Financial Assistance Interior Regulation, 6462-6469 [2016-02039]

Agencies

• DEPARTMENT OF THE INTERIOR
• Office of the Secretary

[Federal Register Volume 81, Number 25 (Monday, February 8, 2016)]
[Proposed Rules]
[Pages 6462-6469]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2016-02039]


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Proposed Rules
                                                Federal Register
________________________________________________________________________

This section of the FEDERAL REGISTER contains notices to the public of 
the proposed issuance of rules and regulations. The purpose of these 
notices is to give interested persons an opportunity to participate in 
the rule making prior to the adoption of the final rules.

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Federal Register / Vol. 81, No. 25 / Monday, February 8, 2016 / 
Proposed Rules

[[Page 6462]]



DEPARTMENT OF THE INTERIOR

Office of the Secretary

2 CFR Part 1403

[4334-63 167DOI02DM DS62400000 DLSN00000.000000 DX62401]
RIN 1090-AB11


Financial Assistance Interior Regulation

AGENCY: Office of the Secretary, Interior.

ACTION: Proposed rule.

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SUMMARY: This proposed rule establishes the Financial Assistance 
Interior Regulation (FAIR). The FAIR supplements the OMB Uniform 
Administrative Requirements, Cost Principles, and Audit Requirements 
for Federal Awards (Omni-Circular), which was adopted The Department of 
the Interior (Department) on December 19, 2014. This proposed rule 
would consolidate the Department's financial assistance regulations and 
policies derived from the OMB Omni-Circular.

DATES: Submit comments on or before April 8, 2016.

ADDRESSES: You may submit comments on the rulemaking through the 
Federal eRulemaking Portal at https://www.regulations.gov. Please use 
Regulation Identifier Number (RIN) 1090-AB08 in your message. Follow 
the instructions on the Web site for submitting comments.

FOR FURTHER INFORMATION CONTACT: Mr. James McCaffery, Deputy Director, 
Office of Acquisition and Property Management, Department of the 
Interior, 1849 C Street NW., Mail Stop 4262 MIB, Washington, DC 20240; 
telephone (202) 513-0695; or email James_McCaffery@ios.doi.gov.

SUPPLEMENTARY INFORMATION:

I. Background

    On December 26, 2013, the Office of Management and Budget (OMB) 
published its Uniform Administrative Requirements, Cost Principles, and 
Audit Requirements for Federal Awards (referred to as the ``Omni-
Circular,'' 78 FR 78590). The Omni-Circular provided a government-wide 
framework for Federal awards management; and streamlined administrative 
requirements, cost principles, and audit requirements for Federal 
awards including grants and cooperative agreements.
    The Omni-Circular required Federal agencies to promulgate 
regulations implementing the policies and procedures applicable to 
Federal awards by December 26, 2014. On December 19, 2014, the 
Department published a final rule to adopt the OMB Omni-Circular in 
full as 2 CFR 1402, Uniform Administrative Requirements, Cost 
Principles, and Audit Requirements for Federal Awards [79 FR 75867]. 
Subsequently, on December 22, 2014, the Department issued memoranda to 
supplement the following provisions of the OMB Omni-Circular: (1) 
Indirect Cost Rates for Federal Financial Assistance Awards and 
Agreements; (2) Conflict of Interest and Mandatory Disclosures for 
Financial Assistance; (3) Financial Assistance Application and Merit 
review Processes; and (4) Financial Assistance Awards for For-Profit 
Entities, Foreign Public Entities, and Foreign Organizations.
    When the Omni-Circular became effective, it superseded many of the 
Department's existing financial assistance policies. The Department 
adopted the Omni-Circular in full and has addressed the Department's 
unique statutory requirements. The Department's adoption of the Omni-
Circular is codified at 2 CFR part 1402. The Department intends to add 
supplemental rules or regulations for financial assistance through the 
establishment of the Financial Assistance Interior Regulation (FAIR). 
The FAIR will be codified at 2 CFR part 1403.
    Invitation to Comment: This action represents an administrative 
simplification and is not intended to make any substantive changes to 2 
CFR part 200 policies and procedures. In soliciting comments on these 
actions, the Department therefore is not seeking to revisit substantive 
issues resolved during the development and finalization of the Omni-
Circular.

II. Effect on Prior Issuances

    All Department of the Interior non-regulatory program manuals, 
handbooks and other materials that are inconsistent with 2 CFR part 200 
and 2 CFR parts 1400 and 1402 are superseded, except to the extent that 
they are (1) required by statute; or (2) authorized in accordance with 
Omni-Circular Section 200.101, Applicability.
    Except to the extent inconsistent with the regulations in all 
existing Department of the Interior regulations in 25 CFR parts 23, 27, 
39, 40, 41, 256, 272, 278, and 276; 30 CFR parts 725, 735, 884, 886, 
and 890; 36 CFR parts 60, 61, 63, 65, 67, 72, and 800; 43 CFR parts 26 
and 32; and 50 CFR parts 80, 81, 82, 83, and 401 are not superseded by 
these regulations; nor are any information collection approvals for 
financial assistance forms that have been granted under the Paperwork 
Reduction Act.

