47 Ill. Adm. Code 1.APPENDIX B
B Office of Management and Budget Circular A-110
Section 1
Section 1.APPENDIX B Office
of Management and Budget Circular A-110
Grants and Agreements with
Institutions of Higher Education, Hospital, and Other Nonprofit Organization
Uniform Administrative
Requirements
(July 20, 1976)
Attachment A: Cash Depositories
1. This attachment sets forth standards governing the use of banks
and other institutions as depositories of funds advanced under grants and other
agreements.
2. Except for situations described in paragraphs 3, 4, and 5, no
Federal sponsoring agency shall:
a. Require physical segregation of cash depositories for funds
which are provided to a recipient.
b. Establish any eligibility requirements for cash depositories
for funds which are provided to a recipient.
3. A separate bank account shall be required when applicable
letter-of-credit agreements provide that drawdowns will be made when the
recipient's checks are presented to the bank for payment.
4. Any moneys advanced to a recipient which are subject to the
control or regulation of the United States or any of its officers, agents or
employees (public moneys as defined in Treasury Circular No. 176 (31 CFR 202
(1984)), as amended) must be deposited in a bank with Federal Deposit Insurance
Corporation (FDIC) insurance coverage and the balance exceeding the FDIC
coverage must be collaterally secured.
5. Consistent with the national goal of expanding the
opportunities for minority business enterprises, recipients and subrecipients
shall be encouraged to use minority banks (a bank which is owned at least 50
percent by minority group members).
Attachment B: Bonding and
Insurance
1. This attachment sets forth bonding and insurance requirements
for grants and other agreements with recipients. No other bonding and
insurance requirements shall be imposed other than those normally required by
the recipient.
2. Except as otherwise required by law, a grant or other
agreement that requires the contracting (or subcontracting) for construction or
facility improvements shall provide for the recipient to follow its own
requirements relating to bid guarantees, performance bonds, and payment bond
unless the construction contract or subcontract exceeds $100,000. For those
contracts or subcontracts exceeding $100,000, the Federal agency may accept the
bonding policy and requirements of the grantee provided the Federal agency has
made a determination that the Government's interest is adequately protected.
If such a determination has not been made, the minimum requirements shall be as
follows:
a. A bid guarantee from each bidder equivalent to five percent of
the bid price. - The "bid guarantee" shall consist of a firm
commitment such as a bid bond, certified check, or other negotiable instrument
accompanying a bid as assurance that the bidder will, upon acceptance of his
bid, execute such contractual documents as may be required within the time
specified.
b. 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.
c. 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 law of all persons
supplying labor and material in the execution of the work provided for in the
contract.
3. Where the Federal Government guarantees or insures the
repayment of money agency, 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. (See 47 Ill.
Adm. Code 1.50(c), Cash Management)
4. The Federal sponsoring agency may require adequate fidelity
bond coverage where the recipient has no coverage and the bond is needed to
protect the Government's interest.
5. Where bonds are required in the situations described above,
the bonds shall be obtained from companies holding certificates of authority as
acceptable sureties (31 CFR 223).
Attachment C: Retention and
Custodial Requirement for Records
1. This attachment sets forth record retention requirements for
grants and other agreements with recipients. Federal sponsoring agencies shall
not impose any record retention requirements upon recipients other than those
described below.
2. Except for paragraph 1, this attachment also applies to
subrecipients as referred to in paragraph 5 of the basic circular.
3. Financial records, supporting documents, statistical records,
and all other records pertinent to an agreement shall be retained for a period
of three years, with the following qualifications:
a. If any litigation, claim or audit is started before the expiration
of the 3-year period, the records shall be retained until all litigations,
claims, or audit findings involving the records have been resolved.
b. Records for nonexpendable property acquired with Federal funds
shall be retained for 3 years after its final disposition.
c. When records are transferred to or maintained by the Federal
sponsoring agency, the 3-year retention requirements is not applicable to the
recipient.
4. The retention period starts from the date of the submission of
the final expenditure report or, for grants and other agreements that are
renewed annually, from the date of the submission of the annual financial
status report.
5. Recipient organizations should be authorized by the Federal
sponsoring agency, if they so desire, to substitute microfilm copies in lieu of
original records. (The Department will forward all requests to microfilm
records to the Local Records Commission, which will render a decision based on
the Local Records Commission Regulations (44 Ill. Adm. Code 4000) of the Local
Records Commission and Local Records Act (Ill. Rev. Stat. 1983, ch. 116, pars.
43.102 et seq.).)
6. The Federal sponsoring agency shall request transfer of
certain records to its custody from recipient organizations when it determines that
the records possess long-term retention value. However, in order to avoid
duplication record-keeping, a Federal sponsoring agency may make arrangements
with recipient organizations to retain any records that are continuously needed
for joint use. (The Department will take possession of grant records only when
the Grantee no longer exists.)
