Social Security Administration (SSA).
Notice of Proposed Rule Making (NPRM).
The proposed rule would create a new Part in the Code of Federal Regulations. The new part would provide standards in the administration of grants and agreements with institutions of higher education, hospitals, other non-profit organizations, and commercial organizations.
The Social Security Independence and Program Improvements Act of 1994, enacted August 15, 1994, established SSA as an independent agency separate from the Department of Health and Human Services (HHS), effective March 31, 1995. To implement its own set of grants regulations, SSA proposes to codify almost verbatim the text of the Office of Management and Budget (OMB) Circular Number A-110 “Uniform Administrative Requirements for Grants and Agreements with Institutions of Higher Education, Hospitals, and Other Non-profit Organizations.” These regulations would establish SSA grants regulations, separate from the HHS regulations. We plan to publish additional regulations on the subject of grants at a future date.
To be sure your comments are considered, we must receive them no later than June 26, 2000.
Comments should be submitted in writing to the Commissioner of Social Security, P.O. Box 1585, Baltimore, Maryland 21235-6401. Comments may be sent by telefax to (410) 966-2830, sent by E-mail to “firstname.lastname@example.org,” or delivered to the Social Security Administration, 2109 West Low Rise Building, 6401 Security Boulevard, Baltimore, MD 21235-6401, between 8:00 a.m. and 4:30 p.m. on regular business days. Comments may be inspected during these same hours by making arrangements with the contact person shown below. The electronic file of this document is available on the Internet at www.access.gpo.gov/su docs/aces/aces140.htm at 6:00 a.m. on the date of publication in the Federal Register. It is also available on the Internet site for SSA (i.e., SSA Online), http://www.ssa.gov/.Start Further Info
FOR FURTHER INFORMATION CONTACT:
E. Joe Smith, Grants Management Officer, Office of Operations Contracts and Grants, Office of Acquisition and Grants, SSA, 1710 Gwynn Oak Ave., Baltimore, MD 21207-5279; telephone (410) 965-9503; fax (410) 966-9310.End Further Info End Preamble Start Supplemental Information
OMB Circular A-110 (Circular) provides standards for obtaining consistency and uniformity among Federal agencies in the administration of grants and agreements with institutions of higher education, hospitals, and other non-profit organizations. The Circular was originally issued in 1976 and, except for a minor revision in 1987, it remained unchanged until it was revised by OMB in 1993 (58 FR 62992). It was subsequently amended in 1997 (62 FR 45934) and 1999 (64 FR 54926).
In 1987, OMB convened an interagency task force to update the Circular. The work of the task force resulted in the publication of a 1988 notice in the Federal Register (53 FR 44716) proposing that the Circular be merged with OMB Circular A-102, “Uniform Administrative Requirements for Grants and Cooperative Agreements to State and Local Governments” as a consolidated “common rule.” The public response led to a decision by OMB to not finalize the proposal.
In November 1990, another interagency task force was established to revise the Circular and develop a set of common principles for the administration of grants and agreements with institutions of higher education, hospitals and other non-profit organizations. The task force solicited suggestions for changes to the Circular from university groups, non-profit organizations and other interested parties and compared, for consistency, the provisions of similar provisions applied to State and local governments. As a result, in August 1992, OMB published a notice in the Federal Register (57 FR 39018) requesting comments on proposed revisions to the Circular. OMB received over 200 comments from Federal agencies, non-profit organizations, professional organizations and others. OMB considered all comments in developing the final revision to the Circular. The Circular issued in 1993 reflects the results of these efforts. The revised Circular was developed in a model rule format to facilitate regulatory adoption by affected Federal agencies. OMB's notice directed each affected agency to promulgate its own rules adopting the language as it appears in the Circular unless different provisions are required by Federal statute or are approved by OMB (58 FR 62992-93). The notice states that OMB will review agency regulations and implementation of the Circular and will provide interpretations of policy requirements and assistance to insure effective and efficient implementation. Any exceptions will be subject to approval by OMB and will only be made in particular cases where adequate justification is presented.
Except as provided therein, the standards set forth in the Circular are applicable to all Federal agencies. If any statute specifically prescribes policies or specific requirements that differ from the standards provided in the Circular, the provisions of the statute shall govern. Federal agencies must apply the provisions of the Circular in making awards to the covered entities. Recipients must apply the provisions of the Circular to subrecipients performing substantive work under grants and agreements that are passed through or awarded by the primary recipient, if such subrecipients are organizations that are covered entities. The Circular does not apply to grants, contracts, or other agreements between the Federal Government and units of State or local governments covered by OMB Circular A-102, “Grants and Cooperative Agreements with State and Local Governments.” And, it does not apply to the Federal agencies' grants management common rule that standardized and codified the administrative requirements Federal agencies impose on State and local grantees. In addition, the Circular does not cover subawards and contracts to State or local governments. However, the Circular applies to subawards made by State and local governments to organizations covered by the Circular. Federal agencies may apply the provisions of the Circular to commercial organizations, foreign governments, organizations under the jurisdiction of foreign governments, and international organizations.
HHS applies the provisions of Circular A-110 in making awards to institutions of higher education, hospitals, other non-profit organizations, and commercial organizations through its regulations at 45 CFR part 74. Prior to March 31, 1995, SSA was an operating component of HHS. As a result of Public Law 103-296, SSA became an independent agency on Start Printed Page 24769March 31, 1995. However, pursuant to section 106(b) of that law, the HHS regulations at 45 CFR part 74 have remained applicable to SSA. In order to implement our own set of grant regulations, we propose to adopt almost verbatim the text of Circular A-110. The result will be the SSA grants administration regulations at 20 CFR part 435. HHS regulations at 45 CFR part 74 will cease to be applicable to SSA on the effective date of these regulations, in accordance with section 106(b) of Public Law 103-296.
SSA's new part 435 at 20 CFR will be similar to OMB Circular A-110. Consistent with the guidance provided in Circular A-110, this rule will apply to SSA awards made to institutions of higher education, hospitals, other non-profit organizations, and commercial organizations. When appropriate, this rule will also apply to foreign governments, organizations under the jurisdiction of foreign governments, and international organizations. The proposed rule does not apply to grants under programs commonly referred to as “entitlement programs.”
As noted above, OMB directed each affected agency to promulgate its own rules adopting the provisions of the Circular. Any exceptions or deviations, unless required by Federal statute, require OMB approval. Therefore, in support of OMB's desired uniformity, this proposed rule incorporates the provisions and language of revised Circular A-110, “Uniform Administrative Requirements for Grants and Agreements with Institutions of Higher Education, Hospitals, and Other Non-Profit Organizations,” published by OMB on November 29, 1993 (58 FR 62992), as further amended August 29, 1997 (62 FR 45934) and November 8, 1999 (64 FR 54926).
II. Proposed Differences Between Part 435 and Circular A-110
The proposed rule contains a “SUBPART E—DISPUTES,” which sets forth the SSA appeal process for disputes arising under SSA grants and agreements. OMB Circular A-110 does not contain an appeal process for disputes.
Also, the proposed rule contains the following clarifying language and updates to procedures:
A. To be less generic and more agency specific, where appropriate, the terms “federal awarding agency(ies)” have been replaced by “SSA”.
B. In support of the plain language initiative, throughout the proposed rule, the word “shall” has been replaced by “must” or “will.” Our reason for this change is, the term “shall” sounds especially legalistic and could be open to interpretation. Also, in the interest of making it easier for users to locate material, we have used identifying labels for many of our first level paragraphs (i.e., a, b, c).
C. To be consistent with section 4(11) of the Office of Federal Procurement Policy Act (41 U.S.C. 403(11)), as amended by section 4001 of the Federal Acquisition Streamlining Act of 1994 (FASA), Pub. L. 103-355, the following updates have been made:
Sections 435.2 (definition for “Small awards”); 435.44(e)(2), (3), (4) and (5); 435.46; 435.48(a) (b) and (d); and Appendix A, “Debarment and Suspension” (paragraph 8) have been updated to replace the term “small purchase threshold” with the term “simplified acquisition threshold.” And, where appropriate, the current threshold dollar amount of $100,000 is reflected (instead of $25,000).
D. According to FASA, the threshold for the requirement to include the provision for compliance with sections 102 and 107 of the Contract Work Hours and Safety Standards Act (40 U.S.C. 327-333) has been raised to $100,000. This update has been made in Appendix A.
E. Under the statute commonly referred to as the Byrd Anti-Lobbying Amendment, 31 U.S.C. 1352, the disclosure requirements apply to organizations that apply or bid for an award exceeding $100,000 (not $100,000 or more). This correction has been made in Appendix A.
III. Proposed Differences Between Part 435 and 45 CFR Part 74
In order to mirror the provisions and language of the Circular, SSA's proposed 20 CFR part 435 deviates from 45 CFR part 74. Also, Part 74's Subpart E (Special Provisions for Awards to Commercial Organizations) is not included in Part 435. We believe, however, the omission of this subpart will not have a negative effect on the quality and administration of the SSA grants program. The provisions of Subpart E are not needed in Part 435. Unless SSA provides otherwise in the terms and conditions of the award, and except where provided under the provisions of Circular A-110, SSA will make no distinction between awards to commercial organizations and awards to its other grantee organizations covered by the Circular.
Additionally, Part 74's “Subpart F-Disputes” is not included in the proposed rule. Instead, as noted in section II, above, the proposed rule contains a “SUBPART E—DISPUTES,” which sets forth the SSA appeal process for disputes arising under SSA grants and agreements.
Clarity of This Regulation
Executive Order 12866 and the President's memorandum of June 1, 1998, require each agency to write all rules in plain language. We invite your comments on how to make this proposed rule easier to understand. For example:
- Have we organized the material to suit your needs?
- Are the requirements in the rule clearly stated?
- Does the rule contain technical language or jargon that isn't clear?
- Would a different format (grouping and order of sections, use of headings, paragraphing) make the rule easier to understand?
- Would more (but shorter) sections be better?
- Could we improve clarity by adding tables, lists, or diagrams?
- What else could we do to make the rule easier to understand?
IV. Regulatory Procedures
Executive Order 12866
We have consulted with the Office of Management and Budget (OMB) and have determined that these proposed rules do not meet the criteria for a significant regulatory action under Executive Order 12866. Thus, they are not subject to OMB review.
Regulatory Flexibility Act
We certify that these proposed rules, if promulgated, will not have a significant economic impact on a substantial number of small entities because they merely reflect the adoption of existing grant policies and procedures by SSA and do not promulgate any new policies or procedures which would impact the public. Therefore, a regulatory flexibility analysis as provided in the Regulatory Flexibility Act, as amended, is not required.
Paperwork Reduction Act
These proposed rules contain reporting requirements in 20 CFR part 435 in §§ 435.12, 435.22 and 435.52. However, the reporting forms specified in these sections have already been approved by the Office of Management and Budget and, therefore, we are not seeking approval of the reporting requirements in these sections. The forms are as follows: SF-269, SF-269A, SF-424, SF-270, SF-271 and SF-272.
The proposed regulation contains additional reporting and recordkeeping requirements in the sections listed below. As required by the Paperwork Reduction Act of 1995, we have Start Printed Page 24770submitted the information requirements to the Office of Management and Budget (OMB) for its review. Organizations and individuals desiring to submit comments on these requirements should direct them to the Office of Information and Regulatory Affairs, OMB, New Executive Office Building, Room 10235, Washington, D.C. 20503, ATTENTION: OMB Desk Officer for SSA.
Following is a table of the reporting (Rpt) and recordkeeping (Rec-kp) burdens imposed on the public:
|Section No.||No. of respondents||Frequency of response||Average burden per response (hours)||Estimated annual burden (hours)|
|Total estimated annual burden:||1215|
The public burden includes the time it will take to understand what is needed, gather the necessary facts, and provide the information or maintain the specified records. If you have any comments or suggestions on the estimates, write to the Social Security Administration, ATTN: Reports Clearance Officer, 1-A-21 Operations Building, Baltimore, MD 21235.