III. Required Determinations

    1. Regulatory Planning and Review (Executive Orders 12866 and 
13563). Executive Order (E.O.) 12866 provides that the Office of 
Information and Regulatory Affairs will review all significant rules. 
The Office of Information and Regulatory Affairs has determined that 
this proposed rule is not significant.
    Executive Order 13563 reaffirms the principles of E.O. 12866, 
calling for improvements in the nation's regulatory system to promote 
predictability, to reduce uncertainty, and to use the best, most 
innovative, and least burdensome tools for achieving regulatory ends. 
E.O. 13563 directs agencies to consider regulatory approaches that 
reduce burdens and maintain flexibility and freedom of choice for the 
public, where these approaches are relevant, feasible, and consistent 
with regulatory objectives.
    2. Regulatory Flexibility Act. This proposed rule will not have a 
significant economic effect on a substantial number of small entities 
under the Regulatory Flexibility Act (5 U.S.C. 601 et seq.). The 
Department of the Interior generally does not award grants to small 
businesses. The vast majority of Interior grants are awarded to States, 
local governments, and not-for-profit institutions.
    3. Small Business Regulatory Enforcement Fairness Act. This 
proposed rule is not a major rule under

[[Page 6463]]

the Small Business Regulatory Enforcement Fairness Act (5 U.S.C. 
804(2)). This rule does not have an annual effect on the economy of 
$100 million or more. The Department generally does not award grants to 
small businesses. This proposed rule will not cause a major increase in 
costs or prices for consumers, individual industries, Federal, State, 
or local government agencies, or geographic regions. This proposed rule 
does not have significant adverse effects on competition, employment, 
investment, productivity, innovation, or the ability of U.S.-based 
enterprises to compete with foreign-based enterprises. This proposed 
rule establishes regulations for the Department of the Interior 
financial assistance. The Department's financial assistance is 
typically offered to States, local governments and not-for-profit 
institutions. It would not affect business relationships, employment, 
investment, productivity, innovations, or the ability of U.S.-based 
enterprises to compete internationally.
    4. Unfunded Mandates Reform Act. This proposed rule (1) does not 
impose an unfunded mandate on State, local, or tribal governments or 
the private sector of more than $100 million per year; (2) does not 
have a significant or unique effect on State, local, or tribal 
governments, or the private sector (3) does not impose requirements on 
State, local, or tribal governments; and (4) is a reorganization of 
existing requirements and does not impose any new regulations. A 
statement containing the information required by the Unfunded Mandates 
Reform Act (2 U.S.C. 1531 et seq.) is not required.
    5. Takings (E.O. 12630). Under the criteria in section 2 of E.O. 
12630, this proposed rule does not have significant takings 
implications. It does not impose any obligations on the public that 
would result in a taking. A takings implication assessment is not 
required.
    6. Federalism (E.O. 13132). Under the criteria in section 1 of E.O. 
13132, this proposed rule does not have sufficient Federalism 
implications to warrant the preparation of a Federalism summary impact 
statement. It would not substantially and directly affect the 
relationship between the Federal and state governments. A Federalism 
summary impact statement is not required.
    7. Civil Justice Reform (E.O. 12988). This proposed rule complies 
with the requirements of E.O. 12988. Specifically, this rule (1) meets 
the criteria of section 3(a) of this E.O. requiring that all 
regulations be reviewed to eliminate errors and ambiguity and be 
written to minimize litigation; and (2) meets the criteria of section 
3(b)(2) of this E.O. requiring that all regulations be written in clear 
language and contain clear legal standards.
    8. Consultation with Indian tribes (E.O. 13175). The Department 
strives to strengthen its government-to-government relationship with 
Indian tribes through a commitment to consultation and recognition of 
their right to self-governance and tribal sovereignty. We have 
evaluated this rule under the Department's consultation policy and 
under the criteria in E.O. 13175 and have determined that it has no 
substantial direct effect on Federally recognized Indian tribes and 
that consultation under the Department's tribal consultation policy is 
not required. This rule does not apply to tribal awards made in 
accordance with the Indian Self-Determination and Education Assistance 
Act (Pub. L. 93-638, 88 Stat. 2204), as amended. However, this rule 
does apply to discretionary grants or cooperative agreements awarded to 
Tribes pursuant to Sec. 9 of Pub. L. 93-638 when mutually agreed to by 
the Secretary of the Interior and the tribal organization involved.
    9. Paperwork Reduction Act, 44 U.S.C. 3501, et seq. Information 
collected in the financial assistance application process will be 
collected and managed in accordance with Omni-Circular section 200.206, 
Standard application requirements. However this rule does not contain 
information collection requirements, and a submission to the Office of 
Management and Budget under the Paperwork Reduction Act (44 U.S.C. 3501 
et seq.) is not required. We may not conduct or sponsor, and you are 
not required to respond to, a collection of information unless it 
displays a currently valid OMB control number.
    10. National Environmental Policy Act. This proposed rule does not 
constitute a major Federal action significantly affecting the quality 
of the human environment. A detailed statement under the National 
Environmental Policy Act of 1969 (NEPA) is not required.
    11. Effects on the Energy Supply (E.O. 13211). This proposed rule 
is not a significant energy action under the definition in E.O. 13211. 
A Statement of Energy Effects is not required.
    12. Plain Language. We are required by section 1(b)(12) of E.O. 
12866 and section 3(b)(1)(B) of E.O. 12988 and by the Presidential 
Memorandum of June 1, 1998, to write all rules in plain language. This 
means that each rule we publish must (1) be logically organized; (2) 
use the active voice to address readers directly; (3) use common, 
everyday words and clear language rather than jargon; (4) be divided 
into short sections and sentences; and (5) use lists and tables 
wherever possible. If you feel that we have not met these requirements, 
please contact the person listed in the FOR FURTHER INFORMATION CONTACT 
section of this preamble.

List of Subjects in 2 CFR Part 1403

    Financial assistance, Grant administration, Grant programs.