7. The head of the Federal sponsoring agency and the Comptroller
General of the United States, or any of their duly authorized representative,
shall have access to any pertinent books, documents, papers, and records of the
recipient organization, and their subrecipients, to make audits, examinations,
excerpts and transcripts.
8. Unless otherwise required by law, no Federal sponsoring agency
shall place restrictions on recipient organizations that will limit public
access to the records of recipient organizations that are pertinent to a grant
or agreement except when the agency can demonstrate that such records must be
kept confidential and would have been excepted from disclosure pursuant to the
Freedom of Information Act (5 U.S.C. 552) if the records had belonged to the
Federal sponsoring agency.
Attachment D: Program Income
1. Federal sponsoring agencies shall apply the standards set
forth in this attachment in requiring recipient organizations to account for
program income related to projects financed in whole or in part with Federal
funds. Program income represents gross income earned by the recipient from the
federally supported activities. Such earnings exclude interest earned on
advances and may include, but will not be limited to, income from service fees,
sale of commodities, usage or rental fees, and royalties on patents and
copyrights.
2. Interest earned on advances of Federal funds shall be remitted
to the Federal agency except for interest earned on advances to States or
instrumentalities of a State as provided by the Intergovernmental Cooperation
Act of 1968 (Public Law 90-577).
3. Proceeds from the sale of real and personal property either
provided by the Federal Government or purchased in whole or in part with
Federal funds, shall be handled in accordance with Attachment N to this
circular pertaining to property management.
4. Unless the agreement provides otherwise, recipients shall have
no obligation to the Federal Government with respect to royalties received as a
result of copyrights or patents produced under the grant or other agreement
(see paragraph 8, Attachment N).
5. All other program income earned during the project period
shall be retained by the recipient and, in accordance with the grant or other
agreement, shall be:
a. Added to funds committed to the project by the Federal
sponsoring agency and recipient organization and be used to further eligible
program objectives;
b. used to finance the non-federal share of the project when
approved by the Federal sponsoring agency; or
c. Deducted from the total project costs in determining the net
costs on which the Federal share of costs will be based.
Attachment E: Cost Sharing and
Matching
1. This attachment sets forth criteria and procedures for the
allow- ability of cash and in-kind contributions made by recipients or
subrecipients (as referred to in paragraph 5 of the basic circular), or third
parties in satisfying cost sharing and matching requirements of Federal
sponsoring agencies. This attachment also establishes criteria for the
evaluation of in-kind contributions made by third parties.
2. The following definitions apply for the purpose of this
attachment:
a. Project costs. - Project costs (as set forth in the applicable
Federal cost principles) incurred by a recipient and the value of the in-kind
contributions made by the recipient or third parties in accomplishing the
objectives of the grant or other agreement during the project or program
period.
b. Cost sharing and matching. - In general cost sharing and
matching represent that portion of project or program costs not borne by the
Federal Government.
c. Cash contributions. - Cash contributions represent the
recipients cash outlay, including the outlay of money contributed to the
recipient by non-Federal third parties.
d. In-kind contributions. - In-kind contributions represent the
value of noncash contributions provided by the recipients and non-Federal third
parties. Only when authorized by Federal legislation, may property purchased
with Federal funds be considered as the recipient's in-kind contributions.
In-kind contributions may be in the form of charges for real property and
non-expendable personal property, and the value of goods and services directly
benefiting and specifically identifiable to the project or program.
3. General guidelines for computing cost sharing or matching are
as follows:
a. Cost sharing or matching may consist of:
(1) Charges incurred by the recipient as project costs. (Not all
charges require cash outlays by the recipient during the project period:
examples are depreciation and use charges for building and equipment.)
(2) Project costs financed with cash contribution or donated to
the recipient by other non-Federal public agencies and institutions, and
private organizations and individuals, and
(3) Project costs represented by services and real and personal
property, or used thereof, donated by other non-Federal publics agencies and
institutions, and private organizations and individuals.
b. All contributions both cash and in-kind, shall be accepted as
part of the recipient's cost sharing and 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
program;
(3) Are necessary and reasonable for proper and efficient
accomplishment of project objectives;
(4) Are types of charges that would be allowable under the
applicable cost principles;
(5) Are not paid by the Federal Government under another
assistance agreement (unless the agreement is authorized by Federal law to be
used for cost sharing or matching);
(6) Are provided for in the approved budget when required by the
Federal agency; and
(7) Conform to other provisions of this attachment
4. Specific procedures for the recipients in establishing the
value of in-kind contribution from non-Federal third parties are set forth
below:
a. Valuation of volunteer services. - Volunteer services may be
furnished by professional and technical personnel, consultants, and other
skilled and unskilled labor. Volunteer services may be counted as cost sharing
or matching if the service is an integral and necessary part of an approved
program. ("Integral and necessary" is defined as an allowable cost
for the program if purchased.)
(1) Rates for volunteer services. - Rates for volunteers should 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 should be consistent with those paid for similar work in
the labor market in which recipient competes for the kind of services
involved. (Rates shall be based on the Department of Employment Security's
Occupational Employment Statistics Survey.)
