d k \\ = / / / / 5 < ..w > 4U I e \ § ° - 0 § 2 ® / \ U / /_ § 3 0 0 0 / / S ° 2 d \ \ 6 UNITED STATES CITIZENSHIP ATTESTATION FORM FOR PUBLIC BENEFIT For the purposes of complying with Neb. Rev. Stat. §§ 4-108 through 4-114, I attest as follows: I am a citizen of the United States. OR I am a qualified alien under the Federal Immigration and Nationality Act. My immigration status and alien number as follows: , and I agree to provide a copy of my USCIS (United States Citizenship and Immigration Services) documentation upon request. I hereby attest that my response and the information provided on this form and any related application for public benefits are true, complete and accurate and I understand that this information may be used to verify my lawful presence in the United States. PRINT NAME: By: SIGNATURE: DATE: OPPORTUNITY Q:LibraryiHCD FormsiCitizenship-Attestation Form for Public Benefit l0/26/2009 Ls NON-HOMEOWNERSHIP FINANCIAL STATUS REPORT FORM e� (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: EOUaL NQUSING OPPCIRTUPwry Revised and approved 6/18/2010 U,6d fit AFFIDAVIT FOR EMPLOYEE CLASSIFICATION ACT STATE OF ) § COUNTY OF 1, , being first duly sworn under oath, state and depose as follows: l. I am competent to testify to,and have personal knowledge of, the matters stated in this affidavit. 2. I am(a contractor)(the authorized agent of the contractor ). I attest to the following: (a) each individual performing services for such contractor is properly classified under the Nebraska Employee Classification Act, 2010 LB 563 ("the Act"), (b) such contractor has completed a federal I-9 immigration form and has such form on file for each employee performing services,(c)such contractor has complied with Neb. Rev. Stat. section 4-1 14 (federal immigration verification system), (d) such contractor has no reasonable basis to believe that any individual performing services for such contractor is an undocumented worker, and(e)as of the time of the contract, such contractor is not barred from contracting with the state or any political subdivision pursuant to the Act. FURTHER AFFIANT SAYETH NAUGHT. Affiant SUBSCRIBED AND SWORN TO before me this day of ,20 Notary Public EQUAL HOUSING OPPORTUNNITTYY Approved 6,110 OPPORTUNITY -E,c h l boo 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 50th Street to the west. Only residential use properties are included in the Omaha Lead Superfund Site. Policy: The objectives of the soil work policy are to ensure site soils are safe for the property's intended use and to remove project sites from the Omaha Lead Superfund Site before they are conveyed to another party. The following steps are the preferred means of achieving these objectives while the 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. D 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 HOUSING OPPORTUNITY Rev. 5/7i08 EN f MINORITY BUSINESS & WOMEN BUSINESS ENTERPRISE PLAN October 2014 �2,tAHA,N (Al `11 4 � fi kill 04,44D FEBO' PLANNING•OMAHA Jean Stothert, Mayor PLANNING 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 BUSINESS/WOMEN BUSINESS ENTERPRISE PLAN INTRODUCTION Minority and women business sectors play an important part in Omaha's overall plans for future growth, progress, and prosperity. It is vital to the City's economic condition and well-being that minority and women businesses expand, thrive and prosper, generating economic stability and increased job opportunities. Towards the fulfillment and accomplishment of these important objectives, the City of Omaha remains committed to minority and women business development. The City of Omaha's approach to minority/women business development is embedded in its policy of non- discrimination in the conduct of City business including the procurement of goods, materials and services, construction and community and economic development projects. The City recognizes its obligations to each segment of the various communities it serves. It is in recognition of these responsibilities that the City established the City's Contract Compliance Ordinance. The Ordinance commits the City to: 1. Require contractors and/or vendors to provide employment opportunities without regard to race, color, sex, religion, or national origin; 2. Monitor contractor and vendor equal opportunity performance; and 3. Increase the total number and total dollar volume of City contracts awarded to minority-owned and women-owned firms. GOALS AND OBJECTIVES The following represents a summary of the goals and objectives of the Planning Department as they relate to minority