    For the reasons set forth in the preamble, the Department of the 
Interior proposes to amend 2 CFR chapter XIV by adding part 1403 to 
read as follows:

PART 1403--FINANCIAL ASSISTANCE INTERIOR REGULATION

Sec.
1403.100 What is the purpose of this part?
1403.101 To whom does the Financial Assistance Interior Regulation 
(FAIR) apply?
1403.102 Does the FAIR include any exceptions to OMB guidance?
1403.103 Does the Department have any other policies or procedures 
award recipients must follow?
1403.104-1403.110 [Reserved].
1403.111 What terms do I need to know?
1403.112 What is conflict of interest?
1403.113 What are mandatory disclosures for financial assistance?
1403.114-1403.203 [Reserved]
1403.204 What is the financial assistance application and merit 
review process?
1403.205 [Reserved]
1403.206 What are the FAIR requirements for domestic for-profit and 
foreign entities?
1403.207 What specific conditions apply?
1403.208-1403.400 [Reserved]
1403.401 What are the policies, procedures, and general decision-
making criteria for deviations from negotiated indirect cost rates?
1403.402-1403.999 [Reserved]

    Authority: 5 U.S.C. 301; 2 CFR part 200.


Sec.  1403.100  What is the purpose of this part?

    The Financial Assistance Interior Regulation (FAIR) serves as the 
regulatory structure for the Department's financial assistance 
regulations that implement or supplement the OMB Omni-Circular, 2 CFR 
part 200.


Sec.  1403.101  To whom does the Financial Assistance Interior 
Regulation (FAIR) apply?

    The FAIR applies to all the Department of the Interior grant-making 
organizations and to any non-Federal entity that applies for, receives, 
operates, or expends funds from a Department Federal financial 
assistance award, cooperative agreement or grant.

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Sec.  1403.102  Does the FAIR include any exceptions to OMB Guidance?

    The FAIR does not apply to tribal awards made in accordance with 
the Indian Self-Determination and Education Assistance Act (Public Law 
93-638, 88 Stat. 2204), as amended. However, the FAIR does apply to 
discretionary grants or cooperative agreements awarded to Tribes 
pursuant to section 9 of Public Law 93-638 when mutually agreed to by 
the Secretary of the Interior and the tribal organization involved. The 
FAIR applies to all financial assistance awards within the Department, 
except where otherwise provided by Statute. Grants Officers must 
document statutory exceptions in the official award file.


Sec.  1403.103  Does the Department have any other policies or 
procedures award recipients must follow?

    Award recipients must follow bureau/office program specific 
policies and procedures and applicable government-wide requirements. In 
the event that a bureau's or office's specific policies and procedures 
conflict with 2 CFR part 200 or this part, the bureau/office will 
adhere to the provisions of 2 CFR part 200 and this part unless the 
policy/procedures are required by law.


Sec.  1403.104-1403.110  [Reserved]


Sec.  1403.111  What terms do I need to know?

    (a) Conflict of interest is any relationship or matter which might 
place the recipient, its employees, and/or its subrecipients in a 
position of conflict, real or apparent, between their responsibilities 
under the agreement and any other interests. Conflicts of interest also 
include, but are not limited to, direct or indirect financial 
interests, personal relationships, and business relationships including 
positions of trust in outside organizations, consideration of future 
employment arrangements with a different organization, or decision-
making affecting the award that would cause a reasonable person with 
knowledge of the relevant facts to question the impartiality of the 
Recipient and/or recipient's employees and subrecipients in the matter.
    (b) Discretionary Federal financial assistance means Federal awards 
including grants and cooperative agreements that are awarded at the 
discretion of the agency.
    (c) Employment means:
    (1) In any capacity, even if otherwise permissible, by any 
applicant or potential applicant for a Federal financial assistance 
award;
    (2) Employment within the last 12 months with a different 
organization applying for some portion of the award's approved project 
activities and funding to complete them OR expected to apply for and to 
receive some portion of the award; and/or
    (3) Employment with a different organization of any member of the 
organization employee's household or a relative with whom the 
organization's employee has a close personal relationship who is 
applying for some portion of the award's approved project activities 
and funding to complete them, OR expected to apply for and to receive 
some portion of the award.
    Non-Federal entity means a State, local government, Indian tribe, 
institution of higher education, or nonprofit organization that carries 
out a Federal award as a recipient or subrecipients.
    (d) Personal relationship means a Federal award program employee's 
spouse and/or dependent children, or other members of an employee's 
household, which may compromise or impair the fairness and impartiality 
of the Proposal Evaluator and Advisor and Grants Officer in the review, 
selection, award, and management of a financial assistance award.
    (e) Recipient means a non-Federal entity that receives a Federal 
award directly from a Federal awarding agency to carry out an activity 
under a Federal program. The term recipient does not include 
subrecipients.
    (f) Subrecipient means a non-Federal entity that receives a 
subaward from a pass-through entity to carry out part of a Federal 
program, but does not include an individual that is a beneficiary of 
such program. A subrecipient may also be a recipient of other Federal 
awards directly from a Federal awarding agency.


Sec.  1403.112  What is conflict of interest?