SSA is soliciting comments from the public in order to:
- Evaluate whether the proposed collection of information is necessary for the proper performance of the functions of the agency, including whether the information will have practical utility;
- Evaluate the accuracy of the agency's estimate of the burden of the proposed collection of information, including the validity of the methodology and assumptions used;
- Enhance the quality, utility, and clarity of the information to be collected; and
- Minimize the burden of the collection of information on those who are to respond including through the use of appropriate automated, electronic, mechanical, or other technological collection techniques, or other forms of information technology (e.g., permitting electronic submission of responses).”
(Catalog of Federal Domestic Assistance Program No. 96.007—Social Security—Research and Demonstration)Start List of Subjects
List of Subjects in 20 CFR Part 435
- Administrative practice and procedure
- Colleges and universities
- Grant programs—health
- Grant programs—social programs
- Nonprofit organizations
- Reporting and recordkeeping requirements
Dated: April 5, 2000.
Kenneth S. Apfel,
Commissioner of Social Security.
For the reasons set out in the preamble, we propose to add a new Part 435 to Chapter III of Title 20 of the Code of Federal Regulations to read as follows:Start Part
PART 435—UNIFORM ADMINISTRATIVE REQUIREMENTS FOR GRANTS AND AGREEMENTS WITH INSTITUTIONS OF HIGHER EDUCATION, HOSPITALS, OTHER NON-PROFIT ORGANIZATIONS, AND COMMERCIAL ORGANIZATIONS
- Effect on other issuances.
- Pre-award policies.
- Forms for applying for Federal assistance.
- Debarment and suspension. [Reserved]
- Special award conditions.
- Metric system of measurement.
- Resource Conservation and Recovery Act.
- Certifications and representations.
- Purpose of financial and program management.
- Standards for financial management systems.
- Cost sharing or matching.
- Program income.
- Revision of budget and program plans.
- Non-Federal audits.
- Allowable costs.
- Period of availability of funds.
- Purpose of property standards.
- Insurance coverage.
- Real property.
- Federally-owned and exempt property.
- Supplies and other expendable property.
- Intangible property.
- Property trust relationship.
- Purpose of procurement standards.
- Recipient responsibilities.
- Codes of conduct.
- Procurement procedures.
- Cost and price analysis.
- Procurement records.
- Contract administration.
- Contract provisions.
- Purpose of reports and records.
- Monitoring and reporting program performance.
- Financial reporting.
- Retention and access requirements for records.
- Purpose of termination and enforcement.
- Closeout procedures.
- Subsequent adjustments and continuing responsibilities.
- Collection of amounts due. Start Printed Page 24771
- Appeal process.
- Initial appeal.
- Appeal of decision of ACOAG. Appendix A to Part 435—Contract Provisions
This Part establishes SSA's administrative requirements for SSA grants and agreements awarded to institutions of higher education, hospitals, other non-profit organizations, and commercial organizations. The regulations in this part do not differ from the uniform regulations published in OMB Circular A-110 except as provided in §§ 435.4 and 435.14. Non-profit organizations that implement Federal programs for the States are also subject to State requirements. For availability of OMB circulars, see 5 CFR 1310.3.
(a) Accrued expenditures means the charges incurred by the recipient during a given period requiring the provision of funds for:
(1) Goods and other tangible property received;
(2) Services performed by employees, contractors, subrecipients, and other payees; and,
(3) Other amounts becoming owed under programs for which no current services or performance is required.
(b) Accrued income means the sum of:
(1) Earnings during a given period from—
(i) Services performed by the recipient, and
(ii) Goods and other tangible property delivered to purchasers, and
(2) Amounts becoming owed to the recipient for which no current services or performance is required by the recipient.
(c) Acquisition cost of equipment means the net invoice price of the equipment, including the cost of modifications, attachments, accessories, or auxiliary apparatus necessary to make the property usable for the purpose for which it was acquired. Other charges, such as the cost of installation, transportation, taxes, duty or protective in-transit insurance, must be included or excluded from the unit acquisition cost in accordance with the recipient's regular accounting practices.
(d) Advance means a payment made by Treasury check or other appropriate payment mechanism to a recipient upon its request either before outlays are made by the recipient or through the use of predetermined payment schedules.
(e) Award means financial assistance that provides support or stimulation to accomplish a public purpose. Awards include grants and other agreements in the form of money or property in lieu of money, by the Federal Government to an eligible recipient. The term does not include: technical assistance, which provides services instead of money; other assistance in the form of loans, loan guarantees, interest subsidies, or insurance; direct payments of any kind to individuals; and, contracts which are required to be entered into and administered under procurement laws and regulations.
(f) Cash contributions means the recipient's cash outlay, including the outlay of money contributed to the recipient by third parties.
(g) Closeout means the process by which SSA determines that all applicable administrative actions and all required work of the award have been completed by the recipient and SSA.
(h) Contract means a procurement contract under an award or subaward, and a procurement subcontract under a recipient's or subrecipient's contract.
(i) Cost sharing or matching means that portion of project or program costs not borne by the Federal government.
(j) Date of completion means the date on which all work under an award is completed or the date on the award document, or any supplement or amendment thereto, on which SSA sponsorship ends.
(k) Disallowed costs means those charges to an award that the Federal awarding agency determines to be unallowable, in accordance with the applicable Federal cost principles or other terms and conditions contained in the award.
(l) Equipment means tangible nonexpendable personal property including exempt property charged directly to the award having a useful life of more than one year and an acquisition cost of $5000 or more per unit. However, consistent with recipient policy, lower limits may be established.
(m) Excess property means property under the control of SSA that, as determined by the head thereof, is no longer required for its needs or the discharge of its responsibilities.
(n) Exempt property means tangible personal property acquired in whole or in part with Federal funds, where SSA has statutory authority to vest title in the recipient without further obligation to the Federal Government. An example of exempt property authority is contained in the Federal Grant and Cooperative Agreement Act (31 U.S.C. 6306), for property acquired under an award to conduct basic or applied research by a non-profit institution of higher education or non-profit organization whose principal purpose is conducting scientific research.
(o) SSA means the Federal agency that provides an award to the recipient.
(p) Federal funds authorized means the total amount of Federal funds obligated by the Federal Government for use by the recipient. This amount may include any authorized carryover of unobligated funds from prior funding periods when permitted by agency regulations or agency implementing instructions.
(q) Federal share of real property, equipment, or supplies means that percentage of the property's acquisition costs and any improvement expenditures paid with Federal funds.
(r) Funding period means the period of time when Federal funding is available for obligation by the recipient.
(s) Intangible property and debt instruments means, but is not limited to, trademarks, copyrights, patents and patent applications and such property as loans, notes and other debt instruments, lease agreements, stock and other instruments of property ownership, whether considered tangible or intangible.
(t) Obligations means the amounts of orders placed, contracts and grants awarded, services received and similar transactions during a given period that require payment by the recipient during the same or a future period.
(u) Outlays or expenditures means charges made to the project or program. They may be reported on a cash or accrual basis.
(1) Cash basis. For reports prepared on a cash basis, outlays are the sum of cash disbursements for direct charges for goods and services, the amount of indirect expense charged, the value of third party in-kind contributions applied and the amount of cash advances and payments made to subrecipients.
(2) Accrual basis. For reports prepared on an accrual basis, outlays are the sum of cash disbursements for direct charges for goods and services, the amount of indirect expense incurred, the value of in-kind contributions applied, and the net increase (or decrease) in the amounts owed by the recipient for goods and other property received, for services performed by employees, contractors, subrecipients and other payees and other amounts becoming owed under programs for which no current services or performance are required.
(v) Personal property means property of any kind except real property. It may Start Printed Page 24772be tangible, having physical existence, or intangible, having no physical existence, such as copyrights, patents, or securities.
(w) Prior approval means written approval by an authorized SSA official evidencing prior consent.
(x) Program income means gross income earned by the recipient that is directly generated by a supported activity or earned as a result of the award (see exclusions in §§ 435.24(e) and (h)). Program income includes, but is not limited to, income from fees for services performed, the use or rental of real or personal property acquired under federally-funded projects, the sale of commodities or items fabricated under an award, license fees and royalties on patents and copyrights, and interest on loans made with award funds. Interest earned on advances of Federal funds is not program income. Except as otherwise provided in SSA regulations or the terms and conditions of the award, program income does not include the receipt of principal on loans, rebates, credits, discounts, etc., or interest earned on any of them.
(y) Project costs means all allowable costs, as set forth in the applicable Federal cost principles, incurred by a recipient and the value of the contributions made by third parties in accomplishing the objectives of the award during the project period.
(z) Project period means the period established in the award document during which Federal sponsorship begins and ends.
(aa) Property means, unless otherwise stated, real property, equipment, intangible property and debt instruments.
(bb) Real property means land, including land improvements, structures and appurtenances thereto, but excludes movable machinery and equipment.
(cc) Recipient means an organization receiving financial assistance directly from SSA to carry out a project or program. The term includes public and private institutions of higher education, public and private hospitals, and other quasi-public and private non-profit organizations such as, but not limited to, community action agencies, research institutes, educational associations, and health centers. The term may include commercial organizations, foreign or international organizations (such as agencies of the United Nations) which are recipients, subrecipients, or contractors or subcontractors of recipients or subrecipients at the discretion of SSA. The term does not include government-owned contractor-operated facilities or research centers providing continued support for mission-oriented, large-scale programs that are government-owned or controlled, or are designated as federally-funded research and development centers.
(dd) Research and development means all research activities, both basic and applied, and all development activities that are supported at universities, colleges, and other non-profit institutions. “Research” is defined as a systematic study directed toward fuller scientific knowledge or understanding of the subject studied. “Development” is the systematic use of knowledge and understanding gained from research directed toward the production of useful materials, devices, systems, or methods, including design and development of prototypes and processes. The term research also includes activities involving the training of individuals in research techniques where such activities utilize the same facilities as other research and development activities and where such activities are not included in the instruction function.
(ee) Small awards means a grant or cooperative agreement not exceeding the simplified acquisition threshold fixed at 41 U.S.C. 403(11) (currently $100,000).
(ff) Subaward means an award of financial assistance in the form of money, or property in lieu of money, made under an award by a recipient to an eligible subrecipient or by a subrecipient to a lower tier subrecipient. The term includes financial assistance when provided by any legal agreement, even if the agreement is called a contract, but does not include procurement of goods and services nor does it include any form of assistance which is excluded from the definition of “award” in paragraph (e) of this section.
(gg) Subrecipient means the legal entity to which a subaward is made and which is accountable to the recipient for the use of the funds provided. The term may include foreign or international organizations (such as agencies of the United Nations) at the discretion of the Federal awarding agency.
(hh) Supplies means all personal property excluding equipment, intangible property, and debt instruments as defined in this section, and inventions of a contractor conceived or first actually reduced to practice in the performance of work under a funding agreement (“subject inventions”), as defined in 37 CFR part 401, “Rights to Inventions Made by Nonprofit Organizations and Small Business Firms Under Government Grants, Contracts, and Cooperative Agreements.”
(ii) Suspension means an action by SSA that temporarily withdraws Federal sponsorship under an award, pending corrective action by the recipient or pending a decision to terminate the award by SSA. Suspension of an award is a separate action from suspension under Federal agency regulations implementing Executive Orders 12549 and 12689, “Debarment and Suspension.”
(jj) Termination means the cancellation of Federal sponsorship, in whole or in part, under an agreement at any time prior to the date of completion.
(kk) Third party in-kind contributions means the value of non-cash contributions provided by non-Federal third parties. Third party in-kind contributions may be in the form of real property, equipment, supplies and other expendable property, and the value of goods and services directly benefiting and specifically identifiable to the project or program.
