Guidance for Grants and Agreements, 69390-69500 [2023-21078]
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OMB Office of Federal Financial
Management via email at
MBX.OMB.OFFM.Grants@OMB.eop.gov.
SUPPLEMENTARY INFORMATION:
OFFICE OF MANAGEMENT AND
BUDGET
2 CFR Parts 1, 25, 175, 180, 182, 183,
184, 200
Guidance for Grants and Agreements
Office of Federal Financial
Management, Office of Management and
Budget.
ACTION: Proposed rule; notification of
proposed guidance.
AGENCY:
The Office of Management
and Budget (OMB) is proposing to revise
sections of OMB Guidance for Grants
and Agreements. This proposed revision
reflects comments received from Federal
agencies and those received in response
to the OMB Notice of Request for
Information published in the Federal
Register in February 2023. In response
to Federal agency and public input,
OMB is proposing revisions intended in
many cases to reduce agency and
recipient burden. OMB proposes both
policy changes and clarifications to
existing guidance including plain
language revisions. OMB also proposes
to update the guidance to reflect recent
OMB priorities related to Federal
financial assistance. Finally, OMB is
proposing revisions to improve Federal
financial assistance management,
transparency, and oversight through
more accessible and readily
comprehensible guidance.
DATES: OMB invites interested persons
and organizations to submit comments
on or before December 4, 2023.
ADDRESSES: Comments on this proposal
must be submitted electronically before
the comment closing date to
www.regulations.gov. In submitting
comments, please search for recent
submissions by OMB to find docket
OMB–2023–0017, which includes the
full text of the proposed revisions and
submit comments there. Please provide
clarity as to the section of the guidance
that each comment is referencing by
beginning each comment with the
section number in brackets. For
example; if the comment is on 2 CFR
200.1 include the following before the
comment [200.1]. The public comments
received by OMB will be posted at
https://www.regulations.gov and be a
matter of public record. Accordingly,
please do not include in your comments
any confidential business information or
information of a personal-privacy
nature. In general, responses to the
comments will be summarized and
included in the preamble of the final
guidance.
FOR FURTHER INFORMATION CONTACT:
Andrew Reisig or Steven Mackey at the
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SUMMARY:
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Executive Summary
The Office of Management and Budget
(OMB) proposes to revise several parts
of the OMB Guidance for Grants and
Agreements located in title 2 of the
Code of Federal Regulations (CFR) to
further clarify and update guidance to
Federal agencies on the consistent and
efficient use of Federal financial
assistance. This document includes
proposed revisions to Part 1 (About
Title 2 of the Code of Federal
Regulations and Subtitle A); Part 25
(Universal Identifier and System for
Award Management); Part 170
(Reporting Subaward and Executive
Compensation Information), Part 175
(Award Term for Trafficking in
Persons); Part 180 (OMB Guidelines to
Agencies on Governmentwide
Debarment and Suspension (Nonprocurement)); Part 182
(Governmentwide Requirements for
Drug-Free Workplace (Financial
Assistance)); Part 183 (Never Contract
with the Enemy); and Part 200 (Uniform
Administrative Requirements, Cost
Principles, and Audit Requirements for
Federal Awards).
As explained in further detail below,
OMB proposes revising 2 CFR for
reasons including: (1) incorporating
statutory requirements and
administration priorities; (2) reducing
agency and recipient burden; (3)
clarifying sections that recipients or
agencies have interpreted in different
ways; and (4) rewriting applicable
sections in plain language, improving
flow, and addressing inconsistent use of
terms. Consistent with these objectives,
OMB proposes both policy changes and
clarifications to existing guidance
including plain language revisions.
OMB also proposes to update the
guidance to reflect recent OMB
priorities related to Federal financial
assistance. Finally, OMB’s proposed
revisions are also intended to improve
Federal financial assistance
management, transparency, and
oversight through more accessible and
readily comprehensible guidance.
OMB summarizes its proposals for
policy changes in this document below.
OMB also explains its general
methodology for plain language
revisions. OMB sought to maintain the
existing structure of the 2 CFR guidance,
which remains generally intact and
mostly consistent with earlier iterations
of the guidance—for example, in terms
of the structure of parts, structure of
subparts, and section numbering. Except
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in cases where OMB proposes policy
changes or other edits for consistency
with statutory requirements, OMB also
generally sought to maintain the
existing content of the 2 CFR guidance.
In many cases throughout the guidance,
however, OMB proposes plain language
revisions to simplify the guidance text,
avoid or reduce technical jargon where
feasible, provide greater consistency,
and make the text more succinct.
The proposed revisions align with
OMB’s authority to: (i) issue guidance
promoting consistent and efficient use
of Federal financial assistance
instruments; and (ii) provide overall
direction and leadership to Federal
agencies on policies and requirements
related to Federal financial assistance.
See 31 U.S.C. 6307 and 31 U.S.C.
503(a)(2). Additional authorities for the
proposed revisions are set forth below.
Many of the proposed revisions reflect
comments received from Federal
agencies and those received from the
public in response to the OMB Notice of
Request for Information published in
the Federal Register in February 2023.
See 88 FR 8480 (Feb. 9, 2023).
Background
Between 2012 and 2013, OMB worked
with Federal agencies to revise and
streamline existing guidance to develop
the Uniform Administrative
Requirements, Cost Principles, and
Audit Requirements for Federal Awards
(Uniform Guidance) located in part 200
of 2 CFR. 79 FR 78589 (Dec. 26, 2013).
This effort was intended to assist
programs in delivering better outcomes
on behalf of the American people while
simultaneously reducing administrative
burden and the risk of fraud, waste, and
abuse. The Uniform Guidance in part
200, which OMB established in 2013,
consolidated, streamlined, and
superseded requirements from several
earlier OMB Circulars and guidance
documents related to grants
management and implementation of the
Single Audit Act. OMB explained in
2013 that its guidance intended to
improve both the clarity and
accessibility of these requirements
across the Federal government. Federal
award-making agencies implemented
the Uniform Guidance through an
interim final rule, which became
effective on December 26, 2014. 79 FR
75867 (Dec. 19, 2014).
OMB generally reviews the Uniform
Guidance every five years in accordance
with 2 CFR 200.109. OMB made further
revisions to the Uniform Guidance in
2020. 85 FR 49506 (Aug. 13, 2020). The
2020 revisions addressed topics
including program development and
design, as well as measuring recipient
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performance to assist Federal awarding
agencies and non-Federal entities to
improve program goals and objectives,
share lessons learned, and adopt of
promising performance practices.
Based on feedback and ongoing
engagement with Federal agencies and
the broader Federal financial assistance
community, OMB believes that
additional revisions are now warranted
to the Uniform Guidance in part 200 to
further streamline, clarify, and update
the guidance, including raising certain
thresholds, where permissible under
law, in recognition of inflation over
time. Further information on OMB’s
objectives for the proposed revisions is
provided below.
In addition to proposed revisions in
part 200, OMB also proposes revisions
to other parts in subtitle A of 2 CFR for
similar reasons, including parts 1, 25,
170, 175, 180, 182, and 183. OMB
established these parts at different times
in the last 20 years. See, for example, 69
FR 26276 (May, 11, 2004) (establishing
2 CFR for guidance on grants and other
financial assistance and
nonprocurement agreements); 70 FR
51863 (Aug. 31, 2005) (establishing part
180); 75 FR 55671 (Sep. 14, 2010)
(establishing part 25); and 75 FR 55663
(Sep. 14, 2010) (establishing part 170).
OMB Objectives
OMB’s objectives for the current
proposed revisions to several parts of
subtitle A of 2 CFR include: (1)
incorporating statutory requirements
and administration priorities; (2)
reducing agency and recipient burden;
(3) clarifying sections that recipients or
agencies have interpreted in different
ways; and (4) rewriting applicable
sections in plain language, improving
flow, and addressing inconsistent use of
terms.
The proposed revisions to the
Uniform Guidance in part 200 and other
parts of 2 CFR generally support these
four objectives. In support of objective
(1), OMB proposes to implement
changes throughout the Uniform
Guidance and other parts to ensure
consistency with statutory authorities.
For example, OMB proposes to revise
Parts 25, 170, and 175 to ensure its
guidance properly aligns with
underlying statutes, as amended. These
potential revisions would reduce
inconsistencies between OMB’s
guidance and authorizing statutes to
ensure proper implementation. OMB
has also made several structural changes
to individual parts within Chapter I to
provide further structural consistency
throughout OMB’s guidance in 2 CFR.
In support of objective (2), OMB
proposes to increase several monetary
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thresholds that have not been updated
for many years. For example, OMB
proposes increasing the single audit
threshold from $750,000 to $1,000,000
and increasing the threshold from
$5,000 to $10,000 for determining items
that are considered to be equipment.
OMB reviewed previous increases to the
thresholds and considered current
economic data when making its
determinations. In further support of
reducing burden, OMB is proposing a
complete revision to the template text
for a Notice of Funding Opportunity
(NOFO) located in Appendix I of the
Uniform Guidance in part 200. With this
revision, OMB intends to reduce
administrative burden and unnecessary
obstacles for applying to Federal
financial assistance.
In support of objective (3), OMB
proposes revisions to 2 CFR to clarify
areas of misinterpretation. Many of
these clarifications do not represent a
change in policy but serve to explain the
intent of specific sections of the
Uniform Guidance in part 200, and
other parts in 2 CFR, with greater
precision and clarity. OMB received
feedback from Federal agencies and the
public stating that Federal agencies and
the recipient community interpret many
sections differently. As one example,
OMB clarifies that Federal agencies
approve costs requiring prior approval
when the Federal award is issued if the
costs were included in the recipient’s
proposal, and do not require subsequent
approval prior to expenditure.
In support of objective (4), OMB
proposes to revise the guidance to
follow plain language principles. Plain
language principles OMB focused on
included using simple words and
phrases, avoiding jargon, using terms
consistently, and being concise.
Related to OMB’s plain language
revisions, throughout subparts A to E of
part 200, OMB proposes to use the terms
‘‘recipient,’’ ‘‘subrecipient,’’ or both in
place of ‘‘non-Federal entity.’’ OMB
believes that the existing usage of ‘‘nonFederal entity’’ in subparts A through E
of the existing CFR text in part 200
presents challenges to readers and
makes it difficult to quickly understand
what entity is being addressed,
especially in situations in which
Federal agencies apply part 200 to
Federal agencies, for-profit
organizations, foreign public entities, or
foreign organizations under 2 CFR
200.101. In the revisions to part 200,
OMB uses the term ‘‘non-Federal
entity,’’ as defined in section 200.1, only
when that entity is specifically
intended, such as in subpart F
implementing the Single Audit Act. In
many cases in part 200 OMB proposes
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to replace ‘‘non-Federal entity’’ with
either ‘‘recipient and subrecipient’’ or
‘‘recipient or subrecipient.’’ In cases
where the guidance in part 200 relates
specifically to only either ‘‘recipients’’
or ‘‘subrecipients,’’ but not both, OMB
refers specifically to the applicable
entity. OMB invites comments on this
proposal and any effects it may have on
specific sections or paragraphs of the
guidance in part 200.
OMB notes that these revisions
related to the use of the terms ‘‘nonFederal entity,’’ ‘‘recipient,’’ and
‘‘subrecipient’’ do not directly change
the existing scope of applicability of the
guidance. The applicability provision
for part 200 at section 200.101,
continues to provide Federal agencies
with discretion on whether to apply
subparts A through E of part 200 to
Federal agencies, for-profit entities,
foreign public entities, or foreign
organizations. In the same section, OMB
proposes to encourage Federal agencies
to apply the requirements in subparts A
to E of part 200 to all recipients in a
consistent and equitable manner, but
does not require them to do so. In cases
in which Federal agencies apply part
200 to such entities, OMB’s proposal
further clarifies how the guidance
applies to those entities as either
recipients or subrecipients.
As another example of plain language
revisions, OMB proposes to replace the
use of the general term ‘‘OMB
designated governmentwide systems’’
with more specific terms to reduce
ambiguity for those unfamiliar with the
Uniform Guidance. In this proposed
revisions OMB specifically mentions the
appropriate system, such as SAM.gov,
USASpending.gov, the Contractor
Performance Assessment Reporting
System (CPARS), or Grants.gov.
The overall goal of OMB’s plain
language revision effort is to make the
Uniform Guidance more accessible to
the general public and ensure more
equitable access to Federal funding
opportunities by making the guidance
on that topic easier to understand. OMB
does not directly address the proposed
plain language revisions in this
preamble unless a revision represents a
material change to the Uniform
Guidance. However, OMB invites
comment on whether any of its plain
language revisions in part 200, or other
parts, may have unintended
consequences. OMB also invites
comments on whether further
modifications or additional precision is
needed in any specific instance, such as
in the case of OMB’s proposed use of
the terms ‘‘recipient,’’ ‘‘subrecipient,’’ or
both in particular sections of the
guidance.
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Statutory Authority for OMB Guidance
for Grants and Agreements
where comments may be particularly
useful.
from the remaining provisions of the
guidance, as finalized.
The Director of OMB is authorized
under 31 U.S.C. 6307 to ‘‘issue
supplementary interpretative guidelines
to promote consistent and efficient use
of . . . grant agreements . . . and
cooperative agreements.’’ The Deputy
Director for Management of OMB is
authorized under 31 U.S.C. 503 to,
among other things, provide ‘‘overall
direction and leadership to the
executive branch on financial
management matters by establishing
financial management policies and
requirements.’’ 31 U.S.C. 503(a)(2).
OMB also relies on authorities
including the Single Audit Act
Amendments of 1996 (Pub. L. 104–156,
as amended, codified at 31 U.S.C. 7501–
7507); the Federal Funding
Accountability and Transparency Act of
2006 (FFATA or the Transparency Act)
(Pub. L. 109–282), as amended; the
Digital Accountability and
Transparency Act of 2014 (DATA Act of
2014) (Pub. L. 113–101), as amended;
the Federal Program Information Act
(Pub. L. 95–220 and Pub. L. 98–169, as
amended, codified at 31 U.S.C. 6101–
6106); the Federal Grant and
Cooperative Agreement Act of 1977
(Pub. L. 95–224, as amended, codified at
31 U.S.C. 6301–6309); the Office of
Federal Procurement Policy Act
(codified at 41 U.S.C. 1101–1131); the
Budget and Accounting Procedures Act
of 1950, as amended (codified at 31
U.S.C. 1101–1126); the Chief Financial
Officers Act of 1990 (codified at 31
U.S.C. 503–504); the Trafficking Victims
Protection Act of 2000 (TVPA), as
amended (codified at 22 U.S.C. 7101–
7115); and Executive Order 11541,
‘‘Prescribing the Duties of the Office of
Management and Budget and the
Domestic Policy Council in the
Executive Office of the President.’’
Part 1—About Title 2 of the Code of
Federal Regulations and Subtitle A
OMB proposes to revise the headings
of title of 2 CFR and Subtitle A and
Chapter I to replace ‘‘Grants and
Agreements’’ with ‘‘Federal Financial
Assistance.’’ This revision will help to
ensure that the Uniform Guidance is
understood to be applicable beyond just
grants and cooperative agreements,
unless noted differently in the
applicability provision for the Uniform
Guidance at section 200.101 or relevant
provisions in others parts in chapter I.
OMB proposes to revise section 1.200
to remove paragraphs (b) and (c), which
are no longer accurate. When OMB first
established part 1 in 2004, see 69 FR
26276 (May 11, 2004), it implemented
the Federal Financial Assistance
Management Improvement Act of 1999
(Pub. L. 106–107). That legislation
ceased to be effective on November 20,
2007 based on a sunset date included in
the law. In addition, chapter II of
subtitle A in 2 CFR, which now contains
part 200, was initially intended to
contain OMB guidance in its ‘‘initial
form’’ before it was ‘‘finalized.’’ That
statement no longer accurately reflects
the structure of subtitle A of 2 CFR nor
status of the OMB guidance in part 200.
OMB proposes to provide a more
succinct statement in section 1.215
explaining that some of the guidance
was organized differently within
previous OMB circulars or other
guidance documents before
establishment of title 2 of the CFR.
Because 2 CFR has now existed for
almost 20 years in its current format and
location, OMB does not believe it is
necessary to continue to include the
table showing earlier sources of certain
elements of the OMB guidance in 2 CFR.
The Federal Register notice establishing
2 CFR in 2004, see 69 FR 26276 (May,
11, 2004), and other subsequent Federal
Register notices establishing and
revising particular parts and provisions
of subtitle A in 2 CFR, include that
information.
OMB also proposes to revise section
1.305 to further clarify Federal agency
responsibilities, such as coordinating
with the Council on Federal Financial
Assistance (see OMB Memorandum M–
23–19), the Grants Quality Service
Management Office (QSMO), and other
governance committees.
OMB also proposes to add section
1.231 to clarify its intent that if any
provision of this guidance, as finalized,
were held to be invalid or
unenforceable, such provision, or
combination of provisions, are severable
Part 25—Unique Entity Identifier and
System for Award Management
OMB proposes to revise the guidance
in this part to ensure it properly aligns
with the authorizing statutes, as
amended, including the Transparency
Act and the DATA Act of 2014. OMB
first revises the title of Part 25 to replace
‘‘universal identifier’’ with ‘‘unique
entity identifier.’’ In section 25.105,
which is renamed ‘‘Applicability,’’ OMB
proposes to clarify that the requirement
to obtain a Unique Entity Identifier
(UEI) and register in SAM.gov does not
apply to second-tier subrecipients or
contractors. In support of Federal
agency requests, OMB proposes to
clarify that recipients of loan guarantees
must obtain a UEI and register in
SAM.gov, while a Federal agency may
use discretion when determining to
apply the requirements to beneficiary
borrowers.
In section 25.110, OMB proposes to
clarify that, even if an exception is
granted, a Federal agency remains
responsible for reporting data to comply
with the Transparency Act, as amended,
except that it may use a generic entity
identifier in the circumstances
described.
Although not included in the
proposed guidance in this document,
OMB is also considering other ways of
reducing the administrative burden
associated with obtaining a UEI and
registering in SAM.gov for foreign
organizations or foreign public entity
receiving Federal awards between
$25,000 (the Transparency Act
threshold for a ‘‘Federal award’’) and
$250,000 (the simplified acquisition
threshold). Federal agencies have
explained to OMB that the process for
obtaining a UEI and registering in
SAM.gov can present significant
challenges for some of their applicants
for, and recipients of, awards in this
limited category. Based on this
feedback, OMB is considering
establishing a new exception in section
25.110 that would allow an agency to
grant a one-time exception from the
requirement to obtain a UEI, register in
SAM.gov, or both for foreign
organizations or foreign public entities
applying for or receiving an award
between $25,000 and $250,000 for a
project or program performed outside
the U.S. OMB will work with Federal
agency partners to determine if this
proposal can be implemented in a way
that is consistent with Transparency Act
reporting requirements. If included in
the final revisions to the guidance, OMB
will also consider incorporating further
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Request for Information Issued by OMB
in February 2023
On February 9, 2023, OMB published
a Notice of Request for Information (RFI)
in the Federal Register. 88 FR 8480
(Feb. 9, 2023). OMB received
approximately 1,250 individual
comments from all sources, including
113 submissions from the public
containing multiple comments in each.
In response to Federal agency and
public input, OMB is proposing the
revisions discussed below.
Part-by-Part Discussion of the Proposed
Revisions
OMB invites comments on the
proposed revisions throughout subtitle
A of 2 CFR. OMB identifies areas below
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limits or safeguards in this exception to
mitigate risk, such as not allowing its
application to awards that will include
subawards above $30,000—the
threshold for subaward reporting
established based on the pilot program
in section 5(b) of the Transparency Act,
as amended by the Data Act of 2014.
Public Law 113–101; 85 FR 49506 (Aug.
13, 2020); 2 CFR 170.220. This proposed
change would provide more flexibility—
as needed—to agencies operating in
overseas environments where SAM.gov
registration presents particular
challenges. If finalized, the exception
would only be available on a case-bycase basis in situations in which the
agency has conducted a risk-based
analysis and deemed it impractical for
the entity to comply with the
requirements(s). This proposed change
would only be finalized in a way that
would allow agencies to continue
following Transparency Act reporting
requirements for this limited category of
awards.
Related to the above analysis, OMB is
also considering expanding the exigent
circumstances exception in section
25.110 to provide recipients with
additional time to obtain a UEI and
complete SAM.gov registration if exigent
circumstances persist beyond 30 days.
This proposal is not included in the
proposed guidance in this document,
but OMB is considering ways to provide
this additional flexibility in the final
guidance. When exigent circumstances
exist, the current guidance at section
25.110 allows agencies to provide
recipients up to 30 days after the
Federal award date to obtain a UEI and
complete SAM.gov registration. In
recognition of the issues that sometimes
arise when organizations attempt to
register in SAM.gov, particularly for
new or inexperienced applicants,
OMB’s proposal would provide Federal
agencies with the option to provide
recipients an additional 90 days if
exigent circumstances persist. OMB will
work with Federal agency partners to
determine if this proposal can be
implemented in a way that is consistent
with Transparency Act reporting
requirements. If included in the final
revisions to the guidance, OMB
proposes to further clarify that Federal
agencies should not issue payments to
a recipient that is unable to obtain a UEI
or complete registration in SAM.gov.
OMB also proposes to clarify that
Federal agencies should include an
award term expressly providing that the
recipient’s eligibility to receive any
future payments under the award (such
as outlays of cash) would be contingent
on the recipient receiving a UEI and
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completing registration. Again, this
proposed change would only be
finalized in a way that would allow
agencies to continue following
Transparency Act reporting
requirements for this limited category of
awards.
OMB also proposes several
clarifications in the part, such as a
proposed revision in section 25.205
explaining that the requirement to have
an active UEI does not apply to
amendments to terminate or close a
Federal award.
Part 170—Reporting Subaward and
Executive Compensation Information
OMB proposes to revise the guidance
in this part to ensure it properly aligns
with the authorizing statutes, as
amended, including the Transparency
Act and the DATA Act of 2014. OMB
proposes to clarify the specific Federal
agency reporting requirements and to
revise the award term to resolve issues
related to which entities the award term
applies to. OMB also proposes to revise
certain sections to clarify their intended
meaning. For example, OMB proposes
to move certain requirements currently
contained in section 170.110 to section
170.105, which OMB proposes to
rename ‘‘Applicability.’’
Part 175—Award Term for Trafficking
in Persons
OMB proposes to revise the guidance
in part 175 to ensure it properly aligns
with the authorizing statutes that have
been amended since it was published.
See the TVPA of 2000, as codified at 22
U.S.C. 7101 to 7115. OMB proposes to
update the policy and Award Term to
ensure alignment with the current
statute and to further align with the
format of the CFR. For example, at
section 175.105, OMB proposes adding
provisions related to a compliance plan
and requiring notification to Inspectors
Generals under certain circumstances to
further align with statute.
Part 180—OMB Guidelines to Agencies
on Government-Wide Debarment and
Suspension (Nonprocurement)
OMB proposes minimal revisions to
this part based on feedback received
from the Interagency Suspension and
Debarment Committee (ISDC) in
accordance with section 180.40.
Considering the role of the ISDC in
recommending changes, OMB does not
propose extensive plain language
revisions through this document in part
180. Sections in part 180 that OMB
proposes to revise include sections
180.635 and 180.640 to clarify available
administrative actions in lieu of
debarment. OMB proposes amending
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section 180.705 to include ‘‘other
indicators of adequate evidence that
may include, but are not limited to,
warrants and their accompanying
affidavits’’ for officials to consider
before initiating a suspension. OMB
proposes additional clarifying edits to
sections 180.710, 180.815, and 180.860,
including adding text to section 180.860
to address factors influencing a
debarment decision; this revision
proposes to add text on ‘‘whether your
business, technical, or professional
license(s) has been suspended,
terminated, or revoked.’’ OMB proposes
changes to this part generally in
response to an ISDC recommendation to
provide additional clarifications to 2
CFR to reflect current practice. OMB is
not proposing to establish new policy in
part 180 that would negatively impact
the ability of Federal agencies or
recipients to adhere to this guidance.
Part 182—Government-Wide
Requirements for Drug-Free Workplace
(Financial Assistance)
OMB proposes limited plain language
revisions to this part.
Part 183—Never Contract With The
Enemy
OMB proposes limited plain language
revisions to this part.
Part 184—Buy America Preferences for
Infrastructure Projects
OMB established this part on Buy
America preferences for infrastructure
projects through a separate process. 88
FR 57750 (Aug. 23, 2023). OMB does
not propose changes to part 184 through
this document. OMB notes, however,
that it may potentially make minor, nonsubstantive changes to part 184 through
its final guidance if necessary to ensure
consistency with any changes to the
definitions in section 200.1. OMB notes
that part 184, at section 184.3, states
that acronyms and terms not defined in
part 184 have the same meaning as
provided in section 200.1. Certain terms
used in part 184, such as ‘‘Federal
awarding agency,’’ may be affected by
OMB’s proposed changes under this
notice. Thus, it may be necessary to
make minor conforming changes to part
184 to ensure consistent use of terms.
Part 200—Uniform Administrative
Requirements, Cost Principles, and
Audit Requirements for Federal
Awards
In the paragraphs below, OMB
discusses proposed changes to each
subpart of the Uniform Guidance in 2
CFR part 200.
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Subpart A—Acronyms and Definitions
OMB proposes to update section
200.0 to remove acronyms that either
appear only once or are used
infrequently in the Uniform Guidance.
At the same time, OMB proposes to add
several acronyms that are used more
frequently, but have been omitted from
this section in past updates, such as
Unique Entity Identifier (UEI).
In section 200.1, OMB proposes to
remove several definitions that were
used only once or on a limited basis and
instead move such definitions to the
appropriate section of the Uniform
Guidance where they appear. OMB
proposes this change to ease the
experience of the reader and avoid the
need to review Subpart A for an
understanding of a single section or
small set of sections. For example, OMB
proposes moving the definition of
‘‘Cooperative audit resolution’’ to the
text of Subpart F. OMB also proposes
deleting the definition of ‘‘Federal
awarding agency,’’ which OMB now
proposes to incorporate within the
definition of ‘‘Federal agency.’’
OMB also proposes adding several
new definitions of commonly used
terms based on feedback from agencies
and the RFI. Proposed new definitions
include ‘‘continuation funding,’’ ‘‘forprofit organization,’’ ‘‘key personnel,’’
‘‘participant,’’ and ‘‘prior approval.’’
OMB proposes to revise several
definitions to incorporate threshold
increases referenced in other sections,
such as the threshold increase for
‘‘equipment’’ to $10,000, the threshold
for ‘‘supply’’ to $10,000, and the
definition of ‘‘Modified Total Direct
Costs,’’ which now proposes to exclude
subaward costs above $50,000, as
compared to $25,000 in the existing
guidance.
OMB also proposes to revise several
definitions for other reasons. For
example, OMB proposes to shorten the
definition of ‘‘improper payment’’ to
ensure that the definition references the
appropriate source in Appendix C to
OMB Circular A–123, Requirements for
Payment Integrity Improvement. OMB
proposes to update the definition of
‘‘intangible property’’ to include more
information related to date and licenses.
OMB also proposes to clarify
‘‘participant support costs’’ with
additional explanatory information and
expand the definition of ‘‘questioned
costs’’ to provide greater understanding
of the terms throughout the Uniform
Guidance. In addition, other definitions
that OMB proposes altering include
‘‘cost sharing’’ (discussed below under
section 200.306), ‘‘Federal agency,’’
‘‘Federal award date,’’ ‘‘financial
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obligations,’’ ‘‘Indian tribe,’’ ‘‘period of
performance,’’ ‘‘prior approval,’’ ‘‘real
property’’, ‘‘recipient,’’ ‘‘special purpose
equipment,’’ ‘‘subaward,’’ and
‘‘termination.’’
OMB also proposes a minor change to
the definition of the term ‘‘Federal
financial assistance.’’ OMB proposes the
term to include assistance received or
administered by ‘‘recipients or
subrecipients’’—as compared to
assistance received or administered by
‘‘non-Federal entities’’ in the existing
guidance. In cases in which Federal
agencies apply subparts A through E of
part 200 to for-profit organizations, use
of the terms ‘‘recipients or
subrecipients’’ in this definition may
provide further clarity on the
applicability of the Build America, Buy
America Act (BABA) (Pub. L. 117–58,
135 Stat. 429, 70901–70927, Nov. 15,
2021) to Federal awards made by that
agency to for-profit organizations.
Section 70912(4) of BABA incorporates
the definition of Federal financial
assistance from 2 CFR 200.1 or
successor regulations. For additional
information on BABA and OMB’s
guidance in 2 CFR part 184, see 88 FR
55750 (Aug. 23, 2023). OMB does not,
however, propose to materially change
the sentence in the applicability section
at 200.101(a)(2) providing Federal
agencies with discretion on whether to
apply the guidance to for-profit
organizations.
Subpart B—General Provisions
OMB proposes to revise this subpart,
in section 200.101, to clarify the
applicability of the Uniform Guidance.
In OMB’s proposal, all subparts of part
200 continue to apply to Federal
agencies that make Federal awards to
‘‘non-Federal entities.’’ Federal agencies
also retain discretion on whether to
apply subparts A through E of part 200
to Federal agencies, for-profit entities,
foreign public entities, or foreign
organizations—which are not included
in the definition of the term ‘‘nonFederal entity.’’ OMB proposes to add
language encouraging agencies to apply
the requirements in subparts A through
E of part 200 to all recipients in a
consistent and equitable manner to the
extent permitted within applicable
statutes, regulations, and policies.
In support of plain language
principles, OMB proposes to convert the
applicability table in paragraph (b) of
section 200.101 into paragraph form.
OMB proposes multiple clarifying
revisions in section 200.102 to improve
agency and recipient understanding of
the availability and use of exceptions to,
or deviations from, OMB’s Uniform
Guidance in part 200.
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In section 200.104, OMB proposes to
provide a more succinct statement that
part 200 supersedes previous OMB
guidance issued in 2 CFR on topics
including cost principles and audits for
Federal financial assistance. Because
part 200 has now existed for 10 years in
its current format and location, OMB
does not believe it is necessary to
continue to include the detailed list
identifying elements of the Uniform
Guidance in part 200 previously
contained in OMB Circulars or other
parts of 2 CFR, subtitle A, chapter II.
In section 200.111 OMB proposes new
guidance to permit Federal agencies to
request, receive, and distribute Federal
award information in a language other
than English when it is appropriate for
a specific program or Federal award.
This proposal would allow for more
flexibility when working in
international environments or in
communities where English is the not
the primary language.
Finally, based on feedback from the
oversight community, OMB proposes to
revise the section on mandatory
disclosure to clarify that recipients and
subrecipients must promptly disclose
any credible evidence of a violation of
Federal criminal law potentially
affecting the Federal award. OMB also
proposes to revise this section to require
recipients and subrecipients to provide
written disclosure to the agency’s Office
of Inspector General. OMB believes the
proposed ‘‘credible evidence’’ standard
is more appropriate because it would
not require recipients, subrecipients,
and applicants to make a legal
determination that a criminal law has
been violated before they are required to
make a disclosure of ‘‘credible
evidence’’ of such a violation to the
Federal agency, pass-through entity (if
applicable), and the agency’s Office of
Inspector General.
Subpart C—Pre-Federal Award
Requirements and Contents of Federal
Awards
OMB proposes to revise this subpart
to clarify certain requirements for fixed
amount awards. For example, OMB
proposes to clarify in section 200.201
that recipients are entitled to any
unexpended funds under a fixed
amount award if the required activities
were completed in accordance with the
terms and conditions of the award. In
the same section, OMB also proposes to
clarify record retention and post award
certification requirements. In addition—
although no specific language is
proposed in this document—OMB is
considering requiring additional preaward certifications for fixed amount
awards to address the potential
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increased risk of fraud under fixed
amount awards. OMB invites comments
on appropriate pre-award certifications
for fixed amount awards and notes that
it may include a requirement for such
certifications in the final guidance
document. OMB also proposes to more
specifically identify certain prior
approval requirements that specifically
relate to fixed amount awards.
OMB also proposes to expand section
200.202 on program planning and
design to encourage agencies to
encourage recipients to engage members
of the community that will benefit from
or be impacted by a Federal financial
assistance program. OMB also proposes
to encourage Federal agencies to
develop programs in consultation with
the communities that will benefit from
or be impacted by a program. In section
200.202, OMB also proposes to
underscore that Federal agencies should
consider all available data and
evaluation results from past programs
and coordinate with other agencies
during program planning and design.
OMB proposes to revise section
200.203 on Assistance Listings to
reinforce the importance of
communicating in plain language and
highlighting any program-related
customer service initiatives.
OMB proposes to revise section
200.204 on notices of funding
opportunities in a number of ways to
encourage Federal agencies to focus
more on communicating requirements
to the public in an accessible and
comprehensible manner. For example,
OMB proposes to include an Executive
Summary requirement and to encourage
agencies to use plain language when
publishing opportunities. OMB also
proposes that agencies should
communicate program requirements
specifically and clearly, as well as limit
the length of program announcements.
As noted in the proposed changes to the
guidance, this is particularly important
in consideration of applicants with less
experience applying for Federal
financial assistance, such as applicants
from underserved communities. OMB
also proposes to encourage Federal
agencies to identify all eligible
applicants in the funding opportunity—
for example, by providing greater
specificity on different types of
nonprofit organizations such as labor
unions. In proposing these revisions,
OMB aims to make notices of funding
opportunities more consistent and
transparent. OMB also aims to ensure
that applicants are not unintentionally
excluded from funding opportunities.
OMB also proposes additional
changes in section 200.204, such as
encouraging agencies to provide an
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anticipated award date and providing
additional clarifying guidance on the
availability period for funding
opportunities.
In section 200.205 OMB proposes to
clarify that a Federal agency should
consider diversity when developing
policies and procedures for merit review
panels.
In section 200.206 OMB proposes to
revise the section regarding risk
evaluation by using the term risk
assessment as a standard term and
clarifying agency requirements to
appropriately review eligibility
qualifications and financial integrity
information. OMB also proposes to
clarify that agency processes may
consider any risk criteria pertinent to a
program, such as cybersecurity risk or
impacts on local jobs and the
community. OMB further proposes to
clarify that an agency may modify its
risk assessment at any time during the
lifecycle of an award.
OMB also proposes to clarify in
section 200.209 that those entities who
are exempt from the requirements of 2
CFR part 25 must still complete the
certifications and representations by
submitting the appropriate assurance
form.
OMB also proposes to include several
additions to section 200.216 on the
prohibition of certain
telecommunications and video
surveillance services or equipment to
expand the guidance by incorporating
additional information from OMB’s
Frequently Asked Questions document.
Lastly, OMB proposes to include a
new section 200.217 to expand on the
whistleblower protections and
requirements for recipients of Federal
financial assistance, which had
previously been referenced in section
200.300.
Subpart D—Post Federal Award
Requirements
OMB proposes to retain the guidance
in section 200.300 on statutory and
national policy requirements, which
explains the need to administer Federal
awards in full accordance with the U.S.
Constitution, applicable Federal statutes
and regulations, and requirements of
part 200. OMB proposes to streamline
section 200.300 and to reinforce existing
nondiscrimination requirements under
the Constitution and other applicable
law, consistent with Executive Order
13988 of January 20, 2021 (‘‘Preventing
and Combating Discrimination on the
Basis of Gender Identity or Sexual
Orientation’’), and Executive Order
14075 of June 15, 2022 (‘‘Advancing
Equality for Lesbian, Gay, Bisexual,
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Transgender, Queer, and Intersex
Individuals’’).
In section 200.305 on Federal
payment, OMB proposes to provide
additional flexibilities for recipients
when interest bearing accounts are not
accessible in a foreign country; and to
provide a specific link for returning
funds to the Payment Management
System, rather than including the more
extensive instructions in the guidance
itself.
OMB proposes to revise section
200.306 on cost sharing, as well as the
definition of cost sharing itself, to
clarify that ‘‘matching’’ is one category
of cost sharing overall—thus eliminating
the need to repeat the term ‘‘matching’’
throughout. In the same section, OMB
also proposes to provide additional
guidance on voluntary uncommitted
cost sharing for institutes of higher
education.
OMB proposes to revise section
200.307 on program income by
providing clarifications in paragraph (a)
regarding use and expenditure of
program income, including allowing
program income for certain closeout
costs. OMB also proposes to revise and
provide further clarifying guidance in
paragraph (b) for each of the three
methods for use of program income.
OMB proposes changes to section
200.308 on revision of budget and
program plans by combining the
requirements for construction and nonconstruction awards to provide greater
uniformity in the requirements for all
award types. OMB proposes to clarify
that recipients do not need approval of
individual subrecipients under all
circumstances, but only when making
subawards of programmatic activities
not proposed by the recipient in the
application for an award. A Federal
agency may also require prior approval
of subrecipients through the terms and
conditions of a Federal award. OMB
proposes to further clarify that agencies
should not require approval of a change
in a proposed subrecipient unless the
initial inclusion of a subrecipient was a
determining factor in the agency’s merit
review process. This change is proposed
to reinforce the role of the recipient as
responsible for the efficient and
effective administration of the Federal
award including the selection of a
qualified and capable subrecipient.
OMB also proposes to identify other
items requiring prior approval,
including requesting additional funds,
transferring funds, and no-cost
extensions. OMB proposes to clarify that
no-cost extensions are different from
one-time extensions, which an agency is
permitted to authorize a recipient to do
without prior approval.
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In section 200.309 on modification to
the period of performance, OMB
proposes to provide additional
clarification that when an agency
decides not to continue an award with
multiple budget periods, the period of
performance should be amended to end
at the completion of the currently
authorized budget period. OMB also
proposes to incorporate the definition of
‘‘renewal award’’ in this section.
In section 200.311, addressing real
property, OMB proposes to include a
new paragraph on appraisals to
introduce additional guidance on
standards for conducting independent
appraisals consistent with the Uniform
Relocation Assistance and Real Property
Acquisition Policies Act of 1970, as
amended, (42 U.S.C. 4601–4655) except
as provided in the implementing
regulations at 49 CFR part 24, ‘‘Uniform
Relocation Assistance And Real
Property Acquisition For Federal And
Federally-Assisted Programs.’’ OMB
also proposes to include a definition of
the term ‘‘encumbrance’’ in sections
200.311, 200.313, and 200.315.
In section 200.313, relating to
equipment, OMB proposes to increase
the threshold value for equipment from
$5,000 to $10,000 and to provide
additional guidance on the meaning of
a ‘‘conditional title.’’ Consistent with
proposals in sections 200.311 and
200.315, OMB also proposes a definition
of the term ‘‘encumbrance.’’ Consistent
with the existing requirements for
States, OMB also proposes to allow
Indian Tribe to dispose of equipment in
accordance with tribal law. OMB also
proposes to clarify that agencies may
permit the recipient to retain equipment
with no further obligation to the Federal
government when it is not prohibited by
Federal statue or regulation. OMB also
proposes to reinforce the responsibility
of recipients to maintain updated
records regarding equipment.
OMB proposes to revise section
200.314 on supplies to raise the
threshold from $5,000 to $10,000. OMB
also proposes to clarify that the
requirements for unused supplies apply
to the aggregate value of all supply
types, and not just like-item supplies.
OMB also proposes to include a
definition of ‘‘unused supplies’’ in
section 200.314.
In section 200.315 on intangible
property, OMB proposes to reinforce the
potential requirement for recipients and
subrecipients to make intangible
property publicly available on agencydesignated websites. Consistent with
proposals in sections 200.311 and
200.313, OMB also proposes a definition
of the term ‘‘encumbrance.’’
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OMB proposes several revisions to the
procurement standards in the Uniform
Guidance. In recognition of Tribal
sovereignty, and consistent with the
existing requirements for States, in
section 200.317 OMB proposes to allow
Indian tribes to follow their own
policies and procedures.
OMB also proposes to revise the
procurement standards in section
200.318. These proposed revisions
include providing additional guidance
that contractors appropriately classify
employees consistent with the Fair
Labor Standards Act. See the Fair Labor
Standards Act at 29 U.S.C. chapter 8.
OMB also proposes adding a new
paragraph (l) in section 200.318 to
clarify that that the procurement
standards in part 200 do not prohibit
recipients or subrecipients from using
Project Labor Agreements or similar
forms of pre-hire collective bargaining
agreements; requiring commitments or
goals to hire people residing in highpoverty areas, disadvantaged
communities as defined by the Justice40
Initiative OMB Memorandum M–21–28,
or high-unemployment census tracts
within a region no smaller than the
county where a federally funded
construction project is located,
consistent with the policies and
procedures of the recipient or
subrecipient, provided that a recipient
or subrecipient may not prohibit
interstate hiring; requiring commitments
or goals to individuals with barriers to
employment (as defined in section 3 of
the Workforce Innovation and
Opportunity Act (29 U.S.C. 3102(24)),
including women and people from
underserved communities as defined by
Executive Order 13985; using
agreements intended to ensure
uninterrupted delivery of services; using
agreements intended to ensure
community benefits; or offering
employees of a predecessor contractor
rights of first refusal under a new
contract. The proposed paragraph
explains that Federal agencies may
consider allowing recipients or
subrecipients to use such practices if
consistent with the U.S. Constitution,
applicable Federal statutes and
regulations, the objectives and purposes
of the Federal financial assistance
program, and other requirements of part
200. For example, any hiring preference
for a class or groups of persons would
be permissible only to the extent that it
is consistent with the equal protection
requirement of the U.S. Constitution.
In section 200.319, OMB proposes to
remove the prohibition in the Uniform
Guidance on using geographic
preference requirements. In the same
section, OMB also proposes to state that
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subpart D does not prohibit recipients
and subrecipients from incorporating a
scoring mechanism that rewards bidders
committing to specific numbers and
types of U.S. jobs, as well as certain
compensation and benefits. OMB
cautions, however, that any geographic
preferences or scoring mechanisms must
be consistent with the U.S. Constitution,
applicable Federal statutes and
regulations, and the terms and
conditions of the Federal award. OMB
also proposes to clarify that any such
scoring mechanism must be consistent
with established practices and legal
requirements applicable to the recipient
or subrecipient.
In section 200.320 on procurement
methods, OMB proposes to change
‘‘small purchases’’ to ‘‘simplified
acquisitions’’ to further align with
standard terminology. In paragraph (a),
OMB proposes to clarify that ‘‘micropurchases’’ and ‘‘simplified
acquisitions’’ are types of ‘‘informal
procurement methods for small
purchases.’’ OMB also proposes to
remove the requirements that local and
tribal governments must open sealed
bids in public; this requirement may be
inconsistent with State or tribal policies
and procedures.
In section 200.321, OMB proposes to
add ‘‘veteran-owned business’’ to the
types of businesses that recipients and
subrecipients are encouraged to
consider for procurement contracts
under a Federal award.
OMB proposes to add a new
paragraph (b) in section 200.323.
Executive Order 14057 of December 8,
2021 (‘‘Catalyzing Clean Energy
Industries and Jobs Through Federal
Sustainability’’) establishes that it is the
policy of this Administration to lead by
example and pursue a whole-ofgovernment approach on sustainability
and expanding American technologies,
industries, and jobs that support
sustainability and climate resilience.
The Executive Order tasks the Federal
government with pursuing new
strategies to improve the Nation’s
preparedness and resilience to the
effects of a changing climate, including
financial management strategies. In
support of this policy, OMB proposes to
add a new paragraph (b) in section
200.323 encouraging Federal award
recipients, to the extent permitted by
law, to purchase, acquire, or use
products and services that can be
reused, refurbished, or recycled; contain
recycled content, are biobased, or are
energy and water efficient; and are
sustainable.
OMB proposes to add additional
language to section 200.324 on contract
cost and price to establish that the
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recipient or subrecipient may consider
potential workforce impacts in their
procurement analysis if the
procurement transaction will potentially
displace public sector employees. OMB
also seeks comment on its proposal to
delete the existing paragraph (b) in 2
CFR 200.324, requiring the recipient to
negotiate profit as a separate element of
the price for each contract in which
there is no price competition.
In section 200.328, OMB proposes to
provide additional clarity on required
deadlines for financial reporting to align
with progress reporting requirements.
In section 200.329, OMB proposes to
revise the reporting of program
performance section to remind agencies
of the importance of not requiring
information in programmatic reports
that is not necessary for the effective
monitoring of the award. OMB also
proposes additional language that
emphasizes the importance of
measuring customer experience as well
as considering evaluation plans when
outlining reporting requirements. OMB
further proposes to clarify that
programmatic reporting may not be
required more frequently than quarterly
unless specific conditions have been
applied to the award in accordance with
section 200.208.
In section 200.331 on subrecipient
and contractor determinations, OMB
proposes additional language to
emphasize that Federal agencies do not
have a direct legal relationship with
subrecipients and contractors of passthrough entities. OMB also proposes to
clarify that the characteristics indicative
of a subrecipient or contractor
determination are not limited to the
sample characteristics currently
provided in the guidance.
Based on feedback from the Federal
financial assistance community, OMB
proposes to include in section 200.332
the requirement for pass-through
entities to confirm that potential
subrecipients are not suspended,
debarred, or otherwise excluded from
receiving Federal funds.
In section 200.333, OMB proposes
removing the current Simplified
Acquisition Threshold limit for fixed
amount subawards to provide agencies
and recipients with increased flexibility
in making programmatic and budgetary
decisions, while still allowing recipients
to establish their own award-specific
thresholds with the prior written
approval of the Federal agency. Under
the proposed revision, a recipient’s use
of fixed amount subawards remains
subject to the prior written approval of
the Federal agency.
OMB also proposes to revise and
clarify the guidance pertaining to
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termination and closeout requirements
in sections 200.340 through 200.344. On
termination, in section 200.340 OMB
proposes to remove language that allows
a Federal agency or pass-through entity
to terminate an award ‘‘if an award no
longer effectuates the program goals or
agency priorities.’’ This revision is
proposed only for the purpose of
clarifying the guidance; the proposed
guidance still allows agencies to
terminate a Federal award according to
the terms and condition of the award.
OMB also proposes to clarify that a
termination does not include a Federal
agency’s decision to not provide
continuation funding. In section
200.341, OMB also proposes to clarify
requirements that must be included in
a notice of termination.
In section 200.344 on closeout, OMB
proposes to revise closeout guidance to
clarify that recipients must still submit
a final financial report even when the
recipient does not have a final indirect
cost rate; and proposes to clarify that an
additional final report must be
submitted when the indirect cost rate is
finalized. In the same section, OMB also
proposes to provide additional
flexibilities for agencies and recipients
to closeout Federal awards in a timely
manner. OMB proposes to allow an
agency and recipient to mutually agree
upon a final indirect cost rate for an
individual award. This proposed
revision is not intended to grant
agencies additional authorities to
negotiate rates over cognizant agencies
for indirect rates; rather, it simply
proposes to affirm the Federal agency’s
right to negotiate with the recipient or
subrecipient on a case-by-case basis
with the goal of closing out specific
awards in a timely manner.
Subpart E—Cost Principles
In section 200.401 on applicability,
OMB proposes to clarify that the cost
principles in subpart E do not apply to
grants and cooperative agreements for
food commodities.
In section 200.403, OMB proposes to
add language clarifying when allowable
administrative closeout costs may be
incurred in paragraph (h).
In section 200.407, OMB has removed
ten items from the prior written
approval requirements to reduce Federal
agency and recipient burden. These
proposed revisions include no longer
requiring prior written approval for
such items as, real property, equipment,
direct costs, entertainment costs,
exchange rates, memberships,
participant support costs, selling and
marketing costs, and taxes. In this
section, OMB also proposes to remove
the reference to requiring prior written
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approval for use of grants agreements,
cooperative agreements, and contracts,
but other requirements throughout the
Uniform Guidance in part 200 would
continue to apply to use of these
instruments.
In section 200.414, OMB proposes to
revise several aspects of the guidance
pertaining to indirect costs. OMB
proposes to clarify that recipients and
subrecipients may notify OMB of any
disputes with regards to a Federal
agency’s application or acceptance of a
federally negotiated indirect cost rates.
OMB also proposes to revise the
guidance to clarify that pass-through
entities must accept all federally
negotiated indirect cost rates for
subrecipients.
In the same section, in response to
feedback from the Federal financial
assistance community, OMB proposes to
raise the de minimis rate from 10
percent to 15 percent. This change
would allow for a more reasonable and
realistic recovery of indirect costs,
particularly for new or inexperienced
organizations that may not have the
capacity to undergo a formal rate
negotiation, but still deserve to be fully
compensated for their overhead costs.
The proposed changes still allow
recipients and subrecipients to apply a
rate lower than 15 percent at their own
discretion. At the same time, the
proposed guidance clarifies that Federal
agencies may not compel recipients and
subrecipients to use an indirect rate
lower than the proposed 15 percent rate,
unless required by statute. OMB also
proposes to clarify that the de minimis
rate may not be applied to cost
reimbursement contracts and recipients
and subrecipients are not required to
use the de minimis rate.
Finally, OMB also proposes to remove
the existing requirement in paragraph
(h) of section 200.414 for all indirect
cost rates to be publicly available on a
government-wide website—but this may
be revisited when applicable systems
are updated to allow for the posting of
indirect cost rates. OMB seeks
comments that include analysis on the
advantages and disadvantages of raising
the de minimis rate in the way
proposed.
Based on feedback from the oversight
community, in section 200.415 OMB
proposes to require subrecipients to
certify to pass-through entities that
financial information submitted to the
pass-through entity is complete and
accurate.
Based on feedback from both
Institutions of Higher Education (IHE)
and Federal agencies, OMB also
proposes to remove the requirement in
section 200.419 for an IHE that receives
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an aggregate total $50 million or more
in Federal awards and instruments
subject to subpart E to submit a
disclosure statement form (DS–2)
containing information on cost
accounting standards. This proposed
change, if finalized, would likely reduce
Federal agency and recipient burden.
OMB received a comment indicating
that the DS–2 is outdated, not needed
for ensuring compliance with statutory
authorities related to Federal financial
assistance, and not universally
implemented across the IHE
community. The commenter also
indicated that the DS–2 is not used as
regular tool by the audit or oversight
community to enhance compliance or
oversight. This commenter also stated
that information contained in the DS–2
is readily available in numerous policy
portals at research universities and
creates unnecessary administrative and
cost burden to research universities and
Federal agencies.
If finalized, this proposed change
would not impact the requirement for
IHEs receiving Federal awards above the
threshold to comply with the Cost
Accounting Standards Board’s cost
accounting standards. It would only no
longer require use of the DS–2 form.
This proposed change also is not
intended to impact any FAR-based
requirements related to disclosure of
cost accounting practices.
OMB seeks comments on the potential
impact of this proposed change to
section 200.419, including analysis on
the advantages and disadvantages of
removing the requirement for use of the
DS–2 form. For example, are there any
advantages in retaining consistency and
uniformity in accounting practices
followed by educational institutions for
both contracts under the FAR and
Federal financial assistance under part
200, which are achieved through use of
the DS–2? For additional background,
see, for example, 58 FR 39996, at 39997
(Jul. 26, 1993) (explaining OMB’s initial
plans to expand the Cost Accounting
Standards Board’s regulations and
standards for educational institutions to
Federal grants). Does the requirement to
use the DS–2 at section 200.419 help
ensure that each IHE’s practices used in
estimating costs for a proposal are
consistent with cost accounting
practices used by the institution in
accumulating and reporting costs or
serve other functions? See 48 CFR
9905.501–20. How, if at all, could
removing the requirement to use the
DS–2 from section 200.419 impact
compliance by research universities
with the requirements of 41 U.S.C. 1502
or the implementing regulations at FAR,
Chapter 99 for government contracts? To
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what extent would removing the
requirement to use the DS–2 at section
200.419 reduce burden if the statutory
and FAR-based requirements remain in
effect?
OMB proposes to require several
revisions to the general provisions for
items of costs. Specifically, in section
200.420, OMB proposes to add further
clarifying text explaining that the listed
items of cost are not intended to provide
a comprehensive list and that failure to
mention an item, even as an example, is
not intended to imply that is allowable
or unallowable. OMB proposes this
clarification to address numerous
questions about allowability of costs
that arise in the Federal financial
assistance community.
In section 200.422, OMB proposes to
incorporate the definition of an
‘‘advisory council or committee.’’
At section 200.431, OMB proposes to
revise the section on fringe benefits to
require recipients and subrecipients to
allocate payments for unused leave as
general administrative expenses or
include them in a fringe benefit rate
with cognizant agency approval. Based
on feedback from the oversight
community, OMB also proposes in
section 200.431 to clarify that recipients
and subrecipients may not charge
unfunded pension and post-retirement
health benefits to an award in a manner
that is inconsistent with the allocation
principles of Subpart E. Also in section
200.431, OMB proposes additional
clarifying guidance on pension plan
costs and post-retirement health plans.
OMB proposes to clarify the
description of conferences in section
200.432 to remove any limitations
provided by the specific types of events
listed in the guidance currently. OMB
also proposes to allow for dependentcare costs associated with participants’
attending or partaking in programrelated conferences.
OMB proposes to revise section
200.438 entertainment costs to include
prizes, which currently reside in
Subpart B, despite the fact that prizes
are an item of cost.
In section 200.440, OMB removed the
requirement for prior approval of
fluctuations of exchange rates. While a
recipient or subrecipient needs prior
approval for additional Federal funding,
no approval is required because an
exchange rate has fluctuated and
resulted in a necessary charge to
available funding.
In section 200.454, OMB proposes to
remove prior approval requirements for
the cost of membership in any civic or
community organization.
In section 200.455 on organization
costs, OMB proposes to clarify that any
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costs associated with either persuading
or dissuading employees from collective
bargaining and related activities are not
allowable under Federal awards. OMB
also proposes to add clarifying language
that certain costs related to data,
evaluation, and other related
organization costs are allowable.
In section 200.456, OMB proposes to
remove the prior approval requirement
of participant support costs. OMB
proposes to clarify, however, that the
treatment of participant costs is
ultimately the responsibility of the
recipient or subrecipient to determine,
document, and treat consistently across
all Federal awards (and when
negotiating indirect rates).
In section 200.461, OMB proposes
additional clarifying guidance on
publication and printing costs by adding
reference to ‘‘article processing charges’’
or ‘‘similar open access fees.’’
In section 200.467, OMB also
proposes to remove the prior approval
option for selling and marketing costs,
clarifying selling and marketing costs
are unallowable unless they meet the
requirements in section 200.421 and are
required to meet the requirements of the
award.
Finally, OMB proposes to revise the
section on termination costs at section
200.472 to also include closeout costs.
Specifically, OMB proposes to include
guidance for recipients and
subrecipients to charge administrative
costs specifically associated with the
closeout of a Federal award. OMB
received feedback from the Federal
financial assistance community that the
exclusion of closeout costs in the
Uniform Guidance has been problematic
as recipients and subrecipients have
been unable to charge actual costs
associated with closeout actions, such
as certain administrative or staff costs
not covered through indirect cost
recoveries.
Subpart F—Audit Requirements
In this subpart, OMB proposes to raise
the audit threshold from $750,000 to
$1,000,000 in section 200.501. OMB
reviewed audit submission data as well
as economic data when determining the
increase to this threshold. Every two
years, the Director of OMB is authorized
to adjust the dollar amount of this
threshold consistent with the purposes
of the Single Audit Act, provided the
Director does not make such
adjustments below $300,000. 31 U.S.C.
7502.
In section 200.502 OMB also proposes
to clarify that, in determining Federal
awards expended, loan and loan
guarantees retain their Federal character
through the end of the Federal award
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period of performance unless otherwise
specified in statute or Federal agency
regulations. In response to feedback
from Federal agencies, OMB proposes to
revise the guidance to require that the
schedule of expenditures of Federal
awards for comprehensive annual
financial reports identify the State,
municipal, or local entity recipient or
subrecipient of a Federal award. This
change is necessary to provide greater
transparency and understanding of the
information provided in the schedule.
In section 200.510, at paragraph (b),
OMB proposes additional guidance
explaining that, for audits covering
multiple recipients (such as
departments, agencies, IHEs, and other
organizational units), the schedule of
expenditures must identify the recipient
of the Federal award.
In section 200.513, OMB proposes to
revise the responsibilities of Federal
agencies. Specifically, OMB proposes to
encourage Federal agencies to engage
with external audit stakeholders and the
Federal agency’s Office of Inspector
General National Single Audit
Coordinator (NSAC) prior to submitting
compliance supplement drafts to OMB.
In the same section OMB also proposes
to clarify that a Federal agency’s key
management single audit liaison must
also coordinate with the agency’s Office
of Inspector General NSAC when
appropriate.
In section 200.514, on scope of audit,
OMB proposes to revise compliance
requirements to specify that compliance
testing must include a test of
transactions and other auditing
procedures necessary to provide the
auditor with sufficient evidence to
support an opinion on compliance.
In section 200.516, based on feedback
OMB received from the Federal
financial assistance community, OMB
proposes to revise in the definitions of
known questioned costs and likely
questioned costs and provide further
clarity on how they are identified in an
audit report.
Appendix I to Part 200—Full Text of
Notice of Funding Opportunity
OMB proposes to revise this appendix
in its entirety in support of the goal of
simplifying and clarifying the grant
solicitation and application process,
which is a key objective under
Executive Order 14058 on Transforming
Federal Customer Experience and
Service Delivery to Rebuild Trust in
Government. The proposed changes to
the notice of funding opportunity in
Appendix I are intended to improve the
quality and accessibility of funding
opportunities. Specifically, the
proposed revisions to Appendix I intend
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to: (1) follow plain language principles;
(2) group similar items together to
streamline content; (3) align sections
more closely to the application process;
(4) include basic information at the top
of a funding opportunity so that
applicants can more easily make
decisions about whether or not to apply;
(5) clearly define what must be included
in a section of the funding opportunity
versus what is at an agency’s discretion;
and (6) provide flexibility to agencies
while also giving applicants a common
way to find information in every
funding opportunity.
Appendix III to Part 200—Indirect
(F&A) Costs Identification and
Assignment, and Rate Determination for
Institutions of Higher Education (IHEs)
OMB proposes to update this
appendix to adjust the exclusion
threshold of subawards from $25,000 to
$50,000 for modified total direct costs.
Appendix IV to Part 200—Indirect
(F&A) Costs Identification and
Assignment, and Rate Determination for
Nonprofit Organizations
OMB proposes to update this
appendix to adjust the exclusion
threshold of subawards from $25,000 to
$50,000 for modified total direct costs.
OMB also proposes to clarify that under
the direct cost allocation method, joint
costs include costs for information
technology.
Appendix VII to Part 200—States and
Local Government and Indian Tribe
Indirect Cost Proposals
OMB proposes to update this
appendix to adjust the exclusion
threshold of subawards from $25,000 to
$50,000 under modified total direct
costs (MTDC). OMB also proposes to
clarify the meaning of ‘‘department or
agency’’ for State and local
governments.
OMB also proposes a revision to
underscore that Federal agencies must
accept indirect cost proposals
developed by State or local departments
or agencies receiving less than $35
million in their fiscal year. The
proposed revision to this appendix also
provides that Federal agencies cannot
compel these State or local
governmental departments or agencies
to accept the de minimis rate, or any
other rate established by the Federal
agency, in place of their indirect cost
proposals. OMB emphasizes, however,
that any such indirect cost proposals
must be developed in accordance with
the requirements of part 200 and
maintained for audit—along with
related supporting documentation.
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Appendix X to Part 200—Data
Collection Form (Form SF–SAC)
OMB proposes to revise this appendix
to clarify where audit submission
instructions are located.
Appendix XII to Part 200—Award Term
and Condition for Recipient Integrity
and Performance Matters
OMB proposes to revise this award
term to be consistent with the statutory
obligation and to reflect the appropriate
location (responsibility and
qualification records) in SAM.gov for
reporting integrity and performance
matters. OMB proposes to renumber the
award term to align to the requirements
of the standard organization of the Code
of Federal Regulations.
Other Revisions Under Consideration
for Future Updates
OMB may consider additional
revisions for potential future updates.
Specifically, OMB welcomes additional
comments from the public on the
following topics for consideration in
possible additional revisions in the
future:
• Establishing specific audit
requirements for for-profit entities,
which are not subject to the
requirements of Subpart F;
• Incorporating the requirements of
National Security Presidential
Management (NSPM)–33 on research
security requirements;
• Providing additional guidance in 2
CFR concerning the relationship of
specific aspects of the guidance to loans
and loan guarantees;
• Establishing mechanisms to
automatically adjust certain thresholds
due to inflation or other triggering
events (where permitted by law).
• Removing additional prior approval
requirements.
• Challenges related to negotiating
indirect costs, working with cognizant
agencies, or any other topics related to
indirect costs that could be addressed in
future updates; and
• Expanding the guidance in Subpart
F to include more specific requirements
on the scope of an audit (‘‘proper
perspective’’) so that agencies have
additional contextual information to
guide them in resolving audit findings.
Request for Comments
OMB requests comments on all
aspects of the propose guidance in this
document, including on any reliance
interests that commenters may have
based on the existing text of 2 CFR,
subtitle A that OMB’s proposal may
affect, and that OMB should consider in
deciding whether or how to finalize this
guidance.
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Federal Register / Vol. 88, No. 192 / Thursday, October 5, 2023 / Proposed Rules
Executive Order 12866 (Regulatory
Planning and Review), Executive Order
13563 (Improving Regulation and
Regulatory Review), and Executive
Order 14094 (Modernizing Regulatory
Review)
of 1995 (Pub. L. 104–4, 109 Stat. 48).
The proposed guidance would not result
in the expenditure by State, local, and
Tribal governments, in the aggregate, or
by the private sector, of $168 million or
more in any one year (2 U.S.C. 1532).
2 CFR Part 25
Executive Orders (E.O.s) 12866,
13563, and 14094 direct agencies to
assess all costs and benefits of available
regulatory alternatives, and, if
regulation is necessary, to select
regulatory approaches that maximize
net benefits (including potential
economic, environmental, public health
and safety effects, distributive impacts,
and equity). The OMB Guidance for
Grants and Agreements published in
subtitle A of 2 CFR is guidance to
Federal agencies and not regulation. 2
CFR 1.100(b). OMB has thus determined
that the revision of 2 CFR is not a
significant regulatory action under E.O.
12866, as amended.
Executive Order 13132 (Federalism
Assessment)
Colleges and universities; Grant
programs; Hospitals; International
organizations; Loan programs; Reporting
and recordkeeping requirements.
ddrumheller on DSK120RN23PROD with PROPOSALS2
Regulatory Flexibility Act
This proposed guidance is exempt
from the notice and comment
requirements of the Administrative
Procedure Act (APA) because it is
guidance to Federal agencies and not
regulation. See 5 U.S.C. 553(b).
Moreover, even if this proposed
guidance were otherwise subject to 5
U.S.C. 553, it would be exempt from the
notice and comment requirement as a
matter related to grants. See 5 U.S.C.
553(a)(2). OMB nonetheless provides
the following information for the
information of the public. For a rule
subject to the notice-and-comment
provisions of the APA, the Regulatory
Flexibility Act 5 U.S.C. 601, et seq.,
requires that an agency provide a final
regulatory flexibility analysis or to
certify that the rule will not have a
significant economic impact on a
substantial number of small entities.
Based on the nature of the revisions
proposed in this notice, OMB does not
expect this guidance to have a
significant economic impact on a
substantial number of small entities
within the meaning of the Regulatory
Flexibility Act. There are some
proposed revisions that may impose a
non-significant burden; however, there
are more proposed revisions that reduce
burden to small entities. When
reviewing all proposed revisions, the
burden that will be reduced for
recipients is much greater than the
burden imposed.
The proposed guidance would not
impose unfunded mandates as defined
by the Unfunded Mandates Reform Act
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This guidance does not contain a new
requirement for information collection.
Rather, it streamlines requirements in
specific sections. Thus, the Paperwork
Reduction Act does not apply.
Executive Order 13175 (Tribal
Consultation)
OMB has analyzed this revised
guidance in accordance with the
principles and criteria contained in E.O.
13175, ‘‘Consultation and Coordination
with Indian Tribal Governments’’ 65 FR
67249 (Nov. 9, 2000). On March 7, 2023,
OMB held a two-hour Tribal
consultation to solicit feedback from
Tribal representatives. OMB also
proposes providing greater flexibility to
Tribal governments in the proposed
guidance centered on procurement
standards and disposition of equipment.
OMB also proposes to clarify the
definition of Indian Tribes.
List of Subjects
Frm 00012
2 CFR Part 175
Administrative practice and
procedures; Grant programs; Indians—
tribal government; Nonprofit
organizations; State and local
governments.
2 CFR Part 180
Administrative practice and
procedure; Grant programs; Loan
programs; Reporting and recordkeeping
requirements.
2 CFR Part 182
Administrative practice and
procedure; Drug abuse; Grant programs;
Reporting and recordkeeping
requirements.
2 CFR Part 183
Foreign aid; Grants administration;
Grant programs; International
organizations; Reporting and
recordkeeping requirements.
Administration of Federal financial
assistance, Administrative practice and
procedure, Federal financial assistance
programs.
For the reasons stated in the
preamble, the Office of Management and
Budget proposes to amend title 2,
subtitle A, chapters I and II of the Code
of Federal Regulations as follows:
■ 1. Revise the heading of title 2 to read
as follows:
Title 2—Federal Financial Assistance
2. Revise the heading of subtitle A of
title 2 to read as follows:
■
Subtitle A—Office of Management and
Budget Guidance for Federal Financial
Assistance
3. Revise part 1, consisting of §§ 1.100
through 1.305, to read as follows:
■
PART 1—ABOUT TITLE 2 OF THE
CODE OF FEDERAL REGULATIONS
AND SUBTITLE A
Sec.
Administration of Federal financial
assistance, Administrative practice and
procedure, Federal financial assistance
programs.
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Paperwork Reduction Act
2 CFR Part 1
Unfunded Mandates Reform Act of
1995
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This proposed guidance has been
analyzed in accordance with the
principles and criteria contained in E.O.
13132, ‘‘Federalism,’’ 64 FR 43255 (Aug.
10, 1999). OMB has determined that this
proposed guidance would not have
sufficient federalism implications to
warrant the preparation of a federalism
assessment. The guidance in 2 CFR is
inherently national in scope and
significance. Regardless, in accordance
with section 4(d) of E.O. 13132, OMB
consulted with appropriate State and
local officials that may be affected by
Federal agencies’ implementation of
OMB’s revised guidance by means of
posting the RFI prior to proposing
revisions. OMB weighed carefully the
interests of those who submitted
comments in response to the RFI in
proposing revisions to the guidance,
which balance the State interests with
the need to provide Federal agencies
with consistent, uniform, efficient, and
transparent guidance, which is
consistent with authorizing law.
Administrative practice and
procedure; Grant programs; Grants
administration; Loan programs.
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Subpart A—Introduction to Title 2 of the
CFR
1.100 Content of this title.
1.105 Organization and subtitle content.
1.110 Issuing authorities.
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Subpart B—Introduction to Subtitle A
1.200 Purpose of chapters I and II.
1.205 Applicability to Federal financial
assistance.
1.210 Applicability to Federal agencies and
others.
1.215 Relationship to previous issuances.
1.220 Federal agency implementation of
this subtitle.
1.230 Maintenance of this subtitle.
1.231 Severability.
Subpart C—Responsibilities of OMB and
Federal Agencies
1.300 OMB responsibilities.
1.305 Federal agency responsibilities.
Authority: 31 U.S.C. 503; 31 U.S.C. 1111;
31 U.S.C. 6307; 41 U.S.C. 1121;
Reorganization Plan No. 2 of 1970; E.O.
11541, 35 FR 10737.
Subpart A—Introduction to Title 2 of
the CFR
§ 1.100
Content of this title.
This title contains:
(a) Office of Management and Budget
(OMB) guidance to Federal agencies on
governmentwide policies for the award
and administration of Federal financial
assistance; and
(b) Federal agency regulations
implementing that OMB guidance.
§ 1.105
Organization and subtitle content.
(a) This title is organized into two
subtitles.
(b) The OMB guidance described in
§ 1.100(a) is published in subtitle A.
Publication of the OMB guidance in the
CFR does not change its nature—it is
guidance, not regulation.
(c) Each Federal agency that awards
Federal financial assistance has a
chapter in subtitle B in which it issues
those regulations. The Federal agency
regulations in subtitle B differ in nature
from the OMB guidance in subtitle A
because the OMB guidance is not
regulatory. Federal agency regulations
in subtitle B may give regulatory effect
to the OMB guidance, to the extent that
the agency regulations require
compliance with all or portions of the
OMB guidance. See also § 1.220.
§ 1.110
Issuing authorities.
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OMB issues this subtitle. Each Federal
agency that has a chapter in subtitle B
of this title issues that chapter.
Subpart B—Introduction to Subtitle A
§ 1.200
Purpose of chapters I and II.
Chapters I and II of subtitle A provide
OMB guidance to Federal agencies that
helps ensure consistent and uniform
governmentwide policies and
procedures for the management of the
agencies’ Federal financial assistance.
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§ 1.205 Applicability to Federal financial
assistance.
The types of instruments that are
subject to the guidance in this subtitle
vary from one portion of the guidance
to another. All portions of the guidance
apply to grants and cooperative
agreements, and some portions also
apply to other types of Federal financial
assistance. For example, the:
(a) Guidance on debarment and
suspension in part 180 of this subtitle
applies broadly to all Federal financial
assistance, and not just to grants and
cooperative agreements.
(b) Cost principles in subpart E of part
200 of this subtitle apply to
procurement contracts issued under a
Federal award, as well as to Federal
financial assistance. Cost principles are
implemented for Federal agencies’
direct procurement contracts through
the Federal Acquisition Regulation in
title 48 of the CFR, rather than through
Federal agency regulations on Federal
financial assistance in this title.
§ 1.210 Applicability to Federal agencies
and others.
(a) This subtitle contains guidance
that directly applies only to Federal
agencies.
(b) The guidance in this subtitle may
affect other entities through each
Federal agency’s implementation of the
guidance, portions of which may apply
to:
(1) The agency’s awarding or
administering officials;
(2) Recipients and subrecipients that
receive or apply for the agency’s Federal
financial assistance or receive
subawards under grants or cooperative
agreements; or
(3) Any other entities involved in
agency transactions subject to the
guidance in this chapter.
§ 1.215 Relationship to previous
issuances.
Although some of the guidance was
organized differently within OMB
circulars or other documents, much of
the guidance in this subtitle existed
prior to the establishment of title 2 of
the CFR.
§ 1.220 Federal agency implementation of
this subtitle.
A Federal agency that awards Federal
financial assistance subject to the OMB
guidance in this subtitle implements the
guidance in agency regulations in
subtitle B of this title and in guidance
documents, policy documents, and
procedural issuances, such as internal
instructions to the agency’s awarding
and administering officials. An
applicant, recipient, or subrecipient
would see the effect of that
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implementation in the organization and
content of the agency’s announcements
of funding opportunities and in its
award terms and conditions.
§ 1.230
Maintenance of this subtitle.
OMB issues guidance in this subtitle
after publication in the Federal
Register. Any portion of the guidance
that has a potential impact on the public
is published with an opportunity for
public comment.
§ 1.231
Severability.
The provisions of this subtitle are
separate and severable from one
another. If any provision of this subtitle
is held invalid or unenforceable as
applied to a particular person or
circumstance, the provision should be
construed so as to continue to give the
maximum effect permitted by law as
applied to other persons not similarly
situated or to dissimilar circumstances.
If any provision is determined to be
wholly invalid and unenforceable, it
should be severed from the remaining
provisions of this part, which should
remain in effect.
Subpart C—Responsibilities of OMB
and Federal Agencies
§ 1.300
OMB responsibilities.
OMB is responsible for:
(a) Issuing and maintaining the
guidance in this subtitle, as described in
§ 1.230;
(b) Interpreting the policy
requirements in this subtitle;
(c) Reviewing Federal agency
regulations implementing the
requirements of this subtitle, as required
by Executive Order 12866;
(d) Conducting broad oversight of
governmentwide compliance with the
guidance in this subtitle; and
(e) Performing other OMB functions
specified in this subtitle.
§ 1.305
Federal agency responsibilities.
The head of each Federal agency that
awards and administers Federal
financial assistance subject to the
guidance in this subtitle is responsible
for:
(a) Implementing the guidance in this
subtitle;
(b) Ensuring that the Federal agency
complies with their implementation of
the guidance;
(c) Coordinating with the Council on
Federal Financial Assistance, the Grants
Quality Service Management Office, and
other governance committees as
appropriate; and
(d) Performing other functions
specified in this subtitle.
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4. Revise part 25, consisting of
§ 25.100 through appendix A to part 25,
to read as follows:
■
PART 25—UNIQUE ENTITY IDENTIFIER
AND SYSTEM FOR AWARD
MANAGEMENT
Sec.
Subpart A—General
25.100 Purpose of this part.
25.105 Applicability.
25.110 Exceptions to this part.
Subpart B—Policy
25.200 Requirements for notice of funding
opportunities, regulations, and
application instructions.
25.205 Effect of noncompliance with a
requirement to obtain a UEI or register in
SAM.gov.
25.210 Authority to modify agency
application forms or formats.
25.215 Requirements for agency
information systems.
25.220 Use of award term.
Subpart C—Recipient Requirements of
Subrecipients
25.300 Requirement for recipients to ensure
subrecipients have a unique entity
identifier.
Subpart D—Definitions
25.400 Definitions.
Appendix A to Part 25
Award Term
Authority: 31 U.S.C. 503; 31 U.S.C. 6102;
31 U.S.C. 6307; Pub. L. 109–282; Pub. L. 110–
252, Pub. L. 113–101, Pub. L. 117–40.
Subpart A—General
§ 25.100
Purpose of this part.
This part provides guidance to
Federal agencies that:
(a) The unique entity identifier (UEI)
is the universal identifier for Federal
financial assistance applicants, as well
as recipients and their direct
subrecipients, and;
(b) The System for Award
Management (SAM.gov) is the repository
for standard information about
applicants and recipients.
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§ 25.105
Applicability.
(a) This part applies to a Federal
agency’s Federal financial assistance as
defined in § 25.400. This part applies to
all applicants for and recipients of
Federal financial assistance unless
exempted by Federal statute or § 25.110.
(b) Subrecipients are required to
obtain a UEI in accordance with subpart
C. This part does not apply to
subrecipients of subrecipients (secondtier subrecipients) or contractors under
Federal awards.
(c) This part does not apply to an
individual who applies for or receives
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Federal financial assistance as a natural
person (unrelated to any business or
nonprofit organization an individual
owns or operates).
(d) Because this part applies to loan
guarantees and other guaranteed
programs, recipients of the guarantee
from the Federal agency (for example,
lenders of guaranteed loans) are
required to complete entity validations
and acquire a UEI. Additionally, at the
Federal agency’s discretion, nonindividual beneficiary borrowers (for
example, small businesses or
corporations) may be required by the
Federal agency to obtain a UEI or
register in SAM.gov.
§ 25.110
Exceptions to this part.
(a) General exceptions. (1) Under a
condition identified in paragraph (a)(2)
of this section, a Federal agency may
exempt an applicant or recipient of
Federal financial assistance from the
requirement to obtain a UEI, register in
SAM.gov, or both.
(i) If a Federal agency grants an
exception under paragraph (a)(2) of this
section, it must use a generic entity
identifier in the data it reports to
USAspending.gov if reporting for a
prime award of Federal financial
assistance to the recipient is required by
the Federal Funding Accountability and
Transparency Act (Pub. L. 109–282, as
amended, hereafter cited as
‘‘Transparency Act’’). Granting an
exception under paragraph (a)(2) of this
section does not impact a Federal
agency’s responsibility for reporting
under the Transparency Act, except that
it may use a generic entity identifier in
the circumstances described.
(ii) Federal agencies should use
generic entity identifiers rarely as it
prevents recipients from fulfilling
reporting requirements such as
subaward or executive compensation
reporting required by the Transparency
Act.
(2) A Federal agency may exempt
either an applicant or recipient when:
(i) The Federal agency determines that
it must protect information about the
entity from disclosure in the national
security or foreign policy interests of the
United States or to avoid jeopardizing
the personal safety of the entity’s staff,
partners, beneficiaries, and participants;
(ii) (A) All of the following conditions
are met:
(1) the entity is a foreign organization
or foreign public entity;
(2) the Federal award or subaward
will be performed outside the United
States;
(3) the Federal award or subaward
will be less than $25,000; and
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(5) the Federal agency deems it to be
impractical for the entity to comply
with the requirements of this part.
(B) The Federal agency must
determine this exemption on a case-bycase basis while utilizing a risk-based
approach; or
(iii) For applicants, the Federal
agency determines that there are exigent
circumstances that prohibit the
applicant from receiving a UEI and
registering in SAM.gov before receiving
a Federal award. In these instances,
Federal agencies must require the
recipient to obtain a UEI and complete
registration in SAM.gov within 30 days
of the Federal award date.
(b) Class exceptions. OMB may
approve additional exceptions for
classes of Federal awards, applicants, or
recipients subject to the requirements of
this part when exceptions are not
prohibited by statute.
Subpart B—Policy
§ 25.200 Requirements for notice of
funding opportunities, regulations, and
application instructions.
(a) A Federal agency that issues
Federal financial assistance (see
§ 25.400) must include the requirements
of paragraph (b) of this section in each
notice of funding opportunity,
regulation, or other issuance containing
instructions for applicants that is issued
on or after the effective date of this
guidance. A notice of funding
opportunity is any paper or electronic
issuance that a Federal agency uses to
announce a funding opportunity,
whether it is called a ‘‘program
announcement,’’ ‘‘notice of funding
availability,’’ ‘‘broad agency
announcement,’’ ‘‘research
announcement,’’ ‘‘solicitation,’’ or any
other term.
(b) The notice of funding opportunity,
regulation, or other issuance must
require each applicant that does not
have an exemption under § 25.110 to:
(1) Be registered in SAM.gov before
submitting an application;
(2) Maintain a current and active
registration in SAM.gov at all times
during which it has an active Federal
award or an application under
consideration by a Federal agency. The
applicant must review and update its
information in SAM.gov annually from
the date of initial registration or
subsequent updates to ensure it is
current, accurate, and complete. If
applicable, this includes identifying the
applicant’s immediate and highest-level
owner and subsidiaries, as well as
providing information on all
predecessors that have received a
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Federal award or contract within the
last three years; and
(3) Include its UEI in each application
it submits to the Federal agency.
(c) For the purposes of this policy: the
applicant meets the Federal agency’s
eligibility criteria and has the legal
authority to apply and receive the
Federal award. For example, if a
consortium applies for a Federal award
to be made to the consortium as the
recipient, the consortium must have a
UEI. If a consortium is eligible to receive
funding under a Federal agency
program, but the agency’s policy is to
make the Federal award to a lead entity
for the consortium, the UEI of the lead
applicant must be used.
§ 25.205 Effect of noncompliance with a
requirement to obtain a UEI or register in
SAM.gov.
§ 25.210 Authority to modify agency
application forms or formats.
To implement the policies in
§§ 25.200 and 25.205, a Federal agency
may add a UEI field to information
collections previously approved by
OMB, with no further approval
required.
§ 25.215 Requirements for agency
information systems.
Each Federal agency that awards
Federal financial assistance (see
§ 25.400) must ensure that its
information systems are able to both
accept and transmit the UEI as the
universal identifier for Federal financial
assistance applicants and recipients.
ddrumheller on DSK120RN23PROD with PROPOSALS2
Use of award term.
(a) A Federal agency must include the
award term in Appendix A in all
Federal financial assistance agreements
(see § 25.400) to accomplish the purpose
of § 25.100.
(b) A Federal agency may use
different letters and numbers than those
in Appendix A to designate the
paragraphs of the award term.
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§ 25.300 Requirement for recipients to
ensure subrecipients have a unique entity
identifier.
(a) A recipient may not make a
subaward to a subrecipient that has not
obtained a UEI and provided it to the
recipient. Subrecipients are not required
to complete full registration in SAM.gov
to obtain a UEI.
(b) A recipient must notify any
potential subrecipients that the
recipient cannot make a subaward
unless the subrecipient obtains and
provides a UEI to the recipient.
Definitions.
Terms not defined in this part shall
have the same meaning as provided in
2 CFR part 200, subpart A. As used in
this part:
Applicant means any entity that
applies for a Federal award directly to
a Federal agency.
Entity includes:
(1) Whether for profit or nonprofit:
(i) A corporation;
(ii) An association;
(iii) A partnership;
(iv) A limited liability company;
(v) A limited liability partnership;
(vi) A sole proprietorship;
(vii) Any other legal business entity;
(viii) Another grantee or contractor
that is not excluded by subparagraph
(b); and
(ix) Any State or locality;
(2) Does not include:
(i) An individual recipient of Federal
financial assistance; or
(ii) A Federal employee.
Federal Award means an award of
Federal financial assistance that an
entity receives from a Federal agency.
Federal financial assistance:
(1) Means assistance that entities
receive or administer in the form of a:
(i) Grant;
(ii) Cooperative agreement (which
does not include a cooperative research
and development agreement pursuant to
the Federal Technology Transfer Act of
1986, as amended (15 U.S.C. 3710a);
(iii) Loan;
(iv) Loan guarantee;
(v) Subsidy;
(vi) Insurance;
(vii) Food commodity;
(viii) Direct appropriation;
(ix) Assessed or voluntary
contribution; or
(x) Any other financial assistance
transaction that authorizes the entity’s
expenditure of Federal funds.
(2) For the purposes of this part, the
term ‘‘Federal financial assistance’’ does
not include:
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(i) Technical assistance that provides
services in lieu of money; and
(ii) A transfer of title to federallyowned property provided in lieu of
money, even if the award is called a
grant.
Recipient means an entity that
receives or administers a Federal Award
directly from a Federal agency.
System for Award Management
(SAM.gov) means the Federal repository
into which an entity must provide the
information required for the conduct of
business as a recipient.
Unique entity identifier means the
universal identifier assigned by
SAM.gov to uniquely identify an entity.
Appendix A to Part 25—Award Term
Subpart D—Definitions
§ 25.400
(a) Unless an entity is exempt under
§ 25.110, a Federal agency may not issue
a Federal award or amend an existing
Federal award if the entity is not in
compliance with the requirements of
this part. This does not apply to
amendments to terminate or close out a
Federal award.
(b) At the time a Federal agency is
ready to make a Federal award, if the
intended recipient has not complied
with the requirements to obtain a UEI
and maintain an active registration in
SAM.gov with current information, the
Federal agency may make a Federal
award to another applicant.
§ 25.220
Subpart C—Recipient Requirements of
Subrecipients
69403
I. System for Award Management (SAM.gov)
and Universal Identifier Requirements
(a) Requirement for System for Award
Management.
(1) Unless exempt from this requirement
under 2 CFR 25.110, you must maintain a
current and active registration in SAM.gov.
Your registration must always be current and
active until you submit all final reports
required under this Federal award or receive
the final payment, whichever is later. You
must review and update your information in
SAM.gov at least annually from the date of
your initial registration or any subsequent
updates to ensure it is current, accurate, and
complete. If applicable, this includes
identifying your immediate and highest-level
owner and subsidiaries and providing
information about your predecessors that
have received a Federal award or contract
within the last three years.
(b) Requirement for Unique Entity
Identifier (UEI). (1) If you are authorized to
make subawards under this Federal award,
you:
(i) Must notify potential subrecipients that
no entity may receive a subaward from you
until the entity has provided its UEI to you.
(ii) May not make a subaward to an entity
unless the entity has provided its UEI to you.
Subrecipients are not required to complete
full registration in SAM.gov to obtain a UEI.
(c) Definitions. For the purposes of this
award term:
System for Award Management (SAM.gov)
means the Federal repository into which a
recipient must provide the information
required for the conduct of business as a
recipient. Additional information about
registration procedures may be found in
SAM.gov (currently at https://www.sam.gov).
Unique entity identifier means the
universal identifier assigned by SAM.gov to
uniquely identify an entity.
Entity is defined at 25 CFR 400 and
includes all of the following types as defined
in 2 CFR 200.1:
(1) Non-Federal entity;
(2) Foreign organization;
(3) Foreign public entity;
(4) Domestic for-profit organization; and
(5) Federal agency.
Subaward has the meaning given in 2 CFR
200.1.
Subrecipient has the meaning given in 2
CFR 200.1.
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5. Revise part 170 to read as follows:
PART 170—REPORTING SUBAWARD
AND EXECUTIVE COMPENSATION
INFORMATION
Sec.
Subpart A—General
170.100 Purpose of this part.
170.105 Applicability.
Subpart B—Policy
170.200 Federal agency reporting
requirements.
170.210 Requirements for notices of
funding opportunities, regulations, and
application instructions.
170.220 Use of award term.
Subpart C—Definitions
170.300 Definitions.
Appendix A to Part 170
Award term
Subpart B—Policy
Authority: 31 U.S.C. 503; 31 U.S.C. 6102;
31 U.S.C. 6307; Pub. L. 109–282; Pub. L. 110–
252, Pub. L. 113–101, Pub. L. 117–40.
Subpart A—General
§ 170.100
Purpose of this part.
This part provides guidance to
Federal agencies on establishing
requirements for recipients of Federal
awards to report information on
subawards and executive total
compensation, as required by the
Federal Funding Accountability and
Transparency Act of 2006 (Public Law
109–282), as amended by the Digital
Accountability and Transparency Act of
2014 (Public Law 113–101), hereafter
referred to as the ‘‘Transparency Act.’’
ddrumheller on DSK120RN23PROD with PROPOSALS2
§ 170.105
Applicability.
(a) This part applies to a Federal
agency’s Federal financial assistance as
defined in § 170.300. This part applies
to all recipients and subrecipients of
Federal awards who meet the reporting
requirements of paragraph (c) of this
section, unless exempt under Federal
statute or by paragraph (d) of this
section.
(b) This part does not apply to an
individual who applies for or receives
Federal financial assistance as a natural
person (that is, unrelated to any
business or nonprofit organization an
individual owns or operates).
(c) Reporting Requirements. (1) The
names and total compensation of an
entity’s five most highly compensated
executives must be reported if:
(i) In the entity’s preceding fiscal year,
it received:
(A) 80 percent or more of its annual
gross revenue in Federal procurement
contracts (and subcontracts) and Federal
awards (and subawards) subject to the
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Transparency Act, as defined at
§ 170.300; and
(B) $25,000,000 or more in annual
gross revenue from Federal procurement
contracts (and subcontracts) and Federal
awards (and subawards) subject to the
Transparency Act, as defined at
§ 170.300; and
(ii) The public does not have access
to information about the compensation
of senior executives of the entity
through periodic reports filed under
section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (15 U.S.C. 78m(a),
78o(d)) or section 6104 of the Internal
Revenue Code of 1986.
(d) Class exceptions. OMB may
approve additional exceptions for
classes of Federal awards or recipients
when not prohibited by Federal statute.
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§ 170.200 Federal agency reporting
requirements.
(a) Federal agencies must publicly
report Federal awards that equal or
exceed the micro-purchase threshold
(see 2 CFR 200.1). Federal agencies must
publish the required Federal award
information on USAspending.gov in
accordance with the guidance provided
by OMB and the U.S. Department of the
Treasury’s DATA Act Information
Model Schema (DAIMS).
(b) Federal agencies should ensure
that their agency-specific requirements
do not require recipients to submit data
that is the same as or similar to data
required by the Transparency Act
during a given reporting period.
§ 170.210 Requirements for notices of
funding opportunities, regulations, and
application instructions.
(a) A Federal agency that makes
Federal awards subject to the
Transparency Act must include the
requirements of paragraph (b) of this
section in each notice of funding
opportunity, regulation, or other
issuance containing instructions for
applicants under which Federal awards
may be made that are subject to
Transparency Act reporting
requirements. A notice of funding
opportunity is any paper or electronic
issuance that a Federal agency uses to
announce a funding opportunity,
whether it is called a ‘‘program
announcement,’’ ‘‘notice of funding
availability,’’ ‘‘broad agency
announcement,’’ ‘‘research
announcement,’’ ‘‘solicitation,’’ or any
other term.
(b) The notice of funding opportunity,
regulation, or other issuance must
require each applicant, to which this
part applies, to have the necessary
processes and systems in place to
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comply with this part if they receive a
Federal award.
§ 170.220
Use of award term.
(a) A Federal agency must include the
award term in Appendix A to this part
in each Federal award to a recipient
under which the total funding is
anticipated to equal or exceed $30,000
in Federal funding.
(b) Consistent with paragraph (a) of
this section, a Federal agency is not
required to include the award term in
Appendix A of this part if the total
amount of Federal funding under the
Federal award will not equal or exceed
$30,000. However, the Federal agency
must subsequently add the award term
if increases to the Federal funding result
in the award equaling or exceeding
$30,000.
(c) A Federal agency may use different
letters and numbers than those in
Appendix A to designate the paragraphs
of the award term.
Subpart C—Definitions
§ 170.300
Definitions
Terms not defined in this part shall
have the same meaning as provided in
2 CFR part 200, subpart A. As used in
this part:
Applicant means any entity that
applies for a Federal award directly
from a Federal agency.
Entity includes:
(1) Whether for profit or nonprofit:
(i) A corporation;
(ii) An association;
(iii) A partnership;
(iv) A limited liability company;
(v) A limited liability partnership;
(vi) A sole proprietorship;
(vii) Any other legal business entity;
(viii) Another grantee or contractor
that is not excluded by subparagraph (2)
or (3); and
(ix) Any State or locality;
(2) Does not include:
(i) An individual recipient of Federal
financial assistance; or
(ii) A Federal employee.
Federal Award means an award of
Federal financial assistance that an
entity receives from a Federal agency.
Executive means an officer, managing
partner, or any other employee holding
a management position.
Federal financial assistance:
(1) Means assistance that entities
receive or administer in the form of a:
(i) Grant;
(ii) Cooperative agreement (which
does not include a cooperative research
and development agreement pursuant to
the Federal Technology Transfer Act of
1986, as amended (15 U.S.C. 3710a);
(iii) Loan;
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(iv) Loan guarantee;
(v) Subsidy;
(vi) Insurance;
(vii) Food commodity;
(viii) Direct appropriation;
(ix) Assessed or voluntary
contribution; or
(x) Any other financial assistance
transaction that authorizes the entity’s
expenditure of Federal funds.
(2) For the purposes of this part, the
term ‘‘Federal financial assistance’’ does
not include:
(i) Technical assistance that provides
services in lieu of money;
(ii) A transfer of title to federallyowned property provided in lieu of
money, even if the award is called a
grant;
(iii) Any classified Federal award; or
(iv) Any award funded in whole or in
part with Recovery funds, as defined in
section 1512 of the American Recovery
and Reinvestment Act of 2009 (Pub. L.
111–5).
Recipient means an entity that
receives or administers a Federal Award
directly from a Federal agency.
Total Compensation means the cash
and noncash dollar value an executive
earns during an entity’s preceding fiscal
year. This includes all items of
compensation as prescribed in 17 CFR
29.402(c)(2).
ddrumheller on DSK120RN23PROD with PROPOSALS2
Appendix A to Part 170—Award Term
I. Reporting Subawards and Executive
Compensation
(a) Reporting of first-tier subawards—(1)
Applicability. Unless you are exempt as
provided in paragraph (d) of this award term,
you must report each action that equals or
exceeds $30,000 in Federal funds for a
subaward to an entity or Federal agency. You
must subsequently report an action if
increases to the Federal funding results in the
subaward equaling or exceeding $30,000.
(2) Reporting Requirements. (i) The entity
or Federal agency must report each subaward
described in paragraph (a)(1) of this award
term to the Federal Funding Accountability
and Transparency Act Subaward Reporting
System (FSRS) at https://www.fsrs.gov.
(ii) For subaward information, report no
later than the end of the month following the
month in which the subaward was made.
(For example, if the subaward was made on
November 7, 2025, the subaward must be
reported by no later than December 31, 2025).
(b) Reporting total compensation of
recipient executives for entities—(1)
Applicability. You must report the total
compensation for each of your five most
highly compensated executives for the
preceding completed fiscal year if:
(i) The total Federal funding authorized to
date under this Federal award equals or
exceeds $30,000;
(ii) in the preceding fiscal year, you
received:
(A) 80 percent or more of your annual gross
revenues from Federal procurement contracts
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(and subcontracts) and Federal awards (and
subawards) subject to the Transparency Act;
and
(B) $25,000,000 or more in annual gross
revenues from Federal procurement contracts
(and subcontracts) and Federal awards (and
subawards) subject to the Transparency Act;
and,
(iii) The public does not have access to
information about the compensation of the
executives through periodic reports filed
under section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (15 U.S.C. 78m(a),
78o(d)) or section 6104 of the Internal
Revenue Code of 1986 after receiving this
subaward. (To determine if the public has
access to the compensation information, see
the U.S. Security and Exchange Commission
total compensation filings at https://
www.sec.gov/answers/execomp.htm.)
(2) Reporting Requirements. You must
report executive total compensation
described in paragraph (b)(1) of this
appendix:
(i) As part of your registration profile at
https://www.sam.gov.
(ii) No later than the month following the
month in which this Federal award is made,
and annually after that. (For example, if this
Federal award was made on November 7,
2025, the executive total compensation must
be reported by no later than December 31,
2025.)
(c) Reporting of total compensation of
subrecipient executives—(1) Applicability.
Unless a first-tier subrecipient is exempt as
provided in paragraph (d) of this appendix,
you must report the executive total
compensation of each of the subrecipient’s
five most highly compensated executives for
the subrecipient’s preceding completed fiscal
year, if:
(i) The total Federal funding authorized to
date under the subaward equals or exceeds
$30,000;
(ii) In the subrecipient’s preceding fiscal
year, the subrecipient received:
(A) 80 percent or more of its annual gross
revenues from Federal procurement contracts
(and subcontracts) and Federal awards (and
subawards) subject to the Transparency Act;
and,
(B) $25,000,000 or more in annual gross
revenues from Federal procurement contracts
(and subcontracts), and Federal awards (and
subawards) subject to the Transparency Act;
and
(iii) The public does not have access to
information about the compensation of the
executives through periodic reports filed
under section 13(a) or 15(d) of the Securities
Exchange Act of 1934 (15 U.S.C. 78m(a),
78o(d)) or section 6104 of the Internal
Revenue Code of 1986 after receiving this
subaward. (To determine if the public has
access to the compensation information, see
the U.S. Security and Exchange Commission
total compensation filings at https://
www.sec.gov/answers/execomp.htm.)