and women-owned businesses: 1. Encourage, increase and promote business and procurement opportunities for women-owned businesses; 2. Increase and expand the awareness and understanding regarding the concerns, obstacles, and hindrances preventing increased MBE/WBE participation in Planning Department activities; 3. Assist MBE's/WBE's through the revitalization of business districts; 4. Assist minority and female entrepreneurs in the formation and growth of new small businesses; and 5. Provide technical assistance to neighborhood organizations, MBE's and WBE's to increase their participation in the Planning Department programs and activities at all levels. SCOPE OF WORK In order to accomplish these objectives, the Planning Department will: 1. Require that recipients of grant awards, consulting contracts, or loans to adopt the City's MBE/WBE Enterprise Plan. The Minority Business/Women Business Enterprise and Fair Housing plan must be filled out by contractors, developers, corporations, partnerships and/or sole proprietors. 2. Ensure that Requests for Proposals have the MBE/WBE Enterprise Plan. 3. Ensure that the programs of the Planning Department are advertised in the appropriate new media whose markets are targeted toward MBE/WBE. 2 Reviewed and approved 10/3/2014 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 Famam Street Room 1111 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 68183 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.c om (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 dwight.johnson@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,St., Zip: Phone: General Contractor Information Name: Address: City,St.,Zip: Phone: Federal Tax ID or SSN Contract Amount $ _ Woman Owned Business ❑ Yes ❑ No BRE(Business Owned Race/Ethnic)Code: (BRE Code: 1 White American: 2 Black American: 3 Native American: 4 Hispanic American 5 Asian/Pacific American: 6 Hasidic Jews Subcontractor Information Com lete for each subcontractor for the project) Name/Address I Fed Tax Contract I Woman Own BRE +ID/SSN j Amt. Code Name: -- -- $ ❑ Yes n No Address: City,St.,Zip: Phone: Name: — — — — — — j $ ❑ Yes ❑ No Address: City,St.,Zip: Phone: Name: — — I $_ ❑ Yes ❑No Address: City,St.,Zip: Phone: I j Name: f } ---------- —i $— _- ❑ Yes ❑ No Address: -- --- ------------- � City,St.,Zip: Phone: Name: $ ❑ Yes ❑No Address: City,St.,Zip Phone: I i j I Name: — — — — — $ ❑ Yes ❑ No -- + Address: City,St.,Zip: I Phone: Name: � _ ; + $ j ❑ Yes ❑No _ I Address: — — — City,St.,Zip: Phone: 6 Reviewed and approved 103,/2014 Date: Project Address: Owner Information Name: General Contractor Information Name: (BRE Code: 1 White American; 2 Black American; 3 Native American; 4 Hispanic American 5 Asian/Pacific American; 6 Hasidic Jews Name/Address Fed Tax Contract Woman Own BRE ID/SSN Amt. Name: $ ❑ Yes ❑No Address: City,St.,Zip: Phone: Name: $ ❑ Yes ❑No Address: City,St.,Zip: Phone: Name: $ ❑ Yes ❑No Address: City,St.,Zip: Phone: Name: $ ❑ Yes ❑No Address: City,St.,Zip: Phone: Name: $ ❑ Yes ❑No Address: City,St.,Zip: Phone: Name: $ ❑ 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 BUSINESSWOMEN 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 9 Reviewed and approved 10/3/2014 r 11!ISLd SECTION 3 CLAUSE All Section 3 covered contracts shall include the following clause (referred to as the Section 3 clause): A. The work to be performed under this contract is subject to the requirements of Section 3 of the Housing and Urban Development Act of 1968, as amended, 12 U.S.C. 1701u (Section 3). The purpose of Section 3 is to ensure that employment and other economic opportunities generated by HUD assistance or HUD-assisted projects covered by Section 3 shall, to the greatest extent feasible, be directed to low- and very low-income persons, particularly persons who are recipients of HUD assistance for housing. B. The parties to this contract agree to comply with HUD's regulations in 24 CFR part 135, which implement Section 3. As evidenced by their execution of this contract, the parties to this contract certify that they are under no contractual or other impediment that would prevent them from complying with the part 135 regulations. C. The contractor agrees to send to each labor organization or representative of workers with which the contractor has a collective bargaining agreement or other understanding, if any, a notice advising the labor organization or workers' representative of the contractor's commitments under this Section 3 clause, and will post copies of the notice in conspicuous places at the work site