(ll) Unliquidated obligations, for financial reports prepared on a cash basis, means the amount of obligations incurred by the recipient that have not been paid. For reports prepared on an accrued expenditure basis, they represent the amount of obligations incurred by the recipient for which an outlay has not been recorded.
(mm) Unobligated balance means the portion of the funds authorized by SSA that has not been obligated by the recipient and is determined by deducting the cumulative obligations from the cumulative funds authorized.
(nn) Unrecovered indirect cost means the difference between the amount awarded and the amount which could have been awarded under the recipient's approved negotiated indirect cost rate.
(oo) Working capital advance means a procedure whereby funds are advanced to the recipient to cover its estimated disbursement needs for a given initial period.
For awards subject to this Part, all administrative requirements of codified program regulations, program manuals, handbooks and other nonregulatory materials which are inconsistent with the requirements of this Part are superseded, except to the extent they are required by statute, or authorized in accordance with the deviations provision in § 435.4.
The Office of Management and Budget (OMB) may grant exceptions for classes of grants or recipients subject to the Start Printed Page 24773requirements of this Part when exceptions are not prohibited by statute. However, in the interest of maximum uniformity, exceptions from the requirements of this Part will be permitted only in unusual circumstances. SSA may apply more restrictive requirements to a class of recipients when approved by OMB. SSA may apply less restrictive requirements when awarding small awards, except for those requirements which are statutory. Exceptions on a case-by-case basis may also be made by SSA.
Unless sections of this Part specifically exclude subrecipients from coverage, the provisions of this Part will be applied to subrecipients performing work under awards if such subrecipients are institutions of higher education, hospitals, other non-profit, or commercial organizations.
Subpart B—Pre-award Requirements
Sections 435.11 through 435.17 prescribe forms and instructions and other pre-award matters to be used in applying for Federal awards.
(a) Use of grants and cooperative agreements, and contracts. In each instance, SSA will decide on the appropriate award instrument (i.e., grant, cooperative agreement, or contract). The Federal Grant and Cooperative Agreement Act (31 U.S.C. 6301-08) governs the use of grants, cooperative agreements and contracts.
(1) Grants and cooperative agreements. A grant or cooperative agreement will be used only when the principal purpose of a transaction is to accomplish a public purpose of support or stimulation authorized by Federal statute. The statutory criterion for choosing between grants and cooperative agreements is that for the latter, “substantial involvement is expected between the executive agency and the State, local government, or other recipient when carrying out the activity contemplated in the agreement.”
(2) Contracts. Contracts will be used when the principal purpose is acquisition of property or services for the direct benefit or use of the Federal Government.
(b) Public Notice and priority setting. SSA will notify the public of its intended funding priorities for discretionary grant programs, unless funding priorities are established by Federal statute.
(a) SSA must comply with the applicable report clearance requirements of 5 CFR part 1320, “Controlling Paperwork Burdens on the Public,” with regard to all forms used by SSA in place of or as a supplement to the Standard Form 424 (SF-424) series.
(b) Applicants must use the SF-424 series or those forms and instructions prescribed by SSA.
(c) For Federal programs covered by Executive Order 12372, “Intergovernmental Review of Federal Programs” (3 CFR, 1982 Comp., p. 197), the applicant must complete the appropriate sections of the SF-424 (Application for Federal Assistance) indicating whether the application was subject to review by the State Single Point of Contact (SPOC). The name and address of the SPOC for a particular State can be obtained from SSA or the Catalog of Federal Domestic Assistance. The SPOC will advise the applicant whether the program for which application is made has been selected by that State for review.
(a) When special conditions may apply. SSA may impose additional requirements, as needed, if an applicant or recipient:
(1) Has a history of poor performance,
(2) Is not financially stable,
(3) Has a management system that does not meet the standards prescribed in this Part,
(4) Has not conformed to the terms and conditions of a previous award, or
(5) Is not otherwise responsible.
(b) Notice of special conditions. When imposing additional requirements, SSA will notify the recipient in writing as to:
(1) The nature of the additional requirements,
(2) The reason why the additional requirements are being imposed,
(3) The nature of the corrective action needed,
(4) The time allowed for completing the corrective actions, and
(5) The method for requesting reconsideration of the additional requirements imposed.
(c) Any special conditions will be promptly removed once the conditions that prompted them have been corrected.
The Metric Conversion Act, as amended by the Omnibus Trade and Competitiveness Act (15 U.S.C. 205) declares that the metric system is the preferred measurement system for U.S. trade and commerce. The Act requires each Federal agency to establish a date or dates, in consultation with the Secretary of Commerce, when the metric system of measurement will be used in the agency's procurements, grants, and other business-related activities. Metric implementation may take longer where the use of the system is initially impractical or likely to cause significant inefficiencies in the accomplishment of federally-funded activities. SSA follows the provisions of Executive Order 12770, “Metric Usage in Federal Government Programs” (3 CFR, 1991 Comp., p. 343).
Any State agency or agency of a political subdivision of a State which is using appropriated Federal funds must comply with section 6002 of the Resource Conservation and Recovery Act (RCRA) (Public Law 94-580; 42 U.S.C. 6962). Section 6002 requires that preference be given in procurement programs to the purchase of specific products containing recycled materials identified in guidelines developed by the Environmental Protection Agency (EPA) (40 CFR parts 247-254). Accordingly, State and local institutions of higher education, hospitals, and non-profit organizations that receive direct Federal awards or other Federal funds must give preference in their procurement programs funded with Federal funds to the purchase of recycled products pursuant to the EPA guidelines.
Unless prohibited by statute or codified regulation, SSA will allow recipients to submit certifications and representations required by statute, executive order, or regulation on an annual basis, if the recipients have ongoing and continuing relationships with the agency. Annual certifications and representations must be signed by responsible officials with the authority to ensure recipients' compliance with the pertinent requirements.
Subpart C—Post-award Requirements
Financial and Program Management
Sections 435.21 through 435.28 prescribe standards for financial management systems, methods for making payments and rules for: satisfying cost sharing and matching requirements, accounting for program Start Printed Page 24774income, budget revision approvals, making audits, determining allowability of cost, and establishing fund availability.
(a) Introduction. SSA requires recipients to relate financial data to performance data and develop unit cost information whenever practical.
(b) Basic requirements. Recipients' financial management systems must provide for the following:
(1) Accurate, current and complete disclosure of the financial results of each federally-sponsored project or program in accordance with the reporting requirements set forth in § 435.52. If SSA requires reporting on an accrual basis from a recipient that maintains its records on other than an accrual basis, the recipient will not be required to establish an accrual accounting system. These recipients may develop such accrual data for its reports on the basis of an analysis of the documentation on hand.
(2) Records that identify adequately the source and application of funds for federally-sponsored activities. These records must contain information pertaining to Federal awards, authorizations, obligations, unobligated balances, assets, outlays, income and interest.
(3) Effective control over and accountability for all funds, property and other assets. Recipients must adequately safeguard all such assets and assure they are used solely for authorized purposes.
(4) Comparison of outlays with budget amounts for each award. Whenever appropriate, financial information should be related to performance and unit cost data.
(5) Written procedures to minimize the time elapsing between the transfer of funds to the recipient from the U.S. Treasury and the issuance or redemption of checks, warrants or payments by other means for program purposes by the recipient. To the extent that the provisions of the Cash Management Improvement Act (CMIA) (Pub. L. 101-453; 31 U.S.C. 6501) govern, payment methods of State agencies, instrumentalities, and fiscal agents must be consistent with CMIA Treasury-State Agreements or the CMIA default procedures codified at 31 CFR part 205, “Withdrawal of Cash from the Treasury for Advances under Federal Grant and Other Programs.”
(6) Written procedures for determining the reasonableness, allocability and allowability of costs in accordance with the provisions of the applicable Federal cost principles and the terms and conditions of the award.
(7) Accounting records including cost accounting records that are supported by source documentation.
(c) Bonding and insurance requirements. Where the Federal Government guarantees or insures the repayment of money borrowed by the recipient, SSA, at its discretion, may require adequate bonding and insurance if the bonding and insurance requirements of the recipient are not deemed adequate to protect the interest of the Federal Government.
(d) Fidelity bond coverage requirements. SSA may require adequate fidelity bond coverage where the recipient lacks sufficient coverage to protect the Federal Government's interest.
(e) Obtaining bonds. Where bonds are required in the situations described above, the bonds must be obtained from companies holding certificates of authority as acceptable sureties, as prescribed in 31 CFR part 223, “Surety Companies Doing Business with the United States.”
(a) Introduction. Payment methods must minimize the time elapsing between the transfer of funds from the United States Treasury and the issuance or redemption of checks, warrants, or payment by other means by the recipients. Payment methods of State agencies or instrumentalities must be consistent with Treasury-State CMIA agreements or default procedures codified at 31 CFR part 205.
(b) Advance payment method and requirements. (1) Recipients will be paid in advance, provided they maintain or demonstrate the willingness to maintain:
(i) Written procedures that minimize the time elapsing between the transfer of funds and disbursement by the recipient, and
(ii) Financial management systems that meet the standards for fund control and accountability as established in § 435.21.
(2) Cash advances to a recipient organization will be limited to the minimum amounts needed and be timed to be in accordance with the actual, immediate cash requirements of the recipient organization in carrying out the purpose of the approved program or project. The timing and amount of cash advances must be as close as is administratively feasible to the actual disbursements by the recipient organization for direct program or project costs and the proportionate share of any allowable indirect costs.
(c) Advance payment consolidation and mechanisms. Whenever possible, advances must be consolidated to cover anticipated cash needs for all awards made by SSA to the recipient.
(1) Advance payment mechanisms include, but are not limited to, Treasury check and electronic funds transfer.
(2) Advance payment mechanisms are subject to 31 CFR part 205.
(3) Recipients are authorized to submit requests for advances and reimbursements at least monthly when electronic fund transfers are not used.
(d) How to request advance payment. Requests for Treasury check advance payment must be submitted on SF-270, “Request for Advance or Reimbursement,” or other forms as may be authorized by OMB. This form is not to be used when Treasury check advance payments are made to the recipient automatically through the use of a predetermined payment schedule or if precluded by special SSA instructions for electronic funds transfer.
(e) Reimbursement method. Reimbursement is the preferred method when the advance payment requirements in paragraph (b) of this section cannot be met. SSA may also use this method on any construction agreement, or if the major portion of the construction project is accomplished through private market financing or Federal loans, and the Federal assistance constitutes a minor portion of the project.
(1) When the reimbursement method is used, SSA will make payment within 30 days after receipt of the billing, unless the billing is improper.
(2) Recipients will be authorized to submit request for reimbursement at least monthly when electronic funds transfers are not used.
(f) Working capital advance method. If a recipient cannot meet the criteria for advance payments and SSA has determined that reimbursement is not feasible because the recipient lacks sufficient working capital, SSA may provide cash on a working capital advance basis. Under this procedure, SSA will advance cash to the recipient to cover its estimated disbursement needs for an initial period generally geared to the awardee's disbursing cycle. Thereafter, SSA will reimburse the recipient for its actual cash disbursements. The working capital advance method of payment will not be used for recipients unwilling or unable to provide timely advances to their subrecipient to meet the subrecipient's actual cash disbursements.
(g) Requesting additional cash payments. To the extent available, recipients must disburse funds available Start Printed Page 24775from repayments to and interest earned on a revolving fund, program income, rebates, refunds, contract settlements, audit recoveries and interest earned on such funds before requesting additional cash payments.
(h) Withholding of payments. Unless otherwise required by statute, SSA will not withhold payments for proper charges made by recipients at any time during the project period unless paragraph (h) (1) or (2) of this section apply.
(1) A recipient has failed to comply with the project objectives, the terms and conditions of the award, or Federal reporting requirements.