(2) Reporting Requirements. Subrecipients
must report to you, the recipient, their
executive total compensation described in
paragraph (c)(1) of this appendix. You are
required to submit this information to the
Federal Funding Accountability and
Transparency Act Subaward Reporting
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69405
System (FSRS) at https://www.fsrs.gov no later
than the end of the month following the
month in which the subaward was made.
(For example, if the subaward was made on
November 7, 2025, the subaward must be
reported by no later than December 31, 2025).
(d) Exemptions. (1) If in the previous tax
year you had gross income under $300,000,
you are exempt from the requirements to
report:
(i) Subawards, and
(ii) The total compensation of the five most
highly compensated executives of any
subrecipient.
(e) Definitions.
For purposes of this award term:
Entity includes:
(1) Whether for profit or nonprofit:
(i) A corporation;
(ii) An association;
(iii) A partnership;
(iv) A limited liability company;
(v) A limited liability partnership;
(vi) A sole proprietorship;
(vii) Any other legal business entity;
(viii) Another grantee or contractor that is
not excluded by subparagraph (2); and
(ix) Any State or locality;
(2) Does not include:
(i) An individual recipient of Federal
financial assistance; or
(ii) A Federal employee.
Executive means an officer, managing
partner, or any other employee holding a
management position.
Subaward has the meaning given in 2 CFR
200.1.
Subrecipient has the meaning given in 2
CFR 200.1.
Total Compensation means the cash and
noncash dollar value an executive earns
during an entity’s preceding fiscal year. This
includes all items of compensation as
prescribed in 17 CFR 229.402(c)(2).
■
6. Revise part 175 to read as follows:
PART 175—AWARD TERM FOR
TRAFFICKING IN PERSONS
Sec.
Subpart A—General
175.100 Purpose of this part.
175.105 Statutory requirement.
Subpart B—Guidance
175.200 Use of award term.
175.205 Referral.
Subpart C—Definitions
175.300 Definitions.
Appendix A to Part 175
Award term
Authority: 22 U.S.C. 7104(g); 22 U.S.C.
7104a; 22 U.S.C. 7104b; 22 U.S.C. 7104c; 31
U.S.C. 503; 31 U.S.C. 6307; 31 U.S.C. 1111;
41 U.S.C. 1121; Reorganization Plan No. 2 of
1970; E.O. 11541, 35 FR 10737.
Subpart A—General
§ 175.100
Purpose of this part.
This part establishes a Federal award
term for grants and cooperative
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agreements to implement the
requirements in 22 U.S.C. 7104(g).
ddrumheller on DSK120RN23PROD with PROPOSALS2
§ 175.105
Statutory requirement.
(a) Federal agencies are required to
include in each Federal grant or
cooperative agreement a condition that
authorizes the Federal agency to
terminate the award, without penalty, if
a private entity receiving funds under
the award as a recipient or subrecipient
engages in:
(1) Severe forms of trafficking in
persons;
(2) The procurement of a commercial
sex act during the period of time that
the grant or cooperative agreement is in
effect;
(3) The use of forced labor in the
performance of the grant or cooperative
agreement; or
(4) Acts that directly support or
advance trafficking in persons,
including the following acts:
(i) Destroying, concealing, removing,
confiscating, or otherwise denying an
employee access to that employee’s
identity or immigration documents;
(ii) Failing to provide return
transportation or pay for return
transportation costs to an employee
from a country outside the United States
to the country from which the employee
was recruited upon the end of
employment if requested by the
employee, unless:
(A) exempted from the requirement to
provide or pay for such return
transportation by the Federal
department or agency providing or
entering into the grant or cooperative
agreement; or
(B) the employee is a victim of human
trafficking seeking victim services or
legal redress in the country of
employment or a witness in a human
trafficking enforcement action;
(iii) Soliciting a person for the
purpose of employment, or offering
employment, by means of materially
false or fraudulent pretenses,
representations, or promises regarding
that employment;
(iv) Charging recruited employees a
placement or recruitment fee; or
(v) Providing or arranging housing
that fails to meet the host country’s
housing and safety standards.
(b) Compliance plan and certification
requirement.
(1) Certification. Prior to receiving a
grant or cooperative agreement, if the
estimated value of services required to
be performed under the grant or
cooperative agreement outside the
United States exceeds $500,000, a
recipient must certify that:
(i) The recipient has implemented a
plan to prevent the activities described
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in paragraph (a) of this section, and is
in compliance with this plan;
(ii) The recipient has implemented
procedures to prevent any activities
described in paragraph (a) of this
section and to monitor, detect, and
terminate any subcontractor, subgrantee,
or employee of the recipient engaging in
any activities described in paragraph (a)
of this section; and
(iii) To the best of the recipient’s
knowledge, neither the recipient, nor
any subcontractor or subgrantee of the
recipient or any agent of the recipient or
of such a subcontractor or subgrantee, is
engaged in any of the activities
described in paragraph (a) of this
section.
(2) Annual certification. If the
recipient receives the award, it must
submit an annual certification
consistent with paragraph (b)(1) of this
section for each year the award is in
effect.
(3) Compliance plan. Any plan or
procedures implemented pursuant to
paragraph (b) must be appropriate to the
size and complexity of the grant or
cooperative agreement and to the nature
and scope of its activities, including the
number of non-United States citizens
expected to be employed.
(4) Copies of the compliance plan.
The recipient must provide a copy of
the plan to the grant officer upon
request, and as appropriate, must post
the useful and relevant contents of the
plan or related materials on its website
and at the workplace.
(5) Minimum requirements of the
compliance plan. The compliance plan
must include, at a minimum, the
following:
(i) An awareness program to inform
recipient employees about the
Government’s policy prohibiting
trafficking-related activities described in
paragraph (a) of this section, the
activities prohibited, and the actions
that will be taken against the employee
for violations. Additional information
about Trafficking in Persons and
examples of awareness programs can be
found at the website for the Department
of State’s Office to Monitor and Combat
Trafficking in Persons at https://
www.state.gov/j/tip/.
(ii) A process for employees to report,
without fear of retaliation, activity
inconsistent with the policy prohibiting
trafficking in persons.
(iii) A recruitment and wage plan that
only permits the use of recruitment
companies with trained employees,
prohibits charging recruitment fees to
the employees or potential employees
and ensures that wages meet applicable
host-country legal requirements or
explains any variance.
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(iv) A housing plan, if the recipient,
subrecipient, contractor, or
subcontractor intends to provide or
arrange housing, that ensures that the
housing meets host-country housing and
safety standards.
(v) Procedures to prevent agents,
subrecipients, contractors, or
subcontractors at any tier and at any
dollar value from engaging in trafficking
in persons, including activities in
paragraph (a) of this section, and to
monitor, detect, and terminate any
agents, subgrants, or subrecipient,
contractor, or subcontractor employees
that have engaged in such activities.
(c) Notification to Inspectors General
and cooperation with government. The
head of a Federal agency making or
awarding a grant or cooperative
agreement must require that the
recipient of the grant or cooperative
agreement:
(1) Immediately inform the Inspector
General of the Federal agency of any
information it receives from any source
that alleges credible information that the
recipient, any subcontractor or
subgrantee of the recipient, or any agent
of the recipient or of such a
subcontractor or subgrantee, has
engaged in conduct described in
paragraph (a) of this section; and
(2) Fully cooperate with any Federal
agencies responsible for audits,
investigations, or corrective actions
relating to trafficking in persons.
Subpart B—Guidance
§ 175.200
Use of award term.
(a) To implement the requirements of
22 U.S.C. 7104(g) a Federal agency must
include the award term in Appendix A
of this part for the following Federal
awards:
(1) A grant or cooperative agreement
to a private entity, as defined in
§ 175.300; and
(2) A grant or cooperative agreement
to a State, local government, Indian
Tribe, foreign public entity, or any other
recipient if funding under the award
could be provided to a subrecipient that
is a private entity.
(b) A Federal agency may use
different letters and numbers than those
in Appendix A to designate the
paragraphs of the award term.
§ 175.205
Referral.
A Federal agency official should
inform the agency’s suspension and
debarment official if an award is
terminated based on a violation of a
prohibition in the award term under
Appendix A.
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Subpart C—Definitions
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§ 175.300
Definitions.
Terms not defined in this part shall
have the same meaning as provided in
2 CFR part 200, subpart A. As used in
this part:
Abuse or threatened abuse of law or
legal process means the use or
threatened use of a law or legal process,
whether administrative, civil, or
criminal, in any manner or for any
purpose for which the law was not
designed, in order to exert pressure on
another person to cause that person to
take some action or refrain from taking
some action.
Coercion means:
(1) Threats of serious harm to or
physical restraint against any person;
(2) Any scheme, plan, or pattern
intended to cause a person to believe
that failure to perform an act would
result in serious harm to or physical
restraint against any person; or
(3) The abuse or threatened abuse of
the legal process.
Commercial sex act means any sex act
on account of which anything of value
is given to or received by any person.
Debt bondage means the status or
condition of a debtor arising from a
pledge by the debtor of his or her
personal services or of those of a person
under his or her control as a security for
debt, if the value of those services as
reasonably assessed is not applied
toward the liquidation of the debt or the
length and nature of those services are
not respectively limited and defined.
Involuntary servitude includes a
condition of servitude induced by
means of:
(1) Any scheme, plan, or pattern
intended to cause a person to believe
that, if the person did not enter into or
continue in such condition, that person
or another person would suffer serious
harm or physical restraint; or
(2) The abuse or threatened abuse of
the legal process.
Private Entity means any entity,
including for-profit organizations,
nonprofit organizations, institutes of
higher education, and hospitals. The
term does not include foreign public
entities, Indian Tribes, local
governments, or states as defined in 2
CFR 200.1.
Recruitment Fee means fees of any
type, including charges, costs,
assessments, or other financial
obligations, that are associated with the
recruiting process, regardless of the
time, manner, or location of imposition
or collection of the fee.
(1) Recruitment fees include, but are
not limited to, the following fees (when
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they are associated with the recruiting
process) for:
(i) Advertising;
(ii) Obtaining permanent or temporary
labor certification, including any
associated fees;
(iii) Processing applications and
petitions;
(iv) Acquiring visas, including any
associated fees;
(v) Acquiring photographs and
identity or immigration documents,
such as passports, including any
associated fees;
(vi) Accessing the job opportunity,
including required medical
examinations and immunizations;
background, reference, and security
clearance checks and examinations; and
additional certifications;
(vii) An employer’s recruiters, agents
or attorneys, or other notary or legal
fees;
(viii) Language interpretation or
translation, arranging for or
accompanying on travel, or providing
other advice to employees or potential
employees;
(ix) Government-mandated fees, such
as border crossing fees, levies, or worker
welfare fund;
(x) Transportation and subsistence
costs:
(A) While in transit, including, but
not limited to, airfare or costs of other
modes of transportation, terminal fees,
and travel taxes associated with travel
from the country of origin to the country
of performance and the return journey
upon the end of employment; and
(B) From the airport or
disembarkation point to the worksite;
(xi) Security deposits, bonds, and
insurance; and
(xii) Equipment charges.
(2) A recruitment fee, as described in
the introductory text of this definition,
is a recruitment fee, regardless of
whether the payment is:
(i) Paid in property or money;
(ii) Deducted from wages;
(iii) Paid back in wage or benefit
concessions;
(iv) Paid back as a kickback, bribe, inkind payment, free labor, tip, or tribute;
or
(v) Collected by an employer or a
third party, whether licensed or
unlicensed, including, but not limited
to:
(A) Agents;
(B) Labor brokers;
(C) Recruiters;
(D) Staffing firms (including private
employment and placement firms);
(E) Subsidiaries/affiliates of the
employer;
(F) Any agent or employee of such
entities; and
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(G) Subcontractors at all tiers.
Severe forms of trafficking in persons
means:
(1) Sex trafficking in which a
commercial sex act is induced by force,
fraud, or coercion or in which the
person induced to perform such act has
not attained 18 years of age; or
(2) The recruitment, harboring,
transportation, provision, or obtaining
of a person for labor or services, through
the use of force, fraud, or coercion for
the purpose of subjection to involuntary
servitude, peonage, debt bondage or
slavery.
Sex trafficking means the recruitment,
harboring, transportation, provision,
obtaining, patronizing, or soliciting of a
person for the purpose of a commercial
sex act.
Appendix A to Part 175—Award Term
I. Trafficking in persons.
(a) Provisions applicable to a recipient that
is a private entity. (1) Under this award, you
as the recipient, your employees,
subrecipients under this award, and
subrecipient’s employees may not engage in:
(i) Severe forms of trafficking in persons;
(ii) The procurement of a commercial sex
act during the period of time that this award
or any subaward is in effect;
(iii) The use of forced labor in the
performance of this award or any subaward;
or
(iv) Acts that directly support or advance
trafficking in persons, including the
following acts:
(A) Destroying, concealing, removing,
confiscating, or otherwise denying an
employee access to that employee’s identity
or immigration documents;
(B) Failing to provide return transportation
or pay for return transportation costs to an
employee from a country outside the United
States to the country from which the
employee was recruited upon the end of
employment if requested by the employee,
unless:
(1) Exempted from the requirement to
provide or pay for such return transportation
by the Federal department or agency
providing or entering into the grant or
cooperative agreement; or
(2) The employee is a victim of human
trafficking seeking victim services or legal
redress in the country of employment or a
witness in a human trafficking enforcement
action;
(C) Soliciting a person for the purpose of
employment, or offering employment, by
means of materially false or fraudulent
pretenses, representations, or promises
regarding that employment;
(D) Charging recruited employees a
placement or recruitment fee; or
(E) Providing or arranging housing that
fails to meet the host country’s housing and
safety standards.
(2) We as the awarding Federal agency may
unilaterally terminate this award, without
penalty, if any private entity under this
award:
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(i) Is determined to have violated a
prohibition in paragraph (a)(1) of this
appendix; or
(ii) Has an employee that is determined to
have violated a prohibition in paragraph
(a)(1) of this this appendix through conduct
that is either:
(A) Associated with the performance under
this award; or
(B) Imputed to you or the subrecipient
using the standards and due process for
imputing the conduct of an individual to an
organization that are provided in 2 CFR part
180, ‘‘OMB Guidelines to Agencies on
Government-wide Debarment and
Suspension (Nonprocurement),’’ as
implemented by our agency at [agency must
insert reference here to its regulatory
implementation of the OMB guidelines in 2
CFR part 180 (for example, ‘‘2 CFR part
XX’’)].
(b) Provision applicable to a recipient other
than a private entity. (1) We as the awarding
Federal agency may unilaterally terminate
this award, without penalty, if a subrecipient
that is a private entity under this award:
(i) Is determined to have violated a
prohibition in paragraph (a)(1) of this
appendix; or
(ii) Has an employee that is determined to
have violated a prohibition in paragraph
(a)(1) of this appendix through conduct that
is either:
(A) Associated with the performance under
this award; or
(B) Imputed to the subrecipient using the
standards and due process for imputing the
conduct of an individual to an organization
that are provided in 2 CFR part 180, ‘‘OMB
Guidelines to Agencies on Government-wide
Debarment and Suspension
(Nonprocurement),’’ as implemented by our
agency at [agency must insert reference here
to its regulatory implementation of the OMB
guidelines in 2 CFR part 180 (for example, ‘‘2
CFR part XX’’)].
(c) Provisions applicable to any recipient.
(1) You must inform us immediately of any
information you receive from any source
alleging a violation of a prohibition in
paragraph (a)(1) of this appendix.
(2) Our right to unilaterally terminate this
award as described in paragraphs (a)(2) or
(b)(1) of this appendix:
(i) Implements the requirements of 22
U.S.C. 78, and
(ii) Is in addition to all other remedies for
noncompliance that are available to us under
this award.
(3) You must include the requirements of
paragraph (a)(1) of this award term in any
subaward you make to a private entity.
(d) Definitions. For purposes of this award
term:
Employee means either:
(1) An individual employed by you or a
subrecipient who is engaged in the
performance of the project or program under
this award; or
(2) Another person engaged in the
performance of the project or program under
this award and not compensated by you
including, but not limited to, a volunteer or
individual whose services are contributed by
a third party as an in-kind contribution
toward cost sharing requirements.
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Private Entity means any entity, including
for-profit organizations, nonprofit
organizations, institutions of higher
education, and hospitals. The term does not
include foreign public entities, Indian Tribes,
local governments, or states as defined in 2
CFR 200.1.
The terms ‘‘severe forms of trafficking in
persons,’’ ‘‘commercial sex act,’’ ‘‘sex
trafficking,’’ ‘‘Abuse or threatened abuse of
law or legal process,’’ ‘‘coercion,’’ ‘‘debt
bondage,’’ and ‘‘involuntary servitude’’ have
the meanings given at section 103 of the
TVPA, as amended (22 U.S.C. 7102).
■
7. Revise part 180 to read as follows:
PART 180—OMB GUIDELINES TO
AGENCIES ON GOVERNMENT-WIDE
DEBARMENT AND SUSPENSION
(NONPROCUREMENT)
Sec.
180.5 What does this part do?
180.10 How is this part organized?
180.15 To whom does the guidance apply?
180.20 What must a Federal agency do to
implement these guidelines?
180.25 What must a Federal agency address
in its implementation of the guidance?
180.30 Where does a Federal agency
implement these guidelines?
180.40 How are these guidelines
maintained?
180.45 Do these guidelines cover persons
who are disqualified, as well as those
who are excluded from nonprocurement
transactions?
Subpart A—General
180.100 How are subparts A through I
organized?
180.105 How is this part written?
180.110 Do terms in this part have special
meanings?
180.115 What do subparts A through I of
this part do?
180.120 Do subparts A through I of this part
apply to me?
180.125 What is the purpose of the
nonprocurement debarment and
suspension system?
180.130 How does an exclusion restrict a
person’s involvement in covered
transactions?
180.135 May a Federal agency grant an
exception to let an excluded person
participate in a covered transaction?
180.140 Does an exclusion under the
nonprocurement system affect a person’s
eligibility for Federal procurement
contracts?
180.145 Does an exclusion under the
Federal procurement system affect a
person’s eligibility to participate in
nonprocurement transactions?
180.150 Against whom may a Federal
agency take an exclusion action?
180.155 How do I know if a person is
excluded?
Subpart B—Covered Transactions
180.200 What is a covered transaction?
180.205 Why is it important if a particular
transaction is a covered transaction?
180.210 Which nonprocurement
transactions are covered transactions?
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180.215 Which nonprocurement
transactions are not covered
transactions?
180.220 Are any procurement contracts
included as covered transactions?
180.225 How do I know if a transaction in
which I may participate is a covered
transaction?
Subpart C—Responsibilities of Participants
Regarding Transactions Doing Business
With Other Persons
180.300 What must I do before I enter into
a covered transaction with another
person at the next lower tier?
180.305 May I enter into a covered
transaction with an excluded or
disqualified person?
180.310 What must I do if a Federal agency
excludes a person with whom I am
already doing business in a covered
transaction?
180.315 May I use the services of an
excluded person as a principal under a
covered transaction?
180.320 Must I verify that principals of my
covered transactions are eligible to
participate?
180.325 What happens if I do business with
an excluded person in a covered
transaction?
180.330 What requirements must I pass
down to persons at lower tiers with
whom I intend to do business?
Disclosing Information—Primary Tier
Participants
180.335 What information must I provide
before entering into a covered
transaction with a Federal agency?
180.340 If I disclose unfavorable
information required under § 180.335,
will I be prevented from participating in
the transaction?
180.345 What happens if I fail to disclose
information required under § 180.335?
180.350 What must I do if I learn of
information required under § 180.335
after entering into a covered transaction
with a Federal agency?
Disclosing Information—Lower Tier
Participants
180.355 What information must I provide to
a higher tier participant before entering
into a covered transaction with that
participant?
180.360 What happens if I fail to disclose
information required under § 180.355?
180.365 What must I do if I learn of
information required under § 180.355
after entering into a covered transaction
with a higher tier participant?
Subpart D—Responsibilities of Federal
Agency Officials Regarding Transactions
180.400 May I enter into a transaction with
an excluded or disqualified person?
180.405 May I enter into a covered
transaction with a participant if a
principal of the transaction is excluded?
180.410 May I approve a participant’s use
of the services of an excluded person?
180.415 What must I do if a Federal agency
excludes the participant or a principal
after I enter into a covered transaction?
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180.420 May I approve a transaction with
an excluded or disqualified person at a
lower tier?
180.425 When do I check to see if a person
is excluded or disqualified?
180.430 How do I check to see if a person
is excluded or disqualified?
180.435 What must I require of a primary
tier participant?
180.440 What action may I take if a primary
tier participant knowingly does business
with an excluded or disqualified person?
180.445 What action may I take if a primary
tier participant fails to disclose the
information required under § 180.335?
180.450 What action may I take if a lower
tier participant fails to disclose the
information required under § 180.355 to
the next higher tier?
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Subpart E—System for Award Management
(SAM.gov) Exclusions
180.500 What is the purpose of the System
for Award Management (SAM.gov)
Exclusions?
180.505 Who uses SAM.gov Exclusions?
180.510 Who maintains SAM.gov
Exclusions?
180.515 What specific information is in
SAM.gov Exclusions?
180.520 Who places the information into
SAM.gov Exclusions?
180.525 Whom do I ask if I have questions
about a person in SAM.gov Exclusions?
180.530 Where can I find SAM.gov
Exclusions?
Subpart F—General Principles Relating to
Suspension and Debarment Actions
180.600 How do suspension and debarment
actions start?
180.605 How does suspension differ from
debarment?
180.610 What procedures does a Federal
agency use in suspension and debarment
actions?
180.615 How does a Federal agency notify
a person of a suspension or debarment
action?
180.620 Do Federal agencies coordinate
suspension and debarment actions?
180.625 What is the scope of a suspension
or debarment?
180.630 May a Federal agency impute the
conduct of one person to another?
180.635 May a Federal agency resolve an
administrative action in lieu of
debarment or suspension?
180.640 May a settlement include a
voluntary exclusion?
180.645 Do other Federal agencies know if
an agency agrees to a voluntary
exclusion?
180.650 May an administrative agreement
be the result of a settlement?
180.655 How will other Federal awarding
agencies know about an administrative
agreement that is the result of a
settlement?
180.660 Will administrative agreement
information about me in SAM.gov be
corrected or updated?
Subpart G—Suspension
180.700 When may the suspending official
issue a suspension?
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180.705 What does the suspending official
consider in issuing a suspension?
180.710 When does a suspension take
effect?
180.715 What notice does the suspending
official give me if I am suspended?
180.720 How may I contest a suspension?
180.725 How much time do I have to
contest a suspension?
180.730 What information must I provide to
the suspending official if I contest the
suspension?
180.735 Under what conditions do I get an
additional opportunity to challenge the
facts on which the suspension is based?
180.740 Are suspension proceedings
formal?
180.745 How is fact-finding conducted?
180.750 What does the suspending official
consider in deciding whether to continue
or terminate my suspension?
180.755 When will I know whether the
suspension is continued or terminated?
180.760 How long may my suspension last?
Subpart H—Debarment
180.800 What are the causes for debarment?
180.805 What notice does the debarring
official give me if I am proposed for
debarment?
180.810 When does a debarment take
effect?
180.815 How may I contest a proposed
debarment?
180.820 How much time do I have to
contest a proposed debarment?
180.825 What information must I provide to
the debarring official if I contest the
proposed debarment?
180.830 Under what conditions do I get an
additional opportunity to challenge the
facts on which the proposed debarment
is based?
180.835 Are debarment proceedings formal?
180.840 How is fact-finding conducted?
180.845 What does the debarring official
consider in deciding whether to debar
me?
180.850 What is the standard of proof in a
debarment action?
180.855 Who has the burden of proof in a
debarment action?
180.860 What factors may influence the
debarring official’s decision?
180.865 How long may my debarment last?
180.870 When do I know if the debarring
official debars me?
180.875 May I ask the debarring official to
reconsider a decision to debar me?
180.880 What factors may influence the
debarring official during
reconsideration?
180.885 May the debarring official extend a
debarment?
Subpart I—Definitions
180.900 Adequate evidence.
180.905 Affiliate.
180.910 Agent or representative.
180.915 Civil judgment.
180.920 Conviction.
180.925 Debarment.
180.930 Debarring official.
180.935 Disqualified.
180.940 Excluded or exclusion.
180.945 System for Award Management
Exclusions (SAM.gov) Exclusions.
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69409
180.950 Federal agency.
180.955 Indictment.
180.960 Ineligible or ineligibility.
180.965 Legal proceedings.
180.970 Nonprocurement transaction.
180.975 Notice.
180.980 Participant.
180.985 Person.
180.990 Preponderance of the evidence.
180.995 Principal.
180.1000 Respondent.
180.1005 State.
180.1010 Suspending official.
180.1015 Suspension.
180.1020 Voluntary exclusion or
voluntarily excluded.
Appendix A to Part 180
Covered Transactions
Authority: 31 U.S.C. 503; 31 U.S.C. 6102;
31 U.S.C. 6307; Pub. L. 103–355; Pub. L. 109–
282; Pub. L. 110–252; Pub. L. 111–84; Pub.
L. 113–101; Pub. L. 115–232; Pub. L. 117–40;
E.O. 12549; E.O. 12689.
§ 180.5
What does this part do?
This part provides guidance for
Federal agencies on how to implement
the government-wide debarment and
suspension system for nonprocurement
programs and activities.
§ 180.10
How is this part organized?
This part is organized into two
segments.
(a) Sections 180.5 through 180.45
contain general policy direction for
Federal agencies’ use of the standards in
subparts A through I.
(b) Subparts A through I contain
uniform government-wide standards
that Federal agencies are to use to
specify:
(1) The types of transactions that are
covered by the nonprocurement
debarment and suspension system;
(2) The effects of an exclusion under
that nonprocurement system, including
reciprocal effects with the governmentwide debarment and suspension system
for procurement;
(3) The criteria and minimum due
process to be used in nonprocurement
debarment and suspension actions; and
(4) Related policies and procedures to
ensure the effectiveness of those actions.
§ 180.15
apply?
To whom does the guidance
This part provides guidance to
Federal agencies. Publication of this
guidance in the Code of Federal
Regulations (CFR) does not change its
nature—it is guidance and not
regulation. Federal agencies’
implementation of this guidance
governs the rights and responsibilities of
other persons affected by the
nonprocurement debarment and
suspension system.
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§ 180.20 What must a Federal agency do to
implement these guidelines?
As Section 3 of Executive Order
12549 requires, each Federal agency
with nonprocurement programs and
activities covered by subparts A through
I of the guidance must issue regulations
consistent with those subparts.
§ 180.25 What must a Federal agency
address in its implementation of the
guidance?
Each Federal agency’s implementing
regulation:
(a) Must establish policies and
procedures for that Federal agency’s
nonprocurement debarment and
suspension programs and activities
consistent with this guidance. When
adopted by a Federal agency, the
provisions of the guidance have a
regulatory effect on that Federal
agency’s programs and activities.
(b) Must address some matters for
which these guidelines give each
Federal agency some discretion.
Specifically, the regulation must:
(1) Identify either the Federal agency
head or the title of the designated
official who is authorized to grant
exceptions under § 180.135 to let an
excluded person participate in a
covered transaction.
(2) State whether the Federal agency
includes as covered transactions an
additional tier of contracts awarded
under covered nonprocurement
transactions, as permitted under
§ 180.220(c).
(3) Identify the method(s) a Federal
agency official may use when entering
into a covered transaction with a
primary tier participant to communicate
to the participant the requirements
described in § 180.435. Examples of
methods are an award term that requires
compliance as a condition of the award,
an assurance of compliance obtained at
the time of application, or a
certification.
(4) State whether the Federal agency
specifies a particular method that
participants must use to communicate
compliance requirements to lower tier
participants, as described in
§ 180.330(a). If there is a specified
method, the regulation must require
Federal agency officials to communicate
that requirement when entering into
covered transactions with primary tier
participants.
(c) May also, at the Federal agency’s
option:
(1) Identify any specific types of
transactions the Federal agency includes
as ‘‘nonprocurement transactions’’ in
addition to the examples provided in
§ 180.970.
(2) Identify any types of
nonprocurement transactions that the
Federal agency exempts from coverage
under these guidelines, as authorized
under § 180.215(g)(2).
(3) Identify specific examples of types
of individuals who would be
‘‘principals’’ under the Federal agency’s
nonprocurement programs and
transactions, in addition to the types of
individuals described in § 180.995.
(4) Specify the Federal agency’s
procedures, if any, by which a
respondent may appeal a suspension or
debarment decision.
(5) Identify by title the officials
designated by the Federal agency head
as debarring officials under § 180.930 or
suspending officials under § 180.1010.
(6) Include a subpart covering
disqualifications, as authorized in
§ 180.45.
(7) Include any provisions authorized
by OMB.
§ 180.30 Where does a Federal agency
implement these guidelines?
Each Federal agency that participates
in the government-wide
nonprocurement debarment and
suspension system must issue a
regulation implementing these
guidelines within its chapter in subtitle
B of this title.
§ 180.40 How are these guidelines
maintained?
The Interagency Committee on
Debarment and Suspension, established
by section 4 of Executive Order 12549,
recommends to the OMB any needed
revisions to the guidelines in this part.
The OMB publishes proposed changes
to the guidelines in the Federal Register
for public comment, considers
comments with the help of the
Interagency Committee on Debarment
and Suspension, and issues the final
guidelines.
§ 180.45 Do these guidelines cover
persons who are disqualified, as well as
those who are excluded from
nonprocurement transactions?
A Federal agency may add a subpart
covering disqualifications to its
regulation implementing these
guidelines, but the guidelines in
subparts A through I:
(a) Address disqualified persons only
to:
(1) Provide for their inclusion in the
System for Award Management
(SAM.gov) Exclusions; and
(2) State the responsibilities of
Federal agencies and participants to
check for disqualified persons before
entering into covered transactions.
(b) Do not specify the:
(1) Transactions for which a
disqualified person is ineligible. Those
transactions vary on a case-by-case basis
because they depend on the language of
the specific statute, Executive order, or
regulation that caused the
disqualification;
(2) Entities to which a disqualification
applies; or
(3) Process that a Federal agency uses
to disqualify a person. Unlike exclusion
under subparts A through I of this part,
disqualification is frequently not a
discretionary action that a Federal
agency takes and may include special
procedures.
Subpart A—General
§ 180.100 How are subparts A through I
organized?
(a) Each subpart contains information
related to a broad topic or specific
audience with special responsibilities,
as shown in table 1:
ddrumheller on DSK120RN23PROD with PROPOSALS2
TABLE 1 TO PARAGRAPH (a)
In subpart . . .
You will find provisions related to . . .
A ................................
B ................................
C ................................
D ................................
E ................................
F ................................
G ................................
H ................................
I ..................................
general information about Subparts A through I.
the types of transactions that are covered by the government-wide nonprocurement suspension and debarment system.
the responsibilities of persons who participate in covered transactions.
the responsibilities of Federal agency officials who are authorized to enter into covered transactions.
the responsibilities of Federal agencies for entering information into SAM.gov Exclusions.
the general principles governing suspension, debarment, voluntary exclusion and settlement.
suspension actions.
debarment actions.
definitions of terms used in this part.
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(b) Table 2 shows which subparts may
be of special interest to you, depending
on who you are:
TABLE 2 TO PARAGRAPH (b)
If you are . . .
See subpart(s) . . .
(1)
(2)
(3)
(4)
(5)
(6)
A,
A,
A,
A,
A,
A,
a
a
a
a
a
a
participant or principal in a nonprocurement transaction ...........................................................................................
respondent in a suspension action ............................................................................................................................
respondent in a debarment action .............................................................................................................................
suspending official ......................................................................................................................................................
debarring official .........................................................................................................................................................
Federal agency official authorized to enter into a covered transaction .....................................................................
§ 180.105
How is this part written?
(a) This part uses a ‘‘plain language’’
format to make it easier for the general
public and business community. The
section headings and text must be read
together, as they are often in the form
of questions and answers.
(b) Pronouns used within this part,
such as ‘‘I’’ and ‘‘you,’’ change from
subpart to subpart depending on the
audience being addressed.
(c) The ‘‘Covered Transactions’’
diagram in the appendix to this part
shows the levels or ‘‘tiers’’ at which a
Federal agency may enforce an
exclusion.
ddrumheller on DSK120RN23PROD with PROPOSALS2
§ 180.110 Do terms in this part have
special meanings?
This part uses terms throughout the
text that have special meanings. Those
terms are defined in subpart I. For
example, three important terms are:
(a) Exclusion or excluded, which
refers only to discretionary actions
taken by a suspending or debarring
official under Executive Order 12549
and Executive Order 12689 or under the
Federal Acquisition Regulations (48
CFR part 9, subpart 9.4);
(b) Disqualification or disqualified,
which refers to prohibitions under
specific statutes, executive orders (other
than Executive Order 12549 and
Executive Order 12689), or other
authorities. Disqualifications frequently
are not subject to the discretion of a
Federal agency official, may have a
different scope than exclusions, or have
special conditions that apply to the
disqualification; and
(c) Ineligibility or ineligible, which
generally refers to a person who is either
excluded or disqualified.
§ 180.115 What do subparts A through I of
this part do?
Subparts A through I provide for the
reciprocal exclusion of persons who
have been excluded under the Federal
Acquisition Regulations and provide for
the consolidated listing of all persons
who are excluded, or disqualified by
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B,
B,
B,
B,
B,
B,
C and I.
F, G and I.
F, H and I.
E, F, G and I.
D, F, H and I.
D, E and I.
statute, executive order or other legal
authority.
§ 180.135 May a Federal agency grant an
exception to let an excluded person
participate in a covered transaction?
§ 180.120 Do subparts A through I of this
part apply to me?
(a) A Federal agency head or designee
may grant an exception permitting an
excluded person to participate in a
particular covered transaction. If the
Federal agency head or designee grants
an exception, the exception must be in
writing and state the reason(s) for
deviating from the government-wide
policy in Executive Order 12549.
(b) An exception granted by one
Federal agency for an excluded person
does not extend to the covered
transactions of another Federal agency.
Portions of subparts A through I (see
table at § 180.100(b)) apply to you if you
are a:
(a) Person who has been, is, or may
reasonably be expected to be, a
participant or principal in a covered
transaction;
(b) Respondent (a person against
whom a Federal agency has initiated a
debarment for suspension action);
(c) Federal agency debarring or
suspending official; or
(d) Federal agency official who is
authorized to enter into covered
transactions with non-Federal parties.
§ 180.125 What is the purpose of the
nonprocurement debarment and
suspension system?
(a) To protect the public interest, the
Federal Government ensures the
integrity of Federal programs by
conducting business only with
responsible persons.
(b) A Federal agency uses the
nonprocurement debarment and
suspension system to exclude persons
who are not presently responsible from
Federal programs.
(c) An exclusion is a serious action
that a Federal agency may take only to
protect the public interest. A Federal
agency may not exclude a person or
commodity for the purposes of
punishment.
§ 180.130 How does an exclusion restrict a
person’s involvement in covered
transactions?
With the exceptions stated in
§§ 180.135, 315, and 420, a person who
is excluded by any Federal agency may
not:
(a) Be a participant in a Federal
agency transaction that is a covered
transaction; or
(b) Act as a principal of a person
participating in one of those covered
transactions.
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§ 180.140 Does an exclusion under the
nonprocurement system affect a person’s
eligibility for Federal procurement
contracts?
When a Federal agency excludes a
person under Executive Order 12549 or
Executive Order 12689 on or after
August 25, 1995, the excluded person is
also ineligible for Federal procurement
transactions under the Federal
Acquisition Regulations. Therefore, an
exclusion under this part has a
reciprocal effect on Federal
procurement transactions.
§ 180.145 Does an exclusion under the
Federal procurement system affect a
person’s eligibility to participate in
nonprocurement transactions?
When a Federal agency excludes a
person under the Federal Acquisition
Regulations (FAR) on or after August 25,
1995, the excluded person is also
ineligible to participate in Federal
agencies’ nonprocurement covered
transactions. Therefore, an exclusion
under the FAR has a reciprocal effect on
Federal nonprocurement transactions.
§ 180.150 Against whom may a Federal
agency take an exclusion action?
Given a cause that justifies an
exclusion under this part, a Federal
agency may exclude any person who
has been, is, or may reasonably be
expected to be a participant or principal
in a covered transaction.
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§ 180.155 How do I know if a person is
excluded?
transactions unless listed in the
exemptions under § 180.215.
Check the System for Award
Management (SAM.gov) Exclusions to
determine whether a person is
excluded. The General Services
Administration (GSA) maintains
SAM.gov Exclusions and makes it
available, as detailed in subpart E.
When a Federal agency takes action to
exclude a person under the
nonprocurement or procurement
debarment and suspension system, the
agency enters the information about the
excluded person into SAM.gov
Exclusions.
Subpart B—Covered Transactions
§ 180.200
What is a covered transaction?
A covered transaction is a
nonprocurement or procurement
transaction subject to this part’s
prohibitions. It may be a transaction at:
(a) The primary tier, between a
Federal agency and a person (see
Appendix to this part); or
(b) A lower tier between a participant
in a covered transaction and another
person.
ddrumheller on DSK120RN23PROD with PROPOSALS2
§ 180.205 Why is it important if a particular
transaction is a covered transaction?
The importance of whether a
transaction is a covered transaction
depends upon who you are.
(a) As a participant in the transaction,
you have the responsibilities laid out in
subpart C of this part. Those include
responsibilities to the person or Federal
agency at the next higher tier from
whom you received the transaction, if
any. They also include responsibilities
if you subsequently enter into other
covered transactions with persons at the
next lower tier.
(b) As a Federal official who enters
into a primary tier transaction, you have
the responsibilities laid out in subpart D
of this part.
(c) As an excluded person, you may
not be a participant or principal in the
transaction unless:
(1) The person who entered into the
transaction with you allows you to
continue your involvement in a
transaction that predates your
exclusion, as permitted under § 180.310
or § 180.415; or
(2) A Federal agency official obtains
an exception from the agency head or
designee to allow you to be involved in
the transaction, as permitted under
§ 180.135.
§ 180.210 Which nonprocurement
transactions are covered transactions?
All nonprocurement transactions, as
defined in § 180.970, are covered
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§ 180.215 Which nonprocurement
transactions are not covered transactions?
The following types of
nonprocurement transactions are not
covered transactions:
(a) A direct award to:
(1) A foreign government or foreign
governmental entity;
(2) A public international
organization;
(3) An entity owned (in whole or in
part) or controlled by a foreign
government; or
(4) Any other entity consisting wholly
or partially of one or more foreign
governments or foreign governmental
entities.
(b) A benefit to an individual as a
personal entitlement without regard to
the individual’s present responsibility
(but benefits received in an individual’s
business capacity are not excepted). For
example, when a person receives social
security benefits under the
Supplemental Security Income
provisions of the Social Security Act, 42
U.S.C. 1301 et seq., those benefits are
not covered transactions and, therefore,
are not affected if the person is
excluded.
(c) Federal employment.
(d) A transaction that a Federal
agency needs to respond to a national or
agency recognized emergency or
disaster.
(e) A permit, license, certificate, or
similar instrument issued as a means to
regulate public health, safety, or the
environment, unless a Federal agency
specifically designates it to be a covered
transaction.
(f) An incidental benefit that results
from ordinary governmental operations.
(g) Any other transaction if:
(1) The application of an exclusion to
the transaction is prohibited by law; or
(2) A Federal agency’s regulation
exempts it from coverage under this
part.
(h) Notwithstanding paragraph (a) of
this section, covered transactions must
include non-procurement and
procurement transactions involving
entities engaged in activity that
contributed to or is a significant factor
in a country’s non-compliance with its
obligations under arms control,
nonproliferation or disarmament
agreements, or commitments with the
United States. Federal agencies and
primary tier non-procurement recipients
must not award, renew, or extend a nonprocurement transaction or procurement
transaction, regardless of amount or tier,
with any entity listed in SAM.gov
Exclusions on the basis of involvement
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in activities that violate arms control,
nonproliferation or disarmament
agreements, or commitments with the
United States (see section 1290 of the
National Defense Authorization Act for
Fiscal Year 2017). The head of a Federal
agency may grant an exception to this
requirement under 2 CFR 180.135 and
with the concurrence of the OMB
Director.
§ 180.220 Are any procurement contracts
included as covered transactions?
(a) Covered transactions under this
part:
(1) Do not include any procurement
contracts awarded directly by a Federal
agency; but
(2) Do include some procurement
contracts awarded under
nonprocurement covered transactions.
(b) Specifically, a contract for goods
or services is a covered transaction if
any of the following applies:
(1) The contract is awarded by a
participant in a nonprocurement
transaction covered under § 180.210,
and the contract amount is expected to
equal or exceed $25,000.
(2) The contract requires the consent
of an official of a Federal agency. In that
case, the contract is always a covered
transaction regardless of the amount or
who awarded it. For example, it could
be a subcontract awarded by a
contractor at a tier below a
nonprocurement transaction, as shown
in the Appendix to this part.
(3) The contract is for Federallyrequired audit services.
(c) A subcontract also is a covered
transaction if:
(1) It is awarded by a participant in a
procurement transaction under a
nonprocurement transaction of a
Federal agency that extends the
coverage of paragraph (b)(1) of this
section to additional tiers of contracts
(see the diagram in the Appendix to this
part showing that optional lower tier
coverage); and
(2) The value of the subcontract is
expected to equal or exceed $25,000.
§ 180.225 How do I know if a transaction
in which I may participate is a covered
transaction?
As a participant in a transaction, you
will know that it is a covered
transaction because of the Federal
agency regulations governing the
transaction. The appropriate Federal
agency official or participant at the next
higher tier who enters into the
transaction with you will tell you that
you must comply with applicable
portions of this part.
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Subpart C—Responsibilities of
Participants Regarding Transactions
Doing Business With Other Persons
§ 180.300 What must I do before I enter
into a covered transaction with another
person at the next lower tier?
When you enter into a covered
transaction with another person at the
next lower tier, you must verify that the
person with whom you intend to do
business is not excluded or disqualified.
You do this by:
(a) Checking SAM.gov Exclusions; or
(b) Collecting a certification from that
person; or
(c) Adding a clause or condition to the
covered transaction with that person.
§ 180.305 May I enter into a covered
transaction with an excluded or disqualified
person?
(a) As a participant, you may not enter
into a covered transaction with an
excluded person unless the Federal
agency responsible for the transaction
grants an exception under § 180.135.
(b) You may not enter into any
transaction with a person who is
disqualified from that transaction unless
you have obtained an exception under
the disqualifying statute, Executive
Order, or regulation.
§ 180.310 What must I do if a Federal
agency excludes a person with whom I am
already doing business in a covered
transaction?
(a) As a participant, you may continue
covered transactions with an excluded
person if the transactions were in
existence when the Federal agency
excluded the person. However, you are
not required to continue the
transactions, and you may consider
termination. You should decide whether
to terminate and the type of termination
action, if any, only after a thorough
review to ensure that the action is
proper and appropriate.
(b) You may not renew or extend
covered transactions (other than no-cost
time extensions) with any excluded
person unless the Federal agency
responsible for the transaction grants an
exception under § 180.135.
ddrumheller on DSK120RN23PROD with PROPOSALS2
§ 180.315 May I use the services of an
excluded person as a principal under a
covered transaction?
(a) As a participant, you may continue
to use the services of an excluded
person as a principal under a covered
transaction if you were using that
person’s services in the transaction
before the person was excluded.
However, you are not required to
continue using that person’s services as
a principal. You should decide whether
to discontinue that person’s services
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only after a thorough review to ensure
that the action is proper and
appropriate.
(b) You may not begin to use the
services of an excluded person as a
principal under a covered transaction
unless the Federal agency responsible
for the transaction grants an exception
under § 180.135.
§ 180.320 Must I verify that principals of
my covered transactions are eligible to
participate?
(a) Yes. As a participant, you are
responsible for determining whether
your principals of your covered
transactions are excluded or
disqualified from participating in the
transaction.
(b) You may decide the method and
frequency by which you do so. You
may, but are not required to check
SAM.gov Exclusions.
§ 180.325 What happens if I do business
with an excluded person in a covered
transaction?
As a participant, if you knowingly do
business with an excluded person, the
Federal agency responsible for your
transaction may disallow costs, annul or
terminate the transaction, issue a stop
work order, debar or suspend you, or
take other remedies as appropriate.
§ 180.330 What requirements must I pass
down to persons at lower tiers with whom
I intend to do business?
Before entering into a covered
transaction with a participant at the
next lower tier, you must require that
participant to:
(a) Comply with this subpart as a
condition of participating in the
transaction. You may do so using any
method(s) unless the regulation of the
Federal agency responsible for the
transaction requires you to use specific
methods.
(b) Pass the requirement to comply
with this subpart to each person the
participant enters into a covered
transaction at the next lower tier.
Disclosing Information—Primary Tier
Participants
§ 180.335 What information must I provide
before entering into a covered transaction
with a Federal agency?
Before you enter into a covered
transaction at the primary tier, you, as
the participant, must notify the Federal
agency office that is entering into the
transaction with you if you know that
you or any of the principals for that
covered transaction:
(a) Are presently excluded or
disqualified;
(b) Have been convicted within the
preceding three years of any of the
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69413
offenses listed in § 180.800(a) or had a
civil judgment rendered against you for
one of those offenses within that time
period;
(c) Are presently indicted for or
otherwise criminally or civilly charged
by a governmental entity (Federal, State,
or local) with the commission of any of
the offenses listed in § 180.800(a); or
(d) Have had one or more public
transactions (Federal, State, or local)
terminated within the preceding three
years for cause or default.
§ 180.340 If I disclose unfavorable
information required under § 180.335, will I
be prevented from participating in the
transaction?
As a primary tier participant,
disclosing unfavorable information
about yourself or a principal under
§ 180.335 will not necessarily cause a
Federal agency to deny your
participation in the covered transaction.
The Federal agency will consider the
information when determining whether
to enter into the covered transaction.
The Federal agency will also consider
any additional information or
explanation you elect to submit with the
disclosed information.
§ 180.345 What happens if I fail to disclose
information required under § 180.335?
If a Federal agency later determines
that you failed to disclose information
under § 180.335 that you knew at the
time you entered into the covered
transaction, the Federal agency may:
(a) Terminate the transaction for
material failure to comply with the
terms and conditions of the transaction;
or
(b) Pursue any other available
remedies, including suspension and
debarment.
§ 180.350 What must I do if I learn of
information required under § 180.335 after
entering into a covered transaction with a
Federal agency?
At any time after you enter into a
covered transaction, you must give
immediate written notice to the Federal
agency office with which you entered
into the transaction if you learn either
that:
(a) You failed to disclose information
earlier, as required by § 180.335; or
(b) Due to changed circumstances,
you or any of the principals for the
transaction now meet any of the criteria
in § 180.335.
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Disclosing Information—Lower Tier
Participants
§ 180.355 What information must I provide
to a higher tier participant before entering
into a covered transaction with that
participant?
Before you enter into a covered
transaction with a person at the next
higher tier, you, as a lower tier
participant, must notify that person if
you know that you or any of the
principals are presently excluded or
disqualified.
When a Federal agency later
determines that you failed to tell the
person at the higher tier that you were
excluded or disqualified at the time you
entered into the covered transaction
with that person, the agency may pursue
any available remedies, including
suspension and debarment.
§ 180.365 What must I do if I learn of
information required under § 180.355 after
entering into a covered transaction with a
higher tier participant?
At any time after you enter into a
lower tier covered transaction with a
person at a higher tier, you must
provide immediate written notice to that
person if you learn either that:
(a) You failed to disclose information
earlier, as required by § 180.355; or
(b) Due to changed circumstances,
you or any of the principals for the
transaction now meet any of the criteria
in § 180.355.
Subpart D—Responsibilities of Federal
Agency Officials Regarding
Transactions
§ 180.400 May I enter into a transaction
with an excluded or disqualified person?
ddrumheller on DSK120RN23PROD with PROPOSALS2
(a) As a Federal agency official, you
may not enter into a covered transaction
with an excluded person unless you
obtain an exception under § 180.135.
(b) You may not enter into any
transaction with a person disqualified
from that transaction unless you obtain
a waiver or exception under the statute,
Executive Order, or regulation that is
the basis for the person’s
disqualification.
§ 180.405 May I enter into a covered
transaction with a participant if a principal
of the transaction is excluded?
As a Federal agency official, you may
not enter into a covered transaction with
a participant if you know that a
principal of the transaction is excluded
unless you obtain an exception under
§ 180.135.
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§ 180.430 How do I check to see if a
person is excluded or disqualified?
After entering into a covered
transaction with a participant, you, as a
Federal agency official, may not approve
a participant’s use of an excluded
person as a principal under that
transaction unless you obtain an
exception under § 180.135.
You check to see if a person is
excluded or disqualified in two ways:
(a) As a Federal agency official, you
must check SAM.gov Exclusions when
you take any action listed in § 180.425.
(b) You must review the information
that a participant gives you, as required
by § 180.335, about its status or the
status of the principals of a transaction.
§ 180.415 What must I do if a Federal
agency excludes the participant or a
principal after I enter into a covered
transaction?
§ 180.360 What happens if I fail to disclose
information required under § 180.355?
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§ 180.410 May I approve a participant’s
use of the services of an excluded person?
(a) As a Federal agency official, you
may continue covered transactions with
an excluded person or under which an
excluded person is a principal if the
transactions were in existence when the
person was excluded. However, you are
not required to continue the
transactions, and you may consider
termination. You should decide whether
to terminate and the type of termination
action, if any, only after a thorough
review to ensure that the action is
proper and appropriate.
(b) You may not renew or extend
covered transactions (other than no-cost
time extensions) with any excluded
person or under which an excluded
person is a principal unless you obtain
an exception under § 180.135.
§ 180.420 May I approve a transaction with
an excluded or disqualified person at a
lower tier?
If a transaction at a lower tier is
subject to your approval, you, as a
Federal agency official, may not
approve:
(a) A covered transaction with a
person who is currently excluded unless
you obtain an exception under
§ 180.135; or
(b) A transaction with a person who
is disqualified from that transaction
unless you obtain a waiver or exception
under the statute, Executive Order, or
regulation that is the basis for the
person’s disqualification.
§ 180.425 When do I check to see if a
person is excluded or disqualified?
As a Federal agency official, you must
check to see if a person is excluded or
disqualified before you:
(a) Enter into a primary tier covered
transaction;
(b) Approve a principal in a primary
tier covered transaction;
(c) Approve a lower tier participant if
your Federal agency’s approval of the
lower tier participant is required; or
(d) Approve a principal in connection
with a lower tier transaction if your
Federal agency’s approval of the
principal is required.
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§ 180.435 What must I require of a primary
tier participant?
As a Federal agency official, you must
require each participant in a primary
tier covered transaction to:
(a) Comply with subpart C as a
condition of participation in the
transaction; and
(b) Communicate the requirement to
comply with subpart C to persons at the
next lower tier with whom the primary
tier participant enters into covered
transactions.
§ 180.440 What action may I take if a
primary tier participant knowingly does
business with an excluded or disqualified
person?
If a participant knowingly does
business with an excluded or
disqualified person, you, as a Federal
agency official, may refer the matter for
suspension and debarment
consideration. You may also disallow
costs, annul or terminate the
transaction, issue a stop work order, or
take any other appropriate remedy.
§ 180.445 What action may I take if a
primary tier participant fails to disclose the
information required under § 180.335?
As a Federal agency official, if you
determine that a participant failed to
disclose information, as required by
§ 180.335, at the time it entered into a
covered transaction with you, you may:
(a) Terminate the transaction for
material failure to comply with the
terms and conditions of the transaction;
or
(b) Pursue any other available
remedies, including suspension and
debarment.
§ 180.450 What action may I take if a lower
tier participant fails to disclose the
information required under § 180.355 to the
next higher tier?
As a Federal agency official, if you
determine that a lower tier participant
failed to disclose information, as
required by § 180.355, at the time it
entered into a covered transaction with
a participant at the next higher tier, you
may pursue any remedies available to
you, including the initiation of a
suspension or debarment action.
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Subpart E—System for Award
Management (SAM.gov) Exclusions
§ 180.500 What is the purpose of the
System for Award Management (SAM.gov)
Exclusions?
The SAM.gov Exclusions is a widely
available source of the most current
information about persons who are
excluded or disqualified from covered
transactions.
§ 180.505
Who uses SAM.gov Exclusions?
(a) Federal agency officials use
SAM.gov Exclusions to determine
whether to enter into a transaction with
a person, as required under § 180.430.
(b) Participants also may, but are not
required to, use SAM.gov Exclusions to
determine if:
(1) Principals of their transactions are
excluded or disqualified, as required
under § 180.320; or
(2) Persons with whom they are
entering into covered transactions at the
next lower tier are excluded or
disqualified.
(c) The SAM.gov Exclusions are
available to the general public.
§ 180.510 Who maintains SAM.gov
Exclusions?
GSA maintains SAM.gov Exclusions.
When a Federal agency takes an action
to exclude a person under the
nonprocurement or procurement
debarment and suspension system, the
agency enters the information about the
excluded person into SAM.gov
Exclusions.
§ 180.515 What specific information is in
SAM.gov Exclusions?
(a) At a minimum, SAM.gov
Exclusions indicate:
(1) The full name (where available)
and address of each excluded and
disqualified person, in alphabetical
order, with cross-references if more than
one name is involved in a single action;
(2) The type of action;
(3) The cause for the action;
(4) The scope of the action;
(5) Any termination date for the
action;
(6) The Federal agency and name and
telephone number of the agency point of
contact for the action; and
(7) The unique entity identifier
approved by the GSA of the excluded or
disqualified person, if available.
(b)(1) The SAM.gov Exclusions
includes a field for the Taxpayer
Identification Number (TIN), or the
Social Security Number (SSN) for an
individual, of an excluded or
disqualified person.
(2) Agencies disclose an individual’s
SSN to verify an individual’s identity
only if permitted under the Privacy Act
of 1974 and, if appropriate, the
Computer Matching and Privacy
Protection Act of 1988, as codified in 5
U.S.C. 552(a).
(1) Taking an exclusion action;
(2) Modifying or rescinding an
exclusion action;
(3) Finding that a person is
disqualified; or
(4) Finding that there has been a
change in the status of a person who is
listed as disqualified.
§ 180.525 Whom do I ask if I have
questions about a person in SAM.gov
Exclusions?
If you have questions about a listed
person in SAM.gov Exclusions, ask the
point of contact for the Federal agency
that placed the person’s name into
SAM.gov Exclusions. You may find the
Federal agency point of contact from
SAM.gov Exclusions.
§ 180.530 Where can I find SAM.gov
Exclusions?
You may access SAM.gov Exclusions
through the internet, currently at
https://www.sam.gov.
§ 180.520 Who places the information into
SAM.gov Exclusions?
Subpart F—General Principles Relating
to Suspension and Debarment Actions
Federal agency officials who take
actions to exclude persons under this
part or officials who are responsible for
identifying disqualified persons must
enter the following information about
those persons into SAM.gov Exclusions:
(a) Information required by
§ 180.515(a);
(b) The Taxpayer Identification
Number (TIN) of the excluded or
disqualified person, including the
Social Security Number (SSN) for an
individual, if the number is available
and may be disclosed under the law;
(c) Information about an excluded or
disqualified person, within three
business days, after:
§ 180.600 How do suspension and
debarment actions start?
When Federal agency officials receive
information from any source concerning
a cause for suspension or debarment,
they will promptly report it, and the
agency will investigate. The officials
refer the question of whether to suspend
or debar you to their suspending or
debarring official for consideration, if
appropriate.
§ 180.605 How does suspension differ
from debarment?
Suspension differs from debarment in
that:
A suspending official . . .
A debarring official . . .
(a) Imposes suspension as a temporary status of ineligibility for procurement and
nonprocurement transactions, pending completion of an investigation or legal or
debarment proceeding.
(b) Must:
(1) Have adequate evidence that there may be a cause for debarment of a person; and
(2) Conclude that immediate action is necessary to protect the Federal interest ....
Imposes debarment for a specified period as a final determination that a person is not presently responsible.
(c) Usually imposes the suspension first, and then promptly notifies the suspended person, giving the person an opportunity to contest the suspension and
have it lifted.
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§ 180.610 What procedures does a Federal
agency use in suspension and debarment
actions?
In deciding whether to suspend or
debar you, a Federal agency handles the
actions as informally as practicable,
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Must conclude, based on a preponderance of the evidence,
that the person has engaged in conduct that warrants debarment.
Imposes debarment after giving the respondent notice of the
action and an opportunity to contest the proposed debarment.
consistent with principles of
fundamental fairness.
(a) For suspension actions, a Federal
agency uses the procedures in this
subpart and subpart G.
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(b) For debarment actions, a Federal
agency uses the procedures in this
subpart and subpart H.
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§ 180.615 How does a Federal agency
notify a person of a suspension or
debarment action?
(a) The suspending or debarring
official sends a written notice to the last
known street address, facsimile number,
or email address of:
(1) You or your identified counsel; or
(2) Your agent for service of process,
or any of your partners, officers,
directors, owners, or joint venturers.
(b) The notice is effective if sent to
any of these persons.
§ 180.620 Do Federal agencies coordinate
suspension and debarment actions?
Yes, when more than one Federal
agency has an interest in a suspension
or debarment, the agencies may
consider designating one Federal agency
as the lead agency for making the
decision. Agencies are encouraged to
establish methods and procedures for
coordinating their suspension and
debarment actions.
§ 180.625 What is the scope of a
suspension or debarment?
If you are suspended or debarred, the
suspension or debarment is effective as
follows:
(a) Your suspension or debarment
constitutes suspension or debarment of
all of your divisions and other
organizational elements from all
covered transactions unless the
suspension or debarment decision is
limited:
(1) By its terms to one or more
specifically identified individuals,
divisions, or other organizational
elements; or
(2) To specific types of transactions.
(b) Any affiliate of a participant may
be included in a suspension or
debarment action if the suspending or
debarring official:
(1) Officially names the affiliate in the
notice; and
(2) Gives the affiliate an opportunity
to contest the action.
ddrumheller on DSK120RN23PROD with PROPOSALS2
§ 180.630 May a Federal agency impute the
conduct of one person to another?
For purposes of actions taken under
this part, a Federal agency may impute
conduct as follows:
(a) Conduct imputed from an
individual to an organization. A Federal
agency may impute the fraudulent,
criminal, or other improper conduct of
any officer, director, shareholder,
partner, employee, or other individual
associated with an organization to that
organization when the improper
conduct occurred in connection with
the individual’s performance of duties
for or on behalf of that organization, or
with the organization’s knowledge,
approval or acquiescence. The
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organization’s acceptance of the benefits
derived from the conduct is evidence of
knowledge, approval, or acquiescence.
(b) Conduct imputed from an
organization to an individual or
between individuals. A Federal agency
may impute the fraudulent, criminal, or
other improper conduct of any
organization to an individual, or from
one individual to another individual, if
the individual to whom the improper
conduct is imputed either participated
in, had knowledge of, or reason to know
of the improper conduct.
(c) Conduct imputed from one
organization to another organization. A
Federal agency may impute the
fraudulent, criminal, or other improper
conduct of one organization to another
organization when the improper
conduct occurred in connection with a
partnership, joint venture, joint
application, association, corporation,
company, or similar arrangement or
with the organization’s knowledge,
approval, or acquiescence, or when the
organization to whom the improper
conduct is imputed has the power to
direct, manage, control or influence the
activities of the organization responsible
for the improper conduct. Acceptance of
the benefits derived from the conduct is
evidence of knowledge, approval, or
acquiescence.
§ 180.635 May a Federal agency resolve an
administrative action in lieu of debarment
or suspension?
Yes. A Federal agency may resolve an
administrative action in lieu of
debarment or suspension by entering
into an agreement at any time if it is in
the Federal Government’s best interest.
§ 180.640 May an agreement to resolve an
administrative action include a voluntary
exclusion?
Yes. If a Federal agency enters into an
agreement to resolve an administrative
action with you in which you agree to
be excluded, it is called a voluntary
exclusion and has a government-wide
effect.
part of the settlement of a debarment or
suspension action.
§ 180.655 How will other Federal awarding
agencies know about an administrative
agreement that is the result of a settlement?
The suspending or debarring official
who enters into an administrative
agreement with you must report
information about the agreement in
SAM.gov within three business days
after entering into the agreement. The
suspending and debarring official must
use the Contractor Performance
Assessment Reporting System (CPARS)
to enter or amend information in
SAM.gov. This information is required
by section 872 of the Duncan Hunter
National Defense Authorization Act for
Fiscal Year 2009 (41 U.S.C. 2313).
§ 180.660 Will administrative agreement
information about me in SAM.gov be
corrected or updated?
Yes. The suspending or debarring
official who entered information into
SAM.gov about an administrative
agreement with you:
(a) Must correct the information
within three business days if the official
subsequently learn that any information
is erroneous.
(b) Must correct in SAM.gov, within
three business days, the ending date of
the period during which the agreement
is in effect if the agreement is amended
to extend that period.
(c) Must report any other modification
to the administrative agreement in
SAM.gov within three business days.
(d) Is strongly encouraged to amend
the information in SAM.gov in a timely
way to incorporate any update that the
official obtains and that could be
helpful to Federal agencies who must
use the system.
Subpart G—Suspension
§ 180.700 When may the suspending
official issue a suspension?
(a) Yes. The Federal agency agreeing
to the voluntary exclusion enters
information about it into SAM.gov
Exclusions.
(b) Also, any agency or person may
contact the Federal agency that agreed
to the voluntary exclusion to find out
the details of the voluntary exclusion.
Suspension is a serious action. Using
the procedures of this subpart and
subpart F of this part, the suspending
official may impose suspension only
when that official determines that:
(a) There exists an indictment for, or
other adequate evidence to suspect, an
offense listed under § 180.800(a), or
(b) There exists adequate evidence to
suspect any other cause for debarment
listed under § 180.800(b) through (d);
and
(c) Immediate action is necessary to
protect the public interest.
§ 180.650 May an administrative
agreement be the result of a settlement?
§ 180.705 What does the suspending
official consider in issuing a suspension?
Yes. A Federal agency may enter into
an administrative agreement with you as
(a) In determining the adequacy of the
evidence to support the suspension, the
§ 180.645 Do other Federal agencies know
if an agency agrees to a voluntary
exclusion?
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suspending official considers how much
information is available, how credible it
is given the circumstances, whether or
not important allegations are
corroborated, and what inferences can
reasonably be drawn as a result.
(b) In making this determination, the
suspending official may examine:
(1) The basic documents, including
grants, cooperative agreements, loan
authorizations, contracts, and other
relevant documents;
(2) An indictment, criminal
information, conviction, civil judgment,
or other official findings by Federal,
State, or local bodies that determine
factual or legal matters constitutes
adequate evidence for purposes of
suspension actions; and
(3) Other indicators of adequate
evidence that may include, but are not
limited to, warrants and their
accompanying affidavits.
(c) In deciding whether immediate
action is needed to protect the public
interest, the suspending official has
wide discretion. For example, the
suspending official may infer the
necessity for immediate action to
protect the public interest either from
the nature of the circumstances giving
rise to a cause for suspension or from
potential business relationships or
involvement with a program of the
Federal Government.
§ 180.710
effect?
When does a suspension take
A suspension is effective when the
suspending official signs the decision to
suspend.
ddrumheller on DSK120RN23PROD with PROPOSALS2
§ 180.715 What notice does the
suspending official give me if I am
suspended?
After deciding to suspend you, the
suspending official promptly sends you
a Notice of Suspension advising you:
(a) That you have been suspended;
(b) That your suspension is based on:
(1) An indictment;
(2) A criminal information;
(3) A conviction;
(4) A civil judgment;
(5) Other adequate evidence that you
have committed irregularities that
seriously reflect on the propriety of
further Federal Government dealings
with you; or
(6) Conduct of another person that has
been imputed to you or your affiliation
with a suspended or debarred person;
(c) Of any other irregularities
supporting your suspension in terms
sufficient to put you on notice without
disclosing certain evidence in the
Federal Government’s pending or
contemplated legal proceedings;
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(d) Of the cause(s) upon which the
suspending official relied under
§ 180.700 for imposing suspension;
(e) That your suspension is for a
temporary period pending the
completion of an investigation or
resulting legal or debarment
proceedings;
(f) Of the applicable provisions of this
subpart, subpart F, and any other
Federal agency procedures governing
suspension decision-making; and
(g) Of the government-wide effect of
your suspension from procurement and
nonprocurement programs and
activities.
§ 180.720 How may I contest a
suspension?
As a respondent, if you wish to
contest a suspension, you or your
representative must provide the
suspending official with information in
opposition to the suspension. You may
do this orally or in writing. While oral
statements may be a part of the official
record, any information provided orally
that you consider important must also
be submitted in writing for the official
record.
§ 180.725 How much time do I have to
contest a suspension?
(a) As a respondent, you or your
representative must either send or make
arrangements to appear and present the
information and argument to the
suspending official within 30 days after
you receive the Notice of Suspension.
(b) The Federal agency taking the
action considers the notice to be
received by you:
(1) When delivered, if the Federal
agency mails the notice to the last
known street address, or five days after
the agency sends it if the letter is
undeliverable;
(2) When sent, if the Federal agency
sends the notice by facsimile or five
days after the agency sends it if the
facsimile is undeliverable; or
(3) When delivered, if the Federal
agency sends the notice by email or five
days after the agency sends it if the
email is undeliverable.
§ 180.730 What information must I provide
to the suspending official if I contest the
suspension?
(a) In addition to any information and
argument in opposition, as a
respondent, your submission to the
suspending official must identify:
(1) Specific facts that contradict the
statements contained in the Notice of
Suspension. A general denial is
insufficient to raise a genuine dispute
over facts material to the suspension;
(2) All existing, proposed, or prior
exclusions under regulations
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69417
implementing Executive Order 12549
and all similar actions taken by Federal,
State, or local agencies, including
administrative agreements that affect
only those agencies;
(3) All criminal and civil proceedings
not included in the Notice of
Suspension that grew out of facts
relevant to the cause(s) stated in the
notice; and
(4) All of your affiliates.
(b) Your submission must also
identify any of the paragraphs in
§ 180.730(a) that do not apply to you.
(c) If you fail to disclose this
information or provide false
information, the Federal agency taking
the action may seek further criminal,
civil, or administrative action against
you, as appropriate.
§ 180.735 Under what conditions do I get
an additional opportunity to challenge the
facts on which the suspension is based?
(a) As a respondent, you will not have
an additional opportunity to challenge
the facts if the suspending official
determines that:
(1) Your suspension is based upon an
indictment, conviction, civil judgment,
or other findings by a Federal, State, or
local body for which an opportunity to
contest the facts was provided;
(2) Your presentation in opposition
contains only general denials to the
information contained in the Notice of
Suspension;
(3) The issues raised in your
presentation in opposition to the
suspension are not factual in nature, or
are no material to the suspending
official’s initial decision to suspend, or
the official’s decision whether to
continue the suspension; or
(4) On the basis of advice from the
Department of Justice, an office of the
United States Attorney, a State attorney
general’s office, or a State or local
prosecutor’s office, that substantial
interests of the government in pending
or contemplated legal proceedings based
on the same facts as the suspension
would be prejudiced by conducting factfinding.
(b) You will have an opportunity to
challenge the facts if the suspending
official determines that:
(1) The conditions in paragraph (a) of
this section do not exist; and
(2) Your presentation in opposition
raises a genuine dispute over facts
material to the suspension.
(c) If you have an opportunity to
challenge disputed material facts under
this section, the suspending official or
designee must conduct additional
proceedings to resolve those facts.
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§ 180.740
formal?
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Are suspension proceedings
(a) Suspension proceedings are
conducted in a fair and informal
manner. The suspending official may
use flexible procedures to allow you to
present matters in opposition. In so
doing, the suspending official is not
required to follow formal rules of
evidence or procedure in creating an
official record upon which the official
will base a final suspension decision.
(b) As a respondent, you or your
representative must submit any
documentary evidence you want the
suspending official to consider.
§ 180.745
How is fact-finding conducted?
(a) If fact-finding is conducted:
(1) You may present witnesses and
other evidence and confront any witness
presented; and
(2) The fact-finder must prepare
written findings of fact for the record.
(b) A transcribed record of factfinding proceedings must be made,
unless you, as a respondent, and the
Federal agency agree to waive it in
advance. If you want a copy of the
transcribed record, you may purchase it.
§ 180.750 What does the suspending
official consider in deciding whether to
continue or terminate my suspension?
(a) The suspending official bases the
decision on all information contained in
the official record. The record includes:
(1) All information in support of the
suspending official’s initial decision to
suspend you;
(2) Any further information and
argument presented in support of, or
opposition to, the suspension; and
(3) Any transcribed record of factfinding proceedings.
(b) The suspending official may refer
disputed material facts to another
official for findings of fact. The
suspending official may reject any
resulting findings, in whole or in part,
only after specifically determining them
to be arbitrary, capricious, or clearly
erroneous.
ddrumheller on DSK120RN23PROD with PROPOSALS2
§ 180.755 When will I know whether the
suspension is continued or terminated?
The suspending official must make a
written decision whether to continue,
modify, or terminate your suspension
within 45 days of closing the official
record. The official record closes upon
the suspending official’s receipt of final
submissions, information, and findings
of fact, if any. The suspending official
may extend that period for good cause.
§ 180.760
last?
How long may my suspension
(a) If legal or debarment proceedings
are initiated at the time of or during
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your suspension, the suspension may
continue until the conclusion of those
proceedings. However, a suspension
may not exceed 12 months if
proceedings are not initiated.
(b) The suspending official may
extend the 12-month limit under
paragraph (a) of this section for an
additional 6 months if an office of a U.S.
Assistant Attorney General, U.S.
Attorney, or other Federal, State, or
local responsible prosecuting official
requests an extension in writing. In no
event may a suspension exceed 18
months without initiating proceedings
under paragraph (a) of this section.
(c) The suspending official must
notify the appropriate officials under
paragraph (b) of this section of an
impending termination of a suspension
at least 30 days before the 12-month
period expires to allow the officials an
opportunity to request an extension.
Subpart H—Debarment
§ 180.800 What are the causes for
debarment?
A Federal agency may debar a person
for:
(a) Conviction of or civil judgment for:
(1) Commission of fraud or a criminal
offense in connection with obtaining,
attempting to obtain, or performing a
public or private agreement or
transaction;
(2) Violation of Federal or State
antitrust statutes, including those
proscribing price fixing between
competitors, allocation of customers
between competitors, and bid rigging;
(3) Commission of embezzlement,
theft, forgery, bribery, falsification, or
destruction of records, making false
statements, violating Federal criminal
tax laws, receiving stolen property,
making false claims, or obstruction of
justice; or
(4) Commission of any other offense
indicating a lack of business integrity or
business honesty that seriously and
directly affects your present
responsibility;
(b) Violation of the terms of a public
agreement or transaction so serious as to
affect the integrity of a Federal agency
program, such as:
(1) A willful failure to perform in
accordance with the terms of one or
more public agreements or transactions;
(2) A history of failure to perform or
of unsatisfactory performance of one or
more public agreements or transactions;
or
(3) A willful violation of a statutory or
regulatory provision or requirement
applicable to a public agreement or
transaction;
(c) Any of the following causes:
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(1) A nonprocurement debarment by
any Federal agency taken before October
1, 1988, or a procurement debarment by
any Federal agency taken pursuant to 48
CFR part 9, subpart 9.4, before August
25, 1995;
(2) Knowingly doing business with an
ineligible person, except as permitted
under § 180.135;
(3) Failure to pay a single substantial
debt, or a number of outstanding debts
(including disallowed costs and
overpayments, but not including sums
owed the Federal Government under the
Internal Revenue Code) owed to any
Federal agency or instrumentality,
provided the debt is uncontested by the
debtor or, if contested, provided that the
debtor’s legal and administrative
remedies have been exhausted;
(4) Violation of a material provision of
a voluntary exclusion agreement entered
into under § 180.640 or of any other
agreement that resolves a debarment or
suspension action; or
(5) Violation of the provisions of the
Drug-Free Workplace Act of 1988 (41
U.S.C. 701); or
(d) Any other cause that is so serious
or compelling in nature that it affects
your present responsibility.
§ 180.805 What notice does the debarring
official give me if I am proposed for
debarment?
After consideration of the causes in
§ 180.800, if the debarring official
proposes to debar you, the official sends
you a Notice of Proposed Debarment,
pursuant to § 180.615, advising you:
(a) That the debarring official is
considering debarring you;
(b) The reasons for proposing to debar
you in terms sufficient to put you on
notice of the conduct or transactions
upon which the proposed debarment is
based;
(c) The cause(s) under § 180.800 upon
which the debarring official relied for
proposing your debarment;
(d) The applicable provisions of this
subpart, subpart F of this part, and any
other Federal agency procedures
governing debarment; and
(e) The government-wide effect of a
debarment from procurement and
nonprocurement programs and
activities.
§ 180.810
effect?
When does a debarment take
Unlike a suspension, a debarment is
not effective until the debarring official
issues a decision. The debarring official
does not issue a decision until the
respondent has had an opportunity to
contest the proposed debarment.
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§ 180.815 How may I contest a proposed
debarment?
As a respondent, if you wish to
contest a proposed debarment, you or
your representative must provide the
debarring official with information in
opposition to the proposed debarment.
You may do this orally or in writing.
While oral statements may be a part of
the official record, any information
provided orally that you consider
important must also be submitted in
writing for the official record.
§ 180.820 How much time do I have to
contest a proposed debarment?
(a) As a respondent, you or your
representative must either send or make
arrangements to appear and present the
information and argument to the
debarring official within 30 days after
you receive the Notice of Proposed
Debarment.
(b) The Federal agency taking the
action considers the Notice of Proposed
Debarment to be received by you:
(1) When delivered, if the Federal
agency mails the notice to the last
known street address, or five days after
the agency sends it if the letter is
undeliverable;
(2) When sent, if the Federal agency
sends the notice by facsimile or five
days after the agency sends it if the
facsimile is undeliverable; or
(3) When delivered, if the Federal
agency sends the notice by email or five
days after the agency sends it if the
email is undeliverable.
ddrumheller on DSK120RN23PROD with PROPOSALS2
§ 180.825 What information must I provide
to the debarring official if I contest the
proposed debarment?
(a) In addition to any information and
argument in opposition, as a
respondent, your submission to the
debarring official must identify:
(1) Specific facts that contradict the
statements contained in the Notice of
Proposed Debarment. Include any
information about any of the factors
listed in § 180.860. A general denial is
insufficient to raise a genuine dispute
over facts material to the debarment;
(2) All existing, proposed, or prior
exclusions under regulations
implementing Executive Order 12549
and all similar actions taken by Federal,
State, or local agencies, including
administrative agreements that affect
only those agencies;
(3) All criminal and civil proceedings
not included in the Notice of Proposed
Debarment that grew out of facts
relevant to the cause(s) stated in the
notice; and
(4) All of your affiliates.
(b) If you fail to disclose this
information or provide false
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information, the Federal agency taking
the action may seek further criminal,
civil, or administrative action against
you, as appropriate.
§ 180.830 Under what conditions do I get
an additional opportunity to challenge the
facts on which the proposed debarment is
based?
(a) As a respondent, you will not have
an additional opportunity to challenge
the facts if the debarring official
determines that:
(1) Your debarment is based upon a
conviction or civil judgment;
(2) Your presentation in opposition
contains only general denials to the
information contained in the Notice of
Proposed Debarment; or
(3) The issues raised in your
presentation in opposition to the
proposed debarment are not factual in
nature, or are not material to the
debarring official’s decision whether to
debar.
(b) You will have an additional
opportunity to challenge the facts if the
debarring official determines that:
(1) The conditions in paragraph (a) of
this section do not exist; and
(2) Your presentation in opposition
raises a genuine dispute over facts
material to the proposed debarment.
(c) If you have an opportunity to
challenge disputed material facts under
this section, the debarring official or
designee must conduct additional
proceedings to resolve those facts.
§ 180.835
formal?
Are debarment proceedings
(a) Debarment proceedings are
conducted in a fair and informal
manner. The debarring official may use
flexible procedures to allow you, as a
respondent, to present matters in
opposition. In so doing, the debarring
official is not required to follow formal
rules of evidence or procedure in
creating an official record upon which
the official will base the decision on
whether to debar.
(b) You or your representative must
submit any documentary evidence you
want the debarring official to consider.
§ 180.840
How is fact-finding conducted?
(a) If fact-finding is conducted:
(1) You may present witnesses and
other evidence and confront any witness
presented; and
(2) The fact-finder must prepare
written findings of fact for the record.
(b) A transcribed record of factfinding proceedings must be made
unless you, as a respondent, and the
Federal agency agree to waive it in
advance. If you want a copy of the
transcribed record, you may purchase it.
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§ 180.845 What does the debarring official
consider in deciding whether to debar me?
(a) The debarring official may debar
you for any of the causes in § 180.800.
However, the official need not debar
you even if a cause for debarment exists.
The official may consider the
seriousness of your acts or omissions
and the mitigating or aggravating factors
set forth at § 180.860.
(b) The debarring official bases the
decision on all information contained in
the official record. The record includes:
(1) All information in support of the
debarring official’s proposed debarment;
(2) Any further information and
argument presented in support of, or in
opposition to, the proposed debarment;
and
(3) Any transcribed record of factfinding proceedings.
(c) The debarring official may refer
disputed material facts to another
official for findings of fact. The
debarring official may reject any
resultant findings, in whole or in part,
only after specifically determining them
to be arbitrary, capricious, or clearly
erroneous.
§ 180.850 What is the standard of proof in
a debarment action?
(a) In any debarment action, the
Federal agency must establish the cause
for debarment by a preponderance of the
evidence.
(b) If the proposed debarment is based
upon a conviction or civil judgment, the
standard of proof is met.
§ 180.855 Who has the burden of proof in
a debarment action?
(a) The Federal agency has the burden
to prove that a cause for debarment
exists.
(b) Once a cause for debarment is
established, you as a respondent have
the burden of demonstrating to the
satisfaction of the debarring official that
you are presently responsible and that
debarment is not necessary.
§ 180.860 What factors may influence the
debarring official’s decision?
This section lists the mitigating and
aggravating factors that the debarring
official may consider in determining
whether to debar you and the length of
your debarment period. The debarring
official may consider other factors if
appropriate in light of the circumstances
of a particular case. The existence or
nonexistence of any factor, such as one
of those set forth in this section, is not
necessarily determinative of your
present responsibility. In making a
debarment decision, the debarring
official may consider the following
factors:
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(a) The actual or potential harm or
impact that results or may result from
the wrongdoing.
(b) The frequency of incidents or
duration of the wrongdoing.
(c) Whether there is a pattern or prior
history of wrongdoing. For example, if
you have been found by another Federal
agency or a State agency to have
engaged in wrongdoing similar to that
found in the debarment action, the
existence of this fact may be used by the
debarring official in determining that
you have a pattern or prior history of
wrongdoing.
(d) Whether you are or have been
excluded or disqualified by an agency of
the Federal Government or have not
been allowed to participate in State or
local contracts or assistance agreements
on a basis of conduct similar to one or
more of the causes for debarment
specified in this part.
(e) Whether you have entered into an
administrative agreement with a Federal
agency or a State or local government
that is not government-wide but is based
on conduct similar to one or more of the
causes for debarment specified in this
part.
(f) Whether and to what extent you
planned, initiated, or carried out the
wrongdoing.
(g) Whether you have accepted
responsibility for the wrongdoing and
recognize the seriousness of the
misconduct that led to the cause for
debarment.
(h) Whether you have paid or agreed
to pay all criminal, civil, and
administrative liabilities for the
improper activity, including any
investigative or administrative costs
incurred by the government, and have
made or agreed to make full restitution.
(i) Whether you have cooperated fully
with the government agencies during
the investigation and any court or
administrative action. In determining
the extent of cooperation, the debarring
official may consider when the
cooperation began and whether you
disclosed all pertinent information
known to you.
(j) Whether the wrongdoing was
pervasive within your organization.
(k) The kind of positions held by the
individuals involved in the wrongdoing.
(l) Whether your organization took
appropriate corrective action or
implemented remedial or protective
measures in the form of procedures,
policies, and programs to effectively
address the activity cited as a basis for
the debarment.
(m) Whether your principals tolerated
the offense.
(n) Whether you brought the activity
cited as a basis for the debarment to the
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attention of the appropriate government
agency in a timely manner.
(o) Whether you have fully
investigated the circumstances
surrounding the cause for debarment
and, if so, made the result of the
investigation available to the debarring
official.
(p) Whether you had effective
standards of conduct and internal
control systems in place at the time the
questioned conduct occurred.
(q) Whether you have taken
appropriate disciplinary action against
the individuals responsible for the
activity which constitutes the cause for
debarment.
(r) Whether you have had adequate
time to eliminate the circumstances
within your organization that led to the
cause for the debarment.
(s) Whether your business, technical,
or professional license(s) has been
suspended, terminated, or revoked.
(t) Other factors that are appropriate
to the circumstances of a particular case.
§ 180.865
last?
How long may my debarment
(a) If the debarring official decides to
debar you, your period of debarment
will be based on the seriousness of the
cause(s) upon which your debarment is
based. Generally, debarment should not
exceed three years. However, if
circumstances warrant, the debarring
official may impose a longer period of
debarment.
(b) In determining the period of
debarment, the debarring official may
consider the factors in § 180.860. If a
suspension has preceded your
debarment, the debarring official must
consider the time you were suspended.
(c) If the debarment is for a violation
of the provisions of the Drug-Free
Workplace Act of 1988, your period of
debarment may not exceed five years.
§ 180.870 When do I know if the debarring
official debars me?
(a) The debarring official must make
a written decision whether to debar
within 45 days of closing the official
record. The official record closes upon
the debarring official’s receipt of final
submissions, information, and findings
of fact, if any. The debarring official
may extend that period for good cause.
(b) The debarring official sends you
written notice, pursuant to § 180.615,
that the official decided either:
(1) Not to debar you; or
(2) To debar you. In this event, the
notice:
(i) Refers to the Notice of Proposed
Debarment;
(ii) Specifies the reasons for your
debarment;
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(iii) States the period of your
debarment, including the effective
dates; and
(iv) Advises you that your debarment
is effective for covered transactions and
contracts that are subject to the Federal
Acquisition Regulations (48 CFR
chapter 1) throughout the executive
branch of the Federal Government
unless an agency head or an authorized
designee grants an exception.
§ 180.875 May I ask the debarring official
to reconsider a decision to debar me?
Yes. As a debarred person, you may
ask the debarring official to reconsider
the debarment decision or to reduce the
time period or scope of the debarment.
However, you must submit your request
in writing and support it with
documentation.
§ 180.880 What factors may influence the
debarring official during reconsideration?
The debarring official may reduce or
terminate your debarment based on:
(a) Newly discovered material
evidence;
(b) A reversal of the conviction or
civil judgment upon which your
debarment was based;
(c) A bona fide change in ownership
or management;
(d) Elimination of other causes for
which the debarment was imposed; or
(e) Other reasons the debarring official
finds appropriate.
§ 180.885 May the debarring official extend
a debarment?
(a) Yes. The debarring official may
extend a debarment for an additional
period if that official determines that an
extension is necessary to protect the
public interest.
(b) However, the debarring official
may not extend a debarment solely on
the basis of the facts and circumstances
upon which the initial debarment action
was based.
(c) If the debarring official decides
that a debarment for an additional
period is necessary, the debarring
official must follow the applicable
procedures in this subpart, and subpart
F, to extend the debarment.
Subpart I—Definitions
§ 180.900
Adequate evidence.
Adequate evidence means
information sufficient to support the
reasonable belief that a particular act or
omission has occurred.
§ 180.905
Affiliate.
Persons are affiliates of each other if,
directly or indirectly, either one
controls or has the power to control the
other or a third person controls or has
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the power to control both. The ways a
Federal agency may determine control
include, but are not limited to:
(a) Interlocking management or
ownership;
(b) Identity of interests among family
members;
(c) Shared facilities and equipment;
(d) Common use of employees; or
(e) A business entity organized
following the exclusion of a person with
the same or similar management,
ownership, or principal employees as
the excluded person.
§ 180.910
Agent or representative.
Agent or representative means any
person who acts on behalf of or who is
authorized to commit a participant in a
covered transaction.
§ 180.915
Civil judgment.
Civil judgment means the disposition
of a civil action by any court of
competent jurisdiction, whether by
verdict, decision, settlement,
stipulation, or other disposition which
creates a civil liability for the
complained of wrongful acts or a final
determination of liability under the
Program Fraud Civil Remedies Act of
1986 (31 U.S.C. 3801–3812).
§ 180.920
Conviction.
Conviction means:
(a) A judgment or any other
determination of guilt of a criminal
offense by any court of competent
jurisdiction, whether entered upon a
verdict or plea, including a plea of nolo
contendere; or
(b) Any other resolution that is the
functional equivalent of a judgment,
including probation before judgment
and deferred prosecution. A disposition
without the participation of the court is
the functional equivalent of a judgment
only if it includes an admission of guilt.
ddrumheller on DSK120RN23PROD with PROPOSALS2
§ 180.925
Debarment.
specified Federal procurement or
nonprocurement transactions as
required under a statute, Executive
order (other than Executive Orders
12549 and 12689), or other authority.
Examples of disqualifications include
persons prohibited under—
(a) The Davis-Bacon Act (40 U.S.C.
3142);
(b) The equal employment
opportunity acts and Executive orders;
or
(c) The Clean Air Act (42 U.S.C.
7606), Clean Water Act (33 U.S.C. 1368),
and Executive Order 11738 (38 FR
25161).
§ 180.940
§ 180.945 System for Award Management
(SAM.gov) Exclusions.
System for Award Management
(SAM.gov) Exclusions means the list
maintained and disseminated by the
General Services Administration (GSA)
containing the names and other
information about ineligible persons.
§ 180.950
§ 180.955
§ 180.930
§ 180.960
Debarring official.
§ 180.935
Disqualified.
Disqualified means that a person is
prohibited from participating in
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Federal agency.
Federal agency means any United
States executive department, military
department, defense agency, or any
other executive branch agency. For the
purposes of this part, other agencies of
the Federal Government are not
considered ‘‘agencies’’ unless they issue
regulations adopting the governmentwide Debarment and Suspension system
under Executive Orders 12549 and
12689.
Debarment means an action taken by
a debarring official under Subpart H to
exclude a person from participating in
covered transactions and transactions
covered under the Federal Acquisition
Regulations (48 CFR chapter 1). A
person so excluded is debarred.
Debarring official means a Federal
agency official who is authorized to
impose debarment. A debarring official
is either:
(a) The agency head; or
(b) An official designated by the
agency head.
Excluded or exclusion.
Excluded or exclusion means:
(a) That a person or commodity is
prohibited from being a participant in
covered transactions, whether the
person has been suspended; debarred;
proposed for debarment under 48 CFR
part 9, subpart 9.4; voluntarily
excluded; or
(b) The act of excluding a person.
Indictment.
Indictment means an indictment for a
criminal offense. A presentment,
information, or other filing by a
competent authority charging a criminal
offense will be given the same effect as
an indictment.
Ineligible or ineligibility.
Ineligible or ineligibility means that a
person or commodity is prohibited from
covered transactions because of an
exclusion or disqualification.
§ 180.965
Legal proceedings.
Legal proceeding means any criminal
proceeding or any civil judicial
proceeding, including a proceeding
under the Program Fraud Civil
Remedies Act of 1986 (31 U.S.C. 3801–
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69421
3812), to which the Federal Government
or a State or local government or quasigovernmental authority is a party. The
term also includes appeals from those
proceedings.
§ 180.970
Nonprocurement transaction.
(a) Nonprocurement transaction
means any transaction, regardless of
type (except procurement contracts),
including, but not limited to, the
following:
(1) Grants;
(2) Cooperative agreements;
(3) Scholarships;
(4) Fellowships;
(5) Contracts of assistance;
(6) Loans;
(7) Loan guarantees;
(8) Subsidies;
(9) Insurances;
(10) Payments for specified uses; and
(11) Donation agreements.
(b) A nonprocurement transaction at
any tier does not require the transfer of
Federal funds.
§ 180.975
Notice.
Notice means a written
communication served in person, sent
by certified mail or its equivalent, or
sent electronically by email or facsimile.
(See § 180.615.)
§ 180.980
Participant.
Participant means any person who
submits a proposal for or enters into a
covered transaction, including an agent
or representative of a participant.
§ 180.985
Person.
Person means any individual,
corporation, partnership, association,
unit of government, or legal entity,
regardless of how organized.
§ 180.990
Preponderance of the evidence.
Preponderance of the evidence means
proof by information that, compared
with information opposing it, leads to
the conclusion that the fact at issue is
more probably true than not.
§ 180.995
Principal.
Principal means:
(a) An officer, director, owner,
partner, principal investigator, or
another person within a participant
with management or supervisory
responsibilities related to a covered
transaction; or
(b) A consultant or other person,
whether or not employed by the
participant or paid with Federal funds,
who:
(1) Is in a position to handle Federal
funds;
(2) Is in a position to influence or
control the use of those funds; or,
(3) Occupies a technical or
professional position capable of
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substantially influencing the
development or outcome of an activity
required to perform the covered
transaction.
(b) For purposes of this part, State
does not include institutions of higher
education, hospitals, or units of local
government.
§ 180.1000
§ 180.1010
Respondent.
Respondent means a person against
whom a Federal agency has initiated a
debarment or suspension action.
§ 180.1005
State.
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(a) State means:
(1) Any of the states of the United
States;
(2) The District of Columbia;
(3) The Commonwealth of Puerto
Rico;
(4) Any territory or possession of the
United States; or
(5) Any agency or instrumentality of
a State.
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Suspending official.
(a) Suspending official means a
Federal agency official authorized to
impose suspension. The suspending
official is either:
(1) The agency head; or
(2) An official designated by the
agency head.
§ 180.1015
Suspension.
Suspension is an action taken by a
suspending official under subpart G of
this part that immediately prohibits a
person from participating in covered
transactions and transactions covered
under the Federal Acquisition
Regulations (48 CFR chapter 1) for a
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temporary period, pending completion
of a Federal agency investigation and
any judicial or administrative
proceedings that may ensue. A person
so excluded is suspended.
§ 180.1020 Voluntary exclusion or
voluntarily excluded.
(a) Voluntary exclusion means a
person’s agreement to be excluded
under the terms of a settlement between
the person and one or more agencies.
Voluntary exclusion must have a
government-wide effect.
(b) Voluntarily excluded means the
status of a person who has agreed to a
voluntary exclusion.
Appendix A to Part 180—Covered
Transactions
BILLING CODE 3110–01–P
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69423
COVIIUD ~ % O R S
Federal Agency
All Primary Tier
Nonproeurement Transaefloas
AU Lower Tier
Nonproeurement Transactions
AU First Tier
Procurement C&ntraets
.~25,000
AD First Tier Procurement
Contracts Subject to
Aaeney Consent
All Lower Tier Subcontraets
Subject to
Agency Consent
ddrumheller on DSK120RN23PROD with PROPOSALS2
■
182.25 What must a Federal agency address
in its implementation of the guidance?
182.30 Where does a Federal agency
implement the guidance?
182.40 How is the guidance maintained?
8. Revise part 182 to read as follows:
PART 182—GOVERNMENT-WIDE
REQUIREMENTS FOR DRUG-FREE
WORKPLACE (FINANCIAL
ASSISTANCE)
Subpart A—Purpose and Coverage
Sec.
182.5 What does this part do?
182.10 How is this part organized?
182.15 To whom does the guidance apply?
182.20 What must a Federal agency do to
implement the guidance?
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182.100 How is this part written?
182.105 Do terms in this part have special
meanings?
182.110 What do subparts A through F of
this part do?
182.115 Does this part apply to me?
182.120 Are any of my Federal assistance
awards exempt from this part?
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182.125 Does this part affect the Federal
contracts that I receive?
Subpart B—Requirements for Recipients
Other Than Individuals
182.200 What must I do to comply with this
part?
182.205 What must I include in my drugfree workplace statement?
182.210 To whom must I distribute my
drug-free workplace statement?
182.215 What must I include in my drugfree awareness program?
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182.220 By when must I publish my drugfree workplace statement and establish
my drug-free awareness program?
182.225 What actions must I take
concerning employees who are convicted
of drug violations in the workplace?
182.230 How and when must I identify
workplaces?
Subpart C—Requirements for Recipients
Who Are Individuals
182.300 What must I do to comply with this
part if I am an individual recipient?
Subpart D—Responsibilities of Agency
Awarding Officials
182.400 What are my responsibilities as an
agency awarding official?
Subpart E—Violations of This Part and
Consequences
182.500 How are violations of this part
determined for recipients other than
individuals?
182.505 How are violations of this part
determined for recipients who are
individuals?
182.510 What actions will the Federal
Government take against a recipient
determined to have violated this part?
182.515 Are there any exceptions to those
actions?
Subpart F—Definitions
182.605 Award.
182.610 Controlled substance.
182.615 Conviction.
182.620 Cooperative agreement.
182.625 Criminal drug statute.
182.630 Debarment.
182.635 Drug-free workplace.
182.640 Employee.
182.645 Federal agency or agency.
182.650 Grant.
182.655 Individual.
182.660 Recipient.
182.665 State.
182.670 Suspension.
What does this part do?
This part provides guidance for
Federal agencies on the portion of the
Drug-Free Workplace Act of 1988 (41
U.S.C. 8101–8106, as amended) that
applies to grants. It also applies the
provisions of the Act to cooperative
agreements and other financial
assistance awards, as a matter of Federal
Government policy.
ddrumheller on DSK120RN23PROD with PROPOSALS2
§ 182.10
How is this part organized?