(2) Volunteers employed by other organizations. - When an employer
other than the recipient furnishes the services of an employee, these services
shall be valued at the employee's regular rate of pay (exclusive of fringe
benefits and overhead cost) provided these services are in the same skill for
which the employee is normally paid.
b. Valuation of donated, expendable personal property. - Donated
expendable personal property includes such items as expendable equipment,
office supplies, laboratory supplies or workshop and classroom supplies. Value
assessed to expendable personal property included in the cost or matching share
should be reasonable and should not exceed the market value of the property at
the time of the donation.
c. Valuation of donated, nonexpendable personal property,
buildings, and land or use thereof.
(1) The method used for charging cost sharing or matching for
donated nonexpendable personal property, buildings and land may differ
according to the purpose of the grant or other agreement as follows:
(a) If the purpose of grant or other agreement 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.
(b) If the purpose of the agreement is to support activities that
require the use of equipment, buildings or land, depreciation or use charges
for equipment and buildings may be made. The full value of equipment or other
capital assets and fair rental charges for land may be allowed provided that
the Federal agency has approved the charges.
(2) The value of donated property will be determined in accordance
with the usual accounting policies of the recipient with the following
qualifications.
(a) Land and buildings. - 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 GSA representatives) and certified by a responsible official of
the recipient.
(b) Nonexpendable personal property. - The value of donated
nonexpendable personal property shall not exceed the fair market value of
equipment and property of the same age and condition at the time of donation.
(c) Use of space. - The value of donated space shall not exceed
the fair rental value of comparable space as established by an independent
appraisal of comparable space and facilities in a privately-owned building in
the same locality.
(d) Loaned equipment. - The value of loaned equipment shall not
exceed its fair rental value.
5. The following requirements pertain to the recipient's
supporting records for in-kind contributions from non-Federal third parties.
a. Volunteer services must be documented and, to the extent
feasible, support by the same methods used by the recipient for its employees.
b. The basis for determining the valuation for personal services,
material, equipment, buildings and land must be documented.
Attachment F: Standards for
Financial Management Systems
1. This attachment prescribes standards for financial management
systems of recipients. Federal sponsoring agencies shall not impose additional
standards on recipients unless specifically provided for in the applicable
statutes (e.g., the Joint Funding Simplification Act, P.L. 93-510) or other
attachments to this circular. However, Federal sponsoring agencies are
encouraged to make suggestions and assist recipients in establishing or
improving financial management systems when such assistance is needed or requested.
2. Recipients' financial management systems shall provide for:
a. 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 Attachment G to this circular. When a
Federal sponsoring agency requires reporting on an accrual basis, the recipient
shall not be required to establish an accrual accounting system but shall
develop such accrual data for its reports on the basis of an analysis of the
documentation on hand.
b. Records that identify adequately the source and application of
funds for federally sponsored activities. These records shall contain
information pertaining to Federal awards, authorizations, obligations,
unobligated balances, assets, outlays, and income.
c. Effective control over and accountability for all funds,
property and other assets. Recipients shall adequately safeguard all such
assets and shall assure that they are used solely for authorized purposes.
(See 47 Ill. Adm. Code 1.90, Financial Management Standards.)
d. Comparison of actual outlays with budget amounts for each
grant or other agreement. Whenever appropriate or required by the Federal
sponsoring agency, financial information should be related to performance and
unit cost data.
e. Procedures to minimize the time elapsing between the transfer
of funds from the U.S. Treasury and the disbursement by the recipient, whenever
funds are advanced by the Federal Government. When advances are made by a letter-of-credit
method, the recipient shall make drawdowns as close as possible to the time of
making disbursements.
f. Procedures for determining the reasonableness, allowability
and allocability of costs in accordance with the provisions of the applicable
Federal cost principles and the terms of the grant or other agreement.
g. Accounting records that are supported by source documentation.
h. Examinations in the form of audits or internal audits. Such
audits shall be made by qualified individuals who are sufficiently independent
of those who authorize the expenditure of Federal funds, to produce unbiased
opinions, conclusions or judgments. These examinations are intended to
ascertain the effectiveness of the financial management systems and internal
procedures that have been established to meet the terms and conditions of the
agreements. It is intended that each agreement awarded to the recipient be
examined. Generally, examinations should be conducted on an organization wide
basis to test the fiscal integrity of financial transactions, as well as
compliance with the terms and conditions of the Federal grants and other
agreements. Such tests would include an appropriate sampling of Federal
agreements. Examinations will be conducted with reasonable frequency, on a
continuing basis or at scheduled intervals, usually annually, but not less
frequently than every two years. The frequency of these examinations shall
depend upon the nature, size and the complexity of the activity. These
examinations do not relieve Federal agencies of their audit responsibilities,
but may affect the frequency and scope of such audits.
i. A systematic method to assure timely and appropriate
resolution of audit findings and recommendations.