where both employees and applicants for training and employment positions can see the notice. The notice shall describe the Section 3 preference, shall set forth minimum number and job titles subject to hire, availability of apprenticeship and training positions, the qualifications for each; and the name and location of the person(s) taking applications for each of the positions; and the anticipated date the work shall begin. D. The contractor agrees to include this Section 3 clause in every subcontract subject to compliance with regulations in 24 CFR part 135, and agrees to take appropriate action, as provided in an applicable provision of the subcontract or in this Section 3 clause, upon a finding that the subcontractor is in violation of the regulations in 24 CFR part 135. The contractor will 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. Div CITY OF OMAHA -DEFINITION OF INCOME Annual Income Includes: • 1. Wages, salaries, tips, commissions, etc.; 2. Self-employment income from owned non-farm business, including proprietorships and partnerships; 3. Farm self-employment income; 4. Interest, dividends, net rental income, or income from estates or trusts 5. Social security or railroad retirement; 6. Supplemental Security Income, Aid to Families with Dependent Children, or other public assistance or public welfare programs; 7. Retirement, survivor or disability pensions; 8. Any other sources of income received regularly including Veterans' (VA) payments, unemployment compensation, child support and alimony; and 9. Income from assets, as shown below: a. Amounts in savings certificates, money market funds and other investment accounts. b. Stocks, bonds, savings certificates, money market funds and other investment accounts. c. Equity in real property or other capital investments. Equity is the estimated current market value of the asset less the unpaid balance on all loans secured by the asset and reasonable costs (such as broker fees) that would be incurred in selling the asset. Do not include equity in principle residence (home equity). d. The cash value of trusts that are available to the household. e. IRA, Keogh and similar retirement savings accounts, even though withdrawal would result in a penalty. f. Contributions to company retirement/pension funds that can be withdrawn without retiring or terminating employment. g. Assets which, although owned by more than one person, allow unrestricted access by the applicant. h. Lump sum receipts such as inheritances, capital gains, lottery winnings, insurance settlements and other claims. i. Personal property held as an investment such as gems, jewelry, coin collections, antique cars, etc. j. Cash value of life insurance policies. k. Assets disposed of for less than fair market value during two years preceding certification or re- certification. 10. Actual income from assets if total assets are $5,000 or less. 11. If assets are more than $5,000, the greater of (a) actual income from assets, or (b) total assets times passbook rate. Annual Income Does Not Include the Following Assets: 1. Necessary personal property, except as noted in 9 (i). 2. Interest in Indian trust lands. 3. Assets that are a part of an active business or farming operation. NOTE: Rental properties are considered personal assets held as an investment rather than business assets unless real estate is the applicant's/tenant's main occupation. 4. Assets not accessible to the family and which provide no income for the family. 5. Vehicles especially equipped for the handicapped. 6. Equity in owner-occupied cooperatives and manufactured homes in which the family lives. 7. Equity in principle residence (home equity). EQUAL HOUSING oP FokTUNIII Revised and approved 7/12/2011 s 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 Federal Sub-award Reporting System(FSRS) 9 Digit DUNS Number: Organization Name: Address: shed Cer State Zip Cede+4 Question 1:During your organizations preceding completed fiscal year,did the legal entity to which the DUNS number belongs receive(1)80 percent or more of its annual gross revenues in U.S.federal contracts,subcontracts, loans,grants, subgrants,and/or cooperative agreements;and(2)$25,000,000 or more in annual gross revenues from U.S.federal contracts,subcontracts,loans,grants,subgrants,and/or cooperative agreements? 