This part is organized into two
segments.
(a) Sections 182.5 through 182.40
contain general policy direction for
Federal agencies’ use of the uniform
policies and procedures in subparts A
through F.
(b) Subparts A through F contain
uniform government-wide policies and
procedures for Federal agency use to
specify the:
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§ 182.15
apply?
To whom does the guidance
This part provides guidance to
Federal agencies. Publication of this
guidance in the Code of Federal
Regulations (CFR) does not change its
nature—it is guidance and not
regulation. Federal agencies’
implementation of this guidance
governs the rights and responsibilities of
other persons affected by the drug-free
workplace requirements.
§ 182.20 What must a Federal agency do to
implement the guidance?
To comply with the requirement in 41
U.S.C. 8106 for government-wide
regulations, each Federal agency that
awards grants or cooperative agreements
or makes other financial assistance
awards that are subject to the drug-free
workplace requirements in subparts A
through F of the guidance must issue a
regulation consistent with those
subparts.
§ 182.25 What must a Federal agency
address in its implementation of the
guidance?
Authority: 41 U.S.C. 8101–8106; 31 U.S.C.
503; 31 U.S.C. 6307.
§ 182.5
(1) Types of awards that are covered
by drug-free workplace requirements;
(2) Drug-free workplace requirements
with which a recipient must comply;
(3) Actions required of a Federal
agency awarding official; and
(4) Consequences of a violation of
drug-free workplace requirements.
Each Federal agency’s implementing
regulation:
(a) Must establish drug-free workplace
policies and procedures for that Federal
agency’s Federal awards consistent with
this guidance. When adopted by a
Federal agency, the provisions of the
guidance have a regulatory effect on that
Federal agency’s awards.
(b) Must address some matters for
which the guidance in this part gives
the Federal agency discretion.
Specifically, the regulation must:
(1) State whether the Federal agency:
(i) Has a central point to which a
recipient may send the notification of a
conviction that is required under
§ 182.225(a) or § 182.300(b); or
(ii) Requires the recipient to send the
notification to the Federal agency
awarding official or their designee for
each Federal award.
(2) Either:
(i) State that the Federal agency head
is the official authorized to determine
under § 182.500 or § 182.505 that a
recipient has violated the drug-free
workplace requirements; or
(ii) Provide the title of the official
designated to make that determination.
(c) May also, at the Federal agency’s
option, identify any specific types of
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financial assistance awards, in addition
to grants and cooperative agreements, to
which the Federal agency makes this
guidance applicable.
§ 182.30 Where does a Federal agency
implement the guidance?
Each Federal agency that awards
grants or cooperative agreements or
makes other financial assistance awards
that are subject to the drug-free
workplace guidance in this part must
issue a regulation implementing the
guidance within its chapter in subtitle B
of this title of the Code of Federal
Regulations.
§ 182.40
How is the guidance maintained?
The OMB publishes proposed changes
to the guidance in the Federal Register
for public comment, considers
comments with the help of appropriate
interagency working groups, and then
issues any changes to the guidance in
final form.
Subpart A—Purpose and Coverage
§ 182.100
How is this part written?
(a) This part uses a ‘‘plain language’’
format to make it easier for the general
public and business community to use
and understand. The section headings
and text must be read together, as they
are often in the form of questions and
answers.
(b) Pronouns used within this part,
such as ‘‘I’’ and ‘‘you,’’ change from
subpart to subpart depending on the
audience being addressed.
§ 182.105 Do terms in this part have
special meanings?
This part uses terms that have special
meanings. Those terms are defined in
subpart F.
§ 182.110 What do subparts A through F of
this part do?
Subparts A through F specify
standard policies and procedures to
carry out the Drug-Free Workplace Act
of 1988 for financial assistance awards.
§ 182.115
Does this part apply to me?
(a) Portions of this part apply to you
if you are either:
(1) A recipient of a Federal assistance
award (see definitions of award and
recipient in §§ 182.605 and 182.660,
respectively); or
(2) A Federal agency awarding
official.
(b) The following table shows the
subparts that apply to you:
If you are * * *
See subparts * * *
(1) a recipient who is not
an individual.
(2) a recipient who is an individual.
A, B and E.
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If you are * * *
See subparts * * *
(3) a Federal agency
awarding official.
A, D and E.
§ 182.120 Are any of my Federal
assistance awards exempt from this part?
This part does not apply to any award
to which the Federal agency head, or
their designee, determines that the
application of this part would be
inconsistent with the international
obligations of the United States or the
laws or regulations of a foreign
government.
§ 182.125 Does this part affect the Federal
contracts that I receive?
This part will affect future contract
awards indirectly if you are debarred or
suspended for a violation of the
requirements of this part, as described
in § 182.510(c). However, this part does
not apply directly to procurement
contracts. The portion of the Drug-Free
Workplace Act of 1988 that applies to
Federal procurement contracts is carried
out through the Federal Acquisition
Regulation in Chapter 1 of Title 48 of
the Code of Federal Regulations (the
drug-free workplace coverage currently
is in 48 CFR part 23, subpart 23.5).
Subpart B—Requirements for
Recipients Other Than Individuals
§ 182.200 What must I do to comply with
this part?
There are two general requirements if
you are a recipient other than an
individual.
(a) First, you must make a good faith
effort, on a continuing basis, to maintain
a drug-free workplace. You must agree
to do so as a condition for receiving any
award covered by this part. The specific
measures that you must take in this
regard are described in more detail in
subsequent sections of this subpart.
Briefly, those measures are to:
(1) Publish a drug-free workplace
statement and establish a drug-free
awareness program for your employees
(see §§ 182.205 through 182.220); and
(2) Take actions concerning
employees convicted of violating drug
statutes in the workplace (see
§ 182.225).
(b) Second, you must identify all
known workplaces under your Federal
awards (see § 182.230).
§ 182.205 What must I include in my drugfree workplace statement?
You must publish a statement that—
(a) Tells your employees that the
unlawful manufacture, distribution,
dispensing, possession, or use of a
controlled substance is prohibited in
your workplace;
(b) Specifies the actions that you will
take against employees for violating that
prohibition; and
(c) Lets each employee know that, as
a condition of employment under any
award, the employee:
(1) Will abide by the terms of the
statement; and
(2) Must notify you in writing if the
employee is convicted for a violation of
a criminal drug statute occurring in the
workplace and must do so no more than
five calendar days after the conviction.
§ 182.210 To whom must I distribute my
drug-free workplace statement?
You must require that a copy of the
statement described in § 182.205 be
given to each employee who will be
engaged in the performance of any
Federal award.
§ 182.215 What must I include in my drugfree awareness program?
You must establish an ongoing drugfree awareness program to inform
employees about:
(a) The dangers of drug abuse in the
workplace;
(b) Your policy of maintaining a drugfree workplace;
(c) Any available drug counseling,
rehabilitation, and employee assistance
programs; and
(d) The penalties that you may impose
upon them for drug abuse violations
occurring in the workplace.
§ 182.220 By when must I publish my
drug-free workplace statement and
establish my drug-free awareness
program?
If you are a new recipient that does
not already have a policy statement as
described in § 182.205 and an ongoing
awareness program as described in
§ 182.215, you must publish the
statement and establish the program by
the time given in the following table:
If * * *
Then you * * *
(a) The performance period of the award is less than 30 days ..............
Must have the policy statement and program in place as soon as possible, but before the date on which performance is expected to be
completed.
Must have the policy statement and program in place within 30 days
after award.
May ask the Federal agency awarding official to give you more time to
do so. The amount of additional time, if any, to be given is at the discretion of the Federal agency awarding official.
(b) The performance period of the award is 30 days or more ................
(c) You believe there are extraordinary circumstances that will require
more than 30 days for you to publish the policy statement and establish the awareness program.
§ 182.225 What actions must I take
concerning employees who are convicted
of drug violations in the workplace?
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There are two actions you must take
if an employee is convicted of a drug
violation in the workplace:
(a) First, you must notify Federal
agencies if an employee who is engaged
in the performance of an award informs
you about a conviction, as required by
§ 182.205(c)(2), or you otherwise learn
of the conviction. Your notification to
the Federal agencies must:
(1) Be in writing;
(2) Include the employee’s position
title;
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(3) Include the identification
number(s) of each affected award;
(4) Be sent within ten calendar days
after you learn of the conviction; and
(5) Be sent to every Federal agency on
whose award the convicted employee
was working. It must be sent to every
Federal agency awarding official or their
designee, unless the Federal agency has
specified a central point for the receipt
of the notices.
(b) Second, within 30 calendar days of
learning about an employee’s
conviction, you must either:
(1) Take appropriate personnel action
against the employee, up to and
including termination, consistent with
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the requirements of the Rehabilitation
Act of 1973 (29 U.S.C. 794), as
amended; or
(2) Require the employee to
participate satisfactorily in a drug abuse
assistance or rehabilitation program
approved for these purposes by a
Federal, State, or local health, law
enforcement, or another appropriate
agency.
§ 182.230 How and when must I identify
workplaces?
(a) You must identify all known
workplaces under each Federal agency
award. A failure to do so is a violation
of your drug-free workplace
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requirements. You may identify the
workplaces:
(1) To the Federal agency awarding
official that is making the Federal
award, either at the time of application
or upon award; or
(2) In documents that you keep on file
in your offices during the performance
of the Federal award, in which case you
must make the information available for
inspection upon request by agency
officials or their designated
representatives.
(b) Your workplace identification for
a Federal award must include the actual
address of buildings (or parts of
buildings) or other sites where work
under the award takes place. Categorical
descriptions may be used (for example,
all vehicles of a mass transit authority
or State highway department while in
operation, State employees in each local
unemployment office, performers in
concert halls or radio studios).
(c) If you identified workplaces to the
Federal agency awarding official at the
time of application or award, as
described in paragraph (a)(1) of this
section, and any workplace that you
identified changes during the
performance of the Federal award, you
must inform the Federal agency
awarding official.
Subpart D—Responsibilities of Federal
Agency Awarding Officials
§ 182.400 What are my responsibilities as
a Federal agency awarding official?
As a Federal agency awarding official,
you must obtain each recipient’s
agreement, as a condition of the award,
to comply with the requirements in:
(a) Subpart B, if the recipient is not an
individual; or
(b) Subpart C, if the recipient is an
individual.
§ 182.500 How are violations of this part
determined for recipients other than
individuals?
A recipient other than an individual
is in violation of the requirements of
this part if the Federal agency head or
their designee determines, in writing,
that:
(a) The recipient has violated the
requirements of subpart B; or
(b) The number of convictions of the
recipient’s employees for violating
criminal drug statutes in the workplace
is large enough to indicate that the
recipient has failed to make a good-faith
effort to provide a drug-free workplace.
§ 182.505 How are violations of this part
determined for recipients who are
individuals?
§ 182.300 What must I do to comply with
this part if I am an individual recipient?
A recipient who is an individual is in
violation of the requirements of this part
if the Federal agency head or their
designee determines, in writing, that:
(a) The recipient has violated the
requirements of subpart C; or
(b) The recipient is convicted of a
criminal drug offense resulting from a
violation occurring during the conduct
of any award activity.
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For a particular award, the Federal
agency head may waive, in writing, a
suspension of payments under an
award, suspension or termination of an
award, or suspension or debarment of a
recipient if the agency head determines
that such a waiver would be in the
public interest. This exception authority
cannot be delegated to any other official.
Subpart F—Definitions
§ 182.605
Subpart E—Violations of This Part and
Consequences
Subpart C—Requirements for
Recipients Who Are Individuals
As a condition of receiving a Federal
award, if you are an individual
recipient, you must agree that:
(a) You will not engage in the
unlawful manufacture, distribution,
dispensing, possession, or use of a
controlled substance in conducting any
activity related to the Federal award;
and
(b) If you are convicted of a criminal
drug offense resulting from a violation
occurring during the conduct of any
Federal award activity, you will report
the conviction:
(1) In writing.
(2) Within 10 calendar days of the
conviction.
(3) To the Federal agency awarding
official or their designee for each
Federal award that you currently have,
unless the agency designates a central
point for the receipt of the notices,
either in the award document or its
regulation implementing the guidance
in this part. When notice is made to a
central point, it must include the
identification number(s) of each affected
Federal award.
§ 182.515 Are there any exceptions to
those actions?
§ 182.510 What actions will the Federal
Government take against a recipient
determined to have violated this part?
If a recipient is determined to have
violated this part, as described in
§ 182.500 or § 182.505, the Federal
agency may take one or more of the
following actions:
(a) Suspension of payments under the
award;
(b) Suspension or termination of the
award; and
(c) Suspension or debarment of the
recipient under the Federal agency’s
regulation implementing the OMB
guidance on nonprocurement
debarment and suspension (2 CFR part
180) for a period not to exceed five
years.
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Award.
Award means an award of financial
assistance by a Federal agency directly
to a recipient.
(a) The term award includes:
(1) A Federal grant or cooperative
agreement, in the form of money or
property in lieu of money.
(2) A block grant or a grant in an
entitlement program, whether or not the
grant is exempted from coverage under
the government-wide rule that
implements OMB Circular A–102 (for
availability of OMB circulars, see 5 CFR
1310.3) and specifies uniform
administrative requirements.
(b) The term award does not include:
(1) Technical assistance that provides
services instead of money.
(2) Loans.
(3) Loan guarantees.
(4) Interest subsidies.
(5) Insurance.
(6) Direct appropriations.
(7) Veterans’ benefits to individuals
(that is, any benefit to veterans, their
families, or survivors by virtue of the
service of a veteran in the Armed Forces
of the United States).
§ 182.610
Controlled substance.
Controlled substance means a
controlled substance in schedules I
through V of the Controlled Substances
Act (21 U.S.C. 812), and as further
defined by regulation at 21 CFR 1308.11
through 1308.15.
§ 182.615
Conviction.
Conviction means a finding of guilt
(including a plea of nolo contendere) or
imposition of sentence, or both, by any
judicial body charged with the
responsibility to determine violations of
the Federal or State criminal drug
statutes.
§ 182.620
Cooperative agreement.
Cooperative agreement means an
award of financial assistance that,
consistent with 31 U.S.C. 6305, is used
to enter into the same kind of
relationship as a grant (see definition of
grant in § 182.650), except that
substantial involvement is expected
between the Federal agency and the
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recipient when carrying out the activity
contemplated by the award. The term
does not include cooperative research
and development agreements as defined
in 15 U.S.C. 3710a.
§ 182.625
Criminal drug statute.
Criminal drug statute means a Federal
or non-Federal criminal statute
involving the manufacture, distribution,
dispensing, use, or possession of any
controlled substance.
§ 182.630
Debarment.
Debarment means an action taken by
a Federal agency to prohibit a recipient
from participating in Federal
Government procurement contracts and
covered nonprocurement transactions.
A recipient so prohibited is debarred, in
accordance with the Federal Acquisition
Regulation for procurement contracts
(48 CFR part 9, subpart 9.4) and Federal
agency regulations implementing the
OMB guidance on nonprocurement
debarment and suspension (2 CFR part
180, which implements Executive
Orders 12549 and 12689).
§ 182.635
Drug-free workplace.
Drug-free workplace means a site for
the performance of work done in
connection with a specific award at
which employees of the recipient are
prohibited from engaging in the
unlawful manufacture, distribution,
dispensing, possession, or use of a
controlled substance.
ddrumheller on DSK120RN23PROD with PROPOSALS2
§ 182.640
Employee.
(a) Employee means the employee of
a recipient directly engaged in the
performance of work under the award,
including:
(1) All direct charge employees;
(2) All indirect charge employees,
unless their impact or involvement in
the performance of work under the
award is insignificant to the
performance o’ the award; and
(3) Temporary personnel and
consultants who are directly engaged in
the performance of work under the
award and who are on the recipient’s
payroll.
(b) This definition does not include
workers not on the payroll of the
recipient (for example, volunteers, even
if used to meet a cost sharing
requirement; consultants or
independent contractors not on the
payroll; or employees of subrecipients
or subcontractors in covered
workplaces).
§ 182.645
Federal agency or agency.
Federal agency or agency means any
United States executive department,
military department, government
corporation, government-controlled
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corporation, any other establishment in
the executive branch (including the
Executive Office of the President), or
any independent regulatory agency.
§ 182.650
Grant.
Grant means an award of financial
assistance that, consistent with 31
U.S.C. 6304, is used to enter into a
relationship:
(a) The principal purpose of which is
to transfer a thing of value to the
recipient to carry out a public purpose
of support or stimulation authorized by
a law of the United States rather than to
acquire property or services for the
Federal Government’s direct benefit or
use; and
(b) In which substantial involvement
is not expected between the Federal
agency and the recipient when carrying
out the activity contemplated by the
award.
§ 182.655
Individual.
Individual means a natural person.
§ 182.660
Recipient.
Recipient means any individual,
corporation, partnership, association,
unit of government (except a Federal
agency), or legal entity, regardless of
how it is organized, that receives an
award directly from a Federal agency.
§ 182.665
State.
State means any of the States of the
United States, the District of Columbia,
the Commonwealth of Puerto Rico, or
any territory or possession of the United
States.
§ 182.670
Suspension.
Suspension means an action taken by
a Federal agency that immediately
prohibits a recipient from participating
in Federal Government procurement
contracts and covered nonprocurement
transactions for a temporary period,
pending completion of an investigation
and any judicial or administrative
proceedings that may ensue. A recipient
so prohibited is suspended in
accordance with the Federal Acquisition
Regulation for procurement contracts
(48 CFR part 9, subpart 9.4) and Federal
agency regulations implementing the
OMB guidance on nonprocurement
debarment and suspension (2 CFR part
180, which implements Executive
Orders 12549 and 12689). Suspension of
a recipient is a distinct and separate
action from suspension of an award or
suspension of payments under an
award.
■ 9. Revise part 183 to read as follows:
PART 183—NEVER CONTRACT WITH
THE ENEMY
Sec.
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183.5 Purpose of this part.
183.10 Applicability.
183.15 Responsibilities of Federal agencies.
183.20 Reporting responsibilities of Federal
agencies.
183.25 Responsibilities of recipients.
183.30 Access to records.
183.35 Definitions.
Appendix A to Part 183
Award Terms for Never Contract With the
Enemy
Authority: Pub. L. 113–291, as amended by
Pub. L. 115–232, Pub. L. 116–92, Pub. L.
116–283, Pub. L. 117–263; 31 U.S.C. 503; 31
U.S.C. 6307.
§ 183.5
Purpose of this part.
This part provides guidance to
Federal agencies on the implementation
of the Never Contract with the Enemy
requirements applicable to certain
grants and cooperative agreements, as
specified in subtitle E, title VIII of the
National Defense Authorization Act
(NDAA) for Fiscal Year (FY) 2015 (Pub.
L. 113–291), as amended by Sec. 820 of
the National Defense Authorization Act
for Fiscal Year 2023 (Pub. L. 117–263),
hereafter cited as ‘‘Never Contract with
the Enemy’’).
§ 183.10
Applicability.
(a) This part applies only to grants
and cooperative agreements that are
expected to exceed $50,000 and that are
performed outside the United States,
including U.S. territories, and that are in
support of a contingency operation in
which members of the Armed Forces are
actively engaged in hostilities. It does
not apply to the authorized intelligence
or law enforcement activities of the
Federal Government.
(b) All elements of this part are
applicable until the date of expiration as
provided in law.
§ 183.15 Responsibilities of Federal
agencies.
(a) Prior to making an award for a
covered grant or cooperative agreement
(see also § 183.35), the Federal agency
must check the current list of prohibited
or restricted persons or entities in the
System for Award Management
(SAM.gov) Exclusions.
(b) The Federal agency may include
the award term provided in appendix A
in all covered grant and cooperative
agreement awards in accordance with
Never Contract with the Enemy.
(c) A Federal agency may become
aware of a person or entity that:
(1) Provides funds, including goods
and services, received under a covered
grant or cooperative agreement of an
executive agency directly or indirectly
to covered persons or entities; or
(2) Fails to exercise due diligence to
ensure that no funds, including goods
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and services, received under an
executive agency’s covered grant or
cooperative agreement are provided
directly or indirectly to covered persons
or entities.
(d) When a Federal agency becomes
aware of such a person or entity, it may
do any of the following actions:
(1) Restrict the future award of all
Federal contracts, grants, and
cooperative agreements to the person or
entity based upon concerns that Federal
awards to the entity would provide
grant funds directly or indirectly to a
covered person or entity.
(2) Terminate any grant, cooperative
agreement, or contract to a covered
person or entity upon becoming aware
that the recipient has failed to exercise
due diligence to ensure that no award
funds are provided directly or indirectly
to a covered person or entity.
(3) Void in whole or in part any grant,
cooperative agreement, or contracts of
the executive agency concerned upon a
written determination by the head of
contracting activity or another
appropriate official that the grant or
cooperative agreement provides funds
directly or indirectly to a covered
person or entity.
(e) The Federal agency must notify
recipients in writing regarding its
decision to restrict all future awards,
terminate or void a grant or cooperative
agreement, or both. The agency must
also notify the recipient in writing about
the recipient’s right to request an
administrative review (using the
agency’s procedures) of the restriction,
termination, or void of the grant or
cooperative agreement within 30 days of
receiving notification.
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§ 183.20 Reporting responsibilities of
Federal agencies.
(a) If a Federal agency restricts all
future awards to a covered person or
entity, it must enter information on the
ineligible person or entity into SAM.gov
Exclusions as a prohibited or restricted
source pursuant to Never Contract with
the Enemy.
(b) When a Federal agency terminates
or voids a grant or cooperative
agreement due to Never Contract with
the Enemy, it must report the action as
a termination for material failure to
comply in SAM.gov. Federal agencies
must use the Contractor Performance
Assessment Reporting System (CPARS)
to enter or amend information in
SAM.gov.
(c) The Federal agency must
document and report to the head of the
executive agency concerned (or the
designee of such head) and the
commander of the covered combatant
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command concerned (or specific
deputies):
(1) Any action to restrict all future
awards or to terminate or void an award
with a covered person or entity.
(2) Any decision not to restrict all
future awards, terminate, or void an
award along with the agency’s reasoning
for not taking one of these actions after
the agency became aware that a person
or entity is a prohibited or restricted
source.
(d) Each report referenced in
paragraph (c)(1) of this section must
include the following:
(1) The executive agency taking such
action.
(2) An explanation of the basis for the
action taken.
(3) The value of the terminated or
voided grant or cooperative agreement.
(4) The value of all grants and
cooperative agreements of the executive
agency with the person or entity
concerned at the time the grant or
cooperative agreement was terminated
or voided.
(e) Each report referenced in
paragraph (c)(2) of this section must
include the following:
(1) The executive agency concerned.
(2) An explanation of the basis for not
taking the action.
(f) For each instance in which an
executive agency exercised the
additional authority to examine
recipient and lower tier entity (for
example, subrecipient or contractor)
records, the agency must report in
writing to the head of the executive
agency concerned (or the designee of
such head) and the commander of the
covered combatant command concerned
(or specific deputies) the following:
(1) An explanation of the basis for the
action taken; and
(2) A summary of the results of any
examination of records.
§ 183.25
Responsibilities of recipients.
(a) Recipients of covered grants or
cooperative agreements must fulfill the
requirements outlined in the award term
provided in Appendix A to this part.
(b) Recipients must also flow down
the provisions in award terms covered
in Appendix A to this part to all
contracts and subawards under the
award.
§ 183.30
Access to records.
In addition to any other existing
examination-of-records authority, the
Federal Government is authorized to
examine any records of the recipient
and its subawards, to the extent
necessary, to ensure that funds,
including supplies and services,
received under a covered grant or
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cooperative agreement (see § 183.35) are
not provided directly or indirectly to a
covered person or entity in accordance
with Never Contract with the Enemy.
The Federal agency may only exercise
this authority upon a written
determination by the Federal agency
that relies on a finding by the
commander of a covered combatant
command that there is reason to believe
that funds, including supplies and
services, received under the grant or
cooperative agreement may have been
provided directly or indirectly to a
covered person or entity.
§ 183.35
Definitions.
Terms used in this part are defined as
follows:
Contingency operation, as defined in
10 U.S.C. 101(a)(13), means a military
operation that:
(1) Is designated by the Secretary of
Defense as an operation in which
members of the armed forces are or may
become involved in military actions,
operations, or hostilities against an
enemy of the United States or against an
opposing military force; or
(2) Results in the call or order to, or
retention on, active duty of members of
the uniformed services under 10 U.S.C.
688, 12301(a), 12302, 12304, 12304a,
12305, 12406 of 10 U.S.C. chapter 15, 14
U.S.C. 3713 or any other provision of
law during a war or during a national
emergency declared by the President or
Congress.
Covered combatant command means
the following:
(1) The United States Africa
Command.
(2) The United States Central
Command.
(3) The United States European
Command.
(4) The United States Pacific
Command.
(5) The United States Southern
Command.
(6) The United States Transportation
Command.
Covered grant or cooperative
agreement means a grant or cooperative
agreement, as defined in 2 CFR 200.1
with an estimated value in excess of
$50,000 that is performed outside the
United States, including its possessions
and territories, in support of a
contingency operation in which
members of the Armed Forces are
actively engaged in hostilities. Except
for U.S. Department of Defense grants
and cooperative agreements that were
awarded on or before December 19,
2017, that will be performed in the
United States Central Command, where
the estimated value is in excess of
$100,000.
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Covered person or entity means a
person or entity that is actively
opposing United States or coalition
forces involved in a contingency
operation in which members of the
Armed Forces are actively engaged in
hostilities.
Appendix A to Part 183—Award Terms
for Never Contract With the Enemy
Federal agencies may include the following
award terms in all awards for covered grants
and cooperative agreements in accordance
with Never Contract with the Enemy:
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I. Term 1—Prohibition on Providing Funds
to the Enemy
(a) You must:
(1) Exercise due diligence to ensure that no
funds, including supplies and services,
received under this grant or cooperative
agreement are provided directly or indirectly
(including through subawards or contracts) to
a person or entity who is actively opposing
the United States or coalition forces involved
in a contingency operation in which
members of the Armed Forces are actively
engaged in hostilities, which must be
completed through 2 CFR 180.300 prior to
issuing a subaward or contract and;
(2) Terminate or void in whole or in part
any subaward or contract with a person or
entity listed in the System for Award
Management (SAM.gov) as a prohibited or
restricted source pursuant to subtitle E of
Title VIII of the NDAA for FY 2015, unless
the Federal agency provides written approval
to continue the subaward or contract.
(b) You may include the substance of this
clause, including paragraph (a) of this clause,
in subawards under this grant or cooperative
agreement that have an estimated value over
$50,000 and will be performed outside the
United States, including its outlying areas.
(c) The Federal agency has the authority to
terminate or void this grant or cooperative
agreement, in whole or in part, if the Federal
agency becomes aware that you have failed
to exercise due diligence as required by
paragraph (a) of this clause or if the Federal
agency becomes aware that any funds
received under this grant or cooperative
agreement have been provided directly or
indirectly to a person or entity who is
actively opposing coalition forces involved in
a contingency operation in which members
of the Armed Forces are actively engaged in
hostilities.
(End of term)
II. Term 2—Additional Access to Recipient
Records
(a) In addition to any other existing
examination-of-records authority, the Federal
Government is authorized to examine any of
your records and the records of your
subawards or contracts to the extent
necessary to ensure that funds, including
supplies and services, available under this
grant or cooperative agreement are not
provided, directly or indirectly, to a person
or entity that is actively opposing the United
States or coalition forces involved in a
contingency operation in which members of
the Armed Forces are actively engaged in
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hostilities, except for awards awarded by the
Department of Defense on or before Dec 19,
2017, that will be performed in the United
States Central Command (USCENTCOM)
theater of operations.
(b) The substance of this clause, including
this paragraph (b), must be included in
subawards or contracts under this grant or
cooperative agreement that have an estimated
value over $50,000 and will be performed
outside the United States, including its
outlying areas.
(End of term)
10. Revise the authority citation for
part 200 to read as follows:
■
Authority: 31 U.S.C. 503; 31 U.S.C. 6101–
6106; 31 U.S.C. 6307; 31 U.S.C. 7501–7507.
11. Amend part 200 by revising
subparts A through F to read as follows:
■
PART 200—UNIFORM
ADMINISTRATIVE REQUIREMENTS,
COST PRINCIPLES, AND AUDIT
REQUIREMENTS FOR FEDERAL
AWARDS
Subpart A—Acronyms and Definitions
Acronyms
Sec.
200.0 Acronyms.
200.1 Definitions.
Subpart B—General Provisions
200.100 Purpose.
200.101 Applicability.
200.102 Exceptions.
200.103 Authorities.
200.104 Supersession.
200.105 Effect on other issuances.
200.106 Agency implementation.
200.107 OMB responsibilities.
200.108 Inquiries.
200.109 Review date.
200.110 Effective date.
200.111 English language.
200.112 Conflict of interest.
200.113 Mandatory disclosures.
Subpart C—Pre-Federal Award
Requirements and Contents of Federal
Awards
200.200 Purpose.
200.201 Use of grants, cooperative
agreements, fixed amount awards, and
contracts.
200.202 Program planning and design.
200.203 Requirement to provide public
notice of Federal financial assistance
programs.
200.204 Notices of funding opportunities.
200.205 Federal agency review of merit of
proposals.
200.206 Federal agency review of risk
posed by applicants.
200.207 Standard application requirements.
200.208 Specific conditions.
200.209 Certifications and representations.
200.210 Pre-award costs.
200.211 Information contained in a Federal
award.
200.212 Public access to Federal award
information.
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200.213 Reporting a determination that an
applicant is not qualified for a Federal
award.
200.214 Suspension and debarment.
200.215 Never contract with the enemy.
200.216 Prohibition on certain
telecommunications and video
surveillance services or equipment.
200.217 Whistleblower Protections
Subpart D—Post Federal Award
Requirements
200.300 Statutory and national policy
requirements.
200.301 Performance measurement.
200.302 Financial management.
200.303 Internal controls.
200.304 Bonds.
200.305 Federal payment.
200.306 Cost sharing.
200.307 Program income.
200.308 Revision of budget and program
plans.
200.309 Modifications to Period of
Performance.
Property Standards
200.310 Insurance coverage.
200.311 Real property.
200.312 Federally-owned and exempt
property.
200.313 Equipment.
200.314 Supplies.
200.315 Intangible property.
200.316 Property trust relationship.
Procurement Standards
200.317 Procurements by states and Indian
Tribes.
200.318 General procurement standards.
200.319 Competition.
200.320 Procurement Methods.
200.321 Contracting with small businesses,
minority businesses, women’s business
enterprises, veteran-owned businesses,
and labor surplus area firms.
200.322 Domestic preferences for
procurements.
200.323 Procurement of recovered
materials.
200.324 Contract cost and price.
200.325 Federal awarding agency or passthrough entity review.
200.326 Bonding requirements.
200.327 Contract provisions.
Performance and Financial Monitoring and
Reporting
200.328 Financial reporting.
200.329 Monitoring and reporting program
performance.
200.330 Reporting on real property.
Subrecipient Monitoring and Management
200.331 Subrecipient and contractor
determinations.
200.332 Requirements for pass-through
entities.
200.333 Fixed amount subawards.
Record Retention and Access
200.334 Record retention requirements.
200.335 Requests for transfer of records.
200.336 Methods for collection,
transmission, and storage of information.
200.337 Access to records.
200.338 Restrictions on public access to
records.
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Remedies for Noncompliance
200.339 Remedies for noncompliance.
200.340 Termination.
200.341 Notification of termination
requirement.
200.342 Opportunities to object, hearings,
and appeals.
200.343 Effects of suspension and
termination.
Closeout
200.344 Closeout.
Post-Closeout Adjustments and Continuing
Responsibilities
200.345 Post-closeout adjustments and
continuing responsibilities.
Collection of Amounts Due
200.346 Collection of amounts due.
Subpart E—Cost Principles
General Provisions
200.400 Policy guide.
200.401 Application.
Basic Considerations
200.402 Composition of costs.
200.403 Factors affecting allowability of
costs.
200.404 Reasonable costs.
200.405 Allocable costs.
200.406 Applicable credits.
200.407 Prior written approval (prior
approval).
200.408 Limitation on allowance of costs.
200.409 Special considerations.
200.410 Collection of unallowable costs.
200.411 Adjustment of previously
negotiated indirect cost rates containing
unallowable costs.
Direct and Indirect Costs
200.412 Classification of costs.
200.413 Direct costs.
200.414 Indirect costs.
200.415 Required certifications.
Special Considerations for States, Local
Governments and Indian Tribes
200.416 Cost allocation plans and indirect
cost proposals.
200.417 Interagency service.
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Special Considerations for Institutions of
Higher Education
200.418 Costs incurred by states and local
governments.
200.419 Cost accounting standards.
General Provisions for Selected Items of Cost
200.420 Considerations for selected items of
cost.
200.421 Advertising and public relations.
200.422 Advisory councils.
200.423 Alcoholic beverages.
200.424 Alumni activities.
200.425 Audits conducted in accordance
with the Single Audit Act.
200.426 Bad debts.
200.427 Bonding costs.
200.428 Collections of improper payments.
200.429 Commencement and convocation
costs.
200.430 Compensation—personal services.
200.431 Compensation—fringe benefits.
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200.432 Conferences.
200.433 Contingency provisions.
200.434 Contributions and donations.
200.435 Defense and prosecution of
criminal and civil proceedings, claims,
appeals and patent infringements.
200.436 Depreciation.
200.437 Employee health and welfare costs.
200.438 Entertainment and prizes.
200.439 Equipment and other capital
expenditures.
200.440 Exchange rates.
200.441 Fines, penalties, damages and other
settlements.
200.442 Fund raising and investment
management costs.
200.443 Gains and losses on the disposition
of depreciable assets.
200.444 General costs of government.
200.445 Goods or services for personal use.
200.446 Idle facilities and idle capacity.
200.447 Insurance and indemnification.
200.448 Intellectual property.
200.449 Interest.
200.450 Lobbying.
200.451 Losses on other awards or
contracts.
200.452 Maintenance and repair costs.
200.453 Materials and supplies costs,
including costs of computing devices.
200.454 Memberships, subscriptions, and
professional activity costs.
200.455 Organization costs.
200.456 Participant support costs.
200.457 Plant and security costs.
200.458 Pre-award costs.
200.459 Professional service costs.
200.460 Proposal costs.
200.461 Publication and printing costs.
200.462 Rearrangement and reconversion
costs.
200.463 Recruiting costs.
200.464 Relocation costs of employees.
200.465 Rental costs of real property and
equipment.
200.466 Scholarships and student aid costs.
200.467 Selling and marketing costs.
200.468 Specialized service facilities.
200.469 Student activity costs.
200.470 Taxes (including Value Added
Tax).
200.471 Telecommunication and video
surveillance costs.
200.472 Termination and standard closeout
costs.
200.473 Training and education costs.
200.474 Transportation costs.
200.475 Travel costs.
200.476 Trustees.
Subpart F—Audit Requirements
General
200.500 Purpose.
Audits
200.501 Audit requirements.
200.502 Basis for determining Federal
awards expended.
200.503 Relation to other audit
requirements.
200.504 Frequency of audits.
200.505 Remedies for noncompliance.
200.506 Audit costs.
200.507 Program-specific audits.
Auditees
200.508 Auditee responsibilities.
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200.509
200.510
200.511
200.512
Auditor selection.
Financial statements.
Audit findings follow-up.
Report submission.
Federal Agencies
200.513 Responsibilities.
Auditors
200.514
200.515
200.516
200.517
200.518
200.519
200.520
Scope of audit.
Audit reporting.
Audit findings.
Audit documentation.
Major program determination.
Criteria for Federal program risk.
Criteria for a low-risk auditee.
Management Decisions
200.521 Management decisions.
Subpart A—Acronyms and Definitions
Acronyms
§ 200.0
Acronyms.
(a) CAS Cost Accounting Standards
(b) CFR Code of Federal Regulations
(c) F&A Facilities and Administration
(d) FAC Federal Audit Clearinghouse
(e) FAIN Federal Award Identification
Number
(f) FAR Federal Acquisition Regulation
(g) FASB Financial Accounting
Standards Board
(h) FFATA Federal Funding
Accountability and Transparency
Act of 2006 or Transparency Act—
Public Law 109–282, as amended
by section 6202(a) of Public Law
110–252; section 3 of Public Law
113–101; section 2(a) of Public Law
117–40 (See 31 U.S.C. 6101,
statutory note)
(i) FOIA Freedom of Information Act
(j) FR Federal Register
(k) GAAP Generally Accepted
Accounting Principles
(l) GAGAS Generally Accepted
Government Auditing Standards
(m) GASB Government Accounting
Standards Board
(n) GAO Government Accountability
Office
(o) GSA General Services
Administration
(p) IBS Institutional Base Salary
(q) IHE Institutions of Higher Education
(r) IRC Internal Revenue Code
(s) ISDEAA Indian Self-Determination
and Education and Assistance Act
(t) MTC Modified Total Cost
(u) MTDC Modified Total Direct Cost
(v) NFE Non-Federal Entity
(w) NOFO Notice of Funding
Opportunity
(x) OMB Office of Management and
Budget
(y) PII Personally Identifiable
Information
(z) PMS Payment Management System
(aa) SAM System for Award
Management (SAM.gov)
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(bb) UEI Unique Entity Identifier
(cc) U.S.C. United States Code
(dd) VAT Value Added Tax
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§ 200.1
Definitions.
The following is a list of definitions
of key terms frequently used in 2 CFR
part 200. Definitions found in Federal
statutes or regulations that apply to
particular programs take precedence
over the following definitions. However,
where the following definitions
implement specific statutory
requirements that apply governmentwide, such as the Single Audit Act, the
following definitions take precedence
over Federal regulations. For purposes
of this part, the following definitions
apply—
Acquisition cost means the (total) cost
of the asset including the cost to ready
the asset for its intended use. For
example, acquisition cost for equipment
means the net invoice price of the
equipment, including the cost of any
modifications, attachments, accessories,
or auxiliary apparatus necessary to
make it usable for the purpose for which
it is acquired. Acquisition costs for
software include those development
costs capitalized in accordance with
generally accepted accounting
principles (GAAP). Ancillary charges
such as taxes, duty, protective in transit
insurance, freight, and installation may
be included in or excluded from the
acquisition cost in accordance with the
recipient’s or subrecipient’s regular
accounting practices.
Advance payment means a payment
that a Federal agency or pass-through
entity makes by any appropriate
payment mechanism and payment
method before the recipient or
subrecipient disburses the funds for
program purposes.
Allocation means the process of
assigning a cost, or a group of costs, to
one or more cost objective(s), in
reasonable proportion to the benefit
provided or other equitable relationship.
The process may entail assigning a
cost(s) directly to a final cost objective
or through one or more intermediate
cost objectives.
Assistance Listings refer to the
publicly available listing of Federal
assistance programs managed and
administered by the General Services
Administration (GSA) at SAM.gov.
Assistance Listing number means a
unique number assigned to identify an
Assistance Listing.
Assistance Listing program title
means the title that corresponds to the
Assistance Listing number.
Audit finding means deficiencies
which the auditor is required to report
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in the schedule of findings and
questioned costs. (See § 200.516(a))
Auditee means any non-Federal entity
that must be audited under this part.
(See § 200.501)
Auditor means an auditor who is a
public accountant or a Federal, State,
local government, or Indian Tribe audit
organization that meets the general
standards specified for external auditors
in generally accepted government
auditing standards (GAGAS). The term
auditor does not include internal
auditors of nonprofit organizations.
Budget means the financial plan for
the Federal award that the Federal
agency or pass-through entity approves
during the Federal award process or in
subsequent amendments to the Federal
award. It may include the Federal and
non-Federal share or only the Federal
share, as determined by the Federal
agency or pass-through entity.
Budget period means the time interval
from the start date of a funded portion
of an award to the end date of that
funded portion, during which recipients
and subrecipients are authorized to
incur financial obligations of the funds
awarded, including any funds carried
forward or other revisions pursuant to
§ 200.308.
Capital assets means:
(1) Tangible or intangible assets used
in operations having a useful life of
more than one year which are
capitalized in accordance with GAAP.
Capital assets include:
(i) Land, buildings (facilities),
equipment, and intellectual property
(including software), whether acquired
by purchase, construction, manufacture,
exchange, or through a lease accounted
for as financed purchase under
Government Accounting Standards
Board (GASB) standards or a finance
lease under Financial Accounting
Standards Board (FASB) standards; and
(ii) Additions, improvements,
modifications, replacements,
rearrangements, reinstallations,
renovations, or alterations to capital
assets that materially increase their
value or useful life (not ordinary repairs
and maintenance).
(2) For purpose of this part, capital
assets do not include intangible right-touse assets (per GASB) and right-to-use
operating lease assets (per FASB). For
example, assets capitalized that
recognize a lessee’s right to control the
use of property or equipment for a
period of time under a lease contract.
See § 200.465.
Capital expenditures means
expenditures to acquire capital assets or
expenditures to make additions,
improvements, modifications,
replacements, rearrangements,
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reinstallations, renovations, or
alterations to capital assets that
materially increase their value or useful
life.
Central service cost allocation plan
means the documentation identifying,
accumulating, and allocating or
developing billing rates based on the
allowable costs of services provided by
a State, local government, or Indian
Tribe to its departments and agencies on
a centralized basis. The costs of these
services may be allocated or billed to
users.
Claim means, depending on the
context, either:
(1) A written demand or assertion by
one of the parties to a Federal award
seeking as a matter of right:
(i) The payment of money;
(ii) The adjustment or interpretation
of the terms and conditions of the
Federal award; or
(iii) Other relief arising under or
relating to a Federal award.
(2) A request for payment not in
dispute when submitted.
Class of Federal awards means a
group of Federal awards either awarded
under a specific program or group of
programs or to a specific type of
recipient or group of recipients to which
specific provisions or exceptions may
apply.
Closeout means the process by which
the Federal agency or pass-through
entity determines that all applicable
administrative actions and all required
work of the Federal award have been
completed and takes actions as
described in § 200.344.
Cluster of programs means a grouping
of closely related programs that share
common compliance requirements. The
types of clusters of programs are
research and development (R&D),
student financial aid (SFA), and other
clusters. ‘‘Other clusters’’ are defined by
OMB in the compliance supplement or
designated by a State for Federal awards
the State provides to its subrecipients
that meet the definition of a cluster of
programs. When designating ‘‘other
clusters,’’ a State must identify the
Federal awards included in the cluster
and advise the subrecipients of
compliance requirements applicable to
the cluster, consistent with § 200.332. A
cluster of programs must be considered
one program when determining major
programs as described in § 200.518, and
with the exception of R&D as described
in § 200.501(d), whether a programspecific audit may be elected.
Cognizant agency for audit means the
Federal agency designated to carry out
the responsibilities described in
§ 200.513(a). The cognizant agency for
audit is not necessarily the same as the
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cognizant agency for indirect costs. A
list of cognizant agencies for audit can
be found on the Federal Audit
Clearinghouse (FAC) website.
Cognizant agency for indirect costs
means the Federal agency responsible
for reviewing, negotiating and
approving cost allocation plans or
indirect cost proposals on behalf of all
Federal agencies. The cognizant agency
for indirect cost is not necessarily the
same as the cognizant agency for audit.
For assignments of cognizant agencies,
see the following:
(1) For Institutions of Higher
Education (IHEs): Appendix III,
paragraph C.11.
(2) For nonprofit organizations:
Appendix IV, paragraph C.2.a.
(3) For State and local governments:
Appendix V, paragraph F.1.
(4) For Indian Tribes: Appendix VII,
paragraph D.1.
Compliance supplement means an
annually updated authoritative source
of information for auditors that
identifies existing important compliance
requirements that the Federal
Government expects to be considered as
part of an audit. Auditors use it to
understand the Federal program’s
objectives, procedures, and compliance
requirements, as well as audit objectives
and suggested audit procedures for
determining compliance with the
relevant Federal program.
Computing devices means machines
that acquire, store, analyze, process, and
publish data and other information
electronically, including accessories (or
‘‘peripherals’’) for printing, transmitting
and receiving, or storing electronic
information. See also the definitions of
supplies and information technology
systems in this section.
Contract means, for the purpose of
Federal financial assistance, a legal
instrument by which a recipient or
subrecipient purchases property or
services under a Federal award. For
additional information on subrecipient
and contractor determinations, see
§ 200.331. See also the definition of
subaward in this section.
Contractor means an entity that
receives a contract.
Continuation funding means a
discretionary decision by a Federal
agency to fund a second or subsequent
budget period within the period of
performance.
Cooperative agreement means a legal
instrument of financial assistance
between a Federal agency or passthrough entity and a recipient or
subrecipient that, consistent with 31
U.S.C. 6302–6305:
(1) Is used to enter into a relationship
the principal purpose of which is to
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transfer anything of value to carry out a
public purpose authorized by a law of
the United States (see 31 U.S.C.
6101(3)); and not to acquire property or
services for the Federal Government or
pass-through entity’s direct benefit or
use;
(2) Is distinguished from a grant in
that it provides for substantial
involvement of the Federal agency in
carrying out the activity contemplated
by the Federal award.
(3) The term does not include:
(i) A cooperative research and
development agreement as defined in 15
U.S.C. 3710a; or
(ii) An agreement that provides only:
(A) Direct United States Government
cash assistance to an individual;
(B) A subsidy;
(C) A loan;
(D) A loan guarantee; or
(E) Insurance.
Corrective action means action taken
by the auditee that:
(1) Corrects identified deficiencies;
(2) Produces recommended
improvements; or
(3) Demonstrates that audit findings
are either invalid or do not warrant
auditee action.
Cost allocation plan means a central
service or public assistance cost
allocation plan.
Cost objective means a program,
function, activity, award, organizational
subdivision, contract, or work unit for
which cost data are desired and for
which provision is made to accumulate
and measure the cost of processes,
products, jobs, and capital projects. A
cost objective may be a major function
of the recipient or subrecipient, a
particular service or project, a Federal
award, or an indirect (Facilities &
Administrative (F&A)) cost activity, as
described in subpart E. See also the
definitions of final cost objective and
intermediate cost objective in this
section.
Cost sharing means the portion of
project costs not paid by Federal funds
or contributions (unless authorized by
Federal statute). This term includes
matching, which refers to required
levels of cost share that must be
provided. See § 200.306.
Disallowed cost means charges to a
Federal award that the Federal agency
or pass-through entity determines to be
unallowable.
Discretionary award means an award
in which the Federal agency, in keeping
with specific statutory authority that
enables the agency to exercise judgment
(‘‘discretion’’), selects the recipient or
the amount of Federal funding awarded
through a competitive process or based
on merit of proposals. A discretionary
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award may be selected on a noncompetitive basis, as appropriate.
Equipment means tangible personal
property (including information
technology systems) having a useful life
of more than one year and a per-unit
acquisition cost that equals or exceeds
the lesser of the capitalization level
established by the recipient or
subrecipient for financial statement
purposes, or $10,000. See this section’s
definitions of capital assets, computing
devices, general purpose equipment,
information technology systems, special
purpose equipment, and supplies.
Expenditures means charges made by
a recipient or subrecipient to a Federal
award.
(1) The charges may be reported on a
cash or accrual basis as long as the
methodology is disclosed and
consistently applied.
(2) For reports prepared on a cash
basis, expenditures are the sum of:
(i) Cash disbursements for direct
charges for property and services;
(ii) The amount of indirect expense
charged;
(iii) The value of third-party in-kind
contributions applied; and
(iv) The amount of cash advance
payments and payments made to
subrecipients.
(3) For reports prepared on an accrual
basis, expenditures are the sum of:
(i) Cash disbursements for direct
charges for property and services;
(ii) The amount of indirect expense
incurred;
(iii) The value of third-party in-kind
contributions applied; and
(iv) The net increase or decrease in
the amounts owed by the recipient or
subrecipient for:
(A) Goods and other property
received;
(B) Services performed by employees,
contractors, subrecipients, and other
payees; and
(C) Programs for which no current
services or performance are required,
such as annuities, insurance claims, or
other benefit payments.
Federal agency has the meaning in
paragraph (2) of this definition unless
the context clearly indicates that the
more general meaning in paragraph (1)
of this definition is intended:
(1) An ‘‘agency’’ as defined at 5 U.S.C.
551(1) and further clarified by 5 U.S.C.
552(f); or
(2) An ‘‘agency’’ as defined at 5 U.S.C.
551(1) and further clarified by 5 U.S.C.
552(f) that provides a Federal award
directly to a recipient.
See also definitions of Federal award
and recipient.
Federal Audit Clearinghouse (FAC)
means the repository of record
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designated by OMB where non-Federal
entities must transmit the information
required by subpart F.
Federal award has the meaning,
depending on the context, in either
paragraph (1) or (2) of this definition:
(1)(i) The Federal financial assistance
that a recipient receives directly from a
Federal agency or indirectly from a
pass-through entity, as described in
§ 200.101; or
(ii) The cost-reimbursement contract
under the Federal Acquisition
Regulations that a non-Federal entity
receives directly from a Federal agency
or indirectly from a pass-through entity,
as described in § 200.101.
(2) The instrument setting forth the
terms and conditions. The instrument is
the grant agreement, cooperative
agreement, other agreement for
assistance covered in paragraph (2) of
the definition of Federal financial
assistance in this section, or the costreimbursement contract awarded under
the Federal Acquisition Regulations.
(3) Federal award does not include
other contracts that a Federal agency
uses to buy goods or services from a
contractor or a contract to operate
government-owned, contractoroperated (GOCO) facilities.
(4) See also definitions of Federal
financial assistance, grant agreement,
and cooperative agreement.
Federal award date means the date
when the authorized official of the
Federal agency signed (physically or
digitally) the Federal award or when an
alternative binding agreement,
consistent with the requirements of 31
U.S.C. 1501, is reached with the
recipient.
Federal financial assistance means:
(1) Assistance that recipients or
subrecipients receive or administer in
the form of:
(i) Grants;
(ii) Cooperative agreements;
(iii) Non-cash contributions or
donations of property (including
donated surplus property);
(iv) Direct appropriations;
(v) Food commodities; and
(vi) Other financial assistance (except
assistance listed in paragraph (2) of this
definition).
(2) For § 200.203 and subpart F of this
part, Federal financial assistance also
includes assistance that recipients or
subrecipients receive or administer in
the form of:
(i) Loans;
(ii) Loan Guarantees;
(iii) Interest subsidies; and
(iv) Insurance.
(3) For § 200.216, Federal financial
assistance includes assistance that
recipients or subrecipients receive or
administer in the form of:
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(i) Grants;
(ii) Cooperative agreements;
(iii) Loans; and
(iv) Loan Guarantees.
(4) Federal financial assistance does
not include amounts received as
reimbursement for services rendered to
individuals as described in § 200.502(h)
and (i).
Federal interest means, for purposes
of § 200.330 or when used in connection
with the acquisition or improvement of
real property, equipment, or supplies
under a Federal award, the dollar
amount that is the product of the:
(1) The percentage of Federal
participation in the total cost of the real
property, equipment, or supplies; and
(2) Current fair market value of the
property, improvements, or both, to the
extent the costs of acquiring or
improving the property were included
as project costs.
Federal program means:
(1) All Federal awards which are
assigned a single Assistance Listings
Number.
(2) When no Assistance Listings
Number is assigned, all Federal awards
from the same agency made for the same
purpose must be combined and
considered one program.
(3) Notwithstanding paragraphs (1)
and (2) of this definition, a cluster of
programs. The types of clusters of
programs are:
(i) Research and development (R&D);
(ii) Student financial aid (SFA); and
(iii) ‘‘Other clusters,’’ as described in
the definition of cluster of programs in
this section. Federal share means the
portion of the Federal award costs paid
using Federal funds.
Final cost objective means a cost
objective that has allocated to it both
direct and indirect costs and, in the
recipient’s or subrecipient’s
accumulation system, is one of the final
accumulation points, such as a
particular award, internal project, or
other direct activity of a recipient or
subrecipient. See also the definitions of
cost objective and intermediate cost
objective in this section.
Financial obligations means orders
placed for property and services,
contracts and subawards made, and
similar transactions that require
payment by a recipient or subrecipient
under a Federal award that result in
expenditures by a recipient or
subrecipient under a Federal award.
Fixed amount award means a type of
grant or cooperative agreement pursuant
to which the Federal agency or passthrough entity provides a specific
amount of funding without regard to
actual costs incurred under the Federal
award. This type of Federal award
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reduces some of the administrative
burden and record-keeping
requirements for both the recipient or
subrecipient and the Federal agency or
pass-through entity. Accountability is
based primarily on performance and
results. See §§ 200.102(c), 200.201(b),
and 200.333.
For-profit organization generally
means an organization or entity
organized for the purpose of earning a
profit. The term includes but is not
limited to:
(1) An ‘‘S corporation’’ incorporated
under Subchapter S of the Internal
Revenue Code;
(2) A corporation incorporated under
another authority;
(3) A partnership;
(4) A limited liability company or
partnership; and
(5) A sole proprietorship.
Foreign organization means an entity
that is:
(1) A public or private organization
located in a country other than the
United States and its territories that is
subject to the laws of the country in
which it is located, irrespective of the
citizenship of project staff or place of
performance;
(2) A private nongovernmental
organization located in a country other
than the United States that solicits and
receives cash contributions from the
general public;
(3) A charitable organization located
in a country other than the United
States that is nonprofit and tax-exempt
under the laws of the country where it
is registered and is not a university,
college, accredited degree-granting
institution of education, private
foundation, hospital, an organization
engaged exclusively in research or
scientific activities, church, synagogue,
mosque or other similar entities
organized primarily for religious
purposes; or
(4) An organization located in a
country other than the United States not
recognized as a foreign public entity.
Foreign public entity means:
(1) A foreign government or foreign
governmental entity;
(2) A public international
organization, which is an organization
entitled to enjoy privileges, exemptions,
and immunities as an international
organization under the International
Organizations Immunities Act (22
U.S.C. 288–288f);
(3) An entity owned (in whole or in
part) or controlled by a foreign
government; or
(4) Any other entity consisting wholly
or partially of one or more foreign
governments or foreign governmental
entities.
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General purpose equipment means
equipment that is not limited to
research, medical, scientific, or other
technical activities. Examples include
office equipment and furnishings,
modular offices, telephone networks,
information technology equipment and
systems, air conditioning equipment,
reproduction and printing equipment,
and motor vehicles. See also the
definitions of equipment and special
purpose equipment in this section.
Generally accepted accounting
principles (GAAP) has the meaning
specified in accounting standards issued
by the Government Accounting
Standards Board (GASB) and the
Financial Accounting Standards Board
(FASB).
Generally accepted government
auditing standards (GAGAS), also
known as the Yellow Book, means
generally accepted government auditing
standards issued by the Comptroller
General of the United States, which
apply to financial audits.
Grant agreement or grant means a
legal instrument of financial assistance
between a Federal agency or passthrough entity and a recipient or
subrecipient that, consistent with 31
U.S.C. 6302, 6304:
(1) Is used to enter into a relationship,
the principal purpose of which is to
transfer anything of value to carry out a
public purpose authorized by a law of
the United States (see 31 U.S.C.
6101(3)); and not to acquire property or
services for the Federal agency or passthrough entity’s direct benefit or use;
(2) Is distinguished from a cooperative
agreement in that it does not provide for
substantial involvement of the Federal
agency in carrying out the activity
contemplated by the Federal award.
(3) Does not include an agreement
that provides only:
(i) Direct United States Government
cash assistance to an individual;
(ii) A subsidy;
(iii) A loan;
(vi) A loan guarantee; or
(v) Insurance.
Highest-level owner means the entity
that owns or controls an immediate
owner of an applicant or that owns or
controls one or more entities that
control an immediate owner of an
applicant. No entity owns or exercises
control of the highest-level owner as
defined in the Federal Acquisition
Regulations (FAR) (48 CFR 52.204–17).
Hospital means a facility licensed as
a hospital under the law of any State or
a facility operated as a hospital by the
United States, a State, or a subdivision
of a State.
Improper payment means a payment
that should not have been made or that
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was made in an incorrect amount under
statutory, contractual, administrative, or
other legally applicable requirements.
The term improper payment includes:
any payment to an ineligible recipient;
any payment for an ineligible good or
service; any duplicate payment; any
payment for a good or service not
received, except for those payments
where authorized by law; any payment
that is not authorized by law; and any
payment that does not account for credit
for applicable discounts. See OMB
Circular A–123 Appendix C,
Requirements for Payment Integrity
Improvement for additional definitions
and guidance on the requirements for
payment integrity.
Indian Tribe means any Indian Tribe,
band, nation, or other organized group
or community, including any Alaska
Native village or regional or village
corporation as defined in or established
pursuant to the Alaska Native Claims
Settlement Act (43 U.S.C. Chapter 33),
which is recognized as eligible for the
special programs and services provided
by the United States to Indians because
of their status as Indians. See 25 U.S.C.
5304(e). This includes any Indian Tribe
identified in the annually published
Bureau of Indian Affairs list of ‘‘Indian
Entities Recognized and Eligible to
Receive Services’’ and other entities that
qualify as an Alaska Native village or
regional village corporation as defined
in or established pursuant to the Alaska
Native Claims Settlement Act.
Indirect (facilities & administrative
(F&A)) cost means those costs incurred
for a common or joint purpose
benefitting more than one cost objective
and not readily assignable to the cost
objectives specifically benefitted,
without effort disproportionate to the
results achieved. It may be necessary to
establish multiple pools of indirect costs
to facilitate equitable distribution of
indirect expenses to the cost objectives
served. Indirect cost pools must be
distributed to benefitted cost objectives
on bases that will produce an equitable
result in consideration of relative
benefits derived.
Indirect cost rate proposal means the
documentation prepared by a recipient
to substantiate its request to establish an
indirect cost rate as described in
appendices III through VII and
Appendix IX to this part.
Information technology systems
means computing devices, ancillary
equipment, software, firmware, and
similar procedures, services (including
support services), and related resources.
See also the definitions of computing
devices and equipment in this section.
Institution of Higher Education (IHE)
is defined at 20 U.S.C. 1001.
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Intangible property means property
having no physical existence, such as
trademarks, copyrights, data (including
data licenses), websites, IP licenses,
trade secrets, patents, patent
applications, and property such as
loans, notes and other debt instruments,
lease agreements, stocks and other
instruments of property ownership of
either tangible or intangible property
ownership, such as intellectual
property, software, or software
subscriptions/licenses. Intermediate
cost objective means a cost objective
that is used to accumulate indirect costs
or service center costs that are
subsequently allocated to one or more
indirect cost pools or final cost
objectives. See this section’s definitions
of cost objective and final cost objective.
Internal control for recipients and
subrecipients means:
(1) Processes designed and
implemented by recipients and
subrecipients to provide reasonable
assurance regarding the achievement of
objectives in the following categories:
(i) Effectiveness and efficiency of
operations;
(ii) Reliability of reporting for internal
and external use; and
(iii) Compliance with applicable laws
and regulations.
Key Personnel means any individuals
(including employees and contractors)
working under a Federal award that are
designated in the Federal award as
being particularly integral or meaningful
to the program.
Loan means a Federal loan or loan
guarantee received or administered by a
recipient, except as used in this
section’s definition of program income.
(1) The term ‘‘direct loan’’ means a
disbursement of funds by the Federal
Government to a non-Federal borrower
under a contract that requires the
repayment of such funds with or
without interest. The term includes the
purchase of, or participation in, a loan
made by another lender and financing
arrangements that defer payment for
more than 90 days, including the sale of
a Federal Government asset on credit
terms. The term does not include the
acquisition of a federally guaranteed
loan in satisfaction of default claims or
the price support loans of the
Commodity Credit Corporation.
(2) The term ‘‘direct loan obligation’’
means a binding agreement by a Federal
agency to make a direct loan when
specified conditions are fulfilled by the
borrower.
(3) The term ‘‘loan guarantee’’ means
any Federal Government guarantee,
insurance, or other pledges for the
payment of all or a part of the principal
or interest on any debt obligation of a
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non-Federal borrower to a non-Federal
lender but does not include the
insurance of deposits, shares, or other
withdrawable accounts in financial
institutions.
(4) The term ‘‘loan guarantee
commitment’’ means a binding
agreement by a Federal agency to make
a loan guarantee when specified
conditions are fulfilled by the borrower,
the lender, or any other party to the
guarantee agreement.
Local government means any unit of
government within a State, including a:
(1) County;
(2) Borough;
(3) Municipality;
(4) City;
(5) Town;
(6) Township;
(7) Parish;
(8) Local public authority, including
any public housing agency under the
United States Housing Act of 1937;
(9) Special district;
(10) School district;
(11) Intrastate district;
(12) Council of governments, whether
or not incorporated as a nonprofit
corporation under State law; and
(13) Any other agency or
instrumentality of a multi-, regional, or
intra-State or local government.
Major program means a Federal
program determined by the auditor to be
a major program in accordance with
§ 200.518 or a program identified as a
major program by a Federal agency or
pass-through entity in accordance with
§ 200.503(e).
Management decision means the
Federal agency’s or pass-through
entity’s written determination, provided
to the auditee, of the adequacy of the
auditee’s proposed corrective actions to
address the findings based on its
evaluation of the audit findings and
proposed corrective actions.
Micro-purchase means an individual
procurement transaction for supplies or
services, the aggregate amount of which
does not exceed the micro-purchase
threshold. Micro-purchases comprise a
subset of a recipient’s or subrecipient’s
small purchases using informal
procurement methods as set forth in
§ 200.320.
Micro-purchase threshold means the
dollar amount at or below which a
recipient or subrecipient may purchase
property, or services using micropurchase procedures (see § 200.320).
Generally, the micro-purchase threshold
for procurement activities administered
under Federal awards is not to exceed
the amount set by the FAR at 48 CFR
part 2, subpart 2.1, unless a higher
threshold is requested by the recipient
or subrecipient and approved by the
cognizant agency for indirect costs.
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Modified Total Direct Cost (MTDC)
means all direct salaries and wages,
applicable fringe benefits, materials and
supplies, services, travel, and up to the
first $50,000 of each subaward
(regardless of the period of performance
of the subawards under the award).
MTDC excludes equipment, capital
expenditures, charges for patient care,
rental costs, tuition remission,
scholarships and fellowships,
participant support costs, and the
portion of each subaward in excess of
$50,000. Other items may only be
excluded when necessary to avoid a
serious inequity in the distribution of
indirect costs and with the approval of
the cognizant agency for indirect costs.
Non-discretionary award means an
award made by the Federal agency to
specific recipients in accordance with
statutory, eligibility, and compliance
requirements, such that in keeping with
specific statutory authority, the Federal
agency has cannot exercise judgment
(‘‘discretion’’). A non-discretionary
award amount could be specifically
determined or by formula.
Non-Federal entity (NFE) means a
State, local government, Indian Tribe,
Institution of Higher Education (IHE), or
nonprofit organization that carries out a
Federal award as a recipient or
subrecipient.
Nonprofit organization means any
organization that:
(1) Is operated primarily for scientific,
educational, service, charitable, or
similar purposes in the public interest;
(2) Is not organized primarily for
profit;
(3) Uses net proceeds to maintain,
improve, or expand the organization’s
operations; and
(4) Is not an IHE.
Notice of funding opportunity means
a formal announcement of the
availability of Federal funding through
a financial assistance program from a
Federal agency. The notice of funding
opportunity provides information on the
award, such as who is eligible to apply,
the evaluation criteria for selecting a
recipient or subrecipient, the required
components of an application, and how
to submit the application. The notice of
funding opportunity is any paper or
electronic issuance that an agency uses
to announce a funding opportunity,
whether it is called a ‘‘program
announcement,’’ ‘‘notice of funding
availability,’’ ‘‘broad agency
announcement,’’ ‘‘research
announcement,’’ ‘‘solicitation,’’ or some
other term.
Office of Management and Budget
(OMB) means the Executive Office of the
President, Office of Management and
Budget.
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Oversight agency for audit means the
Federal agency that provides the
predominant amount of funding directly
(direct funding) (as listed on the
schedule of expenditures of Federal
awards, see § 200.510(b)) to a recipient
or subrecipient unless OMB designates
a specific cognizant agency for audit.
When the direct funding represents less
than 25 percent of the total Federal
expenditures (as direct and sub-awards)
by the recipient or subrecipient, then
the Federal agency with the
predominant amount of total funding is
the designated oversight agency for
audit. When there is no direct funding,
the Federal agency that is the
predominant source of pass-through
funding must assume the oversight
responsibilities. The duties of the
oversight agency for audit and the
process for any reassignments are
described in § 200.513(b).
Participant generally means an
individual who is not a recipient or
subrecipient staff member or consultant,
or an individual who is developing or
leading the implementation of the
Federal award; but rather attending,
benefitting from, or is otherwise playing
a role in the overall program activities.
Examples include, community members
participating in a community outreach
program, members of the public whose
perspectives or input are sought as part
of a program, exchange students, or
conference attendees.
Participant support costs means direct
costs that support participants and their
involvement in a Federal award, such as
stipends, subsistence allowances, travel
allowances, registration fees, dependent
care, and per diem paid directly to or on
behalf of participants.
Pass-through entity means a recipient
or subrecipient that provides a
subaward to a subrecipient (including
lower tier subrecipients) to carry out
part of a Federal program.
Performance goal means a measurable
target level of performance expressed as
a tangible, measurable objective, against
which actual achievement can be
compared, including a goal expressed as
a quantitative standard, value, or rate. In
some instances (for example,
discretionary research awards), this may
be limited to the requirement to submit
technical performance reports (to be
evaluated in accordance with agency
policy).
Period of performance means the time
during which the recipient and
subrecipient must perform and
complete the work authorized under the
Federal award. It is the time interval
between the start and end date of a
Federal award, which may include one
or more funded portions or budget
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periods. The period of performance does
not commit the Federal agency to fund
the award beyond the currently
approved budget period.
Personal property means property
other than real property. It may be
tangible or intangible.
Personally Identifiable Information
(PII) means information that can be used
to distinguish or trace an individual’s
identity, either alone or when combined
with other personal or identifying
information that is linked or linkable to
a specific individual. Some PII is
available in public sources such as
telephone books, websites, and
university listings. This type of
information is considered Public PII.
Public PII includes, for example, first
and last name, address, work telephone
number, email address, home telephone
number, and general educational
credentials. The definition of PII is not
attached to any single category of
information or technology. Instead, it
requires a case-by-case assessment of
the specific risk that an individual can
be identified. Non-PII can become PII
whenever additional information is
made publicly available, in any medium
and from any source, that could be used
to identify an individual when
combined with other available
information.
Prior approval means the written
approval by an authorized official of a
Federal agency or pass-through entity of
certain costs or programmatic decisions.
Program income means gross income
earned by the recipient or subrecipient
that is directly generated by a supported
activity or earned as a result of the
Federal award during the period of
performance except as provided in
§ 200.307(c). Program income includes
but is not limited to income from fees
for services performed, the use or rental
of real or personal property acquired
under Federal awards, the sale of
commodities or items fabricated under a
Federal award, license fees, and
royalties on patents and copyrights, and
principal and interest on loans made
with Federal award funds. Interest
earned on advances of Federal funds is
not program income. Except as
otherwise provided in Federal statutes,
regulations, or the terms and conditions
of the Federal award, program income
does not include rebates, credits,
discounts, and interest earned on any of
them. See § 200.407. See also 35 U.S.C.
200–212 ‘‘Disposition of Rights in
Educational Awards,’’ which applies to
inventions made under Federal awards.
Project cost means total allowable
costs incurred under a Federal award
and all cost sharing, including thirdparty contributions.
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Property means real property or
personal property. See this section’s
definitions of real property and personal
property.
Protected Personally Identifiable
Information (Protected PII) means an
individual’s first name or first initial
and last name in combination with any
one or more type of information,
including, but not limited to, social
security number, passport number,
credit card numbers, clearances, bank
numbers, biometrics, date and place of
birth, mother’s maiden name, criminal,
medical and financial records,
educational transcripts. This definition
does not include PII that must be
disclosed by law. See this section’s
definition of Personally Identifiable
Information (PII).
Questioned cost has the meaning
given in paragraphs (1) through (3).
(1) Questioned cost means an amount,
expended or received from a Federal
award, that in the auditor’s judgment:
(i) Is noncompliant or suspected
noncompliant with Federal statutes,
regulations, or the terms and conditions
of the Federal award;
(ii) At the time of the audit, lacked
adequate documentation to support
compliance; or
(iii) Appeared unreasonable and did
not reflect the actions a prudent person
would take in the circumstances.
(2) The questioned cost amount under
(1)(ii) is calculated as if the portion of
a transaction that lacked adequate
documentation were confirmed
noncompliant.
(3) There is no questioned cost solely
because of:
(i) Deficiencies in internal control; or
(ii) Noncompliance with reporting
requirements if this noncompliance
does not affect the amount expended or
received from the Federal award.
(4) Known questioned cost means a
questioned cost specifically identified
by the auditor. Known questioned costs
are a subset of likely questioned costs.
(5) Likely questioned cost means the
auditor’s best estimate of total
questioned costs, not just the known
questioned costs. Likely questioned
costs are developed by extrapolating
from audit evidence obtained, for
example, by projecting known
questioned costs identified in an audit
sample to the entire population from
which the sample was drawn. In
evaluating the effect of questioned costs
on the opinion on compliance, the
auditor considers the likely questioned
costs, not just the known questioned
costs.
Real property means land, including
land improvements, structures,
appurtenances thereto, and legal
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interests in land such as a fee title,
licenses, rights of way, easements, but
excludes moveable machinery and
equipment.
Recipient means an entity that
receives a Federal award directly from
a Federal agency to carry out an activity
under a Federal program. The term
recipient does not include subrecipients
or individuals that are participants and
beneficiaries of the award.
Renewal award means an award made
after the expiration of a Federal award
for which the start date is contiguous
with, or closely follows, the end of the
expiring Federal award. The start date of
a renewal award begins a new and
distinct period of performance.
Research and Development (R&D)
means all basic and applied research
activities and all development activities
performed by a recipient or
subrecipient. The term research also
includes activities involving the training
of individuals in research techniques
where such activities use the same
facilities as other research and
development activities and where such
activities are not included in the
instruction function. ‘‘Research’’ is the
systematic study directed toward fuller
scientific knowledge or understanding
of the subject studied. ‘‘Development’’ is
the systematic use of knowledge and
understanding gained from research to
produce useful materials, devices,
systems, or methods, including
designing and developing prototypes
and processes.
Simplified acquisition threshold
means the dollar amount below which
a recipient or subrecipient may
purchase property or services using
small purchase methods (see § 200.320).
Recipients and subrecipients adopt
small purchase procedures to expedite
the purchase of items at or below the
simplified acquisition threshold. The
simplified acquisition threshold set in
the FAR at 48 CFR part 2, subpart 2.1
is used in this part as the simplified
acquisition threshold for secondary
procurement activities administered
under Federal awards. The recipient or
subrecipient is responsible for
determining an appropriate simplified
acquisition threshold, which is less than
or equal to the dollar value established
in the FAR, based on internal controls,
an evaluation of risk, and its
documented procurement procedures.
Recipients and subrecipients should
also determine if local government
purchasing laws apply. This threshold
must never exceed the dollar value
established in the FAR.
Special purpose equipment means
equipment that is used only for
research, medical, scientific, or other
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technical activities. Examples of special
purpose equipment include
microscopes, x-ray machines, surgical
instruments, spectrometers, and
associated software. See also the
definitions of equipment and general
purpose equipment in this section.
State means any State of the United
States, the District of Columbia, the
Commonwealth of Puerto Rico, U.S.
Virgin Islands, Guam, American Samoa,
the Commonwealth of the Northern
Mariana Islands, and any agency or
instrumentality thereof exclusive of
local governments.
Student Financial Aid (SFA) means
Federal awards under those programs of
general student assistance, such as those
authorized by Title IV of the Higher
Education Act of 1965, as amended (20
U.S.C. 1070–1099d), which the U.S.
Department of Education administers,
and similar programs provided by other
Federal agencies. It does not include
Federal awards under programs that
provide fellowships or similar Federal
awards to students on a competitive
basis or for specified studies or research.
Subaward means an award provided
by a pass-through entity to a
subrecipient for the subrecipient to
contribute to the goals and objectives of
the project by carrying out part of a
Federal award received by the passthrough entity. It does not include
payments to a contractor or to an
individual that is a Federal program
beneficiary. A subaward may be
provided through any legal agreement,
including an agreement the passthrough entity considers a contract.
Subrecipient means an entity that
receives a subaward from a pass-through
entity to carry out part of a Federal
award. It does not include an individual
that is a Federal program beneficiary or
participant. A subrecipient may also be
a recipient of other Federal awards
directly from a Federal agency.
Subsidiary means an entity in which
more than 50 percent of the entity is
owned or controlled directly by a parent
corporation or through another
subsidiary of a parent corporation.
Supply means all tangible personal
property other than those described in
the equipment definition. A computing
device is a supply if the acquisition cost
is below the lesser of the capitalization
level established by the recipient or
subrecipient for financial statement
purposes or $10,000, regardless of the
length of its useful life. See this
section’s definitions of computing
devices and equipment.
Telecommunications cost means the
cost of using communication
technologies such as mobile phones,
landlines, and the internet.
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Termination means the action a
Federal agency or pass-through entity
takes to discontinue a Federal award, in
whole or in part at any time before the
planned end date of the period of
performance. Termination does not
include discontinuing a Federal award
(for example, not issuing continuation
funding which is at the discretion of a
Federal agency), or a lack of available
funds.
Third-party in-kind contributions
means the value of non-cash
contributions (meaning, property or
services) that:
(1) Benefit a federally-assisted project
or program Federal award; and
(2) Are contributed by non-Federal
third parties, without charge, to a
recipient or subrecipient under a
Federal award.
Unliquidated financial obligation
means financial obligations incurred by
the recipient or subrecipient but not
paid (liquidated) for financial reports
prepared on a cash basis. For reports
prepared on an accrual basis, these are
financial obligations incurred by the
recipient or subrecipient but not
recorded.
Unobligated balance means the
amount of funds under a Federal award
that the recipient or subrecipient has
not obligated. The amount is computed
by subtracting the cumulative amount of
the recipient’s or subrecipient’s
unliquidated financial obligations and
expenditures under the Federal award
from the cumulative amount of funds
the Federal agency or pass-through
entity authorized the recipient or
subrecipient to obligate.
Voluntary committed cost sharing
means cost sharing specifically pledged
voluntarily in the proposal’s budget on
the part of the recipient or subrecipient,
which becomes a binding requirement
of the Federal award. See § 200.306.
Subpart B—General Provisions
§ 200.100
Purpose.
(a) Purpose. (1) This part establishes
uniform administrative requirements,
cost principles, and audit requirements
for Federal awards. Federal agencies
must not impose additional
requirements except as allowed in
§§ 200.102, 200.211, or unless
specifically required by Federal statute,
regulation, or Executive order.
(2) This part provides Federal
agencies with the policy for collecting
and submitting information on all
Federal financial assistance programs to
the Office of Management and Budget
(OMB) and communicating this
information to the public. It also
establishes Federal policies related to
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69437
the delivery of this information to the
public, including through the use of
electronic media. It also sets forth how
the General Services Administration
(GSA), OMB, and Federal agencies
implement the Federal Program
Information Act (31 U.S.C. 6101–6106).
(b) Administrative requirements.
Subparts B through D set forth the
uniform administrative requirements for
Federal financial assistance. This
includes establishing requirements for
Federal agencies management of Federal
financial assistance programs before a
Federal award is made, and
requirements that Federal agencies may
impose on recipients and subrecipients
throughout the lifecycle of a Federal
award.
(c) Cost principles. Subpart E
establishes principles for determining
allowable costs incurred by recipients
and subrecipients under Federal
awards. These principles are for the
purpose of cost determination. They do
not address the circumstances nor
dictate the extent of Federal
Government funding of a particular
program or project.
(d) Single Audit Requirements and
Audit Follow-up. Subpart F is issued
pursuant to the Single Audit Act
Amendments of 1996 (31 U.S.C. 7501–
7507). Subpart F sets forth the standards
for achieving consistency and
uniformity among Federal agencies for
the audit of non-Federal entities
administering Federal awards. Subpart
F also provides the policies and
procedures for Federal agencies or passthrough entities when using the results
of these audits.
§ 200.101
Applicability.
(a) General applicability to Federal
agencies. (1) Subparts A through F
apply to Federal agencies that make
Federal awards to non-Federal entities.
(2) Federal agencies may apply
subparts A through E to Federal
agencies, for-profit organizations,
foreign public entities, or foreign
organizations as permitted in agency
regulations or program statutes, except
when a Federal agency determines that
the application of these subparts would
be inconsistent with the international
responsibilities of the United States or
the laws of a foreign government. If a
Federal agency does not apply subpart
E to for-profit organizations, the cost
principles of the Federal Acquisition
Regulations (FAR) will apply. Subpart F
only applies to non-Federal entities as
defined in the Single Audit Act
Amendments of 1996 (31 U.S.C. 7501–
7507). Federal agencies should apply
the requirements to all recipients in a
consistent and equitable manner to the
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extent permitted within applicable
statutes, regulations, and policies.
(b) Applicability to different types of
Federal awards. (1) Throughout
subparts A through F, the word ‘‘must’’
indicates a requirement. The word
‘‘should’’ or ‘‘may’’ indicates a
recommended approach and permits
discretion.
(2) Paragraphs (b)(3) through (6) of
this section describe what portions of
this part apply to specific types of
Federal financial assistance. The terms
and conditions of Federal awards and
the requirements of this part flow down
to subrecipients unless indicated
otherwise in Federal statute, regulation,
or the terms and conditions of the
Federal award. Pass-through entities
must comply with the requirements
described in §§ 200.331 through
200.333, and any other sections directed
toward pass-through entities.
(3) Subparts A and B apply to all
Federal financial assistance with the
following exceptions:
(i) Sections 200.111, 200.112, and
200.113 do not apply to agreements for
loans, loan guarantees, interest
subsidies, insurance, and procurement
contracts under the FAR and
subcontracts under those contracts.
(4) Subparts C and D apply only to
grants and cooperative agreements with
the following exceptions:
(i) Section 200.203 also applies to
agreements for loans, loan guarantees,
interest subsidies, and insurance;
(ii) Section 200.216 also applies to
loans and loan guarantees; and
(iii) Sections 200.303 and 200.331
through 200.333 also apply to all types
of Federal financial assistance.
(5) Subpart E applies to grants,
cooperative agreements, and certain
procurement contracts under the FAR
but does not apply to the following:
(i) Grants and Cooperative
Agreements providing food
commodities;
(ii) Fixed Amount Awards;
(iii) Agreements for loans, loan
guarantees, interest subsidies, and
insurance;
(iv) Procurement contracts under the
FAR that are not negotiated; and
(v) Federal awards to hospitals (See
Appendix IX—Hospital Cost Principles)
(6) Subpart F only applies to the
following:
(i) Grants and cooperative agreements
(including fixed amount awards);
(ii) Contracts and subcontracts
awarded under the FAR (except for
fixed price contracts and subcontracts);
(iii) Agreements for loans, loan
guarantees, interest subsidies, and
insurance; and
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(iv) Any other form of Federal
financial assistance as defined by the
Single Audit Act Amendment of 1996.
(c) Federal award of a costreimbursement contract under the
Federal Acquisition Regulations (FAR)
to a non-Federal entity. When a nonFederal entity is awarded a costreimbursement contract under the FAR,
only subpart D, §§ 200.331 through
200.333, and subparts E and F are
incorporated by reference into the
contract. The requirements of subparts
D, E, and F are supplementary to the
FAR and the contract. In cases of
conflict, the FAR and the terms and
conditions of the contract awarded
under the FAR shall prevail over the
incorporated requirements from this
part. When the Cost Accounting
Standards (CAS) are applicable to the
contract, they also take precedence over
the incorporated requirements from this
part. In addition, costs that are
identified as unallowable under 41
U.S.C. 4304(a) and as stated in the FAR
(48 CFR part 31, subpart 31.2, and 48
CFR 31.603) are always unallowable.
For requirements other than those
covered in subpart D, §§ 200.331
through 200.333, and subparts E and F,
the terms of the contract and the FAR
apply.
(d) Governing provisions. With the
exception of subpart F, which is
required by the Single Audit Act,
Federal statutes or regulations govern in
any circumstances where they conflict
with the provisions of this part. For
agreements with Indian Tribes, this
includes the provisions of the Indian
Self-Determination and Education and
Assistance Act (ISDEAA), as amended
(see 25 U.S.C. 5301–5423.
(e) Program applicability. Except for
§§ 200.203, 200.216, and 200.331
through 200.333, the requirements in
subparts C, D, and E do not apply to the
following programs:
(1) The block grant awards authorized
by the Omnibus Budget Reconciliation
Act of 1981 (including Community
Services), except to the extent that
subpart E apply to subrecipients of
Community Services Block Grant funds
pursuant to 42 U.S.C. 9916(a)(1)(B);
(2) Federal awards to local education
agencies under 20 U.S.C. 7702–7703b,
(portions of the Impact Aid program);
(3) Payments under the Department of
Veterans Affairs’ State Home Per Diem
Program (38 U.S.C. 1741); and
(4) Federal awards authorized under
the Child Care and Development Block
Grant Act of 1990, as amended:
(i) Child Care and Development Block
Grant (42 U.S.C. 9858).
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(ii) Child Care Mandatory and
Matching Funds of the Child Care and
Development Fund (42 U.S.C. 9858).
(f) Additional program applicability.
Except for §§ 200.203 and 200.216, the
guidance in subpart C does not apply to
the following programs:
(1) Entitlement Federal awards to
carry out the following programs of the
Social Security Act:
(i) Temporary Assistance for Needy
Families (Title IV–A of the Social
Security Act, 42 U.S.C. 601–619);
(ii) Child Support Enforcement and
Establishment of Paternity (Title IV–D of
the Social Security Act, 42 U.S.C. 651–
669b);
(iii) Federal Payments for Foster Care,
Prevention, and Permanency (Title IV–
E of the Act, 42 U.S.C. 670–679c);
(iv) Aid to the Aged, Blind, and
Disabled (Titles I, X, XIV, and XVI–
AABD of the Act, as amended);
(v) Medical Assistance (Medicaid)
(Title XIX of the Act, 42 U.S.C. 1396–
1396w–5) not including the State
Medicaid Fraud Control program
authorized by Section 1903(a)(6)(B) of
the Social Security Act (42 U.S.C.
1396b(a)(6)(B)); and
(vi) Children’s Health Insurance
Program (Title XXI of the Act, 42 U.S.C.
1397aa–1397mm).
(2) A Federal award for an
experimental, pilot, or demonstration
project that is also supported by a
Federal award listed in paragraph (f)(1)
of this section.
(3) Federal awards under subsection
412(e) of the Immigration and
Nationality Act and subsection 501(a) of
the Refugee Education Assistance Act of
1980 (Pub. L. 96–422, 94 Stat. 1809), for
cash assistance, medical assistance, and
supplemental security income benefits
to refugees and entrants and the
administrative costs of providing the
assistance and benefits (8 U.S.C.
1522(e)).
(4) Entitlement awards under the
following programs of The National
School Lunch Act:
(i) National School Lunch Program
(Section 4 of the Act, 42 U.S.C. 1753);
(ii) Commodity Assistance (Section 6
of the Act, 42 U.S.C. 1755);
(iii) Special Meal Assistance (Section
11 of the Act, 42 U.S.C. 1759a);
(iv) Summer Food Service Program for
Children (Section 13 of the Act, 42
U.S.C. 1761); and
(v) Child and Adult Care Food
Program (Section 17 of the Act, 42
U.S.C. 1766).
(5) Entitlement awards under the
following programs of The Child
Nutrition Act of 1966:
(i) Special Milk Program (Section 3 of
the Act, 42 U.S.C. 1772);
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(ii) School Breakfast Program (Section
4 of the Act, 42 U.S.C. 1773); and
(iii) State Administrative Expenses
(Section 7 of the Act, 42 U.S.C. 1776).
(6) Entitlement awards for State
Administrative Expenses under The
Food and Nutrition Act of 2008 (Section
16 of the Act, 7 U.S.C. 2025).
(7) Non-discretionary Federal awards
under the following non-entitlement
programs:
(i) Special Supplemental Nutrition
Program for Women, Infants and
Children (Section 17 of the Child
Nutrition Act of 1966) 42 U.S.C. 1786;
(ii) The Emergency Food Assistance
Programs (Emergency Food Assistance
Act of 1983) 7 U.S.C. 7501 note; and
(iii) Commodity Supplemental Food
Program (Section 5 of the Agriculture
and Consumer Protection Act of 1973) 7
U.S.C. 612c note.
ddrumheller on DSK120RN23PROD with PROPOSALS2
§ 200.102
Exceptions.
(a) OMB exceptions. Except for
subpart F, OMB may allow either
exceptions to or deviations from
requirements of this part for classes of
Federal awards, or of recipients,
subrecipients, or both, when not
prohibited by statute. For example,
OMB may allow exceptions or
deviations in support of innovative
program designs or emergency
situations. Deviation means applying
more or less restrictive requirements to
a class of Federal awards, recipients, or
subrecipients.
(b) Statutory exceptions. When
required by Federal statute, a Federal
agency does not need OMB approval to
allow exceptions to or deviations from
requirements of this part (except for
subpart F) for a class of Federal awards
or recipients, subrecipients, or both.
(c) Agency exceptions. Federal
agencies may allow exceptions to
requirements of this part for individual
Federal awards, or recipients, or
subrecipients on a case-by-case basis
when the exceptions are not prohibited
by statute and OMB approval is not
expressly required by this part. Only the
cognizant agency for indirect costs may
authorize exceptions related to cost
allocation plans or indirect cost rate
proposals. A Federal agency may also
apply less restrictive requirements when
issuing fixed amount awards (see
§ 200.1), except for those requirements
imposed by statute or in subpart F.
§ 200.103
Authorities.
This part is issued under the
following authorities.
(a) Subparts B through D are
authorized under 31 U.S.C. 503 (the
Chief Financial Officers Act, Functions
of the Deputy Director for Management);
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the Federal Program Information Act
(Pub. L. 95–220 and Pub. L. 98–169, as
amended, codified at 31 U.S.C. 6101–
6106); the Federal Grant and
Cooperative Agreement Act of 1977
(Pub. L. 95–224, as amended, codified at
31 U.S.C. 6301–6309); 41 U.S.C. 1101–
1131 (the Office of Federal Procurement
Policy Act); Reorganization Plan No. 2
of 1970 and Executive Order 11541
(‘‘Prescribing the Duties of the Office of
Management and Budget and the
Domestic Policy Council in the
Executive Office of the President’’); and
the Single Audit Act Amendments of
1996 (31 U.S.C. 7501–7507).
(b) Subpart E is authorized under the
Budget and Accounting Act of 1921, as
amended; the Budget and Accounting
Procedures Act of 1950, as amended (31
U.S.C. 1101–1126); the Chief Financial
Officers Act of 1990 (31 U.S.C. 503–
504); Reorganization Plan No. 2 of 1970;
and Executive Order 11541,
‘‘Prescribing the Duties of the Office of
Management and Budget and the
Domestic Policy Council in the
Executive Office of the President.’’ OMB
also relies on authority under 31 U.S.C.
503 and 31 U.S.C. 6307.
(c) Subpart F is authorized under the
Single Audit Act Amendments of 1996,
(31 U.S.C. 7501–7507). OMB also relies
on authority under 31 U.S.C. 503 and 31
U.S.C. 6307.
award as permitted by Federal statute,
regulation, or this part.
§ 200.106
Supersession.
This part supersedes previous OMB
guidance issued under Title 2, subtitle
A, chapter I of the Code of Federal
Regulations related to uniform
administrative requirements, cost
principles, and audit requirements for
Federal awards.
§ 200.105
Effect on other issuances.
(a) Superseding inconsistent
requirements. For Federal awards made
subject to this part by a Federal agency,
this part takes precedence over any
administrative requirements, program
manuals, handbooks, and other nonregulatory materials that are
inconsistent with the requirements of
those subparts upon implementation of
this part by the Federal agency, except
to the extent that they are required by
statute or authorized in accordance with
§ 200.102.
(b) Imposition of requirements on
recipients. Agencies may only impose
legally binding requirements on
recipients and subrecipients through:
(1) Notice and public comment
procedures through an approved agency
process, including as authorized by this
part, other statutes, or regulations; or
(2) Incorporating requirements into
the terms and conditions of a Federal
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Agency implementation.
The specific requirements and
responsibilities of Federal agencies,
non-Federal entities, recipients, and
subrecipients are set forth in this part.
Federal agencies making Federal awards
to non-Federal entities must implement
the language in subparts C through F of
this part in codified regulations unless
different provisions are required by
Federal statute or are approved by OMB.
§ 200.107
OMB responsibilities.
OMB will review Federal agency
regulations and implementation of this
part. OMB will provide interpretations
of policy requirements and assistance to
ensure effective, efficient, and
consistent implementation. Any
exceptions will be subject to approval
by OMB and only with adequate
justification from the Federal agency.
§ 200.108
Inquiries.
Inquiries from Federal agencies
concerning this part may be directed to
OMB. Inquiries from recipients or
subrecipients should be addressed to
the Federal agency, the cognizant
agency for indirect costs, the cognizant
agency for audit, or the pass-through
entity as appropriate.
§ 200.109
§ 200.104
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Review date.
OMB will review this part
periodically.
§ 200.110
Effective date.
(a) The standards set forth in this part
affecting the administration of Federal
awards by Federal agencies become
effective once implemented by Federal
agencies or when any future amendment
to this part becomes final.
(b) Existing negotiated indirect cost
rates will remain in place until they
expire. The effective date of changes to
indirect cost rates must be based upon
the date a newly re-negotiated rate goes
into effect for the recipient’s or
subrecipient’s fiscal year. Therefore, for
indirect cost rates and cost allocation
plans, the revisions to this part (as of the
publication date for revisions to this
guidance) become effective in
generating proposals and negotiating a
new rate (when the rate is renegotiated).
§ 200.111
English language.
(a) All Federal financial assistance
announcements, applications, and
Federal award information should be in
the English language and must be in
terms of U.S. dollars. However, Federal
agencies, recipients, and subrecipients
may issue or translate a Federal award
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or other documents into another
language. A Federal agency may
translate formal or informal
announcements of the availability of
Federal funding through a financial
assistance program, such as a notice of
funding opportunity, when translations
may serve to increase the pool of
applicants or the participation of a
specific community (for example,
programs administered in foreign
countries where the primary language is
not English). There must be official
controlling English versions of
announcements and award documents.
(b) Applications, reports, and official
correspondence may be submitted in
languages other than English if specified
in the notice of funding opportunity or
the terms and conditions of the Federal
award.
(c) In the event of inconsistency
between English and another language,
the English language meaning will
control. When a significant portion of
the recipient’s or subrecipient’s
employees administering a Federal
award are not fluent in English, the
Federal award should be provided in
English and the language(s) with which
employees are more familiar.
§ 200.112
Conflict of interest.
Federal agencies must establish
conflict of interest policies for Federal
awards. A recipient or subrecipient
must disclose in writing any potential
conflict of interest to the Federal agency
or pass-through entity in accordance
with the established Federal agency
policies.
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§ 200.113
Mandatory disclosures.
An applicant, recipient, or
subrecipient of a Federal award must
promptly disclose whenever they have
credible evidence of a violation of
Federal criminal law potentially
affecting the Federal award (for
example, fraud, embezzlement, bribery,
gratuity violations, identity theft, or
sexual assault and exploitation) or a
violation of the civil False Claims Act.
(See also 2 CFR 175.105 regarding the
obligation to report credible information
related to conduct prohibited by the
Trafficking Victims Protection Act, 22
U.S.C. 7104c). The disclosure must be
made in writing to the Federal agency,
pass-through entity (if applicable), and
the agency’s Office of Inspector General.
Recipients and subrecipients are
required to report matters related to
recipient integrity and performance in
accordance with Appendix XII of this
part. Failure to make required
disclosures can result in any of the
remedies described in § 200.339. (See
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also 2 CFR part 180, 31 U.S.C. 3321, and
41 U.S.C. 2313.)
Subpart C—Pre-Federal Award
Requirements and Contents of Federal
Awards
§ 200.200
Purpose.
Sections 200.201 through 200.216
prescribe instructions and other preaward matters to be used by Federal
agencies in the program planning,
announcement, application, and award
processes.
§ 200.201 Use of grants, cooperative
agreements, fixed amount awards, and
contracts.
(a) Federal awards. The Federal
agency or pass-through entity must
decide on the appropriate type of
agreement for a Federal award (for
example, a grant, cooperative
agreement, subaward, or contract) in
accordance with this guidance. See the
Federal Grant and Cooperative
Agreement Act (31 U.S.C. 6301–6309).
(b) Fixed amount awards. The Federal
agency or pass-through entity (see
§ 200.333) may use fixed amount awards
(see Fixed amount awards in § 200.1) for
which the following conditions apply:
(1) The Federal award amount is
negotiated using the cost principles (or
other pricing information) as a guide.
The Federal agency or pass-through
entity may use fixed amount awards if
the project scope has measurable goals
and objectives and if adequate cost,
historical, or unit pricing data is
available to establish a fixed budget
based on a reasonable estimate of actual
costs. Accountability must be based on
performance and results, which can be
communicated in performance reports
or through routine monitoring. Except
in the case of termination before the
completion of the Federal award, there
is no review of the actual costs incurred
by the recipient or subrecipient under
the Federal award. Therefore, no
financial reporting is required. This
does not absolve the awardee from the
record retention requirements contained
in sections 200.334 through 200.338.
Payments must be based on meeting
specific requirements of the Federal
award. Some of the ways in which the
Federal award may be paid include, but
are not limited to:
(i) In several partial payments. The
amount of each payment as well as the
‘‘milestone’’ or event triggering the
payment, should be agreed to in
advance and included in the Federal
award;
(ii) On a unit price basis. The defined
unit(s) or price(s) should be agreed to in
advance and included in the Federal
award; or
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(iii) In one payment at the completion
of the Federal award.