3. Primary recipients shall require subrecipients (as defined in
paragraph 5 of the basic circular) to adopt the standards in paragraph 2, above
except for the requirement in subparagraph 2e, regarding the use of the
letter-of-credit method and that part of subparagraph 2a, regarding reporting
forms and frequencies prescribed in Attachment G to this circular.
Attachment G: Financial
Reporting Requirements
1. This attachment prescribes uniform reporting procedures for
recipients to: summarize expenditures made and Federal funds unexpended for
each award, report the status of Federal cash advanced, request advances and
reimbursement when the letter-of-credit method is not used; and promulgates
standard forms incident thereto.
2. The following definitions apply for purposes of this
attachment:
a. Accrued expenditures. - Accrued expenditures are 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. - Accrued income is 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. Federal funds authorized. - Federal funds authorized are the
total amount of Federal funds obligated by the Federal Government for use by
the recipient. This amount may include any authorized carry-over of
unobligated funds from prior fiscal years when permitted by law or agency
regulation.
d. In-kind contributions. - In-kind contributions are defined in
Attachment E to this circular.
e. Obligations. - Obligations are the amounts of orders placed,
contracts and grants awarded, services received, and similar transactions
during a given period that will require payment by the recipient during the
same or a future period.
f. Outlays. - Outlays or expenditures represent charges made to
the project or program. They may be reported on a cash or accrual basis. For
reports prepared on a cash basis, outlays are the sum of actual cash
disbursements for direct charges for goods and services, the amount of indirect
expense charged, the value of in-kind contributions applied, and the amount of
cash advances and payments made to subrecipients. For reports prepared on an
accrual basis, outlays are the sum of actual 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.
g. Program income. - Program income is defined in Attachment D of
this circular. It may be reported on a cash or accrual basis, whichever is
used for reporting outlays.
h. Unobligated balance. - The unobligated balance is the portion
of the funds authorized by the Federal sponsoring agency that has not been
obligated by the recipient and is determined by deducting the cumulative obligations
from the cumulative funds authorized.
i. Unliquidated obligations. - For reports prepared on a cash
basis, unliquidated obligations represent the amount of obligations incurred by
the recipient that has 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.
Attachment H: Monitoring and
Reporting Program Performance
1. This attachment sets forth the procedures for monitoring and
reporting program performance of recipients.
2. Recipients shall monitor the performance under grants and
other agreements and, where appropriate, ensure that time schedules are being
met, projected work units by time periods are being accomplished, and other
performance goals are being achieved. This review shall be made for each
program, function, or activity of each agreement as set forth in the approved
application or award document.
3. Recipients shall submit a performance report (technical
report) for each agreement that briefly presents the following information for
each program, function, or activity involved as prescribed by the Federal
sponsoring agency:
a. A comparison of actual accomplishments with the goals
established for the period, the findings of the investigator, or both. If the
output of programs or projects can be readily quantified, such quantitative
data should be related to cost data for computation of units costs.
b. Reasons why established goals were not met.
c. Other pertinent information including, when appropriate,
analysis and explanation of cost overruns or high unit costs.
4. Between the required performance reporting dates, events may
occur that have significant impact upon the project or program. In such
instances, the recipient shall inform the Federal sponsoring agency as soon as
the following types of conditions become known:
a. Problems, delays, or adverse conditions that will materially
affect the ability to attain program objectives, prevent the meeting of time
schedules and goals, or preclude the attainment of project work units by
established time periods. This disclosure shall be accompanied by a statement
of the action taken, or contemplated, and any Federal assistant needed to
resolve the situation.
b. Favorable developments or events that enable time schedules to
be met sooner than anticipated or more work units to be produced than
originally projected.
5. If any performance review conducted by the recipient discloses
the need for change in the budget estimates, the recipient shall submit a
request for budget revision.
6. The Federal sponsoring agency shall make site visits as
frequently as practicable to:
a. Review program accomplishments and management control systems,
and
b. Provide such technical assistance as may be required.
Attachment N: Property
Management Standards
1. This attachment prescribes uniform standards governing
management of property furnished by the Federal Government or whose cost was
charged to a project supported by a Federal grant or other agreement. Federal
sponsoring agencies shall require recipients to observe these standards under
grants and other agreements and shall not impose additional requirements unless
specifically required by Federal law. The recipient may use its own property
management standards and procedures provided it observes the provisions of this
attachment. This attachment also applies to subrecipients as referred to in
paragraph 5 of the basic circular.