(2) The recipient or subrecipient is delinquent in a debt to the United States as defined in OMB Circular A-129, “Managing Federal Credit Programs.” Under such conditions, SSA may, upon reasonable notice, inform the recipient that payments will not be made for obligations incurred after a specified date until the conditions are corrected or the indebtedness to the Federal Government is liquidated.
(i) Standards governing the use of banks and other institutions as depositories of funds advanced under awards. (1) Except for situations described in paragraph (i)(2) of this section, SSA will not require separate depository accounts for funds provided to a recipient or establish any eligibility requirements for depositories for funds provided to a recipient. However, recipients must be able to account for the receipt, obligation and expenditure of funds.
(2) Advances of Federal funds must be deposited and maintained in insured accounts whenever possible.
(j) Use of women-owned and minority-owned banks. Consistent with the national goal of expanding the opportunities for women-owned and minority-owned business enterprises, recipients will be encouraged to use women-owned and minority-owned banks (a bank which is owned at least 50 percent by women or minority group members).
(k) Use of interest bearing accounts. Recipients must maintain advances of Federal funds in interest bearing accounts, unless paragraph (k) (1), (2) or (3) of this section apply.
(1) The recipient receives less than $120,000 in Federal awards per year.
(2) The best reasonably available interest bearing account would not be expected to earn interest in excess of $250 per year on Federal cash balances.
(3) The depository would require an average or minimum balance so high that it would not be feasible within the expected Federal and non-Federal cash resources.
(l) Remittance of interest earned. For those entities where CMIA and its implementing regulations do not apply, interest earned on Federal advances deposited in interest bearing accounts must be remitted annually to Department of Health and Human Services, Payment Management System, Rockville, MD 20852. Interest amounts up to $250 per year may be retained by the recipient for administrative expense. State universities and hospitals must comply with CMIA, as it pertains to interest. If an entity subject to CMIA uses its own funds to pay pre-award costs for discretionary awards without prior written approval from SSA, it waives its right to recover the interest under CMIA.
(m) Forms for requesting advances and reimbursements. Except as noted elsewhere in this Part, only the following forms are authorized for the recipients in requesting advances and reimbursements. SSA will not require more than an original and two copies of these forms.
(1) SF-270, Request for Advance or Reimbursement. SSA has adopted the SF-270 as a standard form for all nonconstruction programs when electronic funds transfer or predetermined advance methods are not used. SSA, however, has the option of using this form for construction programs in lieu of the SF-271, “Outlay Report and Request for Reimbursement for Construction Programs.”
(2) SF-271, Outlay Report and Request for Reimbursement for Construction Programs. SSA has adopted the SF-271 as the standard form to be used for requesting reimbursement for construction programs. However, SSA may substitute the SF-270 when SSA determines that it provides adequate information to meet Federal needs.
(a) All contributions, including cash and third party in-kind, will be accepted as part of the recipient's cost sharing or matching when such contributions meet all of the following criteria:
(1) Are verifiable from the recipient's records.
(2) Are not included as contributions for any other federally-assisted project or program.
(3) Are necessary and reasonable for proper and efficient accomplishment of project or program objectives.
(4) Are allowable under the applicable cost principles.
(5) Are not paid by the Federal Government under another award, except where authorized by Federal statute to be used for cost sharing or matching.
(6) Are provided for in the approved budget when required by SSA.
(7) Conform to other provisions of this Part, as applicable.
(b) Unrecovered indirect costs may be included as part of cost sharing or matching only with the prior approval of SSA.
(c) Values for recipient contributions of services and property will be established in accordance with the applicable cost principles. If SSA authorizes recipients to donate buildings or land for construction/facilities acquisition projects or long-term use, the value of the donated property for cost sharing or matching will be the lesser of paragraph (c)(1) or (2) of this section.
(1) The certified value of the remaining life of the property recorded in the recipient's accounting records at the time of donation.
(2) The current fair market value. However, when there is sufficient justification, SSA may approve the use of the current fair market value of the donated property, even if it exceeds the certified value at the time of donation to the project.
(d) Volunteer services furnished by professional and technical personnel, consultants, and other skilled and unskilled labor may be counted as cost sharing or matching if the service is an integral and necessary part of an approved project or program. Rates for volunteer services must be consistent with those paid for similar work in the recipient's organization. In those instances in which the required skills are not found in the recipient organization, rates must be consistent with those paid for similar work in the labor market in which the recipient competes for the kind of services involved. In either case, paid fringe benefits that are reasonable, allowable, and allocable may be included in the valuation.
(e) When an employer other than the recipient furnishes the services of an employee, these services must be valued at the employee's regular rate of pay (plus an amount of fringe benefits that are reasonable, allowable, and allocable, but exclusive of overhead costs), provided these services are in the same skill for which the employee is normally paid.
(f) Donated supplies may include such items as expendable equipment, office supplies, laboratory supplies or workshop and classroom supplies. Value assessed to donated supplies included in the cost sharing or matching Start Printed Page 24776share must be reasonable and may not exceed the fair market value of the property at the time of the donation.
(g) The method used for determining cost sharing or matching for donated equipment, buildings and land for which title passes to the recipient may differ according to the purpose of the award, if paragraph (g)(1) or (2) of this section apply.
(1) If the purpose of the award is to assist the recipient in the acquisition of equipment, buildings or land, the total value of the donated property may be claimed as cost sharing or matching.
(2) If the purpose of the award is to support activities that require the use of equipment, buildings or land, normally only depreciation or use charges for equipment and buildings may be made. However, the full value of equipment or other capital assets and fair rental charges for land may be allowed, provided that SSA has approved the charges.
(h) The value of donated property must be determined in accordance with the usual accounting policies of the recipient, with the following qualifications:
(1) The value of donated land and buildings may not exceed its fair market value at the time of donation to the recipient as established by an independent appraiser (e.g., certified real property appraiser or General Services Administration representative) and certified by a responsible official of the recipient.
(2) The value of donated equipment may not exceed the fair market value of equipment of the same age and condition at the time of donation.
(3) The value of donated space may not exceed the fair rental value of comparable space as established by an independent appraisal of comparable space and facilities in a privately-owned building in the same locality.
(4) The value of loaned equipment may not exceed its fair rental value.
(5) The following requirements pertain to the recipient's supporting records for in-kind contributions from third parties:
(i) Volunteer services must be documented and, to the extent feasible, supported by the same methods used by the recipient for its own employees.
(ii) The basis for determining the valuation for personal service, material, equipment, buildings and land must be documented.
(a) Introduction. SSA will apply the standards set forth in this section in requiring recipient organizations to account for program income related to projects financed in whole or in part with Federal funds.
(b) Use of program income. Except as provided in paragraph (h) of this section, program income earned during the project period must be retained by the recipient and, in accordance with SSA regulations or the terms and conditions of the award, must be used in one or more of the following ways. Program income must be:
(1) Added to funds committed to the project by the Federal awarding agency and recipient and used to further eligible project or program objectives.
(2) Used to finance the non-Federal share of the project or program.
(3) Deducted from the total project or program allowable cost in determining the net allowable costs on which the Federal share of costs is based.
(c) Use of excess program income. When an agency authorizes the disposition of program income as described in paragraph (b)(1) or (b)(2) of this section, program income in excess of any limits stipulated must be used in accordance with paragraph (b)(3) of this section.
(d) When the use of program income is not specified. In the event that SSA does not specify in its regulations or the terms and conditions of the award how program income is to be used, paragraph (b)(3) of this section will apply automatically to all projects or programs except research. For awards that support research, paragraph (b)(1) of this section will apply automatically unless SSA indicates in the terms and conditions another alternative on the award or the recipient is subject to special award conditions, as indicated in § 435.14.
(e) Program income earned after end of project period. Unless SSA regulations or the terms and conditions of the award provide otherwise, recipients will have no obligation to the Federal Government regarding program income earned after the end of the project period.
(f) Costs incident to generation of program income. If authorized by SSA regulations or the terms and conditions of the award, costs incident to the generation of program income may be deducted from gross income to determine program income, provided these costs have not been charged to the award.
(g) Proceeds from sale of property. Proceeds from the sale of property must be handled in accordance with the requirements of the Property Standards (See §§ 435.30 through 435.37).
(h) Program income from license fees and royalties. Unless SSA regulations or the terms and condition of the award provide otherwise, recipients have no obligation to the Federal Government with respect to program income earned from license fees and royalties for copyrighted material, patents, patent applications, trademarks, and inventions produced under an award. However, Patent and Trademark Amendments (35 U.S.C. 18) apply to inventions made under an experimental, developmental, or research award.
(a) The budget plan is the financial expression of the project or program as approved during the award process. It may include either the Federal and non-Federal share, or only the Federal share, depending upon SSA requirements. It must be related to performance for program evaluation purposes whenever appropriate.
(b) Recipients are required to report deviations from budget and program plans, and request prior approvals for budget and program plan revisions, in accordance with this section.
(c) For nonconstruction awards, recipients must request prior approvals from SSA for one or more of the following program or budget related reasons:
(1) Change in the scope or the objective of the project or program (even if there is no associated budget revision requiring prior written approval).
(2) Change in a key person specified in the application or award document.
(3) The absence for more than three months, or a 25 percent reduction in time devoted to the project, by the approved project director or principal investigator.
(4) The need for additional Federal funding.
(5) The transfer of amounts budgeted for indirect costs to absorb increases in direct costs, or vice versa, if approval is required by SSA.
(6) The inclusion, unless waived by SSA, of costs that require prior approval in accordance with OMB Circular A-21, “Cost Principles for Educational Institutions,” OMB Circular A-122, “Cost Principles for Non-Profit Organizations,” or 45 CFR part 74 Appendix E, “Principles for Determining Costs Applicable to Research and Development under Grants and Contracts with Hospitals,” or 48 CFR part 31, “Contract Cost Principles and Procedures,” as applicable.
(7) The transfer of funds allotted for training allowances (direct payment to trainees) to other categories of expense.
(8) Unless described in the application and funded in the approved awards, the subaward, transfer or Start Printed Page 24777contracting out of any work under an award. This provision does not apply to the purchase of supplies, material, equipment or general support services.
(d) No other prior approval requirements for specific items may be imposed unless a deviation has been approved by OMB.
(e) Except for requirements listed in paragraphs (c)(1) and (c)(4) of this section, SSA may waive cost-related and administrative prior written approvals required by this Part and OMB Circulars A-21 and A-122. Such waivers may include authorizing recipients to do any one or more of the following:
(1) Incur pre-award costs 90 calendar days prior to award or more than 90 calendar days with the prior approval of SSA. All pre-award costs are incurred at the recipient's risk (i.e., SSA is under no obligation to reimburse such costs if for any reason the recipient does not receive an award or if the award is less than anticipated and inadequate to cover such costs).
(2) Initiate a one-time extension of the expiration date of the award of up to 12 months unless one or more of the following conditions apply. For one-time extensions, the recipient must notify SSA in writing with the supporting reasons and revised expiration date at least 10 days before the expiration date specified in the award. This one-time extension may not be exercised merely for the purpose of using unobligated balances.
(i) The terms and conditions of award prohibit the extension.
(ii) The extension requires additional Federal funds.
(iii) The extension involves any change in the approved objectives or scope of the project.
(3) Carry forward unobligated balances to subsequent funding periods.
(4) For awards that support research, unless SSA provides otherwise in the award or in the SSA regulations, the prior approval requirements described in paragraph (e) of this section are automatically waived (i.e., recipients need not obtain such prior approvals) unless one of the conditions included in paragraph (e)(2) of this section applies.
(f) SSA may, at its option, restrict the transfer of funds among direct cost categories or programs, functions and activities for awards in which the Federal share of the project exceeds $100,000 and the cumulative amount of such transfers exceeds or is expected to exceed 10 percent of the total budget as last approved by SSA. No transfers are permitted that would cause any Federal appropriation or part thereof to be used for purposes other than those consistent with the original intent of the appropriation.