0 YES 0 NO If YES please answer Question 2 Question 2:Does the public have access to information about the compensation of the executives in your organization (the legal entity to which.the DUNS number provided belongs)through periodic reports filed under section 13(a)or :L5(d)of the Securities Exchange Act of 1934(15 U.S.C.78m(a),78o(d)or section 6104 of the Internal Revenue Code of 1986? YES NO If NO please answer Question 3 Question 3:What are the Names and Total Compensation for the top 5 employees in your organization? Name Compensation 1 2 $ 3 $ 4 $ 5 $ Signature of Authorized Official Date Requirements for Federal Funding Accountability and Transparency Act Implementation In September 2010, the Office of Management and Budget issued Interim Final Guidance in the Federal Register(Volume 75, No. 177, September 14, 2010, 2 CFR Part 170)to establish reporting requirements necessary for the implementation of the Federal Funding Accountability and Transparency Act of 2006 (Pub. L. 109-282), as amended by section 6202 of Public Law 110-252. This award term implements those requirements and is located at 2 CFR Part 170. Learn more Appendix A to Part 170—Award Term Reporting Subawards and Executive Compensation. a. Reporting of first-tier subawards. 1 Applicability. Unless you are exempt as provided in paragraph d. of this award term, you must report each action that obligates $25,000 or more in Federal funds that does not include Recovery funds(as defined in section 1512(a)(2) of the American Recovery and Reinvestment Act of 2009, Pub. L. 111-5) for a subaward to an entity (see definitions in paragraph e. of this award term). 2. Where and when to report. i_ You must report each obligating action described in paragraph a.1. of this award term to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). ii For subaward information, report no later than the end of the month following the month in which the obligation was made. (For example, if the obligation was made on November 7, 2010, the obligation must be reported by no later than December 31, 2010.) 3. What to report. You must report the information about each obligating action that the submission instructions posted at http://www.fsrs.gov specify. b. Reporting Total Compensation of Recipient Executives. 1 Applicability and what to report. You must report total compensation for each of your five most highly compensated executives for the preceding completed fiscal year, if— i, the total Federal funding authorized to date under this award is$25,000 or more; ii. in the preceding fiscal year, you received— A. 80 percent or more of your annual gross revenues from Federal procurement contracts (and subcontracts) and Federal financial assistance subject to the Transparency Act, as defined at 2 CFR 170.320 (and subawards); and B, $25,000,000 or more in annual gross revenues from Federal procurement contracts (and subcontracts) and Federal financial assistance subject to the Transparency Act, as defined at 2 CFR 170.320 (and subawards); and iii, The public does not have access to information about the compensation of the executives through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986. (To determine if the public has access to the compensation information, see the U.S. Security and Exchange Commission total compensation filings at the Executive Compensation page of the SEC website.) 2. Where and when to report. You must report executive total compensation described in paragraph b.1. of this award term: i. As part of your registration profile at the Central Contractor Registry. ii. By the end of the month following the month in which this award is made, and annually thereafter. c. Reporting of Total Compensation of Subrecipient Executives. 1. Applicability and what to report. Unless you are exempt as provided in paragraph d. of this award term, for each first-tier subrecipient under this award, you shall report the names and total compensation of each of the subrecipient's five most highly compensated executives for the subrecipient's preceding completed fiscal year, if— i, in the subrecipient's preceding fiscal year, the subrecipient received— A. 80 percent or more of its annual gross revenues from Federal procurement contracts (and subcontracts) and Federal financial assistance subject to the Transparency Act, as defined at 2 CFR 170.320 (and subawards); and B. $25,000,000 or more in annual gross revenues from Federal procurement contracts (and subcontracts), and Federal financial assistance subject to the Transparency Act (and subawards); and ii. The public does not have access to information about the compensation of the executives through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986. (To determine if the public has access to the compensation information, see the U.S. Security and Exchange Commission total compensation filings at the Executive Compensation page of the SEC website.) 