2. The following definitions apply for the purpose of this
attachment:
a. Real property. - Real property means land, including land
improvements, structures and appurtenances thereto, but excluding movable
machinery and equipment.
b. Personal property. - Personal property of any kind except real
property. It may be tangible-having physical existence, or intangible-having
no physical existence, such as patents, inventions and copyrights.
c. Nonexpendable personal property. - Nonexpendable personal
property means tangible personal property having a useful life of more than one
year and an acquisition cost of $300 or more per unit. A recipient may use its
own definition of nonexpendable personal property provided that the definition
would at least include all tangible personal property as defined above.
d. Expendable personal property. - Expendable personal property
refers to all tangible personal property other than nonexpendable property.
e. Excess property. - Excess property means property under the
control of any Federal agency that, as determined by the head thereof, is no
longer required for its needs or the discharge of its responsibilities.
f. Acquisition cost of purchased nonexpendable personal
property. - Acquisition cost of an item of purchased nonexpendable personal
property means the net invoice unit price of the property 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, shall be included or excluded from the unit
acquisition cost in accordance with the recipient's regular accounting
practices.
g. Exempt property. - Exempt property means tangible personal
property acquired in whole or in part with Federal funds, and title to which is
vested in the recipient without further obligation to the Federal Government
except as provided in subparagraph 6a below. Such unconditional vesting of
title will be pursuant to any Federal legislation that provides the Federal
sponsoring agency with adequate authority.
3. Real property. - Each Federal sponsoring agency shall
prescribe requirements for recipients concerning the use and disposition of
real property acquired partly or wholly under grants or other agreements.
Unless otherwise provided by statute, such requirements, as a minimum, shall
contain the following:
a. Title to real property shall vest in the recipient subject to
the condition that the recipient shall use the real property for the authorized
purpose of the project, as long as it is needed.
b. The recipient shall obtain approval by the Federal sponsoring
agency for the use of real property in other projects when the recipient
determines that the property is no longer needed for the purpose of the
original project. Use in other projects shall be limited to those under other
federally sponsored projects (i.e., grants or other agreements) or programs
that have purposes consistent with those authorized for support by the Federal
sponsoring agency.
c. When the real property is no longer needed as provided in a
and b above, the recipient shall request disposition instructions from the
Federal sponsoring agency or its successor Federal sponsoring agency. The
Federal sponsoring agency shall observe the following rules in the disposition
instructions:
(1) The recipient may be permitted to retain title after it
compensates the Federal Government in an amount computed by applying the
Federal percentage of participation in the cost of the original project to the
fair market value of the property.
(2) The recipient may be directed to sell the property under
guidelines provided by the Federal sponsoring agency and pay the Federal
Government an amount computed by applying the Federal percentage of
participation in the cost of the original project to the proceeds from sale
(after deducting actual and reasonable selling and fix-up expenses, if any,
from the sales proceeds). When the recipient is authorized or required to sell
the property, proper sales procedures shall be established that provide for
competition to the extent practicable and result in the highest possible
return.
(3) The recipient may be directed to transfer title to the
property to the Federal Government provided that in such cases the recipient
shall be entitled to compensation computed by applying the recipient's
percentage of participation in the cost of the program or project to the
current fair market value of the property.
4. Federally-owned nonexpendable personal property. - Title to
federally-owned property remains vested in the Federal Government. Recipients
shall submit annually an inventory listing of federally-owned property in their
custody to the Federal sponsoring agency. Upon completion of the agreement or
when the property is no longer needed, the recipient shall report the property
to the Federal sponsoring agency for further agency utilization.
If the Federal sponsoring agency has no further need for the
property, it shall be declared excess and reported to the General Services
Administration. Appropriate disposition instructions will be issued to the
recipient after completion of the Federal agency review.
5. Exempt property. - When statutory authority exists, (e.g.,
P.L. 85-934, 42 U.S.C. 1982) title to nonexpendable personal property acquired
with project funds, shall be vested in the recipient upon acquisition unless it
is determined that to do so is not in furtherance of the objectives of the
Federal sponsoring agency. When title is vest in the recipient, the recipient
shall have no other obligation or accountability to the Federal Government for
its use or disposition except as provided in 6a below.
6. Other nonexpendable property. - When other nonexpendable
tangible personal property is acquired by a recipient with project funds, title
shall not be taken by the Federal Government but shall vest in the recipient
subject to the following conditions:
a. Right to transfer title. - For items of nonexpendable personal
property having a unit acquisition cost of $1,000 or more, the Federal
sponsoring agency may reserve the right to transfer the title to the Federal
Government or to a third party named by the Federal Government when such third
party is otherwise eligible under existing statutes. Such reservation shall be
subject to the following standards.
(1) The property shall be appropriately identified in the grant or
other agreement or otherwise made known to the recipient in writing.
(2) The Federal sponsoring agency shall issue disposition
instructions within 120 calendar days after the end of the Federal support of
the project for which it was acquired. If the Federal sponsoring agency fails
to issue disposition instructions within the 120 calendar day period, the
recipient shall apply the standards of subparagraphs 6b and 6c as appropriate.
(3) When the Federal sponsoring agency exercises its right to take
title, the personal property shall be subject to the provisions for
federally-owned nonexpendable property discussed in paragraph 4, above.
(4) When title is transferred either to the Federal Government or
to a third party the provisions of subparagraph 6c(2)(b) should be followed.
b. Use of other tangible nonexpendable property for which the
recipient has title.