(g) All other changes to nonconstruction budgets, except for the changes described in paragraph (j) of this section, do not require prior approval.
(h) For construction awards, recipients must request prior written approval promptly from SSA for budget revisions whenever paragraph (h)(1), (2) or (3) of this section apply.
(1) The revision results from changes in the scope or the objective of the project or program.
(2) The need arises for additional Federal funds to complete the project.
(3) A revision is desired which involves specific costs for which prior written approval requirements may be imposed consistent with applicable OMB cost principles listed in § 435.27.
(i) No other prior approval requirements for specific items will be imposed unless a deviation has been approved by OMB.
(j) When SSA makes an award that provides support for both construction and nonconstruction work, SSA may require the recipient to request prior approval before making any fund or budget transfers between the two types of work supported.
(k) For both construction and nonconstruction awards, recipients must notify SSA in writing promptly whenever the amount of Federal authorized funds is expected to exceed the needs of the recipient for the project period by more than $5000 or five percent of the Federal award, whichever is greater. This notification is not required if an application for additional funding is submitted for a continuation award.
(l) When requesting approval for budget revisions, recipients must use the budget forms that were used in the application unless SSA indicates a letter of request suffices.
(m) Within 30 calendar days from the date of receipt of the request for budget revisions, SSA will review the request and notify the recipient whether the budget revisions have been approved. If the revision is still under consideration at the end of 30 calendar days, SSA will inform the recipient in writing of the date when the recipient may expect the decision.
(a) Recipients and subrecipients that are institutions of higher education or other non-profit organizations (including hospitals) are subject to the audit requirements contained in the Single Audit Act Amendments of 1996 (31 U.S.C. 7501-7507) and revised OMB Circular A-133, “Audits of States, Local Governments, and Non-Profit Organizations.”
(b) State and local governments are subject to the audit requirements contained in the Single Audit Act Amendments of 1996 (31 U.S.C. 7501-7507) and revised OMB Circular A-133, “Audits of States, Local Governments, and Non-Profit Organizations.”
(c) For-profit hospitals not covered by the audit provisions of revised OMB Circular A-133 are subject to the audit requirements of SSA.
(d) Commercial organizations are subject to the audit requirements of SSA or the prime recipient as incorporated into the award document.
For each kind of recipient, there is a set of Federal principles for determining allowable costs. Allowability of costs will be determined in accordance with the cost principles applicable to the entity incurring the costs. Thus:
(a) Allowability of costs incurred by State, local or federally-recognized Indian tribal governments is determined in accordance with the provisions of OMB Circular A-87, “Cost Principles for State, Local, and Indian Tribal Governments.”
(b) Allowability of costs incurred by non-profit organizations is determined in accordance with the provisions of OMB Circular A-122, “Cost Principles for Non-Profit Organizations.”
(c) Allowability of costs incurred by institutions of higher education is determined in accordance with the provisions of OMB Circular A-21, “Cost Principles for Educational Institutions.”
(d) Allowability of costs incurred by hospitals is determined in accordance with the provisions of Appendix E of 45 CFR part 74, “Principles for Determining Costs Applicable to Research and Development Under Grants and Contracts with Hospitals.”
(e) Allowability of costs incurred by commercial organizations and those non-profit organizations listed in Attachment C to Circular A-122 is determined in accordance with the provisions of the Federal Acquisition Regulation (FAR) at 48 CFR part 31.
Where a funding period is specified, a recipient may charge to the grant only allowable costs resulting from obligations incurred during the funding period and any pre-award costs authorized by SSA. Start Printed Page 24778
Sections 435.31 through 435.37 set forth uniform standards governing management and disposition of property furnished by the Federal Government whose cost was charged to a project supported by a Federal award. Recipients must observe these standards under awards and SSA may not impose additional requirements, unless specifically required by Federal statute. The recipient may use its own property management standards and procedures provided it observes the provisions of §§ 435.31 through 435.37.
Recipients must, at a minimum, provide the equivalent insurance coverage for real property and equipment acquired with Federal funds as provided to property owned by the recipient. Federally-owned property need not be insured unless required by the terms and conditions of the award.
SSA will prescribe requirements for recipients concerning the use and disposition of real property acquired in whole or in part under awards. Unless otherwise provided by statute, such requirements, at a minimum, will contain the following.
(a) Title. Title to real property will vest in the recipient subject to the condition that the recipient will use the real property for the authorized purpose of the project as long as it is needed and will not encumber the property without approval of SSA.
(b) Use in other projects. The recipient must obtain written approval by SSA for the use of real property in other federally-sponsored projects when the recipient determines that the property is no longer needed for the purpose of the original project. Use in other projects is limited to those under federally-sponsored projects (i.e., awards) or programs that have purposes consistent with those authorized for support by SSA.
(c) Disposition. When the real property is no longer needed as provided in paragraphs (a) and (b) of this section, the recipient must request disposition instructions from SSA or its successor Federal awarding agency. SSA will observe one or more of the following disposition instructions:
(1) The recipient may be permitted to retain title without further obligation to the Federal Government after it compensates the Federal Government for that percentage of the current fair market value of the property attributable to the Federal participation in the project.
(2) The recipient may be directed to sell the property under guidelines provided by SSA and pay the Federal Government for that percentage of the current fair market value of the property attributable to the Federal participation in the project (after deducting actual and reasonable selling and fix-up expenses, if any, from the sales proceeds). When the recipient is authorized or required to sell the property, proper sales procedures will be established that provide for competition to the extent practicable and result in the highest possible return.
(3) The recipient may be directed to transfer title to the property to the Federal Government or to an eligible third party provided that, in such cases, the recipient will be entitled to compensation for its attributable percentage of the current fair market value of the property.
(a) Federally-owned property. (1) Title to federally-owned property remains vested in the Federal Government. Recipients must submit annually an inventory listing of federally-owned property in their custody to SSA. Upon completion of the award or when the property is no longer needed, the recipient must report the property to SSA for further Federal agency utilization.
(2) If SSA has no further need for the property, it will be declared excess and reported to the General Services Administration, unless SSA has statutory authority to dispose of the property by alternative methods (e.g., the authority provided by the Federal Technology Transfer Act (15 U.S.C. 3710 (I)) to donate research equipment to educational and non-profit organizations in accordance with Executive Order 12821, “Improving Mathematics and Science Education in Support of the National Education Goals” (3 CFR, 1992 Comp., p. 323). Appropriate instructions will be issued to the recipient by SSA.
(b) Exempt property. When statutory authority exists, SSA has the option to vest title to property acquired with Federal funds in the recipient without further obligation to the Federal Government and under conditions SSA considers appropriate. Such property is “exempt property.” Should SSA not establish conditions, title to exempt property upon acquisition will vest in the recipient without further obligation to the Federal Government.
(a) Title to equipment acquired by a recipient with Federal funds will vest in the recipient, subject to conditions of this section.
(b) The recipient may not use equipment acquired with Federal funds to provide services to non-Federal outside organizations for a fee that is less than private companies charge for equivalent services, unless specifically authorized by Federal statute, for as long as the Federal Government retains an interest in the equipment.
(c) The recipient may use the equipment in the project or program for which it was acquired as long as needed, whether or not the project or program continues to be supported by Federal funds and may not encumber the property without approval of SSA. When no longer needed for the original project or program, the recipient must use the equipment in connection with its other federally-sponsored activities, in the following order of priority:
(1) Activities sponsored by SSA, then
(2) activities sponsored by other Federal awarding agencies.
(d) During the time that equipment is used on the project or program for which it was acquired, the recipient must make it available for use on other projects or programs if such other use will not interfere with the work on the project or program for which the equipment was originally acquired. First preference for such other use must be given to other projects or programs sponsored by SSA; second preference must be given to projects or programs sponsored by other Federal awarding agencies. If the equipment is owned by the Federal Government, use on other activities not sponsored by the Federal Government will be permissible if authorized by SSA. User charges will be treated as program income.
(e) When acquiring replacement equipment, the recipient may use the equipment to be replaced as trade-in or sell the equipment and use the proceeds to offset the costs of the replacement equipment subject to the approval of SSA.
(f) The recipient's property management standards for equipment acquired with Federal funds and federally-owned equipment must include all of the following:
(1) Equipment records must be maintained accurately and must include the following information:
(i) A description of the equipment.
(ii) Manufacturer's serial number, model number, Federal stock number, national stock number, or other identification number. Start Printed Page 24779
(iii) Source of the equipment, including the award number.
(iv) Whether title vests in the recipient or the Federal Government.
(v) Acquisition date (or date received, if the equipment was furnished by the Federal Government) and cost.
(vi) Information from which one can calculate the percentage of Federal participation in the cost of the equipment (not applicable to equipment furnished by the Federal Government).
(vii) Location and condition of the equipment and the date the information was reported.
(viii) Unit acquisition cost.
(ix) Ultimate disposition data, including date of disposal and sales price or the method used to determine current fair market value where a recipient compensates the Federal awarding agency for its share.
(2) Equipment owned by the Federal Government must be identified to indicate Federal ownership.
(3) A physical inventory of equipment must be taken and the results reconciled with the equipment records at least once every two years. Any differences between quantities determined by the physical inspection and those shown in the accounting records must be investigated to determine the causes of the difference. The recipient must, in connection with the inventory, verify the existence, current utilization, and continued need for the equipment.
(4) A control system must be in effect to insure adequate safeguards to prevent loss, damage, or theft of the equipment. Any loss, damage, or theft of equipment must be investigated and fully documented; if the equipment was owned by the Federal Government, the recipient must promptly notify SSA.
(5) Adequate maintenance procedures must be implemented to keep the equipment in good condition.
(6) Where the recipient is authorized or required to sell the equipment, proper sales procedures must be established which provide for competition to the extent practicable and result in the highest possible return.
(g) When the recipient no longer needs the equipment, the equipment may be used for other activities in accordance with the following standards. For equipment with a current per unit fair market value of $5000 or more, the recipient may retain the equipment for other uses provided that compensation is made to SSA or its successor. The amount of compensation will be computed by applying the percentage of Federal participation in the cost of the original project or program to the current fair market value of the equipment. If the recipient has no need for the equipment, the recipient must request disposition instructions from SSA. SSA will determine whether the equipment can be used to meet the agency's requirements. If no requirement exists within that agency, the availability of the equipment will be reported to the General Services Administration by SSA to determine whether a requirement for the equipment exists in other Federal agencies. SSA will issue instructions to the recipient no later than 120 calendar days after the recipient's request and the following procedures will govern:
(1) If so instructed or if disposition instructions are not issued within 120 calendar days after the recipient's request, the recipient must sell the equipment and reimburse SSA an amount computed by applying to the sales proceeds the percentage of Federal participation in the cost of the original project or program. However, the recipient is permitted to deduct and retain from the Federal share $500 or ten percent of the proceeds, whichever is less, for the recipient's selling and handling expenses.
(2) If the recipient is instructed to ship the equipment elsewhere, the recipient will be reimbursed by the Federal Government by an amount which is computed by applying the percentage of the recipient's participation in the cost of the original project or program to the current fair market value of the equipment, plus any reasonable shipping or interim storage costs incurred.
(3) If the recipient is instructed to otherwise dispose of the equipment, the recipient will be reimbursed by SSA for such costs incurred in its disposition.
(4) SSA may reserve the right to transfer the title to the Federal Government or to a third party named by the Federal Government when such third party is otherwise eligible under existing statutes. Such a transfer will be subject to the following standards:
(i) The equipment must be appropriately identified in the award or otherwise made known to the recipient in writing.
(ii) SSA must issue disposition instructions within 120 calendar days after receipt of a final inventory. The final inventory must list all equipment acquired with grant funds and federally-owned equipment. If SSA fails to issue disposition instructions within the 120 calendar day period, the recipient must apply the standards of this section, as appropriate.