2. Where and when to report. You must report subrecipient executive total compensation described in paragraph c.1. of this award term: i. To the recipient. ii. By the end of the month following the month during which you make the subaward. For example, if a subaward is obligated on any date during the month of October of a given year(i.e., between October 1 and 31), you must report any required compensation information of the subrecipient by November 30 of that year. d. Exemptions If, in the previous tax year, you had gross income, from all sources, under $300,000, you are exempt from the requirements to report: t. Subawards,and ii. The total compensation of the five most highly compensated executives of any subrecipient. e. Definitions. For purposes of this award term: 1. "Entity" means all of the following, as defined in 2 CFR part 25: i. A Governmental organization, which is a State, local government, or Indian tribe; ii. A foreign public entity; iii. A domestic or foreign nonprofit organization; iv. A domestic or foreign for-profit organization; v. A Federal agency, but only as a subrecipient under an award or subaward to a non-Federal entity. 2. "Executive" means officers, managing partners, or any other employees in management positions. 3. "Subaward": i. This term means a legal instrument to provide support for the performance of any portion of the substantive project or program for which you received this award and that you as the recipient award to an eligible subrecipient. ii. The term does not include your procurement of property and services needed to carry out the project or program (for further explanation, see Sec. II .210 of the attachment to OMB Circular A-133, "Audits of States, Local Governments, and Non-Profit Organizations"). iii. A subaward may be provided through any legal agreement, including an agreement that you or a subrecipient considers a contract. 4 "Subrecipient" means an entity that: i. Receives a subaward from you (the recipient) under this award; and ii. Is accountable to you for the use of the Federal funds provided by the subaward. 5 "Total compensation" means the cash and noncash dollar value earned by the executive during the recipient's or subrecipient's preceding fiscal year and includes the following (for more information see 17 CFR 229.402(c)(2)): I. Salary and bonus. ii. Awards of stock, stock options, and stock appreciation rights. Use the dollar amount recognized for financial statement reporting purposes with respect to the fiscal year in accordance with the Statement of Financial Accounting Standards No. 123 (Revised 2004) (FAS 123R), Shared Based Payments. iii. Earnings for services under non-equity incentive plans. This does not include group life, health, hospitalization or medical reimbursement plans that do not discriminate in favor of executives, and are available generally to all salaried employees. iv. Change in pension value. This is the change in present value of defined benefit and actuarial pension plans. v. Above-market earnings on deferred compensation which is not tax- qualified. vi. Other compensation, if the aggregate value of all such other compensation (e.g. severance, termination payments, value of life insurance paid on behalf of the employee,perquisites or property) for the executive exceeds $10,000. Federal Sub-award Reporting System(FSRS) 9 Digit DUNS Number: Organization Name: Address: Sate State Zip Code+4 Question 1:During your organizations preceding completed fiscal year,did the legal entity to which the DUNS number belongs receive(1)80 percent or more of its annual gross revenues in U.S.federal contracts,subcontracts, loans,grants, subgrants,and/or cooperative agreements;and(2)$25,000,000 or more in annual gross revenues from U.S.federal contracts,subcontracts,loans,grants,subgrants,and/or cooperative agreements? O YES 0 NO If YES please answer Question 2 Question 2:Does the public have access to information about the compensation of the executives in your organization (the legal entity to which the DUNS number provided belongs)through periodic reports filed under section 13(a)or 15(d)of the Securities Exchange Act of 1934(15 U.S.C.78m(a),78o(d)or section 6104 of the Internal Revenue Code of 1986? YES NO If NO please answer Question 3 Question 3:What are the Names and Total Compensation for the top 5 employees In your organization? Name Compensation 1 $ 2 $ 3 $ 4 $ 5 $ Signature of Authorized Official Bate Requirements for Federal Funding Accountability and Transparency Act Implementation In September 2010, the Office of Management and Budget issued Interim Final Guidance in the Federal Register(Volume 75, No. 177, September 14, 2010, 2 CFR Part 170)to establish reporting requirements necessary for the implementation of the Federal Funding Accountability and Transparency Act of 2006(Pub. L. 109-282), as amended by section 6202 of Public Law 110-252. This award term implements those requirements and is located at 2 CFR Part 170. Learn more Appendix A to Part 170—Award Term Reporting Subawards and Executive Compensation. a. Reporting of first-tier subawards. 