(1) The recipient shall use the property 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. When no longer needed for
the original project or program, the recipient shall use the property in
connection with its other federally sponsored activities, in the following
order of priority:
(a) Activities, in the following order of priority;
(b) Activities sponsored by other Federal agencies.
(2) Shared use. - During the time that nonexempt nonexpendable
personal property is held for use on the project or program for which it was
acquired, the recipient shall make it available for use on other projects or
programs if such other use will not interfere with the work on the project or
program for which the property was originally acquired. First preference for
such other use shall be given to other projects or programs sponsored by the
Federal agency that financed the property; second preference shall be given to
projects or programs sponsored by other Federal agencies. If the property is owned
by the Federal Government, use on other activities not sponsored by the Federal
Government shall be permissible if authorized by the Federal agency. User
charges should be considered if appropriate.
c. Disposition of other nonexpendable property. - When the
recipient no longer needs the property as provided in 6b above, the property
may be used for other activities in accordance with the following standards:
(1) Nonexpendable property with a unit acquisition cost of less
than $1,000. - The recipient may use the property for other activities without
reimbursement to the Federal Government or sell the property and retain the
proceeds.
(2) Nonexpendable personal property with a unit acquisition cost
of $1,000 or more. - The recipient may retain the property for other uses
provided that compensation is made to the original Federal sponsoring agency or
its successor. The amount of compensation shall be computed by applying the
percentage of Federal participation in the cost of the original project or
program to the current fair market value of property. If the recipient has no
need for the property and the property has further use value, the recipient
shall request disposition instructions from the original sponsoring agency.
The Federal sponsoring agency shall determine whether the property can be used
to meet the agency's requirements. If no requirement exists within that
agency, the availability of the property shall be reported to the General
Services Administration by the Federal agency to determine whether a
requirement for the property exists in other Federal agencies. The Federal
sponsoring agency shall issue instructions to the recipient no later than 120
days after the recipient's request and the following procedures shall govern:
(a) If so instructed or if disposition instructions are not issued
within 120 calendar days after the recipient's request, the recipient shall
sell the property and reimburse the Federal sponsoring agency an amount
computed by applying to the sales proceeds the percentage of Federal
participation in the cost of the original project or program. However, the
recipient shall be permitted to deduct and retain from the Federal share $100
or ten percent of the proceeds, whichever is greater, for the recipient's selling
and handling expenses.
(b) If the recipient is instructed to ship the property elsewhere,
the recipient shall be reimbursed by the benefiting Federal agency with an
amount which is computed by applying the percentage of the recipient's
participation in the cost of the original grant project or program to the
current fair market value of the property, plus any reasonable shipping or
interim storage costs incurred.
(c) If the recipient is instructed to otherwise dispose of the
property, the recipient shall be reimbursed by the Federal sponsoring agency
for such costs incurred in its disposition.
(d) Property management standards for nonexpendable property. - The
recipient's property management standards for nonexpendable personal property
shall include the following procedural requirements:
(1) Property records shall be maintained accurately and shall
include:
(a) A description of the property.
(b) Manufacturer's serial number, model number, Federal stock
number, national stock number, or other identification number.
(c) Source of the property, including grant or other agreement
number.
(d) Whether title vests in the recipient or the Federal Government.
(e) Acquisition date (or date received, if the property was
furnished by the Federal Government) and cost.
(f) Percentage (at the end of the budget year) of the project or
program for which the property was acquired. (Not applicable to property
furnished by the Federal Government.)
(g) Location, use the and condition of the property and the date
the information was reported.
(h) Unit acquisition cost.
(i) 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 sponsoring agency for its share.
(2) Property owned by the Federal Government must be marked to
indicate Federal ownership.
(3) A physical inventory of property shall be taken and the
results reconciled with the property records at least once every two years. Any
differences between quantities determined by the physical inspection and those
shown in the account records shall be investigated to determine the causes of
the difference. The recipient shall, in connection with the inventory, verify
the existence, current utilization, and continued need for the property.
(4) A control system shall be in effect to insure adequate
safeguards to prevent loss, damage, or theft of the property. Any loss,
damage, or theft of nonexpendable property shall be investigated and fully
documented; if the property was owned by the Federal Government, the recipient
shall promptly notify the Federal sponsoring agency.
(5) Adequately maintenance procedures shall be implemented to keep
the property in good condition.
(6) Where the recipient is authorized or required to sell the
property, proper sales procedures shall be established which would provide for
competition to the extent practicable and result in the highest possible
return.
7. Expendable personal property. - Title to expendable personal
property shall vest in the recipient upon acquisition. If there is a residual
inventory of such property exceeding $1,000 in total aggregate fair market
value, upon termination or completion of the grant or other agreement, and the
property is not needed for any other federally sponsored project or program, the
recipient shall retain the property for use on nonfederally sponsored
activities, or sell it, but must in either case, compensate the Federal
Government for its share. The amount of compensation shall be computed in the
same manner as nonexpendable personal property.