    (a) Non-Federal entities must disclose in writing any potential 
conflict of interest to the Department awarding agency or pass-through 
entity and the Department's Office of Inspector General in accordance 
with 2 CFR 200.112, Conflict of interest. Proposal evaluators and 
advisors, including members of evaluation committees, must render 
impartial, technically sound, and objective assistance and advice to 
protect the integrity of the proposal evaluation and award selection 
process. A Federal employee is prohibited from participating in his or 
her government capacity in any particular matter when the employee, his 
or her spouse, minor child, outside business associate, or a person or 
organization with whom the employee is negotiating or has an 
arrangement for prospective employment, has a financial interest in the 
particular matter (see 18 U.S.C. 208).
    (b) Employees are prohibited from having a direct or indirect 
financial interest that conflicts substantially or appears to conflict 
substantially with his or her government duties and responsibilities 
(see 5 CFR 2635.402 and 5 CFR 2635.502). Employees are also prohibited 
from engaging in, either directly or indirectly, a financial 
transaction resulting from or primarily relying on information obtained 
through his or her government employment (see 5 CFR 2635.702 and 5 CFR 
2635.703). In addition, 43 CFR 20.401-403 contains other regulations 
concerning conflicts of interest involving employees of specific 
bureaus and offices. Employee Responsibility and Conduct Regulations 
for the Department are contained in 43 CFR part 20, 5 CFR 2634, 5 CFR 
2635, and 5 CFR 2640.
    (c) With the exception of contracting personnel, proposal 
evaluators and advisors are not required to file a Statement of 
Employment and Financial Interest (DI-210) unless they occupy positions 
identified in 5 CFR 2634.202 and 5 CFR 2634.904. Therefore, upon 
receipt of a Memorandum of Appointment, each proposal evaluator and 
advisor must sign and return a Conflict of Interest Certificate to the 
Grants Officer or official responsible for the review. If an actual or 
potential conflict of interest exists, the appointee may not evaluate 
or provide advice on a potential applicant's proposal until the 
conflict has been resolved with the servicing Ethics Counselor. Signed 
certificates from all proposal evaluators and advisors must be retained 
in the master file for the Funding Opportunity Announcement.
    (d) During the evaluation process, each proposal evaluator and 
advisor must assure that there are no financial or employment interests 
which conflict or give the appearance of conflicting with his or her 
duty to evaluate proposals impartially and objectively. Examples of 
situations which may be prohibited or represent a potential conflict of 
interest may include, but are not limited to:
    (1) Financial interest, including ownership of stocks and bonds, in 
a firm which submits, or is expected to submit, an application in 
response to the funding opportunity;
    (2) Outstanding financial commitments to any applicant or potential 
applicant;
    (3) Employment in any capacity, even if otherwise permissible, by 
any applicant or potential applicant;

[[Page 6465]]

    (4) Employment within the last 12 months by any applicant or 
potential applicant;
    (5) Any non-vested pension or reemployment rights, or interest in 
profit sharing or stock bonus plan, arising out of the previous 
employment by an applicant or potential applicant;
    (6) Employment of any member of the immediate family by any 
applicant or potential applicant;
    (7) Positions of trust that may include employment, past or 
present, as an officer, director, trustee, general partner, agent, 
attorney, consultant, or contractor;
    (8) A close personal relationship that may include a spouse, 
dependent child or member of the proposal evaluator's household that 
may compromise or impair the fairness and impartiality of the proposal 
evaluator or advisor and grants officer during the proposal evaluation 
and award selection process, and the management of an award; and
    (9) Negotiation of outside employment with any applicant or 
potential applicant.
    (e) Each proposal evaluator and advisor must immediately disclose 
in writing to the Grants Officer or the individual responsible for the 
review as soon as it becomes known that an actual or potential conflict 
of interest exists. The Grants Officer must obtain the assistance of 
the servicing Ethics Counselor in order to reach an opinion or 
resolution. A record of the disposition of all conflict of interest 
situations must be included in the award file.
    (f) All Department financial assistance awards must include the 
following term and condition prohibiting recipient, recipient employee 
and subrecipient conflicts of interest:

Conflict of Interest

    The recipient must establish safeguards to prohibit its 
employees and subrecipients from using their positions for purposes 
that constitute or present the appearance of a personal or 
organizational conflict of interest. The recipient is responsible 
for notifying the Grants Officer in writing of any actual or 
potential conflicts of interest that may arise during the life of 
this award. Conflicts of interest include any relationship or matter 
which might place the recipient or its employees in a position of 
conflict, real or apparent, between their responsibilities under the 
agreement and any other outside interests. Conflicts of interest may 
also include, but are not limited to, direct or indirect financial 
interests, close personal relationships, positions of trust in 
outside organizations, consideration of future employment 
arrangements with a different organization, or decision-making 
affecting the award that would cause a reasonable person with 
knowledge of the relevant facts to question the impartiality of the 
recipient and/or recipient's employees and subrecipients in the 
matter.
    The Grants Officer and the servicing Ethics Counselor will 
determine if a conflict of interest exists. If a conflict of 
interest exists, the Grants Officer will determine whether a 
mitigation plan is feasible. Mitigation plans must be approved by 
the Grants Officer in writing. Failure to resolve conflicts of 
interest in a manner that satisfies the government may be cause for 
termination of the award.
    Failure to make required disclosures may result in any of the 
remedies described in 2 CFR 200.338, including suspension or 
debarment (see also 2 CFR part 180).


Sec.  1403.113  What are mandatory disclosures for financial 
assistance?

    The non-Federal entity or applicant for a Federal award must 
disclose in writing, in a timely manner, to the Federal awarding agency 
or pass-through entity all violations of Federal criminal law involving 
fraud, bribery, or gratuity violations potentially affecting the 
Federal award. Failure to make required disclosures can result in any 
of the remedies described in 2 CFR 200.338 (see also 2 CFR part 180 and 
31 U.S.C. 3321). A non-Federal entity or applicant for a the Department 
award must disclose, in a timely manner, in writing to the Department 
awarding agency or pass-through entity, and to the Department's Office 
of Inspector General, all violations of Federal criminal law involving 
fraud, bribery, or gratuity violations potentially affecting the 
Federal award.


Sec.  1403.114-1403.203  [Reserved]


Sec.  1403.204  What is the financial assistance application and merit 
review process?