(2) A fixed amount award may not be
used in programs that require
mandatory cost sharing.
(3) A fixed amount award may
generate and use program income in
accordance with the terms and
conditions of the Federal award;
however, the requirements of § 200.307
do not apply.
(4) At the end of a fixed amount
award, the recipient or subrecipient
must certify in writing to the Federal
agency or pass-through entity that the
project was completed as agreed to in
the Federal award and that all
expenditures were incurred in
accordance with § 200.403. When the
required activities were not carried out,
including fixed amount awards paid on
a unit price basis under
200.201(b)(1)(ii), the amount of the
Federal award must be reduced by the
amount that reflects the activities that
were not completed in accordance with
the Federal award. When the required
activities were completed in accordance
with the terms and conditions of the
Federal award, the recipient or
subrecipient is entitled to any
unexpended funds.
(5) Periodic reports may be
established for fixed amount awards.
(6) Prior approval requirements that
apply to fixed amount awards are
§ 200.308 (paragraphs 1 through 3, 6,
and 10) and § 200.333.
§ 200.202
Program planning and design.
(a) The Federal agency must design a
program and create an Assistance
Listing before announcing the Notice of
Funding Opportunity. A program must
be designed:
(1) With clear goals and objectives
that provide meaningful results
consistent with the Federal authorizing
legislation of the program;
(2) To measure performance based on
the goals and objectives developed
during program planning and design.
Performance measures may differ
depending on the type of program. See
§ 200.301 for more information on
performance measurement;
(3) To align with the strategic goals
and objectives within the Federal
agency’s performance plan and should
support the Federal agency’s
performance measurement,
management, customer service
initiatives, and reporting as required by
Part 6 of OMB Circular A–11
(Preparation, Submission, and
Execution of the Budget);
(4) To align with the Program
Management Improvement
Accountability Act (Pub. L. 114–264) as
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well as the Foundations for EvidenceBased Policymaking Act (Pub. L. 115–
435), as applicable; and
(5) To encourage the recipient to
engage members of the community that
will benefit from or be impacted by a
program during the design phase, when
practicable.
(b) Federal agencies should develop
programs in consultation with
communities benefiting from or
impacted by the program. In addition,
Federal agencies should consider
available data and evaluation results
from past programs and make every
effort to extend eligibility requirements
to all potential applicants. Federal
agencies are encouraged to coordinate
with other agencies during program
planning and design, particularly when
the goals and objectives of a program or
project align with those of other
agencies.
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§ 200.203 Requirement to provide public
notice of Federal financial assistance
programs.
(a) The Federal agency must maintain
an accurate list of Federal programs in
the Assistance Listings maintained by
the General Services Administration
(GSA) at SAM.gov.
(1) The Assistance Listings is the
comprehensive government-wide source
of Federal financial assistance program
information produced by the executive
branch of the Federal Government.
(2) The information that the Federal
agency must submit to GSA for approval
by OMB is listed in paragraph (b). GSA
must prescribe the format for the
submission in coordination with OMB.
(3) The Federal agency must assign
the appropriate Assistance Listing
before making the Federal award unless
exigent circumstances require otherwise
(for example, timing requirements
imposed by a Federal statute).
(b) To the extent practicable, the
Federal agency must create, update, and
manage Assistance Listing entries based
on the authorizing statute for the
program and comply with additional
guidance provided by GSA (in
consultation with OMB) to ensure
consistent and accurate information is
available to prospective applicants.
Assistance Listings should be
communicated to the public in plain
language. Accordingly, Federal agencies
must submit the following information
to GSA when creating an Assistance
Listing:
(1) Program Description, Purpose,
Goals, and Measurement. A brief
summary of the statutory or regulatory
requirements of the program and its
intended outcome. Where appropriate,
the program description, purpose, goals,
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and performance measurement should
align with the strategic goals and
objectives within the Federal agency’s
performance plan and should support
the Federal agency’s performance
measurement, management, customer
service initiatives, and reporting as
required by Part 6 of OMB Circular A–
11;
(2) Identification. Identification of
whether the program will issue Federal
awards on a discretionary or nondiscretionary basis;
(3) Projected total amount of funds
available for the program. Estimates
based on previous year funding are
acceptable if current appropriations are
not available at the time of the
submission;
(4) Anticipated source of available
funds. The statutory authority for
funding the program and the agency,
sub-agency, or specific program unit
that will issue the Federal awards (to
the extent possible) and associated
funding identifier (for example,
Treasury Account Symbol(s));
(5) General eligibility requirements.
The statutory, regulatory, or other
eligibility factors or considerations that
determine the applicant’s qualification
for Federal awards under the program
(for example, type of recipient); and
(6) Applicability of Single Audit
Requirements. Applicability of Single
Audit Requirements as required by
subpart F.
§ 200.204 Notices of funding
opportunities.
The Federal agency must announce
specific funding opportunities for
Federal financial assistance that will be
openly competed. The term openly
competed means opportunities that are
not directed to one or more specifically
identified applicants. To the extent
possible, the Federal agency should
communicate opportunities to the
public in plain language to ensure the
announcement is accessible to diverse
communities of eligible applicants,
including underserved communities.
The Federal agency should also make
efforts to limit the length and
complexity of the announcement and
only include the information that is
necessary for the effective
communication of the program
objectives. Federal agencies may offer
pre-application technical assistance or
provide clarifying information for
funding opportunities. However,
Federal agencies must ensure these
resources are made accessible and
widely available to all potential
applicants; for example, by posting
answers to questions and requests on
Grants.gov. The Federal agency should
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make every effort to identify in the
NOFO all eligible applicants (for
example, different types of nonprofit
organizations such as labor unions). The
following information must be provided
in a public notice:
(a) Summary information in notices of
funding opportunities. The Federal
agency must display the following
information on Grants.gov, in a location
preceding the full text of the
announcement:
(1) Federal Agency Name;
(2) Funding Opportunity Title;
(3) Announcement Type (whether the
funding opportunity is the initial
announcement or a modification of a
previously announced opportunity);
(4) Funding Opportunity Number
(required, if the Federal agency has
assigned a number to the funding
opportunity announcement);
(5) Assistance Listing Number(s);
(6) Funding Details. To the extent
appropriate, the total amount of funding
that the Federal agency expects to
award, the anticipated number of
awards, and the expected dollar values
of individual awards, which may be a
range or average;
(7) Key Dates. Key dates include due
dates for submitting applications or
Executive Order 12372 submissions, as
well as for any letters of intent or
preapplications. For any announcement
issued before a program’s application
materials are available, key dates also
include the date on which those
materials will be released; and any other
additional information, as deemed
applicable by the Federal agency. If
possible, the Federal agency should
provide an anticipated award date. If the
NOFO states that applications will be
evaluated on a ‘‘rolling’’ basis (that is,
at different points during a specified
period of time), the Federal agency
should provide an estimate of the time
needed to process an application and
notify the applicant of the Federal
agency’s decision;
(8) Executive Summary. A brief
description that is written in plain
language and summarizes the goals and
objectives of the program, the target
audience, and eligible applicants. The
text of the executive summary should
not exceed 500 words; and
(9) Agency contact information.
(b) Availability period. The Federal
agency should make all funding
opportunities available for application
for at least 60 calendar days. However,
the Federal agency may extend the
availability period of an opportunity as
needed. For example, extending the
period may be necessary to provide
technical assistance to an applicant pool
that was not anticipated when the
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announcement was made or has less
experience with applying for Federal
financial assistance. The Federal agency
may also determine that an availability
period of less than 60 days is sufficient
for a particular funding opportunity.
However, no funding opportunity
should be available for less than 30
calendar days unless the Federal agency
determines that exigent circumstances
justify this.
(c) Full text of funding opportunities.
(1) The Federal agency must include the
information in Appendix I for every
funding opportunity.
(2) Federal agencies should ensure
that funding opportunities are written
using plain language. To the extent
possible Federal agencies must
streamline opportunities to make them
accessible, particularly for funding
opportunities that are new, targeted to
underserved communities, or intended
to reach inexperienced applicants.
(3) To reduce application burden,
Federal agencies should consider
whether programmatic or administrative
requirements specific to the agency,
program, or funding opportunity must
be met at the time of application or as
a requirement of receiving a Federal
award.
ddrumheller on DSK120RN23PROD with PROPOSALS2
§ 200.205 Federal agency merit review of
proposals.
Unless prohibited by Federal statute,
the Federal agency must design and
execute a merit review process of
applications for discretionary Federal
awards. The objective of a merit review
process is to select recipients most
likely to be successful in delivering
results based on the program objectives
as outlined in section § 200.202. A merit
review is an objective process of
evaluating Federal award applications
in accordance with the written
standards of the Federal agency. If
utilizing external peer reviewers, these
standards should identify the number of
people the agency requires to participate
in the merit review process and provide
opportunities for a diverse group of
participants, including those
representing underserved communities.
This process must be described or
incorporated by reference in the
applicable funding opportunity. See
Appendix I to this part. See also
§ 200.204. The Federal agency must also
periodically review its merit review
process.
§ 200.206 Federal agency review of risk
posed by applicants.
(a) Review of OMB-designated
repositories of government-wide data.
(1) Prior to making a Federal award, the
Federal agency is required to review
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eligibility information for applicants
and financial integrity information for
applicants available in OMB-designated
databases per the Payment Integrity
Information Act of 2019 (Pub. L. 116–
117), the ‘‘Do Not Pay Initiative’’ (31
U.S.C. 3354), and 41 U.S.C. 2313.
(2) The Federal agency is required to
review the responsibility and
qualification records available in the
non-public segment of the System for
Award Management (SAM.gov) prior to
making a Federal award where the
Federal share is expected to exceed the
simplified acquisition threshold. See 41
U.S.C. 2313. The Federal agency must
consider all of the information available
in SAM.gov with regard to the applicant
and any immediate highest-level owner,
predecessor (meaning, an organization
that is replaced by a successor), or
subsidiary, identified for that applicant
in SAM.gov. See Public Law 112–239,
National Defense Authorization Act for
Fiscal Year 2013. The information in the
system for a prior recipient of a Federal
award must demonstrate a satisfactory
record of administering programs or
activities under Federal financial
assistance or procurement awards, and
integrity and business ethics. The
Federal agency may make a Federal
award to a recipient that does not fully
meet these standards if it is determined
that the information is not relevant to
the Federal award under consideration
or there are specific conditions that can
appropriately mitigate the risk
associated with the recipient in
accordance with § 200.208.
(b) Risk Assessment. (1) The Federal
agency must establish and maintain
policies and procedures for conducting
a risk assessment to evaluate the risks
posed by applicants before issuing
Federal awards. This assessment helps
identify risks that may affect the
advancement toward or the achievement
of a project’s goals and objectives. Risk
assessments assist Federal managers in
determining appropriate resources and
time to devote to project oversight and
monitor recipient progress. This
assessment may incorporate elements
such as the quality of the application,
award amount, risk associated with the
program, cybersecurity risks, and
impacts on local jobs and the
community. If the Federal agency
determines that the Federal award will
be made, specific conditions that
address the assessed risk may be
implemented in the Federal award. The
risk criteria to be evaluated must be
described in the announcement of the
funding opportunity described in
§ 200.204.
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(2) In evaluating risks posed by
applicants, the Federal agency should
consider the following items:
(i) Financial stability. The applicant’s
record of effectively managing financial
risks, assets, and resources;
(ii) Management systems and
standards. Quality of management
systems and ability to meet the
management standards prescribed in
this part;
(iii) History of performance. The
applicant’s record of managing previous
and current Federal awards, including
compliance with reporting requirements
and conformance to the terms and
conditions of Federal awards, if
applicable;
(iv) Audit reports and findings.
Reports and findings from audits
performed under subpart F or the
reports and findings of any other
available audits, if applicable; and
(v) Ability to effectively implement
requirements. The applicant’s ability to
effectively implement statutory,
regulatory, or other requirements
imposed on recipients of Federal
awards.
(c) Adjustments to the Risk
Assessment. The Federal agency may
modify the risk assessment at any time
during the period of performance,
which may justify changes to the terms
and conditions of the Federal award.
See § 200.208.
(d) Suspension and debarment
compliance. (1) The Federal agency
must comply with the government-wide
suspension and debarment guidance in
2 CFR part 180 and individual Federal
agency suspension and debarment
requirements in title 2 of the Code of
Federal Regulations. Federal agencies
must also require recipients to comply
with these requirements. These
requirements restrict making Federal
awards, subawards, and contracts with
certain parties that are debarred,
suspended, or otherwise excluded from
receiving Federal awards participating
in Federal awards.
§ 200.207 Standard application
requirements.
(a) Paperwork clearances. The Federal
agency may only use application
information collections approved by
OMB under the Paperwork Reduction
Act of 1995 and OMB’s implementing
regulations in 5 CFR part 1320 and in
alignment with OMB-approved,
government-wide data elements
available from the OMB-designated
standards lead. OMB will authorize
additional information collections only
on a limited basis and consistent with
these requirements.
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(b) Information collection. The
Federal agency may inform applicants
that they do not need to provide certain
information already being collected
through other means.
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§ 200.208
Specific conditions.
(a) Federal agencies are responsible
for ensuring that specific Federal award
conditions and performance
expectations are consistent with the
program design (See § 200.202 and
§ 200.301)
(b) The Federal agency or passthrough entity may adjust specific
conditions in the Federal award based
on an analysis of the following factors:
(1) Review of OMB-designated
repositories of government-wide data
(for example, SAM.gov) or review of its
risk assessment (See § 200.206);
(2) The recipient’s or subrecipient’s
history of compliance with the terms
and conditions of Federal awards;
(3) The recipient’s or subrecipient’s
ability to meet expected performance
goals as described in § 200.211; or
(4) A determination that a recipient or
subrecipient has adequate financial
resources to perform the Federal award.
(c) Specific conditions may include
the following:
(1) Requiring payments as
reimbursements rather than advance
payments;
(2) Withholding authority to proceed
to the next phase until receipt of
evidence of acceptable performance;
(3) Requiring additional or more
detailed financial reports;
(4) Requiring additional project
monitoring;
(5) Requiring the recipient or
subrecipient to obtain technical or
management assistance; or
(6) Establishing additional prior
approvals.
(d) Prior to imposing specific
conditions, the Federal agency or passthrough entity must notify the recipient
or subrecipient as to:
(1) The nature of the specific
condition(s);
(2) The reason why the specific
condition(s) is being imposed;
(3) The nature of the action needed to
remove the specific condition(s);
(4) The time allowed for completing
the actions; and
(5) The method for requesting the
Federal agency or pass-through entity to
reconsider imposing a specific
condition.
(e) Any specific conditions must be
promptly removed once the conditions
that prompted them have been satisfied.
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§ 200.209 Certifications and
representations.
Unless prohibited by the U.S.
Constitution, Federal statutes, or
regulations, each Federal agency or
pass-through entity is authorized to
require a recipient or subrecipient to
submit certifications and
representations annually in SAM.gov.
Submission may be required more
frequently if a recipient or subrecipient
fails to meet a requirement of a Federal
award. When a recipient or subrecipient
is provided an exception to the
requirements of 2 CFR 25.110, the
recipient or subrecipient must submit
the appropriate assurance form (for
example, SF–424B).
§ 200.210
Pre-award costs.
For requirements on costs incurred by
the applicant prior to the start date of
the period of performance of the Federal
award, see § 200.458.
§ 200.211 Information contained in a
Federal award.
The Federal award must include the
following information:
(a) Federal award performance goals.
Where applicable, performance goals,
indicators, targets, and baseline data
must be included in the Federal award.
The Federal agency must also specify in
the terms and conditions of the Federal
award how performance will be
assessed, including the timing and
scope of expected performance. See
§§ 200.202 and 200.301 for more
information on Federal award
performance goals.
(b) General Federal award
information. The Federal agency must
include the following information in
each Federal award:
(1) Recipient Name (which must
match the name associated with its
unique entity identifier as defined at 2
CFR 25.400);
(2) Recipient’s Unique Entity
Identifier;
(3) Unique Federal Award
Identification Number (FAIN);
(4) Federal Award Date (see Federal
award date in § 200.1);
(5) Period of Performance Start and
End Date;
(6) Budget Period Start and End Date;
(7) Amount of Federal Funds
Obligated by this Action;
(8) Total Amount of Federal Funds
Obligated;
(9) Total Approved Cost Sharing,
where applicable;
(10) Total Amount of the Federal
Award including, approved Cost
Sharing;
(11) Budget Approved by the Federal
Agency;
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(12) Federal Award Description (to
comply with statutory requirements (for
example, FFATA));
(13) Name of the Federal agency
(including contact information for the
awarding official),
(14) Assistance Listings Number and
Title;
(15) Identification of whether the
Award is R&D; and
(15) Indirect Cost Rate for the Federal
award (including if the de minimis rate
is charged per § 200.414).
(c) General terms and conditions. (1)
Federal agencies must incorporate the
following general terms and conditions
either in the Federal award or by
reference, as applicable:
(i) Administrative requirements.
Administrative requirements
implemented by the Federal agency as
specified in this part.
(ii) National policy requirements.
These include statutory, executive
order, other Presidential directive, or
regulatory requirements that apply by
specific reference and are not programspecific. See § 200.300 Statutory and
national policy requirements.
(iii) Recipient integrity and
performance matters. When the total
Federal share of the Federal award may
include more than $500,000 over the
period of performance, the Federal
agency must include the terms and
conditions available in Appendix XII.
See also § 200.113.
(iv) Future budget periods. When it is
anticipated that the period of
performance will include multiple
budget periods, the Federal agency must
indicate that subsequent budget periods
are subject to the availability of funds,
program authority, satisfactory
performance, and compliance with the
terms and conditions of the Federal
award.
(v) Termination provisions. Federal
agencies must inform recipients of the
termination provisions in § 200.340,
including the applicable termination
provisions in the Federal agency’s
regulations or terms and conditions of
the Federal award.
(2) The Federal award must
incorporate, by reference, all general
terms and conditions of the Federal
award, which must be maintained on
the Federal agency’s website.
(3) The Federal agency must provide
a copy of the full text of the general
terms and conditions if a recipient
requests it.
(4) The Federal agency must maintain
an archive of previous versions of the
general terms and conditions, with
effective dates, for use by a recipient,
auditors, or others. The archive should
be located on the Federal agency’s
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website in the same place where current
terms and conditions are available.
(d) Federal award specific terms and
conditions. The Federal agency must
include in each Federal award any
specific terms and conditions that are in
addition to the general terms and
conditions. See also § 200.208.
Whenever practicable, these specific
terms and conditions should also be
available on the Federal agency’s
website and in notices of funding
opportunities (as outlined in § 200.204).
(e) Federal agency requirements. Any
other information required by the
Federal agency.
§ 200.212 Public access to Federal award
information.
(a) Except as noted in paragraph (c) of
this section, the Federal agency must
publish the required Federal award
information on USAspending.gov in
accordance with the guidance provided
by OMB and the U.S. Department of the
Treasury’s DATA Act Information
Model Schema (DAIMS).
(b) All responsibility and qualification
records posted in SAM.gov will be
publicly available after a waiting period
of 14 calendar days, except for:
(1) Past performance reviews required
by Federal Government contractors (See
Federal Acquisition Regulation (FAR)
48 CFR part 42, subpart 42.15);
(2) Information that was entered prior
to April 15, 2011; or
(3) Information that is withdrawn
during the 14-calendar day waiting
period by a Federal agency.
(c) Nothing in this section may be
construed as requiring the publication
of information otherwise exempt under
the Freedom of Information Act (5 U.S.C
552), or controlled unclassified
information pursuant to Executive
Order 13556.
ddrumheller on DSK120RN23PROD with PROPOSALS2
§ 200.213 Reporting a determination that
an applicant is not qualified for a Federal
award.
(a) The Federal agency must report in
SAM.gov if it does not make a Federal
award to an applicant because it
determines that the applicant does not
meet the minimum qualification
standards as described in
§ 200.206(a)(2). The Federal agency
must report that determination only if
all of the following apply:
(1) The only basis for the
determination is the applicant’s prior
record of performance on administering
Federal awards or its record of integrity
and business ethics, as described in
§ 200.206(a)(2) (meaning, the applicant
was determined to be qualified based on
all factors other than those two
standards); and
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(2) The total Federal share of the
Federal award was expected to exceed
the simplified acquisition threshold
over the period of performance.
(b) The Federal agency is not required
to report a determination that an
applicant is not qualified for a Federal
award if they issue the Federal award in
accordance with the requirements of
§ 200.208.
(c) If the Federal agency reports a
determination that an applicant is not
qualified for a Federal award, the
Federal agency also must notify the
applicant that:
(1) The determination was made and
reported in SAM.gov and provides an
explanation of the determination;
(2) The information will be kept in the
system for a period of five years from
the date of the determination and then
archived (See section 872 of Pub. L.
110–417, as amended, codified at 41
U.S.C. 2313);
(3) Each Federal agency that considers
making a Federal award to the applicant
during that five-year period will
consider that information in
determining the applicant’s
qualification to receive a Federal award
when the total Federal share of a
Federal award is expected to exceed the
simplified acquisition threshold over
the period of performance;
(4) The applicant may review the
responsibility/qualification records
accessible in SAM.gov and comment on
any information the system contains
about the applicant; and
(5) Federal agencies must consider the
applicant’s comments in determining
whether the applicant is qualified for a
future Federal award.
(d) If the Federal agency enters
information into SAM.gov about a
determination that an applicant is not
qualified for a Federal award and
subsequently:
(1) Learns that any of that information
is erroneous, the Federal agency must
correct the information in the system
within three business days; and
(2) Obtains an update to that
information that could be helpful to
other Federal agencies, the Federal
agency should amend the information in
the system within 30 days.
(e) Federal agencies must not post any
information that will be made publicly
available in the non-public segment of
the responsibility/qualification records
that is covered by a disclosure
exemption under the Freedom of
Information Act. If a recipient asserts
within seven calendar days to a Federal
agency that some or all of the publicly
available information is covered by a
disclosure exemption under the
Freedom of Information Act, the Federal
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agency that posted the information must
remove the posting within seven
calendar days of receiving the assertion.
Prior to reposting the releasable
information, the Federal agency must
resolve the issue in accordance with the
agency’s Freedom of Information Act
procedures.
§ 200.214
Suspension and debarment.
Recipients and subrecipients are
subject to the non-procurement
debarment and suspension regulations
implementing Executive Orders 12549
and 12689, as well as 2 CFR part 180.
The regulations in 2 CFR part 180
restrict making Federal awards,
subawards, and contracts with certain
parties that are debarred, suspended, or
otherwise excluded from receiving or
participating in Federal awards.
§ 200.215
Never contract with the enemy.
Federal agencies, recipients, and
subrecipients are subject to the guidance
implementing Never Contract with the
Enemy in 2 CFR part 183. The guidance
in 2 CFR part 183 affects covered
contracts, grants, and cooperative
agreements that are expected to exceed
$50,000 during the period of
performance, are performed outside the
United States and its territories, and are
in support of a contingency operation in
which members of the Armed Forces are
actively engaged in hostilities.
§ 200.216 Prohibition on certain
telecommunications and video surveillance
services or equipment.
(a) Recipients and subrecipients are
prohibited from obligating or expending
Federal funds to:
(1) Procure or obtain;
(2) Extend or renew a contract to
procure or obtain; or
(3) Enter into a contract (or extend or
renew a contract) to procure or obtain
equipment, services, or systems that
uses covered telecommunications
equipment or services as a substantial or
essential component of any system, or
as critical technology as part of any
system. As described in section 889 of
Public Law 115–232, covered
telecommunications equipment is
telecommunications equipment
produced by Huawei Technologies
Company or ZTE Corporation (or any
subsidiary or affiliate of such entities).
(i) For the purpose of public safety,
security of government facilities,
physical security surveillance of critical
infrastructure, and other national
security purposes, video surveillance
and telecommunications equipment
produced by Hytera Communications
Corporation, Hangzhou Hikvision
Digital Technology Company, or Dahua
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Technology Company (or any subsidiary
or affiliate of such entities).
(ii) Telecommunications or video
surveillance services provided by such
entities or using such equipment.
(iii) Telecommunications or video
surveillance equipment or services
produced or provided by an entity that
the Secretary of Defense, in consultation
with the Director of the National
Intelligence or the Director of the
Federal Bureau of Investigation,
reasonably believes to be an entity
owned or controlled by, or otherwise
connected to, the government of a
covered foreign country.
(b) In implementing the prohibition
under section 889 of Public Law 115–
232, heads of executive agencies
administering loan, grant, or subsidy
programs shall prioritize available
funding and technical support to assist
affected businesses, institutions and
organizations as is reasonably necessary
for those affected entities to transition
from covered communications
equipment and services, to procure
replacement equipment and services,
and to ensure that communications
service to users and customers is
sustained.
(c) A recipient or subrecipient may
use covered telecommunications
equipment or services for their own
purposes (not program activities)
provided they are not procured with
Federal funds.
(d) The prohibition on covered
telecommunications equipment or
services applies to funds generated as
program income, indirect cost
recoveries, or to satisfy cost share
requirements.
(e) The recipient or subrecipient is not
required to certify that funds were not
expended on covered
telecommunications equipment or
services beyond the certification
provided upon signing the award.
(f) For additional information, see
section 889 of Public Law 115–232 and
§ 200.471.
ddrumheller on DSK120RN23PROD with PROPOSALS2
§ 200.217
Whistleblower protections.
An employee of a recipient or
subrecipient may not be discharged,
demoted, or otherwise discriminated
against as a reprisal for disclosing to a
person or body described in paragraph
(a)(2) of 41 U.S.C. 4712 information that
the employee reasonably believes is
evidence of gross mismanagement of a
Federal contract or grant, a gross waste
of Federal funds, an abuse of authority
relating to a Federal contract or grant, a
substantial and specific danger to public
health or safety, or a violation of law,
rule, or regulation related to a Federal
contract (including the competition for
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or negotiation of a contract) or grant. See
statutory requirements for
whistleblower protections at 10 U.S.C.
4701, 41 U.S.C. 4712, 41 U.S.C. 4304,
and 10 U.S.C. 4310.
Subpart D—Post Federal Award
Requirements
§ 200.300 Statutory and national policy
requirements.
(a) The Federal agency or passthrough entity must manage and
administer the Federal award in a
manner so as to ensure that Federal
funding is expended and associated
programs are implemented in full
accordance with the U.S. Constitution,
applicable Federal statutes (including
statutes that prohibit discrimination)
and regulations, and the requirements of
this part. The Federal agency or passthrough entity must communicate to a
recipient or subrecipient all relevant
requirements, including those contained
in general appropriations provisions,
and incorporate them directly or by
reference in the terms and conditions of
the Federal award.
(b) In administering Federal awards
that are subject to Federal statutes
prohibiting discrimination based on sex,
the Federal agency or pass-through
entity must ensure that the award is
administered in a way that does not
unlawfully discriminate based on sexual
orientation or gender identity,
consistent with the Supreme Court’s
reasoning in Bostock v. Clayton County,
140 S. Ct. 1731 (2020).
(c) In administering awards in
accordance with the U.S. Constitution,
the Federal agency must take account of
the heightened constitutional scrutiny
that may apply under the Constitution’s
Equal Protection clause for government
action that provides differential
treatment based on sexual orientation or
gender identity.
§ 200.301
Performance measurement.
(a) The Federal agency must measure
the recipient’s performance to show
achievement of program goals and
objectives, share lessons learned,
improve program outcomes, and foster
the adoption of promising practices. The
Federal agency should establish
program goals and objectives during
program planning and design (see
§ 200.202). The Federal agency should
clearly communicate the specific
program goals and objectives in the
Federal award, including how the
Federal agency will measure the
achievement of the goals and objectives,
the expected timeline, and information
on how the recipient must report the
achievement of program goals and
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objectives. The Federal agency should
also clearly communicate in the Federal
award any expected outcomes,
indicators, targets, baseline data, or data
collections that the recipient is
responsible for measuring and reporting.
The Federal agency must ensure all
requirements for measuring
performance align with the Federal
agency’s strategic goals, strategic
objectives, or performance goals
relevant to a program (see OMB Circular
A–11, Preparation, Submission, and
Execution of the Budget Part 6).
(b) When establishing performance
reporting frequency and content, the
Federal agency should consider what
information will be necessary to
measure the recipient’s progress, to
identify promising practices of
recipients, and build the evidence upon
which the Federal agency makes
program and performance decisions.
The Federal agency should not require
additional information that is not
necessary for measuring program
performance. See § 200.329 for more
information on reporting program
performance.
(c) The Federal agency should also
specify in the Federal award any
requirements of the recipients’
participation in federally-funded
evaluations.
§ 200.302
Financial management.
(a) Each State must expend and
account for the Federal award in
accordance with State laws and
procedures for expending and
accounting for the State’s funds. All
recipient and subrecipient financial
management systems, including records
documenting compliance with Federal
statutes, regulations, and the terms and
conditions of the Federal award, must
be sufficient to permit the preparation of
reports required by the terms and
conditions; and tracking expenditures to
establish that funds have been used in
accordance with Federal statutes,
regulations, and the terms and
conditions of the Federal award. See
§ 200.450
(b) The recipient’s or subrecipient’s
financial management system must
provide for the following (see
§§ 200.334, 200.335, 200.336, and
200.337):
(1) Identification of all Federal awards
by the Assistance Listings title and
number, Federal award identification
number, Federal award year, and name
of the Federal agency or pass-through
entity.
(2) Accurate, current, and complete
disclosure of the financial results of
each Federal award or program in
accordance with the reporting
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requirements in §§ 200.328 and 200.329.
When a Federal agency or pass-through
entity requires reporting on an accrual
basis from a recipient or subrecipient
that maintains its records other than on
an accrual basis, the recipient or
subrecipient must not be required to
establish an accrual accounting system.
This recipient or subrecipient may
develop accrual data for its reports
based on an analysis of the
documentation on hand.
(3) Maintaining records that
sufficiently identify the source and
expenditure of Federal funds for Federal
awards. These records must contain
information necessary to identify
Federal awards, authorizations,
financial obligations, unobligated
balances, assets, expenditures, income,
and interest and be supported by source
documentation.
(4) Effective control over and
accountability for all funds, property,
and assets. The recipient or subrecipient
must safeguard all assets and ensure
they are used solely for authorized
purposes. See § 200.303.
(5) Comparison of expenditures with
budget amounts for each Federal award.
(6) Written procedures to implement
the requirements of § 200.305.
(7) Written procedures for
determining the allowability of costs in
accordance with subpart E and the
terms and conditions of the Federal
award.
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§ 200.303
Internal controls.
The recipient or subrecipient must:
(a) Establish, document, and maintain
effective internal control over the
Federal award that provides reasonable
assurance that the recipient or
subrecipient is managing the Federal
award in compliance with Federal
statutes, regulations, and the terms and
conditions of the Federal award. These
internal controls should comply with
the guidance in ‘‘Standards for Internal
Control in the Federal Government’’
issued by the Comptroller General of the
United States or the ‘‘Internal ControlIntegrated Framework’’ issued by the
Committee of Sponsoring Organizations
of the Treadway Commission (COSO).
(b) Comply with the U.S.
Constitution, Federal statutes,
regulations, and the terms and
conditions of the Federal award.
(c) Evaluate and monitor the
recipient’s or subrecipient’s compliance
with statutes, regulations, and the terms
and conditions of Federal awards.
(d) Take prompt action when
instances of noncompliance are
identified.
(e) Take cybersecurity and other
measures as appropriate to safeguard
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information including protected
personally identifiable information (PII).
This also includes information the
Federal agency or pass-through entity
designates as sensitive or other
information the recipient or
subrecipient considers sensitive and is
consistent with applicable Federal,
State, local, and tribal laws regarding
privacy and responsibility over
confidentiality.
§ 200.304
Bonds.
(a) Where the Federal Government
guarantees or insures the repayment of
money borrowed by the recipient, the
Federal agency 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.
(b) The Federal agency may require
adequate fidelity bond coverage where
the recipient entity lacks coverage to
protect the interest of the Federal
Government.
(c) Where bonds, insurance, or both
are required in the situations described
above, the bonds and insurance must be
obtained from companies holding
certificates of authority issued by the
U.S. Department of Treasury (see 31
CFR part 223).
§ 200.305
Federal payment.
(a) Payments for States. Payments for
states are governed by Treasury-State
Cash Management Improvement Act
(CMIA) agreements and default
procedures codified at 31 CFR part 205
and Treasury Financial Manual (TFM)
4A–2000, ‘‘Overall Disbursing Rules for
All Federal Agencies.’’
(b) Payments for recipients and
subrecipients other than States. The
payment methods must minimize the
time elapsing between the transfer and
disbursement of funds regardless of
whether the payment is made by
electronic funds transfer or by other
means. See § 200.302(b)(6). Except as
noted in this part, the Federal agency
must require recipients to use only
OMB-approved, government-wide
information collections to request
payment.
(1) The recipient or subrecipient must
be paid in advance, provided it
maintains or demonstrates the
willingness to maintain written
procedures. Such procedures must
minimize the time elapsing between the
transfer and disbursement of funds. The
procedures must also establish a
financial management system that meets
the standards for fund control and
accountability as established in this
part. Advance payments to a recipient
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or subrecipient must be limited to the
minimum amounts needed and be timed
with actual, immediate cash
requirements in carrying out the
purpose of the approved program or
project. The timing and amount of
advance payments must be as close as
is administratively feasible to the actual
disbursements for direct program or
project costs and the proportionate
share of any allowable indirect costs.
The recipient or subrecipient must make
timely payments to contractors in
accordance with the contract provisions.
(2) Whenever possible, advance
payment requests by the recipient or
subrecipient must be consolidated to
cover anticipated cash needs for all
Federal awards received by the recipient
from the Federal agency or pass-through
entity.
(i) Advance payment mechanisms
must comply with 31 CFR part 208 and
include, but are not limited to, Treasury
checks and electronic funds transfers.
(ii) Recipients and subrecipients must
be authorized to submit payment
requests as often as necessary when
electronic fund transfers are used or at
least monthly when electronic transfers
are not used. See Electronic Fund
Transfer Act (15 U.S.C. 1693–1693r).
(3) Reimbursement is preferred when
the requirements in paragraph (b)
cannot be met, when the Federal agency
or pass-through entity sets a specific
condition per § 200.208, when requested
by the recipient or subrecipient, when a
Federal award is for construction, or
when a significant portion of the
construction project is accomplished
through private market financing or
Federal loans and the Federal award
constitutes a minor portion of the
project. When the reimbursement
method is used, the Federal agency or
pass-through entity must make payment
within 30 calendar days after receipt of
the payment request unless the Federal
agency or pass-through entity
reasonably believes the request to be
improper.
(4) If the recipient or subrecipient
cannot meet the criteria for advance
payments and the Federal agency or
pass-through entity has determined that
reimbursement is not feasible because
the recipient or subrecipient lacks
sufficient working capital, the Federal
agency or pass-through entity may
provide cash on a working capital
advance basis. Under this procedure,
the Federal agency or pass-through
entity must advance cash payments to
the recipient or subrecipient to cover its
estimated disbursement needs for an
initial period generally aligned to the
recipient’s or subrecipient’s disbursing
cycle. After that, the Federal agency or
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pass-through entity must reimburse the
recipient or subrecipient for its actual
cash disbursements. Use of the working
capital advance payment method
requires that the pass-through entity
provide timely advance payments to any
subrecipients to meet the subrecipient’s
actual cash disbursements. The passthrough entity must not use the working
capital advance method of payment if
the reason for using this method is the
unwillingness or inability of the passthrough entity to provide timely
advance payments to the subrecipient to
meet the subrecipient’s actual cash
disbursements.
(5) If available, the recipient or
subrecipient must disburse funds
available from program income
(including repayments to a revolving
fund), rebates, refunds, contract
settlements, audit recoveries, and
interest earned on Federal funds before
requesting additional cash payments.
(6) Payments for allowable costs must
not be withheld at any time during the
period of performance unless required
by Federal statute, regulations, or in one
of the following instances:
(i) The recipient or subrecipient has
failed to comply with the terms and
conditions of the Federal award; or
(ii) The recipient or subrecipient is
delinquent in a debt to the United States
as defined in OMB Circular A–129,
‘‘Policies for Federal Credit Programs
and Non-Tax Receivables.’’ Under such
conditions, the Federal agency or passthrough entity may, upon reasonable
notice, inform the recipient that
payments must not be made for
financial obligations incurred after a
specified date until the conditions are
corrected or the debt is repaid to the
Federal Government.
(7) A payment withheld for failure to
comply with the terms and conditions
of the Federal award must be released
to the recipient or subrecipient upon
subsequent compliance. When a Federal
award is suspended, payment
adjustments must be made in
accordance with § 200.343.
(8) A payment must not be made to
a recipient or subrecipient for amounts
that the recipient or subrecipient
withholds from contractors to assure
satisfactory completion of work.
Payment must be made when the
recipient or subrecipient disburses the
withheld funds to the contractors or to
escrow accounts established to ensure
satisfactory completion of work.
(9) The Federal agency or passthrough entity must not require separate
depository accounts for funds provided
to the recipient or subrecipient or
establish any eligibility requirements for
depositories. However, the recipient or
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subrecipient must be able to account for
all Federal funds received, obligated,
and expended.
(10) Advance payments of Federal
funds must be deposited and
maintained in insured accounts
whenever possible.
(11) The recipient or subrecipient
must maintain advance payments of
Federal funds in interest-bearing
accounts unless one of the following
applies:
(i) The recipient or subrecipient
receives less than $250,000 in Federal
funding per year;
(ii) The best available interest-bearing
account would not reasonably be
expected to earn interest in excess of
$500 per year on Federal cash balances;
(iii) The depository would require an
average or minimum balance so high
that it would not be feasible with the
expected Federal and non-Federal cash
resources;
(iv) A foreign government or banking
system prohibits or precludes interestbearing accounts; or
(v) An interest-bearing account is not
readily accessible (for example, due to
public or political unrest in a foreign
country).
(12) The recipient or subrecipient may
retain up to $500 per year of interest
earned on Federal funds to use for
administrative expenses of the recipient
or subrecipient. Any additional interest
earned on Federal funds must be
returned annually to the Department of
Health and Human Services Payment
Management System (PMS) through
either the Automated Clearing House
(ACH) network or a Fedwire Funds
Service payment. All interest in excess
of $500 per year must be returned to
PMS regardless of whether the recipient
or subrecipient was paid through PMS.
Instructions for returning interest can be
found at https://pms.psc.gov/grantrecipients/returning-funds-interest.html.
(13) All other Federal funds must be
returned to the payment system of the
Federal agency. Returns should follow
the instructions provided by the Federal
agency. All returns to PMS should
follow the instructions provided at
https://pms.psc.gov/grant-recipients/
returning-funds-interest.html.
§ 200.306
Cost sharing.
(a) Cost sharing may not be used as a
factor during the merit review of
applications or proposals unless
allowed by the Federal agency’s
regulations, and the information is
included in the notice of funding
opportunity. Voluntarily committed cost
sharing is not expected under Federal
research grants. See §§ 200.414, 200.204,
and Appendix I.
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(b) The Federal agency or passthrough entity must accept any cost
sharing or in-kind contributions as part
of the recipient’s or subrecipient’s
contributions to a program when they:
(1) Are verifiable in the recipient’s or
subrecipient’s records;
(2) Are not included as contributions
for any other Federal award;
(3) Are necessary and reasonable for
achieving the objectives of the Federal
award;
(4) Are allowable under subpart E;
(5) Are not paid by the Federal
Government under another Federal
award, except where the program’s
Federal authorizing statute specifically
provides that Federal funds made
available for the program can be applied
to cost sharing requirements of other
Federal programs;
(6) Are provided for in the approved
budget when required by the Federal
agency; and
(7) Conform to other applicable
provisions of this part.
(c) Unrecovered indirect costs,
including indirect costs on cost sharing,
may be included as part of cost sharing
with the prior approval of the Federal
agency or pass-through entity.
Unrecovered indirect cost means the
difference between the amount charged
to the Federal award and the amount
which could have been charged to the
Federal award under the recipient’s or
subrecipient’s approved indirect cost
rate.
(d) Values for recipient or
subrecipient contributions of services
and property must be established in
accordance with the cost principles in
subpart E. When a Federal agency or
pass-through entity authorizes the
recipient or subrecipient to donate
buildings or land for construction/
facilities acquisition projects or longterm use, the value of the donated
property for cost sharing must be the
lesser of paragraph (d)(1) or (2) below.
(1) The value of the remaining life of
the property recorded in the recipient’s
or subrecipient’s accounting records at
the time of donation.
(2) The current fair market value.
However, when there is sufficient
justification, the Federal agency or passthrough may approve using the current
fair market value of the donated
property, even if it exceeds the value
described in paragraph (d)(1) at the time
of donation.
(e) Volunteer services furnished by
third-party professional and technical
personnel, consultants, and other labor
may be counted as cost sharing if the
service is necessary for the program.
Rates for third-party volunteer services
must be consistent with those paid for
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similar work by the recipient or
subrecipient. When the required skills
are not found in the recipient’s or
subrecipient’s workforce, rates must be
consistent with those paid for similar
work in the labor market where the
recipient or subrecipient competes for
the services involved. In either case,
fringe benefits that are allowable,
allocable, and reasonable may be
included in the valuation.
(f) When a third-party organization
furnishes the services of an employee,
these services must be valued at the
employee’s regular rate of pay plus an
amount of fringe benefits that are
allowable, allocable, and reasonable.
These services may also include indirect
costs at either the third-party
organization’s federally-negotiated
indirect cost rate or a rate in accordance
with § 200.414(d). These services are
allowable if they employ the same
skill(s) for which the employee is
normally paid. Where donated services
are treated as indirect costs, indirect
cost rates will separate the value of the
donated services so that reimbursement
for the donated services will not be
made.
(g) Donated property from third
parties may include items such as
equipment, office supplies, laboratory
supplies, or workshop and classroom
supplies. The assessed value of donated
property included as cost sharing must
not exceed the property’s fair market
value at the time of the donation.
(h) The method used for determining
the value of donated equipment,
buildings, and land for which title
passes to the recipient or subrecipient
may differ according to the following:
(1) If the purpose of the Federal award
is to assist the recipient or subrecipient
in acquiring equipment, buildings, or
land, the aggregate value of the donated
property may be claimed as cost
sharing.
(2) If the purpose of the Federal award
is to support activities that require the
use of equipment, buildings, or land,
only depreciation charges for equipment
and buildings may be made. However,
the fair market value of equipment or
other capital assets and fair rental
charges for land may be allowed if
provided in the terms and conditions of
the Federal award. See § 200.420.
(i) The value of donated property
must be determined in accordance with
the accounting policies of the recipient
or subrecipient with the following
qualifications:
(1) The value of donated land and
buildings must not exceed its fair
market value at the time of donation to
the recipient or subrecipient as
established by an independent appraiser
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(for example, certified real property
appraiser or General Services
Administration representative) and
certified by a responsible official of the
recipient or subrecipient as required by
the Uniform Relocation Assistance and
Real Property Acquisition Policies Act
of 1970, as amended, (42 U.S.C. 4601–
4655) except as provided in the
implementing regulations at 49 CFR part
24, ‘‘Uniform Relocation Assistance
And Real Property Acquisition For
Federal And Federally-Assisted
Programs.’’
(2) The value of donated equipment
must not exceed the fair market value at
the time of donation.
(3) The value of donated space must
not exceed the fair rental value of
comparable space as established by an
independent appraisal of comparable
space and facilities in a privately-owned
building in the same locality.
(4) The value of loaned equipment
must not exceed its fair rental value.
(j) The fair market value of third-party
in-kind contributions must be
documented and, to the extent feasible,
supported by the same methods used
internally by the recipient or
subrecipient.
(k) For institutions of higher
education (IHE), voluntary uncommitted
cost sharing should be treated
differently from mandatory or voluntary
committed cost sharing and should not
be included in the organized research
base for computing the indirect cost rate
or reflected in any allocation of indirect
costs. Voluntary uncommitted cost
sharing effort, is faculty-donated
additional time above that agreed to as
part of the award. See OMB
memorandum M–01–06, dated January
5, 2001, Clarification of OMB A–21
Treatment of Voluntary Uncommitted
Cost Sharing and Tuition Remission
Costs.
§ 200.307
Program income.
(a) General. The recipient or
subrecipient is encouraged to earn
income to defray program costs when
appropriate. Program income must be
used for the original purpose of the
Federal award. Program income earned
during the period of performance may
only be used for costs incurred during
the period of performance or allowable
closeout costs. Program income must be
expended prior to requesting additional
Federal funds. Program income
exceeding amounts specified in the
Federal award may be added to or
deducted from the total allowable costs
in accordance with the terms and
conditions of the Federal award.
(b) Use of program income. There are
three methods of applying program
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income: deduction; addition; and costsharing. The Federal agency should
specify how program income will be
used in the terms and conditions of the
Federal award. The deduction method
will be used if the Federal agency does
not specify a method for applying
program income. However, the addition
method will be used when no method
is specified for awards made to
institutions of higher education (IHE)
and nonprofit research institutions. In
specifying alternatives to the deduction
and addition methods, the Federal
agency may distinguish between income
earned by the recipient and income
earned by subrecipients as well as
between the sources, kinds, or amounts
of income.
(1) Deduction. Program income is
deducted from the total allowable costs,
reducing the overall total amount of the
Federal award.
(2) Addition. Program income is
added to the total allowable costs,
increasing the overall total amount of
the Federal award. If no program
income method is specified in the
Federal award, prior approval is
required to use the addition method.
(3) Cost sharing. Program income is
used to meet the Federal award’s cost
sharing requirement. If no program
income method is specified in the
Federal award, prior approval is
required to use the cost sharing method.
(c) Income after the period of
performance. There are no requirements
governing the disposition of program
income earned after the end of the
period of performance of the Federal
award unless stipulated in the Federal
agency regulations or the terms and
conditions of the Federal award. The
Federal agency may negotiate
agreements with recipients regarding
appropriate uses of income earned after
the end of the period of performance as
part of the closeout process. See
§ 200.344.
(d) Cost of generating program
income. If authorized by Federal
regulations or the Federal award, costs
incidental to generating program income
may be deducted from gross income to
determine program income, provided
these costs have not been charged to the
Federal award.
(e) Not considered program income.
The following are not considered
program income unless specified in
Federal statutes, regulations, or the
terms and conditions of the Federal
award:
(1) Governmental revenues. Taxes,
special assessments, levies, fines, and
similar revenues the recipient or
subrecipient raised.
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(2) Property. Proceeds from the sale of
real property, equipment, or supplies.
The proceeds must be handled in
accordance with the requirements of the
Property Standards of §§ 200.311,
200.313, 200.314, or as explicitly
identified in Federal statutes,
regulations, or the terms and conditions
of the Federal award.
(3) License fees and royalties. License
fees and royalties for copyrighted
material, patents, patent applications,
trademarks, and inventions made under
the Federal award subject to 37 CFR part
401.
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§ 200.308
plans.
Revision of budget and program
(a) Approved budget in general. The
approved budget for the Federal award
summarizes the financial aspects of the
project or program as approved during
the Federal award process. It may
include the Federal share, non-Federal
share, or both depending upon Federal
agency requirements.
(b) Deviations from approved budget.
The recipient or subrecipient must
report deviations from the approved
budget, project or program scope, or
objective(s) in accordance with
§ 200.329. The recipient or subrecipient
must request prior approvals from the
Federal agency or pass-through entity
for budget and program plan revisions
in accordance with this section.
(c) Requesting approval for budget
revisions. When requesting approval for
budget revisions, the recipient or
subrecipient must use the same format
for budget information that was used in
their application. However, the Federal
agency or pass-through entity may
inform the recipient or subrecipient that
a letter of request is sufficient.
(d) Federal agency or pass-through
entity review. The Federal agency or
pass-through entity must review the
request for budget or program plan
revision and notify the recipient or
subrecipient whether the revisions have
been approved within 30 days of receipt
of the request. The Federal agency or
pass-through entity must inform the
recipient or subrecipient in writing
when a decision can be expected if more
than 30 days is required for a review.
(e) Limitation on other prior approval
requirements. Unless specified in this
guidance, the Federal agency may not
impose other prior approval
requirements for specific items not
approved by OMB. See also §§ 200.102
and 200.407.
(f) Revisions Requiring Prior
Approval. A recipient or subrecipient
must request prior written approval
from the Federal agency or pass-through
entity for the following reasons:
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(1) Change in the scope or the
objective of the project or program (even
if there is no associated budget revision
requiring prior written approval).
(2) Change in key personnel specified
in the recipient’s or subrecipient’s
application and included in the Federal
award.
(3) The disengagement from a project
for more than three months, or a 25
percent reduction in time and effort
devoted to the Federal award over the
course of the period of performance, by
the approved project director or
principal investigator.
(4) Incurring costs that require prior
approval in accordance with subpart E.
The Federal agency may waive prior
approval of these costs when the costs
requiring prior approval are included in
the recipient’s or subrecipient’s
application, and also included in the
Federal award.
(5) The transfer of funds budgeted for
participant support costs to other budget
categories.
(6) Subaward activities not proposed
in the application and approved in the
Federal award. A change in subrecipient
only requires prior approval if the
Federal agency or pass-through entity
includes the requirement in the terms
and conditions of the Federal award. In
general, a Federal agency or passthrough entity should not require prior
approval of a change to the subrecipient
unless the inclusion was a determining
factor in the merit review or eligibility
process. This requirement does not
apply to acquiring equipment, supplies,
or general support services.
(7) Changes in the total approved costsharing amount.
(8) Requesting additional Federal
funds to complete the project. If
approved, the Federal agency must
ensure that adequate funds are available
to avoid a violation of the
Antideficiency Act.
(9) Transferring funds between the
construction and nonconstruction work
under a Federal award.
(10) A no-cost extension (meaning, an
extension of time that requires no
additional Federal funds) of the period
of performance, other than any one-time
extension authorized by the Federal
agency in accordance with paragraph
(g)(2). All requests for no-cost
extensions should be submitted at least
10 calendar days before the conclusion
of the period of performance. The
Federal agency may approve multiple
no-cost extensions under a Federal
award if not prohibited by Federal
statute or regulation.
(g) Waiver of certain prior approvals.
Except for the requirements listed in
paragraphs (f)(1) through (10), the
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69449
Federal agency is authorized to waive
other prior written approvals contained
in subparts D and E. Such waivers may
include authorizing recipients to do one
or more of the following:
(1) Pre-award costs. Incur project
costs 90 calendar days before the
Federal award date. Expenses incurred
more than 90 calendar days before the
Federal award date requires prior
approval of the Federal agency. All costs
incurred before the Federal award date
are at the recipient’s own risk (for
example, the Federal agency is not
required to reimburse such costs if the
recipient does not receive the Federal
award or if the Federal award is less
than anticipated and inadequate to
cover such costs). Pre-award costs must
be charged to the initial budget period
of the Federal award unless otherwise
specified by the Federal agency. See
also § 200.458.
(2) One-time extensions. Initiate a
one-time extension of the period of
performance by up to 12 months unless
one or more of the conditions outlined
in paragraphs (g)(2)(i) through (iii) of
this section apply. Prior approval is not
required if a recipient is authorized in
the terms and conditions of the Federal
award to initiate a one-time extension.
However, the recipient must notify the
Federal agency in writing with the
supporting justification and a revised
period of performance at least 10
calendar days before the conclusion of
the period of performance. A one-time
extension may not be exercised for the
sole purpose of using unobligated
balances. This paragraph does not
preclude the Federal agency from
approving further no-cost extensions to
the Federal award. One-time extensions
require prior approval from the Federal
agency when:
(i) The terms and conditions of the
Federal award prohibit the extension.
(ii) The extension requires additional
Federal funds.
(iii) The extension involves any
change in the approved scope of the
project.
(3) Unobligated Balances. Carry
forward unobligated balances to
subsequent budget periods.
(h) Prior approvals for research
awards. The prior approval
requirements described in paragraph (g)
are automatically waived for Federal
awards that support research unless
stipulated in the Federal agency’s
regulations or terms and conditions of
the Federal award. However, one-time
extensions require the Federal agency’s
prior approval when one of the
conditions in paragraph (g)(2) of this
section applies.
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(i) Awards above the Simplified
Acquisition Threshold. The Federal
agency cannot permit a transfer that
would cause any Federal appropriation
to be used for purposes other than those
consistent with the appropriation. The
Federal agency may restrict the transfer
of funds among direct cost categories
(for example, personnel, travel, and
supplies) or programs, functions, and
activities when:
(1) The Federal share of the Federal
award exceeds the simplified
acquisition threshold; and
(2) The cumulative amount of a
transfer exceeds 10 percent of the total
budget, including cost share, as last
approved by the Federal agency.
§ 200.309 Modifications to Period of
Performance.
When the Federal agency or passthrough entity extends the Federal
award, the period of performance will
be amended to end at the completion of
the extension. When the Federal agency
decides not to continue a Federal award
with multiple budget periods, the
period of performance will be amended
to end at the completion of the
authorized budget period. If termination
occurs, the period of performance will
be amended to end upon the effective
date of termination. A renewal award
means an award made after the
expiration of a Federal award for which
the start date is contiguous with, or
closely follows, the end of the expiring
Federal award. The start date of a
renewal award begins a new and
distinct period of performance.
Property Standards
§ 200.310
Insurance coverage.
The recipient or subrecipient must, at
a minimum, provide the equivalent
insurance coverage for real property and
equipment acquired or improved with
Federal funds as provided to property
and equipment owned by the recipient
or subrecipient. Insurance is not
required for Federally-owned property
unless required by the terms and
conditions of the Federal award.
ddrumheller on DSK120RN23PROD with PROPOSALS2
§ 200.311
Real property.
(a) Title. Subject to the requirements
and conditions set forth in this section,
title to real property acquired or
improved under the Federal award will
vest upon acquisition in the recipient or
subrecipient.
(b) Use. Except as otherwise provided
by Federal statutes or the Federal
agency, real property must be used for
the originally-authorized purpose as
long as it is needed for that purpose.
While the property is being used for the
originally-authorized purpose, the
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recipient or subrecipient must not
dispose of or encumber its title or other
interests except as provided by the
Federal agency. An encumbrance is a
claim or liability that is attached to the
property or some other right held by a
party that is not the owner. An
encumbrance may lessen the value of
the property and restrict its free use
until the encumbrance is lifted.
(c) Appraisals. Appraisals of real
property must be as conducted by an
independent appraiser (for example,
certified real property appraiser or
General Services Administration
representative) and certified by a
responsible official of the recipient or
subrecipient as required by the Uniform
Relocation Assistance and Real Property
Acquisition Policies Act of 1970, as
amended, (42 U.S.C. 4601–4655) except
as provided in the implementing
regulations at 49 CFR part 24, ‘‘Uniform
Relocation Assistance And Real
Property Acquisition For Federal And
Federally-Assisted Programs.’’
(d) Disposition. When real property is
no longer needed for the originallyauthorized purpose, the recipient or
subrecipient must obtain disposition
instructions from the Federal agency or
pass-through entity. The instructions
must specify one of the following
disposition methods:
(1) Retain title after compensating the
Federal agency. When the recipient or
subrecipient retains title to the property,
it must pay the Federal agency an
amount calculated by multiplying the
percentage of the Federal agency’s
contribution towards the original
purchase (and costs of any
improvements) by the current fair
market value of the property. However,
in situations where the recipient or
subrecipient is disposing of real
property acquired or improved with the
Federal award and acquiring
replacement real property under the
same Federal award, the net proceeds
from the disposition may be used as an
offset to the cost of the replacement
property.
(2) Sell the property and compensate
the Federal agency. When a recipient or
subrecipient sells the property, it must
pay the Federal agency an amount
calculated by multiplying the
percentage of the Federal agency’s
contribution towards the original
purchase (and cost of any
improvements) by the proceeds of the
sale after deducting any actual and
reasonable expenses paid to sell or fix
up the property for sale. When the
Federal award has not been closed out,
the net proceeds from the sale may be
offset against the original cost of the
property. When directed to sell the
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property, the recipient or subrecipient
must sell the property utilizing
procedures that provide for competition
to the extent practicable and that results
in the highest possible return.
(3) Transfer title to the Federal agency
or a third party designated/approved by
the Federal agency. When a recipient or
subrecipient transfers title to the
property to a Federal agency or third
party designated or approved by the
Federal agency, the recipient or
subrecipient is entitled to be paid an
amount calculated by multiplying the
percentage of the recipient’s or
subrecipient’s contribution towards the
original purchase of the real property
(and cost of any improvements) by the
current fair market value of the
property.
§ 200.312
property.
Federally owned and exempt
(a) Title to Federally-owned property
remains vested in the Federal
Government. The recipient or
subrecipient must submit an inventory
listing of Federally owned property in
its custody to the Federal agency or
pass-through entity on an annual basis.
The recipient or subrecipient must
request disposition instructions from
the Federal agency or pass-through
entity upon completion of the Federal
award or when the property is no longer
needed.
(b) If the Federal agency has no
further need for the property, it must
declare the property excess and report it
for disposal to the appropriate Federal
disposal authority unless the Federal
agency has statutory authority to
dispose of the property by alternative
methods (for example, the authority
provided by the Federal Technology
Transfer Act (15 U.S.C. 3710(i)). The
Federal agency or pass-through entity
must issue appropriate instructions to
the recipient or subrecipient.
(c) Exempt property means property
acquired under the Federal award where
the Federal agency has chosen to vest
title to the property to the recipient or
subrecipient without further
responsibility to the Federal
Government. The Federal agency may
only exercise this option when
permitted by Federal statute and set
forth in the terms and conditions of the
Federal award. Absent statutory
authority and specific terms and
conditions of the Federal award, the
title to exempt property acquired under
the Federal award remains with the
Federal Government.
§ 200.313
Equipment.
See also § 200.439.
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(a) Title. Title to equipment acquired
under the Federal award will vest upon
acquisition in the recipient or
subrecipient subject to the conditions of
this section. This title must be a
conditional title unless a Federal statute
specifically authorizes the Federal
agency to vest title in the recipient or
subrecipient without further
responsibility to the Federal
Government (and the Federal agency
elects to do so). A conditional title
means a clear title is withheld by the
Federal agency until conditions and
requirements specified in the terms and
conditions of a Federal award have been
fulfilled. Title for equipment vested in
a recipient or subrecipient is subject to
the following conditions:
(1) Use the equipment for the
authorized purposes of the project
during the period of performance or
until the property is no longer needed
for the purposes of the project.
(2) While the equipment is being used
for the originally-authorized purpose,
the recipient or subrecipient must not
dispose of or encumber its title or other
interests without the approval of the
Federal agency or pass-through entity.
An encumbrance is a claim or liability
that is attached to the property or some
other right held by a party that is not the
owner. An encumbrance may lessen the
value of the property and restrict its free
use until the encumbrance is lifted.
(3) Use and dispose of the property in
accordance with paragraphs (b), (c), and
(e) of this section.
(b) General. A State must use, manage
and dispose of equipment acquired
under a Federal award in accordance
with State laws and procedures. Indian
Tribes must use, manage, and dispose of
equipment acquired under a Federal
award in accordance with tribal laws
and procedures. If such laws and
procedures do not exist, Indian Tribes
must follow the guidance in this
section. Other recipients and
subrecipients must follow paragraphs
(c) through (e) of this section.
(c) Use. (1) The recipient or
subrecipient must use equipment for the
project or program for which it was
acquired and for as long as needed,
whether or not the project or program
continues to be supported by the
Federal award. The recipient or
subrecipient must not encumber the
equipment without prior approval of the
Federal agency or pass-through entity.
The Federal agency may require the
submission of the applicable common
forms for reporting on equipment. When
no longer needed for the original project
or program, the equipment may be used
in other activities in the following order
of priority:
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(i) Activities under other Federal
awards from the Federal agency that
funded the original project; then
(ii) Activities under Federal awards
from other Federal agencies. These
activities include consolidated
equipment for information technology
systems.
(2) During the time that equipment is
used on the project or program for
which it was acquired, the recipient or
subrecipient must also make the
equipment available for use on other
programs or projects supported by the
Federal Government, provided that such
use will not interfere with the purpose
for which it was originally acquired.
First preference for other use of the
equipment must be given to other
programs or projects supported by the
Federal agency that financed the
equipment. Second preference must be
given to programs or projects under
Federal awards from other Federal
agencies. Use for non-federally-funded
projects is also permissible, provided
such use will not interfere with the
purpose for which it was originally
acquired. The recipient or subrecipient
should consider charging user fees as
appropriate.
(3) Notwithstanding the
encouragement in § 200.307 to earn
program income, the recipient or
subrecipient must not use equipment
acquired with the Federal award to
provide services for a fee that is less
than a private company would charge
for similar services. This restriction is
effective as long as the Federal
Government retains an interest in the
equipment or as authorized by Federal
statute.
(4) When acquiring replacement
equipment, the recipient or subrecipient
may either trade-in or sell the
equipment and use the proceeds to
offset the cost of the replacement
equipment.
(d) Management requirements.
Regardless of whether equipment is
acquired in part or its entirety under the
Federal award, the recipient or
subrecipient must manage equipment
(including replacing equipment)
utilizing procedures that meet the
following requirements:
(1) Property records must include a
description of the property, a serial
number or another identification
number, the source of funding for the
property (including the FAIN), the title
holder, the acquisition date, the cost of
the property, the percentage of the
Federal agency contribution towards the
original purchase, the location, use and
condition of the property, and any
disposition data including the date of
disposal and sale price of the property.
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The recipient is responsible for
maintaining and updating property
records when there is a change in the
status of the property.
(2) A physical inventory of the
property must be conducted, and the
results must be reconciled with the
property records at least once every two
years.
(3) A control system must be in place
to ensure safeguards for preventing
property loss, damage, or theft. Any
loss, damage, or theft of equipment must
be investigated and reported to the
Federal agency or pass-through entity.
(4) Regular maintenance procedures
must be in place to ensure the property
is in proper working condition.
(5) If the recipient or subrecipient is
authorized or required to sell the
property, proper sales procedures must
be in place to ensure the highest
possible return.
(e) Disposition. When equipment
acquired under a Federal award is no
longer needed for the original project,
program, or for other activities currently
or previously supported by a Federal
agency, the recipient or subrecipient
must request disposition instructions
from the Federal agency or pass-through
entity if required by the terms and
conditions of the Federal award.
Disposition of the equipment will be
made as follows, in accordance with
Federal agency or pass-through entity
disposition instructions:
(1) Equipment with a current fair
market value of $10,000 or less (per
unit) may be retained, sold, or otherwise
disposed of with no further
responsibility to the Federal agency or
pass-through entity.
(2) Except as provided in § 200.312(b),
or if the Federal agency or pass-through
entity fails to provide requested
disposition instructions within 120
days, items of equipment with a current
fair market value in excess of $10,000
(per-unit) may be retained or sold by the
recipient or subrecipient. However, the
Federal agency is entitled to an amount
calculated by multiplying the
percentage of the Federal agency’s
contribution towards the original
purchase by the current market value or
proceeds from the sale. If the equipment
is sold, the Federal agency or passthrough entity may permit the recipient
or subrecipient to retain $1,000 or 10
percent (whichever is less) from the
Federal share of the proceeds to cover
expenses associated with the selling and
handling of the equipment.
(3) The recipient or subrecipient may
transfer title to the property to the
Federal Government or to an eligible
third party provided that the recipient
or subrecipient must be entitled to
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compensation for its attributable
percentage of the current fair market
value of the property.
(4) In cases where a recipient or
subrecipient fails to take appropriate
disposition actions, the Federal agency
or pass-through entity may direct the
recipient or subrecipient to take
disposition actions.
(f) Equipment retention. When
included in the terms and conditions of
the Federal award, the Federal agency
may permit the recipient to retain
equipment with no further obligation to
the Federal Government unless
prohibited by Federal statute or
regulation.
ddrumheller on DSK120RN23PROD with PROPOSALS2
§ 200.314
Supplies.
See also § 200.453.
(a) Title to supplies acquired under
the Federal award will vest upon
acquisition in the recipient or
subrecipient. When there is a residual
inventory of unused supplies exceeding
$10,000 in aggregate value at the end of
the period of performance, and the
supplies are not needed for any other
Federal award, the recipient or
subrecipient may retain or sell the
unused supplies. Unused supplies
means supplies that are in new
condition, not having been used or
opened before. The aggregate value of
unused supplies consists of all supply
types, not just like-item supplies. The
Federal agency or pass-through entity is
entitled to compensation in an amount
calculated by multiplying the
percentage of the Federal agency’s or
pass-through-through entity’s
contribution towards the cost of the
original purchase(s) by the current
market value or proceeds from the sale.
If the supplies are sold, the Federal
agency or pass-through entity may
permit the recipient or subrecipient to
retain $500 or 10 percent (whichever is
less) from the Federal share of the
proceeds to cover expenses associated
with the selling and handling of the
supplies.
(b) Unless expressly authorized by
Federal statute, the recipient or
subrecipient must not use supplies
acquired with the Federal award to
provide services for a fee that is less
than a private company would charge
for similar services. This restriction is
effective as long as the Federal
Government retains an interest in the
supplies or as authorized by Federal
statute.
§ 200.315
Intangible property.
(a) Title to intangible property
acquired under a Federal award vest
upon acquisition in the recipient or
subrecipient. The recipient or
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subrecipient must use that intangible
property for the originally-authorized
purpose and must not encumber the
property without the approval of the
Federal agency or pass-through entity.
An encumbrance is a claim or liability
that is attached to the property or some
other right held by a party that is not the
owner. An encumbrance may lessen the
value of the property and restrict its free
use until the encumbrance is lifted.
When no longer needed for the
originally-authorized purpose,
disposition of the intangible property
must occur in accordance with the
provisions in § 200.313(e).
(b) To the extent permitted by law, the
recipient or subrecipient is not
prohibited from asserting any copyright
it may own in any work resulting from
or acquired under the Federal award. To
the extent permitted by law, the Federal
agency reserves a royalty-free,
nonexclusive, and irrevocable right to
reproduce, publish, or otherwise use the
work for Federal purposes and to
authorize others to do so. This includes
the right to require recipients and
subrecipients to make such works
available through agency-designated
public access repositories.
(c) The recipient or subrecipient is
subject to applicable regulations
governing patents and inventions,
including government-wide regulations
in 37 CFR 401.
(d) The Federal Government has the
right to:
(1) Obtain, reproduce, publish, or
otherwise use the data produced under
a Federal award; and
(2) Authorize others to receive,
reproduce, publish, or otherwise use the
data for Federal purposes.
(e)(1) The recipient or subrecipient
must provide research data relating to
published research findings produced
under the Federal award and that were
used by the Federal Government in
developing an agency action that has the
force and effect of law if requested by
the Federal agency in response to a
Freedom of Information Act (FOIA)
request. When the Federal agency
obtains the research data solely in
response to a FOIA request, the Federal
agency may charge the requester a fee
for the cost of obtaining the research
data. This fee should reflect the costs
incurred by the Federal agency and the
recipient or subrecipient. This fee is in
addition to any fees the Federal agency
may assess under the FOIA (5 U.S.C.
552(a)(4)(A)).
(2) Published research findings mean:
(i) Research findings published in a
peer-reviewed scientific or technical
journal; or
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(ii) Research findings publicly cited
by a Federal agency in developing an
agency action that has the force and
effect of law.
(3) Research data means the recorded
factual material commonly accepted in
the scientific community as necessary to
validate research findings. Research
data does not include any of the
following:
(i) Preliminary analyses, drafts of
scientific papers, plans for future
research, peer reviews, or
communications with colleagues. This
‘‘recorded’’ material excludes physical
objects (for example, laboratory
samples).
(ii) Trade secrets, commercial
information, materials necessary to be
held confidential by a researcher until
they are published, or similar
information which is protected under
law; and
(iii) Personnel, medical, and other
personally identifiable information that,
if disclosed, would constitute an
invasion of personal privacy.
Information that could identify a
particular person in a research study is
not considered research data.
§ 200.316
Property trust relationship.
Real property, equipment, and
intangible property acquired or
improved with the Federal award must
be held in trust by the recipient or
subrecipient as trustee for the
beneficiaries of the project or program
under which the property was acquired
or improved. The Federal agency or
pass-through entity may require the
recipient or subrecipient to record liens
or other appropriate notices of record to
indicate that personal or real property
has been acquired or improved with a
Federal award and that use and
disposition conditions apply to the
property.
Procurement Standards
§ 200.317 Procurements by States and
Indian Tribes.
When conducting procurement
transactions under a Federal award, a
State or Indian Tribe must follow the
same policies and procedures it uses for
procurements with non-Federal funds. If
such policies and procedures do not
exist, States and Indian Tribes must
follow the procurement standards in
§§ 200.318 through 200.327. In addition
to its own policies and procedures, a
State or Indian Tribe must also comply
with the following procurement
standards: §§ 200.321, 200.322, 200.323,
and 200.327. All other recipients and
subrecipients, including subrecipients
of a State, must follow the procurement
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standards in §§ 200.318 through
200.327.
ddrumheller on DSK120RN23PROD with PROPOSALS2
§ 200.318
General procurement standards.
(a) Documented procurement
procedures. The recipient or
subrecipient must maintain and use
documented procedures for
procurement transactions under a
Federal award or subaward, including
for acquisition of property or services.
These documented procurement
procedures must be consistent with
State, local, and tribal laws and
regulations and the standards identified
in §§ 200.317 through 200.327.
(b) Oversight of contractors.
Recipients and subrecipients must
maintain oversight to ensure that
contractors perform in accordance with
the terms, conditions, and specifications
of their contracts or purchase orders.
(c) Conflicts of interest. (1) The
recipient or subrecipient must maintain
written standards of conduct covering
conflicts of interest and governing the
actions of its employees engaged in the
selection, award, and administration of
contracts. No employee, officer, agent,
or board member with a real or apparent
conflict of interest may participate in
the selection, award, or administration
of a contract supported by the Federal
award. A conflict of interest includes
when the employee, officer, or agent,
any member of their immediate family,
their partner, or an organization that
employs or is about to employ any of
the parties indicated herein, has a
financial or other interest in or a
tangible personal benefit from an entity
considered for a contract. An employee,
officer, and agent of the recipient or
subrecipient may neither solicit nor
accept gratuities, favors, or anything of
monetary value from contractors.
However, the recipient or subrecipient
may set standards for situations where
the financial interest is not substantial
or a gift is an unsolicited item of
nominal value. The recipient’s or
subrecipient’s standards of conduct
must also provide for disciplinary
actions to be applied for violations by
its employees, officers, agents, or board
members.
(2) If the recipient or subrecipient has
a parent, affiliate, or subsidiary
organization that is not a State or Indian
Tribe, the recipient or subrecipient must
also maintain written standards of
conduct covering organizational
conflicts of interest. Organizational
conflicts of interest mean that because
of relationships with a parent company,
affiliate, or subsidiary organization, the
recipient or subrecipient is unable or
appears to be unable to be impartial in
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conducting a procurement action
involving a related organization.
(d) Avoidance of unnecessary or
duplicative items. The recipient’s or
subrecipient’s procedures must avoid
the acquisition of unnecessary or
duplicative items. Consideration should
be given to consolidating or breaking
out procurements to obtain a more
economical purchase. When
appropriate, an analysis should be made
between leasing and purchasing
property or equipment to determine the
most economical approach.
(e) Procurement arrangements using
strategic sourcing. When appropriate for
the procurement or use of common or
shared goods and services, recipients
and subrecipients are encouraged to
enter into State and local
intergovernmental agreements or interentity agreements for procurement
transactions. These or similar
procurement arrangements using
strategic sourcing may foster greater
economy and efficiency. Documented
procurement actions of this type (using
strategic sourcing, shared services, and
other similar procurement
arrangements) will meet the competition
requirements of this part.
(f) Use of excess and surplus Federal
property. The recipient or subrecipient
is encouraged to use excess and surplus
Federal property instead of purchasing
new equipment and property when it is
feasible and reduces project costs.
(g) Use of value engineering clauses.
When practical, the recipient or
subrecipient is encouraged to use value
engineering clauses in contracts for
construction projects of sufficient size to
offer reasonable opportunities for cost
reductions. Value engineering means
analyzing each contract item or task to
ensure its essential function is provided
at the overall lowest cost.
(h) Responsible contractors. The
recipient or subrecipient must award
contracts only to responsible contractors
that possess the ability to perform
successfully under the terms and
conditions of a proposed contract. The
recipient or subrecipient must consider
contractor integrity, public policy
compliance, proper classification of
employees (see the Fair Labor Standards
Act, 29 U.S.C. 201, chapter 8), past
performance record, and financial and
technical resources when conducting a
procurement transaction. See also
§ 200.214.
(i) Procurement records. The recipient
or subrecipient must maintain records
sufficient to detail the history of each
procurement transaction. These records
must include the rationale for the
procurement method, contract type
selection, contractor selection or
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rejection, and the basis for the contract
price.
(j) Time-and-materials type contracts.
(1) The recipient or subrecipient may
use a time-and-materials type contract
only after a determination that no other
contract is suitable and if the contract
includes a ceiling price that the
contractor exceeds at its own risk. Timeand-materials type contract means a
contract whose cost to a recipient or
subrecipient is the sum of:
(i) The actual cost of materials; and
(ii) Direct labor hours charged at fixed
hourly rates that reflect wages, general
and administrative expenses, and profit.
(2) Because this formula generates an
open-ended contract price, a time-andmaterials contract provides no positive
profit incentive to the contractor for cost
control or labor efficiency. Therefore,
each contract must set a ceiling price
that the contractor exceeds at its own
risk. Further, the recipient or
subrecipient awarding such a contract
must assert a high degree of oversight to
obtain reasonable assurance that the
contractor is using efficient methods
and effective cost controls.
(k) Settlement of contractual and
administrative issues. The recipient or
subrecipient is responsible for the
settlement of all contractual and
administrative issues arising out of its
procurement transactions. These issues
include but are not limited to, source
evaluation, protests, disputes, and
claims. In resolving these issues, the
Federal agency may not substitute its
judgment for that of the recipient or
subrecipient unless the matter is
primarily a Federal concern. Proper
oversight does not relieve the recipient
or subrecipient of any of its contractual
responsibilities. Violations of law must
be referred to the Federal, State, or local
authority with proper jurisdiction.
(l) Examples of labor and employment
practices. The procurement standards in
this subpart do not prohibit recipients
or subrecipients from using Project
Labor Agreements (PLAs) or similar
forms of pre-hire collective bargaining
agreements; requiring construction
contractors to use hiring preferences or
goals for people residing in high-poverty
areas, disadvantaged communities as
defined by the Justice40 Initiative OMB
Memorandum M–21–28, or highunemployment census tracts within a
region no smaller than the county where
a federally funded construction project
is located, consistent with the policies
and procedures of the recipient or
subrecipient, provided that a recipient
or subrecipient may not prohibit
interstate hiring; requiring a contractor
to use hiring preferences or goals for
individuals with barriers to employment
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(as defined in section 3 of the Workforce
Innovation and Opportunity Act (29
U.S.C. 3102(24)), including women and
people from underserved communities
as defined by Executive Order 13985;
using agreements intended to ensure
uninterrupted delivery of services; using
agreements intended to ensure
community benefits; or offering
employees of a predecessor contractor
rights of first refusal under a new
contract. Federal agencies may allow
recipients and subrecipients to use such
practices if consistent with the U.S.
Constitution, applicable Federal statutes
and regulations, the objectives and
purposes of the applicable Federal
financial assistance program, and other
requirements of this part.
ddrumheller on DSK120RN23PROD with PROPOSALS2
§ 200.319
Competition.
(a) All procurement transactions
under the Federal award must be
conducted in a manner that provides
full and open competition and is
consistent with the standards of this
section and § 200.320.
(b) To ensure objective contractor
performance and eliminate unfair
competitive advantage, contractors that
assist recipients and subrecipients with
developing or drafting specifications,
requirements, statements of work, or
invitations for bids must be excluded
from competing on those procurements.
(c) Examples of requirements that may
restrict competition include, but are not
limited to:
(1) Placing unreasonable requirements
on firms for them to qualify to do
business;
(2) Requiring unnecessary experience
and excessive bonding;
(3) Noncompetitive pricing practices
between firms or between affiliated
companies;
(4) Noncompetitive contracts to
consultants that are on retainer
contracts;
(5) Organizational conflicts of interest;
(6) Specifying only a ‘‘brand name’’
product instead of allowing ‘‘an equal’’
product to be offered and describing the
performance or other relevant
requirements of the procurement; and
(7) Any arbitrary action in the
procurement process.
(d) The recipient or subrecipient must
have written procedures for
procurement transactions. These
procedures must ensure that all
solicitations:
(1) Are made in accordance with
§ 200.319(b);
(2) Incorporate a clear and accurate
description of the technical
requirements for the property,
equipment, or service being procured.
The description may include a
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statement of the qualitative nature of the
property, equipment, or service to be
procured. When necessary, the
description must provide minimum
essential characteristics and standards
to which the property, equipment, or
service must conform. Detailed product
specifications should be avoided if at all
possible. When it is impractical or
uneconomical to clearly and accurately
describe the technical requirements, a
‘‘brand name or equivalent’’ description
of features may be used to provide
procurement requirements. The specific
features of the named brand must be
clearly stated; and
(3) Identify any additional
requirements which the offerors must
fulfill and all other factors that will be
used in evaluating bids or proposals.
(e) The recipient or subrecipient must
ensure that all prequalified lists of
persons, firms, or products used in
procurement transactions are current
and include enough qualified sources to
ensure maximum open competition.
When establishing or amending
prequalified lists, the recipient or
subrecipient must consider objective
factors that evaluate price and cost to
maximize competition. The recipient or
subrecipient must not preclude
potential bidders from qualifying during
the solicitation period.
(f) To the extent consistent with
established practices and legal
requirements applicable to the recipient
or subrecipient, this subpart does not
prohibit recipients or subrecipients from
developing written procedures for
procurement transactions that
incorporate a scoring mechanism that
rewards bidders that commit to specific
numbers and types of U.S. jobs,
minimum compensation, benefits, onthe-job-training for employees making
work or products providing services on
a contract, and other worker protections.
This subpart also does not prohibit
recipients and subrecipients from
making inquiries of bidders about these
subjects and assessing the responses.
Any scoring mechanism must be
consistent with the U.S. Constitution,
applicable Federal statutes and
regulations, and the terms and
conditions of the Federal award.
(g) Noncompetitive procurements can
only be awarded in accordance with
§ 200.320(c).
§ 200.320
Procurement Methods.
There are three types of procurement
methods described in this section:
informal procurement methods (for
micro-purchases and simplified
acquisitions); formal procurement
methods (through sealed bids or
proposals); and noncompetitive
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procurement methods. For any of these
methods, the recipient or subrecipient
must maintain and use documented
procurement procedures, consistent
with the standards of this section and
§§ 200.317, 200.318, and 200.319.
(a) Informal procurement methods for
small purchases. These procurement
methods expedite the completion of
transactions, minimize administrative
burdens, and reduce costs. Informal
procurement methods may be used
when the value of the procurement
transaction under the Federal award
does not exceed the simplified
acquisition threshold as defined in
§ 200.1. Recipients and subrecipients
may also establish a lower threshold.
Informal procurement methods include:
(1) Micro-purchases—(i) Distribution.
The aggregate amount of the
procurement transaction does not
exceed the micro-purchase threshold
defined in § 200.1. To the extent
practicable, the recipient or subrecipient
should distribute micro-purchases
equitably among qualified suppliers.
(ii) Micro-purchase awards. Micropurchases may be awarded without
soliciting competitive price or rate
quotations if the recipient or
subrecipient considers the price
reasonable based on research,
experience, purchase history, or other
information. Purchase cards may be
used as a method of payment for micropurchases.
(iii) Micro-purchase thresholds. The
recipient or subrecipient is responsible
for determining and documenting an
appropriate micro-purchase threshold
based on internal controls, an
evaluation of risk, and its documented
procurement procedures. The micropurchase threshold used by the
recipient or subrecipient must be
authorized or not prohibited under
State, local, or tribal laws or regulations.
The recipient or subrecipient may
establish a threshold higher than the
Federal threshold established in the
Federal Acquisition Regulations (FAR)
in accordance with paragraphs (a)(1)(iv)
and (v) of this section.
(iv) Recipient or subrecipient increase
to the micro-purchase threshold up to
$50,000. The recipient or subrecipient
may establish a threshold higher than
the micro-purchase threshold identified
in the FAR in accordance with the
requirements of this section. The
recipient or subrecipient may selfcertify a threshold up to $50,000 on an
annual basis and must maintain
documentation to be made available to
the Federal agency or pass-through
entity and auditors in accordance with
§ 200.334. The self-certification must
include a justification, clear
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identification of the threshold, and
supporting documentation of any of the
following:
(A) A qualification as a low-risk
auditee, in accordance with the criteria
in § 200.520 for the most recent audit;
(B) An annual internal institutional
risk assessment to identify, mitigate,
and manage financial risks; or,
(C) For public institutions, a higher
threshold is consistent with State law.
(v) Recipient or subrecipient increase
to the micro-purchase threshold over
$50,000. Micro-purchase thresholds
higher than $50,000 must be approved
by the cognizant agency for indirect
costs. The recipient or subrecipient
must submit a request that includes the
requirements in paragraph (a)(1)(iv) of
this section. The increased threshold is
valid until any factor that was relied on
in the establishment and rationale of the
threshold changes.
(2) Simplified acquisitions—(i)
Simplified acquisition procedures. The
aggregate dollar amount of the
procurement transaction is higher than
the micro-purchase threshold but does
not exceed the simplified acquisition
threshold. If simplified acquisition
procedures are used, price or rate
quotations must be obtained from an
adequate number of qualified sources as
determined appropriate by the recipient
or subrecipient.
(ii) Simplified acquisition thresholds.
The recipient or subrecipient is
responsible for determining an
appropriate simplified acquisition
threshold based on internal controls, an
evaluation of risk, and its documented
procurement procedures, which may be
lower than, but not exceed, the
threshold established in the FAR.
(b) Formal procurement methods.
Formal procurement methods are
required when the value of the
procurement transaction under a
Federal award exceeds the simplified
acquisition threshold of the recipient or
subrecipient. Formal procurement
methods are competitive and require
public notice. The following formal
methods of procurement are used for
procurement transactions above the
simplified acquisition threshold
determined by the recipient or
subrecipient in accordance with
paragraph (a)(2)(ii) of this section:
(1) Sealed bids. This is a procurement
method in which bids are publicly
solicited through an invitation and a
firm fixed-price contract (lump sum or
unit price) is awarded to the responsible
bidder whose bid conforms with all the
material terms and conditions of the
invitation and is the lowest in price.
The sealed bids procurement method is
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preferred for procuring construction
services.
(i) For sealed bidding to be feasible,
the following conditions should be
present:
(A) A complete, adequate, and
realistic specification or purchase
description is available;
(B) Two or more responsible bidders
have been identified as willing and able
to compete effectively for the business;
and
(C) The procurement lends itself to a
firm-fixed-price contract, and the
selection of the successful bidder can be
made principally based on price.
(ii) If sealed bids are used, the
following requirements apply:
(A) Bids must be solicited from an
adequate number of qualified sources,
providing them with sufficient response
time prior to the date set for opening the
bids. For local governments, the
invitation for bids must be publicly
advertised.
(B) The invitation for bids must define
the items or services with specific
information, including any required
specifications, for the bidder to properly
respond;
(C) All bids will be opened at the time
and place prescribed in the invitation
for bids. For local governments, the bids
must be opened publicly.
(D) A firm-fixed-price contract is
awarded in writing to the lowest
responsive bid and responsible bidder.
When specified in the invitation for
bids, factors such as discounts,
transportation cost, and life-cycle costs
must be considered in determining
which bid is the lowest. Payment
discounts must only be used to
determine the low bid when the
recipient or subrecipient determines
they are a valid factor based on prior
experience.
(E) The recipient or subrecipient must
document and provide a justification for
all bids it rejects.
(2) Proposals. This is a procurement
method used when conditions are not
appropriate for using sealed bids. This
procurement method may result in
either a fixed-price or costreimbursement contract. They are
awarded in accordance with the
following requirements:
(i) Requests for proposals require
public notice, and all evaluation factors
and their relative importance must be
identified. Proposals must be solicited
from multiple qualified entities. To the
maximum extent practicable, any
proposals submitted in response to the
public notice must be considered.
(ii) The recipient or subrecipient must
have written procedures for conducting
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technical evaluations and making
selections.
(iii) Contracts must be awarded to the
responsible offeror whose proposal is
most advantageous to the recipient or
subrecipient considering price and other
factors; and
(iv) The recipient or subrecipient may
use competitive proposal procedures for
qualifications-based procurement of
architectural/engineering (A/E)
professional services whereby the
offeror’s qualifications are evaluated,
and the most qualified offeror is
selected, subject to negotiation of fair
and reasonable compensation. The
method, where the price is not used as
a selection factor, can only be used to
procure architectural/engineering (A/E)
professional services. The method may
not be used to purchase other services
provided by A/E firms that are a
potential source to perform the
proposed effort.
(c) Noncompetitive procurement.
There are specific circumstances in
which the recipient or subrecipient may
use a noncompetitive procurement
method. The noncompetitive
procurement method may only be used
if one of the following circumstances
apply:
(1) The aggregate amount of the
procurement transaction does not
exceed the micro-purchase threshold
(see paragraph (a)(1) of this section);
(2) The procurement transaction can
only be fulfilled by a single source;
(3) The public exigency or emergency
for the requirement will not permit a
delay resulting from providing public
notice of a competitive solicitation;
(4) The recipient or subrecipient
requests in writing to use a
noncompetitive procurement method,
and the Federal agency or pass-through
entity provides written approval; or
(5) After soliciting several sources,
competition is determined inadequate.
§ 200.321 Contracting with small
businesses, minority businesses, women’s
business enterprises, veteran-owned
businesses, and labor surplus area firms.
(a) When possible, the recipient or
subrecipient should ensure that small
businesses, minority businesses,
women’s business enterprises, veteranowned businesses, and labor surplus
area firms (See U.S. Department of
Labor’s list) are considered as set forth
below.
(b) Such consideration means:
(1) These business types are included
on solicitation lists;
(2) These business types are solicited
whenever they are deemed eligible as
potential sources;
(3) Dividing procurement transactions
into separate procurements to permit
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maximum participation by these
business types;
(4) Establishing delivery schedules
(for example, the percentage of an order
to be delivered by a given date of each
month) that encourage participation by
these business types;
(5) Utilizing organizations such as the
Small Business Administration and the
Minority Business Development Agency
of the Department of Commerce; and
(6) Requiring a contractor under a
Federal award to apply this section to
subcontracts.
§ 200.322 Domestic preferences for
procurements.
(a) The recipient or subrecipient
should, to the greatest extent practicable
and consistent with law, provide a
preference for the purchase, acquisition,
or use of goods, products, or materials
produced in the United States
(including but not limited to iron,
aluminum, steel, cement, and other
manufactured products). The
requirements of this section must be
included in all subawards, contracts,
and purchase orders under Federal
awards.
(b) For purposes of this section:
(1) ‘‘Produced in the United States’’
means, for iron and steel products, that
all manufacturing processes, from the
initial melting stage through the
application of coatings, occurred in the
United States.
(2) ‘‘Manufactured products’’ means
items and construction materials
composed in whole or in part of nonferrous metals such as aluminum;
plastics and polymer-based products
such as polyvinyl chloride pipe;
aggregates such as concrete; glass,
including optical fiber; and lumber.
(c) Federal agencies providing Federal
financial assistance for infrastructure
projects must implement the Buy
America preferences set forth in 2 CFR
part 184.
ddrumheller on DSK120RN23PROD with PROPOSALS2
§ 200.323 Procurement of recovered
materials.
(a) A recipient or subrecipient that is
a State agency or agency of a political
subdivision of a State and its contractors
must comply with section 6002 of the
Solid Waste Disposal Act, as amended
by the Resource Conservation and
Recovery Act of 1976 as amended, 42
U.S.C. 6962. The requirements of
Section 6002 include procuring only
items designated in the guidelines of the
Environmental Protection Agency (EPA)
at 40 CFR part 247 that contain the
highest percentage of recovered
materials practicable, consistent with
maintaining a satisfactory level of
competition, where the purchase price
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of the item exceeds $10,000 or the value
of the quantity acquired during the
preceding fiscal year exceeded $10,000;
procuring solid waste management
services in a manner that maximizes
energy and resource recovery; and
establishing an affirmative procurement
program for procurement of recovered
materials identified in the EPA
guidelines.
(b) The recipient or subrecipient
should, to the greatest extent practicable
and consistent with law, purchase,
acquire, or use products and services
that can be reused, refurbished, or
recycled; contain recycled content, are
biobased, or are energy and water
efficient; and are sustainable. This may
include purchasing compostable items
and other products and services that
reduce the use of single-use plastic
products. See Executive Order 14057,
section 101, Policy.
§ 200.324
Contract cost and price.
(a) The recipient or subrecipient must
perform a cost-benefit or price analysis
for every procurement transaction,
including contract modifications, in
excess of the Simplified Acquisition
Threshold. The method and degree of
analysis conducted depend on the facts
surrounding the particular procurement
transaction. For example, the recipient
or subrecipient should consider
potential workforce impacts in their
analysis if the procurement transaction
will displace public sector employees.
However, as a starting point, the
recipient or subrecipient must develop
their own estimates before receiving
bids or proposals.
(b) Costs or prices based on estimated
costs for contracts under the Federal
award are allowable only to the extent
that the costs incurred or cost estimates
included in negotiated prices would be
allowable for the recipient or
subrecipient under subpart E of this
part. The recipient or subrecipient may
reference its own cost principles as long
as they comply with subpart E of this
part.
(c) The recipient or subrecipient may
not use the ‘‘cost plus a percentage of
cost’’ and ‘‘percentage of construction
costs’’ methods of contracting.
§ 200.325 Federal agency or pass-through
entity review.
(a) The Federal agency or passthrough entity may review the technical
specifications of proposed procurements
under the Federal award if the Federal
agency or pass-through entity believes
the review is needed to ensure that the
item or service specified is the one
being proposed for acquisition. The
recipient or subrecipient must submit
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the technical specifications of proposed
procurements when requested by the
Federal agency or pass-through entity.
This review should take place prior to
the time the specifications are
incorporated into a solicitation
document. When the recipient or
subrecipient desires to accomplish the
review after a solicitation has been
developed, the Federal agency or passthrough entity may still review the
specifications. In those cases, the review
should be limited to the technical
aspects of the proposed purchase.
(b) When requested, the recipient or
subrecipient must provide procurement
documents (such as requests for
proposals, invitations for bids, or
independent cost estimates) to the
Federal agency or pass-through entity
for pre-procurement review. The
Federal agency or pass-through entity
may conduct a pre-procurement review
when:
(1) The recipient’s or subrecipient’s
procurement procedures or operation
fails to comply with the procurement
standards in this part;
(2) The procurement is expected to
exceed the Simplified Acquisition
Threshold and is to be awarded without
competition, or only one bid is expected
to be received in response to a
solicitation;
(3) The procurement is expected to
exceed the Simplified Acquisition
Threshold and specifies a ‘‘brand name’’
product;
(4) The procurement is expected to
exceed the Simplified Acquisition
Threshold, and a sealed bid
procurement is to be awarded to an
entity other than the apparent low
bidder; or
(5) A proposed contract modification
changes the scope of a contract or
increases the contract amount by more
than the Simplified Acquisition
Threshold.
(c) The recipient or subrecipient is
exempt from the pre-procurement
review in paragraph (b) of this section
if the Federal agency or pass-through
entity determines that its procurement
systems comply with the standards of
this part.
(1) The recipient or subrecipient may
request that the Federal agency or passthrough entity review its procurement
system to determine whether it meets
these standards for its system to be
certified. Generally, these reviews must
occur where there is continuous highdollar funding and third-party contracts
are awarded regularly.
(2) The recipient or subrecipient may
self-certify its procurement system.
However, self-certification does not
limit the Federal agency’s or pass-
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through-through entity’s right to review
the system. Under a self-certification
procedure, the Federal agency or passthrough entity may rely on written
assurances from the recipient or
subrecipient that it is complying with
the standards of this part. The recipient
or subrecipient must cite specific
policies, procedures, regulations, or
standards as complying with these
requirements and have its system
available for review.
§ 200.326
Bonding requirements.
The Federal agency or pass-through
entity may accept the recipient’s or
subrecipient’s bonding policy and
requirements for construction or facility
improvement contracts or subcontracts
exceeding the Simplified Acquisition
Threshold. Before doing so, the Federal
agency or pass-through entity must
determine that the Federal interest is
adequately protected. If such a
determination has not been made, the
minimum requirements must be as
follows:
(a) A bid guarantee from each bidder
equivalent to five percent of the bid
price. The bid guarantee must consist of
a firm commitment such as a bid bond,
certified check, or other negotiable
instrument accompanying a bid as
assurance that the bidder will, upon
acceptance of the bid, execute any
required contractual obligations within
the specified timeframe.
(b) A performance bond on the
contractor’s part for 100 percent of the
contract price. A performance bond is a
bond executed in connection with a
contract to secure the fulfillment of all
the contractor’s requirements under a
contract.
(c) A payment bond on the
contractor’s part for 100 percent of the
contract price. A payment bond is a
bond executed in connection with a
contract to assure payment as required
by the law of all persons supplying
labor and material in the execution of
the work provided for under a contract.
§ 200.327
Contract provisions.
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The recipient’s or subrecipient’s
contracts must contain the applicable
provisions described in Appendix II of
this part.
Performance and Financial Monitoring
and Reporting
§ 200.328
Financial reporting.
(a) The Federal agency must only
require OMB-approved governmentwide data elements on recipient
financial reports. At the time of
publication, this consists of the Federal
Financial Report (SF–425); however,
this also applies to any future OMB-
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approved government-wide data
elements available from the OMBdesignated standards lead.