8. Intangible property
a. Inventions and patents. - If any program produces patentable
items, patent rights, processes, or inventions, in the course of work sponsored
by the Federal Government, such fact shall be promptly and fully reported to
the Federal sponsoring agency. Unless there is a prior agreement between the
recipient and the Federal sponsoring agency on disposition of such items, the
Federal sponsoring agency shall determine whether protection on the invention
or discovery shall be sought. The Federal sponsoring agency will also
determine how the rights in the invention or discovery - including rights under
any patent issued there on - shall be allocated and administered in order to
protect the public interest consistent with "Government Patent
Policy" (President's Memorandum for Heads of Executive Departments and
Agencies, August 23, 1971, and statement of Government Patent Policy as printed
in 36 F.R. 16889).
b. Copyrights. - Except as otherwise provided in the terms and
conditions of the agreement, the author or the recipient organization is free
to copyright any books, publications, or other copyrightable materials
developed in the course of or under a Federal agreement, but the Federal
sponsoring agency shall reserve a royalty-free, nonexclusive and irrevocable
right to reproduce, publish, or otherwise use, and to authorize others to use,
the work for Government purposes.
Attachment O: Procurement
Standards
1. This attachment provides standards for use by recipients in
establishing procedures for the procurement of supplies, equipment,
construction 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
law and executive orders. No additional procurement standards or requirements
shall be imposed by the Federal sponsoring agencies upon recipients unless specifically
required by Federal statute or executive orders.
2. The standards contained in this attachment do not relieve the
recipient of the contractual responsibilities arising under its contracts. The
recipients is the responsible authority, without recourse to the Federal
sponsoring agency regarding the settlement and satisfaction of all contractual
and administrative issues arising out of procurements entered into, in support
of a grant or other agreement. This includes disputes, claims, protests of award,
source evaluation or other matters of a contractual nature. Matters concerning
violation of law are to be referred to such local, State or Federal authority
as may have proper jurisdiction.
3. Recipients may use their own procurement policies and
procedures. However, all recipients shall adhere to the standards set forth in
paragraphs 3 and 4.
a. The recipient shall maintain a code or standards of conduct
that shall govern the performance of its officers, employees or agents engaged
in the awarding and administration of contracts using Federal funds. No
employee, officer or agent shall participate in the selection, award or
administration of a contract in which Federal funds are used, where, to his
knowledge, he or his immediate family, partners, or organization in which he or
his immediate family or partner has a financial interest or with whom he is
negotiating or has any arrangement concerning prospective employment. The
recipients' officers, employees or agents shall neither solicit nor accept
gratuities, favor or anything of monetary value from contractors or potential
contractors. Such standards shall provide for disciplinary actions to be
applied for violations of such standards by the recipients' officers, employees
or agents.
b. All procurement transactions shall be conducted in a manner to
provide, to the maximum extent practical, open and free competition. The
recipient should be alert to organizational conflicts of interest or
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 should be excluded from
competing for such procurements. Awards shall be made to the bidder/offeror
whose bid/offer is responsive to the solicitation and is most advantageous to
the recipient, price and other factors considered. Solicitations shall clearly
set forth all requirements that the bidder/offeror must fulfill in order for
his bid/offer to be evaluated by the recipient. Any and all bids/offers may be
rejected when it is in the recipient's interest to do so.
c. All recipients shall establish procurement procedures that
provide for, at a minimum, the following procedural requirements.
(1) Proposed procurement actions shall follow a procedure to
assure the avoidance of purchasing unnecessary or duplicative items. Where
appropriate, an analysis shall be made of lease and purchase, alternatives to
determine which would be the most economical, practice procurement.
(2) Solicitations for goods and services shall be based upon a
clear and accurate description of the technical requirements for the materials,
product or service to be procured. Such a description shall not, in
competitive procurements, contain features which unduly restrict competition.
"Brand name or equal" descriptions may be used as a means to define
the performance or other salient requirements of a procurement, and when so
used the specific features of the named brand which must be met by
bidders/offerors shall be clearly specified.
(3) Positive efforts shall be made by the recipients to utilize
small business and minority-owned business sources of supplies and services.
Such efforts should allow these sources the maximum feasible opportunity to
compete for contracts utilizing Federal funds.
(4) The type of procuring instruments used, e.g., fixed price
contracts, cost reimbursable contracts, purchase orders, incentive contracts,
shall be determined by the recipient but must be appropriate for the particular
procurement and for promoting the best interest of the program involved. The
"cost-plus-a-percentage-of-cost" method of contracting shall not be
used.
(5) Contracts shall be made only with responsible contractors who
possess the potential ability to perform successfully under the terms and conditions
of a proposed procurement. Consideration shall be given to such matters as
contractor integrity, record of past performance, financial and technical
resources or accessibility to other necessary resources.
(6) All proposed sole source contracts or where only one bid or
proposal is received in which the aggregate expenditure is expected to exceed
$5,000 shall be subject to prior approval at the discretion of the Federal
sponsoring agency.
(7) Some form of price or cost analysis should be made 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.