    (a) This merit review process does not apply to instruments such as 
intra- and inter-agency agreements, international agreements (excluding 
grants and cooperative agreements with foreign recipients), memoranda 
of understanding or agreement, cooperative research and development 
agreements, concession contracts, permits, or fixed price awards.
    (b) This merit review process must be described or incorporated by 
reference in the applicable funding opportunity announcement (see 2 CFR 
part 200 appendix I and 2 CFR 200.203). It is also important for the 
Department's bureaus and offices to create review systems for 
discretionary programs that are noncompetitive that consider statutory 
or regulatory provisions, a business evaluation, risk assessment, and 
other applicable government-wide pre-award considerations.
    (c) Actions required--(1) Competition in grant and cooperative 
agreement awards. Maximum competition in grant and cooperative 
agreement awards is expected in awarding discretionary funds, unless 
otherwise directed by Congress. When grants and cooperative agreements 
are awarded competitively, the Department requires that the competitive 
process be fair and impartial, that all applicants be evaluated only on 
the criteria stated in the announcement, and that no applicant receive 
an unfair competitive advantage. Synopses of all announcements for open 
competition, and all modifications/amendments to announcements for open 
competition, must be posted on Grants.gov (www.grants.gov).
    (2) Independent objective evaluation of financial assistance 
applications and proposals. Announcements and competitions for 
assistance and agreements must provide for an objective and unbiased 
process for reviewing applications submitted in response to the 
announcement and for selecting applicants for award. This requires a 
comprehensive, impartial, and objective examination of applications 
based on the criteria contained in the announcement by individuals who 
have no conflicts of interest with respect to the competing proposal/
applications or applicants. Bureaus and offices must exercise due 
diligence to ensure that applications are reviewed and evaluated by 
qualified reviewers; applications are scored on the basis of announced 
criteria; consideration is given to the level of applicant risk and 
past performance; applications are ranked; and funding determinations 
are made. Awarding officials must check the System for Award Management 
(SAM) immediately prior to award to verify that the awardee is not 
suspended, debarred or otherwise ineligible at the time of award. The 
SAM review must include a review of the recipient organization's name 
and principal staff.
    (3) Evaluation and Selection Plan for Funding Opportunity 
Announcements. Bureaus and offices must develop an Evaluation and 
Selection Plan in concert with the Funding Opportunity Announcement 
(FOA) to ensure consistency, and to outline and document the selection 
process. The Evaluation and Selection Plan should be finalized prior to 
the release of the FOA. An Evaluation and Selection Plan is comprised 
of five basic elements:
    (i) Merit review factors and sub-factors;
    (ii) A rating system (e.g., adjectival, color coding, numerical, or 
ordinal);
    (iii) Evaluation standards or descriptions which explain the basis 
for

[[Page 6466]]

assignment of the various rating system grades/scores;
    (iv) Program policy factors; and
    (v) The basis for selection.
    (4) Basic review standards. Bureaus and offices must initially 
screen new applications/proposals to ensure that they meet the 
following standards before they are subjected to a detailed evaluation 
utilizing a merit review process. The review system should include 
three phases: initial screening, threshold review and a merit review. 
Bureaus and offices may remove an application from funding 
consideration if it does not pass the Basic Eligibility Screening.
    (5) Basic eligibility screening. The initial stage is to consider 
the timeliness of the application submission, applicant eligibility, 
and completeness of the documents submitted for review. All 
applications should be screened to ensure that:
    (i) The application meets the requirements of the applicable 
funding opportunity;
    (ii) The applicant meets the eligibility requirements detailed in 
the funding opportunity;
    (iii) The applicant entity and principal investigator/key personnel 
are not suspended, debarred, or otherwise described as ineligible in 
the System for Award Management; and
    (iv) The application contains a properly executed Standard Form 
(SF)-424, Application for Financial Assistance, SF-424B or SF-424D, 
Assurances, Detailed Budget Review Sheets; and, if applicable, the SF-
LLL, Disclosure of Lobbying.
    (6) Completeness. Bureaus and offices may return applications/
proposals that are incomplete or otherwise fail to meet the 
requirements of the Grants.gov FOA to the sender to be corrected or 
modified/supplemented by the sender. Until the application/proposal 
meets the above requirements, it shall not be given detailed 
evaluation. Bureaus and offices may use discretion to determine the 
length of time for applicants to resolve application deficiencies.
    (7) Timeliness. In a competitive review process, bureaus and 
offices shall consider the timeliness of the application submission. 
Applications that are submitted beyond the announced deadline date 
shall be removed from the review process.
    (8) Threshold screening. Bureaus and offices are responsible for 
screening applications and proposals for the adequacy of the budget and 
compliance with statutory and other requirements. The SF-424 and 
Detailed Budget Worksheets must be reviewed in accordance with 
Department of the Interior policy on Financial Assistance Cost Reviews. 
Bureaus and offices must also consider risk thresholds at this stage of 
the process. Elements to be considered include organization; single 
audit submissions, past performance; availability of necessary 
resources, equipment, or facilities; financial strength and management 
capabilities; procurement procedures; or procedures for selecting and 
monitoring subrecipients or sub-vendors, if applicable.
    (9) Merit review evaluation screening. This is the final review 
stage where the technical merit of the application/proposal is 
reviewed. In the absence of a program rule or statutory requirement, 
program officials should develop criteria that include all aspects of 
technical merit. Bureaus and offices should develop criteria that are 
conceptually independent of each other, but all-encompassing when taken 
together. While criteria will vary, the basic criteria should focus 
reviewers' attention on the project's underlying merit (i.e., 
significance, approach, and feasibility). The criteria should focus not 
only on the technical details of the proposed project but also on the 
broader importance or potential impact of the project. The criteria 
should be easily understood. If the criteria are susceptible to varying 
interpretations, reviewers will use their own interpretation. Program 
policy factors may be used during the selection process to provide for 
consideration of factors that are important to the fulfillment of 
agency program objectives.


Sec.  1403.205  [Reserved]


Sec.  1403.206  What are the FAIR requirements for domestic for-profit 
and foreign entities?