(b) The Federal agency or passthrough entity must collect financial
reports no less than annually. The
Federal agency or pass-through entity
may not collect financial reports more
frequently than quarterly unless a
specific condition has been
implemented in accordance with
§ 200.208. To the extent practicable, the
Federal agency or pass-through entity
should collect financial reports in
coordination with performance reports.
(c) The recipient or subrecipient must
submit financial reports as required by
the Federal award. Reports submitted
annually by the recipient or
subrecipient must be due no later than
90 calendar days after the reporting
period. Reports submitted quarterly or
semiannually must be due no later than
30 calendar days after the reporting
period.
(d) The final financial report
submitted by the recipient must be due
no later than 120 calendar days after the
conclusion of the period of
performance. A subrecipient must
submit a final financial report to a passthrough entity no later than 90 calendar
days after the conclusion of the period
of performance. See also § 200.344. The
Federal agency or pass-through entity
may extend the due date for any
financial report with justification from
the recipient or subrecipient.
§ 200.329 Monitoring and reporting
program performance.
(a) Monitoring by the recipient. The
recipient or subrecipient is responsible
for the oversight of the Federal award.
The recipient or subrecipient must
monitor its activities under Federal
awards to ensure they are compliant
with all requirements and meeting
performance expectations. Monitoring
by the recipient or subrecipient must
cover each program, function, or
activity. See also § 200.332.
(b) Reporting program performance.
The Federal agency must use OMBapproved common information
collections, as applicable, when
requesting performance reporting
information. The Federal agency must
only require OMB-approved
government-wide data elements in
collection of performance information
including Research Performance
Progress Reports if applicable. The
Federal agency or pass-through entity
may not collect performance reports
more frequently than quarterly unless a
specific condition has been
implemented in accordance with
§ 200.208. To the extent practicable, the
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Federal agency or pass-through entity
should collect performance reports in
coordination with financial reports.
When reporting program performance,
the recipient or subrecipient must relate
financial data and project or program
accomplishments to the performance
goals and objectives of the Federal
award. Also, the recipient or
subrecipient must provide cost
information to demonstrate costeffective practices (for example, through
unit cost data) when required by the
terms and conditions of the Federal
award. In some instances (for example,
discretionary research awards), this may
be limited to the requirement to submit
technical performance reports.
Reporting requirements must clearly
indicate a standard against which the
recipient’s or subrecipient’s
performance can be measured. As noted
in OMB Circular A–11, Part 6, Section
280, measures of customer experience
are of co-equal importance as traditional
measures of financial and operational
performance. Reporting requirements
should not solicit information from the
recipient or subrecipient that is not
necessary for the effective monitoring of
the Federal award. Federal agencies
should consult monitoring framework
documents such as the agency’s
Evaluation Plan to make that
determination.
(c) Submitting performance reports.
(1) The recipient or subrecipient must
submit performance reports as required
by the Federal award. Intervals must be
no less frequent than annually nor more
frequent than quarterly except if specific
conditions are applied (See § 200.208).
Reports submitted annually by the
recipient or subrecipient must be due no
later than 90 calendar days after the
reporting period. Reports submitted
quarterly or semiannually must be due
no later than 30 calendar days after the
reporting period. Alternatively, the
Federal agency or pass-through entity
may require annual reports before the
anniversary dates of multiple-year
Federal awards. The final performance
report submitted by the recipient must
be due no later than 120 calendar days
after the period of performance. A
subrecipient must submit a final
performance report to a pass-through
entity no later than 90 calendar days
after the conclusion of the period of
performance. See also § 200.344. The
Federal agency or pass-through entity
may extend the due date for any
performance report with justification
from the recipient or subrecipient.
(2) As applicable, performance reports
should contain information on the
following:
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(i) A comparison of accomplishments
to the objectives of the Federal award
established for the reporting period (for
example, comparing costs to units of
accomplishment). Where performance
trend data and analysis would be
informative to the Federal agency
program, the Federal agency should
include this as a performance reporting
requirement.
(ii) Explanations on why established
goals or objectives were not met; and
(iii) Additional information, analysis,
and explanation of cost overruns or
higher-than-expected unit costs.
(d) Construction performance reports.
Federal agencies or pass-throughthrough entities rely on on-site technical
inspections and certified percentage of
completion data to monitor progress
under Federal awards for construction.
Therefore, the Federal agency or passthrough entity may require additional
performance reports when necessary to
ensure the goals and objectives of
Federal awards are met.
(e) Significant developments. The
recipient or subrecipient must inform
the Federal agency or pass-through
entity of any significant developments
between performance reporting due
dates that could impact the Federal
award. Significant developments
include events that enable meeting
milestones and objectives sooner or at
less cost than anticipated or that
produce different beneficial results than
originally planned. Significant
developments also include problems,
delays, or adverse conditions which will
impact the recipient’s or subrecipient’s
ability to meet milestones or the
objectives of the Federal award. When
significant developments occur that
negatively impact the Federal Award,
the recipient or subrecipient must
include information on their plan for
corrective action and any assistance
needed to resolve the situation.
(f) Site visits. The Federal agency or
pass-through entity may conduct inperson or virtual site visits as
warranted.
(g) Performance report requirement
waiver. The Federal agency may waive
any performance report that is not
necessary to ensure the goals and
objectives of the Federal award are
being achieved.
§ 200.330
Reporting on real property.
The Federal agency or pass-through
entity must require the recipient or
subrecipient to submit at least annual
reports on the status of real property in
which the Federal Government retains
an interest. In instances where the
Federal Government’s interest in the
real property extends for 15 years or
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more, the Federal agency or passthrough entity may require the recipient
or subrecipient to report at various
multi-year frequencies. Reports
submitted at multi-year frequencies may
not exceed a five-year reporting period.
The Federal agency must only require
OMB-approved government-wide data
elements on recipient real property
reports.
Subrecipient Monitoring and
Management
§ 200.331 Subrecipient and contractor
determinations.
An entity may concurrently receive
Federal awards as a recipient, a
subrecipient, and a contractor. The
recipient or subrecipient is responsible
for making case-by-case determinations
to determine whether the entity
receiving Federal funds is a subrecipient
or a contractor. The Federal agency may
require the recipient or subrecipient to
comply with additional guidance to
inform these determinations. The
Federal agency does not have a direct
legal relationship with subrecipients or
contractors of any tier. All of the
characteristics listed below may not be
present in all cases, and some
characteristics from both categories may
be present at the same time. Therefore,
the recipient or subrecipient is
responsible for determining the nature
of an agreement. The substance of the
relationship is more important than the
form of the agreement.
(a) Subrecipients. A subaward is for
the purpose of carrying out a portion of
the Federal award and creates a Federal
financial assistance relationship with a
subrecipient. See the definition of
Subaward in § 200.1. Characteristics
that support the classification of the
entity as a subrecipient include, but are
not limited to, when the entity:
(1) Determines who is eligible to
receive what Federal assistance;
(2) Has its performance measured in
relation to whether the objectives of a
Federal program were met;
(3) Has responsibility for
programmatic decision-making;
(4) Is responsible for adherence to
applicable Federal program
requirements specified in the Federal
award; and
(5) Implements a program for a public
purpose specified in authorizing statute,
as opposed to providing goods or
services for the benefit of the passthrough entity.
(b) Contractors. A contract is for the
purpose of obtaining goods and services
for the recipient’s or subrecipient’s use
and creates a procurement relationship
with a contractor. See the definition of
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contract in § 200.1. Characteristics that
support a procurement relationship
between the recipient or subrecipient
and a contractor include, but are not
limited to, when the contractor:
(1) Provides the goods and services
within normal business operations;
(2) Provides similar goods or services
to many different purchasers;
(3) Normally operates in a competitive
environment;
(4) Provides goods or services that are
ancillary to the implementation of a
Federal program; and
(5) Is not subject to compliance
requirements of a Federal program as a
result of the agreement. However,
similar requirements may apply for
other reasons.
§ 200.332
entities.
Requirements for pass-through
A pass-through entity must:
(a) Confirm in SAM.gov that a
potential subrecipient is not suspended,
debarred, or otherwise excluded from
receiving Federal funds.
(b) Ensure that every subaward is
clearly identified to the subrecipient as
a subaward and includes the
information provided below. A passthrough entity must provide the best
available information when some of the
information below is unavailable. A
pass-through entity must amend a
subaward if additional information
becomes available or data elements
change. Required information includes:
(1) Federal award identification.
(i) Subrecipient’s name (must match
the name associated with its unique
entity identifier);
(ii) Subrecipient’s unique entity
identifier;
(iii) Federal Award Identification
Number (FAIN);
(iv) Federal Award Date;
(v) Subaward Period of Performance
Start and End Date;
(vi) Subaward Budget Period Start and
End Date;
(vii) Amount of Federal Funds
Obligated in the subaward;
(viii) Total Amount of Federal Funds
Obligated to the subrecipient by the
pass-through entity, including the
current financial obligation;
(ix) Total Amount of the Federal
Award committed to the subrecipient by
the pass-through entity;
(x) Federal award project description,
as required by the Federal Funding
Accountability and Transparency Act
(FFATA);
(xi) Name of the Federal agency, passthrough entity, and contact information
for awarding official of the pass-through
entity;
(xii) Assistance Listings title and
number; the pass-through entity must
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identify the dollar amount made
available under each Federal award and
the Assistance Listings Number at the
time of disbursement;
(xiii) Identification of whether the
Federal award is for research and
development; and
(xiv) Indirect cost rate for the Federal
award (including if the de minimis rate
is used in accordance with § 200.414).
(2) All requirements of the subaward,
including requirements imposed by
Federal statutes, regulations, and the
terms and conditions of the Federal
award;
(3) Any additional requirements that
the pass-through entity imposes on the
subrecipient for the pass-through entity
to meet its responsibilities under the
Federal award. This includes
information and certifications (see
§ 200.415) required for submitting
financial and performance reports that
the pass-through entity must provide to
the Federal agency;
(4) Indirect Cost Rate;
(i) An approved indirect cost rate
negotiated between the subrecipient and
the Federal Government. If no approved
rate exists, a pass-through entity must
determine the appropriate rate in
collaboration with the subrecipient. The
indirect cost rate may be either:
(A) An indirect cost rate negotiated
between the pass-through entity and the
subrecipient. These rates may be based
on a prior negotiated rate between a
different pass-through entity and the
subrecipient. In these instances, the
pass-through entity is not required to
collect information justifying the rate
but may elect to do so; or
(B) The de minimis indirect cost rate.
(ii) The pass-through entity must not
require the use of the de minimis
indirect cost rate if the subrecipient has
an approved indirect cost rate
negotiated with the Federal
Government. Subrecipients may elect to
use the cost allocation method to
account for indirect costs in accordance
with § 200.405(d).
(5) A requirement that the
subrecipient permit the pass-through
entity and auditors to access the
subrecipient’s records and financial
statements for the pass-through entity to
fulfill its monitoring requirements; and
(6) Appropriate terms and conditions
concerning the closeout of the
subaward.
(c) Prior to issuing a subaward,
evaluate each subrecipient’s risk of
noncompliance with a subaward to
determine the appropriate subrecipient
monitoring described in paragraph (e) of
this section. When evaluating a
subrecipient’s risk, a pass-through entity
should consider the following:
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(1) The subrecipient’s prior
experience with the same or similar
subawards;
(2) The results of previous audits.
This includes considering whether or
not the subrecipient receives a Single
Audit in accordance with subpart F and
the extent to which the same or similar
subawards have been audited as a major
program;
(3) Whether the subrecipient has new
personnel or new or substantially
changed systems, policies, or
procedures; and
(4) Any Federal agency monitoring
results (for example, if the subrecipient
also receives Federal awards directly
from the Federal agency).
(d) If appropriate, consider
implementing specific conditions in a
subaward described in § 200.208 and
notify the Federal agency of the specific
conditions.
(e) Monitor the activities of a
subrecipient to ensure that a subaward
complies with Federal statutes,
regulations, and the terms and
conditions of the subaward. The passthrough entity is responsible for
monitoring the overall performance of a
subrecipient to ensure that the goals and
objectives of the subaward are achieved.
In monitoring a subrecipient, a passthrough entity must:
(1) Review financial and performance
reports.
(2) Ensure that the subrecipient takes
corrective action on all significant
developments that negatively affect the
subaward. Significant developments
include Single Audit findings related to
the subaward, other audit findings, site
visits, and written notifications from a
subrecipient of adverse conditions
which will impact their ability to meet
the milestones or the objectives of a
subaward. When significant
developments negatively impact the
subaward, a subrecipient must provide
the pass-through entity with
information on their plan for corrective
action and any assistance needed to
resolve the situation.
(3) Issue a management decision for
audit findings pertaining only to the
Federal award provided to the
subrecipient from the pass-through
entity as required by § 200.521.
(4) Resolve audit findings specifically
related to the subaward. However, the
pass-through entity is not responsible
for resolving cross-cutting findings that
apply to the subaward and other Federal
awards or subawards. If a subrecipient
has a current Single Audit report and
has not been excluded from receiving
Federal funding (meaning, has not been
debarred or suspended), the passthrough entity may rely on the
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subrecipient’s cognizant audit agency or
cognizant oversight agency to perform
audit follow-up and make management
decisions related to cross-cutting
findings in accordance with section
§ 200.513(a)(4)(viii). Such reliance does
not eliminate the responsibility of the
pass-through entity to issue subawards
that conform to agency and awardspecific requirements, to manage risk
through ongoing subaward monitoring,
and to monitor the status of the findings
that are specifically related to the
subaward.
(f) Depending upon the pass-through
entity’s assessment of the risk posed by
the subrecipient (as described in
paragraph (c) of this section), the
following monitoring tools may be
useful for the pass-through entity to
ensure proper accountability and
compliance with program requirements
and achievement of performance goals:
(1) Providing subrecipients with
training and technical assistance on
program-related matters;
(2) Performing site visits to review the
subrecipient’s program operations; and
(3) Arranging for agreed-uponprocedures engagements as described in
§ 200.425.
(g) Verify that a subrecipient is
audited as required by subpart F of this
part.
(h) Consider whether the results of a
subrecipient’s audit, on-site reviews, or
other monitoring necessitate
adjustments to the pass-through entity’s
records.
(i) Consider taking enforcement action
against noncompliant subrecipients as
described in § 200.339 and in program
regulations.
§ 200.333
Fixed amount subawards.
With prior written approval from the
Federal agency, the recipient may
provide subawards based on fixed
amounts. Fixed amount subawards must
meet the requirements of § 200.201.
Record Retention and Access
§ 200.334
Record retention requirements.
The recipient or subrecipient must
retain all Federal award records for
three years from the date of submission
of the final financial report. For awards
that are renewed quarterly or annually,
the recipient or subrecipient must retain
records for three years from the date of
submission of the quarterly or annual
financial report, respectively. Records to
be retained include but are not limited
to, financial records, supporting
documentation, and statistical records.
Federal agencies or pass-throughthrough entities may not impose any
other record retention requirements
except for the following:
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(a) The records must be retained until
all litigation, claims, or audit findings
involving the records have been
resolved and final action taken if any
litigation, claim, or audit is started
before the expiration of the three-year
period.
(b) When the recipient or subrecipient
is notified in writing by the Federal
agency or pass-through entity, cognizant
agency for audit, oversight agency for
audit, or cognizant agency for indirect
costs to extend the retention period.
(c) The records for property and
equipment acquired with the support of
Federal funds must be retained for three
years after final disposition.
(d) The three-year retention
requirement does not apply to the
recipient or subrecipient when records
are transferred to or maintained by the
Federal agency.
(e) The records for program income
earned after the period of performance
must be retained for three years from the
end of the recipient’s or subrecipient’s
fiscal year in which the program income
is earned. This only applies if the
Federal agency or pass-through entity
requires the recipient or subrecipient to
report on program income earned after
the period of performance in the terms
and conditions of the Federal award.
(f) The records for indirect cost rate
computations or proposals, cost
allocation plans, and any similar
accounting computations of the rate at
which a particular group of costs is
chargeable (such as computer usage
chargeback rates or composite fringe
benefit rates) must be retained according
to the applicable option below:
(1) If submitted for negotiation. When
a proposal, plan, or other computation
must be submitted to the Federal
Government to form the basis for
negotiation of an indirect cost rate (or
other standard rates), then the three-year
retention period for its supporting
records starts from the date of
submission.
(2) If not submitted for negotiation.
When a proposal, plan, or other
computation is not required to be
submitted to the Federal Government to
form the basis for negotiation of an
indirect cost rate (or other standard
rates), then the three-year retention
period for its supporting records starts
from the end of the fiscal year (or
another accounting period) covered by
the proposal, plan, or other
computation.
§ 200.335
Requests for transfer of records.
The Federal agency must request the
transfer of records to its custody from
the recipient or subrecipient when it
determines that the records possess
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long-term retention value. However, the
Federal agency may arrange for the
recipient or subrecipient to retain the
records that have long-term retention
value so long as they are continuously
available to the Federal Government.
§ 200.336 Methods for collection,
transmission, and storage of information.
When practicable, the Federal agency
or pass-through entity and the recipient
or subrecipient must collect, transmit,
and store Federal award information in
an open file, non-licensed, and
machine-readable formats. A machinereadable format is a format in a standard
computer language (not English text)
that can be read automatically by a
computer system. Upon request, the
Federal agency or pass-through entity
must always provide or accept paper
versions of Federal award information
to and from the recipient or
subrecipient. The Federal agency or
pass-through entity must not require
additional copies of Federal award
information submitted in paper
versions. The recipient or subrecipient
does not need to create and retain paper
copies when original records are
electronic and cannot be altered. In
addition, the recipient or subrecipient
may substitute electronic versions of
original paper records through
duplication or other forms of electronic
conversion, provided that the
procedures are subject to periodic
quality control reviews. Quality control
reviews must ensure that electronic
conversion procedures provide
safeguards against the alteration of
records and assurance that records
remain in a format that is readable by
a computer system.
§ 200.337
Access to records.
(a) Records of recipients and
subrecipients. The Federal agency or
pass-through entity, Inspectors General,
the Comptroller General of the United
States, or any of their authorized
representatives must have the right of
access to any records of the recipient or
subrecipient pertinent to the Federal
award to perform audits, execute site
visits, or for any other official use. This
right also includes timely and
reasonable access to the recipient’s or
subrecipient’s personnel for the purpose
of interview and discussion related to
such documents or the Federal award in
general.
(b) Extraordinary and rare
circumstances. The recipient or
subrecipient and Federal agency or
pass-through entity must take measures
to protect the name of victims of a crime
when access to the victim’s name is
necessary. Only under extraordinary
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and rare circumstances would such
access include a review of the true name
of victims of a crime. Routine
monitoring cannot be considered
extraordinary and rare circumstances
that would necessitate access to this
information. Any such access, other
than under a court order or subpoena
pursuant to a bona fide confidential
investigation, must be approved by the
head or delegate of the Federal agency.
(c) Expiration of right of access. The
Federal agency’s or pass-throughthrough entity’s rights of access are not
limited to the required retention period
of this part but last as long as the
records are retained. Federal agencies or
pass-through-through entities must not
impose any other access requirements
upon recipients and subrecipients.
§ 200.338
records.
Restrictions on public access to
Federal agencies or pass-throughthrough entities may not place
restrictions on the recipient or
subrecipient that limit public access to
the records of the recipient or
subrecipient pertinent to a Federal
award, except for protected personally
identifiable information (PII) or other
sensitive information when the Federal
agency can demonstrate that such
records will be kept confidential and
would have been exempted from
disclosure pursuant to the Freedom of
Information Act (5 U.S.C. 552) or
controlled unclassified information
pursuant to Executive Order 13556 if
the records had belonged to the Federal
agency. The Freedom of Information Act
(5 U.S.C. 552) (FOIA) does not apply to
records that remain under the
recipient’s or subrecipient’s control
except as required by § 200.315. Unless
required by Federal, State, local, and
tribal law, recipients and subrecipients
are not required to permit public access
to their records. The recipient’s or
subrecipient’s records provided to a
Federal agency generally will be subject
to FOIA and applicable exemptions.
Remedies for Noncompliance
§ 200.339
Remedies for noncompliance.
The Federal agency or pass-through
entity may implement specific
conditions if the recipient or
subrecipient fails to comply with the
U.S. Constitution, Federal statutes,
regulations, or terms and conditions of
the Federal award. See § 200.208 for
additional information on specific
conditions. When the Federal agency or
pass-through entity determines that
noncompliance cannot be remedied by
imposing specific conditions, the
Federal agency or pass-through entity
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may take one or more of the following
actions:
(a) Temporarily withhold payments
until the recipient or subrecipient takes
corrective action.
(b) Disallow costs for all or part of the
activity associated with the
noncompliance of the recipient or
subrecipient.
(c) Suspend or terminate the Federal
award in part or in its entirety.
(d) Initiate suspension or debarment
proceedings as authorized in 2 CFR part
180 and the Federal agency’s
regulations. Pass-through entities must
recommend suspension or debarment
proceedings for a subrecipient or
subcontractor be initiated by the Federal
agency.
(e) Withhold further Federal funds
(new awards or continuation funding)
for the project or program.
(f) Pursue other legally available
remedies.
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§ 200.340
Termination.
(a) The Federal award may be
terminated in part or its entirety as
follows:
(1) By the Federal agency or passthrough entity if the recipient or
subrecipient fails to comply with the
terms and conditions of the Federal
award;
(2) By the Federal agency or passthrough entity with the consent of the
recipient or subrecipient, in which case
the two parties must agree upon the
termination conditions. These
conditions include the effective date
and, in the case of partial termination,
the portion to be terminated;
(3) By the recipient or subrecipient
upon sending the Federal agency or
pass-through entity a written
notification of the reasons for such
termination, the effective date, and, in
the case of partial termination, the
portion to be terminated. However, if
the Federal agency or pass-through
entity determines that the remaining
portion of the Federal award will not
accomplish the purposes for which the
Federal award was made, the Federal
agency or pass-through entity may
terminate the Federal award in its
entirety; or
(4) By the Federal agency or passthrough entity pursuant to the terms and
conditions of the Federal award.
(b) The Federal agency or passthrough entity must clearly and
unambiguously specify all termination
provisions in the terms and conditions
of the Federal award.
(c) When the Federal agency
terminates the Federal award prior to
the end of the period of performance
due to the recipient’s material failure to
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comply with the terms and conditions
of the Federal award, the Federal agency
must report the termination in SAM.gov.
A Federal agency must use the
Contractor Performance Assessment
Reporting System (CPARS) to enter
information in SAM.gov.
(1) The information required under
paragraph (c) of this section is not to be
reported in SAM.gov until the recipient
has either:
(i) Exhausted its opportunities to
object or challenge the decision (see
§ 200.342); or
(ii) Has not, within 30 calendar days
after being notified of the termination,
informed the Federal agency that it
intends to appeal the decision to
terminate.
(2) If a Federal agency, after entering
information about a termination in
SAM.gov, subsequently:
(i) Learns that any of that information
is erroneous, the Federal agency must
correct the information in the system
within three business days;
(ii) Obtains an update to that
information that could be helpful to
other Federal agencies. The Federal
agency is strongly encouraged to amend
the information in the system to
incorporate the update in a timely way.
(3) The Federal agency must not post
any information that will be made
publicly available in the non-public
segment of SAM.gov that is covered by
a disclosure exemption under the
Freedom of Information Act (FOIA).
When the recipient asserts within seven
calendar days to the Federal agency
which posted the information that a
disclosure exemption under FOIA
covers some of the information made
publicly available, the Federal agency
that posted the information must
remove the posting within seven
calendar days of receiving the assertion.
Before reposting the releasable
information, the Federal agency must
resolve the issue in accordance with the
agency’s FOIA procedures.
(d) When the Federal award is
terminated in part or its entirety, the
Federal agency or pass-through entity
and recipient or subrecipient remain
responsible for compliance with the
requirements in §§ 200.344 and 200.345.
(e) A Federal agency determination to
not award continuation funding does
not constitute a termination. For
example, if an award no longer
effectuates the program goals or agency
priorities or continued Federal funding
is not available.
§ 200.341 Notification of termination
requirement.
(a) The Federal agency or passthrough entity must provide written
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notice of termination to the recipient or
subrecipient. The written notice of
termination should include the reasons
for termination, the effective date, and
the portion of the Federal award to be
terminated, if applicable.
(b) If the Federal award is terminated
for the recipient’s material failure to
comply with a Federal award, the
notification must state the following:
(1) The termination decision will be
reported in SAM.gov;
(2) The information will be available
in SAM.gov for five years (and then
archived) from the date of the
termination;
(3) A Federal agency that considers
making a Federal award to the recipient
during that five-year period that is
expected to exceed the simplified
acquisition threshold over the period of
performance must consider the
information regarding the recipient’s
material failure to comply in judging
whether the entity is qualified to receive
the Federal award.
(4) The recipient may comment on
any information in SAM.gov about the
recipient for future consideration by
Federal agencies. The recipient may
submit comments in SAM.gov.
(5) Federal agencies should consider
the recipient’s comments when
determining whether the recipient is
qualified for a Federal award.
(c) Upon termination of the Federal
award, the Federal agency must provide
the information to USAspending.gov as
required by the Federal Funding
Accountability and Transparency Act
(FFATA). In addition, the Federal
agency must update or notify any other
relevant government-wide systems or
entities of any indications of poor
performance as required by 41 U.S.C.
2313 and 31 U.S.C. 3321.
§ 200.342 Opportunities to object,
hearings, and appeals.
The Federal agency or pass-through
entity must maintain written procedures
for processing objections, hearings, and
appeals. Upon initiating a remedy for
noncompliance (for example,
disallowed costs, a corrective action
plan, or termination), the Federal
agency or pass-through entity must
provide the recipient or subrecipient
with an opportunity to object and
provide information challenging the
action. The Federal agency or passthrough entity must comply with any
requirements for hearings, appeals, or
other administrative proceedings to
which the recipient or subrecipient is
entitled under any statute or regulation
applicable to the action involved.
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§ 200.343 Effects of suspension and
termination.
Costs to the recipient or subrecipient
resulting from financial obligations
incurred by the recipient or subrecipient
during a suspension or after the
termination of a Federal award are not
allowable unless the Federal agency or
pass-through entity expressly authorizes
them in the notice of suspension or
termination or subsequently. However,
costs during suspension or after
termination are allowable if:
(a) The costs result from financial
obligations which were properly
incurred by the recipient or subrecipient
before the effective date of suspension
or termination, are not in anticipation of
it; and
(b) The costs would be allowable if
the Federal award was not suspended or
expired normally at the end of the
period of performance in which the
termination takes effect.
Closeout
ddrumheller on DSK120RN23PROD with PROPOSALS2
§ 200.344
Closeout.
(a) The Federal agency or passthrough entity must close out the
Federal award when it determines that
all administrative actions and required
work of the Federal award have been
completed. When the recipient or
subrecipient fails to complete the
necessary administrative actions or the
required work for an award, the Federal
agency or pass-through entity must
proceed with closeout based on the
information available. This section
specifies the administrative actions
required at the end of the period of
performance.
(b) A recipient must submit all reports
(financial, performance, and other
reports required by the Federal award)
no later than 120 calendar days after the
conclusion of the period of
performance. A subrecipient must
submit all reports (financial,
performance, and other reports required
by a subaward) to the pass-through
entity no later than 90 calendar days
after the conclusion of the period of
performance of the subaward (or an
earlier date as agreed upon by the passthrough entity and subrecipient). When
justified, the Federal agency or passthrough entity may approve extensions
for the recipient or subrecipient. When
the recipient does not have a final
indirect cost rate covering the period of
performance, a final financial report
must still be submitted to fulfill the
requirements of this section. The
recipient must submit a revised final
financial report when all applicable
indirect cost rates have been finalized.
(c) The recipient must liquidate all
financial obligations incurred under the
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Federal award no later than 120
calendar days after the conclusion of the
period of performance. A subrecipient
must liquidate all financial obligations
incurred under a subaward no later than
90 calendar days after the conclusion of
the period of performance of the
subaward (or an earlier date as agreed
upon by the pass-through entity and
subrecipient). When justified, the
Federal agency or pass-through entity
may approve extensions for the
recipient or subrecipient.
(d) The Federal agency or passthrough entity must not delay payments
to the recipient or subrecipient for costs
meeting the requirements of subpart E of
this part.
(e) The recipient or subrecipient must
immediately refund any unobligated
funds that the Federal agency or passthrough entity paid and that are not
authorized to be retained. See OMB
Circular A–129 and § 200.346.
(f) The Federal agency or pass-through
entity must make all necessary
adjustments to the Federal share of costs
after closeout reports are received. For
example, the disallowance of any costs
or the deobligation of an unliquidated
balance.
(g) The recipient or subrecipient must
account for any property acquired with
Federal funds or received from the
Federal Government in accordance with
§§ 200.310 through 200.316 and
200.330.
(h) The Federal agency must make
every effort to complete all closeout
actions no later than one year after the
end of the period of performance. If the
indirect cost rate has not been finalized
and would delay closeout, the Federal
agency is authorized to mutually agree
with the recipient to close an award
using the current or most recently
negotiated rate. However, the recipient
is not required to agree to a final rate for
a Federal award for the purpose of
prompt closeout.
(i) If the recipient does not comply
with the requirements of this section,
including submitting all final reports,
the Federal agency must report the
recipient’s material failure to comply
with the terms and conditions of the
Federal award in SAM.gov. A Federal
agency must use the Contractor
Performance Assessment Reporting
System (CPARS) to enter or amend
information in SAM.gov. Federal
agencies may also pursue other
enforcement actions as appropriate. See
§ 200.339.
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Post-Closeout Adjustments and
Continuing Responsibilities
§ 200.345 Post-closeout adjustments and
continuing responsibilities.
(a) The closeout of the Federal award
does not affect any of the following:
(1) The right of the Federal agency or
pass-through entity to disallow costs
and recover funds on the basis of a later
audit or review. However, the Federal
agency or pass-through entity must
make determinations to disallow costs
and notify the recipient or subrecipient
within the record retention period.
(2) The recipient’s or subrecipient’s
requirement to return funds or right to
receive any remaining and available
funds as a result of refunds, corrections,
final indirect cost rate adjustments
(unless the Federal award in closed in
accordance with § 200.344(h)), or other
transactions.
(3) The ability of the Federal agency
or pass-through entity to make financial
adjustments to a previously closed
Federal award, such as resolving
indirect cost payments and making final
payments.
(4) Audit requirements in subpart F of
this part.
(5) Property management and
disposition requirements in §§ 200.310
through 200.316.
(6) Records retention as required in
§§ 200.334 through 200.337.
(b) After the closeout of the Federal
award, a relationship created under the
Federal award may be modified or
ended in whole or in part. This may
only be done with the consent of the
awarding Federal agency or passthrough entity and the recipient or
subrecipient, provided the
responsibilities of the recipient or
subrecipient referred to in paragraph (a)
of this section, including those for
property management as applicable, are
considered and provisions made for
continuing responsibilities of the
recipient or subrecipient, as
appropriate.
Collection of Amounts Due
§ 200.346
Collection of amounts due.
Any Federal funds paid to the
recipient or subrecipient in excess of the
amount that the recipient or
subrecipient is determined to be entitled
to under the Federal award constitutes
a debt to the Federal Government. The
Federal agency must collect all debts
arising out of its Federal awards in
accordance with the Standards for the
Administrative Collection of Claims (31
CFR 901).
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Subpart E—Cost Principles
General Provisions
ddrumheller on DSK120RN23PROD with PROPOSALS2
§ 200.400
Policy guide.
The application of these cost
principles is based on the fundamental
premises that:
(a) The recipient or subrecipient is
responsible for the efficient and
effective administration of the Federal
award through sound management
practices.
(b) The recipient or subrecipient is
responsible for administering Federal
funds in a manner consistent with
Federal statutes, regulations, and the
terms and conditions of the Federal
award.
(c) The recipient or subrecipient, in
recognition of its unique combination of
staff, facilities, and experience, is
responsible for employing organization
and management techniques necessary
to ensure the proper and efficient
administration of the Federal award.
(d) The accounting practices of the
recipient or subrecipient must be
consistent with these cost principles
and support the accumulation of costs
as required by these cost principles,
including maintaining adequate
documentation to support costs charged
to the Federal award.
(e) The cognizant agency for indirect
costs should ensure that the recipient or
subrecipient consistently applies these
cost principles when reviewing,
negotiating, and approving cost
allocation plans or indirect cost
proposals. Where wide variations exist
in the treatment of a given cost item by
the recipient or subrecipient, the
reasonableness and equity of such
treatments should be fully considered.
See the definition of indirect costs in
§ 200.1.
(f) For recipients and subrecipients
that educate and engage students in
research, the dual role of students as
both trainees and employees (including
pre- and post-doctoral staff) contributing
to the completion of Federal awards for
research must be recognized in the
application of these principles.
(g) The recipient or subrecipient may
not earn or keep any profit resulting
from Federal financial assistance unless
explicitly authorized by the terms and
conditions of the Federal award. See
also § 200.307.
§ 200.401
Application.
(a) General. The recipient or
subrecipient must apply these
principles in determining allowable
costs under Federal awards. The
recipient or subrecipient must also use
these principles as a guide in pricing
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fixed-price contracts and subcontracts
when costs are used in determining the
appropriate price. These cost principles
do not apply to:
(1) Arrangements under which
Federal financing is in the form of loans,
scholarships, fellowships, traineeships,
or other fixed amounts based on items
such as education allowance or
published tuition rates and fees.
(2) Capitation awards to Institutions
of Higher Education (IHEs) based on
case counts or the number of
beneficiaries.
(3) Fixed amount awards. See
200.201.
(4) Federal awards to hospitals (see
Appendix IX of this part).
(5) Grants and cooperative agreements
for food commodities.
(6) Other awards under which the
recipient or subrecipient is not required
to account for actual costs incurred.
(b) Federal contract. A Federal
contract awarded to a recipient is
subject to the Cost Accounting
Standards (CAS). It must incorporate the
applicable CAS requirements per 48
CFR Chapter 99 and 48 CFR part 30
(FAR Part 30). With respect to the
allocation of costs, the Cost Accounting
Standards at 48 CFR parts 9904 or 9905
take precedence over the cost principles
in subpart E. When a contract with a
recipient is subject to full CAS coverage,
the allowability of certain costs under
the cost principles will be affected by
the allocation provisions of the Cost
Accounting Standards (for example,
CAS 414—48 CFR 9904.414—Cost of
Money as an Element of the Cost of
Facilities Capital, and CAS 417—48 CFR
9904.417—Cost of Money as an Element
of the Cost of Capital Assets Under
Construction, apply instead of the
allowability provisions of § 200.449).
For example, the allowability of costs in
CAS-covered costs is determined first by
the allocation provisions of the Cost
Accounting Standards rather than the
allowability provisions in § 200.449
(unless the CAS does not address the
specific costs). In complying with those
requirements, the recipient’s application
of cost accounting practices for
estimating, accumulating, and reporting
costs for Federal awards and CAScovered contracts must be consistent
with the cost accounting practices for
the CAS-covered contracts. The
recipient must maintain only one set of
accounting records supporting the
allocation of costs if the recipient
administers both Federal awards and
CAS-covered contracts.
(c) Exemptions. Some nonprofit
organizations, because of their size and
nature of operations, can be considered
to be similar to for-profit organizations
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in terms of the applicability of cost
principles. These nonprofit
organizations must operate under
Federal cost principles that apply to forprofit organizations located at 48 CFR
31.2. Appendix VIII contains a list of
these nonprofit organizations. Other
organizations may be added to this list
if approved by the cognizant agency for
indirect costs.
Basic Considerations
§ 200.402
Composition of costs.
The total cost of a Federal award is
the sum of the allowable direct and
allocable indirect costs minus any
applicable credits.
§ 200.403
costs.
Factors affecting allowability of
Except where otherwise authorized by
statute, costs must meet the following
criteria to be allowable under Federal
awards:
(a) Be necessary and reasonable for
the performance of the Federal award
and be allocable thereto under these
principles.
(b) Conform to any limitations or
exclusions set forth in these principles
or in the Federal award as to types or
amount of cost items.
(c) Be consistent with policies and
procedures that apply uniformly to both
federally-financed and other activities of
the recipient or subrecipient.
(d) Be accorded consistent treatment.
For example, a cost may not be assigned
to a Federal award as a direct cost if any
other cost incurred for the same purpose
in like circumstances has been allocated
to the Federal award as an indirect cost.
(e) Be determined in accordance with
generally accepted accounting
principles (GAAP), except, for State and
local governments and Indian Tribes
only, as otherwise provided for in this
part.
(f) Not be included as a cost or used
to meet cost sharing requirements of any
other federally-financed program in
either the current or a prior period. See
§ 200.306(b).
(g) Be adequately documented. See
§§ 200.300 through 200.309.
(h) Administrative closeout costs may
be incurred until the due date of the
final report(s). If incurred, these costs
must be liquidated prior to the due date
of the final report(s) and charged to the
final budget period of the award unless
otherwise specified by the Federal
agency. All other costs must be incurred
during the approved budget period. At
its discretion, the Federal agency is
authorized to waive prior written
approvals to carry forward unobligated
balances to subsequent budget periods.
See § 200.308(g)(3).
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Reasonable costs.
A cost is reasonable if it does not
exceed an amount that a prudent person
would incur under the circumstances
prevailing when the decision was made
to incur the cost. In determining the
reasonableness of a given cost,
consideration must be given to the
following:
(a) Whether the cost is generally
recognized as ordinary and necessary
for the recipient’s or subrecipient’s
operation or the proper and efficient
performance of the Federal award;
(b) The restraints or requirements
imposed by such factors as sound
business practices; arm’s-length
bargaining; Federal, State, local, tribal,
and other laws and regulations; and
terms and conditions of the Federal
award.
(c) Market prices for comparable costs
for the geographic area; and
(d) Whether the individuals
concerned acted with prudence in the
circumstances considering their
responsibilities to the recipient or
subrecipient, its employees, its students
or membership (if applicable), the
public at large, and the Federal
Government.
(e) The degree to which the cost
represents a deviation from the
recipient’s or subrecipient’s established
written policies and procedures for
incurring costs.
ddrumheller on DSK120RN23PROD with PROPOSALS2
§ 200.405
Allocable costs.
(a) Allocable costs in general. A cost
is allocable to a Federal award if the
cost is assignable to that Federal award
in accordance with the relative benefits
received. This standard is met if the cost
satisfies any of the following criteria:
(1) Is incurred specifically for the
Federal award;
(2) Benefits both the Federal award
and other work of the recipient or
subrecipient and can be distributed in
proportions that may be approximated
using reasonable methods; or
(3) Is necessary to the overall
operation of the recipient or
subrecipient and is assignable in part to
the Federal award in accordance with
these cost principles.
(b) Allocation of indirect costs. All
activities which benefit from the
recipient’s or subrecipient’s indirect
cost, including unallowable activities
and donated services by the recipient or
subrecipient or third parties, will
receive an appropriate allocation of
indirect costs.
(c) Limitation on charging certain
allocable costs to other Federal awards.
A cost allocable to a particular Federal
award may not be charged to other
Federal awards (for example, to
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overcome fund deficiencies or to avoid
restrictions imposed by Federal statutes,
regulations, or the terms and conditions
of the Federal awards). However, this
prohibition would not preclude the
recipient or subrecipient from shifting
costs that are allowable under two or
more Federal awards in accordance with
existing Federal statutes, regulations, or
the terms and conditions of the Federal
awards.
(d) Direct cost allocation principles. If
a cost benefits two or more projects or
activities in proportions that can be
determined without undue effort or
cost, the cost must be allocated to the
projects based on the proportional
benefit. However, when those
proportions cannot be determined
because of the interrelationship of the
work involved, then, notwithstanding
paragraph (c), the costs may be allocated
or transferred to benefitted projects on
any reasonable documented basis.
Where the purchase of equipment or
other capital asset is specifically
authorized under a Federal award, the
costs are assignable to the Federal award
regardless of the use that may be made
of the equipment or other capital asset
involved, when no longer needed for the
purpose for which it was originally
required. See also §§ 200.310 through
200.316 and 200.439.
(e) Costs of contracts subject to CAS.
Costs of contracts subject to CAS must
be allocated according to the Cost
Accounting Standards, which take
precedence over the allocation
provisions in this part.
§ 200.406
Applicable credits.
(a) Applicable credits refer to
transactions that offset or reduce direct
or indirect costs allocable to a Federal
award. Examples of such transactions
are purchase discounts, rebates or
allowances, recoveries or indemnities
on losses, insurance refunds or rebates,
adjustments of overpayments, or
erroneous charges. To the extent that
such credits accruing to or received by
the recipient or subrecipient relate to
allowable costs, they must be credited to
the Federal award either as a cost
reduction or cash refund, as
appropriate.
(b) In some instances, the amounts
received from the Federal Government
to finance activities or service
operations of the recipient or
subrecipient should be treated as
applicable credits. Specifically, the
concept of netting such credit items
(including any amounts used to meet
cost sharing requirements) must be
recognized in determining the rates or
amounts to be charged to the Federal
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award. See §§ 200.436 and 200.468 for
potential application areas.
§ 200.407 Prior written approval (prior
approval).
The reasonableness and allocability of
certain costs under Federal awards may
be difficult to determine. To avoid
subsequent disallowance or dispute
based on unreasonableness or
nonallocability, the recipient may seek
the prior written approval of the Federal
agency (or, for indirect costs, the
cognizant agency for indirect costs)
before incurring the cost. The absence of
prior written approval on any element
of cost will not, in itself, affect the
reasonableness or allocability of that
cost unless prior approval is specifically
required for allowability as described
under certain circumstances in the
following sections:
(a) Section 200.306 Cost sharing;
(b) Section 200.307 Program income;
(c) Section 200.308 Revision of
budget and program plans;
(d) Section 200.333 Fixed amount
subawards;
(e) Section 200.430 Compensation—
personal services, paragraph (h);
(f) Section 200.431 Compensation—
fringe benefits;
(g) Section 200.439 Equipment and
other capital expenditures;
(h) Section 200.441 Fines, penalties,
damages and other settlements;
(i) Section 200.442 Fund raising and
investment management costs;
(j) Section 200.445 Goods or services
for personal use;
(k) Section 200.447 Insurance and
indemnification;
(l) Section 200.455 Organization
costs;
(m) Section 200.458 Pre-award costs;
(n) Section 200.462 Rearrangement
and reconversion costs;
(o) Section 200.475 Travel costs.
§ 200.408
costs.
Limitation on allowance of
Statutory requirements may limit the
allowability of costs. Any costs that
exceed the maximum amount allowed
by statute may not be charged to the
Federal award. Only the amount
allowable by statute may be charged to
the Federal award.
§ 200.409
Special considerations.
Other sections in this part describe
special considerations and requirements
applicable to states, local governments,
Indian Tribes, and IHEs. In addition,
certain provisions among the items of
cost in this subpart are only applicable
to certain types of recipients and
subrecipients, as specified in the
following sections:
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(a) Direct and Indirect Costs
(§§ 200.412–200.415);
(b) Special Considerations for States,
Local Governments and Indian Tribes
(§§ 200.416 and 200.417); and
(c) Special Considerations for
Institutions of Higher Education
(§§ 200.418 and 200.419).
§ 200.410
Collection of unallowable costs.
Payments made for costs determined
to be unallowable by either the
awarding Federal agency, cognizant
agency for indirect costs, or passthrough entity must be refunded with
interest to the Federal Government.
Unless directed by Federal statute or
regulation, repayments must be made in
accordance with the instructions
provided by the Federal agency or passthrough entity that made the
allowability determination. See
§§ 200.300 through 200.309, and
§ 200.346.
ddrumheller on DSK120RN23PROD with PROPOSALS2
§ 200.411 Adjustment of previously
negotiated indirect cost rates containing
unallowable costs.
(a) Federal negotiated indirect cost
rates based on a proposal later found to
have included costs that:
(1) Are unallowable as specified by
Federal statutes, regulations or the terms
and conditions of a Federal award; or
(2) Are unallowable because they are
not allocable to the Federal award(s),
must be adjusted, or a refund must be
made in accordance with the
requirements of this section. These
adjustments or refunds are intended to
correct the proposals used to establish
the rates and do not constitute a
reopening of the rate negotiation. The
adjustments or refunds must be made
regardless of the type of rate negotiated
(predetermined, final, fixed, or
provisional).
(b) For rates covering a future fiscal
year of the recipient or subrecipient, the
unallowable costs must be removed
from the indirect cost pools and the
rates must be adjusted.
(c) For rates covering a past period,
the Federal share of the unallowable
costs must be computed for each year
involved, and a cash refund (including
interest) must be made to the Federal
Government in accordance with the
directions provided by the cognizant
agency for indirect costs. When cash
refunds are made for past periods
covered by provisional or fixed rates,
appropriate adjustments must be made
when the rates are finalized to avoid
duplicate recovery of the unallowable
costs.
(d) For rates covering the current
period, either a rate adjustment or a
refund, as described in paragraphs (b)
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and (c) of this section, must be required
by the cognizant agency for indirect
costs. The choice of method must be at
the discretion of the cognizant agency
for indirect costs, based on its judgment
as to which method would be most
practical.
(e) The amount or proportion of
unallowable costs included in each
year’s rate will be assumed to be the
same as the amount or proportion of
unallowable costs included in the base
year proposal used to establish the rate.
Direct and Indirect Costs
§ 200.412
Classification of costs.
There is no universal rule for
classifying certain costs as direct or
indirect costs. A cost may be direct for
some specific service or function but
indirect for the Federal award or other
final cost objective. Therefore, each cost
incurred for the same purpose in like
circumstances must be treated
consistently either as a direct or an
indirect cost to avoid possible doublecharging of Federal awards. Guidelines
for determining direct and indirect costs
charged to Federal awards are provided
in this subpart.
§ 200.413
Direct costs.
(a) General. Direct costs are those
costs that can be identified specifically
with a particular final cost objective,
such as a Federal award, or other
internally or externally funded activity,
or that can be directly assigned to such
activities relatively easily with a high
degree of accuracy. Costs incurred for
the same purpose in like circumstances
must be treated consistently as direct or
indirect costs. See § 200.405.
(b) Application to Federal awards.
The association of costs with a Federal
award (rather than the nature of the
procurement transaction) determines
whether costs are direct or indirect.
Costs charged directly to a Federal
award are typically incurred specifically
for that Federal award (including, for
example, supplies needed to achieve the
award’s objectives and the proportion of
staff salary expended in relation to that
specific award). However, costs that
otherwise would be treated as indirect
costs may also be considered direct
costs if they are directly related to a
specific award (including, for example,
extraordinary utility consumption, the
cost of materials supplied from stock or
services rendered by specialized
facilities, cybersecurity, integrated data
systems, asset management systems,
performance management costs,
program evaluation costs, or other
institutional service operations).
(c) Administrative and clerical staff
salaries. Administrative and clerical
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staff salaries should normally be treated
as indirect costs. Direct charging of
these costs may be appropriate only if
they meet all of the following
conditions:
(1) The administrative or clerical
services are integral to a Federal award;
(2) Individuals involved can be
specifically identified with a Federal
award; and
(3) The costs are not also recovered as
indirect costs.
(d) Minor items. A minor direct cost
may be treated as an indirect cost when
it is practical to do so and provided that
it is treated consistently for all Federal
and non-Federal purposes.
(e) Treatment of unallowable costs in
determining indirect cost rates.
Unallowable costs for Federal awards
must be treated as direct costs when
determining indirect cost rates.
Additionally, unallowable costs must be
allocated their equitable share of the
recipient’s or subrecipient’s indirect
costs if they represent activities which:
(1) Include the salaries of personnel;
(2) Occupy space; and
(3) Benefit from the recipient’s or
subrecipient’s indirect costs.
(f) Treatment of certain costs for
nonprofit organizations. For nonprofit
organizations, the costs of activities
performed by the nonprofit organization
primarily as a service to members,
clients, or the general public when
significant and necessary to the
organization’s mission must be treated
as direct costs whether or not allowable,
and be allocated an equitable share of
indirect costs. Some examples of these
types of activities include:
(1) Maintenance of membership rolls,
subscriptions, publications, and related
functions. See § 200.454.
(2) Providing services and information
to members, the government, or the
public. See §§ 200.454 and 200.450.
(3) Promotion, lobbying, and other
forms of public relations. See §§ 200.421
and 200.450.
(4) Conferences (except in support of
the general administration of the
recipient or subrecipient). See also
§ 200.432.
(5) Maintenance, protection, and
investment of special funds not used in
the recipient’s or subrecipient’s
operation. See also § 200.442.
(6) Group benefits on behalf of
members or clients, including life and
hospital insurance, annuity or
retirement plans, and financial aid. See
also § 200.431.
§ 200.414
Indirect costs.
(a) Facilities and administration
classification. For major Institutions of
Higher Education (IHE) and major
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nonprofit organizations, indirect costs
must be classified within two broad
categories: ‘‘Facilities’’ and
‘‘Administration.’’ ‘‘Facilities’’ is
defined as depreciation on buildings,
equipment and capital improvements,
interest on debt associated with certain
buildings, equipment and capital
improvements, and operations and
maintenance expenses.
‘‘Administration’’ is defined as general
administration and general expenses
such as the director’s office, accounting,
personnel, and all other types of
expenditures not listed specifically
under one of the subcategories of
‘‘Facilities’’ (including cross allocations
from other pools, where applicable). For
nonprofit organizations, library
expenses are included in the
‘‘Administration’’ category; for IHEs,
they are included in the ‘‘Facilities’’
category. Major IHEs are defined as
those required to use the Standard
Format for Submission as noted in
Appendix III. Major nonprofit
organizations are those which receive
more than $10 million in direct Federal
funding.
(b) Diversity of nonprofit
organizations. It is not always possible
to specify the types of costs that may be
classified as indirect costs for nonprofit
organizations due to the diversity of
their accounting practices. Identification
with a Federal award rather than the
nature of the procurement transaction
involved is the determining factor in
distinguishing direct from indirect costs
of Federal awards. However, typical
examples of indirect cost for many
nonprofit organizations may include
depreciation on buildings and
equipment, the costs of operating and
maintaining facilities, and general
administration and general expenses,
such as the salaries and expenses of
executive officers, personnel
administration, and accounting.
(c) Federal Agency Acceptance of
Negotiated Indirect Cost Rates. (See
§ 200.306.)
(1) Negotiated indirect cost rates must
be accepted by all Federal agencies. A
Federal agency may only use a rate
different from the negotiated rate for
either a class of Federal awards or a
single Federal award when required by
Federal statute, regulation, or when
approved by the awarding Federal
agency based on documented
justification described in paragraph
(c)(3) of this section.
(2) The Federal agency must notify
OMB of any approved deviations. The
recipient or subrecipient may notify
OMB of any disputes with Federal
agencies regarding the application of a
federally negotiated indirect cost rate.
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(3) The Federal agency must
implement, and make publicly
available, the policies, procedures and
general decision-making criteria that
their programs will follow to seek and
justify deviations from negotiated rates.
(4) The Federal agency must include
the policies relating to indirect cost rate
reimbursement or cost share as
approved under paragraph (e) in the
notice of funding opportunity. As
appropriate, the Federal agency should
incorporate discussion of these policies
into its outreach activities with
applicants before posting a notice of
funding opportunity. See § 200.204.
(d) Pass-through entities. Pass-through
entities are subject to the requirements
in § 200.332(b)(4) and must accept all
federally negotiated indirect costs rates
for subrecipients.
(e) Appendices. Requirements for
development and submission of indirect
cost rate proposals and cost allocation
plans are contained in the following
Appendices:
(1) Appendix III to Part 200—Indirect
(F&A) Costs Identification and
Assignment, and Rate Determination for
Institutions of Higher Education (IHEs);
(2) Appendix IV to Part 200—Indirect
(F&A) Costs Identification and
Assignment, and Rate Determination for
Nonprofit Organizations;
(3) Appendix V to Part 200—State/
Local Government-wide Central Service
Cost Allocation Plans;
(4) Appendix VI to Part 200—Public
Assistance Cost Allocation Plans;
(5) Appendix VII to Part 200—States
and Local Government and Indian Tribe
Indirect Cost Proposals; and
(6) Appendix IX to Part 200—Hospital
Cost Principles.
(f) De minimis rate. Recipients and
subrecipients that do not have a current
Federal negotiated indirect cost rate
(including provisional rate) may elect to
charge a de minimis rate of up to 15
percent of modified total direct costs
(MTDC). The recipient or subrecipient is
authorized to determine the appropriate
rate up to this limit. Federal agencies
may not require recipients and
subrecipients to use a de minimis rate
lower than this standard unless required
by Federal statute. The de minimis rate
must not be applied to cost
reimbursement contracts issued directly
by the Federal Government in
accordance with the FAR. Recipients
and subrecipients are not required to
use the de minimis rate and may submit
an indirect cost proposal in accordance
with the appropriate Appendix
referenced in paragraph (e) of this
section. When applying the de minimis
rate, costs must be consistently charged
as either direct or indirect costs and
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may not be double charged or
inconsistently charged as both. The de
minimis rate does not require
documentation to justify its use and
may be used indefinitely. Once elected,
the recipient or subrecipient must use
the de minimis rate for all Federal
awards until the recipient or
subrecipient chooses to receive a
negotiated rate. A governmental
department or agency that receives more
than $35 million in direct Federal
funding during its fiscal year may not
elect to use the de minimis rate (see
Appendix VII, paragraph D.1.b.).
(g) One-time extension of indirect
rates. A recipient or subrecipient with a
current Federal negotiated indirect cost
rate may apply for a one-time extension
of that agreement for up to four years.
This extension will be subject to review
and approval by the cognizant agency
for indirect costs. If granted, the
recipient or subrecipient may only
request a rate review when the
extension period ends. The recipient or
subrecipient must re-apply to negotiate
a new rate when the extension ends.
When a new rate is negotiated, the
recipient or subrecipient may again
apply for a one-time extension of the
new rate in accordance with this
paragraph.
§ 200.415
Required certifications.
(a) Financial reports and payment
requests under Federal awards must
include a certification, signed by an
official who is authorized to legally bind
the recipient or subrecipient, which
reads as follows: ‘‘By signing this report,
I certify to the best of my knowledge
and belief that the report is true,
complete, and accurate, and the
expenditures, disbursements and cash
receipts are for the purposes and
objectives set forth in the terms and
conditions of the Federal award. I am
aware that any false, fictitious, or
fraudulent information, or the omission
of any material fact, may subject me to
criminal, civil or administrative
penalties for fraud, false statements,
false claims or otherwise. (U.S. Code
Title 18, Section 1001 and Title 31,
Sections 3729–3730 and 3801–3812).’’
(b) Subrecipients under the Federal
award must certify to the pass-through
entity whenever applying for funds,
requesting payment, and submitting
reports: ‘‘I certify to the best of my
knowledge and belief that the
information provided herein is true,
complete, and accurate. I am aware that
the provision of false, fictitious, or
fraudulent information, or the omission
of any material fact, may subject me to
criminal, civil, or administrative
consequences including, but not limited
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to violations of U.S. Code Title 18,
Sections 2, 1001, 1343 and Title 31,
Sections 3729–3730 and 3801–3812.’’
Each such certification must be
maintained pursuant to the
requirements of § 200.334. This
paragraph applies to all tiers of
subrecipients.
(c) Certification of cost allocation plan
or indirect cost rate proposal. Each cost
allocation plan or indirect cost rate
proposal must comply with the
following:
(1) A proposal to establish a cost
allocation plan or an indirect cost rate,
whether submitted to a Federal
cognizant agency for indirect costs or
maintained on file by the recipient,
must be certified by the recipient using
the Certificate of Cost Allocation Plan or
Certificate of Indirect Costs as set forth
in appendices III through VII, and IX of
this part. The certificate must be signed
on behalf of the recipient by an
individual at a level no lower than the
vice president or chief financial officer
of the recipient that submits the
proposal.
(2) The Federal Government may
either disallow all indirect costs or
unilaterally establish an indirect cost
rate when the recipient fails to submit
a certified proposal for establishing a
rate. This rate should be based upon
audited historical data or other data
furnished to the cognizant agency for
indirect costs and for which it can be
demonstrated that all unallowable costs
have been excluded. The rate
established must ensure that potentially
unallowable costs are not reimbursed.
Alternatively, the recipient may use the
de minimis indirect cost rate. See
§ 200.414(f).
(d) Nonprofit organizations must
certify that they did not meet the
definition of a major nonprofit
organization as defined in § 200.414(a),
if applicable.
(e) The recipient must certify that the
requirements and standards for lobbying
(see § 200.450) have been met when
submitting its annual indirect cost rate
proposal.
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Special Considerations for States, Local
Governments and Indian Tribes
§ 200.416 Cost allocation plans and
indirect cost proposals.
(a) Awards to states, local
governments, and Indian Tribes are
often implemented at the level of
department within the State, local
government, or Indian Tribe. A central
service cost allocation plan is
established to allow such department to
claim a portion of centralized service
costs that are incurred in proportion to
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the award’s activities. Examples of
centralized service costs may include
motor pools, computer centers,
purchasing, and accounting. Since
Federal awards are performed within
the individual operating agencies, there
needs to be a process whereby these
central service costs can be identified
and assigned to benefitted activities on
a reasonable and consistent basis. The
central service cost allocation plan
establishes this process.
(b) Individual departments typically
charge Federal awards for indirect costs
through an indirect cost rate. A separate
indirect cost rate proposal for each
operating department is usually
necessary to claim indirect costs under
Federal awards. Indirect costs include:
(1) The indirect costs originating in
each operating department of the State,
local government, or Indian Tribe
carrying out Federal awards; and
(2) The costs of central governmental
services distributed through the central
service cost allocation plan and not
otherwise treated as direct costs.
(c) The requirements for developing
and submitting cost allocation plans (for
central service costs and public
assistance programs) and indirect cost
rate proposals are contained in
Appendices V, VI, and VII of this part.
§ 200.417
Interagency service.
An operating department may provide
services to another operating
department of the same State, local
government, or Indian Tribe. In these
instances, the cost of services provided
may include allowable direct costs of
the service plus a pro-rated share of
indirect costs. A standard indirect cost
rate equal to 10 percent of the direct
salaries and wages for providing the
service (excluding overtime, shift
premiums, and fringe benefits) may be
used instead of determining the actual
indirect costs of the service. These
services do not include centralized
services that are included in central
service cost allocation plans described
in Appendix V of this part.
Special Considerations for Institutions
of Higher Education
§ 200.418 Costs incurred by states and
local governments.
Costs incurred or paid by a State or
local government on behalf of and in
direct benefit to its IHEs are allowable.
These costs include but are not limited
to fringe benefit programs such as
pension costs and Federal Insurance
Contributions Act (FICA) costs. These
costs are allowable regardless of
whether or not they are recorded in the
accounting records of the institutions,
subject to the following conditions:
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(a) The costs meet the requirements of
§ 200.402—200.411;
(b) The costs are properly supported
by approved cost allocation plans in
accordance with the applicable cost
accounting principles of this part; and
(c) The costs are not otherwise borne
directly or indirectly by the Federal
Government.
§ 200.419
Cost accounting standards.
An IHE that receive an aggregate total
$50 million or more in Federal awards
and instruments subject to this subpart
(as specified in § 200.101) in its most
recently completed fiscal year must
comply with the Cost Accounting
Standards Board’s cost accounting
standards located at 48 CFR 9905.501,
9905.502, 9905.505, and 9905.506. CAScovered contracts and subcontracts
awarded to the IHEs are subject to the
broader range of CAS requirements at 48
CFR 9900 through 9999 and 48 CFR part
30 (FAR Part 30).
General Provisions for Selected Items of
Cost
§ 200.420 Considerations for selected
items of cost.
(a) This section provides principles to
be applied in establishing the
allowability of certain items involved in
determining cost, in addition to other
requirements of this subpart. These
principles apply whether or not a
particular cost item is properly treated
as a direct or indirect cost.
(b) The following sections are not
intended to be a comprehensive list of
potential items of cost encountered
under Federal awards. Failure to
mention a particular item of cost,
including as an example in certain
sections, is not intended to imply that
it is either allowable or unallowable.
When determining the allowability for
an item of cost, each case should be
based on the treatment provided for
similar or related items of cost and
based on the principles described in
§§ 200.402 through 200.411. In case of a
discrepancy between the provisions of a
specific Federal award and the
provisions below, the Federal award
governs. Criteria outlined in § 200.403
must be applied in determining
allowability.
§ 200.421
Advertising and public relations.
(a) The term advertising costs means
the costs of advertising media and
corollary administrative costs.
Advertising media includes, but is not
limited to, magazines, newspapers,
radio and television, direct mail,
exhibits, and electronic or computer
transmittals.
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(b) The only allowable advertising
costs are those which are solely for:
(1) The recruitment of personnel
required by the recipient or subrecipient
for the performance of a Federal award
(See also § 200.463);
(2) The procurement of goods and
services for the performance of a Federal
award;
(3) The disposal of scrap or surplus
materials acquired in the performance of
a Federal award except when the
recipient or subrecipient is reimbursed
for disposal costs at a predetermined
amount; or
(4) Program outreach and other
specific purposes necessary to meet the
Federal award requirements.
(c) The term ‘‘public relations’’
includes community relations and
means those activities dedicated to
maintaining the recipient’s or
subrecipient’s image or maintaining or
promoting understanding and favorable
relations with the community or public
at large or any segment of the public.
(d) The only allowable public
relations costs are:
(1) Costs specifically required by the
Federal award;
(2) Costs of communicating with the
public and press about specific
activities or accomplishments which
result from the performance of the
Federal award (these costs are
considered necessary as part of the
outreach effort for the Federal award); or
(3) Costs of conducting general liaison
with news media and government
public relations officers, to the extent
that such activities are limited to
communication and liaison necessary to
keep the public informed on matters of
public concern, such as notices of
funding opportunities or financial
matters.
(e) Unallowable advertising and
public relations costs include the
following:
(1) All advertising and public
relations costs other than as specified in
paragraphs (b) and (d) of this section;
(2) Costs of meetings, conventions,
conferences, or other events related to
other activities of the entity (see also
§ 200.432), including:
(i) Costs of displays, demonstrations,
and exhibits;
(ii) Costs of meeting rooms,
hospitality suites, and other special
facilities used in conjunction with
shows and other special events; and
(iii) Salaries and wages of employees
engaged in setting up and displaying
exhibits, making demonstrations, and
providing briefings;
(3) Costs of promotional items and
memorabilia;
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(4) Costs of advertising and public
relations designed solely to promote the
recipient or subrecipient.
§ 200.422
Advisory councils.
An advisory council or committee is
a body that provides advice to the
management of such entities as
corporations, organizations, or
foundations. Costs incurred by advisory
councils or committees are unallowable
unless authorized by statute, the Federal
agency, or as an indirect cost where
allocable to Federal awards. See
§ 200.444, which applies to States, local
governments, and Indian Tribes.
§ 200.423
Alcoholic beverages.
The cost of alcoholic beverages is
unallowable.
§ 200.424
Alumni activities.
Costs incurred by IHEs for, or in
support of, alumni activities are
unallowable.
§ 200.425 Audits conducted in accordance
with the Single Audit Act.
(a) A reasonably proportionate share
of the costs of audits required by and
performed in accordance with the
Single Audit Act Amendments of 1996
(31 U.S.C. 7501–7507), and the
requirements of this part are allowable.
However, the following audit costs are
unallowable:
(1) Any costs for audits that are not
required by and performed in
accordance with the Single Audit Act,
and the requirements of this part; and
(2) Any costs of auditing a recipient
or subrecipient exempt from having an
audit conducted under the Single Audit
Act and the requirements of this part.
(b) The costs of a financial statement
audit of a recipient or subrecipient that
does not currently have a Federal award
may be included in the indirect cost
pool for a cost allocation plan or
indirect cost proposal.
(c) Pass-through entities may charge
Federal awards for the cost of agreedupon procedures engagements to
monitor subrecipients (in accordance
with §§ 200.331–333) exempt from
having an audit conducted under the
Single Audit Act and the requirements
of this part. This cost is allowable only
if the agreed-upon procedures
engagements are:
(1) Conducted in accordance with
GAGAS or applicable international
attestation standards, as appropriate;
(2) Paid for and arranged by the passthrough entity; and
(3) Limited in scope to one or more
of the following compliance
requirements: activities allowed or
unallowed; allowable costs/cost
principles; eligibility; and reporting.
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§ 200.426
Bad debts.
Bad debts (debts determined to be
uncollectable), including losses
(whether actual or estimated) arising
from uncollectable accounts and other
claims, are unallowable. Related
collection costs, and related legal costs,
arising from such debts are also
unallowable. See § 200.428.
§ 200.427
Bonding costs.
(a) Bonding costs arise when the
Federal agency requires assurance
against financial loss to itself or others
because of an act or default of the
recipient. They also arise when the
recipient requires similar assurance,
including bonds as bid, performance,
payment, advance payment,
infringement, and fidelity bonds for
employees and officials.
(b) Bonding costs required under the
Federal award’s terms and conditions
are allowable.
(c) Bonding costs required by the
recipient in the general conduct of its
operations are allowable as an indirect
cost to the extent that such bonding is
in accordance with sound business
practice and the rates and premiums are
reasonable under the circumstances.
§ 200.428 Collections of improper
payments.
The costs incurred by a recipient or
subrecipient to recover improper
payments, including improper
overpayments, are allowable as either
direct or indirect costs, as appropriate.
The recipient or subrecipient may use
the amounts collected in accordance
with cash management standards
described in § 200.305.
§ 200.429 Commencement and
convocation costs.
For IHEs, costs incurred for
commencements and convocations are
unallowable, except as activity costs
provided for in Appendix III, (B)(9)
Student Administration and Services.
§ 200.430
services.
Compensation—personal
(a) General. Compensation for
personal services includes all
remuneration, paid currently or
accrued, for services of employees
rendered during the period of
performance under the Federal award,
including but not necessarily limited to
wages and salaries. Compensation for
personal services may also include
fringe benefits addressed in § 200.431.
Costs of compensation are allowable to
the extent that they satisfy the specific
requirements of this part and that the
total compensation for individual
employees:
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(1) Is reasonable for the services
rendered and conforms to the
established written policy of the
recipient or subrecipient consistently
applied to both Federal and non-Federal
activities;
(2) Follows an appointment made in
accordance with the recipient’s or
subrecipient’s laws, rules, or written
policies and meets the requirements of
Federal statute, where applicable; and
(3) Is determined and supported as
provided in paragraph (g) of this
section, when applicable.
(b) Reasonableness. Compensation for
employees engaged in work on Federal
awards will be reasonable to the extent
that it is consistent with that paid for
similar work in other activities of the
recipient or subrecipient. In cases where
the kinds of employees required for
Federal awards are not found in the
different activities of the recipient or
subrecipient, compensation will be
considered reasonable to the extent that
it is comparable to that paid for similar
work in the labor market in which the
recipient or subrecipient competes for
the kind of employees involved.
(c) Professional activities outside the
recipient or subrecipient. Unless the
Federal agency expressly authorizes an
arrangement, a recipient or subrecipient
must follow its written policies and
procedures concerning the permissible
extent of professional services that can
be provided outside the recipient or
subrecipient for non-organizational
compensation. Where the recipient or
subrecipient does not have written
policies or procedures, or they do not
adequately define the permissible extent
of consulting or other nonorganizational activities undertaken for
extra outside pay, the Federal
Government may require the recipient
or subrecipient to allocate the effort of
professional staff working on Federal
awards between:
(1) Recipient or subrecipient
activities, and
(2) Non-organizational professional
activities. Appropriate arrangements
governing compensation must be
negotiated on a case-by-case basis if the
Federal agency considers the extent of
non-organizational professional effort
excessive or inconsistent with the
conflicts-of-interest terms and
conditions of the Federal award.
(d) Unallowable costs. (1) Costs
unallowable under other sections of
these principles must not be allowable
under this section solely because they
constitute personnel compensation.
(2) The allowable compensation for
certain employees is subject to a ceiling
in accordance with Federal statute. See
10 U.S.C. 2324(e)(1)(P), 41 U.S.C. 1127,
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and 41 U.S.C. 4304(a)(16) for the ceiling
amount, covered compensation subject
to the ceiling, covered employees, and
other relevant provisions for costreimbursement contracts. For different
types of Federal awards, other statutory
ceilings may apply.
(e) Special considerations. Special
considerations in determining the
allowability of compensation will be
given to any change in a recipient’s or
subrecipient’s compensation policy
resulting in a substantial increase in its
employees’ level of compensation
(particularly when the change was
concurrent with an increase in the ratio
of Federal awards to other activities) or
any change in the treatment of
allowability of specific types of
compensation due to changes in Federal
policy.
(f) Incentive compensation. Incentive
compensation to employees based on
cost reduction, efficient performance,
suggestion awards, or safety awards is
allowable to the extent that the overall
compensation is determined to be
reasonable and such costs are paid or
accrued according to an agreement
entered into in good faith between the
recipient or subrecipient and the
employees before the services were
rendered, or according to an established
plan followed by the recipient or
subrecipient so consistently as to imply,
in effect, an agreement to make such
payment.
(g) Standards for Documentation of
Personnel Expenses. (1) Charges to
Federal awards for salaries and wages
must be based on records that accurately
reflect the work performed. These
records must:
(i) Be supported by a system of
internal control that provides reasonable
assurance that the charges are accurate,
allowable, and properly allocated;
(ii) Be incorporated into the official
records of the recipient or subrecipient;
(iii) Reasonably reflect the total
activity for which the employee is
compensated by the recipient or
subrecipient, not exceeding 100 percent
of compensated activities (for IHEs, this
is the IBS);
(iv) Encompass federally-assisted and
all other activities compensated by the
recipient or subrecipient on an
integrated basis but may include the use
of subsidiary records as defined in the
recipient’s or subrecipient’s written
policy;
(v) Comply with the established
accounting policies and procedures of
the recipient or subrecipient (See
paragraph (i)(1)(ii) of this section for
treatment of incidental work for IHEs.);
and
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(vi) Support the distribution of the
employee’s salary or wages among
specific activities or cost objectives if
the employee works on more than one
Federal award; a Federal award and
non-Federal award; an indirect cost
activity and a direct cost activity; two or
more indirect activities allocated using
different allocation bases; or an
unallowable activity and a direct or
indirect cost activity.
(vii) Budget estimates (meaning,
estimates determined before the services
are performed) alone do not qualify as
support for charges to Federal awards,
but may be used for interim accounting
purposes, provided that:
(A) The system for establishing the
estimates produces reasonable
approximations of the activity
performed;
(B) Significant changes in the related
work activity (as defined by the
recipient’s or subrecipient’s written
policies) are promptly identified and
entered into the records. Short-term
(such as one or two months) fluctuation
between workload categories do not
need to be considered as long as the
distribution of salaries and wages is
reasonable over the longer term; and
(C) The recipient’s or subrecipient’s
system of internal controls includes
processes to perform periodic after-thefact reviews of interim charges made to
a Federal award based on budget
estimates. All necessary adjustments
must be made so that the final amount
charged to the Federal award is
accurate, allowable, and properly
allocated based on actual work
performed.
(viii) Because practices vary as to the
activity constituting a full workload (for
example, IBS for IHEs), records may
reflect categories of activities expressed
as a percentage distribution of total
activities.
(ix) It is recognized that teaching,
research, service, and administration are
often inextricably intermingled in an
academic setting. Therefore, a precise
assessment of factors contributing to
costs is not required when IHEs record
salaries and wages are charged to
Federal awards.
(2) For records that meet the
standards required in paragraph (g)(1) of
this section, the recipient or
subrecipient is not required to provide
additional support or documentation for
the work performed other than that
referenced in paragraph (g)(3) of this
section.
(3) In accordance with Department of
Labor regulations implementing the Fair
Labor Standards Act (FLSA) (29 CFR
part 516), charges for the salaries and
wages of nonexempt employees, in
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addition to the supporting
documentation described in this
section, must also be supported by
records indicating the total number of
hours worked each day.
(4) Salaries and wages of employees
used in meeting cost sharing
requirements on Federal awards must be
supported in the same manner as
salaries and wages claimed for
reimbursement from Federal awards.
(5) States, local governments, and
Indian Tribes may use substitute
processes or systems for allocating
salaries and wages to Federal awards
either in place of or in addition to the
records described in paragraph (g)(1) of
this section if approved by the cognizant
agency for indirect cost. Such systems
may include, but are not limited to,
random moment sampling, ‘‘rolling’’
time studies, case counts, or other
quantifiable measures of work
performed.
(i) Substitute systems that use
sampling methods (primarily for
Temporary Assistance for Needy
Families (TANF), the Supplemental
Nutrition Assistance Program (SNAP),
Medicaid, and other public assistance
programs) must meet acceptable
statistical sampling standards,
including:
(A) The sampling universe must
include all of the employees whose
salaries and wages are to be allocated
based on sample results except as
provided in paragraph (g)(5)(iii);
(B) The sample must cover the entire
period involved; and
(C) The results must be statistically
valid and applied to the period being
sampled.
(ii) Allocating charges for the sampled
employees’ supervisors and clerical and
support staff, based on the results of the
sampled employees, will be acceptable.
(iii) Less than full compliance with
the statistical sampling standards noted
in paragraph (5)(i) may be accepted by
the cognizant agency for indirect costs
if it concludes that the amounts
allocated to Federal awards will be
minimal or if it concludes that the
system proposed by the recipient or
subrecipient will result in lower costs to
Federal awards than a system which
complies with the standards.
(6) Cognizant agencies for indirect
costs are encouraged to approve
alternative proposals based on outcomes
and milestones for program performance
when these are clearly documented.
These plans are acceptable as an
alternative to requirements in paragraph
(g)(1) of this section when approved by
the cognizant agency for indirect costs.
(7) For Federal awards of similar
purpose activity or instances of
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approved blended funding, a recipient
or subrecipient may submit performance
plans that incorporate funds from
multiple Federal awards and account for
their combined use based on
performance-oriented metrics, provided
the plans are approved in advance by all
involved Federal agencies. In these
instances, the recipient or subrecipient
must submit a request for waiver of the
requirements based on documentation
that describes the method of charging
costs, relates the charging of costs to the
specific activity that is applicable to all
fund sources, and is based on
quantifiable measures of the activity in
relation to time charged.
(8) For a recipient or subrecipient
whose records do not meet the
standards described in this section, the
Federal Government may require
personnel activity reports, including
prescribed certifications, or equivalent
documentation supporting the records
as required in this section.
(h) Nonprofit organizations. This
paragraph provides guidance specific to
only nonprofit organizations. For
compensation to members of nonprofit
organizations, trustees, directors,
associates, officers, or the immediate
families thereof, a determination must
be made that the compensation is
reasonable for the actual personal
services rendered rather than a
distribution of earnings above actual
costs. Compensation may include
director’s and executive committee
member’s fees, incentive awards, off-site
or incentive pay, location allowances,
hardship pay, and cost-of-living
differentials.
(i) Institutions of Higher Education
(IHEs). This paragraph provides
guidance specific to only IHEs.
(1) Determining allowable personnel
costs. Certain conditions require special
consideration and possible limitations
in determining allowable personnel
compensation costs under Federal
awards. Among such conditions are the
following:
(i) Allowable activities. Charges to
Federal awards may include reasonable
amounts for activities contributing and
directly related to work under an
agreement, such as delivering special
lectures about specific aspects of the
ongoing activity, writing reports and
articles, developing and maintaining
protocols (human, animals, etcetera),
managing substances/chemicals,
managing and securing project-specific
data, coordinating research subjects,
participating in appropriate seminars,
consulting with colleagues and graduate
students, and attending meetings and
conferences.
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(ii) Incidental activities. Incidental
activities for which supplemental
compensation is allowable under the
written institutional policy (at a rate not
to exceed institutional base salary) do
not need to be included in the records
described in paragraph (g) to charge
payments of incidental activities
directly, such activities must either be
expressly authorized in the Federal
award budget or receive prior written
approval by the Federal agency.
(2) Salary basis. Charges for work
performed on Federal awards by faculty
members during the academic year are
allowable at the institutional base salary
(IBS) rate. Except as noted in paragraph
(i)(1)(ii), in no event will charges to
Federal awards, irrespective of the basis
of computation, exceed the
proportionate share of the IBS for that
period. This principle applies to all
members of the faculty at an institution.
IBS is the annual compensation paid by
an IHE for an individual’s appointment,
whether that individual’s time is spent
on research, instruction, administration,
or other activities. IBS excludes any
income an individual earns outside of
duties performed for the IHE. Unless
there is prior approval by the Federal
agency, charges of a faculty member’s
salary to a Federal award may not
exceed the proportionate share of the
IBS for the period during which the
faculty member worked on the Federal
award.
(3) Intra-Institution of Higher
Education (IHE) consulting. Intra-IHE
consulting by faculty should be
undertaken as an IHE responsibility
requiring no compensation in addition
to IBS. However, in unusual cases
where consultation is across
departmental lines or involves a
separate or remote operation, and the
work performed by the faculty members
is in addition to their regular
responsibilities, any charges for such
work representing additional
compensation above IBS are allowable
provided that such consulting
arrangements are expressly authorized
in the Federal award or approved in
writing by the Federal agency.
(4) Extra service pay. Extra service
pay typically represents overload
compensation, subject to institutional
compensation policies for services
above and beyond IBS. Where extra
service pay results from Intra-IHE
consulting, it is subject to the same
requirements of paragraph (b) of this
section. It is allowable if all of the
following conditions are met:
(i) The IHE establishes consistent
written policies which apply uniformly
to all faculty members, not just those
working on Federal awards.
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(ii) The IHE establishes a consistent
written definition of work covered by
IBS, which is specific enough to
determine conclusively when work
beyond that level has occurred. This
definition may be described in
appointment letters or other
documentation.
(iii) The supplementation amount
paid is commensurate with the IBS pay
rate and additional work performed. See
paragraph (i)(2) of this section.
(iv) The salaries, as supplemented,
fall within the salary structure and pay
ranges established by and documented
in writing or otherwise applicable to the
IHE.
(v) The total salaries charged to
Federal awards, including extra service
payments, are subject to the standards of
documentation as described in
paragraph (g).
(5) Periods outside the academic year.
(i) Except as specified for teaching
activity in paragraph (i)(5)(ii) of this
section, charges for work performed by
faculty members on Federal awards
during periods not included in the base
salary period must be at a rate not more
than the IBS.
(ii) Charges for teaching activities
performed by faculty members on
Federal awards during periods not
included in IBS period must be based
on the written policy of the IHE
governing compensation to faculty
members for teaching assignments
during such periods.
(6) Part-time faculty. Charges for work
performed on Federal awards by faculty
members having only part-time
appointments must be determined at a
rate not more than that regularly paid
for part-time assignments.
(7) Sabbatical leave costs. Rules for
sabbatical leave are as follows:
(i) Costs of leaves of absence by
employees for performance of graduate
work or sabbatical study, travel, or
research are allowable, provided the IHE
has a uniform written policy on
sabbatical leave for persons engaged in
instruction and persons engaged in
research. These costs must be allocated
equitably among all related activities of
the IHE.
(ii) Where sabbatical leave is included
in fringe benefits as a direct charge, the
aggregate amount of assessments
applicable to all work of the institution
during the base period must be
reasonable in relation to the IHE’s
experience under its sabbatical leave
policy.
(8) Salary rates for non-faculty
members. Non-faculty full-time
professional personnel may also earn
‘‘extra service pay’’ in accordance with
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the recipient’s written policy and
paragraph (i)(1)(i).
§ 200.431
Compensation—fringe benefits.
(a) General. Fringe benefits are
allowances and services employers
provide to their employees as
compensation in addition to regular
salaries and wages. Fringe benefits
include, but are not limited to, the costs
of leave (vacation, family, sick, or
military), employee insurance,
pensions, and unemployment benefits.
Except as provided elsewhere in these
principles, the costs of fringe benefits
are allowable provided that the benefits
are reasonable and are required by law,
an organization-employee agreement, or
an established policy of the recipient or
subrecipient.
(b) Leave. The cost of fringe benefits
in the form of regular compensation
paid to employees during periods of
authorized absences from the job, such
as for annual leave, family-related leave,
sick leave, holidays, court leave,
military leave, administrative leave, and
other similar benefits, are allowable if
all of the following criteria are met:
(1) They are provided under
established written leave policies;
(2) The costs are equitably allocated to
all related activities, including Federal
awards; and,
(3) The accounting basis (cash or
accrual) selected for costing each type of
leave is consistently followed by the
recipient or subrecipient or a specified
grouping of employees.
(i) When a recipient or subrecipient
uses the cash basis of accounting, the
cost of leave is recognized in the period
that the leave is taken and paid for.
Payments for unused leave when an
employee retires or terminates
employment are allowable in the year of
payment and must be allocated as a
general administrative expense to all
activities. These costs may be included
in fringe benefit rates with the approval
of the cognizant agency for indirect
costs.
(ii) The accrual basis may be only
used for those types of leave for which
a liability as defined by GAAP exists
when the leave is earned. When a
recipient or subrecipient uses the
accrual basis of accounting, allowable
leave costs are the lesser of the amount
accrued or funded.
(c) Fringe benefits. The cost of fringe
benefits in the form of employer
contributions or expenses for social
security; employee life, health,
unemployment, and worker’s
compensation insurance (except as
indicated in § 200.447); pension plan
costs; and other similar benefits are
allowable, provided such benefits are
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permitted under established written
policies. The recipient or subrecipient
must allocate fringe benefits to Federal
awards and all other activities in a
manner consistent with the pattern of
benefits attributable to the individuals
or group(s) of employees whose salaries
and wages are chargeable to such
Federal awards and other activities, and
charged as direct or indirect costs
following the recipient’s or
subrecipient’s accounting practices.
(d) Cost objectives. The recipient or
subrecipient may assign fringe benefits
to cost objectives by identifying specific
benefits to specific individual
employees or by allocating them based
on entity-wide salaries and wages of the
employees receiving the benefits. When
the allocation method is used, separate
allocations must be made to selective
groupings of employees unless the
recipient or subrecipient demonstrates
that costs in relationship to salaries and
wages do not differ significantly for
different groups of employees.
(e) Insurance. See also § 200.447(d)(1)
and (2).
(1) Provisions for a reserve under a
self-insurance program for
unemployment compensation or
workers’ compensation are allowable to
the extent that the provisions represent
reasonable estimates of the liabilities for
such compensation and the types of
coverage, the extent of coverage, and
rates and premiums would have been
allowable had insurance been
purchased to cover the risks. However,
provisions for self-insured liabilities
which do not become payable for more
than one year after the provision is
made must not exceed the present value
of the liability.
(2) Insurance costs on the lives of
trustees, officers, or other employees
holding positions of similar
responsibility are allowable only to the
extent that the insurance represents
additional compensation. The cost of
such insurance is unallowable when the
recipient or subrecipient is named as
beneficiary.
(3) Actual claims paid to or on behalf
of employees or former employees for
workers’ compensation, unemployment
compensation, severance pay, and
similar employee benefits (for example,
post-retirement health benefits) are
allowable in the year of payment
provided that the recipient or
subrecipient follows a consistent costing
policy.
(f) Automobiles. That portion of
automobile costs furnished by the
recipient or subrecipient that relates to
personal use by employees (including
transportation to and from work) is
unallowable as a fringe benefit or
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indirect costs regardless of whether the
cost is reported as taxable income to the
employees.
(g) Pension plan costs. Pension plan
costs incurred in accordance with the
established written policies of the
recipient or subrecipient are allowable,
provided that:
(1) Such policies meet the test of
reasonableness.
(2) The methods of cost allocation are
not discriminatory.
(3) The cost assigned to each fiscal
year should be determined in
accordance with GAAP, except for State
and local governments.
(4) The costs assigned to a given fiscal
year are funded for all plan participants
within six months after the end of that
year. However, increases to normal and
past service pension costs caused by a
delay in funding the actuarial liability
beyond 30 calendar days after each
quarter of the year to which such costs
are assignable are unallowable. The
recipient or subrecipient may follow the
‘‘Cost Accounting Standard for
Composition and Measurement of
Pension Costs’’ (48 CFR 9904.412).
(5) Premiums for pension plan
termination insurance that are paid
according to the Employee Retirement
Income Security Act (ERISA) of 1974
(29 U.S.C. 1301–1461) are allowable.
Late payment charges on such
premiums are unallowable. Excise taxes
on accumulated funding deficiencies
and other penalties imposed under
ERISA are unallowable.
(6) Pension plan costs may be
computed using a pay-as-you-go method
or an actuarial cost method recognized
by GAAP and following the recipient’s
or subrecipient’s established written
policies.
(i) For pension plans financed on a
pay-as-you-go method, allowable costs
will be limited to those representing
actual payments to retirees or their
beneficiaries.
(ii) Pension costs calculated using an
actuarial cost method recognized by
GAAP are allowable for a given fiscal
year if they are funded for that year
within six months after the end of that
year. Costs funded after six months (or
a later period agreed to by the cognizant
agency for indirect costs) are allowable
in the year funded. The cognizant
agency for indirect costs may agree to an
extension if an appropriate adjustment
is made to compensate for the timing of
the charges to the Federal Government
and related Federal reimbursement and
the recipient’s or subrecipient’s
contribution to the pension fund.
Adjustments may be made by cash
refund or other equitable procedures to
compensate the Federal Government for
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the time value of Federal
reimbursements in excess of
contributions to the pension fund.
(iii) Amounts funded by the recipient
or subrecipient in excess of the costs
calculated using an actuarial cost-based
method recognized by GAAP for a fiscal
year may be used as the recipient’s or
subrecipient’s contribution in future
periods.
(iv) When a recipient or subrecipient
establishes or converts to an acceptable
actuarial cost method, as defined by
GAAP, and funds pension costs in
accordance with this method, the
unfunded liability at the time of
conversion is allowable if amortized
over a period of years in accordance
with GAAP.
(v) Payments for unfunded pension
costs must be charged in accordance
with the allocation principles of this
subpart. Specifically, the recipient or
subrecipient may not charge unfunded
pension costs directly to a Federal
award if those unfunded pension costs
are related to compensation not
allocable to that award. In all cases, the
payments for unfunded pension costs
may not exceed the contribution rate of
the employee’s current pension costs.
Payments for unfunded pension costs
may only be charged to a Federal award
with the prior approval of the awarding
Federal agency or cognizant agency for
indirect costs if included as part of an
approved negotiated indirect cost rate
agreement. The recipient or subrecipient
must notify the awarding Federal
agency or cognizant agency for indirect
costs, as applicable, if unfunded
pension costs are re-amortized.
(vi) The recipient or subrecipient
must provide the Federal Government
an equitable share of any previously
allowed pension costs (including
subsequent earnings) that the recipient
or subrecipient receives through a
refund, withdrawal, or other credit.
(h) Post-retirement health. A postretirement health plan (PRHP) refers to
the costs of health insurance or health
services not included in a pension plan
covered by paragraph (g) for retirees and
their spouses, dependents, and
survivors. PRHP costs may be computed
using a pay-as-you-go method or an
actuarial cost method recognized by
GAAP and following the recipient’s or
subrecipient’s established written
policies.
(1) For PRHP financed on a pay-asyou-go method, allowable costs will be
limited to those representing actual
payments to retirees or their
beneficiaries.
(2) PRHP costs calculated using an
actuarial cost method recognized by
GAAP are allowable for a given fiscal
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year if they are funded for that year
within six months after the end of that
year. Costs funded after six months (or
a later period agreed to by the cognizant
agency for indirect costs) are allowable
in the year funded. The cognizant
agency for indirect costs may agree to an
extension if an appropriate adjustment
is made to compensate for the timing of
the charges to the Federal Government
and related Federal reimbursement and
the recipient’s or subrecipient’s
contributions to the PRHP fund.
Adjustments may be made by cash
refund, reduction in the current year’s
PRHP costs, or other equitable
procedures to compensate the Federal
Government for the time value of
Federal reimbursements in excess of
contributions to the PRHP fund.
(3) Amounts funded by the recipient
or subrecipient in excess of the costs
calculated using an actuarial cost-based
method recognized by GAAP for a fiscal
year may be used as the recipient’s or
subrecipient’s contribution in future
periods.
(4) If a recipient or subrecipient
establishes or converts to an actuarial
cost method and funds PRHP costs in
accordance with this method, the initial
unfunded liability attributable to prior
years is allowable if amortized over a
period of years in accordance with
GAAP, or, if no such GAAP period
exists, over a period negotiated with the
cognizant agency for indirect costs.
(5) Payments for unfunded PRHP
costs must be charged in accordance
with the allocation principles of this
subpart. Specifically, the recipient or
subrecipient may not charge unfunded
PRHP costs directly to a Federal award
if those unfunded PRHP costs are
related to compensation not allocable to
that award. In all cases, the payments
for unfunded PHRP costs may not
exceed the contribution rate of the
employee’s current health benefit costs.
Payments for unfunded PRHP costs may
only be charged to a Federal award with
the prior approval of the awarding
Federal agency or cognizant agency for
indirect costs if included as part of an
approved negotiated indirect cost rate
agreement. The recipient or subrecipient
must notify the awarding Federal
agency or cognizant agency for indirect
costs, as applicable, if unfunded PHRP
costs are re-amortized.
(6) To be allowable in the current
year, the PRHP costs must be paid either
to:
(i) An insurer or other benefit
provider as current year costs or
premiums; or
(ii) An insurer or trustee that will
maintain a trust fund or reserve for the
sole purpose of providing post-
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retirement benefits to retirees and other
beneficiaries.
(7) The recipient or subrecipient must
provide the Federal Government an
equitable share of any previously
allowed post-retirement benefit costs
(including subsequent earnings) that the
recipient or subrecipient receives
through a refund, withdrawal, or other
credit.
(i) Severance pay. (1) Severance pay,
also commonly referred to as dismissal
wages, is a payment in addition to
regular salaries and wages, by recipients
and subrecipients to workers whose
employment is being terminated.
Severance pay is allowable only to the
extent that, in each case, it is required
by:
(i) Law;
(ii) Employer-employee agreement;
(iii) Established policy that
constitutes, in effect, an implied
agreement on the recipient’s or
subrecipient’s part; or
(iv) Circumstances of the particular
employment.
(2) Costs of severance payments are
divided into two categories as follows:
(i) Actual severance payments for
normal turnover must be allocated to all
activities; or, where the recipient or
subrecipient provides for a reserve for
normal severances, such method is
acceptable if the charge to current
operations is reasonable in light of
payments made for normal severances
over a representative past period, and if
amounts charged are allocated to all
activities of the recipient or
subrecipient.
(ii) Measuring the costs of abnormal
or mass severance pay by means of an
accrual method will not achieve equity
for both parties. Therefore, accruals are
not allowable. However, the Federal
Government recognizes its
responsibility to contribute its fair share
toward a specific payment. Prior
approval by the Federal agency or
cognizant agency for indirect cost, as
appropriate, is required.
(3) Costs incurred in severance pay
packages that are in excess of the
standard severance pay provided by the
recipient or subrecipient to an employee
upon termination of employment and
that are paid to the employee contingent
upon a change in management control
over, or ownership of, the recipient’s or
subrecipient’s assets, are unallowable.
(4) Severance payments to foreign
nationals employed by the recipient or
subrecipient outside the United States,
to the extent that the amount exceeds
the customary or prevailing practices for
the recipient or subrecipient in the
United States, are unallowable unless
they are required by applicable foreign
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law or necessary for the performance of
Federal programs and approved by the
Federal agency.
(5) Severance payments to foreign
nationals employed by the recipient or
subrecipient outside the United States
due to the termination of the foreign
national as a result of the closing of, or
curtailment of activities by, the
recipient or subrecipient in that
country, are unallowable unless they are
required by applicable foreign law or
necessary for the performance of Federal
programs and approved by the Federal
agency.
(j) For IHEs only. (1) Fringe benefits in
the form of undergraduate and graduate
tuition or tuition remission for
individual employees are allowable,
provided such benefits are granted in
accordance with established written
policies of the IHE and are distributed
to all IHE activities on an equitable
basis. Tuition benefits for family
members other than the employee are
unallowable.
(2) Fringe benefits in the form of
undergraduate and graduate tuition or
tuition remission for individual
employees not employed by the IHE are
limited to the tax-free amount allowed
by the Internal Revenue Code as
amended (26 U.S.C. 127).
(3) IHEs may offer employees tuition
waivers or reductions, provided that the
benefit does not discriminate in favor of
highly compensated employees.
Employees can exercise these benefits at
other institutions according to
institutional policy. See § 200.466, for
treatment of tuition remission provided
to students.
(k) Fringe benefit programs and other
benefit costs. For IHEs whose costs are
paid by a State or local government,
fringe benefit programs (such as pension
costs and FICA) and any other benefits
costs incurred specifically on behalf of,
and in direct benefit to, the IHE, are
allowable. These costs do not need to be
recorded in the accounting records of
the IHE but are subject to the following:
(1) The costs meet the requirements of
Basic Considerations in §§ 200.402
through 200.411;
(2) The costs are properly supported
by approved cost allocation plans in
accordance with applicable Federal cost
accounting principles; and
(3) The costs are not otherwise borne
directly or indirectly by the Federal
Government.
§ 200.432
Conferences.
A conference means an event whose
primary purpose is to disseminate
technical information beyond the
recipient or subrecipient and is
necessary and reasonable for successful
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performance under the Federal award.
Allowable conference costs paid by the
recipient or subrecipient as a sponsor or
host of the conference may include
rental of facilities, speakers’ fees, costs
of meals and refreshments, local
transportation, and other incidental
items to such conferences unless further
restricted by the terms and conditions of
the Federal award. The costs of
identifying and providing locally
available dependent-care resources for
participants are allowable as needed.
Conference hosts/sponsors must
exercise discretion and judgment in
ensuring that conference costs are
appropriate, necessary, and managed to
minimize costs to the Federal award.
The Federal agency may authorize
exceptions for programs including
Indian Tribes, children, and the elderly.
See also §§ 200.438, 200.456, and
200.475.