1. Applicability. Unless you are exempt as provided in paragraph d. of this award term, you must report each action that obligates $25,000 or more in Federal funds that does not include Recovery funds(as defined in section 1512(a)(2) of the American Recovery and Reinvestment Act of 2009, Pub. L. 111-5)for a subaward to an entity (see definitions in paragraph e. of this award term). 2. Where and when to report. i. You must report each obligating action described in paragraph a.l. of this award term to the Federal Funding Accountability and Transparency Act Subaward Reporting System (FSRS). ii_ For subaward information, report no later than the end of the month following the month in which the obligation was made. (For example, if the obligation was made on November 7, 2010, the obligation must be reported by no later than December 31, 2010.) 3. What to report. You must report the information about each obligating action that the submission instructions posted at http:llwww.fsrs.gov specify. b. Reporting Total Compensation of Recipient Executives. 1. Applicability and what to report. You must report total compensation for each of your five most highly compensated executives for the preceding completed fiscal year, if— i, the total Federal funding authorized to date under this award is $25,000 or more; ii, in the preceding fiscal year, you received— A. 80 percent or more of your annual gross revenues from Federal procurement contracts (and subcontracts) and Federal financial assistance subject to the Transparency Act, as defined at 2 CFR 170.320 (and subawards); and B, $25,000,000 or more in annual gross revenues from Federal procurement contracts (and subcontracts) and Federal financial assistance subject to the Transparency Act, as defined at 2 CFR 170.320 (and subawards); and iii. The public does not have access to information about the compensation of the executives through periodic reports filed under section 13(a)or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986. (To determine if the public has access to the compensation information, see the U.S. Security and Exchange Commission total compensation filings at the Executive Compensation page of the SEC website.) 2, Where and when to report. You must report executive total compensation described in paragraph b.1. of this award term: i. As part of your registration profile at the Central Contractor Registry. ii. By the end of the month following the month in which this award is made, and annually thereafter. c. Reporting of Total Compensation of Subrecipient Executives. 1 Applicability and what to report. Unless you are exempt as provided in paragraph d. of this award term, for each first-tier subrecipient under this award, you shall report the names and total compensation of each of the subrecipient's five most highly compensated executives for the subrecipient's preceding completed fiscal year, if— in the subrecipient's preceding fiscal year, the subrecipient received— A. 80 percent or more of its annual gross revenues from Federal procurement contracts (and subcontracts) and Federal financial assistance subject to the Transparency Act, as defined at 2 CFR 170.320 (and subawards); and B. $25,000,000 or more in annual gross revenues from Federal procurement contracts (and subcontracts), and Federal financial assistance subject to the Transparency Act (and subawards); and ii The public does not have access to information about the compensation of the executives through periodic reports filed under section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code of 1986. (To determine if the public has access to the compensation information, see the U.S. Security and Exchange Commission total compensation filings at the Executive Compensation page of the SEC website.) 