(iii) When SSA exercises its right to take title, the equipment will be subject to the provisions for federally-owned equipment.
(a) Title to supplies and other expendable property will vest in the recipient upon acquisition. If there is a residual inventory of unused supplies exceeding $5000 in total aggregate value upon termination or completion of the project or program and the supplies are not needed for any other federally-sponsored project or program, the recipient may retain the supplies for use on non-Federal sponsored activities or sell them, but must, in either case, compensate the Federal Government for its share. The amount of compensation will be computed in the same manner as for equipment.
(b) The recipient may not use supplies acquired with Federal funds to provide services to non-Federal outside organizations for a fee that is less than private companies charge for equivalent services, unless specifically authorized by Federal statute as long as the Federal Government retains an interest in the supplies.
(a) Copyright. The recipient may copyright any work that is subject to copyright and was developed, or for which ownership was purchased, under an award. SSA reserves a royalty-free, nonexclusive and irrevocable right to reproduce, publish, or otherwise use the work for Federal purposes, and to authorize others to do so.
(b) Patents and inventions. Recipients are subject to applicable regulations governing patents and inventions, including government-wide regulations issued by the Department of Commerce at 37 CFR part 401, “Rights to Inventions Made by Nonprofit Organizations and Small Business Firms Under Government Grants, Contracts and Cooperative Agreements.”
(c) Rights of Federal Government. The Federal Government has the right to:
(1) Obtain, reproduce, publish or otherwise use the data first produced under an award; and
(2) Authorize others to receive, reproduce, publish, or otherwise use such data for Federal purposes.
(d) FOIA requests for research data. (1) In addition, in response to a Freedom of Information Act (FOIA) request for research data relating to published research findings produced under an award that were used by the Federal Government in developing an agency action that has the force and effect of law, SSA shall request, and the recipient shall provide, within a reasonable time, the research data so that they can be made available to the public through the procedures Start Printed Page 24780established under the FOIA. If SSA obtains the research data solely in response to a FOIA request, SSA may charge the requester a reasonable fee equaling the full incremental cost of obtaining the research data. This fee should reflect costs incurred by SSA, the recipient, and applicable subrecipients. This fee is in addition to any fees SSA may assess under the FOIA (5 U.S.C. 552(a)(4)(A)).
(2) The following definitions apply for purposes of this paragraph (d):
(i) Research data is defined as the recorded factual material commonly accepted in the scientific community as necessary to validate research findings, but not any of the following: preliminary analyses, drafts of scientific papers, plans for future research, peer reviews, or communications with colleagues. This “recorded” material excludes physical objects (e.g., laboratory samples). Research data also do not include:
(A) Trade secrets, commercial information, materials necessary to be held confidential by a researcher until they are published, or similar information which is protected under law; and
(B) Personnel and medical information and similar information the disclosure of which would constitute a clearly unwarranted invasion of personal privacy, such as information that could be used to identify a particular person in a research study.
(ii) Published is defined as either when:
(A) Research findings are published in a peer-reviewed scientific or technical journal; or
(B) A Federal agency publicly and officially cites the research findings in support of an agency action that has the force and effect of law.
(iii) Used by the Federal Government in developing an agency action that has the force and effect of law is defined as when an agency publicly and officially cites the research findings in support of an agency action that has the force and effect of law.
(e) Title to intangible property and debt instruments. Title to intangible property and debt instruments acquired under an award or subaward vests upon acquisition in the recipient. The recipient must use that property for the originally-authorized purpose, and the recipient may not encumber the property without approval of SSA. When no longer needed for the originally authorized purpose, disposition of the intangible property will occur in accordance with the provisions of § 435.34(g).
Real property, equipment, intangible property and debt instruments that are acquired or improved with Federal funds must be held in trust by the recipient as trustee for the beneficiaries of the project or program under which the property was acquired or improved. Agencies may require recipients to record liens or other appropriate notices of record to indicate that personal or real property has been acquired or improved with Federal funds and that use and disposition conditions apply to the property.
Sections 435.41 through 435.48 set forth standards for use by recipients in establishing procedures for the procurement of supplies and other expendable property, equipment, real property and other services with Federal funds. These standards are furnished to ensure that such materials and services are obtained in an effective manner and in compliance with the provisions of applicable Federal statutes and executive orders. No additional procurement standards or requirements may be imposed by SSA upon recipients, unless specifically required by Federal statute or executive order or approved by OMB.
The standards contained in this section do not relieve the recipient of the contractual responsibilities arising under its contract(s). The recipient is the responsible authority, without recourse to SSA, regarding the settlement and satisfaction of all contractual and administrative issues arising out of procurements entered into in support of an award or other agreement. This includes disputes, claims, protests of award, source evaluation or other matters of a contractual nature. Matters concerning violation of statute are to be referred to such Federal, State or local authority as may have proper jurisdiction.
The recipient must maintain written standards of conduct governing the performance of its employees engaged in the award and administration of contracts. No employee, officer, or agent may participate in the selection, award, or administration of a contract supported by Federal funds if a real or apparent conflict of interest would be involved. Such a conflict would arise when the employee, officer, or agent, any member of his or her immediate family, his or her partner, or an organization which employs or is about to employ any of the parties indicated herein, has a financial or other interest in the firm selected for an award. The officers, employees, and agents of the recipient may neither solicit nor accept gratuities, favors, or anything of monetary value from contractors, or parties to subagreements. However, recipients may set standards for situations in which the financial interest is not substantial or the gift is an unsolicited item of nominal value. The standards of conduct must provide for disciplinary actions to be applied for violations of such standards by officers, employees, or agents of the recipient.
All procurement transactions must be conducted in a manner to provide, to the maximum extent practical, open and free competition. The recipient must be alert to organizational conflicts of interest as well as noncompetitive practices among contractors that may restrict or eliminate competition or otherwise restrain trade. In order to ensure objective contractor performance and eliminate unfair competitive advantage, contractors that develop or draft specifications, requirements, statements of work, invitations for bids and/or requests for proposals must be excluded from competing for such procurements. Awards must be made to the bidder or offeror whose bid or offer is responsive to the solicitation and is most advantageous to the recipient, price, quality and other factors considered. Solicitations must clearly set forth all requirements that the bidder or offeror must fulfill in order for the bid or offer to be evaluated by the recipient. Any and all bids or offers may be rejected when it is in the recipient's interest to do so.
(a) All recipients must establish written procurement procedures. These procedures must provide for, at a minimum, that paragraphs (a) (1), (2), and (3) of this section apply.
(1) Recipients avoid purchasing unnecessary items.
(2) Where appropriate, an analysis is made of lease and purchase alternatives to determine which would be the most economical and practical procurement for the Federal Government.
(3) Solicitations for goods and services provide for all of the following:
(i) A clear and accurate description of the technical requirements for the material, product or service to be procured. In competitive procurements, such a description may not contain Start Printed Page 24781features which unduly restrict competition.
(ii) Requirements which the bidder/offeror must fulfill and all other factors to be used in evaluating bids or proposals.
(iii) A description, whenever practicable, of technical requirements in terms of functions to be performed or performance required, including the range of acceptable characteristics or minimum acceptable standards.
(iv) The specific features of “brand name or equal” descriptions that bidders are required to meet when such items are included in the solicitation.
(v) The acceptance, to the extent practicable and economically feasible, of products and services dimensioned in the metric system of measurement.
(vi) Preference, to the extent practicable and economically feasible, for products and services that conserve natural resources and protect the environment and are energy efficient.
(b) Positive efforts must be made by recipients to utilize small businesses, minority-owned firms, and women's business enterprises, whenever possible. Recipients of Federal awards must take all of the following steps to further this goal:
(1) Ensure that small businesses, minority-owned firms, and women's business enterprises are used to the fullest extent practicable.
(2) Make information on forthcoming opportunities available and arrange time frames for purchases and contracts to encourage and facilitate participation by small businesses, minority-owned firms, and women's business enterprises.
(3) Consider in the contract process whether firms competing for larger contracts intend to subcontract with small businesses, minority-owned firms, and women's business enterprises.
(4) Encourage contracting with consortiums of small businesses, minority-owned firms and women's business enterprises when a contract is too large for one of these firms to handle individually.
(5) Use the services and assistance, as appropriate, of such organizations as the Small Business Administration and the Department of Commerce's Minority Business Development Agency in the solicitation and utilization of small businesses, minority-owned firms and women's business enterprises.
(c) The type of procuring instruments used (e.g., fixed price contracts, cost reimbursable contracts, purchase orders, and incentive contracts) may be determined by the recipient but must be appropriate for the particular procurement and for promoting the best interest of the program or project involved. The “cost-plus-a-percentage-of-cost” or “percentage of construction cost” methods of contracting may not be used.
(d) Contracts may be made only with responsible contractors who possess the potential ability to perform successfully under the terms and conditions of the proposed procurement. Consideration must be given to such matters as contractor integrity, record of past performance, financial and technical resources or accessibility to other necessary resources. In certain circumstances, contracts with certain parties are restricted by agencies' implementation of Executive Orders 12549 and 12689, “Debarment and Suspension” (3 CFR, 1986 Comp., p. 189 and 3 CFR, 1989 Comp., p. 235).
(e) Recipients must, on request, make available for SSA, pre-award review and procurement documents, such as request for proposals or invitations for bids, independent cost estimates, etc., when any of the following conditions apply:
(1) A recipient's procurement procedures or operation fails to comply with the procurement standards in this Part.
(2) The procurement is expected to exceed the simplified acquisition threshold fixed at 41 U.S.C. 403 (11) (currently $100,000) and is to be awarded without competition or only one bid or offer is received in response to a solicitation.
(3) The procurement, which is expected to exceed the simplified acquisition threshold, specifies a “brand name” product.
(4) The proposed award over the simplified acquisition threshold is to be awarded to other than the apparent low bidder under a sealed bid procurement.
(5) A proposed contract modification changes the scope of a contract or increases the contract amount by more than the amount of the simplified acquisition threshold.
Some form of cost or price analysis must be made and documented in the procurement files in connection with every procurement action. Price analysis may be accomplished in various ways, including the comparison of price quotations submitted, market prices and similar indicia, together with discounts. Cost analysis is the review and evaluation of each element of cost to determine reasonableness, allocability and allowability.
Procurement records and files for purchases in excess of the simplified acquisition threshold must include the following at a minimum:
(a) Basis for contractor selection,
(b) Justification for lack of competition when competitive bids or offers are not obtained, and
(c) Basis for award cost or price.
A system for contract administration must be maintained to ensure contractor conformance with the terms, conditions and specifications of the contract and to ensure adequate and timely follow up of all purchases. Recipients must evaluate contractor performance and document, as appropriate, whether contractors have met the terms, conditions and specifications of the contract.
The recipient must include, in addition to provisions to define a sound and complete agreement, the following provisions in all contracts. The following provisions must also be applied to subcontracts:
(a) Contracts in excess of the simplified acquisition threshold must contain contractual provisions or conditions that allow for administrative, contractual, or legal remedies in instances in which a contractor violates or breaches the contract terms, and provide for such remedial actions as may be appropriate.
(b) All contracts in excess of the simplified acquisition threshold must contain suitable provisions for termination by the recipient, including the manner by which termination will be effected and the basis for settlement. In addition, such contracts must describe conditions under which the contract may be terminated for default as well as conditions where the contract may be terminated because of circumstances beyond the control of the contractor.