§ 200.433
Contingency provisions.
(a) Contingency provisions are part of
a budget estimate of future costs
(typically of large construction projects,
IT systems, or other items approved by
the Federal agency) which are
associated with possible events or
conditions arising from causes for
which the precise outcome is
indeterminable at the time of estimate
and that are likely to result, in the
aggregate, in additional costs for the
approved activity or project.
Contingency costs for major project
scope changes, unforeseen risks, or
extraordinary events are not allowable.
(b) It is permissible for contingency
costs other than those excluded in
paragraph (a) of this section to be
explicitly included in budget estimates
to the extent necessary to improve their
precision. Contingency costs must be
estimated using broadly-accepted cost
estimating methodologies, specified in
the budget documentation of the Federal
award, and accepted by the Federal
agency. As such, contingency amounts
are to be included in the Federal award.
In order for actual costs incurred to be
allowable, they must comply with the
cost principles and other requirements
of this part (see §§ 200.300 and
200.403), be necessary and reasonable
for proper and efficient accomplishment
of project or program objectives, and be
verifiable from the recipient’s or
subrecipient’s records.
(c) Payments to a recipient’s or
subrecipient’s ‘‘contingency reserve’’ or
any similar payment made for events
the occurrence of which cannot be
foretold with certainty as to the time or
intensity, or with an assurance of their
happening, are unallowable, except as
noted in §§ 200.431 and 200.447.
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Contributions and donations.
(a) Costs of contributions and
donations, including cash, property, and
services, from the recipient or
subrecipient to other entities are
unallowable.
(b) The value of services and property
donated (including in-kind) to the
recipient or subrecipient may not be
charged to the Federal award either as
a direct or indirect cost. The value of
donated services and property may be
used to meet cost sharing requirements
(see § 200.306). Depreciation on donated
assets is permitted so long as the
donated property is not counted
towards meeting cost sharing
requirements (see § 200.436).
(c) Services donated or volunteered to
the recipient or subrecipient may be
provided by professional and technical
personnel, consultants, and other
skilled and unskilled labor. The value of
these services may not be charged to the
Federal award as a direct or indirect
cost. However, the value of donated
services may be used to meet cost
sharing requirements in accordance
with the provisions of § 200.306.
(d) To the extent feasible, services
donated to the recipient or subrecipient
will be supported by the same methods
used to support the allocability of
regular personnel services.
(e) The following provisions apply to
nonprofit organizations. The value of
services donated to a nonprofit
organization and used in the
performance of a direct cost activity
must be considered in the determination
of the recipient’s or subrecipient’s
indirect cost rate(s) and, accordingly,
must be allocated a proportionate share
of applicable indirect costs when the
following circumstances exist:
(1) The aggregate value of the services
is material;
(2) The services are supported by a
significant amount of the indirect costs
incurred by the recipient or
subrecipient;
(i) In those instances where there is
no basis for determining the fair market
value of the services rendered, the
recipient or subrecipient and the
cognizant agency for indirect costs must
negotiate an appropriate allocation of
indirect cost to the services.
(ii) Where donated services directly
benefit a project supported by the
Federal award, the indirect costs
allocated to the services will be
considered as a part of the project’s total
costs. Such indirect costs may be
reimbursed under the Federal award or
used to meet cost sharing requirements.
(f) Fair market value of donated
services must be computed as described
in § 200.306.
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(g) Personal Property and Use of
Space.
(1) Donated personal property and use
of space may be furnished to a recipient
or subrecipient. The value of the
personal property and space may not be
charged to the Federal award either as
a direct or indirect cost.
(2) The value of the donations may be
used to meet cost sharing requirements
described in § 200.300. The recipient or
subrecipient must value the donations
in accordance with § 200.300. Where the
recipient or subrecipient treats
donations as indirect costs, indirect cost
rates must separate the value of the
donations so that reimbursement is not
made.
§ 200.435 Defense and prosecution of
criminal and civil proceedings, claims,
appeals and patent infringements.
(a) Definitions for this section—(1)
Conviction means a judgment or
conviction of a criminal offense by any
court of competent jurisdiction, whether
entered upon verdict or a plea,
including a conviction due to a plea of
nolo contendere.
(2) Costs include the services of inhouse or private counsel, accountants,
consultants, or others engaged to assist
the recipient or subrecipient before,
during, and after the commencement of
a judicial or administrative proceeding
that bears a direct relationship to the
proceeding.
(3) Fraud means:
(i) Acts of fraud or corruption or
attempts to defraud the Federal
Government or to corrupt its agents,
(ii) Acts that constitute a cause for
debarment or suspension (as specified
in agency regulations), and
(iii) Acts that violate the False Claims
Act (31 U.S.C. 3729–3732) or the Antikickback Act (42 U.S.C. 1320a–7b(b)).
(4) Penalty does not include
restitution, reimbursement, or
compensatory damages.
(5) Proceeding includes an
investigation.
(b) Costs. (1) Except as otherwise
described herein, costs incurred in
connection with any criminal, civil, or
administrative proceeding (including
the filing of a false certification)
commenced by the Federal Government,
a State, local government, or foreign
government, or joined by the Federal
Government (including a proceeding
under the False Claims Act), against the
recipient or subrecipient, (or
commenced by third parties or a current
or former employee of the recipient or
subrecipient who submits a
whistleblower complaint of reprisal in
accordance with 10 U.S.C. 4701 or 41
U.S.C. 4712), are not allowable if the
proceeding:
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(i) Relates to a violation of, or failure
to comply with, a Federal, State, local
or foreign statute, regulation, or the
terms and conditions of the Federal
award by the recipient or subrecipient
(including its agents and employees);
and
(ii) Results in any of the following
dispositions:
(A) In a criminal proceeding, a
conviction.
(B) In a civil or administrative
proceeding involving an allegation of
fraud or similar misconduct, a
determination of recipient or
subrecipient liability.
(C) In the case of any civil or
administrative proceeding, the
disallowance of costs, the imposition of
a monetary penalty, or an order issued
by the Federal agency head or delegate
to the recipient or subrecipient to take
corrective action under 10 U.S.C. 4701
or 41 U.S.C. 4712.
(D) A final decision by an appropriate
Federal official to debar or suspend the
recipient or subrecipient, to rescind or
void a Federal award, or to terminate a
Federal award because of a violation or
failure to comply with a statute,
regulation, or the terms and conditions
of the Federal award.
(E) A disposition by consent or
compromise if the action could have
resulted in any of the dispositions
described in paragraphs (b)(1)(ii)(A)
through (D) of this section.
(2) If more than one proceeding
involves the same alleged misconduct,
the costs of all such proceedings are
unallowable if any results in one of the
dispositions shown in paragraph (b) of
this section.
(c) Allowability of costs for
proceeding commenced by Federal
Government. If a proceeding referred to
in paragraph (b) of this section is
commenced by the Federal Government
and is resolved by consent or
compromise pursuant to an agreement
by the recipient or subrecipient and the
Federal Government, then the costs
incurred may be allowed to the extent
expressly authorized in the agreement.
(d) Allowability of costs for
proceeding commenced by State, local,
or foreign government. If a proceeding
referred to in paragraph (b) of this
section is commenced by a State, local
or foreign government, then the costs
incurred may be allowed if the
authorized Federal official determines
that the costs were incurred as a result
of:
(1) A specific term or condition of the
Federal award, or
(2) Specific written direction of an
authorized official of the Federal
agency.
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(e) Allowability of costs in general.
Costs incurred in connection with
proceedings described in paragraph (b),
and that are not unallowable, may be
allowable to the extent that:
(1) The costs are reasonable and
necessary for the administration of the
Federal award and activities required to
deal with the proceeding and the
underlying cause of action;
(2) Payment of the reasonable,
necessary, allocable and otherwise
allowable costs incurred is not
prohibited by any other provision(s) of
the Federal award;
(3) The costs are not recovered from
the Federal Government or a third party,
either directly as a result of the
proceeding or otherwise; and,
(4) An authorized Federal official
must determine the percentage of costs
allowed considering the complexity of
litigation, generally accepted principles
governing the award of legal fees in civil
actions involving the United States, and
other factors that may be appropriate.
This percentage must not exceed 80
percent unless the agreement under
paragraph (c) has explicitly considered
this limitation and permitted a higher
percentage. In that case, the total
amount of costs incurred may be
allowable.
(f) Major Fraud Act. Costs incurred by
the recipient or subrecipient in
connection with the defense of suits
brought by its employees or exemployees under section 2 of the Major
Fraud Act of 1988 (18 U.S.C. 1031),
including the cost of all relief necessary
to make the employee whole, where the
recipient or subrecipient was found
liable or settled, are unallowable.
(g) Un-allowability of costs for
prosecuting claims against Federal
Government. Costs for prosecuting
claims against the Federal Government,
including appeals of final Federal
agency decisions, are unallowable.
(h) Costs of legal, accounting,
consultant services. Costs of legal,
accounting, consultant services, and
related costs incurred in connection
with patent infringement litigation, are
unallowable unless otherwise provided
for in the Federal award.
(i) Potentially unallowable costs.
Costs that may be unallowable under
this section, including directly
associated costs, must be segregated and
accounted for separately. During the
pendency of any proceeding covered by
paragraphs (b) and (f) of this section, the
Federal Government must generally
withhold payment of such costs.
However, if in its best interests, the
Federal Government may provide for
conditional payment upon a provision
of adequate security, or other adequate
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assurance, and agreement to repay all
unallowable costs, plus interest, if the
costs are subsequently determined to be
unallowable.
§ 200.436
Depreciation.
(a) Depreciation is the method for
allocating the cost of fixed assets to
periods benefitting from asset use. The
recipient or subrecipient may be
compensated for the use of its buildings,
capital improvements, equipment, and
software projects capitalized in
accordance with GAAP provided that
they are needed and used in the
recipient’s or subrecipient’s activities
and correctly allocated to Federal
awards. The compensation must be
made by computing the proper
depreciation.
(b) The allocation for depreciation
must be made in accordance with
Appendices III through IX of this part.
(c) Depreciation is computed applying
the following rules. The computation of
depreciation must be based on the
acquisition cost of the assets involved.
For an asset donated to the recipient or
subrecipient by a third party, its fair
market value at the time of the donation
must be considered as the acquisition
cost. Such assets may be depreciated or
claimed as cost sharing but not both.
When computing depreciation charges,
the acquisition cost will exclude:
(1) The cost of land;
(2) Any portion of the cost of
buildings and equipment borne by or
donated by the Federal Government,
irrespective of where the title was
originally vested or is presently located;
(3) Any portion of the cost of
buildings and equipment contributed by
or for the recipient or subrecipient that
is already claimed as cost sharing or
where law or agreement prohibits
recovery; and
(4) Any asset acquired solely for the
performance of a non-Federal award.
(d) When computing depreciation
charges, the following must be observed:
(1) The period of useful service or
useful life established in each case for
usable capital assets must take into
consideration such factors as the type of
construction, nature of the equipment,
technological developments in the
particular area, historical data, and the
renewal and replacement policies
followed for the individual items or
classes of assets involved.
(2) The depreciation method used to
charge the cost of an asset (or group of
assets) to accounting periods must
reflect the pattern of consumption of the
asset during its useful life. In the
absence of clear evidence indicating that
the expected consumption of the asset
will be significantly greater in the early
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portions than in the later portions of its
useful life, the straight-line method
must be presumed to be the appropriate
method. Depreciation methods once
used may not be changed unless
approved in advance by the cognizant
agency for indirect costs. The
depreciation methods used to calculate
the depreciation amounts for indirect
cost rate purposes must be the same
methods used by the recipient or
subrecipient for its financial statements.
(3) The entire building, including the
shell and all components, may be
treated as a single asset and depreciated
over a single useful life. A building may
also be divided into multiple
components. Each component may be
depreciated over its estimated useful life
in this case. The building components
must be grouped into three general
components: building shell (including
construction and design costs), building
services systems (for example, elevators,
HVAC, and plumbing system), and fixed
equipment (for example, sterilizers,
casework, fume hoods, cold rooms, and
glassware/washers). A cognizant agency
for indirect costs may authorize a
recipient or subrecipient to use more
than these three groupings in
exceptional cases. When a recipient or
subrecipient elects to depreciate its
buildings by their components, the same
depreciation method must be used for
indirect and financial statements
purposes, as described in paragraphs
(d)(1) and (2).
(4) No depreciation may be allowed
on assets that have outlived their
depreciable lives.
(5) Where the depreciation method is
introduced to replace the use allowance
method, depreciation must be computed
as if the asset had been depreciated over
its entire life meaning, from the date the
asset was acquired and ready for use to
the date of disposal or withdrawal from
service). The total amount of use
allowance and depreciation for an asset
(including imputed depreciation
applicable to periods before the
conversion from the use allowance
method and depreciation after the
conversion) may not exceed the total
acquisition cost of the asset.
(e) Adequate property records must
support depreciation charges, and
physical inventories must be taken at
least once every two years to ensure that
the assets exist and are usable, used,
and needed. The recipient or
subrecipient may use statistical
sampling techniques when taking these
inventories. In addition, the recipient or
subrecipient must maintain adequate
depreciation records showing the
amount of depreciation.
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§ 200.437
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Employee health and welfare
(a) Costs incurred in accordance with
the recipient’s or subrecipient’s
established written policies for
improving working conditions,
employer-employee relations, employee
health, and employee performance are
allowable.
(b) These costs must be equitably
apportioned to all activities of the
recipient or subrecipient. Income
generated from these activities must be
credited to the cost thereof unless such
income has been irrevocably sent to
employee welfare organizations.
(c) Losses resulting from operating
food services are allowable only if the
recipient’s or subrecipient’s objective is
to operate food services on a break-even
basis. Losses sustained because of
operating objectives other than the
above are allowable only when:
(1) The recipient or subrecipient can
demonstrate unusual circumstances;
and
(2) Approved by the cognizant agency
for indirect costs.
§ 200.438
Entertainment and prizes.
(a) Entertainment costs. Costs of
entertainment, including amusement,
diversion, and social activities and any
associated costs (such as gifts), are
unallowable unless they have a specific
and direct programmatic purpose and
are included in a Federal award.
(b) Prizes. Costs of prizes or
challenges are allowable if they have a
specific and direct programmatic
purpose and are included in the Federal
award. Federal agencies should refer to
OMB guidance in M–10–11 ‘‘Guidance
on the Use of Challenges and Prizes to
Promote Open Government,’’ issued
March 8, 2010, or its successor.
ddrumheller on DSK120RN23PROD with PROPOSALS2
§ 200.439 Equipment and other capital
expenditures.
(a) See § 200.1 for the definitions of
capital expenditures, equipment, special
purpose equipment, general purpose
equipment, acquisition cost, and capital
assets.
(b) The following rules of allowability
must apply to equipment and other
capital expenditures:
(1) Capital expenditures for generalpurpose equipment, buildings, and land
are unallowable as direct charges,
except with the prior written approval
of the Federal agency or pass-through
entity.
(2) Capital expenditures for special
purpose equipment are allowable as
direct costs, provided that items with a
unit cost of $10,000 or more have the
prior written approval of the Federal
agency or pass-through entity.
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(3) Capital expenditures for
improvements to land, buildings, or
equipment that materially increase their
value or useful life are unallowable as
a direct cost except with the prior
written approval of the Federal agency
or pass-through entity. See § 200.436 on
the allowability of depreciation on
buildings, capital improvements, and
equipment. See § 200.465 on the
allowability of real property and
equipment rental costs.
(4) When approved as a direct charge
in accordance with paragraphs (b)(1)
through (3), capital expenditures must
be charged in the period in which the
expenditure is incurred or as otherwise
determined appropriate and negotiated
with the Federal agency.
(5) The recipient or subrecipient may
claim the unamortized portion of any
equipment written off as a result of a
change in capitalization levels by
continuing to claim the otherwise
allowable depreciation on the
equipment or by amortizing the amount
to be written off over a period of years
negotiated with the cognizant agency for
indirect cost.
(6) Cost of equipment disposal. If the
Federal agency instructs the recipient or
subrecipient to otherwise dispose of or
transfer the equipment, the costs of
disposal or transfer are allowable.
(7) Equipment and other capital
expenditures are unallowable as
indirect costs. See § 200.436.
§ 200.440
Exchange rates.
Cost increases for fluctuations in the
exchange rate are allowable costs
subject to funding availability. The
recipient or subrecipient must conduct
reviews of fluctuations in the exchange
rate to determine if there is the need for
additional Federal funding before the
end date of the Federal award.
Subsequent adjustments for currency
increases may be allowed only when the
recipient or subrecipient provides the
Federal agency or pass-through entity
with adequate source documentation
from a commonly used source in effect
when the cost was incurred and to the
extent that sufficient Federal funds are
available.
§ 200.441 Fines, penalties, damages and
other settlements.
Costs resulting from recipient or
subrecipient violations of, alleged
violations of, or failure to comply with,
Federal, State, local, tribal, or foreign
laws and regulations are unallowable,
except when incurred as a result of
compliance with specific provisions of
the Federal award, or with the prior
written approval of the Federal agency.
See § 200.435.
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§ 200.442 Fundraising and investment
management costs.
(a) Costs of organized fundraising,
including financial campaigns,
endowment drives, solicitation of gifts
and bequests, and similar expenses
incurred to raise capital or obtain
contributions, are unallowable.
Fundraising costs for meeting the
Federal program objectives are
allowable with the prior written
approval of the Federal agency.
(b) Costs of investment counsel and
staff and similar expenses incurred to
enhance income from investments are
unallowable except when associated
with investments covering pension, selfinsurance, or other funds, which
include Federal participation allowed
by this part.
(c) Costs related to the physical
custody and control of monies and
securities are allowable.
(d) Both allowable and unallowable
fundraising and investment activities
must be allocated as an appropriate
share of indirect costs in accordance
with § 200.413.
§ 200.443 Gains and losses on the
disposition of depreciable assets.
(a) The recipient or subrecipient must
include gains and losses on the sale,
retirement, or other disposition of
depreciable property in the year they
occur as credits or charges to the asset
cost grouping(s) of the property. The
amount of the gain or loss is the
difference between the amount realized
on the property and the undepreciated
basis of the property.
(b) Gains and losses from the
disposition of depreciable property
must not be recognized as a separate
credit or charge under the following
conditions:
(1) The gain or loss is processed
through a depreciation account and is
reflected in the depreciation allowable
under §§ 200.436 and 200.439.
(2) The property is given in exchange
as part of the purchase price of a similar
item, and the gain or loss is taken into
account in determining the depreciation
cost basis of the new item.
(3) A loss results from failing to
maintain proper insurance, except as
provided in § 200.447.
(4) Compensation for the use of the
property was provided through use
allowances instead of depreciation.
(5) Gains and losses arising from
extraordinary or bulk sales, retirements,
or other dispositions must be
considered on an individual basis.
(c) Gains or losses of any nature
arising from the sale or exchange of
property other than the property
covered in paragraph (a) of this section
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must be excluded in computing Federal
award costs.
(d) When assets acquired with Federal
funds, in part or wholly, are disposed
of, the distribution of the proceeds must
be made in accordance with §§ 200.310
through 200.316.
§ 200.444
General costs of government.
(a) For states, local governments, and
Indian Tribes, the general costs of
government are unallowable except as
provided in § 200.475. Unallowable
costs include:
(1) Salaries and expenses of the Office
of the Governor of a State or the chief
executive of a local government or the
chief executive of an Indian Tribe;
(2) Salaries and other expenses of a
State legislature, tribal council, or
similar local governmental body, such
as a county supervisor, city council, or
school board, whether incurred for
purposes of legislation or executive
direction;
(3) Costs of the judicial branch of a
government;
(4) Costs of prosecutorial activities
unless treated as a direct cost to a
specific program if authorized by statute
or regulation. However, this does not
preclude the allowability of other legal
activities of the Attorney General as
described in § 200.435; and
(5) Costs of other general types of
government services normally provided
to the general public, such as fire and
police, unless provided as a direct cost
under a program statute or regulation.
(b) Indian Tribes and Councils of
Governments (COGs) (see definition for
Local government in § 200.1) may
include up to 50 percent of salaries and
expenses directly attributable to
managing and operating Federal
programs by the chief executive and
their staff in the indirect cost
calculation without documentation.
ddrumheller on DSK120RN23PROD with PROPOSALS2
§ 200.445
use.
Goods or services for personal
(a) Costs of goods or services for the
personal use of the recipient’s or
subrecipient’s employees are
unallowable regardless of whether the
cost is reported as taxable income to the
employees.
(b) Housing costs (for example,
depreciation, maintenance, utilities,
furnishings, rent), housing allowances,
and personal living expenses are only
allowable as direct costs regardless of
whether reported as taxable income to
the employees. In addition, these costs
must be approved in advance by a
Federal agency to be allowable.
§ 200.446
Idle facilities and idle capacity.
(a) Definitions for the purpose of this
section:
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(1) Facilities means land and
buildings or any portion thereof,
equipment individually or collectively,
or any other tangible capital asset,
wherever located, and whether owned
or leased by the recipient or
subrecipient.
(2) Idle facilities mean completely
unused facilities that exceed the
recipient’s or subrecipient’s current
needs.
(3) Idle capacity means the unused
capacity of partially used facilities. It is
the difference between:
(i) That which a facility could achieve
under 100 percent operating time on a
one-shift basis less operating
interruptions resulting from time lost for
repairs, setups, unsatisfactory materials,
and other normal delays and;
(ii) The extent to which the facility
was actually used to meet demands
during the accounting period. A multishift basis should be used if it can be
shown that this amount of usage would
normally be expected for the type of
facility involved.
(4) Cost of idle facilities or idle
capacity means maintenance, repair,
housing, rent, and other related costs
(for example, insurance, interest, and
depreciation). These costs could include
the costs of idle public safety emergency
facilities, telecommunications, or
information technology system capacity
that is built to withstand major
fluctuations in load (for example,
consolidated data centers).
(b) The costs of idle facilities are
unallowable except to the extent that:
(1) They are necessary to meet
workload requirements which may
fluctuate, and are allocated
appropriately to all benefiting programs;
or
(2) Although not necessary to meet
fluctuations in workload, they were
necessary when acquired and are now
idle because of changes in program
requirements, efforts to achieve more
economical operations, reorganization,
termination, or other causes which
could not have been reasonably
foreseen. Under this exception, costs of
idle facilities are allowable for a
reasonable period, ordinarily not to
exceed one year, depending on the
initiative taken to use, lease, or dispose
of such facilities.
(c) The costs of idle capacity are
normal costs of doing business and are
a factor in the normal fluctuations of
usage or indirect cost rates from period
to period. These costs are allowable,
provided that the capacity is reasonably
anticipated to be necessary to carry out
the purpose of the Federal award or was
originally reasonable and is not subject
to reduction or elimination by use on
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other Federal awards, subletting,
renting, or sale, in accordance with
sound business, economic, or security
practices. Widespread idle capacity
throughout an entire facility or among a
group of assets having substantially the
same function may be considered idle
facilities.
§ 200.447
Insurance and indemnification.
(a) Costs of insurance required or
approved and maintained by the terms
and conditions of the Federal award are
allowable.
(b) Costs of other insurance in
connection with the general conduct of
activities are allowable subject to the
following limitations:
(1) The types, extent, and cost of
coverage are in accordance with the
recipient’s or subrecipient’s established
written policy and sound business
practices.
(2) Costs of insurance or contributions
to any reserve covering the risk of loss
of, or damage to, Federal Government
property are unallowable except to the
extent that the Federal agency has
approved the costs.
(3) Costs allowed for business
interruption or other similar insurance
must exclude coverage of management
fees.
(4) Insurance costs on the lives of
trustees, officers, or other employees
holding positions of similar
responsibilities are allowable only when
the insurance represents additional
compensation (see § 200.431). This
insurance is unallowable when the
recipient or subrecipient is identified as
the beneficiary.
(5) Insurance costs to correct defects
in the recipient’s or subrecipient’s
materials or workmanship are
unallowable.
(6) Medical liability (malpractice)
insurance. Medical liability insurance is
an allowable cost of a Federal research
program only when the program
involves human subjects or training of
participants in research techniques.
Medical liability insurance costs must
be treated as a direct cost and assigned
to individual projects based on how the
insurer allocates the risk to the
population covered by the insurance.
(c) Actual losses which could have
been covered by permissible insurance
(through a self-insurance program or
otherwise) are unallowable unless
expressly authorized in the Federal
award. However, costs incurred because
of losses not covered under nominal
deductible insurance coverage provided
in keeping with sound management
practice, and minor losses not covered
by insurance, such as spoilage,
breakage, and disappearance of small
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hand tools, which occur in the ordinary
course of operations, are allowable.
(d) Contributions to a reserve for a
self-insurance program, including
workers’ compensation, unemployment
compensation, and severance pay, are
allowable subject to the following
requirements:
(1) The type, extent, and cost of
coverage and the rates and premiums
would have been allowed had the
insurance (including reinsurance) been
purchased to cover the risks. However,
a provision for known or reasonably
estimated self-insured liabilities, which
do not become payable for more than
one year after the provision is made,
must not exceed the discounted present
value of the liability. The rate used for
discounting the liability must be
determined by considering factors such
as the recipient’s or subrecipient’s
settlement rate for those liabilities and
its investment rate of return.
(2) Earnings or investment income on
reserves must be credited to those
reserves.
(3)(i) Contributions to reserves must
be based on sound actuarial principles
using historical experience and
reasonable assumptions. Reserve levels
must be analyzed and updated at least
biennially for each major risk being
insured and take into account any
reinsurance, coinsurance, and other
relevant factors or information. Reserve
levels related to employee-related
coverages must normally be limited to
the value of claims:
(A) Submitted and adjudicated but
not paid;
(B) Submitted but not adjudicated;
and
(C) Incurred but not submitted.
(ii) Reserve levels exceeding the
above-mentioned value must be
identified and justified in the cost
allocation plan or indirect cost rate
proposal.
(4) Accounting records, actuarial
studies, and cost allocations (or billings)
must recognize any significant
differences due to the types of insured
risk and losses generated by the various
insured activities or agencies of the
recipient or subrecipient. If individual
departments or agencies of the recipient
or subrecipient experience significantly
different levels of claims for a particular
risk, those differences must be
recognized by using separate allocations
or other techniques resulting in an
equitable allocation.
(5) Whenever funds are transferred
from a self-insurance reserve to other
accounts (for example, general fund or
unrestricted account), refunds must be
made to the Federal Government for its
share of funds transferred, including
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earned or imputed interest from the date
of transfer and debt interest, if
applicable, chargeable in accordance
with the claims collection regulations of
the cognizant agency for indirect cost.
(e) Insurance refunds must be credited
against insurance costs in the year the
refund is received.
(f) Indemnification includes securing
the recipient or subrecipient against
liabilities to third persons and other
losses not compensated by insurance or
otherwise. The Federal Government is
obligated to indemnify the recipient or
subrecipient only to the extent expressly
provided for in the Federal award,
except as provided in paragraph (c).
§ 200.448
Intellectual property.
(a) Patent and copyright costs. (1) The
following costs related to securing
patents and copyrights are allowable:
(i) Costs of preparing disclosures,
reports, and other documents required
by the Federal award and of searching
the art to the extent necessary to make
such disclosures;
(ii) Costs of preparing documents and
any other patent costs in connection
with the filing and prosecution of a
United States patent application where
the Federal Government requires that a
title or a royalty-free license be
conveyed to the Federal Government;
and
(iii) General counseling services
relating to patent and copyright matters,
such as advice on patent and copyright
laws, regulations, clauses, and employee
intellectual property agreements (See
§ 200.459).
(2) The following costs related to
securing patents and copyrights are
unallowable:
(i) Costs of preparing disclosures,
reports, and other documents and of
searching the art to make disclosures
not required by the Federal award;
(ii) Costs in connection with filing
and prosecuting any foreign patent
application, or any United States patent
application, where the Federal award
does not require conveying title or a
royalty-free license to the Federal
Government.
(b) Royalties and other costs for the
use of patents and copyrights. (1)
Royalties on a patent or copyright or
amortization of the cost of acquiring by
purchase a copyright, patent, or rights
thereto, necessary for the proper
performance of the Federal award are
allowable unless:
(i) The Federal Government already
has a license or the right to free use of
the patent or copyright.
(ii) The patent or copyright has been
adjudicated to be invalid or
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administratively determined to be
invalid.
(iii) The patent or copyright is
considered to be unenforceable.
(iv) The patent or copyright is
expired.
(2) Special care should be exercised in
determining reasonableness when the
royalties may have been obtained as a
result of less-than-arm’s-length
bargaining, such as:
(i) Royalties paid to persons,
including corporations, affiliated with
the recipient or subrecipient.
(ii) Royalties paid to unaffiliated
parties, including corporations, under
an agreement entered into in
contemplation that a Federal award
would be made.
(iii) Royalties paid under an
agreement entered into after a Federal
award is made to a recipient or
subrecipient.
(3) In any case involving a patent or
copyright formerly owned by the
recipient or subrecipient, the amount of
royalty allowed must not exceed the
cost which would have been allowed
had the recipient or subrecipient
retained the title.
§ 200.449
Interest.
(a) General. Costs incurred for interest
on borrowed capital, temporary use of
endowment funds, or the use of the
recipient’s or subrecipient’s own funds
are unallowable. Financing costs
(including interest) to acquire,
construct, or replace capital assets are
allowable, subject to the requirements of
this section.
(b) Capital assets. (1) Capital assets is
defined in § 200.1. An asset cost
includes (as applicable) acquisition
costs, construction costs, and other costs
capitalized in accordance with GAAP.
(2) For recipient or subrecipient fiscal
years beginning on or after January 1,
2016, intangible assets include patents
and computer software. For software
development projects, only interest
attributable to the portion of the project
costs capitalized in accordance with
GAAP is allowable.
(c) Conditions for all recipients and
subrecipients. (1) The recipient or
subrecipient uses the capital assets in
support of Federal awards;
(2) The allowable asset costs to
acquire facilities and equipment are
limited to a fair market value available
to the recipient or subrecipient from an
unrelated (arm’s length) third party.
(3) The recipient or subrecipient
obtains the financing via an arm’slength transaction (meaning, a
transaction with an unrelated third
party); or claims reimbursement of
actual interest cost at a rate available via
such a transaction.
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(4) The recipient or subrecipient
limits claims for Federal reimbursement
of interest costs to the least expensive
alternative. For example, a lease
contract that transfers ownership by the
end of the contract may be determined
less costly than purchasing through
other types of debt financing, in which
case reimbursement must be limited to
the amount of interest determined if
leasing had been used.
(5) The recipient or subrecipient
expenses or capitalizes allowable
interest cost in accordance with GAAP.
(6) Earnings generated by the
investment of borrowed funds pending
their disbursement for the asset costs are
used to offset the current period’s
allowable interest cost, whether that
cost is expensed or capitalized. Earnings
subject to being reported to the Federal
Internal Revenue Service under
arbitrage requirements are excludable.
(7) The following conditions must
apply to debt arrangements over $1
million to purchase or construct
facilities unless the recipient or
subrecipient makes an initial equity
contribution to the purchase of 25
percent or more. For this purpose,
‘‘initial equity contribution’’ means the
amount or value of contributions made
by the recipient or subrecipient for the
acquisition of facilities prior to
occupancy.
(i) The recipient or subrecipient must
reduce claims for reimbursement of
interest cost by an amount equal to
imputed interest earnings on excess
cash flow attributable to the portion of
the facility used for Federal awards.
(ii) The recipient or subrecipient must
impute interest on excess cash flow as
follows:
(A) Annually, the recipient or
subrecipient must prepare a cumulative
(from the project’s inception) report of
monthly cash inflows and outflows,
regardless of the funding source. For
this purpose, inflows consist of Federal
reimbursement for depreciation,
amortization of capitalized construction
interest, and annual interest cost.
Outflows consist of initial equity
contributions, debt principal payments
(less the pro-rata share attributable to
the cost of land), and interest payments.
(B) To compute monthly cash inflows
and outflows, the recipient or
subrecipient must divide the abovementioned annual amounts by the
months in the year (usually 12) that the
building is in service.
(C) For any month in which
cumulative cash inflows exceed
cumulative outflows, interest must be
calculated on the excess inflows for that
month and be treated as a reduction to
allowable interest cost. The interest rate
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to be used must be the three-month
Treasury bill closing rate as of the last
business day of that month.
(8) Interest attributable to a fully
depreciated asset is unallowable.
(d) Additional conditions for states,
local governments and Indian Tribes.
For interest costs to be allowable for
states, local governments, and Indian
Tribes, the recipient or subrecipient
must have incurred the interest costs for
buildings after October 1, 1980, or after
September 1, 1995, for land and
equipment.
(1) The requirement to offset the
interest earned on borrowed funds
against allowable interest cost
(paragraph (c)(5) of this section) also
applies to earnings on debt service
reserve funds.
(2) The recipient or subrecipient must
negotiate the amount of allowable
interest cost related to the acquisition of
facilities with asset costs of $1 million
or more, as described in paragraph (c)(7)
of this section. For this purpose, a
recipient or subrecipient must consider
only cash inflows and outflows
attributable to that portion of the real
property used for Federal awards.
(e) Additional conditions for IHEs. For
interest costs to be allowable, the IHE
must have incurred the interest costs
after July 1, 1982, in connection with
acquisitions of capital assets that
occurred after that date.
(f) Additional condition for nonprofit
organizations. For interest costs to be
allowable, the nonprofit organization
must have incurred the interest costs
after September 29, 1995, in connection
with acquisitions of capital assets that
occurred after that date.
(g) The interest allowability
provisions of this section do not apply
to a nonprofit organization subject to
‘‘full coverage’’ under the Cost
Accounting Standards (CAS), as defined
at 48 CFR 9903.201–2(a). The nonprofit
organization’s Federal awards are
instead subject to CAS 414 (48 CFR
9904.414), ‘‘Cost of Money as an
Element of the Cost of Facilities
Capital,’’ and CAS 417 (48 CFR
9904.417), ‘‘Cost of Money as an
Element of the Cost of Capital Assets
Under Construction.’’
§ 200.450
Lobbying.
(a) Lobbying costs associated with
obtaining Federal assistance awards.
The costs of certain influencing
activities associated with obtaining
grants, cooperative agreements,
contracts, or loans are unallowable.
Lobbying with respect to certain grants,
cooperative agreements, contracts, and
loans is governed by relevant statutes,
including the provisions of 31 U.S.C.
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1352, as well as the common rule, ‘‘New
Restrictions on Lobbying,’’ published on
February 26, 1990, including
definitions, and the Office of
Management and Budget ‘‘Governmentwide Guidance for New Restrictions on
Lobbying’’ and notices published on
December 20, 1989, June 15, 1990,
January 15, 1992, and January 19, 1996.
(b) Executive lobbying costs. Costs
incurred in attempting to improperly
influence, either directly or indirectly,
an employee or officer of the executive
branch of the Federal Government to
give consideration or to act regarding a
Federal award or a regulatory matter are
unallowable. Improper influence means
any influence that induces or tends to
induce a Federal employee or officer to
give consideration or to act regarding a
Federal award or regulatory matter on
any basis other than the merit.
(c) Restrictions on nonprofit
organizations and IHEs. In addition, the
following restrictions apply to nonprofit
organizations and IHEs:
(1) Costs associated with the
following activities are unallowable:
(i) Attempts to influence the outcomes
of any Federal, State, or local election,
referendum, initiative, or similar
procedure through in-kind or cash
contributions, endorsements, publicity,
or similar activity;
(ii) Establishing, administering,
contributing to, or paying the expenses
of a political party, campaign, political
action committee, or other organization
established to influence the outcomes of
elections in the United States;
(iii) Any attempt to influence:
(A) The introduction of Federal or
State legislation;
(B) The enactment or modification of
any pending Federal or State legislation
through communication with any
member or employee of the Congress or
State legislature (including efforts to
influence State or local officials to
engage in similar lobbying activity);
(C) The enactment or modification of
any pending Federal or State legislation
by preparing, distributing, or using
publicity or propaganda or by urging
members of the general public, or any
segment thereof, to contribute to or
participate in any mass demonstration,
march, rally, fundraising drive, lobbying
campaign or letter writing or telephone
campaign; or
(D) Any government official or
employee in connection with a decision
to sign or veto enrolled legislation;
(iv) Legislative liaison activities,
including attendance at legislative
sessions or committee hearings,
gathering information regarding
legislation, and analyzing the effect of
legislation, when such activities are
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carried on in support of or in knowing
preparation for an effort to engage in
unallowable lobbying.
(2) The following activities are
excepted from the coverage of paragraph
(c)(1) of this section:
(i) Technical and factual presentations
on topics directly related to the
performance of a grant, contract, or
other agreement (through hearing
testimony, statements, or letters to the
Congress or a State legislature, or
subdivision, member, or cognizant staff
member thereof), in response to a
documented request (including a
Congressional Record notice requesting
testimony or statements for the record at
a regularly scheduled hearing) made by
the recipient’s or subrecipient’s member
of congress, legislative body,
subdivision, or a cognizant staff member
thereof, provided such information is
readily obtainable and can be readily
put in deliverable form, and further
provided that costs under this section
for travel, lodging or meals are
unallowable unless incurred to offer
testimony at a regularly scheduled
Congressional hearing pursuant to a
written request for such presentation
made by the Chairman or Ranking
Minority Member of the Committee or
Subcommittee conducting such
hearings;
(ii) Any lobbying made unallowable
by paragraph (c)(1)(iii) of this section to
influence State legislation to directly
reduce the cost, or to avoid material
impairment of the recipient’s or
subrecipient’s authority to perform the
grant, contract, or other agreement; or
(iii) Any activity specifically
authorized by statute to be undertaken
with funds from the Federal award.
(iv) Any activity excepted from the
definitions of ‘‘lobbying’’ or
‘‘influencing legislation’’ by the Internal
Revenue Code provisions that require
nonprofit organizations to limit their
participation in direct and ‘‘grass roots’’
lobbying activities to retain their
charitable deduction status and avoid
punitive excise taxes, 26 U.S.C. (I.R.C.)
501(c)(3), 501(h), 4911(a), including:
(A) Nonpartisan analysis, study, or
research reports;
(B) Examinations and discussions of
broad social, economic, and similar
problems; and
(C) Information provided upon
request by a legislator for technical
advice and assistance, as defined by
I.R.C. 4911(d)(2) and 26 CFR 56.4911–
2(c)(1) through (c)(3).
(v) When a recipient or subrecipient
seeks reimbursement for indirect costs,
total lobbying costs must be identified
separately in the indirect cost rate
proposal and thereafter be treated as
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other unallowable activity costs in
accordance with § 200.413.
(vi) The recipient or subrecipient
must submit a certification that the
requirements and standards of this
section have been complied with as part
of its annual indirect cost rate proposal.
(See § 200.415.)
(vii)(A) Time logs, calendars, or
similar records are not required to be
created for purposes of complying with
the record-keeping requirements in
§ 200.302 with respect to lobbying costs
during a particular calendar month
when:
(1) The employee engages in lobbying
(as defined in paragraphs (c)(1) and
(c)(2) of this section) for 25 percent or
less of the employee’s compensated
hours of employment during that
calendar month; and
(2) Within the preceding five-year
period, the recipient or subrecipient has
not materially misstated allowable or
unallowable costs of any nature,
including legislative lobbying costs.
(B) When conditions in paragraph
(c)(2)(vii)(A)(1) and (2) of this section
are met, recipients and subrecipients are
not required to establish records to
support the allowability of claimed
costs in addition to records already
required or maintained. Also, when
conditions in paragraphs (c)(2)(vii)(A)(1)
and (2) of this section are met, the
absence of time logs, calendars, or
similar records will not serve as a basis
for disallowing costs by contesting
estimates of lobbying time spent by
employees during a calendar month.
(viii) In consultation with OMB, the
Federal agency must establish
procedures for resolving, in advance,
any significant questions or
disagreements concerning the
interpretation or application of this
section. Any such advance resolutions
must be binding in any subsequent
settlements, audits, or investigations
with respect to that grant or contract for
purposes of interpretation of this part,
provided, however, that this must not be
construed to prevent a contractor or
recipient or subrecipient from
contesting the lawfulness of such a
determination.
§ 200.451 Losses on other awards or
contracts.
Any excess costs over income under
any other award or contract of any
nature is unallowable. This includes,
but is not limited to, the recipient’s or
subrecipient’s contributed portion by
reason of cost sharing agreements or any
under-recoveries through negotiation of
flat amounts for indirect costs. Also, any
excess of costs over authorized funding
levels transferred from any award or
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contract to another is unallowable. All
losses are not allowable indirect costs
and must be included in the appropriate
indirect cost rate base for allocating
indirect costs.
§ 200.452
Maintenance and repair costs.
Costs incurred for utilities, insurance,
security, necessary maintenance,
janitorial services, repair, or upkeep of
buildings and equipment (including
Federal property unless otherwise
provided for) which neither add to the
permanent value of the property nor
appreciably prolong its intended life,
but keep it in an efficient operating
condition, are allowable. Costs incurred
for improvements that add to the
permanent value of the buildings and
equipment or appreciably prolong their
intended life must be treated as capital
expenditures (see § 200.439). These
costs are only allowable to the extent
not paid through rental or other
agreements.
§ 200.453 Materials and supplies costs,
including costs of computing devices.
(a) Costs incurred for materials,
supplies, and fabricated parts necessary
for the performance of a Federal award
are allowable.
(b) Purchased materials and supplies
must be charged at their actual prices,
net of applicable credits. Withdrawals
from general stores or stockrooms must
be charged at their actual net cost under
any recognized method of pricing
inventory withdrawals, consistently
applied. Incoming transportation
charges are an allowable part of
materials and supplies costs.
(c) Materials and supplies used for the
performance of a Federal award may be
charged as direct costs. Charging
computing devices as direct costs is
allowable for devices that are essential
and allocable, but not solely dedicated,
to the performance of a Federal award.
(d) Where Federally-donated or
furnished materials are used in
performing the Federal award, the
materials will be used without charge.
§ 200.454 Memberships, subscriptions,
and professional activity costs.
(a) Costs of the recipient’s or
subrecipient’s membership in business,
technical, and professional
organizations are allowable.
(b) Costs of the recipient’s or
subrecipient’s subscriptions to business,
professional, and technical periodicals
are allowable.
(c) Costs of membership in any civic
or community organization are
allowable.
(d) Costs of membership in any
country club or social or dining club or
organization are unallowable.
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(e) Costs of membership in
organizations whose primary purpose is
lobbying are unallowable. See § 200.450.
§ 200.455
Organization costs.
(a) Costs such as incorporation fees,
brokers’ fees, fees to promoters,
organizers or management consultants,
attorneys, accountants, or investment
counselors, whether or not employees of
the recipient or subrecipient in
connection with the establishment or
reorganization of an organization, are
unallowable except with prior approval
of the Federal agency.
(b) The costs of any activities
undertaken to persuade employees of
the recipient or subrecipient, or any
other entity, to exercise or not to
exercise, or concerning the manner of
exercising, the right to organize and
bargain collectively through
representatives of the employees’ own
choosing, are unallowable.
(c) The costs related to data and
evaluation are allowable and include
(but are not limited to) the expenditures
needed to gather, store, track, manage,
analyze, disaggregate, secure, share,
publish, or otherwise use data to
administer or improve the program,
such as data systems, personnel, data
dashboards, cyber security, and related
items. Data costs may also include
direct or indirect costs associated with
building integrated data systems—data
systems that link individual-level data
from multiple State and local
government agencies for purposes of
management, research, and evaluation.
§ 200.456
Participant support costs.
Participant support costs are
allowable (see § 200.1). The
classification of items as participant
support costs must be documented in
the recipient’s or subrecipient’s written
policies and procedures and treated
consistently across all Federal awards.
ddrumheller on DSK120RN23PROD with PROPOSALS2
§ 200.457
Plant and security costs.
Necessary and reasonable expenses
incurred for the protection and security
of facilities, personnel, and work
products are allowable. Such costs
include, but are not limited to, wages
and uniforms of personnel engaged in
security activities; equipment; barriers;
protective (non-military) gear, devices,
and equipment; contractual security
services; and consultants. Capital
expenditures for plant security purposes
are subject to § 200.439.
§ 200.458
Pre-award costs.
Pre-award costs are those incurred
before the start date of the Federal
award or subaward directly pursuant to
the negotiation and in anticipation of
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the Federal award where such costs are
necessary for efficient and timely
performance of the scope of work. These
costs are allowable only to the extent
that they would have been allowed if
incurred after the start date of the
Federal award and only with the prior
written approval of the Federal agency.
If approved, these costs must be charged
to the initial budget period of the
Federal award unless otherwise
specified by the Federal agency or passthrough entity.
§ 200.459
Professional service costs.
(a) Costs of professional and
consultant services rendered by persons
who are members of a particular
profession or possess a special skill and
who are not officers or employees of the
recipient or subrecipient are allowable,
subject to paragraphs (b) and (c) of this
section when reasonable in relation to
the services rendered and when not
contingent upon recovery of the costs
from the Federal Government. In
addition, legal and related services are
limited under § 200.435.
(b) In determining the allowability of
costs in a particular case, no single
factor or any combination of factors is
necessarily determinative. However, the
following factors are relevant:
(1) The nature and scope of the
service rendered in relation to the
service required.
(2) The necessity of contracting for the
service, considering the recipient’s or
subrecipient’s capability in the
particular area.
(3) The past pattern of such costs,
particularly in the years prior to
receiving a Federal award(s).
(4) The impact of Federal awards on
the recipient’s or subrecipient’s
business (meaning, what new problems
have arisen).
(5) Whether the proportion of Federal
work to the recipient’s or subrecipient’s
total business influences the recipient or
subrecipient in favor of incurring the
cost, particularly where the services
rendered are not of a continuing nature
and have little relationship to work
under Federal awards.
(6) Whether the service can be
performed more economically by direct
employment rather than contracting.
(7) The qualifications of the
individual or entity providing the
service and the customary fees charged,
especially on non-federally funded
activities.
(8) Adequacy of the contractual
agreement for the service (for example,
description of the service, estimate of
the time required, rate of compensation,
and termination provisions).
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(c) To be allowable, retainer fees must
be supported by evidence of bona fide
services available or rendered in
addition to the factors in paragraph (b)
of this section.
§ 200.460
Proposal costs.
Proposal costs are the costs of
preparing bids, proposals, or
applications on potential Federal and
non-Federal awards or projects,
including developing data necessary to
support the recipient’s or subrecipient’s
bids or proposals. Proposal costs of the
current accounting period of both
successful and unsuccessful bids and
proposals normally should be treated as
indirect costs and allocated to all
current activities of the recipient or
subrecipient. No proposal costs of past
accounting periods may be allocated to
the current period.
§ 200.461
Publication and printing costs.
(a) Publication costs for electronic and
print media, including distribution,
promotion, and general handling, are
allowable. These costs should be
allocated as indirect costs to all
benefiting activities of the recipient or
subrecipient if they are not identifiable
with a particular cost objective.
(b) Page charges, article processing
charges, or similar open access fees for
professional journal publications and
other peer-reviewed publications
developed under a Federal award are
allowable where:
(1) The publications report work
supported by the Federal Government;
and
(2) The charges are levied impartially
on all items published by the journal,
whether or not under a Federal award.
(3) The recipient or subrecipient may
charge the Federal award during
closeout for the costs of publication or
sharing of research results if the costs
were not incurred during the period of
performance of the Federal award. If
incurred, these costs must be charged to
the final budget period of the award
unless otherwise specified by the
Federal agency.
§ 200.462 Rearrangement and
reconversion costs.
(a) Costs incurred for ordinary and
normal rearrangement and alteration of
facilities are allowable as indirect costs.
Special arrangements and alterations are
allowable as a direct cost if the costs are
incurred specifically for a Federal award
and with the prior approval of the
Federal agency or pass-through entity.
(b) Costs incurred in restoring or
rehabilitating the recipient’s or
subrecipient’s facilities to
approximately the same condition
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existing immediately before the
commencement of a Federal award(s),
less costs related to normal wear and
tear, are allowable.
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§ 200.463
Recruiting costs.
(a) Subject to paragraphs (b) and (c) of
this section, and provided that the size
of the staff recruited and maintained is
in keeping with workload requirements,
costs of ‘‘help wanted’’ advertising,
operating costs of an employment office
necessary to secure and maintain
adequate staff, costs of operating an
aptitude and educational testing
program, travel costs of employees
while engaged in recruiting personnel,
travel costs of applicants for interviews
for prospective employment, and
relocation costs incurred incident to
recruitment of new employees, are
allowable to the extent that such costs
are incurred pursuant to the recipient’s
or subrecipient’s standard recruitment
program. When the recipient or
subrecipient uses employment agencies,
costs not in excess of standard
commercial rates for such services are
allowable.
(b) Special emoluments, fringe
benefits, and salary allowances incurred
to attract professional personnel that do
not meet the test of reasonableness or do
not conform with the established
practices of the recipient or
subrecipient, are unallowable.
(c) If relocation costs incurred
incident to recruitment of a new
employee have been funded in whole or
in part by a Federal award, and the
newly hired employee resigns for
reasons within the employee’s control
within 12 months after hire, the
recipient or subrecipient must refund or
credit the Federal Government for its
share of the cost. See § 200.464.
(d) Short-term visa costs (as opposed
to longer-term immigration visas) are
generally allowable expenses that may
be proposed as a direct cost. Since
short-term visas are issued for a specific
period and purpose and can be clearly
identified as directly connected to work
performed on a Federal award. For these
costs to be directly charged to a Federal
award, they must:
(1) Be critical and necessary for the
conduct of the project;
(2) Be allowable under the applicable
cost principles;
(3) Be consistent with the recipient’s
or subrecipient’s cost accounting
practices and established written policy;
and
(4) Meet the definition of ‘‘direct cost’’
as described in the applicable cost
principles.
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§ 200.464
Relocation costs of employees.
(a) Relocation costs are costs incident
to the permanent change of duty
assignment (for an indefinite period or
a stated period of not less than 12
months) of an existing employee or
upon recruitment of a new employee.
Relocation costs are allowable, subject
to the limitations described in
paragraphs (b), (c), and (d) of this
section, provided that:
(1) The move is for the benefit of the
employer.
(2) Reimbursement to the employee is
in accordance with an established
written policy consistently followed by
the employer.
(3) The reimbursement does not
exceed the employee’s actual (or
reasonably estimated) expenses.
(b) Allowable relocation costs for
current employees are limited to the
following:
(1) The costs of transportation of the
employee, members of their immediate
family and their household, and
personal effects to the new location.
(2) The costs of finding a new home,
such as advance trips by employees and
spouses to locate living quarters and
temporary lodging during the transition
period, up to a maximum period of 30
calendar days.
(3) Closing costs, such as brokerage,
legal, and appraisal fees, incidental to
the disposition of the employee’s former
home. These costs, together with those
described in paragraph (b)(4) of this
section, are limited to eight percent of
the sales price of the employee’s former
home.
(4) The continuing costs of ownership
(for up to six months) of the vacant
former home after the settlement or
lease date of the employee’s new
permanent home, such as maintenance
of buildings and grounds (exclusive of
fixing-up expenses), utilities, taxes, and
property insurance.
(5) Other necessary and reasonable
expenses normally incident to
relocation, such canceling an unexpired
lease, transportation of personal
property, and purchasing insurance
against loss of or damages to personal
property. The cost of canceling an
unexpired lease is limited to three times
the monthly rental.
(c) Allowable relocation costs for new
employees are limited to those
described in paragraphs (b)(1) and (2) of
this section. If relocation costs incurred
incident to the recruitment of a new
employee have been funded in whole or
in part by a Federal award, and the
newly hired employee resigns for
reasons within the employee’s control
within 12 months after hire, the
recipient or subrecipient must refund or
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credit the Federal Government for its
share of the cost. If a new employee is
relocating to an overseas location and
dependents are not permitted for any
reason, and the costs do not include
transporting household goods, the costs
must be considered travel costs in
accordance with § 200.474, not
relocation costs under § 200.464).
(d) The following costs related to
relocation are unallowable:
(1) Fees and other costs associated
with acquiring a new home.
(2) A loss on the sale of a former
home.
(3) Continuing mortgage principal and
interest payments on a home being sold.
(4) Income taxes paid by an employee
related to reimbursed relocation costs.
§ 200.465 Rental costs of real property and
equipment.
(a) Subject to the limitations
described in paragraphs (b) through (d)
of this section, rental costs are allowable
to the extent that the rates are
reasonable in light of such factors as
costs of comparable rental properties;
market conditions in the area;
alternatives available; and the type, life
expectancy, condition, and value of the
property leased. Rental arrangements
should be reviewed periodically to
determine if circumstances have
changed and if other options are
available.
(b) Rental costs under ‘‘sale and lease
back’’ arrangements are allowable only
up to the amount allowed if the
recipient or subrecipient had continued
to own the property. This amount
would include expenses such as
depreciation, maintenance, taxes, and
insurance.
(c) Rental costs under ‘‘less-thanarm’s-length’’ leases are allowable only
up to the amount described in
paragraph (b) of this section. For this
purpose, a less-than-arm’s-length lease
is one under which one party to the
lease agreement can control or
substantially influence the actions of the
other. Such leases include, but are not
limited to, those between:
(1) Divisions of the recipient or
subrecipient;
(2) The recipient or subrecipient
under common control through
common officers, directors, or members;
and
(3) The recipient or subrecipient and
a director, trustee, officer, or key
employee of the recipient or
subrecipient or an immediate family
member, either directly or through
corporations, trusts, or similar
arrangements in which they hold a
controlling interest. For example, the
recipient or subrecipient may establish
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a separate corporation to own property
and lease it back to the recipient or
subrecipient.
(4) Family members include one party
with any of the following relationships
to another party:
(i) Spouse and parents thereof;
(ii) Children and spouses thereof;
(iii) Parents and spouses thereof;
(iv) Siblings and spouses thereof;
(v) Grandparents and grandchildren
and spouses thereof;
(vi) Domestic partner and parents
thereof, including domestic partners of
any individual in 2 through 5 of this
definition; and
(vii) Any individual related by blood
or affinity whose close association with
the employee is the equivalent of a
family relationship.
(d) Rental costs under leases which
are required to be accounted for as a
financed purchase under GASB
standards or a finance lease under
GAAP are allowable only up to the
amount (described in paragraph (b) of
this section) allowed if the recipient or
subrecipient had purchased the
property on the date the lease agreement
was executed. Interest costs related to
these leases are allowable if they meet
the criteria in § 200.449. Unallowable
costs include costs that would not have
been incurred if the recipient or
subrecipient had purchased the
property, such as amounts paid for
profit, management fees, and taxes.
(e) Rental or lease payments are
allowable under lease contracts where
the recipient or subrecipient is required
to recognize an intangible right-to-use
lease asset under GASB standards or
right-of-use operating lease workspace
asset under GAAP for purposes of
financial reporting in accordance with
GAAP.
(f) The rental of any property owned
by any individuals or entities affiliated
with the recipient or subrecipient,
including commercial or residential real
estate, for purposes such as the home
office is unallowable.
ddrumheller on DSK120RN23PROD with PROPOSALS2
§ 200.466
costs.
Scholarships and student aid
(a) Costs of scholarships, fellowships,
and student aid programs at IHEs are
allowable only when the purpose of the
Federal award is to provide training to
participants, and the Federal agency
approves the cost. However, tuition
remission and other forms of
compensation paid as, or instead of,
wages to students performing necessary
work are allowable provided that:
(1) The individual is conducting
activities necessary to the Federal
award;
(2) Tuition remission and other
support are provided in accordance
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with the established written policy of
the IHE and consistently provided in a
like manner to students in return for
similar activities conducted under
Federal awards as well as other
activities; and
(3) The student is enrolled in an
advanced degree program at the IHE or
an affiliated institution during the
academic period and the student’s
activities under the Federal award are
related to their degree program;
(4) The tuition or other payments are
reasonable compensation for the work
performed and are conditioned
explicitly upon the performance of
necessary work; and
(5) The IHE compensates students
under Federal awards as well as other
activities in similar manners.
(b) Charges for tuition remission and
other forms of compensation paid to
students as, or instead of, salaries and
wages are subject to the reporting
requirements in § 200.430. The charges
must be treated as a direct or indirect
cost in accordance with the actual work
performed. Tuition remission may be
charged on an average rate basis. See
§ 200.431.
§ 200.467
Selling and marketing costs.
Costs of selling and marketing any
products or services of the recipient or
subrecipient are unallowable unless
they are allowed under § 200.421 and
are necessary to meet the requirements
of the Federal award.
§ 200.468
Specialized service facilities.
(a) The costs of services provided by
highly complex or specialized facilities
operated by the recipient or
subrecipient are allowable provided the
charges for the services meet the
conditions of either paragraph (b) or (c)
of this section and take into account any
items of income or Federal financing
that qualify as applicable credits under
§ 200.406. These costs include charges
for facilities such as computing
facilities, wind tunnels, and reactors.
(b) The costs of such services, when
material, must be charged directly to the
applicable Federal awards based on
actual usage of the services on the basis
of a schedule of rates or established
methodology that:
(1) Does not discriminate between
activities under Federal awards and
other activities of the recipient or
subrecipient, including usage by the
recipient or subrecipient for internal
purposes; and
(2) Is designed to recover only the
aggregate costs of the services. Each
service’s costs must normally consist of
its direct costs and an allocable share of
all indirect costs. Rates must be adjusted
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at least biennially and must consider
any over or under-applied costs of the
previous period(s).
(c) Where the costs incurred for a
service are not material, they may be
allocated as indirect costs.
(d) Under extraordinary
circumstances, the cognizant agency for
indirect costs and the recipient or
subrecipient may negotiate and
establish an alternative costing
arrangement if it is in the Federal
Government’s best interest.
§ 200.469
Student activity costs.
Costs incurred for intramural
activities, student publications, student
clubs, and other student activities are
unallowable unless expressly
authorized in the Federal award.
§ 200.470
Tax).
Taxes (including Value Added
(a) For States, local governments, and
Indian Tribes. (1) Taxes that a
governmental unit is legally required to
pay are allowable, except for selfassessed taxes that disproportionately
affect Federal programs or changes in
tax policies that disproportionately
affect Federal programs.
(2) Gasoline taxes, motor vehicle fees,
and other taxes that are, in effect, user
fees for benefits provided to the Federal
Government are allowable.
(3) This provision does not restrict the
authority of the Federal agency to
identify taxes where Federal
participation is inappropriate. The
cognizant agency for indirect costs may
accept a reasonable approximation in
circumstances where determining the
amount of unallowable taxes would
require an excessive amount of effort.
(b) For nonprofit organizations and
IHEs. (1) Taxes that the recipient or
subrecipient is required to pay and
which are paid or accrued in accordance
with GAAP are generally allowable.
These costs include payments made to
local governments instead of taxes and
that are commensurate with the local
government services received. The
following taxes are unallowable:
(i) Taxes for which exemptions are
available to the recipient or subrecipient
directly or which are available to the
recipient or subrecipient based on an
exemption afforded the Federal
Government and, in the latter case,
when the Federal agency makes
available the necessary exemption
certificates;
(ii) Special assessments on land
which represent capital improvements;
and
(iii) Federal income taxes.
(2) Any refund of taxes and interest
thereon, which were allowed as Federal
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award costs, must be credited to the
Federal Government as a cost reduction
or cash refund, as appropriate. However,
any interest paid or credited to a
recipient or subrecipient incident to a
refund of tax, interest, and penalty will
be paid or credited to the Federal
Government only to the extent that such
interest accrued over the period during
which the Federal Government has
reimbursed the recipient or subrecipient
for the taxes, interest, and penalties.
(c) Value Added Tax (VAT). Foreign
taxes charged for procurement
transactions that a recipient or
subrecipient is legally required to pay in
a country is allowable. Foreign tax
refunds or applicable credits under
Federal awards refer to receipts or
reduction of expenditures, which
operate to offset or reduce expense
items that are allocable to Federal
awards as direct or indirect costs. To the
extent that such credits accrued or
received by the recipient or subrecipient
relate to allowable cost, these costs must
be credited to the Federal agency as a
cost reduction or cash refunds, as
appropriate. In cases where the costs are
credited back to the Federal award, the
recipient or subrecipient may reduce the
Federal share of costs by the amount of
the foreign tax reimbursement, or where
Federal award has not expired, the
Federal agency may allow the recipient
or subrecipient to use the foreign
government tax refund for approved
activities under the Federal award.
§ 200.471 Telecommunication and video
surveillance costs.
ddrumheller on DSK120RN23PROD with PROPOSALS2
(a) Costs incurred for
telecommunications and video
surveillance services or equipment such
as phones, internet, video surveillance,
and cloud servers are allowable except
for the following circumstances:
(b) Obligating or expending covered
telecommunications and video
surveillance services or equipment or
services as described in § 200.216 to:
(1) Procure or obtain, extend or renew
a contract to procure or obtain;
(2) Enter into a contract (or extend or
renew a contract) to procure; or
(3) Obtain the equipment, services, or
systems.
§ 200.472 Termination and standard
closeout costs.
(a) Termination Costs. Termination of
a Federal award generally gives rise to
the incurrence of costs or the need for
special treatment of costs, which would
not have arisen had the Federal award
not been terminated. Cost principles
covering these items are set forth in this
section. They must be used in
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conjunction with the other termination
requirements of this part.
(1) The cost of items reasonably
usable on the recipient’s or
subrecipient’s other work is
unallowable unless the recipient or
subrecipient submits evidence that it
would not retain such items without
sustaining a loss. In deciding whether
such items are reasonably usable on
other work of the recipient or
subrecipient, the Federal agency or
pass-through entity should consider the
recipient’s or subrecipient’s plans and
orders for current and scheduled
activity. Contemporaneous purchases of
common items by the recipient or
subrecipient must be considered
evidence that the items are reasonably
usable on the recipient’s or
subrecipient’s other work. Any
acceptance of common items as
allocable to the terminated portion of
the Federal award must be limited to the
extent that the quantities of such items
on hand, in transit, and on order do not
exceed the reasonable quantitative
requirements of other work.
(2) If the recipient or subrecipient
cannot discontinue certain costs
immediately after the effective
termination date, despite making all
reasonable efforts, then the costs are
generally allowable within the
limitations of this part. Any costs
continuing after termination due to the
negligent or willful failure of the
recipient or subrecipient to immediately
discontinue the costs are unallowable.
(3) Loss of useful value of special
tooling, machinery, and equipment is
generally allowable if:
(i) Such special tooling, special
machinery, or equipment is not
reasonably capable of use in the other
work of the recipient or subrecipient;
(ii) The interest of the Federal
Government is protected by transfer of
title or by other means deemed
appropriate by the Federal agency (see
§ 200.313 (d)); and
(iii) The loss of useful value for one
terminated Federal award is limited to
the portion of the acquisition cost which
bears the same ratio to the total
acquisition cost as the terminated
portion of the Federal award bears to the
entire terminated Federal award and
other Federal awards for which the
special tooling, machinery, or
equipment was acquired.
(4) Rental costs under unexpired
leases are generally allowable where
clearly shown to have been reasonably
necessary for the performance of the
terminated Federal award less the
residual value of such leases, if:
(i) The amount of claimed rental costs
does not exceed the reasonable use
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value of the property leased for the
period of the Federal award and a
further period as may be reasonable; and
(ii) The recipient or subrecipient
makes all reasonable efforts to
terminate, assign, settle, or otherwise
reduce the cost of the lease. The cost of
alterations of the leased property
provided they were necessary for the
performance of the Federal award, and
the cost of reasonable restoration
required by the lease may be included.
(5) The following settlement expenses
are generally allowable.
(i) Accounting, legal, clerical, and
similar costs that are reasonably
necessary for:
(A) The preparation and presentation
to the Federal agency or pass-through
entity of settlement claims and
supporting data with respect to the
terminated portion of the Federal award,
unless the termination is for cause (see
§§ 200.339–200.343); and
(B) The termination and settlement of
subawards.
(ii) Reasonable costs for the storage,
transportation, protection, and
disposition of property provided by the
Federal Government or acquired or
produced for the Federal award.
(6) Claims under subawards,
including the allocable portion of claims
common to the Federal award and other
work of the recipient or subrecipient,
are generally allowable. An appropriate
share of the recipient’s or subrecipient’s
indirect costs may be allocated to the
amount of settlements with contractors
and subrecipients, provided that the
amount allocated is consistent with the
requirements of § 200.414. These
allocated indirect costs must exclude
the same and similar costs claimed
directly or indirectly as settlement
expenses.
(b) Closeout Costs. Administrative
costs associated with the closeout
activities of a Federal award are
allowable. The recipient or subrecipient
may charge the Federal award during
the closeout for the necessary
administrative costs of that Federal
award (for example, salaries of
personnel preparing final reports,
publication and printing costs, and the
costs associated with the disposition of
equipment and property). These costs
may be incurred until the due date of
the final report(s). If incurred, these
costs must be liquidated prior to the due
date of the final report(s) and charged to
the final budget period of the award
unless otherwise specified by the
Federal agency.
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§ 200.473
Training and education costs.
The cost of training and education
provided for employee development is
allowable.
§ 200.474
Transportation costs.
Costs incurred for freight, express,
cartage, postage, and other
transportation services relating to goods
purchased, in process, or delivered, are
allowable. When the costs can be
readily identified with the items
involved, they may be charged directly
as transportation costs or added to the
cost of such items. When identification
with the materials received cannot be
readily identified, the inbound
transportation cost may be charged to
the appropriate indirect cost accounts if
the recipient or subrecipient follows a
consistent, equitable procedure in this
respect. If reimbursable under the terms
and conditions of the Federal award,
outbound freight should be treated as a
direct cost.
ddrumheller on DSK120RN23PROD with PROPOSALS2
§ 200.475
Travel costs.
(a) General. Travel costs include the
transportation, lodging, subsistence, and
related items incurred by employees
who are in travel status on official
business of the recipient or
subrecipient. These costs may be
charged on an actual cost basis, a per
diem or mileage basis, or on a
combination of the two, provided the
method used is applied to an entire trip
and not to selected days of the trip. The
method used must be consistent with
those normally allowed in like
circumstances in the recipient’s or
subrecipient’s other activities and in
accordance with the recipient’s or
subrecipient’s established written
policies. Notwithstanding the
provisions of § 200.444, travel costs of
officials covered by that section are
allowable with the prior written
approval of the Federal agency or passthrough entity when they are
specifically related to the Federal
award.
(b) Lodging and subsistence. Costs
incurred by employees and officers for
travel, including costs of lodging, other
subsistence, and incidental expenses,
must be considered reasonable and
otherwise allowable only to the extent
such costs do not exceed charges
normally allowed by the recipient or
subrecipient in its regular operations as
the result of the recipient’s or
subrecipient’s established written
policy. In addition, if these costs are
charged directly to the Federal award
documentation must justify that:
(1) Participation of the individual is
necessary for the Federal award; and
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(2) The costs are reasonable and
consistent with the recipient’s or
subrecipient’s established written
policy.
(c) Dependent costs. (1) Temporary
dependent care costs (dependent is
defined in 26 U.S.C. 152) above and
beyond regular dependent care that
directly results from travel to
conferences is allowable provided that:
(i) The costs are a direct result of the
individual’s travel for the Federal
award;
(ii) The costs are consistent with the
recipient’s or subrecipient’s established
written policy for all travel; and
(iii) Are only temporary during the
travel period.
(2) Travel costs for dependents are
unallowable, except for travel of six
months or more with prior approval of
the Federal agency. See § 200.432.
(d) Establishing rates and amounts. In
the absence of an established written
policy regarding travel costs, the rates
and amounts established under 5 U.S.C.
5701–11 (‘‘Travel and Subsistence
Expenses; Mileage Allowances’’), by the
Administrator of General Services, or by
the President (or their designee)
pursuant to any provisions of such
subchapter must apply to travel under
Federal awards (48 CFR 31.205–46(a)).
(e) Commercial air travel. (1) Airfare
costs in excess of the basic least
expensive unrestricted accommodations
class offered by commercial airlines are
unallowable except when such
accommodations would:
(i) Require circuitous routing;
(ii) Require travel during
unreasonable hours;
(iii) Excessively prolong travel;
(iv) Result in additional costs that
would offset the transportation savings;
or
(v) Offer accommodations not
reasonably adequate for the traveler’s
medical needs. The recipient or
subrecipient must justify and document
these conditions on a case-by-case basis
for the use of first-class or business-class
airfare to be allowable in such cases.
(2) Unless a pattern of avoidance is
detected, the Federal Government will
generally not question a recipient’s or
subrecipient’s determinations that
customary standard airfare or other
discount airfare is unavailable for
specific trips if the recipient or
subrecipient can demonstrate that such
airfare was not available in the specific
case.
(f) Air travel by other than
commercial carrier. Travel costs by
recipient or subrecipient-owned,
-leased, or -chartered aircraft include
the cost of the lease, charter, operation
(including personnel costs),
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maintenance, depreciation, insurance,
and other related costs. The portion of
these costs that exceed the cost of
airfare, as provided for in paragraph (d),
is unallowable.
§ 200.476
Trustees.
Travel and subsistence costs of
trustees (or directors) at IHEs and
nonprofit organizations are allowable.
See § 200.475.
Subpart F—Audit Requirements
General
§ 200.500
Purpose.
This part sets forth standards for
obtaining consistency and uniformity
among Federal agencies for the audit of
non-Federal entities expending Federal
awards.
Audits
§ 200.501
Audit requirements.
(a) Audit required. A non-Federal
entity that expends $1,000,000 or more
during the non-Federal entity’s fiscal
year in Federal awards must have a
single or program-specific audit
conducted for that year in accordance
with the provisions of this part.
(b) Single audit. A non-Federal entity
that expends $1,000,000 in Federal
awards during its fiscal year must have
a single audit conducted in accordance
with § 200.514 except when it elects to
have a program-specific audit
conducted in accordance with
paragraph (c) or (d) of this section.
(c) Program-specific audit election (in
general). A non-Federal entity may elect
to have a program-specific audit
conducted in accordance with § 200.507
if the following conditions are met:
(1) The non-Federal entity expends
Federal awards under only one Federal
program (excluding research and
development); and
(2) The Federal program’s statutes or
regulations, or terms and conditions of
the Federal award, do not require a
financial statement audit of the nonFederal entity.
(d) Program-specific audit election for
research and development. A nonFederal entity may elect to have a
program-specific audit for research and
development conducted in accordance
with § 200.507, but only if all of the
following conditions are met:
(1) The non-Federal entity expends
Federal awards only from the same
Federal agency, or the same Federal
agency and the same pass-through
entity; and
(2) The Federal agency, or passthrough entity in the case of a
subrecipient, approves a programspecific audit in advance.
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(e) Exemption when Federal awards
expended are less than $1,000,000. A
non-Federal entity that expends less
than $1,000,000 in Federal awards
during its fiscal year is exempt from
Federal audit requirements for that year,
except as noted in § 200.503. However,
in all instances, the records of the nonFederal entity must be available for
review or audit by appropriate officials
of the Federal agency, pass-through
entity, and the Government
Accountability Office (GAO).
(f) Federally Funded Research and
Development Centers (FFRDC).
Management of an auditee that owns or
operates a FFRDC may elect to treat the
FFRDC as a separate entity for purposes
of this part.
(g) Subrecipients and contractors. An
auditee may simultaneously be a
recipient, a subrecipient, and a
contractor. Federal awards expended as
a recipient or a subrecipient are subject
to audit under this part. Payments
received for goods or services provided
as a contractor under a Federal award
(see § 200.331) are not subject to audit
under this part.
(h) Compliance responsibility for
contractors. In most cases, the auditee’s
compliance responsibility for
contractors is to ensure that the
procurement, receipt, and payment for
goods and services comply with Federal
statutes, regulations, and the terms and
conditions of a Federal award. Federal
award compliance requirements
normally do not flow down to
contractors. However, the auditee is
responsible for ensuring compliance for
procurement transactions that require a
contractor to be responsible for program
compliance and the contractor’s records
must be reviewed to determine program
compliance. Also, when these
procurement transactions relate to a
major program, the scope of the audit
must include a determination that these
transactions comply with Federal
statutes, regulations, and the terms and
conditions of a Federal award.
(i) For-profit subrecipient. This part
does not apply to for-profit
organizations. As necessary, the passthrough entity is responsible for
establishing requirements to ensure
compliance by for-profit subrecipients.
The subaward with a for-profit
subrecipient must describe applicable
compliance requirements and the forprofit subrecipient’s compliance
responsibility. Methods to ensure
compliance for Federal awards made to
for-profit subrecipients may include
pre-award audits, monitoring
throughout the performance of the
subaward, and post-award audits (see
§ 200.332).
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§ 200.502 Basis for determining Federal
awards expended.
(a) Determining Federal awards
expended. The determination of when a
Federal award is expended must be
based on when the activity related to the
Federal award occurs. Generally, the
activity related to the Federal award
pertains to events that require the nonFederal entity to comply with Federal
statutes, regulations, and the terms and
conditions of Federal awards, such as:
(1) Expenditure/expense transactions
associated with grants, cooperative
agreements, cost-reimbursement
contracts under the FAR, compacts with
Indian Tribes, and direct
appropriations;
(2) The disbursement of funds to
subrecipients;
(3) The use of loan proceeds under
loan and loan guarantee programs;
(4) The receipt of property (including
surplus property);
(5) The receipt or use of program
income;
(6) The distribution or use of food
commodities;
(7) The disbursement of amounts
entitling the non-Federal entity to an
interest subsidy; and
(8) The period when insurance is in
force.
(b) Loan and loan guarantees (loans).
Loan and loan guarantees retain their
Federal character through the end of the
Federal award period of performance
unless otherwise specified in statute or
Federal agency regulations. The Federal
Government is at risk for loans until the
debt is repaid. Therefore, the following
guidelines must be used to calculate the
value of Federal awards expended
under loan programs (except as noted in
paragraphs (c) and (d)):
(1) The value of new loans made or
received during the audit period; plus
(2) The balance of loans from previous
years at the beginning of the audit
period for which the Federal
Government imposes continuing
compliance requirements; plus
(3) Any interest subsidy, cash, or
administrative cost allowance received.
(c) Loan and loan guarantees (loans)
at Institutions of Higher Education
(IHE). When loans are made to students
of an IHE, but the IHE itself does not
have continuing compliance
requirements for the loans, then only
the value of loans made during the audit
period are considered Federal awards
expended in that audit period. The
balance of loans for previous audit
periods is not included as Federal
awards expended because the lender
accounts for the prior balances.
(d) Prior loan and loan guarantees
(loans). Loans, the proceeds of which
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were received and expended in prior
years, are not considered Federal
awards expended under this part when
Federal statutes, regulations, and the
terms and conditions of Federal awards
pertaining to such loans impose no
continuing compliance requirements
other than to repay the loans.
(e) Endowment funds. The cumulative
balance of Federal awards for
endowment funds that are federally
restricted is considered Federal awards
expended in each audit period in which
the funds are still restricted.
(f) Free rent. Free rent received by
itself is not considered a Federal award
expended under this part. However, free
rent received as part of a Federal award
to carry out a Federal program must be
included in determining Federal awards
expended and is subject to audit under
this part.
(g) Valuing non-cash assistance.
Federal non-cash assistance (such as
free rent, food commodities, donated
property, or donated surplus property
that is received as part of a Federal
award to carry out a Federal program)
must be valued at fair market value at
the time of receipt or the assessed value
provided by the Federal agency and
must be included in determining
Federal awards expended under this
part
(h) Medicare. Medicare payments to a
non-Federal entity for providing patient
care services to Medicare-eligible
individuals are not considered Federal
awards expended under this part.
(i) Medicaid. Medicaid payments to a
subrecipient for providing patient care
services to Medicaid-eligible
individuals are not considered Federal
awards expended under this part unless
a State requires the funds to be treated
as Federal awards expended because
reimbursement is on a costreimbursement basis.
(j) Certain loans provided by the
National Credit Union Administration.
For purposes of this part, loans from the
National Credit Union Share Insurance
Fund and the Central Liquidity Facility
funded by contributions from insured
non-Federal entities are not considered
Federal awards expended.
§ 200.503 Relation to other audit
requirements.
(a) Other financial audits. An audit
conducted in accordance with this part
must be in lieu of any financial audit of
Federal awards which a non-Federal
entity is required to undergo under any
other Federal statute or regulation. To
the extent that such an audit provides
a Federal agency with the information it
requires to carry out its responsibilities
under Federal statute or regulation, a
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Federal agency must rely upon and use
that information.
(b) Conducting additional audits.
Notwithstanding paragraph (a) of this
section, a Federal agency, Inspectors
General, or GAO may conduct or
arrange additional audits to carry out its
responsibilities under Federal statute or
regulation. The provisions of this part
do not authorize any non-Federal entity
to constrain, in any manner, such
Federal agency from carrying out or
arranging for such additional audits,
except that the Federal agency must
plan such audits not to be duplicative
of other audits of Federal awards. Prior
to commencing such an audit, the
Federal agency or pass-through entity
must review the FAC for recent audits
submitted by the non-Federal entity,
and to the extent such audits meet a
Federal agency or pass-through entity’s
needs, the Federal agency or passthrough entity must rely upon and use
such audits. Any additional audits must
be planned and performed in such a
way as to build upon work performed,
including the audit documentation,
sampling, and testing already performed
by other auditors.
(c) Authority to conduct additional
audits. The provisions of this part do
not limit the authority of Federal
agencies to conduct, or arrange for the
conduct of, audits and evaluations of
Federal awards, nor limit the authority
of any Federal agency Inspector General
or other Federal officials. For example,
requirements that may be applicable
under the FAR or CAS and the terms
and conditions of a cost-reimbursement
contract may include additional
applicable audits to be conducted or
arranged for by Federal agencies.
(d) Federal agency to pay for
additional audits. A Federal agency that
conducts or arranges for additional
audits must, consistent with other
applicable Federal statutes and
regulations, arrange for funding the full
cost of such additional audits.
(e) Request for a program to be
audited as a major program. A Federal
agency may request that an auditee have
a particular Federal program audited as
a major program in lieu of the Federal
agency conducting or arranging for the
additional audits. Such requests should
be made at least 180 calendar days prior
to the end of the fiscal year to be
audited to allow for planning. After
consultation with its auditor, the
auditee should promptly respond to
such a request by informing the Federal
agency whether the program would
otherwise be audited as a major program
using the risk-based audit approach
described in § 200.518 and, if not, the
estimated incremental cost. The Federal
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agency must then promptly confirm to
the auditee whether it wants the
program audited as a major program. If
the program is to be audited as a major
program based upon this Federal agency
request, and the Federal agency agrees
to pay the full incremental costs, then
the auditee must have the program
audited as a major program. With
approval of the Federal agency, a passthrough entity may use the provisions of
this paragraph for a subrecipient.
§ 200.504
Frequency of audits.
Audits required by this part must be
performed annually except as provided
in paragraphs (a) and (b) of this section:
(a) A State, local government, or
Indian Tribe that is required by
constitution or statute, in effect on
January 1, 1987, to undergo its audits
less frequently than annually, is
permitted to undergo biennial (every
other year) audits pursuant to this part.
This requirement must still be in effect
for the biennial period.
(b) Any nonprofit organization that
had biennial audits for all biennial
periods ending between July 1, 1992,
and January 1, 1995, is permitted to
undergo biennial audits pursuant to this
part. Biennial audits must cover both
fiscal years within the biennial period.
§ 200.505
Remedies for noncompliance.
In cases of continued inability or
unwillingness to have an audit
conducted in accordance with this part,
Federal agencies or pass-throughthrough entities must take appropriate
action as provided in § 200.339.
§ 200.506
Audit costs.
See § 200.425.
§ 200.507
Program-specific audits.
(a) Program-specific audit guide
available. In some cases, a programspecific audit guide will be available to
provide specific guidance to the auditor
concerning internal controls,
compliance requirements, suggested
audit procedures, and audit reporting
requirements. A listing of current
program-specific audit guides can be
found in the compliance supplement
(Appendix VI, Program-Specific Audit
Guides). When a current programspecific audit guide is available, the
auditor must follow Generally Accepted
Government Auditing Standards
(GAGAS) and the guide when
performing a program-specific audit.
(b) Program-specific audit guide not
available. (1) When a current programspecific audit guide is not available, the
auditee and auditor must basically have
the same responsibilities for the Federal
program as they would have for an audit
of a major program in a single audit.
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(2) The auditee must prepare the
financial statement(s) for the Federal
program that includes a schedule of
expenditures of Federal awards for the
program and notes that describe the
significant accounting policies used in
preparing the schedule, a summary
schedule of prior audit findings
consistent with the requirements of
§ 200.511(b), and a corrective action
plan consistent with the requirements of
§ 200.511(c).
(3) The auditor must:
(i) Perform an audit of the financial
statement(s) for the Federal program in
accordance with GAGAS;
(ii) Obtain an understanding of
internal controls and perform tests of
internal controls over the Federal
program consistent with the
requirements for a major program in
accordance with§ 200.514(c);
(iii) Determine whether the auditee
has complied with Federal statutes,
regulations, and the terms and
conditions of Federal awards that could
have a direct and material effect on the
Federal program consistent with the
requirements for a major program under
§ 200.514(d);
(iv) Follow up on prior audit findings
and perform procedures to assess the
reasonableness of the summary
schedule of prior audit findings
prepared by the auditee in accordance
with the requirements of § 200.511
When the auditor concludes that the
summary schedule of prior audit
findings materially misrepresents the
status of any prior audit finding, the
auditor must report this condition as a
current-year audit finding.; and
(v) Report any audit findings
consistent with the requirements of
§ 200.516.
(4) The auditor’s report(s) may be in
the form of either combined or separate
reports. It may be organized differently
from the manner presented in this
section. The auditor’s report(s) must
state that the audit was conducted in
accordance with this part and include
the following:
(i) An opinion (or disclaimer of
opinion) as to whether the financial
statement(s) of the Federal program is
presented fairly in all material respects
in accordance with the stated
accounting policies;
(ii) A report on internal control
related to the Federal program, which
must describe the scope of testing of
internal control and the results of the
tests;
(iii) A report on compliance that
includes an opinion (or disclaimer of
opinion) as to whether the auditee
complied with laws, regulations, and
the terms and conditions of Federal
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awards which could have a direct and
material effect on the Federal program;
and
(iv) A schedule of findings and
questioned costs for the Federal
program that includes a summary of the
auditor’s results relative to the Federal
program in a format consistent with
§ 200.515(d)(1) and findings and
questioned costs consistent with the
requirements of § 200.515(d)(3).
(c) Report submission for programspecific audits. (1) Audit period. The
audit must be completed and submitted
in accordance with paragraph (c)(2) or
(c)(3) of this section. Unless a different
period is specified in the programspecific audit guide, the audit must be
submitted within 30 calendar days after
receiving the auditor’s report(s) or nine
months after the end of the audit period
(whichever is earlier). The reporting
package is due the next business day
when the due date falls on a Saturday,
Sunday, or Federal holiday. Unless
restricted by Federal law or regulation,
the auditee must make copies of the
report(s) available for public inspection.
Auditees and auditors must ensure that
their respective parts of the reporting
package do not include protected
personally identifiable information.
(2) Program-specific audit guide
available. When a program-specific
audit guide is available, the auditee
must electronically submit the data
collection form prepared in accordance
with § 200.512(b), as applicable to the
program-specific audit, to the Federal
Audit Clearinghouse (FAC). The
submission must also include the
reporting required by the programspecific audit guide.
(3) Program-specific audit guide not
available. When a program-specific
audit guide is not available, the auditee
must electronically submit the data
collection form prepared in accordance
with § 200.512(b) to the FAC. The
submission must consist of the financial
statement(s) of the Federal program, a
summary schedule of prior audit
findings, a corrective action plan as
described in paragraph (b)(2), and the
auditor’s report(s) described in
paragraph (b)(4).
(d) Other sections of this part may
apply. Program-specific audits are
subject to:
(1) 200.500 Purpose through 200.503
Relation to other audit requirements,
paragraph (d);
(2) 200.504 Frequency of audits
through 200.506 Audit costs;
(3) 200.508 Auditee responsibilities
through 200.509 Auditor selection;
(4) 200.511 Audit findings followup;
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(5) 200.512 Report submission,
paragraphs (e) through (h);
(6) 200.513 Responsibilities;
(7) 200.516 Audit findings through
200.517 Audit documentation;
(8) 200.521 Management decision;
and
(9) Other referenced provisions of this
part unless contrary to the provisions of
this section, a program-specific audit
guide, or program statutes and
regulations.
exceed $1 million. This restriction
applies to the base year used to prepare
the indirect cost proposal or cost
allocation plan and any subsequent
years in which the resulting indirect
cost agreement or cost allocation plan is
used to recover costs.
(c) Use of Federal auditors. Federal
auditors may perform all or part of the
work required under this part if they
fully comply with the requirements of
this part.
Auditees
§ 200.510
§ 200.508
(a) Financial statements. The auditee
must prepare financial statements that
reflect its financial position, results of
operations or changes in net assets, and,
where appropriate, cash flows for the
fiscal year audited. The financial
statements must be for the same
organizational unit and fiscal year
chosen to meet this part’s requirements.
However, organization-wide financial
statements of the non-Federal entity
may also include departments, agencies,
and other organizational units that have
separate audits in accordance with
§ 200.514(a) and prepare separate
financial statements.
(b) Schedule of expenditures of
Federal awards. The auditee must also
prepare a schedule of expenditures of
Federal awards for the period covered
by the auditee’s financial statements.
The schedule must include the total
Federal awards expended as determined
in accordance with § 200.502. The
auditee may choose to provide
information requested by Federal
agencies or pass-through-through
entities to make the schedule easier to
use. For example, when a Federal
program has multiple Federal award
years, the auditee may separately list the
amount of Federal awards expended for
each year of a Federal award. The
schedule must:
(1) List individual Federal programs
by Federal agency using the applicable
Assistance Listing number(s). For a
cluster of programs, the non-Federal
entity must provide the cluster name, a
list of individual Federal programs
within the cluster, and provide the
Federal agency name and the applicable
Assistance Listing number(s). For
research and development, total Federal
awards expended must be shown either
by individual Federal award or by
Federal agency and major subdivision
within the Federal agency. For example,
the National Institutes of Health is a
major subdivision within the
Department of Health and Human
Services.
(2) For audits covering multiple
recipients (such as departments,
agencies, IHEs, and other organizational
Auditee responsibilities.
The auditee must:
(a) Arrange for the audit required by
this part in accordance with § 200.509,
and ensure it is properly performed and
submitted in accordance with § 200.512.
(b) Prepare financial statements,
including the schedule of expenditures
of Federal awards in accordance with
§ 200.510.
(c) Promptly follow up and take
corrective action on audit findings. This
includes preparing a summary schedule
of prior audit findings and a corrective
action plan in accordance with
§ 200.511(b) and (c), respectively.
(d) Provide the auditor access to
personnel, accounts, books, records,
supporting documentation, and any
other information needed for the auditor
to perform the audit required by this
part.
§ 200.509
Auditor selection.
(a) Auditor procurement. When
procuring audit services, the auditee
must follow the procurement standards
in §§ 200.317 through 200.327 of
subpart D or the FAR (48 CFR part 42),
as applicable. When requesting
proposals for audit services, the
objectives and scope of the audit must
be made clear, and the non-Federal
entity must request a copy of the audit
organization’s peer review report, which
the auditor must provide under GAGAS.
Factors to be considered in evaluating
each proposal for audit services include
the responsiveness to the request for
proposal, relevant experience,
availability of staff with professional
qualifications and technical abilities,
the results of peer and external quality
control reviews, and price. Whenever
possible, the auditee must make efforts
to contract with businesses as stated in
§ 200.321 or the FAR (48 CFR part 42),
as applicable.
(b) Restriction on auditor preparing
indirect cost proposals. An auditor who
prepares the indirect cost proposal or
cost allocation plan may not be selected
to perform the audit required by this
part when the indirect costs recovered
by the auditee during the prior year
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units), identify the recipient of the
Federal award.
(3) For Federal awards received as a
subrecipient, the name of the passthrough entity and identifying number
assigned by the pass-through entity
must be included.
(4) Provide total Federal awards
expended for each individual Federal
program and the Assistance Listings
number or other identifying number
when the Assistance Listings
information is unavailable. For a cluster
of programs, the auditee must also
provide the total for the cluster.
(5) Include the total amount provided
to subrecipients from each Federal
program.
(6) For loan or loan guarantee
programs described in § 200.502(b),
identify in the notes to the schedule the
balances outstanding at the end of the
audit period. This requirement is in
addition to including the total Federal
awards expended for loan or loan
guarantee programs in the schedule.
(7) Include notes describing the
significant accounting policies used in
preparing the schedule and whether the
auditee elected to use the 15 percent de
minimis indirect cost rate (see
§ 200.414).
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§ 200.511
Audit findings follow-up.
(a) General. The auditee is responsible
for follow-up and corrective action on
all audit findings. As part of this
responsibility, the auditee must prepare
a summary schedule of prior audit
findings. The auditee must also prepare
a corrective action plan for current year
audit findings. The summary schedule
of prior audit findings and the
corrective action plan must include the
reference numbers the auditor assigns to
audit findings under § 200.516(c). Since
the summary schedule may include
audit findings from multiple years, it
must include the fiscal year in which
the finding initially occurred. The
corrective action plan and summary
schedule of prior audit findings must
include findings relating to the financial
statements, which must be reported in
accordance with GAGAS.
(b) Summary schedule of prior audit
findings. The summary schedule of
prior audit findings must report the
status of all audit findings included in
the prior audit’s schedule of findings
and questioned costs. The summary
schedule must also include audit
findings reported in the prior audit’s
summary schedule of prior audit
findings except audit findings listed as
corrected in accordance with paragraph
(b)(1) of this section or no longer valid
or not warranting further action in
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accordance with paragraph (b)(3) of this
section.
(1) When audit findings were fully
corrected, the summary schedule need
only list the audit findings and state that
corrective action was taken.
(2) When audit findings were not
corrected or only partially corrected, the
summary schedule must describe the
reasons for the finding’s recurrence,
planned corrective action, and any
partial corrective action taken. When
the corrective action taken significantly
differs from the corrective action
previously reported in a corrective
action plan or the Federal agency’s or
pass-through-through entity’s
management decision, the summary
schedule must provide an explanation.
(3) When the auditee believes the
audit findings are no longer valid or do
not warrant further action, the reasons
for this position must be described in
the summary schedule. A valid reason
for considering an audit finding as not
warranting further action is that all of
the following have occurred:
(i) Two years have passed since the
audit report in which the finding
occurred was submitted to the FAC;
(ii) The Federal agency or passthrough entity is not currently following
up with the auditee on the audit
finding; and
(iii) A management decision was not
issued.
(c) Corrective action plan. At the
completion of the audit, the auditee
must prepare a corrective action plan to
address each audit finding included in
the auditor’s report for the current year.
The corrective action plan must be a
document separate from the auditor’s
findings described in § 200.516. The
corrective action plan must also provide
the name(s) of the contact person(s)
responsible for the corrective action, the
corrective action to be taken, and the
anticipated completion date. When the
auditee does not agree with the audit
findings or believes corrective action is
not required, the corrective action plan
must include a detailed explanation of
the reasons.
§ 200.512
Report submission.
(a) General. (1) The audit must be
completed and include the data
collection form described in paragraph
(b) of this section and the reporting
package described in paragraph (c) of
this section. The audit must be
submitted within 30 calendar days after
receiving the auditor’s report(s) or nine
months after the end of the audit period
(whichever is earlier). If the due date
falls on a Saturday, Sunday, or Federal
holiday, the reporting package is due
the next business day.
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(2) The auditee must make copies
available for public inspection unless
restricted by Federal statute or
regulation. Auditees and auditors must
ensure that their respective parts of the
reporting package do not include
protected personally identifiable
information.
(b) Data collection. The FAC is the
repository of record for subpart F
reporting packages and the data
collection form. All Federal agencies,
pass-through entities and others
interested in a reporting package and
data collection form must obtain it by
accessing the FAC.
(1) The auditee must submit the
required data collection form (SF–SAC)
described in Appendix X of this part.
This form provides information about
the auditee, its Federal programs, the
results of the audit, and whether the
audit was completed in accordance with
this part. The form must include all
information required by this part that is
necessary for Federal agencies to use the
audit to ensure the integrity of Federal
programs. The form includes data
elements and a format that OMB must
approve, is available from the FAC, and
include collections of information from
the reporting package described in
paragraph (c).
(2) A senior-level representative of the
auditee (for example, a State controller,
director of finance, chief executive
officer, or chief financial officer) must
sign a statement to be included as part
of the data collection form stating that
the auditee complied with the
requirements of this part, including that:
(i) The data collection form was
prepared in accordance with this part
(and the instructions accompanying the
form);
(ii) The reporting package does not
include protected personally
identifiable information;
(iii) The information included in its
entirety is accurate and complete; and
(iv) The FAC is authorized to make
the reporting package and the form
publicly available on a website.
(3) An auditee that is an Indian Tribe
or a tribal organization (as defined in
the Indian Self-Determination,
Education and Assistance Act
(ISDEAA), 25 U.S.C. 450b(l)) may opt
not to authorize the FAC to make the
reporting package publicly available on
a website. To opt-out, an Indian Tribe or
tribal organization must exclude the
authorization described in paragraph
(b)(2)(iv) of this section. In these
instances, the Indian Tribe is
responsible for submitting the reporting
package directly to any pass-through
entities through which it has received a
Federal award and to pass-through
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entities for which the summary
schedule of prior audit findings
reported the status of any findings
related to those Federal awards that the
pass-through entity provided. Unless
restricted by Federal statute or
regulation, if the auditee opts not to
authorize publication, the Indian Tribe
must make copies of the reporting
package available for public inspection.
(4) The auditor must complete the
applicable data elements of the data
collection form using the information
included in the reporting package
described in paragraph (c) of this
section. The auditor must sign a
statement to be included as part of the
data collection form stating:
(i) The source of information included
in the data collection form;
(ii) The auditor’s responsibility for the
information;
(iii) The data collection form is not a
substitute for the reporting package
described in paragraph (c); and
(iv) The content of the form is limited
to the collection of information
prescribed by OMB.