    The Omni-Circular and the Department's FAIR Omni-Circular 
supplement apply to for-profit entities, foreign public entities or 
foreign organizations except where the Federal awarding agency 
determines that the application of these subparts would be inconsistent 
with the international obligations of the United States or the statute 
or regulations of a foreign government (see definitions in 2 CFR 200.46 
and 2 CFR 200.47).
    (a) Requirements for domestic for-profit entities. (1) Section 
1403.207 contains standard award terms and conditions that bureaus and 
offices must always apply to for-profit entities; and terms and 
conditions that bureaus and offices may apply to for-profit entities. 
Bureaus and offices must always incorporate into awards to domestic 
for-profit organizations the award terms and conditions that always 
apply, either directly or by reference.
    (2) Bureaus and offices may apply the administrative guidelines in 
2 CFR part 200 subparts A through D; the cost principles at 48 CFR part 
1, subpart 31.2; and the procedures for negotiating indirect costs 
detailed in section 1403.401 of the FAIR, to domestic for-profit 
entities
    (3) Depending on the nature of a particular program, offices and 
bureaus may alternatively develop program-specific administrative 
guidelines for domestic for-profits based on the requirements in 2 CFR 
part 200 subparts A through D, but may not apply more restrictive 
requirements than the requirements in 2 CFR part 200 subparts A through 
D unless approved by OMB through a request to the Director, Office of 
Acquisition and Property Management.
    (b) Requirements for foreign entities. Section 1403.207 of the FAIR 
contains standard award terms and conditions for foreign entities that 
include terms and conditions that bureaus and offices must always apply 
to foreign entities; and terms and conditions that bureaus and offices 
may apply to foreign entities. Bureaus and offices must always 
incorporate the terms and conditions that always apply to awards to 
foreign entities, either directly or by reference. All applicable award 
terms and conditions apply unless the foreign recipient provides 
conclusive evidence to the Departmental grant making program, and the 
program agrees, that application of a particular requirement is 
inconsistent with the international obligations of the United States or 
the laws or regulations of a foreign government to which the recipient 
is subject.
    (c) Restrictions on foreign awards. Bureaus and offices must not 
fund projects in countries determined by the U.S. Department of State 
to have provided support for acts of international terrorism (see 
https://www.state.gov/j/ct/list/c14151.htm for more information), and 
are therefore subject to sanctions that restrict U.S. foreign 
assistance and other financial transactions, without proper licenses 
administered by the U.S. Department of the Treasury, Office of Foreign 
Asset Controls (see https://www.treasury.gov/resourcecenter/sanctions/Pages/default.aspx for more information).
    (d) Method of payment for foreign awards. Foreign recipients must 
not register in or be paid through the Department of the Treasury's 
Automated Standard Application for Payments (ASAP). Foreign recipients

[[Page 6467]]

with bank accounts in the United States are paid by Electronic Funds 
Transfer (EFT) through the Automated Clearing House (ACH). Foreign 
recipients with bank accounts outside of the United States are paid 
electronically through the Department of the Treasury's International 
Treasury Services (ITS) system. The Debt Collection Improvement Act of 
1996 requires that all Federal agency payments be made electronically. 
However, Treasury regulations do allow for some exceptions, including 
or certain foreign entities. Refer to Department of the Interior 
guidance on Electronic Funds Transfer Waiver Process at https://www.doi.gov/sites/doi.gov/files/migrated/pam/programs/acquisition/upload/DIAPR-2012-06-Amendment-1-Electronic-Funds-Transfer-Waiver-Process-2.pdf for more information.
    (e) Requirements for award terms and conditions. Bureau and office 
award terms and conditions must be managed in accordance with the 
requirements in 2 CFR 200.210.


Sec.  1403.207  What specific conditions apply?

    (a) Mandatory award terms and conditions for domestic for-profit 
entities. The award terms and conditions in:
    (1) 2 CFR part 25, Universal Identifier and System for Award 
Management;
    (2) 2 CFR part 170, Reporting Subawards and Executive Compensation;
    (3) 2 CFR part 175, Award Term for Trafficking in Persons;
    (4) 2 CFR part 1400, Government-wide Debarment and Suspension (Non-
procurement);
    (5) 2 CFR part 1401, Requirements for Drug-Free Workplace 
(Financial Assistance); and
    (6) 43 CFR part 18, New Restrictions on Lobbying, always apply to 
domestic for-profit entities.
    (b) Submission of an application for financial assistance also 
represents the applicant's certification of the statements in 43 CFR 
part 18, appendix A, Certification Regarding Lobbying.
    (c) The terms and conditions of 41 U.S.C. 4712, Pilot Program for 
Enhancement of Recipient and Subrecipient Employee Whistleblower 
Protection, apply to all awards issued after July 1, 2013 and shall 
remain in effect until January 1, 2017.
    (d) Bureaus and offices shall include the terms and conditions of 
41 U.S.C. 6306, Prohibition on Members of Congress Making Contracts 
with the Federal Government, 41 U.S.C. 6306; and Executive Order 13513, 
Federal Leadership on Reducing Text Messaging while Driving, in all 
awards to domestic for-profit entities.
    (e) Whistleblower protection clause. Recipients must insert the 
following clause in all subawards and contracts related to the prime 
award that are over the Simplified Acquisition Threshold:

------------------------------------------------------------------------
 
---------------------------------------------------------------------------
 All awards and related subawards and contracts over the Simplified
 Acquisition Threshold, and all employees working on applicable awards
 and related subawards and contracts, are subject to the whistleblower
 rights and remedies in accordance with the pilot program on award
 recipient employee whistleblower protections established at 41 U.S.C.
 4712 by section 828 of the National Defense Authorization Act for
 Fiscal Year 2013 (Pub. L. 112-239).
------------------------------------------------------------------------