(c) Except as otherwise required by statute, an award that requires the contracting (or subcontracting) for construction or facility improvements must provide for the recipient to follow its own requirements relating to bid guarantees, performance bonds, and payment bonds unless the construction contract or subcontract exceeds $100,000. For those contracts or subcontracts exceeding $100,000, SSA may accept the bonding policy and requirements of the recipient, provided SSA has made a determination that the Federal Government's interest is adequately protected. If such a determination has not been made, the minimum requirements are as follows:
(1) A bid guarantee from each bidder equivalent to five percent of the bid Start Printed Page 24782price. The “bid guarantee” must consist of a firm commitment such as a bid bond, certified check, or other negotiable instrument accompanying a bid as assurance that the bidder will, upon acceptance of his bid, execute such contractual documents as may be required within the time specified.
(2) A performance bond on the part of the contractor for 100 percent of the contract price. A “performance bond” is one executed in connection with a contract to secure fulfillment of all the contractor's obligations under such contract.
(3) A payment bond on the part of the contractor for 100 percent of the contract price. A “payment bond” is one executed in connection with a contract to assure payment as required by statute of all persons supplying labor and material in the execution of the work provided for in the contract.
(4) Where bonds are required in the situations described herein, the bonds must be obtained from companies holding certificates of authority as acceptable sureties pursuant to 31 CFR part 223, “Surety Companies Doing Business with the United States.”
(d) All negotiated contracts (except those for less than the simplified acquisition threshold) awarded by recipients must include a provision to the effect that the recipient, SSA, the Comptroller General of the United States, or any of their duly authorized representatives, will have access to any books, documents, papers and records of the contractor which are directly pertinent to a specific program for the purpose of making audits, examinations, excerpts and transcriptions.
(e) All contracts, including small purchases, awarded by recipients and their contractors must contain the procurement provisions of Appendix A to this Part, as applicable.
Reports and Records
Sections 435.51 through 435.53 set forth the procedures for monitoring and reporting on the recipient's financial and program performance and the necessary standard reporting forms. They also set forth record retention requirements.
(a) Recipients are responsible for managing and monitoring each project, program, subaward, function or activity supported by the award. Recipients must monitor subawards to ensure subrecipients have met the audit requirements as delineated in § 435.26.
(b) SSA will prescribe the frequency with which the performance reports must be submitted. Except as provided in paragraph (f) of this section, performance reports will not be required more frequently than quarterly or, less frequently than annually. Annual reports are due 90 calendar days after the grant year; quarterly or semi-annual reports are due 30 days after the reporting period. SSA may require annual reports before the anniversary dates of multiple year awards in lieu of these requirements. The final performance reports are due 90 calendar days after the expiration or termination of the award.
(c) If inappropriate, a final technical or performance report will not be required after completion of the project.
(d) When required, performance reports must generally contain, for each award, brief information on each of the following:
(1) A comparison of actual accomplishments with the goals and objectives established for the period, the findings of the investigator, or both. Whenever appropriate and the output of programs or projects can be readily quantified, such quantitative data should be related to cost data for computation of unit costs.
(2) Reasons why established goals were not met, if appropriate.
(3) Other pertinent information including, when appropriate, analysis and explanation of cost overruns or high unit costs.
(e) Recipients will not be required to submit more than the original and two copies of performance reports.
(f) Recipients must immediately notify SSA of developments that have a significant impact on the award-supported activities. Also, notification must be given in the case of problems, delays, or adverse conditions which materially impair the ability to meet the objectives of the award. This notification must include a statement of the action taken or contemplated, and any assistance needed to resolve the situation.
(g) SSA may make site visits, as needed.
(h) SSA will comply with clearance requirements of 5 CFR part 1320 when requesting performance data from recipients.
(a) Authorized forms. The following forms or such other forms as may be approved by OMB are authorized for obtaining financial information from recipients:
(1) SF-269 or SF-269A, Financial Status Report. (i) SSA requires recipients to use the SF-269 or SF-269A to report the status of funds for all nonconstruction projects or programs. However, SSA has the option of not requiring the SF-269 or SF-269A when the SF-270, Request for Advance or Reimbursement, or SF-272, Report of Federal Cash Transactions, is determined to provide adequate information to meet its needs, except that a final SF-269 or SF-269A will be required at the completion of the project when the SF-270 is used only for advances.
(ii) SSA may prescribe whether the report will be on a cash or accrual basis. If SSA requires accrual information and the recipient's accounting records are not normally kept on the accrual basis, the recipient will not be required to convert its accounting system, but must develop such accrual information through best estimates based on an analysis of the documentation on hand.
(iii) SSA will determine the frequency of the Financial Status Report for each project or program, considering the size and complexity of the particular project or program. However, the report will not be required more frequently than quarterly or less frequently than annually. A final report is required at the completion of the agreement.
(iv) SSA will require recipients to submit the SF-269 or SF-269A (an original and no more than two copies) no later than 30 days after the end of each specified reporting period for quarterly and semi-annual reports, and 90 calendar days for annual and final reports. Extensions of reporting due dates may be approved by SSA upon request of the recipient.
(2) SF-272, Report of Federal Cash Transactions. (i) When funds are advanced to recipients, SSA will require each recipient to submit the SF-272 and, when necessary, its continuation sheet, SF-272a. SSA will use this report to monitor cash advanced to recipients and to obtain disbursement information for each agreement with the recipients.
(ii) SSA may require forecasts of Federal cash requirements in the “Remarks” section of the report.
(iii) When practical and deemed necessary, SSA may require recipients to report in the “Remarks” section the amount of cash advances received in excess of three days. Recipients must provide short narrative explanations of actions taken to reduce the excess balances.
(iv) Recipients are required to submit not more than the original and two copies of the SF-272 15 calendar days following the end of each quarter. SSA may require a monthly report from those Start Printed Page 24783recipients receiving advances totaling $1 million or more per year.
(v) SSA may waive the requirement for submission of the SF-272 for any one of the following reasons:
(A) When monthly advances do not exceed $25,000 per recipient, provided that such advances are monitored through other forms contained in this section;
(B) If, in SSA's opinion, the recipient's accounting controls are adequate to minimize excessive Federal advances; or
(C) When the electronic payment mechanisms provide adequate data.
(b) When SSA needs additional information or more frequent reports, the following will be observed:
(1) When additional information is needed to comply with legislative requirements, SSA will issue instructions to require recipients to submit such information under the “Remarks” section of the reports.
(2) When SSA determines that a recipient's accounting system does not meet the standards in § 435.21, additional pertinent information to further monitor awards may be obtained upon written notice to the recipient until such time as the system is brought up to standard. SSA, in obtaining this information, will comply with report clearance requirements of 5 CFR part 1320.
(3) SSA may shade out any line item on any report if not necessary.
(4) SSA may accept the identical information from the recipients in machine readable format or computer printouts or electronic outputs in lieu of prescribed formats.
(5) SSA may provide computer or electronic outputs to recipients when such expedites or contributes to the accuracy of reporting.
(a) Purpose. This section sets forth the requirements for record retention and access to records for awards to recipients. SSA may not impose any other record retention or access requirements upon recipients.
(b) Retention periods. Financial records, supporting documents, statistical records, and all other records pertinent to an award must be retained for a period of three years from the date of submission of the final expenditure report or, for awards that are renewed quarterly or annually, from the date of the submission of the quarterly or annual financial report, as authorized by SSA. The only exceptions are the following:
(1) If any litigation, claim, or audit is started before the expiration of the 3-year period, the records must be retained until all litigation, claims or audit findings involving the records have been resolved and final action taken.
(2) Records for real property and equipment acquired with Federal funds must be retained for 3 years after final disposition.
(3) When records are transferred to or maintained by SSA, the 3-year retention requirement is not applicable to the recipient.
(4) Indirect cost rate proposals, cost allocations plans, etc. as specified in paragraph (g) of this section.
(c) Use of copies. Copies of original records may be substituted for the original records if authorized by SSA.
(d) Records with long term retention value. SSA will request transfer of certain records to its custody from recipients when it determines that the records possess long term retention value. However, in order to avoid duplicate recordkeeping, SSA may make arrangements for recipients to retain any records that are continuously needed for joint use.
(e) Federal access to records. SSA, the Inspector General, Comptroller General of the United States, or any of their duly authorized representatives, have the right of timely and unrestricted access to any books, documents, papers, or other records of recipients that are pertinent to the awards, in order to make audits, examinations, excerpts, transcripts and copies of such documents. This right also includes timely and reasonable access to a recipient's personnel for the purpose of interview and discussion related to such documents. The rights of access in this paragraph are not limited to the required retention period, but will last as long as records are retained.
(f) Public access to records. Unless required by statute, SSA may not place restrictions on recipients that limit public access to the records of recipients that are pertinent to an award, except when SSA can demonstrate that such records will be kept confidential and would have been exempted from disclosure pursuant to the Freedom of Information Act (5 U.S.C. 552) if the records had belonged to SSA.
(g) Retention of indirect cost rate proposals, cost allocations plans, etc. Paragraphs (g)(1) and (g)(2) of this section apply to the following types of documents, and their supporting records: indirect cost rate computations or proposals, cost allocation plans, and any similar accounting computations of the rate at which a particular group of costs is chargeable (such as computer usage chargeback rates or composite fringe benefit rates).
(1) If submitted for negotiation. If the recipient submits to SSA or the subrecipient submits to the recipient the proposal, plan, or other computation to form the basis for negotiation of the rate, then the 3-year retention period for its supporting records starts on the date of such submission.
(2) If not submitted for negotiation. If the recipient is not required to submit to SSA or the subrecipient is not required to submit to the recipient the proposal, plan, or other computation for negotiation purposes, then the 3-year retention period for the proposal, plan, or other computation and its supporting records starts at the end of the fiscal year (or other accounting period) covered by the proposal, plan, or other computation.
Termination and Enforcement
Sections 435.61 and 435.62 set forth uniform suspension, termination and enforcement procedures.
(a) Awards may be terminated in whole or in part only under the following circumstances—
(1) By SSA, if a recipient materially fails to comply with the terms and conditions of an award.
(2) By SSA with the consent of the recipient, in which case the two parties will agree upon the termination conditions, including the effective date and, in the case of partial termination, the portion to be terminated.
(3) By the recipient upon sending to SSA written notification setting forth the reasons for such termination, the effective date, and, in the case of partial termination, the portion to be terminated. However, if SSA determines in the case of partial termination that the reduced or modified portion of the grant will not accomplish the purposes for which the grant was made, it may terminate the grant in its entirety under either paragraph (a)(1) or (a)(2) of this section.
(b) If costs are allowed under an award, the responsibilities of the recipient referred to in § 435.71(a), including those for property management as applicable, will be considered in the termination of the award, and provision will be made for continuing responsibilities of the recipient after termination, as appropriate.
(a) Remedies for noncompliance. If a recipient materially fails to comply with the terms and conditions of an award, whether stated in a Federal statute, regulation, assurance, application, or notice of award, SSA may, in addition to imposing any of the special conditions outlined in § 435.14, take one or more of the following actions, as appropriate in the circumstances:
(1) Temporarily withhold cash payments pending correction of the deficiency by the recipient or more severe enforcement action by SSA.
(2) Disallow (that is, deny both use of funds and any applicable matching credit for) all or part of the cost of the activity or action not in compliance.
(3) Wholly or partly suspend or terminate the current award.
(4) Withhold further awards for the project or program.
(5) Take other remedies that may be legally available.
(b) Hearings and appeals. In taking an enforcement action, SSA must provide the recipient an opportunity for hearing, appeal, or other administrative proceeding to which the recipient is entitled under any statute or regulation applicable to the action involved.
(c) Effects of suspension and termination. Costs of a recipient resulting from obligations incurred by the recipient during a suspension or after termination of an award are not allowable unless SSA expressly authorizes them in the notice of suspension or termination or subsequently. Other recipient costs during suspension or after termination which are necessary and not reasonably avoidable are allowable if—
(1) The costs result from obligations which were properly incurred by the recipient before the effective date of suspension or termination, are not in anticipation of it, and in the case of a termination, are noncancellable.
(2) The costs would be allowable if 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 a recipient from being subject to debarment and suspension under Executive Orders 12549 and 12689.