(c) Reporting package. The reporting
package must include the following:
(1) Financial statements and schedule
of expenditures of Federal awards
discussed in § 200.510(a) and (b),
respectively;
(2) Summary schedule of prior audit
findings discussed in § 200.511(b);
(3) Auditor’s report(s) discussed in
§ 200.515; and
(4) Corrective action plan discussed in
§ 200.511(c).
(d) Submission to FAC. The auditee
must electronically submit the data
collection form described in paragraph
(b) of this section and the reporting
package described in paragraph (c) of
this section to the FAC.
(e) Requests for management letters
issued by the auditor. Auditees must
submit a copy of any management
letters issued by the auditor when
requested by a Federal agency or passthrough entity.
(f) Report retention requirements.
Auditees must keep a copy of the data
collection form described in paragraph
(b) of this section and a copy of the
reporting package described in
paragraph (c) on file for three years from
the date of submission to the FAC.
Copies of audit records must be
maintained in accordance with
§ 200.336.
(g) FAC responsibilities. The FAC
must make available the reporting
packages received in accordance with
paragraph (c) of this section and
§ 200.507(c) to the public, except for
Indian Tribes exercising the option in
paragraph (b)(3) of this section, and
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maintain a database of completed
audits, provide appropriate information
to Federal agencies, and follow up with
known auditees that the FAC knows
have not submitted the required data
collection forms and reporting packages.
(h) Electronic filing. Nothing in this
part must preclude electronic
submissions to the FAC in such a
manner as may be approved by OMB.
Federal Agencies
§ 200.513
Responsibilities.
(a) Cognizant agency for audit
responsibilities. (1) A non-Federal entity
expending more than $50 million a year
in Federal awards must have a
cognizant agency for audit. The
cognizant agency for audit must be the
Federal agency that provides the largest
amount of direct funding to a nonFederal entity (as listed on the Schedule
of expenditures of Federal awards, see
§ 200.510(b)) to a non-Federal entity
unless OMB designates a specific
cognizant agency for audit. When the
direct funding represents less than 25
percent of the total expenditures (as
direct and subawards) by the nonFederal entity, then the Federal agency
with the predominant amount of total
funding is the designated cognizant
agency for audit.
(2) To provide for continuity of
cognizance, the determination of the
predominant amount of direct funding
must be based upon direct Federal
awards expended in the non-Federal
entity’s fiscal years ending in 2019 and
every fifth year after that.
(3) Notwithstanding how audit
cognizance is determined, a Federal
agency may reassign cognizance to
another Federal agency that provides
substantial funding to an auditee if it
agrees to be the cognizant agency for
audit. Within 30 calendar days after any
reassignment, both the old and the new
cognizant agency for audit must notify
the change to the FAC, the auditee, and,
if known, the auditor.
(4) The cognizant agency for audit
must:
(i) Provide technical audit advice and
assistance to auditees and auditors.
(ii) Obtain or conduct quality control
reviews on selected audits made by nonFederal auditors and provide the results
to other interested organizations.
(iii) Cooperate and support the
Federal agency designated by OMB to
lead a government-wide analysis to
assess the quality of single audits. The
government-wide analysis may rely on
the current and ongoing quality control
review work performed by Federal
agencies, State auditors, and
professional audit associations. This
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government-wide audit analysis must be
performed at an interval determined by
OMB, and the results must be posted
publicly. In providing support to the
government-wide analysis, a Federal
agency must provide the following:
(A) An assessment of the extent to
which single audits conform to the
requirements, standards, and
procedures of this part; and
(B) Recommendations to address
audit quality issues, including
recommendations for any changes to
this part’s requirements, standards, and
procedures.
(iv) Promptly inform the appropriate
Federal law enforcement officials and
impacted Federal agencies of any direct
reporting by the auditee or its auditor
required by GAGAS, Federal statute, or
regulation.
(v) Advise the community of
independent auditors of any noteworthy
or important factual trends related to the
quality of audits stemming from quality
control reviews. Significant problems or
quality issues consistently identified
through quality control reviews of audit
reports must be referred to appropriate
State licensing agencies and
professional bodies.
(vi) Advise the auditor, Federal
awarding agencies, and, where
appropriate, the auditee of any
deficiencies found in the audits when
the deficiencies require corrective
action by the auditor. When advised of
deficiencies, the auditee must work
with the auditor to take corrective
action. If corrective action is not taken,
the cognizant agency for audit must
notify the auditor, the auditee, and
applicable Federal awarding agencies
and pass-through entities of the facts
and make recommendations for followup action. Major inadequacies or
repetitive substandard performance by
auditors must be referred to appropriate
State licensing agencies and
professional bodies for disciplinary
action.
(vii) Coordinate, to the extent
practical, audits or reviews made by or
for Federal agencies that are in addition
to the audits made pursuant to this part,
so that the additional audits or reviews
build upon, rather than duplicate,
audits performed in accordance with
this part.
(viii) Coordinate a management
decision for cross-cutting audit findings
that affect the Federal programs of more
than one agency when requested by any
Federal awarding agency whose awards
are included in the audit finding of the
auditee. Cross-cutting audit finding
means an audit finding where the same
underlying condition or issue affects all
Federal awards (including Federal
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awards of more than one Federal agency
or pass-through entity).
(ix) Coordinate the audit work and
reporting responsibilities among
auditors to achieve the most costeffective audit.
(x) Provide advice to auditees as to
how to handle changes in fiscal year.
(b) Oversight agency for audit
responsibilities. An auditee who does
not have a designated cognizant agency
for audit will be under the general
oversight of the Federal agency
determined in accordance with § 200.1
oversight agency for audit. A Federal
agency with oversight for an auditee
may reassign oversight to another
Federal agency that agrees to be the
oversight agency for audit. Within 30
calendar days after any reassignment,
both the old and the new oversight
agency for audit must provide notice of
the change to the FAC, the auditee, and,
if known, the auditor. The oversight
agency for audit:
(1) Must provide technical advice and
assistance to auditees and auditors.
(2) May assume all or some of the
responsibilities normally performed by
a cognizant agency for audit.
(c) Awarding Federal agency
responsibilities. In addition to all other
requirements of this part, the awarding
Federal agency must:
(1) Ensure that audits are completed,
and reports are received in a timely
manner in accordance with the
requirements of this part.
(2) Provide technical advice and
assistance to auditees and auditors.
(3) Follow-up on audit findings to
ensure that non-Federal entities take
appropriate and timely corrective
action. Follow-up includes:
(i) Issuing a management decision in
accordance with § 200.521;
(ii) Monitoring the non-Federal
entity’s progress implementing a
corrective action;
(iii) Using a cooperative audit
resolution approach to improve Federal
program outcomes through better audit
resolution, follow-up, and corrective
action, which means the use of audit
follow-up techniques promoting prompt
corrective action by improving
communication, fostering collaboration,
promoting trust, and developing an
understanding between the Federal
agency and the non-Federal entity. This
approach is based upon:
(A) A strong commitment by Federal
agency and non-Federal entity
leadership to Federal program integrity;
(B) Federal agencies strengthening
partnerships and working cooperatively
with non-Federal entities and their
auditors; non-Federal entities and their
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auditors working cooperatively with
Federal agencies;
(C) A focus on current conditions and
corrective action going forward;
(D) Federal agencies offering
appropriate relief for past
noncompliance when audits show
prompt corrective action has occurred;
and
(E) Federal agency leadership sending
a clear message that continued failure to
correct conditions identified by audits
likely to cause improper payments,
fraud, waste, or abuse is unacceptable
and will result in sanctions.
(iv) Tracking the effectiveness of the
Federal agency’s follow-up processes,
the effectiveness of single audits in
improving non-Federal entity
accountability, and the use of single
audits in making Federal award
decisions. The Federal agency should
develop a baseline, metrics, and targets
to track, over time, the effectiveness of
the Federal agency’s process to follow
up on audit findings.
(4) Provide OMB with annual updates
to the compliance supplement. These
updates include working with OMB to
ensure that the compliance supplement
focuses the auditor on testing the
compliance requirements most likely to
cause improper payments, fraud, waste,
abuse, or generate audit findings for
which the Federal agency with take
action in accordance with § 200.505.
Federal agencies are encouraged to
engage with external audit stakeholders
and the Federal agency’s Office of
Inspector General’s National Single
Audit Coordinator (NSAC) prior to
submitting compliance supplement
drafts to OMB.
(5) Provide OMB with the name of a
single audit accountable official from
among the senior policy officials of the
Federal agency. The accountable official
must be:
(i) Responsible for ensuring that the
Federal agency fulfills the requirements
of this section and effectively uses the
single audit process to reduce improper
payments and improve Federal program
outcomes.
(ii) Accountable for improving the
effectiveness of the Federal agency’s
single audit processes in accordance
with paragraph (c)(3)(iv).
(iii) Responsible for designating the
Federal agency’s key management single
audit liaison.
(6) Provide OMB with the name of a
key management single audit liaison.
The liaison must:
(i) Serve as the Federal agency’s point
of contact for the single audit process
within and outside the Federal
Government.
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69491
(ii) Promote interagency coordination,
consistency, and information sharing.
This includes coordinating audit followup, identifying high-risk non-Federal
entities, providing input on single audit
and follow-up policy, enhancing the
utility of the FAC, and identifying ways
to use single audit results to improve
Federal award accountability and best
practices.
(iii) Oversee training for the Federal
agency’s program management
personnel related to the single audit
process.
(iv) Promote the Federal agency’s use
of a cooperative audit resolution
approach as described in paragraph
(c)(3)(iii) of this section.
(v) Coordinate the Federal agency’s
audit follow-up processes and ensure
non-Federal entities implement
corrective actions for audit findings.
(vi) Manage the Federal agency’s audit
follow-up processes for the cognizant
agency for an audit if there are crosscutting audit findings. Cross-cutting
audit findings means an audit finding
where the same underlying condition or
issue affects all Federal awards
(including Federal awards of more than
one Federal agency or pass-through
entity).
(vii) Ensure the Federal agency
provides OMB with annual updates to
the compliance supplement consistent
with the compliance supplement
preparation guide.
(viii) Support the mission of the
Federal agency’s single audit
accountable official and coordinate with
the Federal agency’s Office of Inspector
General’s National Single Audit
Coordinator (NSAC).
Auditors
§ 200.514
Scope of audit.
(a) General. The audit must be
conducted in accordance with GAGAS.
The audit must also cover the entire
operations of the auditee, or, at the
option of the auditee, such audit must
include a series of audits that cover
departments, agencies, and other
organizational units that expended or
otherwise administered Federal awards
during the audit period. In these
instances, the audit must include the
financial statements and schedule of
expenditures of Federal awards for each
such department, agency, and other
organizational unit, which must be
considered to be a non-Federal entity.
The financial statements and schedule
of expenditures of Federal awards must
be for the same audit period.
(b) Financial statements. The auditor
must determine whether the auditee’s
financial statements are presented fairly
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in all material respects in accordance
with generally accepted accounting
principles. The auditor must also
determine whether the schedule of
expenditures of Federal awards is stated
fairly in all material respects in relation
to the auditee’s financial statements as
a whole.
(c) Internal control. (1) The
compliance supplement provides
guidance on internal controls over
Federal programs based upon the
guidance in Standards for Internal
Control in the Federal Government
issued by the Comptroller General of the
United States and the Internal ControlIntegrated Framework, issued by the
Committee of Sponsoring Organizations
of the Treadway Commission (COSO).
(2) In addition to the requirements of
GAGAS, the auditor must perform
procedures to obtain an understanding
of internal control over Federal
programs sufficient to plan the audit to
support a low assessed level of control
risk of noncompliance for major
programs.
(3) Except as provided in paragraph
(c)(4) of this section, the auditor must:
(i) Plan the testing of internal control
over compliance for major programs to
support a low assessed level of control
risk for assertions relevant to the
compliance requirements for each major
program; and
(ii) Perform testing of internal control
as planned in paragraph (c)(3)(i) of this
section.
(4) When internal control over some
or all of the compliance requirements
for a major program are likely to be
ineffective in preventing or detecting
noncompliance, the planning and
performing of testing described in
paragraph (c)(3) of this section are not
required for those compliance
requirements. However, the auditor
must report a significant deficiency or
material weakness in accordance with
§ 200.516, assess the related control risk
at the maximum, and consider whether
additional compliance tests are required
because of ineffective internal control.
(d) Compliance. (1) In addition to the
requirements of GAGAS, the auditor
must determine whether the auditee has
complied with Federal statutes,
regulations, and the terms and
conditions of Federal awards that may
have a direct and material effect on each
of its major programs.
(2) The principal compliance
requirements applicable to most Federal
programs and the compliance
requirements of the largest Federal
programs are included in the
compliance supplement.
(3) For the compliance requirements
related to Federal programs contained in
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the compliance supplement, an audit of
these compliance requirements will
meet the requirements of this part.
Where there have been changes to the
compliance requirements, and the
changes are not reflected in the
compliance supplement, the auditor
must determine the current compliance
requirements and modify the audit
procedures accordingly. For those
Federal programs not covered in the
compliance supplement, the auditor
must follow the compliance
supplement’s guidance for programs not
included.
(4) The compliance testing must
include tests of transactions and other
auditing procedures necessary to
provide the auditor with sufficient audit
evidence to support an opinion on
compliance.
(e) Audit follow-up. The auditor must
follow up on prior audit findings
regardless of whether a prior audit
finding is related to a major program in
the current year. Audit follow-up
includes performing procedures to
assess the reasonableness of the
summary schedule of prior audit
findings prepared by the auditee in
accordance with the requirements of
§ 200.511. When the auditor concludes
that the summary schedule of prior
audit findings materially misrepresents
the status of any prior audit finding, the
auditor must report this condition as a
current-year audit finding.
(f) Data collection form. As required
in § 200.512(b)(4), the auditor must
complete and sign specified sections of
the data collection form.
§ 200.515
Audit reporting.
The auditor’s report(s) may be in the
form of either combined or separate
reports. It may be organized differently
from the manner presented in this
section. The auditor’s report(s) must
state that the audit was conducted in
accordance with this part and include
the following:
(a) An opinion (or disclaimer of
opinion) from the auditor determining
whether the financial statement(s) of the
auditee is presented fairly in all material
respects in accordance with generally
accepted accounting principles (or a
special purpose framework such as
cash, modified cash, or regulatory as
required by State law). The auditor must
also decide whether the schedule of
expenditures of Federal awards is stated
fairly in all material respects in relation
to the auditee’s financial statements as
a whole.
(b) A report on internal control over
financial reporting and compliance with
provisions of laws, regulations,
contracts, and award agreements,
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noncompliance with which could have
a material effect on the financial
statements. This report must describe
the scope of internal control and
compliance testing and the results of the
tests. Where applicable, the report must
refer to the separate schedule of findings
and questioned costs described in
paragraph (d) of this section.
(c) A report on compliance for each
major program and a report on internal
control over compliance. This report
must describe the scope of testing of
internal control over compliance and
include an opinion (or disclaimer of
opinion) as to whether the auditee
complied with Federal statutes,
regulations, and the terms and
conditions of Federal awards that could
have a direct and material effect on each
major program and refer to the separate
schedule of findings and questioned
costs described in paragraph (d) of this
section.
(d) A schedule of findings and
questioned costs which must include
the following three components:
(1) A summary of the auditor’s results,
which must include:
(i) The type of report the auditor
issued (unmodified opinion, qualified
opinion, adverse opinion, or disclaimer
of opinion) on whether the audited
financial statements were prepared in
accordance with GAAP;
(ii) A statement about whether
significant deficiencies or material
weaknesses in internal control were
disclosed by the audit of the financial
statements, if applicable;
(iii) A statement as to whether the
audit disclosed any noncompliance that
is material to the financial statements of
the auditee;
(iv) A statement about whether
significant deficiencies or material
weaknesses in internal control over
major programs were disclosed by the
audit, if applicable;
(v) The type of report the auditor
issued (unmodified opinion, qualified
opinion, adverse opinion, or disclaimer
of opinion) on compliance for major
programs;
(vi) A statement as to whether the
audit disclosed any audit findings that
the auditor is required to report under
§ 200.516(a);
(vii) An identification of major
programs by listing each individual
major program; however, in the case of
a cluster of programs, only the cluster
name as shown on the schedule of
expenditures of Federal Awards is
required for a cluster of programs;
(viii) The dollar threshold used to
distinguish between Type A and Type B
programs, as described in
§ 200.518(b)(1) or (3) when a
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recalculation of the Type A threshold is
required for large loan or loan
guarantees; and
(ix) A statement as to whether the
auditee qualified as a low-risk auditee
under§ 200.520.
(2) Findings relating to the financial
statements required to be reported in
accordance with GAGAS.
(3) Findings and questioned costs for
Federal awards which must include
audit findings as defined in § 200.516(a)
and be reported in the following
manner:
(i) Audit findings (for example,
internal control findings, compliance
findings, questioned costs, or fraud) that
relate to the same issue must be
presented as a single audit finding.
Where practical, audit findings should
be organized by Federal agency or passthrough entity.
(ii) Audit findings that relate to both
the financial statements (paragraph
(d)(2) of this section) and Federal
awards (this paragraph (d)(3)) must be
reported in both sections of the
schedule. However, the reporting in one
section of the schedule may be in
summary form and reference a detailed
reporting in the other section.
(e) Nothing in this part precludes
combining the reporting required by this
section with the reporting required by
§ 200.512(b) when allowed by GAGAS
and Appendix X of this part.
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§ 200.516
Audit findings.
(a) Audit findings reported. The
auditor must report the following as an
audit finding in the schedule of findings
and questioned costs:
(1) Significant deficiencies and
material weaknesses in internal control
over major programs. The auditor’s
determination of whether a deficiency
in internal control is a significant
deficiency or a material weakness for
the purpose of reporting an audit
finding is in relation to a type of
compliance requirement for a major
program identified in the compliance
supplement.
(2) Material noncompliance with the
provisions of Federal statutes,
regulations, or the terms and conditions
of Federal awards related to a major
program. The auditor’s determination of
whether noncompliance with the
provisions of Federal statutes,
regulations, or the terms and conditions
of Federal awards is material for the
purpose of reporting an audit finding is
in relation to a type of compliance
requirement for a major program
identified in the compliance
supplement.
(3) Known questioned costs when
either known or likely questioned costs
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are greater than $25,000 for a type of
compliance requirement for a major
program. When reporting questioned
costs, the auditor must include
information to provide proper
perspective for evaluating the
prevalence and consequences of the
questioned costs.
(4) Known questioned costs greater
than $25,000 for a Federal program that
is not audited as a major program.
Except for audit follow-up, the auditor
is not required to perform audit
procedures for such a Federal program;
therefore, the auditor will normally not
find questioned costs for a program that
is not audited as a major program.
However, if the auditor does become
aware of questioned costs for a Federal
program that is not audited as a major
program (for example, as part of audit
follow-up or other audit procedures)
and the known questioned costs are
greater than $25,000, the auditor must
report this as an audit finding.
(5) The circumstances concerning
why the auditor’s report on compliance
for each major program is other than an
unmodified opinion. This must be
included unless the circumstances are
otherwise reported as audit findings in
the schedule of findings and questioned
costs.
(6) Known or likely fraud affecting a
Federal award, unless the fraud is
otherwise reported as an audit finding
in the schedule of findings and
questioned costs. This paragraph does
not require the auditor to publicly
report information that could
compromise investigative or legal
proceedings or to make an additional
reporting when the auditor confirms
that the fraud was reported outside the
auditor’s reports under the direct
reporting requirements of GAGAS.
(7) Instances where the results of
audit follow-up procedures disclosed
that the summary schedule of prior
audit findings prepared by the auditee
in accordance with § 200.511(b)
materially misrepresents the status of
any prior audit finding.
(b) Audit finding detail and clarity.
Audit findings must be presented with
sufficient detail and clarity for both the
auditee to prepare a corrective action
plan and take corrective action and for
Federal agencies or pass-throughthrough entities to arrive at a
management decision. As applicable,
the following information must be
included in audit findings:
(1) The Federal program and specific
Federal award identification, including
the Assistance Listings title and
number, Federal award identification
number and year, the name of the
Federal agency, and name of the
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applicable pass-through entity. When
information, such as the Assistance
Listings title and number or Federal
award identification number, is
unavailable, the auditor must provide
the best information available to
describe the Federal award.
(2) The criteria or specific
requirement for the audit finding (for
example, the specific Federal statute,
regulation, or term and condition of the
Federal award). The criteria or specific
requirement provides a context for
evaluating evidence and understanding
findings. As a result, the criteria should
generally identify the required or
desired state or expectation with respect
to the program or operation.
(3) The condition found, including
facts that support the deficiency
identified in the audit finding.
(4) A statement of cause that identifies
the reason or explanation for the
condition or the factors responsible for
the difference between the situation that
exists (condition) and the required or
desired state (criteria), which may also
serve as a basis for recommendations for
corrective action.
(5) The possible asserted effect to
provide sufficient information to the
auditee and Federal agency or passthrough entity to permit them to
determine the cause and effect to
facilitate prompt and proper corrective
action. A statement of the effect or
potential effect should provide a clear,
logical link to establish the impact or
potential impact of the difference
between the condition and the criteria.
(6) The identification of known
questioned costs, by applicable
Assistance Listing number(s) and
Federal award identification number(s),
and how these questioned costs were
computed.
(7) When there are known questioned
costs but the dollar amount is
undetermined or not reported, a
description of why the dollar amount
was undetermined or otherwise could
not be reported.
(8) Information to provide proper
perspective for evaluating the
prevalence and consequences of the
audit finding. For example, whether the
audit finding represents an isolated
instance or a systemic problem. Where
appropriate, instances identified must
be related to the universe and the
number of cases examined and be
quantified in terms of dollar value. In
addition, the audit should indicate
whether the sampling was a statistically
valid sample.
(9) The identification of whether the
audit finding is a repeat of a finding in
the immediately prior audit. The audit
must identify the applicable prior year
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audit finding numbers in these
instances.
(10) Recommendations to prevent
future occurrences of the deficiency
identified in the audit finding.
(11) Views of the responsible officials
of the auditee.
(c) Reference numbers. Each audit
finding in the schedule of findings and
questioned costs must include a
reference number in the format meeting
the requirements of the data collection
form submission (see § 200.512(b)).
§ 200.517
Audit documentation.
(a) Retention of audit documentation.
The auditor must retain audit
documentation and reports for a
minimum of three years after the date of
issuance of the auditor’s report(s) to the
auditee. The cognizant agency for audit,
oversight agency for audit, cognizant
agency for indirect costs, or pass-
through entity may extend the retention
period by providing written notification
to the auditor. When the auditor is
aware that the Federal agency, passthrough entity, or auditee is contesting
an audit finding, the auditor must
contact the parties contesting the audit
finding for guidance prior to the
destruction of the audit documentation
and reports.
(b) Access to audit documentation.
Audit documentation must be made
available upon request to the cognizant
or oversight agency for audit or its
designee, cognizant agency for indirect
cost, a Federal agency, or GAO at the
completion of the audit, as part of a
quality review, to resolve audit findings,
or to carry out oversight responsibilities
consistent with the purposes of this
part. Access to audit documentation
includes the right of Federal agencies to
obtain copies of audit documentation as
is reasonable and necessary.
§ 200.518
Major program determination.
(a) General. The auditor must use a
risk-based approach to determine which
Federal programs are major programs.
This risk-based approach must consider
current and prior audit experience,
oversight by Federal agencies and passthrough entities, and the inherent risk of
the Federal program. The process
described in paragraphs (b) through (h)
of this section must be followed.
(b) Step one. (1) The auditor must
identify and label the larger Federal
programs as Type A programs. Type A
programs are defined as Federal
programs with Federal awards
expended during the audit period
exceeding the levels outlined in the
table 1:
TABLE TO PARAGRAPH (b)(1)
Total Federal awards expended
Type A threshold
ddrumheller on DSK120RN23PROD with PROPOSALS2
Equal to or exceed $1,000,000 but less than or equal to $25 million ..................................
Exceed $25 million but less than or equal to $100 million ...................................................
Exceed $100 million but less than or equal to $1 billion ......................................................
Exceed $1 billion but less than or equal to $10 billion .........................................................
Exceed $10 billion but less than or equal to $20 billion .......................................................
Exceed $20 billion .................................................................................................................
(2) Federal programs not labeled Type
A under paragraph (b)(1) of this section
must be labeled Type B programs.
(3) Including large loans and loan
guarantees (loans) must not result in the
exclusion of other programs as Type A
programs. A Federal program providing
loans is considered a large loan program
when it exceeds four times the largest
non-loan program. For these large loan
programs, the auditor must consider the
Federal program as a Type A program
and exclude its values in determining
other Type A programs. This
recalculation of the Type A program is
performed after removing the total of all
large loan programs. For this paragraph,
a program is only considered a Federal
program providing loans if the value of
Federal awards expended for loans
within the program comprises 50
percent or more of the total Federal
awards expended for the program. A
cluster of programs is treated as one
program, and the value of Federal
awards expended under a loan program
is determined as described in § 200.502.
(4) For biennial audits (see § 200.504),
the determination of Type A and Type
B programs must be based on the
Federal awards expended during the
two-year audit period.
(c) Step two. (1) The auditor must
identify Type A programs that are low-
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$750,000.
Total Federal awards expended times .03.
$3 million.
Total Federal awards expended times .003.
$30 million.
Total Federal awards expended times .0015.
risk. In making this determination, the
auditor must consider whether the
requirements in § 200.519(c), the results
of audit follow-up, or any changes in
personnel or systems affecting the
program indicate significantly increased
risk and therefore preclude the program
from being low-risk. For a Type A
program to be considered low-risk, it
must have been audited as a major
program in at least one of the two most
recent audit periods (in the most recent
audit period in the case of a biennial
audit), and, in the most recent audit
period, the program must not have had:
(i) Internal control deficiencies that
were identified as material weaknesses
in the auditor’s report on internal
control for major programs as required
under § 200.515(c);
(ii) A modified opinion on the
program in the auditor’s report on major
programs as required under
§ 200.515(c); or
(iii) Known or likely questioned costs
that exceed five percent of the total
Federal awards expended for the
program.
(2) Notwithstanding paragraph (c)(1)
of this section, OMB may approve a
Federal agency request that a Type A
program not be considered low-risk for
a specific recipient. For example, it may
be necessary for a large Type A program
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to be audited as a major program each
year for a particular recipient for the
Federal agency to comply with 31
U.S.C. 3515. The Federal agency must
notify the auditee and, if known, the
auditor of OMB’s approval at least 180
calendar days prior to the end of the
fiscal year to be audited.
(d) Step three. (1) The auditor must
identify high-risk Type B programs
using professional judgment and the
criteria in § 200.519. However, the
auditor is not required to identify more
high-risk Type B programs than at least
one-fourth of the number of low-risk
Type A programs identified as low-risk
under step two. Except for known
material weakness in internal control or
compliance problems as discussed in
§ 200.519(b)(1), (2), and (c)(1), a single
criterion in risk would rarely cause a
Type B program to be considered highrisk. When identifying which Type B
programs to assess for risk, the auditor
is encouraged to use an approach that
provides an opportunity for different
high-risk Type B programs to be audited
as major programs over a period of time.
(2) The auditor is not expected to
perform risk assessments on relatively
small Federal programs. Therefore, the
auditor is only required to perform risk
assessments on Type B programs that
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exceed 25 percent (0.25) of the Type A
threshold determined in step one.
(e) Step four. At a minimum, the
auditor must audit all of the following
as major programs:
(1) All Type A programs not
identified as low-risk under step two.
(2) All Type B programs identified as
high-risk under step three.
(3) Additional programs as necessary
to comply with the percentage of
coverage rule described in paragraph (f).
This rule may require the auditor to
audit more programs as major programs
than the number of Type A programs.
(f) Percentage of coverage rule. When
the auditee meets the criteria in
§ 200.520, the auditor only needs to
audit the major programs identified in
paragraphs (e)(1) and (2) of this section
and such additional Federal programs
with Federal awards expended that, in
the aggregate, all major programs
encompass at least 20 percent (0.20) of
total Federal awards expended.
Otherwise, the auditor must audit the
major programs identified in paragraphs
(e)(1) and (2) of this section and such
additional Federal programs with
Federal awards expended that, in the
aggregate, all major programs
encompass at least 40 percent (0.40) of
total Federal awards expended.
(g) Documentation of risk. The auditor
must include in the audit
documentation the risk analysis used for
determining major programs.
(h) Auditor’s judgment. The auditor’s
judgment in applying the risk-based
approach to determine major programs
must be presumed correct when the
determination was performed and
documented in accordance with this
part. Challenges by a Federal agency or
pass-through entity must only be for
clearly improper use of the
requirements in this part. However, a
Federal agency or pass-through entity
may provide auditors guidance about
the risk of a particular Federal program.
The auditor must consider this guidance
in determining major programs in audits
not yet completed.
ddrumheller on DSK120RN23PROD with PROPOSALS2
§ 200.519
Criteria for Federal program risk.
(a) General. The auditor’s
determination should be based on an
overall evaluation of the risk of
noncompliance occurring that could be
material to the Federal program. The
auditor must consider criteria, such as
those described in paragraphs (b), (c),
and (d) of this section, to identify risk
in Federal programs. Also, as part of the
risk analysis, the auditor may wish to
discuss a particular Federal program
with auditee management and the
Federal agency or pass-through entity.
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(b) Current and prior audit
experience. (1) Weaknesses in internal
control over Federal programs would
indicate higher risk. Therefore,
consideration should be given to the
control environment over Federal
programs. This includes considering
factors such as the expectation of
management’s adherence to Federal
statutes, regulations, and the terms and
conditions of Federal awards, and the
competence and experience of
personnel who administer the Federal
programs.
(i) A Federal program administered
under multiple internal control
structures may have higher risk. When
assessing risk in a large single audit, the
auditor must consider whether
weaknesses are isolated in a single
operating unit (for example, one college
campus) or pervasive throughout the
entity.
(ii) A weak system for monitoring
subrecipients would indicate higher risk
when significant parts of a Federal
program are passed to subrecipients
through subawards.
(2) Prior audit findings would
indicate higher risk, especially when the
situations identified in the audit
findings could significantly impact a
Federal program or have not been
corrected.
(3) Federal programs not recently
audited as major programs may be of
higher risk than those recently audited
as major programs without audit
findings.
(c) Oversight exercised by Federal
agencies and pass-through entities. (1)
The oversight exercised by Federal
agencies or pass-through-through
entities may be used to assess risk. For
example, recent monitoring or other
reviews performed by an oversight
entity that disclosed no significant
problems would indicate lower risk,
whereas monitoring that disclosed
significant problems would indicate
higher risk.
(2) With the concurrence of OMB, a
Federal agency may identify Federal
programs that are higher risk. OMB will
identify these Federal programs in the
compliance supplement.
(d) Inherent risk of the Federal
program. (1) The nature of a Federal
program may indicate risk.
Consideration should be given to the
complexity of the program and the
extent to which the Federal program
contracts for goods and services. For
example, Federal programs that disburse
funds through third-party contracts or
have eligibility criteria may be higher
risk. Federal programs primarily
involving staff payroll costs may be at
high risk for noncompliance with the
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requirements of § 200.430 but otherwise
be at low risk.
(2) The phase of a Federal program in
its lifecycle at the Federal agency may
indicate risk. For example, a new
Federal program with new or interim
regulations may have higher risk than
an established program with time-tested
regulations. Also, significant changes in
Federal programs, statutes, regulations,
or the terms and conditions of Federal
awards may increase risk.
(3) The phase of a Federal program in
its lifecycle at the auditee may indicate
risk. For example, during the first and
last years that an auditee participates in
a Federal program, the risk may be
higher due to the start-up or closeout of
program activities and staff.
(4) Type B programs with larger
Federal awards expended would be of
higher risk than programs with
substantially smaller Federal awards
expended.
§ 200.520
Criteria for a low-risk auditee.
An auditee that meets all of the
following conditions for each of the
preceding two audit periods must
qualify as a low-risk auditee and be
eligible for reduced audit coverage in
accordance with § 200.518.
(a) Single audits were performed on
an annual basis in accordance with the
provisions of this subpart, including
submitting the data collection form and
the reporting package to the FAC within
the timeframe specified in § 200.512. A
non-Federal entity that has biennial
audits does not qualify as a low-risk
auditee.
(b) The auditor issued unmodified
opinions on both the schedule of
expenditures of Federal awards and
whether the financial statements were
prepared in accordance with GAAP (or
a basis of accounting required by State
law).
(c) No internal control deficiencies
were identified as material weaknesses
under the requirements of GAGAS.
(d) The auditor did not report a
substantial doubt about the auditee’s
ability to continue as a going concern.
(e) None of the Federal programs had
audit findings from any of the following
in either of the preceding two audit
periods in which they were classified as
Type A programs:
(1) Internal control deficiencies that
were identified as material weaknesses
in the auditor’s report on internal
control for major programs as required
under § 200.515(c);
(2) A modified opinion on a major
program in the auditor’s report on major
programs as required under
§ 200.515(c); or
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(3) Known or likely questioned costs
that exceeded five percent (.05) of the
total Federal awards expended for a
Type A program during the audit
period.
Management Decisions
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§ 200.521
Management decisions.
(a) General. The management decision
must clearly state whether or not the
audit finding is sustained, the reasons
for the decision, and the expected
auditee action to repay disallowed costs,
make financial adjustments or take other
action. If the auditee has not completed
corrective action, a timetable for followup should be given. Prior to issuing the
management decision, the Federal
agency or pass-through entity may
request additional information or
documentation from the auditee,
including a request for auditor
assurance related to the documentation,
as a way of mitigating disallowed costs.
The management decision should
describe any appeal process available to
the auditee. While not required, the
Federal agency or pass-through entity
may also issue a management decision
on findings relating to the financial
statements, which are required to be
reported in accordance with GAGAS.
(b) Federal agency. The cognizant
agency for audit is responsible for
coordinating a management decision for
audit findings that affect the programs
of more than one Federal agency (see
§ 200.513(a)(4)(vii)). The awarding
Federal agency is responsible for issuing
a management decision for audit
findings that affect the Federal awards
it makes to a non-Federal entity (see
§ 200.513(c)(3)(i)).
(c) Pass-through entity. The passthrough entity is responsible for issuing
a management decision for audit
findings that affect subawards it issues
to subrecipients under a Federal award
(see § 200.332(d)).
(d) Time requirements. The Federal
agency or pass-through entity
responsible for issuing a management
decision must do so within six months
of the FAC’s acceptance of the audit
report. The auditee must initiate and
proceed with corrective action as
rapidly as possible and corrective action
should begin no later than upon receipt
of the audit report.
(e) Reference numbers. Management
decisions must include the reference
numbers the auditor assigned to each
audit finding in accordance with
§ 200.516(c).
■ 12. Revise appendix I to part 200 to
read as follows:
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Appendix I to Part 200—Full Text of
Notice of Funding Opportunity
(a) General Requirements.
(1) In developing a notice of funding
opportunity (NOFO), Federal agencies must:
(i) Be concise and use plain language per
the guidance at PlainLanguage.gov wherever
possible.
(ii) For electronic NOFOs and other
information about them, comply with Section
508 of the Rehabilitation Act of 1973 (29
U.S.C. 794d).
(2) Federal agencies may:
(i) Link to standard content to include
required information rather than including
the full language in the NOFO. The NOFO
should make clear if linked information is
critical—for example, standard terms and
conditions, administrative and national
policy requirements, and standard templates.
(ii) Include links to relevant regulations
and other sources.
(iii) Use cross-references between the
sections, including hyperlinks in electronic
versions.
(3) Required Consistency. Potential
applicants must be able to find similar
information across all Federal NOFOs. To
that end, Federal agencies must include the
same or similar section headings and a table
of contents with at least these sections:
(i) Basic Information
(ii) Eligibility
(iii) Program Description
(iv) Application Contents and Format
(v) Submission Requirements and Deadlines
(vi) Application Review Information
(vii) Award Notices
(viii) Post-Award Requirements and
Administration
(b) Required Sections and Information.
As required below, the Federal agency
must include the following sections and
information in the text of a NOFO and a table
of contents.
(1) Basic Information.
This section provides sufficient
information to help an applicant make an
informed decision about whether to submit a
proposal.
(i) This section must include the following:
(A) Federal Agency Name.
(B) Funding Opportunity Title.
(C) Announcement Type (whether the
funding opportunity is the initial
announcement or a modification of a
previously announced opportunity).
(D) Funding Opportunity Number
(required, if the Federal agency has assigned
a number to the funding opportunity
announcement).
(E) Assistance Listing Number(s).
(F) Funding Details. The total amount of
funding that the Federal agency expects to
award, the anticipated number of awards,
and the expected dollar values of individual
awards, which may be a range.
(G) Key Dates. Key dates include due dates
for submitting applications or Executive
Order 12372 submissions, as well as for any
letters of intent or preapplications. For any
announcement issued before a program’s
application materials are available, key dates
also include the date on which those
materials will be released; and any other
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additional information, as deemed applicable
by the Federal agency. If possible, the Federal
agency should provide an anticipated award
date. If the NOFO is evaluated on a ‘‘rolling’’
basis, the Federal agency should provide an
estimate of the time needed to process an
application and notify the applicant of the
Federal agency’s decision.
(H) Executive Summary. A brief
description that is written in plain language
and summarizes the goals and objectives of
the program, the target audience, and eligible
recipients. The text of the executive summary
should not exceed 500 words.
(I) Agency contact information.
(ii) This section could include the
following:
(A) The amount of funding per Federal
award, on average, experienced in previous
years.
(B) Whether this is a new program or a onetime initiative.
(2) Eligibility.
This section addresses the factors that
determine applicant or application eligibility.
(i) Eligible Applicants. This subsection
must identify the following:
(A) A complete and specific list of entity
types eligible to apply.
(B) Any additional restrictions on
eligibility beyond the type of entity.
(C) Eligibility factors for the principal
investigator or project director, if any.
(D) Criteria that would make any particular
projects ineligible.
(E) A reference to any funding restriction
elsewhere in the NOFO that could affect an
applicant’s or project’s eligibility.
(F) A reference or link to any other factors
that would disqualify an applicant or
application, such as the responsiveness
criteria in 6a.
(G) Any limit on the number of
applications an applicant may submit under
the announcement. Make clear whether the
limitation is on the submitting organization,
individual investigator or program director,
or both.
(ii) Cost Sharing. This subsection must
state:
(A) Whether there is required cost sharing.
This statement must be clear that not
committing to the required cost sharing will
make the application ineligible. If cost
sharing is not required, the announcement
must say so.
(B) An explanation of the calculation for
the required cost sharing. Required cost
sharing may be a certain percentage or
amount or in the form of contributions of
specified items or activities (for example,
provision of equipment).
(C) Any restrictions on the types of cost,
such as in-kind contributions, acceptable as
cost sharing.
(D) Any requirement to commit to cost
sharing. This section should refer to the
appropriate portions of section D stating any
pre-award requirements for the submission of
letters or other documentation to verify
commitments to meet cost-sharing
requirements if a Federal award is made.
(3) Program Description.
This section contains the full program
description of the funding opportunity.
(i) This section must include the following:
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(A) The general purpose of the funding and
what it is expected to achieve for the public
good.
(B) The Federal agency’s funding priorities
or focus areas, if any.
(C) Program goals and objectives.
(D) A description of how the award will
contribute to achieving the program’s goals
and objectives.
(E) The expected performance goals,
indicators, targets, baseline data, data
collection, and other outcomes the Federal
agency expects recipients to achieve.
(F) For cooperative agreements, the
‘‘substantial involvement’’ that the Federal
agency expects to have or should reference
where the potential applicant can find that
information.
(G) Information on program specific
unallowable costs so that the applicant can
develop an application and budget consistent
with program requirements and any limits on
indirect costs.
(H) Any eligibility criteria for beneficiaries
or program participants other than Federal
award recipients.
(I) Citations for authorizing statutes and
regulations for the funding opportunity.
(ii) This section could also include the
following:
(A) Any program history, such as whether
it is a new program or a new or changed area
of program emphasis.
(B) Examples of successful projects funded
in the past.
(C) Other information the Federal agency
finds necessary.
(4) Application Contents and Format.
This subsection must identify the required
content of an application and the forms or
formats an applicant must use. If any
requirements are stated elsewhere, this
section should refer to where those
requirements may be found. This section also
should include required forms or formats as
part of the announcement or state where the
applicant may obtain them.
(i) This subsection must specifically
address content and form or format
requirements for:
(A) Pre-applications, letters of intent, or
white papers are required or encouraged if
they apply.
(B) The application as a whole.
(C) Component pieces of the application.
(D) Information that successful applicants
must submit after notification of intent to
make a Federal award but prior to a Federal
award. For example, this could include
evidence of compliance with requirements
relating to human subjects or information
needed to comply with the National
Environmental Policy Act (NEPA) (42 U.S.C.
4321 et seq.).
(ii) Within each of the categories above,
this subsection must include, where relevant:
(A) Limitations on page numbers.
(B) Formatting requirements, including
font and font size, margins, paper size, and
color limitations.
(C) Any requirements for file naming, file
size limitations, or file format such as PDF.
(D) The number of copies required if paper
submissions are allowed.
(E) The sequence required for application
sections or components.
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(F) Signature requirements, including those
for electronic submissions.
(G) Any requirements for third-party
information such as references, letters of
support, or letters of commitment to the
project or to contribute to cost sharing.
(H) A reference to any requirements in
Section 6 to provide documentation to
support an eligibility determination, such as
proof of 501(c)(3) status or an authorizing
tribal resolution.
(I) Instructions needed to develop the
narrative portions of the application. Include
any requirements for its order, format, or
required headings.
(J) If applicable, the need to identify
proprietary information. Include how to do
so and how the Federal agency will handle
it.
(5) Submission Requirements and
Deadlines.
(i) Address to Request Application
Package. This subsection must include the
following:
(A) How to get application forms, kits, or
other materials needed to apply. If the
announcement contains everything needed,
this section needs only say so. If not, the
guidance must include:
(1) An internet address where the materials
can be accessed.
(2) An email address.
(3) A U.S. Postal Service mailing address.
(4) Telephone number.
(5) Telephone Device for the Deaf (TDD),
Text Telephone (TTY) number, or other
appropriate telecommunication relay service.
(ii) Unique entity identifier and System for
Award Management (SAM.gov). This
subsection must state the requirements for
unique entity identifiers and registration in
SAM.gov. It must include the following:
(A) Each applicant must:
(1) Be registered in SAM.gov before
submitting its application;
(2) Provide a valid unique entity identifier
in its application; and
(3) Continue to maintain an active
registration in SAM.gov with current
information at all times during which it has
an active Federal award or an application or
plan under consideration by a Federal
agency.
(B) If individuals are eligible to apply, they
are exempt from this requirement under 2
CFR 25.110(b).
(C) If the Federal agency exempts any
applicants from this requirement under 2
CFR 25.110(c) or (d), a statement to that
effect.
(iii) Submission Instructions. This
subsection addresses how the applicant will
submit the application. It must include the
following:
(A) Actions needed prior to applying:
(1) Instructions on any registrations
required to access electronic submission
systems or links to them. Where possible,
provide the expected time frames needed to
complete the registration process.
(B) The methods for submitting the
application:
(1) Whether the applicant must submit in
electronic or paper form or whether the
applicant has an option. Applicants should
not be required to submit in more than one
format.
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(2) Instructions on how to submit
electronically or links to them. Must include
the URL to the electronic submission system
and information on or links to information
about the system or software requirements
needed by the system.
(3) If the Federal agency allows paper
submissions, the process used to approve this
option if it is not automatically allowed.
(4) If the Federal agency allows paper
submissions, the method for submitting the
application. This information must include a
postal address and ‘‘care of’’ information
needed to route the application to the
appropriate person, office, or email address,
if the Federal agency allows such
submissions.
(C) If applicable, this subsection also must
say how applicants must submit preapplications, letters of intent, third-party
information, or other information required
before the award. It must include the
following:
(1) Instructions on how to submit
electronically or links to them.
(2) Whether the applicant must submit in
electronic or paper form or whether the
applicant has an option.
(3) If the Federal agency allows paper
submissions, the method for submitting the
required information. This information must
include a postal address and ‘‘care of’’
information needed to route the application
to the appropriate person, office, or email
address.
(D) This subsection must also include what
to do in the event of system problems and a
point of contact who will be available if the
applicant experiences technical difficulties.
(iv) Submission Dates and Times. This
subsection must include due dates and times
for all submissions. If they are different for
electronic and paper submissions, be clear
about the differences. This includes the
following:
(A) Full applications.
(B) Any preliminary submissions, such as
letters of intent, white papers, or preapplications.
(C) Any other submissions required before
Federal award separate from the full
application.
(D) If the funding opportunity is a general
announcement that is open for a period of
time with no specific due dates for
applications, this section should say so.
(v) Intergovernmental Review. This section
must include the following:
(A) Whether or not the funding
opportunity is subject to Executive Order
12372, ‘‘Intergovernmental Review of Federal
Programs’’.
(B) If it is applicable, include the
following:
(1) A short description of this requirement.
(2) Where applicants can find their State’s
Single Point of Contact, learn whether their
State has an intergovernmental review
process, and if so, get information on their
State’s process. The list of SPOCs is on the
Office of Management and Budget’s website.
(6) Application Review Information.
(i) Responsiveness Review. This section
includes information on the criteria that
make an application or project ineligible.
These are sometimes referred to as
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‘‘responsiveness’’ criteria, ‘‘go-no-go’’
criteria, or ‘‘threshold’’ criteria. Federal
agencies may change the title of this section
as appropriate. This section must include the
following:
(A) A brief understanding of the Federal
agency responsiveness review process.
(B) A list and enough detail to understand
the criteria or disqualifying factors to be
reviewed.
(C) A reference to the regulation or
requirement that describes the restriction, if
applicable. For example, if entities that have
been found to be in violation of a particular
Federal statute are ineligible, say so.
(ii) Review Criteria. This section must
address the review criteria that the Federal
agency will use to evaluate applications for
merit. This information includes the merit
and other review criteria evaluators will use
to judge applications, including any
statutory, regulatory, or other preferences
that will be applied in the review process.
These criteria are distinct from eligibility
criteria that are addressed before an
application is accepted for review and any
program policy or other factors that are
applied during the selection process, after the
review process is completed.
The intent is to make the application
process transparent so applicants can make
informed decisions when preparing their
applications to maximize the fairness of the
process.
(A) This section must include the
following:
(1) A clear description of each criterion
and sub-criterion used.
(2) If criteria vary in importance, the
relative percentages, weights, or other means
used to distinguish between them.
(3) For statutory, regulatory, or other
preferences, an explanation of those
preferences with an explicit indication of
their effect, for example, if they result in
additional points being assigned.
(4) How an applicant’s proposed cost
sharing will be considered in the review
process if it is not an eligibility criterion in
Section 2b. For example, to assign a certain
number of additional points to applicants
who offer cost sharing or to break ties among
applications with equivalent scores after
evaluation against all other factors. If cost
sharing will not be considered in the
evaluation, the announcement should say so.
Do not include statements that cost sharing
is encouraged without providing clarity
about what that means.
(5) The relevant information if the Federal
agency permits applicants to nominate
reviewers of their applications or suggest
those, they feel may be inappropriate due to
a conflict of interest.
(B) This section could include the
following:
(1) The types of people responsible for
evaluation against the merit criteria. For
example, peers external to the Federal agency
or Federal agency personnel.
(2) The number of people on an evaluation
panel and how it operates, how reviewers are
selected, reviewer qualifications, and how
conflicts of interest are avoided.
(iii) Review and Selection Process.
This section may vary in the level of detail
provided.
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(A) It must include the following:
(1) Any program policy, factors, or
elements that the selecting official may use
in selecting applications for the award. For
example, geographical dispersion, program
balance, or diversity.
(2) A brief description of the merit review
process, including how the Federal agency
uses merit review outcomes in final decisionmaking. For example, whether they are
advisory only.
(B) It could also include the following:
(1) Who makes the final selections for
awards.
(2) Any multi-phase review methods. For
example, an external panel that advises on,
makes, or approves final recommendations to
the deciding official.
(iv) Risk Review.
(A) This section must include the
following:
(1) A brief description of the factors used
for the Federal agency’s risk review as
required by § 200.206.
(2) If the Federal agency expects that any
award under the NOFO will be more than the
simplified acquisition threshold during its
period of performance, include the following
information:
(i) That before making a Federal award
with a total amount of Federal share greater
than the simplified acquisition threshold, the
Federal agency must review and consider any
information about the applicant that is in the
responsibility/qualification records available
in SAM.gov (see 41 U.S.C. 2313).
(ii) That an applicant can review and
comment on any information in the
responsibility/qualification records available
in SAM.gov.
(iii) That before making decisions in the
risk review required by § 200.206 the Federal
agency will consider any comments by the
applicant, along with information available
in the responsibility/qualification records in
SAM.gov.
(7) Award Notices.
This section must address what a
successful applicant can expect to receive
following selection.
(i) It must include the following:
(A) If the Federal agency’s practice is to
provide a separate notice stating that an
application has been selected before it makes
the Federal award, indicate that the letter is
not an authorization to begin performance
and that the Federal award is the authorizing
document.
(B) If pre-award costs are allowed,
beginning performance is at the applicant’s
own risk.
(C) This section should indicate that the
notice of Federal award signed by the grants
officer, or equivalent, is the official document
that obligates funds, and whether it is
provided through postal mail or by electronic
means and to whom.
(D) The timing, form, and content of
notifications to unsuccessful applicants. See
also § 200.211.
(8) Post-Award Requirements and
Administration.
(i) Administrative and National Policy
Requirements. Providing information on
administrative and policy requirements lets a
potential applicant identify any requirements
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with which it would have difficulty
complying. This section must include the
following:
(A) A statement related to the ‘‘general’’
terms and conditions of the award, including
requirements that the Federal agency
normally includes.
(B) Any relevant special terms and
conditions.
(C) Any special requirements that could
apply to specific awards after the review of
applications and other information based on
the particular circumstances of the effort to
be supported. For example, if human subjects
were to be involved or if some situations may
justify special terms on intellectual property,
data sharing, or security requirements.
(D) As in other sections, the announcement
need not include all terms and conditions of
the award but may refer to documents with
details on terms and conditions.
(ii) Reporting.
This section includes information needed
to understand the post-award reporting
requirements. Highlight any special reporting
requirements for Federal awards under this
funding opportunity that differ from what the
Federal agency’s Federal awards usually
require. For example, differences in report
type, frequency, form, format, or
circumstances for use. This section must
include the following:
(A) The type of reporting required, such as
financial or performance.
(B) The reporting frequency.
(C) The means of submission, such as
paper or electronic.
(D) References to all relevant requirements,
such as those at 2 CFR 180.335 and 180.350.
(E) If the Federal share of any Federal
award may include more than $500,000 over
the period of performance, this section must
inform potential applicants about the postaward reporting requirements reflected in
appendix XII to this part.
(9) Other Information—Optional.
This section may include any additional
information to help potential applicants. For
example, the section could include the
following:
(i) Related programs or other upcoming or
ongoing Federal agency funding
opportunities for similar activities.
(ii) Current internet addresses for Federal
agency websites that may be useful to an
applicant in understanding the program.
(iii) Routine notices to applicants. For
example, the Federal Government is not
obligated to make any Federal award as a
result of the announcement, or only grants
officers can bind the Federal Government to
the expenditure of funds.
13. Amend appendix III to part 200 by
revising the heading of section A.1. and
paragraph C.2 to read as follows:
■
Appendix III to Part 200—Indirect
(F&A) Costs Identification and
Assignment, and Rate Determination
for Institutions of Higher Education
(IHEs)
*
*
*
*
*
*
*
*
A. General
*
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1. Major Functions/Activities of an IHE
C. Determination and Application of Indirect
(F&A) Cost Rate or Rates
c. * * *
(1) total direct costs (excluding capital
expenditures and other distorting items, such
as pass-through funds, subcontracts in excess
of $50,000, and participant support costs),
*
*
*
*
*
*
*
*
*
*
*
2. The Distribution Basis
Indirect (F&A) costs must be distributed to
applicable Federal awards and other
benefitting activities within each major
function (see section A.1) on the basis of
modified total direct costs (MTDC),
consisting of all salaries and wages, fringe
benefits, materials and supplies, services,
travel, and up to the first $50,000 of each
subaward (regardless of the period covered
by the subaward). MTDC is defined in
§ 200.1. For this purpose, an indirect (F&A)
cost rate should be determined for each of the
separate indirect (F&A) cost pools developed
pursuant to subsection 1. The rate in each
case should be stated as the percentage
which the amount of the particular indirect
(F&A) cost pool is of the modified total direct
costs identified with such pool.
14. Amend appendix IV to part 200 by
revising paragraphs B.2.c. and B.4.a.iii
to read as follows:
■
Appendix IV to Part 200—Indirect
(F&A) Costs Identification and
Assignment, and Rate Determination
for Nonprofit Organizations
*
*
*
*
*
B. Allocation of Indirect Costs and
Determination of Indirect Cost Rates
*
*
*
*
*
2. * * *
c. The distribution base may be total direct
costs (excluding capital expenditures and
other distorting items, such as subawards for
$50,000 or more), direct salaries and wages,
or other base which results in an equitable
distribution. The distribution base must
exclude participant support costs as defined
in § 200.1.
*
*
*
*
*
4. * * *
a. * * *
(iii) other direct functions (including
projects performed under Federal awards).
Joint costs, such as depreciation, rental costs,
operation and maintenance of facilities,
telephone expenses, information technology
and the like are prorated individually as
direct costs to each category and to each
Federal award or other activity using a base
most appropriate to the particular cost being
prorated.
15. Amend appendix VII to part 200
by
■ a. Revising paragraphs C.2.c.(1),
C.3.e.(1), and D.1.b.;
■ b. Redesignating paragraphs D.1.c.
and D.1.d. as D.1.d. and D.1.e; and
■ c. Adding a new paragraph D.1.c.
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■
*
*
*
*
*
2. * * *
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*
*
*
*
*
*
*
*
D. Submission and Documentation of
Proposals
*
*
*
*
*
1. * * *
b. A governmental department or agency
(such as a state or local Department of
Health, Department of Transportation, or
Department of Housing) that receives more
than $35 million in direct Federal funding
during its fiscal year must submit its indirect
cost rate proposal to its cognizant agency for
indirect costs.
c. If a governmental department or agency
(such as a state or local Department of
Health, Department of Transportation, or
Department of Housing) receives $35 million
or less in direct Federal funding during its
fiscal year, it must develop an indirect cost
proposal in accordance with the
requirements of this part and maintain the
proposal and related supporting
documentation for audit. This established
rate must be accepted by any Federal agency
to which the governmental department or
agency applies for funding. Federal agencies
must not compel the governmental
department or agency to accept the de
minimis rate or some other rate established
by the Federal agency. These governmental
departments or agencies are not required to
submit their proposals unless they are
specifically requested to do so by the
cognizant agency for indirect costs. Where a
non-Federal entity only receives funds as a
subrecipient, the pass-through entity will be
responsible for negotiating and/or monitoring
the subrecipient’s indirect costs.
*
*
*
*
*
16. Revise appendix X to part 200 to
read as follows:
■
Appendix X to Part 200—Data
Collection Form (Form SF–SAC)
The Data Collection Form SF–SAC is
available as a webform on the Federal Audit
Clearinghouse (FAC). Form and submission
instructions can be found at https://
www.fac.gov/.
25. Revise appendix XII to part 200 to
read as follows:
■
Appendix XII to Part 200—Award
Term and Condition for Recipient
Integrity and Performance Matters
The revisions and addition read as follows:
C. Allocation of Indirect Costs and
Determination of Indirect Cost Rates
*
3. * * *
e. * * *
(1) total direct costs (excluding capital
expenditures and other distorting items such
as pass-through funds, subawards in excess
of $50,000, and participant support costs),
I. Reporting of Matters Related to Recipient
Integrity and Performance
(a) General Reporting Requirement.
(1) If the total value of your active grants,
cooperative agreements, and procurement
contracts from all Federal agencies exceeds
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Fmt 4701
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69499
$10,000,000 for any period of time during the
period of performance of this Federal award,
then you as the recipient must ensure the
information available in the responsibility/
qualification records through the System for
Award Management (SAM.gov), about civil,
criminal, or administrative proceedings
described in paragraph (b) of this award term
is current and complete. This is a statutory
requirement under section 872 of Public Law
110–417, as amended (41 U.S.C. 2313). As
required by section 3010 of Public Law 111–
212, all information posted in responsibility/
qualification records in SAM.gov on or after
April 15, 2011 (except past performance
reviews required for Federal procurement
contracts) will be publicly available.
(b) Proceedings About Which You Must
Report.
(1) You must submit the required
information about each proceeding that—
(i) Is in connection with the award or
performance of a grant, cooperative
agreement, or procurement contract from the
Federal Government;
(ii) Reached its final disposition during the
most recent five-year period; and
(iii) Is one of the following—
(A) A criminal proceeding that resulted in
a conviction;
(B) A civil proceeding that resulted in a
finding of fault and liability and payment of
a monetary fine, penalty, reimbursement,
restitution, or damages of $5,000 or more;
(C) An administrative proceeding that
resulted in a finding of fault and liability and
your payment of either a monetary fine or
penalty of $5,000 or more or reimbursement,
restitution, or damages in excess of $100,000;
or
(D) Any other criminal, civil, or
administrative proceeding if—
(1) It could have led to an outcome
described in paragraph (b)(1)(iii)(A) through
(C);
(2) It had a different disposition arrived at
by consent or compromise with an
acknowledgment of fault on your part; and
(3) The requirement in this award term to
disclose information about the proceeding
does not conflict with applicable laws and
regulations.
(c) Reporting Procedures.
Enter the required information in SAM.gov
for each proceeding described in paragraph
(b) of this award term. You do not need to
submit the information a second time under
grants and cooperative agreements that you
received if you already provided the
information in SAM.gov because you were
required to do so under Federal procurement
contracts that you were awarded.
(d) Reporting Frequency.
During any period of time when you are
subject to the requirement in paragraph (a) of
this award term, you must report proceedings
information in SAM.gov for the most recent
five-year period, either to report new
information about a proceeding that you have
not reported previously or affirm that there
is no new information to report. If you have
Federal contract, grant, and cooperative
agreement awards with a cumulative total
value greater than $10,000,000, you must
disclose semiannually any information about
the criminal, civil, and administrative
proceedings.
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(e) Definitions.
For purposes of this award term—
Administrative proceeding means a nonjudicial process that is adjudicatory in nature
to make a determination of fault or liability
(for example, Securities and Exchange
Commission Administrative proceedings,
Civilian Board of Contract Appeals
proceedings, and Armed Services Board of
Contract Appeals proceedings). This includes
proceedings at the Federal and State level but
only in connection with the performance of
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a Federal contract or grant. It does not
include audits, site visits, corrective plans, or
inspection of deliverables.
Conviction means a judgment or conviction
of a criminal offense by any court of
competent jurisdiction, whether entered
upon a verdict or a plea, and includes a
conviction entered upon a plea of nolo
contendere.
Total value of currently active grants,
cooperative agreements, and procurement
contracts includes the value of the Federal
PO 00000
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share already received plus any anticipated
Federal share under those awards (such as
continuation funding).
II. [Reserved]
Deidre A. Harrison,
Deputy Controller, performing the delegated
duties of the Controller Office of Federal
Financial Management.
[FR Doc. 2023–21078 Filed 9–28–23; 4:15 pm]
BILLING CODE 3110–01–P
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Agencies
[Federal Register Volume 88, Number 192 (Thursday, October 5, 2023)]
[Proposed Rules]
[Pages 69390-69500]
From the Federal Register Online via the Government Publishing Office [www.gpo.gov]
[FR Doc No: 2023-21078]
[[Page 69389]]
Vol. 88
Thursday,
No. 192
October 5, 2023
Part III
Office of Management and Budget
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2 CFR Parts 1, 25, 175, et al.
Guidance for Grants and Agreements; Proposed Rule
Federal Register / Vol. 88, No. 192 / Thursday, October 5, 2023 /
Proposed Rules
[[Page 69390]]
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OFFICE OF MANAGEMENT AND BUDGET
2 CFR Parts 1, 25, 175, 180, 182, 183, 184, 200
Guidance for Grants and Agreements
AGENCY: Office of Federal Financial Management, Office of Management
and Budget.
ACTION: Proposed rule; notification of proposed guidance.
-----------------------------------------------------------------------
SUMMARY: The Office of Management and Budget (OMB) is proposing to
revise sections of OMB Guidance for Grants and Agreements. This
proposed revision reflects comments received from Federal agencies and
those received in response to the OMB Notice of Request for Information
published in the Federal Register in February 2023. In response to
Federal agency and public input, OMB is proposing revisions intended in
many cases to reduce agency and recipient burden. OMB proposes both
policy changes and clarifications to existing guidance including plain
language revisions. OMB also proposes to update the guidance to reflect
recent OMB priorities related to Federal financial assistance. Finally,
OMB is proposing revisions to improve Federal financial assistance
management, transparency, and oversight through more accessible and
readily comprehensible guidance.
DATES: OMB invites interested persons and organizations to submit
comments on or before December 4, 2023.
ADDRESSES: Comments on this proposal must be submitted electronically
before the comment closing date to www.regulations.gov. In submitting
comments, please search for recent submissions by OMB to find docket
OMB-2023-0017, which includes the full text of the proposed revisions
and submit comments there. Please provide clarity as to the section of
the guidance that each comment is referencing by beginning each comment
with the section number in brackets. For example; if the comment is on
2 CFR 200.1 include the following before the comment [200.1]. The
public comments received by OMB will be posted at https://www.regulations.gov and be a matter of public record. Accordingly,
please do not include in your comments any confidential business
information or information of a personal-privacy nature. In general,
responses to the comments will be summarized and included in the
preamble of the final guidance.
FOR FURTHER INFORMATION CONTACT: Andrew Reisig or Steven Mackey at the
OMB Office of Federal Financial Management via email at
[email protected].
SUPPLEMENTARY INFORMATION:
Executive Summary
The Office of Management and Budget (OMB) proposes to revise
several parts of the OMB Guidance for Grants and Agreements located in
title 2 of the Code of Federal Regulations (CFR) to further clarify and
update guidance to Federal agencies on the consistent and efficient use
of Federal financial assistance. This document includes proposed
revisions to Part 1 (About Title 2 of the Code of Federal Regulations
and Subtitle A); Part 25 (Universal Identifier and System for Award
Management); Part 170 (Reporting Subaward and Executive Compensation
Information), Part 175 (Award Term for Trafficking in Persons); Part
180 (OMB Guidelines to Agencies on Governmentwide Debarment and
Suspension (Non-procurement)); Part 182 (Governmentwide Requirements
for Drug-Free Workplace (Financial Assistance)); Part 183 (Never
Contract with the Enemy); and Part 200 (Uniform Administrative
Requirements, Cost Principles, and Audit Requirements for Federal
Awards).
As explained in further detail below, OMB proposes revising 2 CFR
for reasons including: (1) incorporating statutory requirements and
administration priorities; (2) reducing agency and recipient burden;
(3) clarifying sections that recipients or agencies have interpreted in
different ways; and (4) rewriting applicable sections in plain
language, improving flow, and addressing inconsistent use of terms.
Consistent with these objectives, OMB proposes both policy changes and
clarifications to existing guidance including plain language revisions.
OMB also proposes to update the guidance to reflect recent OMB
priorities related to Federal financial assistance. Finally, OMB's
proposed revisions are also intended to improve Federal financial
assistance management, transparency, and oversight through more
accessible and readily comprehensible guidance.
OMB summarizes its proposals for policy changes in this document
below. OMB also explains its general methodology for plain language
revisions. OMB sought to maintain the existing structure of the 2 CFR
guidance, which remains generally intact and mostly consistent with
earlier iterations of the guidance--for example, in terms of the
structure of parts, structure of subparts, and section numbering.
Except in cases where OMB proposes policy changes or other edits for
consistency with statutory requirements, OMB also generally sought to
maintain the existing content of the 2 CFR guidance. In many cases
throughout the guidance, however, OMB proposes plain language revisions
to simplify the guidance text, avoid or reduce technical jargon where
feasible, provide greater consistency, and make the text more succinct.
The proposed revisions align with OMB's authority to: (i) issue
guidance promoting consistent and efficient use of Federal financial
assistance instruments; and (ii) provide overall direction and
leadership to Federal agencies on policies and requirements related to
Federal financial assistance. See 31 U.S.C. 6307 and 31 U.S.C.
503(a)(2). Additional authorities for the proposed revisions are set
forth below. Many of the proposed revisions reflect comments received
from Federal agencies and those received from the public in response to
the OMB Notice of Request for Information published in the Federal
Register in February 2023. See 88 FR 8480 (Feb. 9, 2023).
Background
Between 2012 and 2013, OMB worked with Federal agencies to revise
and streamline existing guidance to develop the Uniform Administrative
Requirements, Cost Principles, and Audit Requirements for Federal
Awards (Uniform Guidance) located in part 200 of 2 CFR. 79 FR 78589
(Dec. 26, 2013). This effort was intended to assist programs in
delivering better outcomes on behalf of the American people while
simultaneously reducing administrative burden and the risk of fraud,
waste, and abuse. The Uniform Guidance in part 200, which OMB
established in 2013, consolidated, streamlined, and superseded
requirements from several earlier OMB Circulars and guidance documents
related to grants management and implementation of the Single Audit
Act. OMB explained in 2013 that its guidance intended to improve both
the clarity and accessibility of these requirements across the Federal
government. Federal award-making agencies implemented the Uniform
Guidance through an interim final rule, which became effective on
December 26, 2014. 79 FR 75867 (Dec. 19, 2014).
OMB generally reviews the Uniform Guidance every five years in
accordance with 2 CFR 200.109. OMB made further revisions to the
Uniform Guidance in 2020. 85 FR 49506 (Aug. 13, 2020). The 2020
revisions addressed topics including program development and design, as
well as measuring recipient
[[Page 69391]]
performance to assist Federal awarding agencies and non-Federal
entities to improve program goals and objectives, share lessons
learned, and adopt of promising performance practices.
Based on feedback and ongoing engagement with Federal agencies and
the broader Federal financial assistance community, OMB believes that
additional revisions are now warranted to the Uniform Guidance in part
200 to further streamline, clarify, and update the guidance, including
raising certain thresholds, where permissible under law, in recognition
of inflation over time. Further information on OMB's objectives for the
proposed revisions is provided below.
In addition to proposed revisions in part 200, OMB also proposes
revisions to other parts in subtitle A of 2 CFR for similar reasons,
including parts 1, 25, 170, 175, 180, 182, and 183. OMB established
these parts at different times in the last 20 years. See, for example,
69 FR 26276 (May, 11, 2004) (establishing 2 CFR for guidance on grants
and other financial assistance and nonprocurement agreements); 70 FR
51863 (Aug. 31, 2005) (establishing part 180); 75 FR 55671 (Sep. 14,
2010) (establishing part 25); and 75 FR 55663 (Sep. 14, 2010)
(establishing part 170).
OMB Objectives
OMB's objectives for the current proposed revisions to several
parts of subtitle A of 2 CFR include: (1) incorporating statutory
requirements and administration priorities; (2) reducing agency and
recipient burden; (3) clarifying sections that recipients or agencies
have interpreted in different ways; and (4) rewriting applicable
sections in plain language, improving flow, and addressing inconsistent
use of terms.
The proposed revisions to the Uniform Guidance in part 200 and
other parts of 2 CFR generally support these four objectives. In
support of objective (1), OMB proposes to implement changes throughout
the Uniform Guidance and other parts to ensure consistency with
statutory authorities. For example, OMB proposes to revise Parts 25,
170, and 175 to ensure its guidance properly aligns with underlying
statutes, as amended. These potential revisions would reduce
inconsistencies between OMB's guidance and authorizing statutes to
ensure proper implementation. OMB has also made several structural
changes to individual parts within Chapter I to provide further
structural consistency throughout OMB's guidance in 2 CFR.
In support of objective (2), OMB proposes to increase several
monetary thresholds that have not been updated for many years. For
example, OMB proposes increasing the single audit threshold from
$750,000 to $1,000,000 and increasing the threshold from $5,000 to
$10,000 for determining items that are considered to be equipment. OMB
reviewed previous increases to the thresholds and considered current
economic data when making its determinations. In further support of
reducing burden, OMB is proposing a complete revision to the template
text for a Notice of Funding Opportunity (NOFO) located in Appendix I
of the Uniform Guidance in part 200. With this revision, OMB intends to
reduce administrative burden and unnecessary obstacles for applying to
Federal financial assistance.
In support of objective (3), OMB proposes revisions to 2 CFR to
clarify areas of misinterpretation. Many of these clarifications do not
represent a change in policy but serve to explain the intent of
specific sections of the Uniform Guidance in part 200, and other parts
in 2 CFR, with greater precision and clarity. OMB received feedback
from Federal agencies and the public stating that Federal agencies and
the recipient community interpret many sections differently. As one
example, OMB clarifies that Federal agencies approve costs requiring
prior approval when the Federal award is issued if the costs were
included in the recipient's proposal, and do not require subsequent
approval prior to expenditure.
In support of objective (4), OMB proposes to revise the guidance to
follow plain language principles. Plain language principles OMB focused
on included using simple words and phrases, avoiding jargon, using
terms consistently, and being concise.
Related to OMB's plain language revisions, throughout subparts A to
E of part 200, OMB proposes to use the terms ``recipient,''
``subrecipient,'' or both in place of ``non-Federal entity.'' OMB
believes that the existing usage of ``non-Federal entity'' in subparts
A through E of the existing CFR text in part 200 presents challenges to
readers and makes it difficult to quickly understand what entity is
being addressed, especially in situations in which Federal agencies
apply part 200 to Federal agencies, for-profit organizations, foreign
public entities, or foreign organizations under 2 CFR 200.101. In the
revisions to part 200, OMB uses the term ``non-Federal entity,'' as
defined in section 200.1, only when that entity is specifically
intended, such as in subpart F implementing the Single Audit Act. In
many cases in part 200 OMB proposes to replace ``non-Federal entity''
with either ``recipient and subrecipient'' or ``recipient or
subrecipient.'' In cases where the guidance in part 200 relates
specifically to only either ``recipients'' or ``subrecipients,'' but
not both, OMB refers specifically to the applicable entity. OMB invites
comments on this proposal and any effects it may have on specific
sections or paragraphs of the guidance in part 200.
OMB notes that these revisions related to the use of the terms
``non-Federal entity,'' ``recipient,'' and ``subrecipient'' do not
directly change the existing scope of applicability of the guidance.
The applicability provision for part 200 at section 200.101, continues
to provide Federal agencies with discretion on whether to apply
subparts A through E of part 200 to Federal agencies, for-profit
entities, foreign public entities, or foreign organizations. In the
same section, OMB proposes to encourage Federal agencies to apply the
requirements in subparts A to E of part 200 to all recipients in a
consistent and equitable manner, but does not require them to do so. In
cases in which Federal agencies apply part 200 to such entities, OMB's
proposal further clarifies how the guidance applies to those entities
as either recipients or subrecipients.
As another example of plain language revisions, OMB proposes to
replace the use of the general term ``OMB designated governmentwide
systems'' with more specific terms to reduce ambiguity for those
unfamiliar with the Uniform Guidance. In this proposed revisions OMB
specifically mentions the appropriate system, such as SAM.gov,
USASpending.gov, the Contractor Performance Assessment Reporting System
(CPARS), or Grants.gov.
The overall goal of OMB's plain language revision effort is to make
the Uniform Guidance more accessible to the general public and ensure
more equitable access to Federal funding opportunities by making the
guidance on that topic easier to understand. OMB does not directly
address the proposed plain language revisions in this preamble unless a
revision represents a material change to the Uniform Guidance. However,
OMB invites comment on whether any of its plain language revisions in
part 200, or other parts, may have unintended consequences. OMB also
invites comments on whether further modifications or additional
precision is needed in any specific instance, such as in the case of
OMB's proposed use of the terms ``recipient,'' ``subrecipient,'' or
both in particular sections of the guidance.
[[Page 69392]]
Statutory Authority for OMB Guidance for Grants and Agreements
The Director of OMB is authorized under 31 U.S.C. 6307 to ``issue
supplementary interpretative guidelines to promote consistent and
efficient use of . . . grant agreements . . . and cooperative
agreements.'' The Deputy Director for Management of OMB is authorized
under 31 U.S.C. 503 to, among other things, provide ``overall direction
and leadership to the executive branch on financial management matters
by establishing financial management policies and requirements.'' 31
U.S.C. 503(a)(2).
OMB also relies on authorities including the Single Audit Act
Amendments of 1996 (Pub. L. 104-156, as amended, codified at 31 U.S.C.
7501-7507); the Federal Funding Accountability and Transparency Act of
2006 (FFATA or the Transparency Act) (Pub. L. 109-282), as amended; the
Digital Accountability and Transparency Act of 2014 (DATA Act of 2014)
(Pub. L. 113-101), as amended; the Federal Program Information Act
(Pub. L. 95-220 and Pub. L. 98-169, as amended, codified at 31 U.S.C.
6101-6106); the Federal Grant and Cooperative Agreement Act of 1977
(Pub. L. 95-224, as amended, codified at 31 U.S.C. 6301-6309); the
Office of Federal Procurement Policy Act (codified at 41 U.S.C. 1101-
1131); the Budget and Accounting Procedures Act of 1950, as amended
(codified at 31 U.S.C. 1101-1126); the Chief Financial Officers Act of
1990 (codified at 31 U.S.C. 503-504); the Trafficking Victims
Protection Act of 2000 (TVPA), as amended (codified at 22 U.S.C. 7101-
7115); and Executive Order 11541, ``Prescribing the Duties of the
Office of Management and Budget and the Domestic Policy Council in the
Executive Office of the President.''
Request for Information Issued by OMB in February 2023
On February 9, 2023, OMB published a Notice of Request for
Information (RFI) in the Federal Register. 88 FR 8480 (Feb. 9, 2023).
OMB received approximately 1,250 individual comments from all sources,
including 113 submissions from the public containing multiple comments
in each. In response to Federal agency and public input, OMB is
proposing the revisions discussed below.
Part-by-Part Discussion of the Proposed Revisions
OMB invites comments on the proposed revisions throughout subtitle
A of 2 CFR. OMB identifies areas below where comments may be
particularly useful.
Part 1--About Title 2 of the Code of Federal Regulations and Subtitle A
OMB proposes to revise the headings of title of 2 CFR and Subtitle
A and Chapter I to replace ``Grants and Agreements'' with ``Federal
Financial Assistance.'' This revision will help to ensure that the
Uniform Guidance is understood to be applicable beyond just grants and
cooperative agreements, unless noted differently in the applicability
provision for the Uniform Guidance at section 200.101 or relevant
provisions in others parts in chapter I.
OMB proposes to revise section 1.200 to remove paragraphs (b) and
(c), which are no longer accurate. When OMB first established part 1 in
2004, see 69 FR 26276 (May 11, 2004), it implemented the Federal
Financial Assistance Management Improvement Act of 1999 (Pub. L. 106-
107). That legislation ceased to be effective on November 20, 2007
based on a sunset date included in the law. In addition, chapter II of
subtitle A in 2 CFR, which now contains part 200, was initially
intended to contain OMB guidance in its ``initial form'' before it was
``finalized.'' That statement no longer accurately reflects the
structure of subtitle A of 2 CFR nor status of the OMB guidance in part
200.
OMB proposes to provide a more succinct statement in section 1.215
explaining that some of the guidance was organized differently within
previous OMB circulars or other guidance documents before establishment
of title 2 of the CFR. Because 2 CFR has now existed for almost 20
years in its current format and location, OMB does not believe it is
necessary to continue to include the table showing earlier sources of
certain elements of the OMB guidance in 2 CFR. The Federal Register
notice establishing 2 CFR in 2004, see 69 FR 26276 (May, 11, 2004), and
other subsequent Federal Register notices establishing and revising
particular parts and provisions of subtitle A in 2 CFR, include that
information.
OMB also proposes to revise section 1.305 to further clarify
Federal agency responsibilities, such as coordinating with the Council
on Federal Financial Assistance (see OMB Memorandum M-23-19), the
Grants Quality Service Management Office (QSMO), and other governance
committees.
OMB also proposes to add section 1.231 to clarify its intent that
if any provision of this guidance, as finalized, were held to be
invalid or unenforceable, such provision, or combination of provisions,
are severable from the remaining provisions of the guidance, as
finalized.
Part 25--Unique Entity Identifier and System for Award Management
OMB proposes to revise the guidance in this part to ensure it
properly aligns with the authorizing statutes, as amended, including
the Transparency Act and the DATA Act of 2014. OMB first revises the
title of Part 25 to replace ``universal identifier'' with ``unique
entity identifier.'' In section 25.105, which is renamed
``Applicability,'' OMB proposes to clarify that the requirement to
obtain a Unique Entity Identifier (UEI) and register in SAM.gov does
not apply to second-tier subrecipients or contractors. In support of
Federal agency requests, OMB proposes to clarify that recipients of
loan guarantees must obtain a UEI and register in SAM.gov, while a
Federal agency may use discretion when determining to apply the
requirements to beneficiary borrowers.
In section 25.110, OMB proposes to clarify that, even if an
exception is granted, a Federal agency remains responsible for
reporting data to comply with the Transparency Act, as amended, except
that it may use a generic entity identifier in the circumstances
described.
Although not included in the proposed guidance in this document,
OMB is also considering other ways of reducing the administrative
burden associated with obtaining a UEI and registering in SAM.gov for
foreign organizations or foreign public entity receiving Federal awards
between $25,000 (the Transparency Act threshold for a ``Federal
award'') and $250,000 (the simplified acquisition threshold). Federal
agencies have explained to OMB that the process for obtaining a UEI and
registering in SAM.gov can present significant challenges for some of
their applicants for, and recipients of, awards in this limited
category. Based on this feedback, OMB is considering establishing a new
exception in section 25.110 that would allow an agency to grant a one-
time exception from the requirement to obtain a UEI, register in
SAM.gov, or both for foreign organizations or foreign public entities
applying for or receiving an award between $25,000 and $250,000 for a
project or program performed outside the U.S. OMB will work with
Federal agency partners to determine if this proposal can be
implemented in a way that is consistent with Transparency Act reporting
requirements. If included in the final revisions to the guidance, OMB
will also consider incorporating further
[[Page 69393]]
limits or safeguards in this exception to mitigate risk, such as not
allowing its application to awards that will include subawards above
$30,000--the threshold for subaward reporting established based on the
pilot program in section 5(b) of the Transparency Act, as amended by
the Data Act of 2014. Public Law 113-101; 85 FR 49506 (Aug. 13, 2020);
2 CFR 170.220. This proposed change would provide more flexibility--as
needed--to agencies operating in overseas environments where SAM.gov
registration presents particular challenges. If finalized, the
exception would only be available on a case-by-case basis in situations
in which the agency has conducted a risk-based analysis and deemed it
impractical for the entity to comply with the requirements(s). This
proposed change would only be finalized in a way that would allow
agencies to continue following Transparency Act reporting requirements
for this limited category of awards.
Related to the above analysis, OMB is also considering expanding
the exigent circumstances exception in section 25.110 to provide
recipients with additional time to obtain a UEI and complete SAM.gov
registration if exigent circumstances persist beyond 30 days. This
proposal is not included in the proposed guidance in this document, but
OMB is considering ways to provide this additional flexibility in the
final guidance. When exigent circumstances exist, the current guidance
at section 25.110 allows agencies to provide recipients up to 30 days
after the Federal award date to obtain a UEI and complete SAM.gov
registration. In recognition of the issues that sometimes arise when
organizations attempt to register in SAM.gov, particularly for new or
inexperienced applicants, OMB's proposal would provide Federal agencies
with the option to provide recipients an additional 90 days if exigent
circumstances persist. OMB will work with Federal agency partners to
determine if this proposal can be implemented in a way that is
consistent with Transparency Act reporting requirements. If included in
the final revisions to the guidance, OMB proposes to further clarify
that Federal agencies should not issue payments to a recipient that is
unable to obtain a UEI or complete registration in SAM.gov. OMB also
proposes to clarify that Federal agencies should include an award term
expressly providing that the recipient's eligibility to receive any
future payments under the award (such as outlays of cash) would be
contingent on the recipient receiving a UEI and completing
registration. Again, this proposed change would only be finalized in a
way that would allow agencies to continue following Transparency Act
reporting requirements for this limited category of awards.
OMB also proposes several clarifications in the part, such as a
proposed revision in section 25.205 explaining that the requirement to
have an active UEI does not apply to amendments to terminate or close a
Federal award.
Part 170--Reporting Subaward and Executive Compensation Information
OMB proposes to revise the guidance in this part to ensure it
properly aligns with the authorizing statutes, as amended, including
the Transparency Act and the DATA Act of 2014. OMB proposes to clarify
the specific Federal agency reporting requirements and to revise the
award term to resolve issues related to which entities the award term
applies to. OMB also proposes to revise certain sections to clarify
their intended meaning. For example, OMB proposes to move certain
requirements currently contained in section 170.110 to section 170.105,
which OMB proposes to rename ``Applicability.''
Part 175--Award Term for Trafficking in Persons
OMB proposes to revise the guidance in part 175 to ensure it
properly aligns with the authorizing statutes that have been amended
since it was published. See the TVPA of 2000, as codified at 22 U.S.C.
7101 to 7115. OMB proposes to update the policy and Award Term to
ensure alignment with the current statute and to further align with the
format of the CFR. For example, at section 175.105, OMB proposes adding
provisions related to a compliance plan and requiring notification to
Inspectors Generals under certain circumstances to further align with
statute.
Part 180--OMB Guidelines to Agencies on Government-Wide Debarment and
Suspension (Nonprocurement)
OMB proposes minimal revisions to this part based on feedback
received from the Interagency Suspension and Debarment Committee (ISDC)
in accordance with section 180.40. Considering the role of the ISDC in
recommending changes, OMB does not propose extensive plain language
revisions through this document in part 180. Sections in part 180 that
OMB proposes to revise include sections 180.635 and 180.640 to clarify
available administrative actions in lieu of debarment. OMB proposes
amending section 180.705 to include ``other indicators of adequate
evidence that may include, but are not limited to, warrants and their
accompanying affidavits'' for officials to consider before initiating a
suspension. OMB proposes additional clarifying edits to sections
180.710, 180.815, and 180.860, including adding text to section 180.860
to address factors influencing a debarment decision; this revision
proposes to add text on ``whether your business, technical, or
professional license(s) has been suspended, terminated, or revoked.''
OMB proposes changes to this part generally in response to an ISDC
recommendation to provide additional clarifications to 2 CFR to reflect
current practice. OMB is not proposing to establish new policy in part
180 that would negatively impact the ability of Federal agencies or
recipients to adhere to this guidance.
Part 182--Government-Wide Requirements for Drug-Free Workplace
(Financial Assistance)
OMB proposes limited plain language revisions to this part.
Part 183--Never Contract With The Enemy
OMB proposes limited plain language revisions to this part.
Part 184--Buy America Preferences for Infrastructure Projects
OMB established this part on Buy America preferences for
infrastructure projects through a separate process. 88 FR 57750 (Aug.
23, 2023). OMB does not propose changes to part 184 through this
document. OMB notes, however, that it may potentially make minor, non-
substantive changes to part 184 through its final guidance if necessary
to ensure consistency with any changes to the definitions in section
200.1. OMB notes that part 184, at section 184.3, states that acronyms
and terms not defined in part 184 have the same meaning as provided in
section 200.1. Certain terms used in part 184, such as ``Federal
awarding agency,'' may be affected by OMB's proposed changes under this
notice. Thus, it may be necessary to make minor conforming changes to
part 184 to ensure consistent use of terms.
Part 200--Uniform Administrative Requirements, Cost Principles, and
Audit Requirements for Federal Awards
In the paragraphs below, OMB discusses proposed changes to each
subpart of the Uniform Guidance in 2 CFR part 200.
[[Page 69394]]
Subpart A--Acronyms and Definitions
OMB proposes to update section 200.0 to remove acronyms that either
appear only once or are used infrequently in the Uniform Guidance. At
the same time, OMB proposes to add several acronyms that are used more
frequently, but have been omitted from this section in past updates,
such as Unique Entity Identifier (UEI).
In section 200.1, OMB proposes to remove several definitions that
were used only once or on a limited basis and instead move such
definitions to the appropriate section of the Uniform Guidance where
they appear. OMB proposes this change to ease the experience of the
reader and avoid the need to review Subpart A for an understanding of a
single section or small set of sections. For example, OMB proposes
moving the definition of ``Cooperative audit resolution'' to the text
of Subpart F. OMB also proposes deleting the definition of ``Federal
awarding agency,'' which OMB now proposes to incorporate within the
definition of ``Federal agency.''
OMB also proposes adding several new definitions of commonly used
terms based on feedback from agencies and the RFI. Proposed new
definitions include ``continuation funding,'' ``for-profit
organization,'' ``key personnel,'' ``participant,'' and ``prior
approval.''
OMB proposes to revise several definitions to incorporate threshold
increases referenced in other sections, such as the threshold increase
for ``equipment'' to $10,000, the threshold for ``supply'' to $10,000,
and the definition of ``Modified Total Direct Costs,'' which now
proposes to exclude subaward costs above $50,000, as compared to
$25,000 in the existing guidance.
OMB also proposes to revise several definitions for other reasons.
For example, OMB proposes to shorten the definition of ``improper
payment'' to ensure that the definition references the appropriate
source in Appendix C to OMB Circular A-123, Requirements for Payment
Integrity Improvement. OMB proposes to update the definition of
``intangible property'' to include more information related to date and
licenses. OMB also proposes to clarify ``participant support costs''
with additional explanatory information and expand the definition of
``questioned costs'' to provide greater understanding of the terms
throughout the Uniform Guidance. In addition, other definitions that
OMB proposes altering include ``cost sharing'' (discussed below under
section 200.306), ``Federal agency,'' ``Federal award date,''
``financial obligations,'' ``Indian tribe,'' ``period of performance,''
``prior approval,'' ``real property'', ``recipient,'' ``special purpose
equipment,'' ``subaward,'' and ``termination.''
OMB also proposes a minor change to the definition of the term
``Federal financial assistance.'' OMB proposes the term to include
assistance received or administered by ``recipients or
subrecipients''--as compared to assistance received or administered by
``non-Federal entities'' in the existing guidance. In cases in which
Federal agencies apply subparts A through E of part 200 to for-profit
organizations, use of the terms ``recipients or subrecipients'' in this
definition may provide further clarity on the applicability of the
Build America, Buy America Act (BABA) (Pub. L. 117-58, 135 Stat. 429,
70901-70927, Nov. 15, 2021) to Federal awards made by that agency to
for-profit organizations. Section 70912(4) of BABA incorporates the
definition of Federal financial assistance from 2 CFR 200.1 or
successor regulations. For additional information on BABA and OMB's
guidance in 2 CFR part 184, see 88 FR 55750 (Aug. 23, 2023). OMB does
not, however, propose to materially change the sentence in the
applicability section at 200.101(a)(2) providing Federal agencies with
discretion on whether to apply the guidance to for-profit
organizations.
Subpart B--General Provisions
OMB proposes to revise this subpart, in section 200.101, to clarify
the applicability of the Uniform Guidance. In OMB's proposal, all
subparts of part 200 continue to apply to Federal agencies that make
Federal awards to ``non-Federal entities.'' Federal agencies also
retain discretion on whether to apply subparts A through E of part 200
to Federal agencies, for-profit entities, foreign public entities, or
foreign organizations--which are not included in the definition of the
term ``non-Federal entity.'' OMB proposes to add language encouraging
agencies to apply the requirements in subparts A through E of part 200
to all recipients in a consistent and equitable manner to the extent
permitted within applicable statutes, regulations, and policies.
In support of plain language principles, OMB proposes to convert
the applicability table in paragraph (b) of section 200.101 into
paragraph form.
OMB proposes multiple clarifying revisions in section 200.102 to
improve agency and recipient understanding of the availability and use
of exceptions to, or deviations from, OMB's Uniform Guidance in part
200.
In section 200.104, OMB proposes to provide a more succinct
statement that part 200 supersedes previous OMB guidance issued in 2
CFR on topics including cost principles and audits for Federal
financial assistance. Because part 200 has now existed for 10 years in
its current format and location, OMB does not believe it is necessary
to continue to include the detailed list identifying elements of the
Uniform Guidance in part 200 previously contained in OMB Circulars or
other parts of 2 CFR, subtitle A, chapter II.
In section 200.111 OMB proposes new guidance to permit Federal
agencies to request, receive, and distribute Federal award information
in a language other than English when it is appropriate for a specific
program or Federal award. This proposal would allow for more
flexibility when working in international environments or in
communities where English is the not the primary language.
Finally, based on feedback from the oversight community, OMB
proposes to revise the section on mandatory disclosure to clarify that
recipients and subrecipients must promptly disclose any credible
evidence of a violation of Federal criminal law potentially affecting
the Federal award. OMB also proposes to revise this section to require
recipients and subrecipients to provide written disclosure to the
agency's Office of Inspector General. OMB believes the proposed
``credible evidence'' standard is more appropriate because it would not
require recipients, subrecipients, and applicants to make a legal
determination that a criminal law has been violated before they are
required to make a disclosure of ``credible evidence'' of such a
violation to the Federal agency, pass-through entity (if applicable),
and the agency's Office of Inspector General.
Subpart C--Pre-Federal Award Requirements and Contents of Federal
Awards
OMB proposes to revise this subpart to clarify certain requirements
for fixed amount awards. For example, OMB proposes to clarify in
section 200.201 that recipients are entitled to any unexpended funds
under a fixed amount award if the required activities were completed in
accordance with the terms and conditions of the award. In the same
section, OMB also proposes to clarify record retention and post award
certification requirements. In addition--although no specific language
is proposed in this document--OMB is considering requiring additional
pre-award certifications for fixed amount awards to address the
potential
[[Page 69395]]
increased risk of fraud under fixed amount awards. OMB invites comments
on appropriate pre-award certifications for fixed amount awards and
notes that it may include a requirement for such certifications in the
final guidance document. OMB also proposes to more specifically
identify certain prior approval requirements that specifically relate
to fixed amount awards.
OMB also proposes to expand section 200.202 on program planning and
design to encourage agencies to encourage recipients to engage members
of the community that will benefit from or be impacted by a Federal
financial assistance program. OMB also proposes to encourage Federal
agencies to develop programs in consultation with the communities that
will benefit from or be impacted by a program. In section 200.202, OMB
also proposes to underscore that Federal agencies should consider all
available data and evaluation results from past programs and coordinate
with other agencies during program planning and design.
OMB proposes to revise section 200.203 on Assistance Listings to
reinforce the importance of communicating in plain language and
highlighting any program-related customer service initiatives.
OMB proposes to revise section 200.204 on notices of funding
opportunities in a number of ways to encourage Federal agencies to
focus more on communicating requirements to the public in an accessible
and comprehensible manner. For example, OMB proposes to include an
Executive Summary requirement and to encourage agencies to use plain
language when publishing opportunities. OMB also proposes that agencies
should communicate program requirements specifically and clearly, as
well as limit the length of program announcements. As noted in the
proposed changes to the guidance, this is particularly important in
consideration of applicants with less experience applying for Federal
financial assistance, such as applicants from underserved communities.
OMB also proposes to encourage Federal agencies to identify all
eligible applicants in the funding opportunity--for example, by
providing greater specificity on different types of nonprofit
organizations such as labor unions. In proposing these revisions, OMB
aims to make notices of funding opportunities more consistent and
transparent. OMB also aims to ensure that applicants are not
unintentionally excluded from funding opportunities.
OMB also proposes additional changes in section 200.204, such as
encouraging agencies to provide an anticipated award date and providing
additional clarifying guidance on the availability period for funding
opportunities.
In section 200.205 OMB proposes to clarify that a Federal agency
should consider diversity when developing policies and procedures for
merit review panels.
In section 200.206 OMB proposes to revise the section regarding
risk evaluation by using the term risk assessment as a standard term
and clarifying agency requirements to appropriately review eligibility
qualifications and financial integrity information. OMB also proposes
to clarify that agency processes may consider any risk criteria
pertinent to a program, such as cybersecurity risk or impacts on local
jobs and the community. OMB further proposes to clarify that an agency
may modify its risk assessment at any time during the lifecycle of an
award.
OMB also proposes to clarify in section 200.209 that those entities
who are exempt from the requirements of 2 CFR part 25 must still
complete the certifications and representations by submitting the
appropriate assurance form.
OMB also proposes to include several additions to section 200.216
on the prohibition of certain telecommunications and video surveillance
services or equipment to expand the guidance by incorporating
additional information from OMB's Frequently Asked Questions document.
Lastly, OMB proposes to include a new section 200.217 to expand on
the whistleblower protections and requirements for recipients of
Federal financial assistance, which had previously been referenced in
section 200.300.
Subpart D--Post Federal Award Requirements
OMB proposes to retain the guidance in section 200.300 on statutory
and national policy requirements, which explains the need to administer
Federal awards in full accordance with the U.S. Constitution,
applicable Federal statutes and regulations, and requirements of part
200. OMB proposes to streamline section 200.300 and to reinforce
existing nondiscrimination requirements under the Constitution and
other applicable law, consistent with Executive Order 13988 of January
20, 2021 (``Preventing and Combating Discrimination on the Basis of
Gender Identity or Sexual Orientation''), and Executive Order 14075 of
June 15, 2022 (``Advancing Equality for Lesbian, Gay, Bisexual,
Transgender, Queer, and Intersex Individuals'').
In section 200.305 on Federal payment, OMB proposes to provide
additional flexibilities for recipients when interest bearing accounts
are not accessible in a foreign country; and to provide a specific link
for returning funds to the Payment Management System, rather than
including the more extensive instructions in the guidance itself.