    (f) Recipients, their subrecipients and contractors that are 
awarded contracts over the Simplified Acquisition Threshold related to 
an applicable award, shall inform their employees, in writing, in the 
predominant language of the workforce, of the employee whistleblower 
rights and protections under 41 U.S.C. 4712.
    (g) Discretionary award terms and conditions for domestic for-
profit entities. The award terms and conditions in 2 CFR part 200, 
subparts A through E; and 48 CFR part 1, subpart 31.2, Contracts with 
Commercial Organizations, apply only when the Federal program 
specifically incorporates them into a for-profit recipient's notice of 
award.
    (f) Indirect cost rates. For information on indirect cost rate 
negotiations, contact the Interior Business Center (IBC) Indirect Cost 
Services Division by telephone at (916) 566-7111 or by email at 
ics@ibc.doi.gov. Visit the IBC Indirect Cost Services Division Web site 
at https://www.doi.gov/ibc/services/Indirect_Cost_Services/index.cfm for 
more information.
    (g) Mandatory award terms and conditions for foreign public 
entities. (1) The award terms and conditions in 2 CFR part 25, 
Universal Identifier and System for Award Management; 2 CFR part 170, 
Reporting Subawards and Executive Compensation; 2 CFR part 175, Award 
Term for Trafficking in Persons (applicable to private entity 
subrecipients of foreign public entities); 2 CFR part 1401, 
Requirements for Drug-Free Workplace (Financial Assistance); and 43 CFR 
part 18, New Restrictions on Lobbying, always apply to all foreign 
public entities (see definition in 2 CFR 200.46) and foreign 
organizations (see definition in 2 CFR 200.47). Submission of an 
application for financial assistance also represents the applicant's 
certification of the statements in 43 CFR part 18, appendix A, 
Certification Regarding Lobbying.
    (2) Bureaus and offices must also include the terms and conditions 
of 41 U.S.C. 6306, Prohibition on Members of Congress Making Contracts 
with Federal Government; and Executive Order 13513, Federal Leadership 
on Reducing Text Messaging While Driving, in awards to foreign public 
entities.
    (h) Discretionary award terms and conditions for foreign public 
entities and foreign organizations. (1) The award terms and conditions 
in 2 CFR part 200 subparts A through E apply to foreign public entities 
and foreign organizations only when the Federal program specifically 
incorporates them into a foreign recipient's notice of award. Foreign 
public entities are also subject to the requirements specific to 
States, with the following exceptions:
    (2) State payment procedures in 2 CFR 200.305(a) do not apply. 
Foreign public entities must follow the payment procedures in 2 CFR 
200.305(b)).
    (3) The requirements of 2 CFR part 6 200.321, Contracting with 
Small and Minority Businesses, Women's Business Enterprises, and Labor 
Surplus Area Firms; and 2 CFR 200.322, Procurement of Recovered 
Materials, do not apply.
    (4) Foreign non-profit organizations (see definition in 2 CFR 
200.70) are subject to the requirements specific to domestic non-profit 
organizations.
    (5) Foreign institutions of higher education (IHEs) (institutions 
located outside the United States that meet the definition in 20 U.S.C. 
1001) are subject to requirements specific domestic to IHEs.
    (i) Cost principles. Foreign public entities are subject to the 
cost principles in 48 CFR part 1, subpart 31.2. Foreign hospitals 
(i.e., a facility licensed as a hospital under the law of any foreign 
governmental entity or a facility operated as a hospital by a foreign 
public entity) are subject to the cost principles in 45 CFR part 74, 
appendix E.
    (j) Indirect costs. (1) The provisions of 2 CFR part 200, appendix 
IV, Indirect (F&A) Costs Identification and Assignment, and Rate 
Determination for Nonprofit Organizations, apply to foreign non-profit 
organizations.
    (2) The provisions of 2 CFR part 200 appendix VII, States and Local 
Government and Indian Tribe Indirect Cost Proposals, apply to foreign 
public entities. Foreign for-profit entities may contact the Interior 
Business Center (IBC) Indirect Cost Services by telephone at (916) 566-
7111 or by email at ics@ibc.doi.gov, or visit the IBC Indirect Cost 
Services Web site at https://www.doi.govgov/ibc/services/

[[Page 6468]]

Indirect_Cost_Services/index.cfm for more information.
    (3) The provisions of 45 CFR part 74, appendix E, Principles for 
Determining Costs Applicable to Research and Development under Grants 
and Contracts with Hospitals, apply to foreign hospitals. The U.S. 
Department of Health and Human Services (HHS) is the cognizant agency 
for indirect costs for foreign hospitals. Visit the HHS Cost Allocation 
Services Web site at https://rates.psc.gov/ for more information.
    (4) Indirect costs for institutes of higher education are 
negotiated with HHS in accordance with 2 CFR part 200 appendix III, 
Indirect (F&A) Costs Identification and Assignment, and Rate 
Determination for Institutions of Higher Education (IHEs). Visit the 
HHS Cost Allocation Services Web site at https://rates.psc.gov/ for 
more information.
    (5) The applicable standard award terms and conditions will apply 
unless the recipient provides conclusive evidence for an exception. In 
granting the exception, the bureau/office agrees that the application 
of a particular requirement is inconsistent with the international 
obligations of the United States or the laws or regulations of a 
foreign government to which the recipient is subject. Such case-by-case 
exceptions are allowable under 2 CFR 200.102(b).
    (6) The immunities provided to public international organizations 
under the International Organizations Immunities Act (22 U.S.C. 288-
288f) are not considered waived unless they are expressly waived in 
writing by an authorized official at the organization. Signing the SF-
424 Assurances or accepting an award does not constitute an express 
waiver of such immunities. The SF-424 Assurances form also states that 
``certain of these assurances may not be applicable to your project or 
program.'' For a list of public international organizations awarded 
immunities under the International Organizations Immunities Act (see 
the U.S. Department of State's Foreign Affairs Manual (FAM), at 9 FAM 
41.24, Exhibit I).