2. Where and when to report. You must report subrecipient executive total compensation described in paragraph c.1. of this award term: To the recipient. ii. By the end of the month following the month during which you make the subaward. For example, if a subaward is obligated on any date during the month of October of a given year (i.e., between October 1 and 31), you must report any required compensation information of the subrecipient by November 30 of that year. d. Exemptions If, in the previous tax year, you had gross income, from all sources, under$300,000, you are exempt from the requirements to report: i. Subawards,and ill. The total compensation of the five most highly compensated executives of any subrecipient. e. Definitions. For purposes of this award term: 1. "Entity" means all of the following, as defined in 2 CFR part 25: i. A Governmental organization, which is a State, local government, or Indian tribe; ii. A foreign public entity; A domestic or foreign nonprofit organization; iv. A domestic or foreign for-profit organization; v. A Federal agency, but only as a subrecipient under an award or subaward to a non-Federal entity. 2. "Executive" means officers, managing partners, or any other employees in management positions. 3. "Subaward": i. This term means a legal instrument to provide support for the performance of any portion of the substantive project or program for which you received this award and that you as the recipient award to an eligible subrecipient. ii. The term does not include your procurement of property and services needed to carry out the project or program (for further explanation, see Sec. II .210 of the attachment to OMB Circular A-133, "Audits of States, Local Governments, and Non-Profit Organizations"). iii. A subaward may be provided through any legal agreement, including an agreement that you or a subrecipient considers a contract. 4. "Subrecipient" means an entity that: i, Receives a subaward from you (the recipient) under this award; and ii. Is accountable to you for the use of the Federal funds provided by the subaward. 5. "Total compensation" means the cash and noncash dollar value earned by the executive during the recipient's or subrecipient's preceding fiscal year and includes the following (for more information see 17 CFR 229.402(c)(2)): i. Salary and bonus. ii. Awards of stock, stock options, and stock appreciation rights. Use the dollar amount recognized for financial statement reporting purposes with respect to the fiscal year in accordance with the Statement of Financial Accounting Standards No. 123 (Revised 2004) (FAS 123R), Shared Based Payments. Earnings for services under non-equity incentive plans. This does not include group life, health, hospitalization or medical reimbursement plans that do not discriminate in favor of executives, and are available generally to all salaried employees. iv, Change in pension value. This is the change in present value of defined benefit and actuarial pension plans. v Above-market earnings on deferred compensation which is not tax- qualified. vi. Other compensation, if the aggregate value of all such other compensation (e.g. severance, termination payments, value of life insurance paid on behalf of the employee,perquisites or property) for the executive exceeds $10,000. C-25A 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 Home Investment Partnerships Program (HOME) funds for the purpose of providing affordable rental housing benefiting low- and moderate-income residents; and, WHEREAS, the City Council approved the 2013 Consolidated Plan, outlining priorities, programs and funding allocations for the 2013 program year, on February 5, 2013, by Resolution No. 26, as amended; and, WHEREAS, Sheltering Tree, Inc., a Nebraska 501(c)(3) non-profit corporation (51% owner); J. Development, L.L.C., a Nebraska Limited Liability company (49% owner);7400 Military Avenue, L.L.C., a Nebraska Limited Liability company; and James Royer and Julie Stavneak, authorized representatives, 7400 Military Avenue, Omaha, Nebraska 68134 (hereinafter referred to as the "Owner"), has submitted an application to the City of Omaha for funding assistance to construct a new single-story building located at 7400 Military Avenue with 24 units consisting of 20 one-bedroom units for developmentally disabled adults and 4 manager units (2 studio part-time manager units and (2) two-bedroom full-time manager units), a community room with a full kitchen, access to green space with vegetable gardens, a theatre/movie room, a fitness center and on-site laundry facilities. Six (6) of the one-bedroom units will be considered floating HOME-assisted units and each to be occupied, as their principal place of residence throughout the