Subpart D—After-the-Award Requirements
Sections 435.71 through 435.73 contain closeout procedures and other procedures for subsequent disallowances and adjustments.
(a) Recipients must submit, within 90 calendar days after the date of completion of the award, all financial, performance, and other reports as required by the terms and conditions of the award. SSA may approve extensions when requested by the recipient.
(b) Unless SSA authorizes an extension, a recipient must liquidate all obligations incurred under the award not later than 90 calendar days after the funding period or the date of completion as specified in the terms and conditions of the award or in agency implementing instructions.
(c) SSA will make prompt payments to a recipient for allowable reimbursable costs under the award being closed out.
(d) The recipient must promptly refund any balances of unobligated cash that SSA has advanced or paid and that is not authorized to be retained by the recipient for use in other projects. OMB Circular A-129 governs unreturned amounts that become delinquent debts.
(e) When authorized by the terms and conditions of the award, SSA will make a settlement for any upward or downward adjustments to the Federal share of costs after closeout reports are received.
(f) The recipient must account for any real and personal property acquired with Federal funds or received from the Federal Government in accordance with §§ 435.31 through 435.37.
(g) In the event a final audit has not been performed prior to the closeout of an award, SSA will retain the right to recover an appropriate amount after fully considering the recommendations on disallowed costs resulting from the final audit.
(a) The closeout of an award does not affect any of the following:
(1) The right of SSA to disallow costs and recover funds on the basis of a later audit or other review.
(2) The obligation of the recipient to return any funds due as a result of later refunds, corrections, or other transactions.
(3) Audit requirements in § 435.26.
(4) Property management requirements in §§ 435.31 through 435.37.
(5) Records retention as required in § 435.53.
(b) After closeout of an award, a relationship created under an award may be modified or ended in whole or in part with the consent of SSA and the recipient, provided the responsibilities of the recipient referred to in § 435.73(a), including those for property management as applicable, are considered and provisions made for continuing responsibilities of the recipient, as appropriate.
(a) Methods of collection. Any funds paid to a recipient in excess of the amount to which the recipient is finally determined to be entitled under the terms and conditions of the award constitute a debt to the Federal Government. If not paid within a reasonable period after the demand for payment, SSA may reduce the debt by:
(1) making an administrative offset against other requests for reimbursements;
(2) withholding advance payments otherwise due to the recipient; or
(3) taking other action permitted by statute.
(b) Charging of interest. Except as otherwise provided by law, SSA will charge interest on an overdue debt in accordance with 4 CFR Chapter II, “Federal Claims Collection Standards.”
(a) Levels of appeal. Grantee institutions (grantees) may appeal certain post-award adverse grant administration decisions made by SSA officials in the administration of discretionary grant programs. SSA has two levels of appeal:
(1) initial appeal to the Associate Commissioner for the Office of Acquisition and Grants (ACOAG) from an adverse decision rendered by the Grants Management Officer (GMO); and
(2) final appeal to the Commissioner of Social Security from an adverse decision rendered by the ACOAG.
(b) Decisions that may be appealed. The following types of adverse post-award written decisions by the GMO may be appealed:
(1) A disallowance or other determination denying payment of an amount claimed under an award. This does not apply to determinations of award amount or disposition of unobligated balances, or selection in the award document of an option for disposition of program-related income.
(2) A termination of an award for failure of the grantee to comply with any law, regulation, assurance, term, or condition applicable to the award.
(3) A denial of a noncompeting continuation award under the project period system of funding where the denial is for failure to comply with the Start Printed Page 24785terms and conditions of a previous award.
(4) A voiding of an award on the basis that it was fraudulently obtained or because the award was not authorized by statute or regulation.
(c) Notice of adverse decision and requirements of grantee response. The Grants Management Officer's (GMO) adverse post-award written decision should include the following statement:
This is the final decision of the Grants Management Officer. It will become the final decision of the Social Security Administration unless you submit a request for review of this decision to the Associate Commissioner for the Office of Acquisition and Grants, 1710 Gwynn Oak Avenue, Baltimore, Maryland 21207-5279. Your request for review must be in writing, include a copy of this decision, and fully state why you disagree with it. The request for review must be received by the ACOAG no later than 30 calendar days after the date of this decision.
(a) Timeliness of appeal to ACOAG. A grantee may appeal an adverse decision rendered by the GMO by submitting to the ACOAG a written request for review of the adverse decision. The written request for review must be received by the ACOAG no later than 30 calendar days after the date of the GMO's adverse decision. Any request for review that is received after the thirtieth day will be dismissed as untimely.
(b) Content of appeal to ACOAG. The written request for review should fully explain why the grantee disagrees with the GMO's decision, state the pertinent facts and law relied upon, and provide any relevant documentation in support of the grantee's position.
(c) Decision of ACOAG. The ACOAG, or the ACOAG's delegate, will issue a written decision within 30 calendar days of the date of receipt of the written request for review. If the written decision is adverse to the grantee, the decision will include the following statement:
This is the final decision of the Office of Acquisition and Grants. It will become the final decision of the Social Security Administration unless you submit a request for review of this decision to the Commissioner of Social Security, Social Security Administration, Baltimore, Maryland 21235-0001. Your request for review must be in writing, include a copy of this decision, and fully state why you disagree with it. The request for review must be received by the Commissioner no later than 15 calendar days after the date of this decision. You should also send a copy of the request for review to the ACOAG.
(a) Timeliness of appeal to Commissioner. A grantee may appeal an adverse decision rendered by the ACOAG by submitting to the Commissioner of Social Security a written request for review of the ACOAG's decision. The written request for review must be received by the Commissioner no later than 15 calendar days after the date of the ACOAG's adverse decision. Any request for review that is filed after the fifteenth day will be dismissed as untimely. The grantee should also send a copy of the request for review to the ACOAG.
(b) Content of appeal to Commissioner. The written request for review should fully explain why the grantee disagrees with the ACOAG's decision, state the pertinent facts and law relied upon, and provide any relevant documentation in support of the grantee's position. A copy of the ACOAG's decision should also be appended to the request for review.
(c) Decision of Commissioner. The Commissioner, or the Commissioner's delegate, will issue a written decision on the request for review. Generally, the decision will be issued within 90 calendar days of the date of receipt of the request for review. If a decision is not issued within 90 days, the Commissioner, or the Commissioner's delegate, will inform the grantee in writing when a decision can be expected.
(d) Final decision of SSA. The decision of the Commissioner, or of the Commissioner's delegate, shall be the final decision of the Social Security Administration on the matter(s) in dispute.
Appendix A to Part 435—Contract Provisions
All contracts, awarded by a recipient including small purchases, must contain the following provisions as applicable:
1. Equal Employment Opportunity— All contracts must contain a provision requiring compliance with Executive Order 11246, “Equal Employment Opportunity,” as amended by Executive Order 11375, “Amending Executive Order 11246 Relating to Equal Employment Opportunity,” and as supplemented by regulations at 41 CFR part 60, “Office of Federal Contract Compliance Programs, Equal Employment Opportunity, Department of Labor.”
2. Copeland “Anti-Kickback” Act (18 U.S.C. 874 and 40 U.S.C. 276c)— All contracts and subgrants in excess of $2000 for construction or repair awarded by recipients and subrecipients must include a provision for compliance with the Copeland “Anti-Kickback” Act (18 U.S.C. 874), as supplemented by Department of Labor regulations (29 CFR part 3, “Contractors and Subcontractors on Public Building or Public Work Financed in Whole or in Part by Loans or Grants from the United States”). The Act provides that each contractor or subrecipient will be prohibited from inducing, by any means, any person employed in the construction, completion, or repair of public work, to give up any part of the compensation to which he is otherwise entitled. The recipient must report all suspected or reported violations to the Federal awarding agency.
3. Davis-Bacon Act, as amended (40 U.S.C. 276a to a-7)— When required by Federal program legislation, all construction contracts awarded by the recipients and subrecipients of more than $2000 must include a provision for compliance with the Davis-Bacon Act (40 U.S.C. 276a to a-7) and as supplemented by Department of Labor regulations (29 CFR part 5, “Labor Standards Provisions Applicable to Contracts Governing Federally Financed and Assisted Construction”). Under this Act, contractors are required to pay wages to laborers and mechanics at a rate not less than the minimum wages specified in a wage determination made by the Secretary of Labor. In addition, contractors are required to pay wages not less than once a week. The recipient must place a copy of the current prevailing wage determination issued by the Department of Labor in each solicitation and the award of a contract will be conditioned upon the acceptance of the wage determination. The recipient must report all suspected or reported violations to the Federal awarding agency.
4. Contract Work Hours and Safety Standards Act (40 U.S.C. 327-333)— Where applicable, all contracts awarded by recipients in excess of $100,000 for construction contracts and for other contracts that involve the employment of mechanics or laborers must include a provision for compliance with Sections 102 and 107 of the Contract Work Hours and Safety Standards Act (40 U.S.C. 327-333), as supplemented by Department of Labor regulations (29 CFR part 5). Under Section 102 of the Act, each contractor is required to compute the wages of every mechanic and laborer on the basis of a standard work week of 40 hours. Work in excess of the standard work week is permissible provided that the worker is compensated at a rate of not less than 11/2 times the basic rate of pay for all hours worked in excess of 40 hours in the work week. Section 107 of the Act is applicable to construction work and provides that no laborer or mechanic will be required to work in surroundings or under working conditions which are unsanitary, hazardous or dangerous. These requirements do not apply to the purchases of supplies or materials or articles ordinarily available on the open market, or contracts for transportation or transmission of intelligence.
5. Rights to Inventions Made Under a Contract or Agreement— Contracts or agreements for the performance of experimental, developmental, or research work must provide for the rights of the Federal Government and the recipient in any resulting invention in accordance with 37 CFR part 401, “Rights to Inventions Made by Nonprofit Organizations and Small Business Start Printed Page 24786Firms Under Government Grants, Contracts and Cooperative Agreements,” and any implementing regulations issued by the awarding agency.
6. Clean Air Act (42 U.S.C. 7401 et seq.) and the Federal Water Pollution Control Act (33 U.S.C. 1251 et seq.), as amended— Contracts and subgrants of amounts in excess of $100,000 must contain a provision that requires the recipient to agree to comply with all applicable standards, orders or regulations issued pursuant to the Clean Air Act (42 U.S.C. 7401 et seq.) and the Federal Water Pollution Control Act as amended (33 U.S.C. 1251 et seq.). Violations must be reported to the Federal awarding agency and the Regional Office of the Environmental Protection Agency (EPA).
7. Byrd Anti-Lobbying Amendment (31 U.S.C. 1352)— Contractors who apply or bid for an award of more than $100,000 must file the required certification. Each tier certifies to the tier above that it will not and has not used Federal appropriated funds to pay any person or organization for influencing or attempting to influence an officer or employee of any agency, a member of Congress, officer or employee of Congress, or an employee of a member of Congress in connection with obtaining any Federal contract, grant or any other award covered by 31 U.S.C. 1352. Each tier must also disclose any lobbying with non-Federal funds that takes place in connection with obtaining any Federal award. Such disclosures are forwarded from tier to tier up to the recipient.
8. Debarment and Suspension (Executive Orders 12549 and 12689)— No contract will be made to parties listed on the General Services Administration's List of Parties Excluded from Federal Procurement or Nonprocurement Programs in accordance with Executive Orders 12549 and 12689, “Debarment and Suspension.” This list contains the names of parties debarred, suspended, or otherwise excluded by agencies, and contractors declared ineligible under statutory or regulatory authority other than Executive Order 12549. Contractors with awards that exceed the simplified acquisition threshold must provide the required certification regarding its exclusion status and that of its principal employees.
[FR Doc. 00-9399 Filed 4-26-00; 8:45 am]
BILLING CODE 4191-02-U