Sec.  1403.208-1403.400  [Reserved]


Sec.  1403.401  What are the policies, procedures, and general 
decision-making criteria for deviations from negotiated indirect cost 
rates?

    (a) The provisions of 2 CFR 200.414(c) require Federal agencies to 
accept federally negotiated indirect cost rates. Federal agencies may 
use a rate different from the negotiated rate for a class of awards or 
a single Federal award only when required by Federal statute or 
regulation, or when approved by a Federal awarding agency head or 
delegate based upon documented justification described within 2 CFR 
200.414(c)(3). In addition, the Department accepts indirect cost rates 
that have been reduced or removed voluntarily by the proposed recipient 
of the award, on an award-specific basis. The following policies, 
procedures and general decision-making criteria apply for deviations 
from negotiated indirect cost rates for financial assistance programs 
and agreements.
    (1) Distribution basis. For all deviations to the Federal 
negotiated indirect cost rate, including statutory, regulatory, 
programmatic, and voluntary, the basis of direct costs against which 
the indirect cost rate is applied must be:
    (i) The same base identified in the recipient's negotiated indirect 
cost rate agreement, if the recipient has a federally negotiated 
indirect cost rate agreement; or
    (ii) The modified total direct cost (MTDC) base, in cases where the 
recipient does not have a federally negotiated indirect cost rate 
agreement or, with prior approval of the Awarding Agency, when the 
recipient's federally negotiated indirect cost rate agreement base is 
only a subset of the MTDC (such as salaries and wages) and the use of 
the MTDC still results in an overall reduction in the total indirect 
cost recovered. The MTDC is the base defined by 2 CFR 200.68.
    (iii) In cases where the recipient does not have a federally 
negotiated indirect cost rate agreement, under no circumstances will 
the Department use a modified rate based upon Total Direct Cost or 
other base not identified in the federally negotiated indirect cost 
rate agreement or defined within 2 CFR 200.68. The purpose of this 
restriction is to ensure that the reduced rate is applied against a 
base that does not include any potentially distorting items (such as 
pass-through funds, subcontracts in excess of $25,000, and participant 
support costs); and is based on the requirements outlined in 2 CFR 
200.68; 2 CFR 200.414(f); 2 CFR part 200 appendix III, section C.2.; 2 
CFR part 200 appendix IV, section B.3.f.; and appendix VII, section 
C.2.c.
    (2) Indirect cost rate deviation required by statute or regulation. 
In accordance with 2 CFR 200.414(c)(1), a Federal agency must use a 
rate other than the Federal negotiated rate where required by Federal 
statute or regulation. For such instances within the Department, the 
official award file must document the specific statute or regulation 
that required the deviation.
    (3) Indirect cost rate reductions used as cost-share. Instances 
where the recipient elects to use a rate lower than the federally 
negotiated indirect cost rate, and uses the balance of the unrecovered 
indirect costs to meet a cost-share or matching requirement required by 
the program and/or statute, are not considered a deviation from 2 CFR 
200.414(c), as the federally negotiated indirect cost rate is being 
applied under the agreement in order to meet the terms and conditions 
of the award.
    (4) Programmatic indirect cost rate deviation approval process. The 
following requirements apply for review, approval, and posting of 
programmatic indirect cost rate waivers:
    (5) Program qualifications. Programs that have instituted a 
program-wide requirement and governance process for deviations from 
federally negotiated indirect cost rates may qualify for a programmatic 
deviation approval.
    (6) Deviation requests. Deviation requests must be submitted by the 
responsible senior program manager to the Department Office of 
Acquisition and Property Management. The request for deviation approval 
must include a description of the program, and the governance process 
for negotiating and/or communicating to recipients the indirect cost 
rate requirements under the program. The program must make its 
governance documentation, rate deviations, and other program 
information publicly available.
    (7) Approvals. Programmatic deviations must be approved, in 
writing, by the Director, Office of Acquisition and Property 
Management. Approved deviations will be made publicly available along 
with the governance documentation for the program.
    (8) The following programs are approved to use an indirect cost 
rate that deviates from the federally negotiated indirect cost rate 
agreements:
    (i) Cooperative Fish and Wildlife Research Unit (CRU) Program;
    (ii) Cooperative Ecosystem Studies Unit (CESU) Program; and
    (iii) Land Buy-Back Program for Tribal Nations.
    (9) Voluntary indirect cost rate reduction. On an award-specific 
basis, an applicant and/or proposed recipient may elect to reduce or 
eliminate the indirect cost rate applied to costs under that award. The 
election must be voluntary and cannot be required by the awarding 
official, funding opportunity announcement, program, or other non-
statutory or non-regulatory requirements. For these award-specific and 
voluntary reductions, the Department can accept the lower rate

[[Page 6469]]

provided the official file clearly documents the recipient's voluntary 
election.
    (10) Unrecovered indirect costs. In accordance with 2 CFR 200.405, 
indirect costs not recovered due to deviations to the federally 
negotiated rate are not allowable for recovery via any other means.
    (b) [Reserved]


Sec.  1403.402-1403.999  [Reserved]

    Dated: January 20, 2016.
Kristen J. Sarri,
Principal Deputy Assistant Secretary--Policy, Management and Budget.
[FR Doc. 2016-02039 Filed 2-5-16; 8:45 am]
BILLING CODE 4334-63-P