(8) Procurement records and files for purchase in excess of
$10,000 shall include the following:
(a) Basis for contractor selection;
(b) Justification for lack of competition when competitive bids or
offers are not obtained;
(c) Basis for award cost or price.
(9) A system for contract administration shall be maintained to
ensure contractor conformance with terms, conditions and specifications of the
contract, and to ensure adequate and timely followup of all purchases.
4. The recipient shall include, in addition to provisions to
define a sound and complete agreement, the following provisions in all
contracts. These provisions shall also be applied to subcontractors.
a. Contracts in excess of $10,000 shall contain contractual
provisions or conditions that will allow for administrative, contractual or
legal remedies in instances in which contractors violate or breach contract
terms, and provide for such remedial actions as may be appropriate.
b. All contracts in excess of $10,000 shall 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 shall describe conditions under which the contract may be terminated
for default as well as conditions where the contract may be terminated because
of circumstances be beyond the control of the contractor.
c. In all contracts for construction or facility improvement
awarded for more than $100,000, recipients shall observe the bonding
requirements provided in Attachment B to this circular.
d. All contracts awarded by recipients and their contractors or
subgrantees having a value of more than $10,000, shall contain a provision
requiring compliance with Executive Order 11246, entitled "Equal
Employment Opportunity," as amended by Executive Order 11375, and as
supplemented in Department of Labor regulations (41 CFR, Part 60).
e. All contracts and subgrants in excess of $2,000 for
construction or repair awarded by recipients and subrecipients shall include a
provision for compliance with the Copeland "Anti-Kick Back" Act (18
U.S.C. 874) as supplemented in Department of Labor regulations (29 CFR, Part
3). This Act provides that each contractor or subgrantee shall be prohibited
from inducing, by any means, any person employed in the construction,
completion, or repair of public work, to give up any part of the compensation
to which he is otherwise entitled. The recipient shall report all suspected or
reported violations to the Federal sponsoring agency.
f. When required by the Federal program legislation, all
construction contracts awarded by the recipients and subrecipients of more than
$2,000 shall include a provision for compliance with the Davis-Bacon Act (40
U.S.C. 276a to a-7) and as supplemented by Department of Labor regulations (29
CFR, Part 5). Under this Act contractors shall be required to pay wages to
laborers and mechanics at a rate not less than the minimum wages specified in a
wage determination made by the Secretary of Labor. In addition, contractors
shall be required to pay wages not less than once a week. The recipient shall
place a copy of the current prevailing wage determination issued by the Department
of Labor in each solicitation and the award of a contract shall be conditioned
upon the acceptance of the wage determination. The recipient shall report all
suspected or reported violations to the Federal sponsoring agency.
g. Where applicable, all contracts awarded by recipients in
excess of $2,000 for construction contracts and in excess of $2,500 for other
contracts that involve the employment of mechanics or laborers, shall include a
provision for compliance with sections 103 and 107 of the Contract Work Hours
and Safety Standards Act (40 U.S.C. 327-330) as supplemented by Department of
Labor regulations (29 CFR, Part 5). Under section 103 of the Act, each
contractor shall be required to compute the wages of every mechanic and laborer
on the basis of a standard work day of 8 hours and a standard work week of 40
hours. Work in excess of the standard workday or workweek is permissible
provided that the worker is compensated at a rate of not less than 1 1/2 times
the basic rate of pay for all hours worked in excess of 8 hours in any calendar
day or 40 hours in the workweek. Section 107 of the Act is applicable to
construction work and provides that no laborer or mechanic shall be required to
work in surroundings or under working conditions which are unsanitary,
hazardous or dangerous to his health and safety as determined under
construction safety and health standards promulgated by the Secretary of
Labor. 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.
h. Contracts or agreements, the principal purpose of which is to
create, develop or improve products, processes or methods, or for exploration
into fields that directly concern public health, safety or welfare; or
contracts in the field of science or technology in which there has been little
significant experience outside of work funded by Federal assistance, shall
contain a notice to the effect that matters regarding rights to inventions and
materials generated under the contract or agreement are subject to the
regulations issued by the Federal sponsoring agency and the recipient. The
contractor shall be advised as to the source of additional information regarding
these matters.
i. All negotiated contracts (except those of $10,000 or less)
awarded by recipients shall include a provision to the effect that the
recipient, the Federal sponsoring agency, the Comptroller General of the United
States, or any of their duly authorized representatives, shall have access to
any books, documents, papers and records of the contractor which are directly
pertinent to a specific program for the purpose of making audits, examinations,
excerpts and transcriptions.
j. Contracts and subgrants of amounts in excess of $100,000
shall contain a provision that requires the recipient to agree to comply with
all applicable standards, orders or regulations issued pursuant to the Clear
Air Act of 1970 (42 U.S.C. 187 et seq.) and the Federal Water Pollution Control
Act (33 U.S.C. 1251 et seq.) as amended. Violations shall be reported to the
Federal sponsoring agency and the Regional Office of the Environmental
Protection Agency.