Affordability Period, by a qualified tenant household whose initial annual household income is at or below 80% of the Median Income by Family Size (MFI) (4 units) and 50% of the Median Income by Family Size (2 units). The project will comply with Section 504 accessibility requirements. WHEREAS, the total cost of the residential project is estimated at $4,470,308.00, comprised of$250,000.00 in City HOME program funds and $4,220,308.00 in other private and public funds; and, WHEREAS, the Project provides affordable housing opportunities to qualified low- and moderate-income households; therefore, the Project is consistent with the Consolidated Plan and is eligible for funding; and, WHEREAS, it is in the best interests of the City of Omaha and the residents thereof to enter into an Agreement with the "Owner". for the completion of this worthwhile project. By Councilmember Adopted City Clerk Approved Mayor C-25A CITY OF OMAHA LEGISLATIVE CHAMBER Omaha,Nebraska Page 2 g NOW, THEREFORE, BE IT RESOLVED BY THE CITY COUNCIL OF THE CITY OF OMAHA: THAT, as recommended by the Mayor, the attached Agreement between the City of Omaha and Sheltering Tree, Inc., a Nebraska 501(c)(3) non-profit corporation (51% owner); J. Development, L.L.C., a Nebraska Limited Liability company (49% owner); 7400 Military Avenue, L.L.C., a Nebraska Limited Liability company; and James Royer and Julie Stavneak, authorized representatives, 7400 Military Avenue, Omaha, Nebraska 68134, has submitted an application to the City of Omaha for funding assistance to construct a new single-story building located at 7400 Military Avenue with 24 units consisting of 20 one-bedroom units for developmentally disabled adults and 4 manager units (2 studio part-time manager units and (2) two-bedroom full-time manager units), a community room with a full kitchen, access to green space with vegetable gardens, a theatre/movie room, a fitness center and on-site laundry facilities. Six (6) of the one-bedroom units will be considered floating HOME-assisted units and each will be occupied, as their principal place of residence throughout the Affordability Period, by a qualified household whose initial annual household income is at or below 80% of the Median Income by Family Size (MFI) (4 units) and 50% of the Median Income by Family Size (2 units) is hereby approved. Funding in the amount of $250,000.00 shall be payable from the FY 2013 HOME Program Fund No. 12179 Organization No. 128071. Occupancy and marketing of the units will be targeted to individuals with developmental disabilities and financed from $250,000.00 of City HOME program funds and other private and public funds. 2238 dlh APPROVED AS TO FORM: .v./i . EJ W 967g CITY ATTORNEY DATE By 41.1 I & 14 Adopted JUN 2 1 201 7-6) ... ... aid i- /�i Apt,* City Clerk A rove -`; -023_ Mayor NO. .......... . ................ Resolution by Res. as recommended by the Mayor. the HOME-assisted units and each will be attached Agreement between the City of occupied, as their principal place of residence Omaha and Sheltering Tree, Inc.. a Nebraska throughout the Affordability Period, by a 501(c)(3) non-profit corporation (51% qualified household whose initial annual owner); J. Development, L.L.C., a Nebraska household income is at or below 80% of the Limited Liability company (49% owner); Median Income by Family Size (MFI) (4 '• 7400 Military Avenue, L.L.C., a Nebraska units) and 50% of the Median Income by Limited Liability company; and James Royer Family Size (2 units) is hereby approved. and Julie Stavneak, authorized Funding in the amount of $250,000.00 shall representatives, 7400 Military Avenue, be payable from the FY 2013 HOME Omaha, Nebraska 68134, has submitted an Program Fund No. 12179 Organization No. application to the City of Omaha for funding 128071. Occupancy and marketing of the assistance to construct a new single-story units will be targeted to individuals with building located at 7400 Military Avenue developmental disabilities and financed from with 24 units consisting of 20 one-bedroom $250,000.00 of City HOME program funds units for developmentally disabled adults and and other private and public funds. 4 manager units (2 studio part-time manager units and (2) two-bedroom full-time manager 2238 dlh units), a community room with a full kitchen. access to green space with vegetable gardens. a theatre/movie room, a fitness center and on- site laundry facilities. Six (6) of the one- bedroom units will be considered floating Presented to City Council JUN 2 .1..2a �.....,,.,... Adopted ;, c (gutter growrz City Clerk