OMB proposes to revise section 200.306 on cost sharing, as well as
the definition of cost sharing itself, to clarify that ``matching'' is
one category of cost sharing overall--thus eliminating the need to
repeat the term ``matching'' throughout. In the same section, OMB also
proposes to provide additional guidance on voluntary uncommitted cost
sharing for institutes of higher education.
OMB proposes to revise section 200.307 on program income by
providing clarifications in paragraph (a) regarding use and expenditure
of program income, including allowing program income for certain
closeout costs. OMB also proposes to revise and provide further
clarifying guidance in paragraph (b) for each of the three methods for
use of program income.
OMB proposes changes to section 200.308 on revision of budget and
program plans by combining the requirements for construction and non-
construction awards to provide greater uniformity in the requirements
for all award types. OMB proposes to clarify that recipients do not
need approval of individual subrecipients under all circumstances, but
only when making subawards of programmatic activities not proposed by
the recipient in the application for an award. A Federal agency may
also require prior approval of subrecipients through the terms and
conditions of a Federal award. OMB proposes to further clarify that
agencies should not require approval of a change in a proposed
subrecipient unless the initial inclusion of a subrecipient was a
determining factor in the agency's merit review process. This change is
proposed to reinforce the role of the recipient as responsible for the
efficient and effective administration of the Federal award including
the selection of a qualified and capable subrecipient. OMB also
proposes to identify other items requiring prior approval, including
requesting additional funds, transferring funds, and no-cost
extensions. OMB proposes to clarify that no-cost extensions are
different from one-time extensions, which an agency is permitted to
authorize a recipient to do without prior approval.
[[Page 69396]]
In section 200.309 on modification to the period of performance,
OMB proposes to provide additional clarification that when an agency
decides not to continue an award with multiple budget periods, the
period of performance should be amended to end at the completion of the
currently authorized budget period. OMB also proposes to incorporate
the definition of ``renewal award'' in this section.
In section 200.311, addressing real property, OMB proposes to
include a new paragraph on appraisals to introduce additional guidance
on standards for conducting independent appraisals consistent with the
Uniform Relocation Assistance and Real Property Acquisition Policies
Act of 1970, as amended, (42 U.S.C. 4601-4655) except as provided in
the implementing regulations at 49 CFR part 24, ``Uniform Relocation
Assistance And Real Property Acquisition For Federal And Federally-
Assisted Programs.'' OMB also proposes to include a definition of the
term ``encumbrance'' in sections 200.311, 200.313, and 200.315.
In section 200.313, relating to equipment, OMB proposes to increase
the threshold value for equipment from $5,000 to $10,000 and to provide
additional guidance on the meaning of a ``conditional title.''
Consistent with proposals in sections 200.311 and 200.315, OMB also
proposes a definition of the term ``encumbrance.'' Consistent with the
existing requirements for States, OMB also proposes to allow Indian
Tribe to dispose of equipment in accordance with tribal law. OMB also
proposes to clarify that agencies may permit the recipient to retain
equipment with no further obligation to the Federal government when it
is not prohibited by Federal statue or regulation. OMB also proposes to
reinforce the responsibility of recipients to maintain updated records
regarding equipment.
OMB proposes to revise section 200.314 on supplies to raise the
threshold from $5,000 to $10,000. OMB also proposes to clarify that the
requirements for unused supplies apply to the aggregate value of all
supply types, and not just like-item supplies. OMB also proposes to
include a definition of ``unused supplies'' in section 200.314.
In section 200.315 on intangible property, OMB proposes to
reinforce the potential requirement for recipients and subrecipients to
make intangible property publicly available on agency-designated
websites. Consistent with proposals in sections 200.311 and 200.313,
OMB also proposes a definition of the term ``encumbrance.''
OMB proposes several revisions to the procurement standards in the
Uniform Guidance. In recognition of Tribal sovereignty, and consistent
with the existing requirements for States, in section 200.317 OMB
proposes to allow Indian tribes to follow their own policies and
procedures.
OMB also proposes to revise the procurement standards in section
200.318. These proposed revisions include providing additional guidance
that contractors appropriately classify employees consistent with the
Fair Labor Standards Act. See the Fair Labor Standards Act at 29 U.S.C.
chapter 8.
OMB also proposes adding a new paragraph (l) in section 200.318 to
clarify that that the procurement standards in part 200 do not prohibit
recipients or subrecipients from using Project Labor Agreements or
similar forms of pre-hire collective bargaining agreements; requiring
commitments or goals to hire people residing in high-poverty areas,
disadvantaged communities as defined by the Justice40 Initiative OMB
Memorandum M-21-28, or high-unemployment census tracts within a region
no smaller than the county where a federally funded construction
project is located, consistent with the policies and procedures of the
recipient or subrecipient, provided that a recipient or subrecipient
may not prohibit interstate hiring; requiring commitments or goals to
individuals with barriers to employment (as defined in section 3 of the
Workforce Innovation and Opportunity Act (29 U.S.C. 3102(24)),
including women and people from underserved communities as defined by
Executive Order 13985; using agreements intended to ensure
uninterrupted delivery of services; using agreements intended to ensure
community benefits; or offering employees of a predecessor contractor
rights of first refusal under a new contract. The proposed paragraph
explains that Federal agencies may consider allowing recipients or
subrecipients to use such practices if consistent with the U.S.
Constitution, applicable Federal statutes and regulations, the
objectives and purposes of the Federal financial assistance program,
and other requirements of part 200. For example, any hiring preference
for a class or groups of persons would be permissible only to the
extent that it is consistent with the equal protection requirement of
the U.S. Constitution.
In section 200.319, OMB proposes to remove the prohibition in the
Uniform Guidance on using geographic preference requirements. In the
same section, OMB also proposes to state that subpart D does not
prohibit recipients and subrecipients from incorporating a scoring
mechanism that rewards bidders committing to specific numbers and types
of U.S. jobs, as well as certain compensation and benefits. OMB
cautions, however, that any geographic preferences or scoring
mechanisms must be consistent with the U.S. Constitution, applicable
Federal statutes and regulations, and the terms and conditions of the
Federal award. OMB also proposes to clarify that any such scoring
mechanism must be consistent with established practices and legal
requirements applicable to the recipient or subrecipient.
In section 200.320 on procurement methods, OMB proposes to change
``small purchases'' to ``simplified acquisitions'' to further align
with standard terminology. In paragraph (a), OMB proposes to clarify
that ``micro-purchases'' and ``simplified acquisitions'' are types of
``informal procurement methods for small purchases.'' OMB also proposes
to remove the requirements that local and tribal governments must open
sealed bids in public; this requirement may be inconsistent with State
or tribal policies and procedures.
In section 200.321, OMB proposes to add ``veteran-owned business''
to the types of businesses that recipients and subrecipients are
encouraged to consider for procurement contracts under a Federal award.
OMB proposes to add a new paragraph (b) in section 200.323.
Executive Order 14057 of December 8, 2021 (``Catalyzing Clean Energy
Industries and Jobs Through Federal Sustainability'') establishes that
it is the policy of this Administration to lead by example and pursue a
whole-of-government approach on sustainability and expanding American
technologies, industries, and jobs that support sustainability and
climate resilience. The Executive Order tasks the Federal government
with pursuing new strategies to improve the Nation's preparedness and
resilience to the effects of a changing climate, including financial
management strategies. In support of this policy, OMB proposes to add a
new paragraph (b) in section 200.323 encouraging Federal award
recipients, to the extent permitted by law, to purchase, acquire, or
use products and services that can be reused, refurbished, or recycled;
contain recycled content, are biobased, or are energy and water
efficient; and are sustainable.
OMB proposes to add additional language to section 200.324 on
contract cost and price to establish that the
[[Page 69397]]
recipient or subrecipient may consider potential workforce impacts in
their procurement analysis if the procurement transaction will
potentially displace public sector employees. OMB also seeks comment on
its proposal to delete the existing paragraph (b) in 2 CFR 200.324,
requiring the recipient to negotiate profit as a separate element of
the price for each contract in which there is no price competition.
In section 200.328, OMB proposes to provide additional clarity on
required deadlines for financial reporting to align with progress
reporting requirements.
In section 200.329, OMB proposes to revise the reporting of program
performance section to remind agencies of the importance of not
requiring information in programmatic reports that is not necessary for
the effective monitoring of the award. OMB also proposes additional
language that emphasizes the importance of measuring customer
experience as well as considering evaluation plans when outlining
reporting requirements. OMB further proposes to clarify that
programmatic reporting may not be required more frequently than
quarterly unless specific conditions have been applied to the award in
accordance with section 200.208.
In section 200.331 on subrecipient and contractor determinations,
OMB proposes additional language to emphasize that Federal agencies do
not have a direct legal relationship with subrecipients and contractors
of pass-through entities. OMB also proposes to clarify that the
characteristics indicative of a subrecipient or contractor
determination are not limited to the sample characteristics currently
provided in the guidance.
Based on feedback from the Federal financial assistance community,
OMB proposes to include in section 200.332 the requirement for pass-
through entities to confirm that potential subrecipients are not
suspended, debarred, or otherwise excluded from receiving Federal
funds.
In section 200.333, OMB proposes removing the current Simplified
Acquisition Threshold limit for fixed amount subawards to provide
agencies and recipients with increased flexibility in making
programmatic and budgetary decisions, while still allowing recipients
to establish their own award-specific thresholds with the prior written
approval of the Federal agency. Under the proposed revision, a
recipient's use of fixed amount subawards remains subject to the prior
written approval of the Federal agency.
OMB also proposes to revise and clarify the guidance pertaining to
termination and closeout requirements in sections 200.340 through
200.344. On termination, in section 200.340 OMB proposes to remove
language that allows a Federal agency or pass-through entity to
terminate an award ``if an award no longer effectuates the program
goals or agency priorities.'' This revision is proposed only for the
purpose of clarifying the guidance; the proposed guidance still allows
agencies to terminate a Federal award according to the terms and
condition of the award. OMB also proposes to clarify that a termination
does not include a Federal agency's decision to not provide
continuation funding. In section 200.341, OMB also proposes to clarify
requirements that must be included in a notice of termination.
In section 200.344 on closeout, OMB proposes to revise closeout
guidance to clarify that recipients must still submit a final financial
report even when the recipient does not have a final indirect cost
rate; and proposes to clarify that an additional final report must be
submitted when the indirect cost rate is finalized. In the same
section, OMB also proposes to provide additional flexibilities for
agencies and recipients to closeout Federal awards in a timely manner.
OMB proposes to allow an agency and recipient to mutually agree upon a
final indirect cost rate for an individual award. This proposed
revision is not intended to grant agencies additional authorities to
negotiate rates over cognizant agencies for indirect rates; rather, it
simply proposes to affirm the Federal agency's right to negotiate with
the recipient or subrecipient on a case-by-case basis with the goal of
closing out specific awards in a timely manner.
Subpart E--Cost Principles
In section 200.401 on applicability, OMB proposes to clarify that
the cost principles in subpart E do not apply to grants and cooperative
agreements for food commodities.
In section 200.403, OMB proposes to add language clarifying when
allowable administrative closeout costs may be incurred in paragraph
(h).
In section 200.407, OMB has removed ten items from the prior
written approval requirements to reduce Federal agency and recipient
burden. These proposed revisions include no longer requiring prior
written approval for such items as, real property, equipment, direct
costs, entertainment costs, exchange rates, memberships, participant
support costs, selling and marketing costs, and taxes. In this section,
OMB also proposes to remove the reference to requiring prior written
approval for use of grants agreements, cooperative agreements, and
contracts, but other requirements throughout the Uniform Guidance in
part 200 would continue to apply to use of these instruments.
In section 200.414, OMB proposes to revise several aspects of the
guidance pertaining to indirect costs. OMB proposes to clarify that
recipients and subrecipients may notify OMB of any disputes with
regards to a Federal agency's application or acceptance of a federally
negotiated indirect cost rates. OMB also proposes to revise the
guidance to clarify that pass-through entities must accept all
federally negotiated indirect cost rates for subrecipients.
In the same section, in response to feedback from the Federal
financial assistance community, OMB proposes to raise the de minimis
rate from 10 percent to 15 percent. This change would allow for a more
reasonable and realistic recovery of indirect costs, particularly for
new or inexperienced organizations that may not have the capacity to
undergo a formal rate negotiation, but still deserve to be fully
compensated for their overhead costs. The proposed changes still allow
recipients and subrecipients to apply a rate lower than 15 percent at
their own discretion. At the same time, the proposed guidance clarifies
that Federal agencies may not compel recipients and subrecipients to
use an indirect rate lower than the proposed 15 percent rate, unless
required by statute. OMB also proposes to clarify that the de minimis
rate may not be applied to cost reimbursement contracts and recipients
and subrecipients are not required to use the de minimis rate.
Finally, OMB also proposes to remove the existing requirement in
paragraph (h) of section 200.414 for all indirect cost rates to be
publicly available on a government-wide website--but this may be
revisited when applicable systems are updated to allow for the posting
of indirect cost rates. OMB seeks comments that include analysis on the
advantages and disadvantages of raising the de minimis rate in the way
proposed.
Based on feedback from the oversight community, in section 200.415
OMB proposes to require subrecipients to certify to pass-through
entities that financial information submitted to the pass-through
entity is complete and accurate.
Based on feedback from both Institutions of Higher Education (IHE)
and Federal agencies, OMB also proposes to remove the requirement in
section 200.419 for an IHE that receives
[[Page 69398]]
an aggregate total $50 million or more in Federal awards and
instruments subject to subpart E to submit a disclosure statement form
(DS-2) containing information on cost accounting standards. This
proposed change, if finalized, would likely reduce Federal agency and
recipient burden. OMB received a comment indicating that the DS-2 is
outdated, not needed for ensuring compliance with statutory authorities
related to Federal financial assistance, and not universally
implemented across the IHE community. The commenter also indicated that
the DS-2 is not used as regular tool by the audit or oversight
community to enhance compliance or oversight. This commenter also
stated that information contained in the DS-2 is readily available in
numerous policy portals at research universities and creates
unnecessary administrative and cost burden to research universities and
Federal agencies.
If finalized, this proposed change would not impact the requirement
for IHEs receiving Federal awards above the threshold to comply with
the Cost Accounting Standards Board's cost accounting standards. It
would only no longer require use of the DS-2 form. This proposed change
also is not intended to impact any FAR-based requirements related to
disclosure of cost accounting practices.
OMB seeks comments on the potential impact of this proposed change
to section 200.419, including analysis on the advantages and
disadvantages of removing the requirement for use of the DS-2 form. For
example, are there any advantages in retaining consistency and
uniformity in accounting practices followed by educational institutions
for both contracts under the FAR and Federal financial assistance under
part 200, which are achieved through use of the DS-2? For additional
background, see, for example, 58 FR 39996, at 39997 (Jul. 26, 1993)
(explaining OMB's initial plans to expand the Cost Accounting Standards
Board's regulations and standards for educational institutions to
Federal grants). Does the requirement to use the DS-2 at section
200.419 help ensure that each IHE's practices used in estimating costs
for a proposal are consistent with cost accounting practices used by
the institution in accumulating and reporting costs or serve other
functions? See 48 CFR 9905.501-20. How, if at all, could removing the
requirement to use the DS-2 from section 200.419 impact compliance by
research universities with the requirements of 41 U.S.C. 1502 or the
implementing regulations at FAR, Chapter 99 for government contracts?
To what extent would removing the requirement to use the DS-2 at
section 200.419 reduce burden if the statutory and FAR-based
requirements remain in effect?
OMB proposes to require several revisions to the general provisions
for items of costs. Specifically, in section 200.420, OMB proposes to
add further clarifying text explaining that the listed items of cost
are not intended to provide a comprehensive list and that failure to
mention an item, even as an example, is not intended to imply that is
allowable or unallowable. OMB proposes this clarification to address
numerous questions about allowability of costs that arise in the
Federal financial assistance community.
In section 200.422, OMB proposes to incorporate the definition of
an ``advisory council or committee.''
At section 200.431, OMB proposes to revise the section on fringe
benefits to require recipients and subrecipients to allocate payments
for unused leave as general administrative expenses or include them in
a fringe benefit rate with cognizant agency approval. Based on feedback
from the oversight community, OMB also proposes in section 200.431 to
clarify that recipients and subrecipients may not charge unfunded
pension and post-retirement health benefits to an award in a manner
that is inconsistent with the allocation principles of Subpart E. Also
in section 200.431, OMB proposes additional clarifying guidance on
pension plan costs and post-retirement health plans.
OMB proposes to clarify the description of conferences in section
200.432 to remove any limitations provided by the specific types of
events listed in the guidance currently. OMB also proposes to allow for
dependent-care costs associated with participants' attending or
partaking in program-related conferences.
OMB proposes to revise section 200.438 entertainment costs to
include prizes, which currently reside in Subpart B, despite the fact
that prizes are an item of cost.
In section 200.440, OMB removed the requirement for prior approval
of fluctuations of exchange rates. While a recipient or subrecipient
needs prior approval for additional Federal funding, no approval is
required because an exchange rate has fluctuated and resulted in a
necessary charge to available funding.
In section 200.454, OMB proposes to remove prior approval
requirements for the cost of membership in any civic or community
organization.
In section 200.455 on organization costs, OMB proposes to clarify
that any costs associated with either persuading or dissuading
employees from collective bargaining and related activities are not
allowable under Federal awards. OMB also proposes to add clarifying
language that certain costs related to data, evaluation, and other
related organization costs are allowable.
In section 200.456, OMB proposes to remove the prior approval
requirement of participant support costs. OMB proposes to clarify,
however, that the treatment of participant costs is ultimately the
responsibility of the recipient or subrecipient to determine, document,
and treat consistently across all Federal awards (and when negotiating
indirect rates).
In section 200.461, OMB proposes additional clarifying guidance on
publication and printing costs by adding reference to ``article
processing charges'' or ``similar open access fees.''
In section 200.467, OMB also proposes to remove the prior approval
option for selling and marketing costs, clarifying selling and
marketing costs are unallowable unless they meet the requirements in
section 200.421 and are required to meet the requirements of the award.
Finally, OMB proposes to revise the section on termination costs at
section 200.472 to also include closeout costs. Specifically, OMB
proposes to include guidance for recipients and subrecipients to charge
administrative costs specifically associated with the closeout of a
Federal award. OMB received feedback from the Federal financial
assistance community that the exclusion of closeout costs in the
Uniform Guidance has been problematic as recipients and subrecipients
have been unable to charge actual costs associated with closeout
actions, such as certain administrative or staff costs not covered
through indirect cost recoveries.
Subpart F--Audit Requirements
In this subpart, OMB proposes to raise the audit threshold from
$750,000 to $1,000,000 in section 200.501. OMB reviewed audit
submission data as well as economic data when determining the increase
to this threshold. Every two years, the Director of OMB is authorized
to adjust the dollar amount of this threshold consistent with the
purposes of the Single Audit Act, provided the Director does not make
such adjustments below $300,000. 31 U.S.C. 7502.
In section 200.502 OMB also proposes to clarify that, in
determining Federal awards expended, loan and loan guarantees retain
their Federal character through the end of the Federal award
[[Page 69399]]
period of performance unless otherwise specified in statute or Federal
agency regulations. In response to feedback from Federal agencies, OMB
proposes to revise the guidance to require that the schedule of
expenditures of Federal awards for comprehensive annual financial
reports identify the State, municipal, or local entity recipient or
subrecipient of a Federal award. This change is necessary to provide
greater transparency and understanding of the information provided in
the schedule.
In section 200.510, at paragraph (b), OMB proposes additional
guidance explaining that, for audits covering multiple recipients (such
as departments, agencies, IHEs, and other organizational units), the
schedule of expenditures must identify the recipient of the Federal
award.
In section 200.513, OMB proposes to revise the responsibilities of
Federal agencies. Specifically, OMB proposes to encourage Federal
agencies to engage with external audit stakeholders and the Federal
agency's Office of Inspector General National Single Audit Coordinator
(NSAC) prior to submitting compliance supplement drafts to OMB. In the
same section OMB also proposes to clarify that a Federal agency's key
management single audit liaison must also coordinate with the agency's
Office of Inspector General NSAC when appropriate.
In section 200.514, on scope of audit, OMB proposes to revise
compliance requirements to specify that compliance testing must include
a test of transactions and other auditing procedures necessary to
provide the auditor with sufficient evidence to support an opinion on
compliance.
In section 200.516, based on feedback OMB received from the Federal
financial assistance community, OMB proposes to revise in the
definitions of known questioned costs and likely questioned costs and
provide further clarity on how they are identified in an audit report.
Appendix I to Part 200--Full Text of Notice of Funding Opportunity
OMB proposes to revise this appendix in its entirety in support of
the goal of simplifying and clarifying the grant solicitation and
application process, which is a key objective under Executive Order
14058 on Transforming Federal Customer Experience and Service Delivery
to Rebuild Trust in Government. The proposed changes to the notice of
funding opportunity in Appendix I are intended to improve the quality
and accessibility of funding opportunities. Specifically, the proposed
revisions to Appendix I intend to: (1) follow plain language
principles; (2) group similar items together to streamline content; (3)
align sections more closely to the application process; (4) include
basic information at the top of a funding opportunity so that
applicants can more easily make decisions about whether or not to
apply; (5) clearly define what must be included in a section of the
funding opportunity versus what is at an agency's discretion; and (6)
provide flexibility to agencies while also giving applicants a common
way to find information in every funding opportunity.
Appendix III to Part 200--Indirect (F&A) Costs Identification and
Assignment, and Rate Determination for Institutions of Higher Education
(IHEs)
OMB proposes to update this appendix to adjust the exclusion
threshold of subawards from $25,000 to $50,000 for modified total
direct costs.
Appendix IV to Part 200--Indirect (F&A) Costs Identification and
Assignment, and Rate Determination for Nonprofit Organizations
OMB proposes to update this appendix to adjust the exclusion
threshold of subawards from $25,000 to $50,000 for modified total
direct costs. OMB also proposes to clarify that under the direct cost
allocation method, joint costs include costs for information
technology.
Appendix VII to Part 200--States and Local Government and Indian Tribe
Indirect Cost Proposals
OMB proposes to update this appendix to adjust the exclusion
threshold of subawards from $25,000 to $50,000 under modified total
direct costs (MTDC). OMB also proposes to clarify the meaning of
``department or agency'' for State and local governments.
OMB also proposes a revision to underscore that Federal agencies
must accept indirect cost proposals developed by State or local
departments or agencies receiving less than $35 million in their fiscal
year. The proposed revision to this appendix also provides that Federal
agencies cannot compel these State or local governmental departments or
agencies to accept the de minimis rate, or any other rate established
by the Federal agency, in place of their indirect cost proposals. OMB
emphasizes, however, that any such indirect cost proposals must be
developed in accordance with the requirements of part 200 and
maintained for audit--along with related supporting documentation.
Appendix X to Part 200--Data Collection Form (Form SF-SAC)
OMB proposes to revise this appendix to clarify where audit
submission instructions are located.
Appendix XII to Part 200--Award Term and Condition for Recipient
Integrity and Performance Matters
OMB proposes to revise this award term to be consistent with the
statutory obligation and to reflect the appropriate location
(responsibility and qualification records) in SAM.gov for reporting
integrity and performance matters. OMB proposes to renumber the award
term to align to the requirements of the standard organization of the
Code of Federal Regulations.
Other Revisions Under Consideration for Future Updates
OMB may consider additional revisions for potential future updates.
Specifically, OMB welcomes additional comments from the public on the
following topics for consideration in possible additional revisions in
the future:
Establishing specific audit requirements for for-profit
entities, which are not subject to the requirements of Subpart F;
Incorporating the requirements of National Security
Presidential Management (NSPM)-33 on research security requirements;
Providing additional guidance in 2 CFR concerning the
relationship of specific aspects of the guidance to loans and loan
guarantees;
Establishing mechanisms to automatically adjust certain
thresholds due to inflation or other triggering events (where permitted
by law).
Removing additional prior approval requirements.
Challenges related to negotiating indirect costs, working
with cognizant agencies, or any other topics related to indirect costs
that could be addressed in future updates; and
Expanding the guidance in Subpart F to include more
specific requirements on the scope of an audit (``proper perspective'')
so that agencies have additional contextual information to guide them
in resolving audit findings.
Request for Comments
OMB requests comments on all aspects of the propose guidance in
this document, including on any reliance interests that commenters may
have based on the existing text of 2 CFR, subtitle A that OMB's
proposal may affect, and that OMB should consider in deciding whether
or how to finalize this guidance.
[[Page 69400]]
Executive Order 12866 (Regulatory Planning and Review), Executive Order
13563 (Improving Regulation and Regulatory Review), and Executive Order
14094 (Modernizing Regulatory Review)
Executive Orders (E.O.s) 12866, 13563, and 14094 direct agencies to
assess all costs and benefits of available regulatory alternatives,
and, if regulation is necessary, to select regulatory approaches that
maximize net benefits (including potential economic, environmental,
public health and safety effects, distributive impacts, and equity).
The OMB Guidance for Grants and Agreements published in subtitle A of 2
CFR is guidance to Federal agencies and not regulation. 2 CFR 1.100(b).
OMB has thus determined that the revision of 2 CFR is not a significant
regulatory action under E.O. 12866, as amended.
Regulatory Flexibility Act
This proposed guidance is exempt from the notice and comment
requirements of the Administrative Procedure Act (APA) because it is
guidance to Federal agencies and not regulation. See 5 U.S.C. 553(b).
Moreover, even if this proposed guidance were otherwise subject to 5
U.S.C. 553, it would be exempt from the notice and comment requirement
as a matter related to grants. See 5 U.S.C. 553(a)(2). OMB nonetheless
provides the following information for the information of the public.
For a rule subject to the notice-and-comment provisions of the APA, the
Regulatory Flexibility Act 5 U.S.C. 601, et seq., requires that an
agency provide a final regulatory flexibility analysis or to certify
that the rule will not have a significant economic impact on a
substantial number of small entities. Based on the nature of the
revisions proposed in this notice, OMB does not expect this guidance to
have a significant economic impact on a substantial number of small
entities within the meaning of the Regulatory Flexibility Act. There
are some proposed revisions that may impose a non-significant burden;
however, there are more proposed revisions that reduce burden to small
entities. When reviewing all proposed revisions, the burden that will
be reduced for recipients is much greater than the burden imposed.
Unfunded Mandates Reform Act of 1995
The proposed guidance would not impose unfunded mandates as defined
by the Unfunded Mandates Reform Act of 1995 (Pub. L. 104-4, 109 Stat.
48). The proposed guidance would not result in the expenditure by
State, local, and Tribal governments, in the aggregate, or by the
private sector, of $168 million or more in any one year (2 U.S.C.
1532).
Executive Order 13132 (Federalism Assessment)
This proposed guidance has been analyzed in accordance with the
principles and criteria contained in E.O. 13132, ``Federalism,'' 64 FR
43255 (Aug. 10, 1999). OMB has determined that this proposed guidance
would not have sufficient federalism implications to warrant the
preparation of a federalism assessment. The guidance in 2 CFR is
inherently national in scope and significance. Regardless, in
accordance with section 4(d) of E.O. 13132, OMB consulted with
appropriate State and local officials that may be affected by Federal
agencies' implementation of OMB's revised guidance by means of posting
the RFI prior to proposing revisions. OMB weighed carefully the
interests of those who submitted comments in response to the RFI in
proposing revisions to the guidance, which balance the State interests
with the need to provide Federal agencies with consistent, uniform,
efficient, and transparent guidance, which is consistent with
authorizing law.
Paperwork Reduction Act
This guidance does not contain a new requirement for information
collection. Rather, it streamlines requirements in specific sections.
Thus, the Paperwork Reduction Act does not apply.
Executive Order 13175 (Tribal Consultation)
OMB has analyzed this revised guidance in accordance with the
principles and criteria contained in E.O. 13175, ``Consultation and
Coordination with Indian Tribal Governments'' 65 FR 67249 (Nov. 9,
2000). On March 7, 2023, OMB held a two-hour Tribal consultation to
solicit feedback from Tribal representatives. OMB also proposes
providing greater flexibility to Tribal governments in the proposed
guidance centered on procurement standards and disposition of
equipment. OMB also proposes to clarify the definition of Indian
Tribes.
List of Subjects
2 CFR Part 1
Administration of Federal financial assistance, Administrative
practice and procedure, Federal financial assistance programs.
2 CFR Part 25
Administrative practice and procedure; Grant programs; Grants
administration; Loan programs.
2 CFR Part 170
Colleges and universities; Grant programs; Hospitals; International
organizations; Loan programs; Reporting and recordkeeping requirements.
2 CFR Part 175
Administrative practice and procedures; Grant programs; Indians--
tribal government; Nonprofit organizations; State and local
governments.
2 CFR Part 180
Administrative practice and procedure; Grant programs; Loan
programs; Reporting and recordkeeping requirements.
2 CFR Part 182
Administrative practice and procedure; Drug abuse; Grant programs;
Reporting and recordkeeping requirements.
2 CFR Part 183
Foreign aid; Grants administration; Grant programs; International
organizations; Reporting and recordkeeping requirements.
2 CFR Part 200
Administration of Federal financial assistance, Administrative
practice and procedure, Federal financial assistance programs.
For the reasons stated in the preamble, the Office of Management
and Budget proposes to amend title 2, subtitle A, chapters I and II of
the Code of Federal Regulations as follows:
0
1. Revise the heading of title 2 to read as follows:
Title 2--Federal Financial Assistance
0
2. Revise the heading of subtitle A of title 2 to read as follows:
Subtitle A--Office of Management and Budget Guidance for Federal
Financial Assistance
0
3. Revise part 1, consisting of Sec. Sec. 1.100 through 1.305, to read
as follows:
PART 1--ABOUT TITLE 2 OF THE CODE OF FEDERAL REGULATIONS AND
SUBTITLE A
Sec.
Subpart A--Introduction to Title 2 of the CFR
1.100 Content of this title.
1.105 Organization and subtitle content.
1.110 Issuing authorities.
[[Page 69401]]
Subpart B--Introduction to Subtitle A
1.200 Purpose of chapters I and II.
1.205 Applicability to Federal financial assistance.
1.210 Applicability to Federal agencies and others.
1.215 Relationship to previous issuances.
1.220 Federal agency implementation of this subtitle.
1.230 Maintenance of this subtitle.
1.231 Severability.
Subpart C--Responsibilities of OMB and Federal Agencies
1.300 OMB responsibilities.
1.305 Federal agency responsibilities.
Authority: 31 U.S.C. 503; 31 U.S.C. 1111; 31 U.S.C. 6307; 41
U.S.C. 1121; Reorganization Plan No. 2 of 1970; E.O. 11541, 35 FR
10737.
Subpart A--Introduction to Title 2 of the CFR
Sec. 1.100 Content of this title.
This title contains:
(a) Office of Management and Budget (OMB) guidance to Federal
agencies on governmentwide policies for the award and administration of
Federal financial assistance; and
(b) Federal agency regulations implementing that OMB guidance.
Sec. 1.105 Organization and subtitle content.
(a) This title is organized into two subtitles.
(b) The OMB guidance described in Sec. 1.100(a) is published in
subtitle A. Publication of the OMB guidance in the CFR does not change
its nature--it is guidance, not regulation.
(c) Each Federal agency that awards Federal financial assistance
has a chapter in subtitle B in which it issues those regulations. The
Federal agency regulations in subtitle B differ in nature from the OMB
guidance in subtitle A because the OMB guidance is not regulatory.
Federal agency regulations in subtitle B may give regulatory effect to
the OMB guidance, to the extent that the agency regulations require
compliance with all or portions of the OMB guidance. See also Sec.
1.220.
Sec. 1.110 Issuing authorities.
OMB issues this subtitle. Each Federal agency that has a chapter in
subtitle B of this title issues that chapter.
Subpart B--Introduction to Subtitle A
Sec. 1.200 Purpose of chapters I and II.
Chapters I and II of subtitle A provide OMB guidance to Federal
agencies that helps ensure consistent and uniform governmentwide
policies and procedures for the management of the agencies' Federal
financial assistance.
Sec. 1.205 Applicability to Federal financial assistance.
The types of instruments that are subject to the guidance in this
subtitle vary from one portion of the guidance to another. All portions
of the guidance apply to grants and cooperative agreements, and some
portions also apply to other types of Federal financial assistance. For
example, the:
(a) Guidance on debarment and suspension in part 180 of this
subtitle applies broadly to all Federal financial assistance, and not
just to grants and cooperative agreements.
(b) Cost principles in subpart E of part 200 of this subtitle apply
to procurement contracts issued under a Federal award, as well as to
Federal financial assistance. Cost principles are implemented for
Federal agencies' direct procurement contracts through the Federal
Acquisition Regulation in title 48 of the CFR, rather than through
Federal agency regulations on Federal financial assistance in this
title.
Sec. 1.210 Applicability to Federal agencies and others.
(a) This subtitle contains guidance that directly applies only to
Federal agencies.
(b) The guidance in this subtitle may affect other entities through
each Federal agency's implementation of the guidance, portions of which
may apply to:
(1) The agency's awarding or administering officials;
(2) Recipients and subrecipients that receive or apply for the
agency's Federal financial assistance or receive subawards under grants
or cooperative agreements; or
(3) Any other entities involved in agency transactions subject to
the guidance in this chapter.
Sec. 1.215 Relationship to previous issuances.
Although some of the guidance was organized differently within OMB
circulars or other documents, much of the guidance in this subtitle
existed prior to the establishment of title 2 of the CFR.
Sec. 1.220 Federal agency implementation of this subtitle.
A Federal agency that awards Federal financial assistance subject
to the OMB guidance in this subtitle implements the guidance in agency
regulations in subtitle B of this title and in guidance documents,
policy documents, and procedural issuances, such as internal
instructions to the agency's awarding and administering officials. An
applicant, recipient, or subrecipient would see the effect of that
implementation in the organization and content of the agency's
announcements of funding opportunities and in its award terms and
conditions.
Sec. 1.230 Maintenance of this subtitle.
OMB issues guidance in this subtitle after publication in the
Federal Register. Any portion of the guidance that has a potential
impact on the public is published with an opportunity for public
comment.
Sec. 1.231 Severability.
The provisions of this subtitle are separate and severable from one
another. If any provision of this subtitle is held invalid or
unenforceable as applied to a particular person or circumstance, the
provision should be construed so as to continue to give the maximum
effect permitted by law as applied to other persons not similarly
situated or to dissimilar circumstances. If any provision is determined
to be wholly invalid and unenforceable, it should be severed from the
remaining provisions of this part, which should remain in effect.
Subpart C--Responsibilities of OMB and Federal Agencies
Sec. 1.300 OMB responsibilities.
OMB is responsible for:
(a) Issuing and maintaining the guidance in this subtitle, as
described in Sec. 1.230;
(b) Interpreting the policy requirements in this subtitle;
(c) Reviewing Federal agency regulations implementing the
requirements of this subtitle, as required by Executive Order 12866;
(d) Conducting broad oversight of governmentwide compliance with
the guidance in this subtitle; and
(e) Performing other OMB functions specified in this subtitle.
Sec. 1.305 Federal agency responsibilities.
The head of each Federal agency that awards and administers Federal
financial assistance subject to the guidance in this subtitle is
responsible for:
(a) Implementing the guidance in this subtitle;
(b) Ensuring that the Federal agency complies with their
implementation of the guidance;
(c) Coordinating with the Council on Federal Financial Assistance,
the Grants Quality Service Management Office, and other governance
committees as appropriate; and
(d) Performing other functions specified in this subtitle.
[[Page 69402]]
0
4. Revise part 25, consisting of Sec. 25.100 through appendix A to
part 25, to read as follows:
PART 25--UNIQUE ENTITY IDENTIFIER AND SYSTEM FOR AWARD MANAGEMENT
Sec.
Subpart A--General
25.100 Purpose of this part.
25.105 Applicability.
25.110 Exceptions to this part.
Subpart B--Policy
25.200 Requirements for notice of funding opportunities,
regulations, and application instructions.
25.205 Effect of noncompliance with a requirement to obtain a UEI or
register in SAM.gov.
25.210 Authority to modify agency application forms or formats.
25.215 Requirements for agency information systems.
25.220 Use of award term.
Subpart C--Recipient Requirements of Subrecipients
25.300 Requirement for recipients to ensure subrecipients have a
unique entity identifier.
Subpart D--Definitions
25.400 Definitions.
Appendix A to Part 25
Award Term
Authority: 31 U.S.C. 503; 31 U.S.C. 6102; 31 U.S.C. 6307; Pub.
L. 109-282; Pub. L. 110-252, Pub. L. 113-101, Pub. L. 117-40.
Subpart A--General
Sec. 25.100 Purpose of this part.
This part provides guidance to Federal agencies that:
(a) The unique entity identifier (UEI) is the universal identifier
for Federal financial assistance applicants, as well as recipients and
their direct subrecipients, and;
(b) The System for Award Management (SAM.gov) is the repository for
standard information about applicants and recipients.
Sec. 25.105 Applicability.
(a) This part applies to a Federal agency's Federal financial
assistance as defined in Sec. 25.400. This part applies to all
applicants for and recipients of Federal financial assistance unless
exempted by Federal statute or Sec. 25.110.
(b) Subrecipients are required to obtain a UEI in accordance with
subpart C. This part does not apply to subrecipients of subrecipients
(second-tier subrecipients) or contractors under Federal awards.
(c) This part does not apply to an individual who applies for or
receives Federal financial assistance as a natural person (unrelated to
any business or nonprofit organization an individual owns or operates).
(d) Because this part applies to loan guarantees and other
guaranteed programs, recipients of the guarantee from the Federal
agency (for example, lenders of guaranteed loans) are required to
complete entity validations and acquire a UEI. Additionally, at the
Federal agency's discretion, non-individual beneficiary borrowers (for
example, small businesses or corporations) may be required by the
Federal agency to obtain a UEI or register in SAM.gov.
Sec. 25.110 Exceptions to this part.
(a) General exceptions. (1) Under a condition identified in
paragraph (a)(2) of this section, a Federal agency may exempt an
applicant or recipient of Federal financial assistance from the
requirement to obtain a UEI, register in SAM.gov, or both.
(i) If a Federal agency grants an exception under paragraph (a)(2)
of this section, it must use a generic entity identifier in the data it
reports to USAspending.gov if reporting for a prime award of Federal
financial assistance to the recipient is required by the Federal
Funding Accountability and Transparency Act (Pub. L. 109-282, as
amended, hereafter cited as ``Transparency Act''). Granting an
exception under paragraph (a)(2) of this section does not impact a
Federal agency's responsibility for reporting under the Transparency
Act, except that it may use a generic entity identifier in the
circumstances described.
(ii) Federal agencies should use generic entity identifiers rarely
as it prevents recipients from fulfilling reporting requirements such
as subaward or executive compensation reporting required by the
Transparency Act.
(2) A Federal agency may exempt either an applicant or recipient
when:
(i) The Federal agency determines that it must protect information
about the entity from disclosure in the national security or foreign
policy interests of the United States or to avoid jeopardizing the
personal safety of the entity's staff, partners, beneficiaries, and
participants;
(ii) (A) All of the following conditions are met:
(1) the entity is a foreign organization or foreign public entity;
(2) the Federal award or subaward will be performed outside the
United States;
(3) the Federal award or subaward will be less than $25,000; and
(5) the Federal agency deems it to be impractical for the entity to
comply with the requirements of this part.
(B) The Federal agency must determine this exemption on a case-by-
case basis while utilizing a risk-based approach; or
(iii) For applicants, the Federal agency determines that there are
exigent circumstances that prohibit the applicant from receiving a UEI
and registering in SAM.gov before receiving a Federal award. In these
instances, Federal agencies must require the recipient to obtain a UEI
and complete registration in SAM.gov within 30 days of the Federal
award date.
(b) Class exceptions. OMB may approve additional exceptions for
classes of Federal awards, applicants, or recipients subject to the
requirements of this part when exceptions are not prohibited by
statute.
Subpart B--Policy
Sec. 25.200 Requirements for notice of funding opportunities,
regulations, and application instructions.
(a) A Federal agency that issues Federal financial assistance (see
Sec. 25.400) must include the requirements of paragraph (b) of this
section in each notice of funding opportunity, regulation, or other
issuance containing instructions for applicants that is issued on or
after the effective date of this guidance. A notice of funding
opportunity is any paper or electronic issuance that a Federal agency
uses to announce a funding opportunity, whether it is called a
``program announcement,'' ``notice of funding availability,'' ``broad
agency announcement,'' ``research announcement,'' ``solicitation,'' or
any other term.
(b) The notice of funding opportunity, regulation, or other
issuance must require each applicant that does not have an exemption
under Sec. 25.110 to:
(1) Be registered in SAM.gov before submitting an application;
(2) Maintain a current and active registration in SAM.gov at all
times during which it has an active Federal award or an application
under consideration by a Federal agency. The applicant must review and
update its information in SAM.gov annually from the date of initial
registration or subsequent updates to ensure it is current, accurate,
and complete. If applicable, this includes identifying the applicant's
immediate and highest-level owner and subsidiaries, as well as
providing information on all predecessors that have received a
[[Page 69403]]
Federal award or contract within the last three years; and
(3) Include its UEI in each application it submits to the Federal
agency.
(c) For the purposes of this policy: the applicant meets the
Federal agency's eligibility criteria and has the legal authority to
apply and receive the Federal award. For example, if a consortium
applies for a Federal award to be made to the consortium as the
recipient, the consortium must have a UEI. If a consortium is eligible
to receive funding under a Federal agency program, but the agency's
policy is to make the Federal award to a lead entity for the
consortium, the UEI of the lead applicant must be used.
Sec. 25.205 Effect of noncompliance with a requirement to obtain a
UEI or register in SAM.gov.
(a) Unless an entity is exempt under Sec. 25.110, a Federal agency
may not issue a Federal award or amend an existing Federal award if the
entity is not in compliance with the requirements of this part. This
does not apply to amendments to terminate or close out a Federal award.
(b) At the time a Federal agency is ready to make a Federal award,
if the intended recipient has not complied with the requirements to
obtain a UEI and maintain an active registration in SAM.gov with
current information, the Federal agency may make a Federal award to
another applicant.
Sec. 25.210 Authority to modify agency application forms or formats.
To implement the policies in Sec. Sec. 25.200 and 25.205, a
Federal agency may add a UEI field to information collections
previously approved by OMB, with no further approval required.
Sec. 25.215 Requirements for agency information systems.
Each Federal agency that awards Federal financial assistance (see
Sec. 25.400) must ensure that its information systems are able to both
accept and transmit the UEI as the universal identifier for Federal
financial assistance applicants and recipients.
Sec. 25.220 Use of award term.
(a) A Federal agency must include the award term in Appendix A in
all Federal financial assistance agreements (see Sec. 25.400) to
accomplish the purpose of Sec. 25.100.
(b) A Federal agency may use different letters and numbers than
those in Appendix A to designate the paragraphs of the award term.
Subpart C--Recipient Requirements of Subrecipients
Sec. 25.300 Requirement for recipients to ensure subrecipients have a
unique entity identifier.
(a) A recipient may not make a subaward to a subrecipient that has
not obtained a UEI and provided it to the recipient. Subrecipients are
not required to complete full registration in SAM.gov to obtain a UEI.
(b) A recipient must notify any potential subrecipients that the
recipient cannot make a subaward unless the subrecipient obtains and
provides a UEI to the recipient.
Subpart D--Definitions
Sec. 25.400 Definitions.
Terms not defined in this part shall have the same meaning as
provided in 2 CFR part 200, subpart A. As used in this part:
Applicant means any entity that applies for a Federal award
directly to a Federal agency.
Entity includes:
(1) Whether for profit or nonprofit:
(i) A corporation;
(ii) An association;
(iii) A partnership;
(iv) A limited liability company;
(v) A limited liability partnership;
(vi) A sole proprietorship;
(vii) Any other legal business entity;
(viii) Another grantee or contractor that is not excluded by
subparagraph (b); and
(ix) Any State or locality;
(2) Does not include:
(i) An individual recipient of Federal financial assistance; or
(ii) A Federal employee.
Federal Award means an award of Federal financial assistance that
an entity receives from a Federal agency.
Federal financial assistance:
(1) Means assistance that entities receive or administer in the
form of a:
(i) Grant;
(ii) Cooperative agreement (which does not include a cooperative
research and development agreement pursuant to the Federal Technology
Transfer Act of 1986, as amended (15 U.S.C. 3710a);
(iii) Loan;
(iv) Loan guarantee;
(v) Subsidy;
(vi) Insurance;
(vii) Food commodity;
(viii) Direct appropriation;
(ix) Assessed or voluntary contribution; or
(x) Any other financial assistance transaction that authorizes the
entity's expenditure of Federal funds.
(2) For the purposes of this part, the term ``Federal financial
assistance'' does not include:
(i) Technical assistance that provides services in lieu of money;
and
(ii) A transfer of title to federally-owned property provided in
lieu of money, even if the award is called a grant.
Recipient means an entity that receives or administers a Federal
Award directly from a Federal agency.
System for Award Management (SAM.gov) means the Federal repository
into which an entity must provide the information required for the
conduct of business as a recipient.
Unique entity identifier means the universal identifier assigned by
SAM.gov to uniquely identify an entity.
Appendix A to Part 25--Award Term
I. System for Award Management (SAM.gov) and Universal Identifier
Requirements
(a) Requirement for System for Award Management.
(1) Unless exempt from this requirement under 2 CFR 25.110, you
must maintain a current and active registration in SAM.gov. Your
registration must always be current and active until you submit all
final reports required under this Federal award or receive the final
payment, whichever is later. You must review and update your
information in SAM.gov at least annually from the date of your
initial registration or any subsequent updates to ensure it is
current, accurate, and complete. If applicable, this includes
identifying your immediate and highest-level owner and subsidiaries
and providing information about your predecessors that have received
a Federal award or contract within the last three years.
(b) Requirement for Unique Entity Identifier (UEI). (1) If you
are authorized to make subawards under this Federal award, you:
(i) Must notify potential subrecipients that no entity may
receive a subaward from you until the entity has provided its UEI to
you.
(ii) May not make a subaward to an entity unless the entity has
provided its UEI to you. Subrecipients are not required to complete
full registration in SAM.gov to obtain a UEI.
(c) Definitions. For the purposes of this award term:
System for Award Management (SAM.gov) means the Federal
repository into which a recipient must provide the information
required for the conduct of business as a recipient. Additional
information about registration procedures may be found in SAM.gov
(currently at https://www.sam.gov).
Unique entity identifier means the universal identifier assigned
by SAM.gov to uniquely identify an entity.
Entity is defined at 25 CFR 400 and includes all of the
following types as defined in 2 CFR 200.1:
(1) Non-Federal entity;
(2) Foreign organization;
(3) Foreign public entity;
(4) Domestic for-profit organization; and
(5) Federal agency.
Subaward has the meaning given in 2 CFR 200.1.
Subrecipient has the meaning given in 2 CFR 200.1.
[[Page 69404]]
0
5. Revise part 170 to read as follows:
PART 170--REPORTING SUBAWARD AND EXECUTIVE COMPENSATION INFORMATION
Sec.
Subpart A--General
170.100 Purpose of this part.
170.105 Applicability.
Subpart B--Policy
170.200 Federal agency reporting requirements.
170.210 Requirements for notices of funding opportunities,
regulations, and application instructions.
170.220 Use of award term.
Subpart C--Definitions
170.300 Definitions.
Appendix A to Part 170
Award term
Authority: 31 U.S.C. 503; 31 U.S.C. 6102; 31 U.S.C. 6307; Pub.
L. 109-282; Pub. L. 110-252, Pub. L. 113-101, Pub. L. 117-40.
Subpart A--General
Sec. 170.100 Purpose of this part.
This part provides guidance to Federal agencies on establishing
requirements for recipients of Federal awards to report information on
subawards and executive total compensation, as required by the Federal
Funding Accountability and Transparency Act of 2006 (Public Law 109-
282), as amended by the Digital Accountability and Transparency Act of
2014 (Public Law 113-101), hereafter referred to as the ``Transparency
Act.''
Sec. 170.105 Applicability.
(a) This part applies to a Federal agency's Federal financial
assistance as defined in Sec. 170.300. This part applies to all
recipients and subrecipients of Federal awards who meet the reporting
requirements of paragraph (c) of this section, unless exempt under
Federal statute or by paragraph (d) of this section.
(b) This part does not apply to an individual who applies for or
receives Federal financial assistance as a natural person (that is,
unrelated to any business or nonprofit organization an individual owns
or operates).
(c) Reporting Requirements. (1) The names and total compensation of
an entity's five most highly compensated executives must be reported
if:
(i) In the entity's preceding fiscal year, it received:
(A) 80 percent or more of its annual gross revenue in Federal
procurement contracts (and subcontracts) and Federal awards (and
subawards) subject to the Transparency Act, as defined at Sec.
170.300; and
(B) $25,000,000 or more in annual gross revenue from Federal
procurement contracts (and subcontracts) and Federal awards (and
subawards) subject to the Transparency Act, as defined at Sec.
170.300; and
(ii) The public does not have access to information about the
compensation of senior executives of the entity through periodic
reports filed under section 13(a) or 15(d) of the Securities Exchange
Act of 1934 (15 U.S.C. 78m(a), 78o(d)) or section 6104 of the Internal
Revenue Code of 1986.
(d) Class exceptions. OMB may approve additional exceptions for
classes of Federal awards or recipients when not prohibited by Federal
statute.
Subpart B--Policy
Sec. 170.200 Federal agency reporting requirements.
(a) Federal agencies must publicly report Federal awards that equal
or exceed the micro-purchase threshold (see 2 CFR 200.1). Federal
agencies must publish the required Federal award information on
USAspending.gov in accordance with the guidance provided by OMB and the
U.S. Department of the Treasury's DATA Act Information Model Schema
(DAIMS).
(b) Federal agencies should ensure that their agency-specific
requirements do not require recipients to submit data that is the same
as or similar to data required by the Transparency Act during a given
reporting period.
Sec. 170.210 Requirements for notices of funding opportunities,
regulations, and application instructions.
(a) A Federal agency that makes Federal awards subject to the
Transparency Act must include the requirements of paragraph (b) of this
section in each notice of funding opportunity, regulation, or other
issuance containing instructions for applicants under which Federal
awards may be made that are subject to Transparency Act reporting
requirements. A notice of funding opportunity is any paper or
electronic issuance that a Federal agency uses to announce a funding
opportunity, whether it is called a ``program announcement,'' ``notice
of funding availability,'' ``broad agency announcement,'' ``research
announcement,'' ``solicitation,'' or any other term.
(b) The notice of funding opportunity, regulation, or other
issuance must require each applicant, to which this part applies, to
have the necessary processes and systems in place to comply with this
part if they receive a Federal award.
Sec. 170.220 Use of award term.
(a) A Federal agency must include the award term in Appendix A to
this part in each Federal award to a recipient under which the total
funding is anticipated to equal or exceed $30,000 in Federal funding.
(b) Consistent with paragraph (a) of this section, a Federal agency
is not required to include the award term in Appendix A of this part if
the total amount of Federal funding under the Federal award will not
equal or exceed $30,000. However, the Federal agency must subsequently
add the award term if increases to the Federal funding result in the
award equaling or exceeding $30,000.
(c) A Federal agency may use different letters and numbers than
those in Appendix A to designate the paragraphs of the award term.
Subpart C--Definitions
Sec. 170.300 Definitions
Terms not defined in this part shall have the same meaning as
provided in 2 CFR part 200, subpart A. As used in this part:
Applicant means any entity that applies for a Federal award
directly from a Federal agency.
Entity includes:
(1) Whether for profit or nonprofit:
(i) A corporation;
(ii) An association;
(iii) A partnership;
(iv) A limited liability company;
(v) A limited liability partnership;
(vi) A sole proprietorship;
(vii) Any other legal business entity;
(viii) Another grantee or contractor that is not excluded by
subparagraph (2) or (3); and
(ix) Any State or locality;
(2) Does not include:
(i) An individual recipient of Federal financial assistance; or
(ii) A Federal employee.
Federal Award means an award of Federal financial assistance that
an entity receives from a Federal agency.
Executive means an officer, managing partner, or any other employee
holding a management position.
Federal financial assistance:
(1) Means assistance that entities receive or administer in the
form of a:
(i) Grant;
(ii) Cooperative agreement (which does not include a cooperative
research and development agreement pursuant to the Federal Technology
Transfer Act of 1986, as amended (15 U.S.C. 3710a);
(iii) Loan;
[[Page 69405]]
(iv) Loan guarantee;
(v) Subsidy;
(vi) Insurance;
(vii) Food commodity;
(viii) Direct appropriation;
(ix) Assessed or voluntary contribution; or
(x) Any other financial assistance transaction that authorizes the
entity's expenditure of Federal funds.
(2) For the purposes of this part, the term ``Federal financial
assistance'' does not include:
(i) Technical assistance that provides services in lieu of money;
(ii) A transfer of title to federally-owned property provided in
lieu of money, even if the award is called a grant;
(iii) Any classified Federal award; or
(iv) Any award funded in whole or in part with Recovery funds, as
defined in section 1512 of the American Recovery and Reinvestment Act
of 2009 (Pub. L. 111-5).
Recipient means an entity that receives or administers a Federal
Award directly from a Federal agency.
Total Compensation means the cash and noncash dollar value an
executive earns during an entity's preceding fiscal year. This includes
all items of compensation as prescribed in 17 CFR 29.402(c)(2).
Appendix A to Part 170--Award Term
I. Reporting Subawards and Executive Compensation
(a) Reporting of first-tier subawards--(1) Applicability. Unless
you are exempt as provided in paragraph (d) of this award term, you
must report each action that equals or exceeds $30,000 in Federal
funds for a subaward to an entity or Federal agency. You must
subsequently report an action if increases to the Federal funding
results in the subaward equaling or exceeding $30,000.
(2) Reporting Requirements. (i) The entity or Federal agency
must report each subaward described in paragraph (a)(1) of this
award term to the Federal Funding Accountability and Transparency
Act Subaward Reporting System (FSRS) at https://www.fsrs.gov.
(ii) For subaward information, report no later than the end of
the month following the month in which the subaward was made. (For
example, if the subaward was made on November 7, 2025, the subaward
must be reported by no later than December 31, 2025).
(b) Reporting total compensation of recipient executives for
entities--(1) Applicability. You must report the total compensation
for each of your five most highly compensated executives for the
preceding completed fiscal year if:
(i) The total Federal funding authorized to date under this
Federal award equals or exceeds $30,000;
(ii) in the preceding fiscal year, you received:
(A) 80 percent or more of your annual gross revenues from
Federal procurement contracts (and subcontracts) and Federal awards
(and subawards) subject to the Transparency Act; and
(B) $25,000,000 or more in annual gross revenues from Federal
procurement contracts (and subcontracts) and Federal awards (and
subawards) subject to the Transparency Act; and,
(iii) The public does not have access to information about the
compensation of the executives through periodic reports filed under
section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15
U.S.C. 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code
of 1986 after receiving this subaward. (To determine if the public
has access to the compensation information, see the U.S. Security
and Exchange Commission total compensation filings at https://www.sec.gov/answers/execomp.htm.)
(2) Reporting Requirements. You must report executive total
compensation described in paragraph (b)(1) of this appendix:
(i) As part of your registration profile at https://www.sam.gov.
(ii) No later than the month following the month in which this
Federal award is made, and annually after that. (For example, if
this Federal award was made on November 7, 2025, the executive total
compensation must be reported by no later than December 31, 2025.)
(c) Reporting of total compensation of subrecipient executives--
(1) Applicability. Unless a first-tier subrecipient is exempt as
provided in paragraph (d) of this appendix, you must report the
executive total compensation of each of the subrecipient's five most
highly compensated executives for the subrecipient's preceding
completed fiscal year, if:
(i) The total Federal funding authorized to date under the
subaward equals or exceeds $30,000;
(ii) In the subrecipient's preceding fiscal year, the
subrecipient received:
(A) 80 percent or more of its annual gross revenues from Federal
procurement contracts (and subcontracts) and Federal awards (and
subawards) subject to the Transparency Act; and,
(B) $25,000,000 or more in annual gross revenues from Federal
procurement contracts (and subcontracts), and Federal awards (and
subawards) subject to the Transparency Act; and
(iii) The public does not have access to information about the
compensation of the executives through periodic reports filed under
section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15
U.S.C. 78m(a), 78o(d)) or section 6104 of the Internal Revenue Code
of 1986 after receiving this subaward. (To determine if the public
has access to the compensation information, see the U.S. Security
and Exchange Commission total compensation filings at https://www.sec.gov/answers/execomp.htm.)
(2) Reporting Requirements. Subrecipients must report to you,
the recipient, their executive total compensation described in
paragraph (c)(1) of this appendix. You are required to submit this
information to the Federal Funding Accountability and Transparency
Act Subaward Reporting System (FSRS) at https://www.fsrs.gov no later
than the end of the month following the month in which the subaward
was made. (For example, if the subaward was made on November 7,
2025, the subaward must be reported by no later than December 31,
2025).
(d) Exemptions. (1) If in the previous tax year you had gross
income under $300,000, you are exempt from the requirements to
report:
(i) Subawards, and
(ii) The total compensation of the five most highly compensated
executives of any subrecipient.
(e) Definitions.
For purposes of this award term:
Entity includes:
(1) Whether for profit or nonprofit:
(i) A corporation;
(ii) An association;
(iii) A partnership;
(iv) A limited liability company;
(v) A limited liability partnership;
(vi) A sole proprietorship;
(vii) Any other legal business entity;
(viii) Another grantee or contractor that is not excluded by
subparagraph (2); and
(ix) Any State or locality;
(2) Does not include:
(i) An individual recipient of Federal financial assistance; or
(ii) A Federal employee.
Executive means an officer, managing partner, or any other
employee holding a management position.
Subaward has the meaning given in 2 CFR 200.1.
Subrecipient has the meaning given in 2 CFR 200.1.
Total Compensation means the cash and noncash dollar value an
executive earns during an entity's preceding fiscal year. This
includes all items of compensation as prescribed in 17 CFR
229.402(c)(2).
0
6. Revise part 175 to read as follows:
PART 175--AWARD TERM FOR TRAFFICKING IN PERSONS
Sec.
Subpart A--General
175.100 Purpose of this part.
175.105 Statutory requirement.
Subpart B--Guidance
175.200 Use of award term.
175.205 Referral.
Subpart C--Definitions
175.300 Definitions.
Appendix A to Part 175
Award term
Authority: 22 U.S.C. 7104(g); 22 U.S.C. 7104a; 22 U.S.C. 7104b;
22 U.S.C. 7104c; 31 U.S.C. 503; 31 U.S.C. 6307; 31 U.S.C. 1111; 41
U.S.C. 1121; Reorganization Plan No. 2 of 1970; E.O. 11541, 35 FR
10737.
Subpart A--General
Sec. 175.100 Purpose of this part.
This part establishes a Federal award term for grants and
cooperative
[[Page 69406]]
agreements to implement the requirements in 22 U.S.C. 7104(g).
Sec. 175.105 Statutory requirement.
(a) Federal agencies are required to include in each Federal grant
or cooperative agreement a condition that authorizes the Federal agency
to terminate the award, without penalty, if a private entity receiving
funds under the award as a recipient or subrecipient engages in:
(1) Severe forms of trafficking in persons;
(2) The procurement of a commercial sex act during the period of
time that the grant or cooperative agreement is in effect;
(3) The use of forced labor in the performance of the grant or
cooperative agreement; or
(4) Acts that directly support or advance trafficking in persons,
including the following acts:
(i) Destroying, concealing, removing, confiscating, or otherwise
denying an employee access to that employee's identity or immigration
documents;
(ii) Failing to provide return transportation or pay for return
transportation costs to an employee from a country outside the United
States to the country from which the employee was recruited upon the
end of employment if requested by the employee, unless:
(A) exempted from the requirement to provide or pay for such return
transportation by the Federal department or agency providing or
entering into the grant or cooperative agreement; or
(B) the employee is a victim of human trafficking seeking victim
services or legal redress in the country of employment or a witness in
a human trafficking enforcement action;
(iii) Soliciting a person for the purpose of employment, or
offering employment, by means of materially false or fraudulent
pretenses, representations, or promises regarding that employment;
(iv) Charging recruited employees a placement or recruitment fee;
or
(v) Providing or arranging housing that fails to meet the host
country's housing and safety standards.
(b) Compliance plan and certification requirement.
(1) Certification. Prior to receiving a grant or cooperative
agreement, if the estimated value of services required to be performed
under the grant or cooperative agreement outside the United States
exceeds $500,000, a recipient must certify that:
(i) The recipient has implemented a plan to prevent the activities
described in paragraph (a) of this section, and is in compliance with
this plan;
(ii) The recipient has implemented procedures to prevent any
activities described in paragraph (a) of this section and to monitor,
detect, and terminate any subcontractor, subgrantee, or employee of the
recipient engaging in any activities described in paragraph (a) of this
section; and
(iii) To the best of the recipient's knowledge, neither the
recipient, nor any subcontractor or subgrantee of the recipient or any
agent of the recipient or of such a subcontractor or subgrantee, is
engaged in any of the activities described in paragraph (a) of this
section.
(2) Annual certification. If the recipient receives the award, it
must submit an annual certification consistent with paragraph (b)(1) of
this section for each year the award is in effect.
(3) Compliance plan. Any plan or procedures implemented pursuant to
paragraph (b) must be appropriate to the size and complexity of the
grant or cooperative agreement and to the nature and scope of its
activities, including the number of non-United States citizens expected
to be employed.
(4) Copies of the compliance plan. The recipient must provide a
copy of the plan to the grant officer upon request, and as appropriate,
must post the useful and relevant contents of the plan or related
materials on its website and at the workplace.
(5) Minimum requirements of the compliance plan. The compliance
plan must include, at a minimum, the following:
(i) An awareness program to inform recipient employees about the
Government's policy prohibiting trafficking-related activities
described in paragraph (a) of this section, the activities prohibited,
and the actions that will be taken against the employee for violations.
Additional information about Trafficking in Persons and examples of
awareness programs can be found at the website for the Department of
State's Office to Monitor and Combat Trafficking in Persons at https://www.state.gov/j/tip/.
(ii) A process for employees to report, without fear of
retaliation, activity inconsistent with the policy prohibiting
trafficking in persons.
(iii) A recruitment and wage plan that only permits the use of
recruitment companies with trained employees, prohibits charging
recruitment fees to the employees or potential employees and ensures
that wages meet applicable host-country legal requirements or explains
any variance.
(iv) A housing plan, if the recipient, subrecipient, contractor, or
subcontractor intends to provide or arrange housing, that ensures that
the housing meets host-country housing and safety standards.
(v) Procedures to prevent agents, subrecipients, contractors, or
subcontractors at any tier and at any dollar value from engaging in
trafficking in persons, including activities in paragraph (a) of this
section, and to monitor, detect, and terminate any agents, subgrants,
or subrecipient, contractor, or subcontractor employees that have
engaged in such activities.
(c) Notification to Inspectors General and cooperation with
government. The head of a Federal agency making or awarding a grant or
cooperative agreement must require that the recipient of the grant or
cooperative agreement:
(1) Immediately inform the Inspector General of the Federal agency
of any information it receives from any source that alleges credible
information that the recipient, any subcontractor or subgrantee of the
recipient, or any agent of the recipient or of such a subcontractor or
subgrantee, has engaged in conduct described in paragraph (a) of this
section; and
(2) Fully cooperate with any Federal agencies responsible for
audits, investigations, or corrective actions relating to trafficking
in persons.
Subpart B--Guidance
Sec. 175.200 Use of award term.
(a) To implement the requirements of 22 U.S.C. 7104(g) a Federal
agency must include the award term in Appendix A of this part for the
following Federal awards:
(1) A grant or cooperative agreement to a private entity, as
defined in Sec. 175.300; and
(2) A grant or cooperative agreement to a State, local government,
Indian Tribe, foreign public entity, or any other recipient if funding
under the award could be provided to a subrecipient that is a private
entity.
(b) A Federal agency may use different letters and numbers than
those in Appendix A to designate the paragraphs of the award term.
Sec. 175.205 Referral.
A Federal agency official should inform the agency's suspension and
debarment official if an award is terminated based on a violation of a
prohibition in the award term under Appendix A.
[[Page 69407]]
Subpart C--Definitions
Sec. 175.300 Definitions.
Terms not defined in this part shall have the same meaning as
provided in 2 CFR part 200, subpart A. As used in this part:
Abuse or threatened abuse of law or legal process means the use or
threatened use of a law or legal process, whether administrative,
civil, or criminal, in any manner or for any purpose for which the law
was not designed, in order to exert pressure on another person to cause
that person to take some action or refrain from taking some action.
Coercion means:
(1) Threats of serious harm to or physical restraint against any
person;
(2) Any scheme, plan, or pattern intended to cause a person to
believe that failure to perform an act would result in serious harm to
or physical restraint against any person; or
(3) The abuse or threatened abuse of the legal process.
Commercial sex act means any sex act on account of which anything
of value is given to or received by any person.
Debt bondage means the status or condition of a debtor arising from
a pledge by the debtor of his or her personal services or of those of a
person under his or her control as a security for debt, if the value of
those services as reasonably assessed is not applied toward the
liquidation of the debt or the length and nature of those services are
not respectively limited and defined.
Involuntary servitude includes a condition of servitude induced by
means of:
(1) Any scheme, plan, or pattern intended to cause a person to
believe that, if the person did not enter into or continue in such
condition, that person or another person would suffer serious harm or
physical restraint; or
(2) The abuse or threatened abuse of the legal process.
Private Entity means any entity, including for-profit
organizations, nonprofit organizations, institutes of higher education,
and hospitals. The term does not include foreign public entities,
Indian Tribes, local governments, or states as defined in 2 CFR 200.1.
Recruitment Fee means fees of any type, including charges, costs,
assessments, or other financial obligations, that are associated with
the recruiting process, regardless of the time, manner, or location of
imposition or collection of the fee.
(1) Recruitment fees include, but are not limited to, the following
fees (when they are associated with the recruiting process) for:
(i) Advertising;
(ii) Obtaining permanent or temporary labor certification,
including any associated fees;
(iii) Processing applications and petitions;
(iv) Acquiring visas, including any associated fees;
(v) Acquiring photographs and identity or immigration documents,
such as passports, including any associated fees;
(vi) Accessing the job opportunity, including required medical
examinations and immunizations; background, reference, and security
clearance checks and examinations; and additional certifications;
(vii) An employer's recruiters, agents or attorneys, or other
notary or legal fees;
(viii) Language interpretation or translation, arranging for or
accompanying on travel, or providing other advice to employees or
potential employees;
(ix) Government-mandated fees, such as border crossing fees,
levies, or worker welfare fund;
(x) Transportation and subsistence costs:
(A) While in transit, including, but not limited to, airfare or
costs of other modes of transportation, terminal fees, and travel taxes
associated with travel from the country of origin to the country of
performance and the return journey upon the end of employment; and
(B) From the airport or disembarkation point to the worksite;
(xi) Security deposits, bonds, and insurance; and
(xii) Equipment charges.
(2) A recruitment fee, as described in the introductory text of
this definition, is a recruitment fee, regardless of whether the
payment is:
(i) Paid in property or money;
(ii) Deducted from wages;
(iii) Paid back in wage or benefit concessions;
(iv) Paid back as a kickback, bribe, in-kind payment, free labor,
tip, or tribute; or
(v) Collected by an employer or a third party, whether licensed or
unlicensed, including, but not limited to:
(A) Agents;
(B) Labor brokers;
(C) Recruiters;
(D) Staffing firms (including private employment and placement
firms);
(E) Subsidiaries/affiliates of the employer;
(F) Any agent or employee of such entities; and
(G) Subcontractors at all tiers.
Severe forms of trafficking in persons means:
(1) Sex trafficking in which a commercial sex act is induced by
force, fraud, or coercion or in which the person induced to perform
such act has not attained 18 years of age; or
(2) The recruitment, harboring, transportation, provision, or
obtaining of a person for labor or services, through the use of force,
fraud, or coercion for the purpose of subjection to involuntary
servitude, peonage, debt bondage or slavery.
Sex trafficking means the recruitment, harboring, transportation,
provision, obtaining, patronizing, or soliciting of a person for the
purpose of a commercial sex act.
Appendix A to Part 175--Award Term
I. Trafficking in persons.
(a) Provisions applicable to a recipient that is a private
entity. (1) Under this award, you as the recipient, your employees,
subrecipients under this award, and subrecipient's employees may not
engage in:
(i) Severe forms of trafficking in persons;
(ii) The procurement of a commercial sex act during the period
of time that this award or any subaward is in effect;
(iii) The use of forced labor in the performance of this award
or any subaward; or
(iv) Acts that directly support or advance trafficking in
persons, including the following acts:
(A) Destroying, concealing, removing, confiscating, or otherwise
denying an employee access to that employee's identity or
immigration documents;
(B) Failing to provide return transportation or pay for return
transportation costs to an employee from a country outside the
United States to the country from which the employee was recruited
upon the end of employment if requested by the employee, unless:
(1) Exempted from the requirement to provide or pay for such
return transportation by the Federal department or agency providing
or entering into the grant or cooperative agreement; or
(2) The employee is a victim of human trafficking seeking victim
services or legal redress in the country of employment or a witness
in a human trafficking enforcement action;
(C) Soliciting a person for the purpose of employment, or
offering employment, by means of materially false or fraudulent
pretenses, representations, or promises regarding that employment;
(D) Charging recruited employees a placement or recruitment fee;
or
(E) Providing or arranging housing that fails to meet the host
country's housing and safety standards.
(2) We as the awarding Federal agency may unilaterally terminate
this award, without penalty, if any private entity under this award:
[[Page 69408]]
(i) Is determined to have violated a prohibition in paragraph
(a)(1) of this appendix; or
(ii) Has an employee that is determined to have violated a
prohibition in paragraph (a)(1) of this this appendix through
conduct that is either:
(A) Associated with the performance under this award; or
(B) Imputed to you or the subrecipient using the standards and
due process for imputing the conduct of an individual to an
organization that are provided in 2 CFR part 180, ``OMB Guidelines
to Agencies on Government-wide Debarment and Suspension
(Nonprocurement),'' as implemented by our agency at [agency must
insert reference here to its regulatory implementation of the OMB
guidelines in 2 CFR part 180 (for example, ``2 CFR part XX'')].
(b) Provision applicable to a recipient other than a private
entity. (1) We as the awarding Federal agency may unilaterally
terminate this award, without penalty, if a subrecipient that is a
private entity under this award:
(i) Is determined to have violated a prohibition in paragraph
(a)(1) of this appendix; or
(ii) Has an employee that is determined to have violated a
prohibition in paragraph (a)(1) of this appendix through conduct
that is either:
(A) Associated with the performance under this award; or
(B) Imputed to the subrecipient using the standards and due
process for imputing the conduct of an individual to an organization
that are provided in 2 CFR part 180, ``OMB Guidelines to Agencies on
Government-wide Debarment and Suspension (Nonprocurement),'' as
implemented by our agency at [agency must insert reference here to
its regulatory implementation of the OMB guidelines in 2 CFR part
180 (for example, ``2 CFR part XX'')].
(c) Provisions applicable to any recipient. (1) You must inform
us immediately of any information you receive from any source
alleging a violation of a prohibition in paragraph (a)(1) of this
appendix.
(2) Our right to unilaterally terminate this award as described
in paragraphs (a)(2) or (b)(1) of this appendix:
(i) Implements the requirements of 22 U.S.C. 78, and
(ii) Is in addition to all other remedies for noncompliance that
are available to us under this award.
(3) You must include the requirements of paragraph (a)(1) of
this award term in any subaward you make to a private entity.
(d) Definitions. For purposes of this award term:
Employee means either:
(1) An individual employed by you or a subrecipient who is
engaged in the performance of the project or program under this
award; or
(2) Another person engaged in the performance of the project or
program under this award and not compensated by you including, but
not limited to, a volunteer or individual whose services are
contributed by a third party as an in-kind contribution toward cost
sharing requirements.
Private Entity means any entity, including for-profit
organizations, nonprofit organizations, institutions of higher
education, and hospitals. The term does not include foreign public
entities, Indian Tribes, local governments, or states as defined in
2 CFR 200.1.
The terms ``severe forms of trafficking in persons,''
``commercial sex act,'' ``sex trafficking,'' ``Abuse or threatened
abuse of law or legal process,'' ``coercion,'' ``debt bondage,'' and
``involuntary servitude'' have the meanings given at section 103 of
the TVPA, as amended (22 U.S.C. 7102).
0
7. Revise part 180 to read as follows:
PART 180--OMB GUIDELINES TO AGENCIES ON GOVERNMENT-WIDE DEBARMENT
AND SUSPENSION (NONPROCUREMENT)
Sec.
180.5 What does this part do?
180.10 How is this part organized?
180.15 To whom does the guidance apply?
180.20 What must a Federal agency do to implement these guidelines?
180.25 What must a Federal agency address in its implementation of
the guidance?
180.30 Where does a Federal agency implement these guidelines?
180.40 How are these guidelines maintained?
180.45 Do these guidelines cover persons who are disqualified, as
well as those who are excluded from nonprocurement transactions?
Subpart A--General
180.100 How are subparts A through I organized?
180.105 How is this part written?
180.110 Do terms in this part have special meanings?
180.115 What do subparts A through I of this part do?
180.120 Do subparts A through I of this part apply to me?
180.125 What is the purpose of the nonprocurement debarment and
suspension system?
180.130 How does an exclusion restrict a person's involvement in
covered transactions?
180.135 May a Federal agency grant an exception to let an excluded
person participate in a covered transaction?
180.140 Does an exclusion under the nonprocurement system affect a
person's eligibility for Federal procurement contracts?
180.145 Does an exclusion under the Federal procurement system
affect a person's eligibility to participate in nonprocurement
transactions?
180.150 Against whom may a Federal agency take an exclusion action?
180.155 How do I know if a person is excluded?
Subpart B--Covered Transactions
180.200 What is a covered transaction?
180.205 Why is it important if a particular transaction is a covered
transaction?
180.210 Which nonprocurement transactions are covered transactions?
180.215 Which nonprocurement transactions are not covered
transactions?
180.220 Are any procurement contracts included as covered
transactions?
180.225 How do I know if a transaction in which I may participate is
a covered transaction?
Subpart C--Responsibilities of Participants Regarding Transactions
Doing Business With Other Persons
180.300 What must I do before I enter into a covered transaction
with another person at the next lower tier?
180.305 May I enter into a covered transaction with an excluded or
disqualified person?
180.310 What must I do if a Federal agency excludes a person with
whom I am already doing business in a covered transaction?
180.315 May I use the services of an excluded person as a principal
under a covered transaction?
180.320 Must I verify that principals of my covered transactions are
eligible to participate?
180.325 What happens if I do business with an excluded person in a
covered transaction?
180.330 What requirements must I pass down to persons at lower tiers
with whom I intend to do business?
Disclosing Information--Primary Tier Participants
180.335 What information must I provide before entering into a
covered transaction with a Federal agency?
180.340 If I disclose unfavorable information required under Sec.
180.335, will I be prevented from participating in the transaction?
180.345 What happens if I fail to disclose information required
under Sec. 180.335?
180.350 What must I do if I learn of information required under
Sec. 180.335 after entering into a covered transaction with a
Federal agency?
Disclosing Information--Lower Tier Participants
180.355 What information must I provide to a higher tier participant
before entering into a covered transaction with that participant?
180.360 What happens if I fail to disclose information required
under Sec. 180.355?
180.365 What must I do if I learn of information required under
Sec. 180.355 after entering into a covered transaction with a
higher tier participant?
Subpart D--Responsibilities of Federal Agency Officials Regarding
Transactions
180.400 May I enter into a transaction with an excluded or
disqualified person?
180.405 May I enter into a covered transaction with a participant if
a principal of the transaction is excluded?
180.410 May I approve a participant's use of the services of an
excluded person?
180.415 What must I do if a Federal agency excludes the participant
or a principal after I enter into a covered transaction?
[[Page 69409]]
180.420 May I approve a transaction with an excluded or disqualified
person at a lower tier?
180.425 When do I check to see if a person is excluded or
disqualified?
180.430 How do I check to see if a person is excluded or
disqualified?
180.435 What must I require of a primary tier participant?
180.440 What action may I take if a primary tier participant
knowingly does business with an excluded or disqualified person?
180.445 What action may I take if a primary tier participant fails
to disclose the information required under Sec. 180.335?
180.450 What action may I take if a lower tier participant fails to
disclose the information required under Sec. 180.355 to the next
higher tier?
Subpart E--System for Award Management (SAM.gov) Exclusions
180.500 What is the purpose of the System for Award Management
(SAM.gov) Exclusions?
180.505 Who uses SAM.gov Exclusions?
180.510 Who maintains SAM.gov Exclusions?
180.515 What specific information is in SAM.gov Exclusions?
180.520 Who places the information into SAM.gov Exclusions?
180.525 Whom do I ask if I have questions about a person in SAM.gov
Exclusions?
180.530 Where can I find SAM.gov Exclusions?
Subpart F--General Principles Relating to Suspension and Debarment
Actions
180.600 How do suspension and debarment actions start?
180.605 How does suspension differ from debarment?
180.610 What procedures does a Federal agency use in suspension and
debarment actions?
180.615 How does a Federal agency notify a person of a suspension or
debarment action?
180.620 Do Federal agencies coordinate suspension and debarment
actions?
180.625 What is the scope of a suspension or debarment?
180.630 May a Federal agency impute the conduct of one person to
another?
180.635 May a Federal agency resolve an administrative action in
lieu of debarment or suspension?
180.640 May a settlement include a voluntary exclusion?
180.645 Do other Federal agencies know if an agency agrees to a
voluntary exclusion?
180.650 May an administrative agreement be the result of a
settlement?
180.655 How will other Federal awarding agencies know about an
administrative agreement that is the result of a settlement?
180.660 Will administrative agreement information about me in
SAM.gov be corrected or updated?
Subpart G--Suspension
180.700 When may the suspending official issue a suspension?
180.705 What does the suspending official consider in issuing a
suspension?
180.710 When does a suspension take effect?
180.715 What notice does the suspending official give me if I am
suspended?
180.720 How may I contest a suspension?
180.725 How much time do I have to contest a suspension?
180.730 What information must I provide to the suspending official
if I contest the suspension?
180.735 Under what conditions do I get an additional opportunity to
challenge the facts on which the suspension is based?
180.740 Are suspension proceedings formal?
180.745 How is fact-finding conducted?
180.750 What does the suspending official consider in deciding
whether to continue or terminate my suspension?
180.755 When will I know whether the suspension is continued or
terminated?
180.760 How long may my suspension last?
Subpart H--Debarment
180.800 What are the causes for debarment?
180.805 What notice does the debarring official give me if I am
proposed for debarment?
180.810 When does a debarment take effect?
180.815 How may I contest a proposed debarment?
180.820 How much time do I have to contest a proposed debarment?
180.825 What information must I provide to the debarring official if
I contest the proposed debarment?
180.830 Under what conditions do I get an additional opportunity to
challenge the facts on which the proposed debarment is based?
180.835 Are debarment proceedings formal?
180.840 How is fact-finding conducted?
180.845 What does the debarring official consider in deciding
whether to debar me?
180.850 What is the standard of proof in a debarment action?
180.855 Who has the burden of proof in a debarment action?
180.860 What factors may influence the debarring official's
decision?
180.865 How long may my debarment last?
180.870 When do I know if the debarring official debars me?
180.875 May I ask the debarring official to reconsider a decision to
debar me?
180.880 What factors may influence the debarring official during
reconsideration?
180.885 May the debarring official extend a debarment?
Subpart I--Definitions
180.900 Adequate evidence.
180.905 Affiliate.
180.910 Agent or representative.
180.915 Civil judgment.
180.920 Conviction.
180.925 Debarment.
180.930 Debarring official.
180.935 Disqualified.
180.940 Excluded or exclusion.
180.945 System for Award Management Exclusions (SAM.gov) Exclusions.
180.950 Federal agency.
180.955 Indictment.
180.960 Ineligible or ineligibility.
180.965 Legal proceedings.
180.970 Nonprocurement transaction.
180.975 Notice.
180.980 Participant.
180.985 Person.
180.990 Preponderance of the evidence.
180.995 Principal.
180.1000 Respondent.
180.1005 State.
180.1010 Suspending official.
180.1015 Suspension.
180.1020 Voluntary exclusion or voluntarily excluded.
Appendix A to Part 180
Covered Transactions
Authority: 31 U.S.C. 503; 31 U.S.C. 6102; 31 U.S.C. 6307; Pub.
L. 103-355; Pub. L. 109-282; Pub. L. 110-252; Pub. L. 111-84; Pub.
L. 113-101; Pub. L. 115-232; Pub. L. 117-40; E.O. 12549; E.O. 12689.
Sec. 180.5 What does this part do?
This part provides guidance for Federal agencies on how to
implement the government-wide debarment and suspension system for
nonprocurement programs and activities.
Sec. 180.10 How is this part organized?
This part is organized into two segments.
(a) Sections 180.5 through 180.45 contain general policy direction
for Federal agencies' use of the standards in subparts A through I.
(b) Subparts A through I contain uniform government-wide standards
that Federal agencies are to use to specify:
(1) The types of transactions that are covered by the
nonprocurement debarment and suspension system;
(2) The effects of an exclusion under that nonprocurement system,
including reciprocal effects with the government-wide debarment and
suspension system for procurement;
(3) The criteria and minimum due process to be used in
nonprocurement debarment and suspension actions; and
(4) Related policies and procedures to ensure the effectiveness of
those actions.
Sec. 180.15 To whom does the guidance apply?
This part provides guidance to Federal agencies. Publication of
this guidance in the Code of Federal Regulations (CFR) does not change
its nature--it is guidance and not regulation. Federal agencies'
implementation of this guidance governs the rights and responsibilities
of other persons affected by the nonprocurement debarment and
suspension system.
[[Page 69410]]
Sec. 180.20 What must a Federal agency do to implement these
guidelines?
As Section 3 of Executive Order 12549 requires, each Federal agency
with nonprocurement programs and activities covered by subparts A
through I of the guidance must issue regulations consistent with those
subparts.
Sec. 180.25 What must a Federal agency address in its implementation
of the guidance?
Each Federal agency's implementing regulation:
(a) Must establish policies and procedures for that Federal
agency's nonprocurement debarment and suspension programs and
activities consistent with this guidance. When adopted by a Federal
agency, the provisions of the guidance have a regulatory effect on that
Federal agency's programs and activities.
(b) Must address some matters for which these guidelines give each
Federal agency some discretion. Specifically, the regulation must:
(1) Identify either the Federal agency head or the title of the
designated official who is authorized to grant exceptions under Sec.
180.135 to let an excluded person participate in a covered transaction.
(2) State whether the Federal agency includes as covered
transactions an additional tier of contracts awarded under covered
nonprocurement transactions, as permitted under Sec. 180.220(c).
(3) Identify the method(s) a Federal agency official may use when
entering into a covered transaction with a primary tier participant to
communicate to the participant the requirements described in Sec.
180.435. Examples of methods are an award term that requires compliance
as a condition of the award, an assurance of compliance obtained at the
time of application, or a certification.
(4) State whether the Federal agency specifies a particular method
that participants must use to communicate compliance requirements to
lower tier participants, as described in Sec. 180.330(a). If there is
a specified method, the regulation must require Federal agency
officials to communicate that requirement when entering into covered
transactions with primary tier participants.
(c) May also, at the Federal agency's option:
(1) Identify any specific types of transactions the Federal agency
includes as ``nonprocurement transactions'' in addition to the examples
provided in Sec. 180.970.
(2) Identify any types of nonprocurement transactions that the
Federal agency exempts from coverage under these guidelines, as
authorized under Sec. 180.215(g)(2).
(3) Identify specific examples of types of individuals who would be
``principals'' under the Federal agency's nonprocurement programs and
transactions, in addition to the types of individuals described in
Sec. 180.995.
(4) Specify the Federal agency's procedures, if any, by which a
respondent may appeal a suspension or debarment decision.
(5) Identify by title the officials designated by the Federal
agency head as debarring officials under Sec. 180.930 or suspending
officials under Sec. 180.1010.
(6) Include a subpart covering disqualifications, as authorized in
Sec. 180.45.
(7) Include any provisions authorized by OMB.
Sec. 180.30 Where does a Federal agency implement these guidelines?
Each Federal agency that participates in the government-wide
nonprocurement debarment and suspension system must issue a regulation
implementing these guidelines within its chapter in subtitle B of this
title.
Sec. 180.40 How are these guidelines maintained?
The Interagency Committee on Debarment and Suspension, established
by section 4 of Executive Order 12549, recommends to the OMB any needed
revisions to the guidelines in this part. The OMB publishes proposed
changes to the guidelines in the Federal Register for public comment,
considers comments with the help of the Interagency Committee on
Debarment and Suspension, and issues the final guidelines.
Sec. 180.45 Do these guidelines cover persons who are disqualified,
as well as those who are excluded from nonprocurement transactions?
A Federal agency may add a subpart covering disqualifications to
its regulation implementing these guidelines, but the guidelines in
subparts A through I:
(a) Address disqualified persons only to:
(1) Provide for their inclusion in the System for Award Management
(SAM.gov) Exclusions; and
(2) State the responsibilities of Federal agencies and participants
to check for disqualified persons before entering into covered
transactions.
(b) Do not specify the:
(1) Transactions for which a disqualified person is ineligible.
Those transactions vary on a case-by-case basis because they depend on
the language of the specific statute, Executive order, or regulation
that caused the disqualification;
(2) Entities to which a disqualification applies; or
(3) Process that a Federal agency uses to disqualify a person.
Unlike exclusion under subparts A through I of this part,
disqualification is frequently not a discretionary action that a
Federal agency takes and may include special procedures.
Subpart A--General
Sec. 180.100 How are subparts A through I organized?
(a) Each subpart contains information related to a broad topic or
specific audience with special responsibilities, as shown in table 1:
Table 1 to Paragraph (a)
------------------------------------------------------------------------
In subpart . . . You will find provisions related to . . .
------------------------------------------------------------------------
A........................... general information about Subparts A
through I.
B........................... the types of transactions that are covered
by the government-wide nonprocurement
suspension and debarment system.
C........................... the responsibilities of persons who
participate in covered transactions.
D........................... the responsibilities of Federal agency
officials who are authorized to enter
into covered transactions.
E........................... the responsibilities of Federal agencies
for entering information into SAM.gov
Exclusions.
F........................... the general principles governing
suspension, debarment, voluntary
exclusion and settlement.
G........................... suspension actions.
H........................... debarment actions.
I........................... definitions of terms used in this part.
------------------------------------------------------------------------
[[Page 69411]]
(b) Table 2 shows which subparts may be of special interest to you,
depending on who you are:
Table 2 to Paragraph (b)
------------------------------------------------------------------------
If you are . . . See subpart(s) . . .
------------------------------------------------------------------------
(1) a participant or principal in a A, B, C and I.
nonprocurement transaction.
(2) a respondent in a suspension action. A, B, F, G and I.
(3) a respondent in a debarment action.. A, B, F, H and I.
(4) a suspending official............... A, B, E, F, G and I.
(5) a debarring official................ A, B, D, F, H and I.
(6) a Federal agency official authorized A, B, D, E and I.
to enter into a covered transaction.
------------------------------------------------------------------------
Sec. 180.105 How is this part written?
(a) This part uses a ``plain language'' format to make it easier
for the general public and business community. The section headings and
text must be read together, as they are often in the form of questions
and answers.
(b) Pronouns used within this part, such as ``I'' and ``you,''
change from subpart to subpart depending on the audience being
addressed.
(c) The ``Covered Transactions'' diagram in the appendix to this
part shows the levels or ``tiers'' at which a Federal agency may
enforce an exclusion.
Sec. 180.110 Do terms in this part have special meanings?
This part uses terms throughout the text that have special
meanings. Those terms are defined in subpart I. For example, three
important terms are:
(a) Exclusion or excluded, which refers only to discretionary
actions taken by a suspending or debarring official under Executive
Order 12549 and Executive Order 12689 or under the Federal Acquisition
Regulations (48 CFR part 9, subpart 9.4);
(b) Disqualification or disqualified, which refers to prohibitions
under specific statutes, executive orders (other than Executive Order
12549 and Executive Order 12689), or other authorities.
Disqualifications frequently are not subject to the discretion of a
Federal agency official, may have a different scope than exclusions, or
have special conditions that apply to the disqualification; and
(c) Ineligibility or ineligible, which generally refers to a person
who is either excluded or disqualified.
Sec. 180.115 What do subparts A through I of this part do?
Subparts A through I provide for the reciprocal exclusion of
persons who have been excluded under the Federal Acquisition
Regulations and provide for the consolidated listing of all persons who
are excluded, or disqualified by statute, executive order or other
legal authority.
Sec. 180.120 Do subparts A through I of this part apply to me?
Portions of subparts A through I (see table at Sec. 180.100(b))
apply to you if you are a:
(a) Person who has been, is, or may reasonably be expected to be, a
participant or principal in a covered transaction;
(b) Respondent (a person against whom a Federal agency has
initiated a debarment for suspension action);
(c) Federal agency debarring or suspending official; or
(d) Federal agency official who is authorized to enter into covered
transactions with non-Federal parties.
Sec. 180.125 What is the purpose of the nonprocurement debarment and
suspension system?
(a) To protect the public interest, the Federal Government ensures
the integrity of Federal programs by conducting business only with
responsible persons.
(b) A Federal agency uses the nonprocurement debarment and
suspension system to exclude persons who are not presently responsible
from Federal programs.
(c) An exclusion is a serious action that a Federal agency may take
only to protect the public interest. A Federal agency may not exclude a
person or commodity for the purposes of punishment.
Sec. 180.130 How does an exclusion restrict a person's involvement in
covered transactions?
With the exceptions stated in Sec. Sec. 180.135, 315, and 420, a
person who is excluded by any Federal agency may not:
(a) Be a participant in a Federal agency transaction that is a
covered transaction; or
(b) Act as a principal of a person participating in one of those
covered transactions.
Sec. 180.135 May a Federal agency grant an exception to let an
excluded person participate in a covered transaction?
(a) A Federal agency head or designee may grant an exception
permitting an excluded person to participate in a particular covered
transaction. If the Federal agency head or designee grants an
exception, the exception must be in writing and state the reason(s) for
deviating from the government-wide policy in Executive Order 12549.
(b) An exception granted by one Federal agency for an excluded
person does not extend to the covered transactions of another Federal
agency.
Sec. 180.140 Does an exclusion under the nonprocurement system affect
a person's eligibility for Federal procurement contracts?
When a Federal agency excludes a person under Executive Order 12549
or Executive Order 12689 on or after August 25, 1995, the excluded
person is also ineligible for Federal procurement transactions under
the Federal Acquisition Regulations. Therefore, an exclusion under this
part has a reciprocal effect on Federal procurement transactions.
Sec. 180.145 Does an exclusion under the Federal procurement system
affect a person's eligibility to participate in nonprocurement
transactions?
When a Federal agency excludes a person under the Federal
Acquisition Regulations (FAR) on or after August 25, 1995, the excluded
person is also ineligible to participate in Federal agencies'
nonprocurement covered transactions. Therefore, an exclusion under the
FAR has a reciprocal effect on Federal nonprocurement transactions.
Sec. 180.150 Against whom may a Federal agency take an exclusion
action?
Given a cause that justifies an exclusion under this part, a
Federal agency may exclude any person who has been, is, or may
reasonably be expected to be a participant or principal in a covered
transaction.
[[Page 69412]]
Sec. 180.155 How do I know if a person is excluded?
Check the System for Award Management (SAM.gov) Exclusions to
determine whether a person is excluded. The General Services
Administration (GSA) maintains SAM.gov Exclusions and makes it
available, as detailed in subpart E. When a Federal agency takes action
to exclude a person under the nonprocurement or procurement debarment
and suspension system, the agency enters the information about the
excluded person into SAM.gov Exclusions.
Subpart B--Covered Transactions
Sec. 180.200 What is a covered transaction?
A covered transaction is a nonprocurement or procurement
transaction subject to this part's prohibitions. It may be a
transaction at:
(a) The primary tier, between a Federal agency and a person (see
Appendix to this part); or
(b) A lower tier between a participant in a covered transaction and
another person.
Sec. 180.205 Why is it important if a particular transaction is a
covered transaction?
The importance of whether a transaction is a covered transaction
depends upon who you are.
(a) As a participant in the transaction, you have the
responsibilities laid out in subpart C of this part. Those include
responsibilities to the person or Federal agency at the next higher
tier from whom you received the transaction, if any. They also include
responsibilities if you subsequently enter into other covered
transactions with persons at the next lower tier.
(b) As a Federal official who enters into a primary tier
transaction, you have the responsibilities laid out in subpart D of
this part.
(c) As an excluded person, you may not be a participant or
principal in the transaction unless:
(1) The person who entered into the transaction with you allows you
to continue your involvement in a transaction that predates your
exclusion, as permitted under Sec. 180.310 or Sec. 180.415; or
(2) A Federal agency official obtains an exception from the agency
head or designee to allow you to be involved in the transaction, as
permitted under Sec. 180.135.
Sec. 180.210 Which nonprocurement transactions are covered
transactions?
All nonprocurement transactions, as defined in Sec. 180.970, are
covered transactions unless listed in the exemptions under Sec.
180.215.
Sec. 180.215 Which nonprocurement transactions are not covered
transactions?
The following types of nonprocurement transactions are not covered
transactions:
(a) A direct award to:
(1) A foreign government or foreign governmental entity;
(2) A public international organization;
(3) An entity owned (in whole or in part) or controlled by a
foreign government; or
(4) Any other entity consisting wholly or partially of one or more
foreign governments or foreign governmental entities.
(b) A benefit to an individual as a personal entitlement without
regard to the individual's present responsibility (but benefits
received in an individual's business capacity are not excepted). For
example, when a person receives social security benefits under the
Supplemental Security Income provisions of the Social Security Act, 42
U.S.C. 1301 et seq., those benefits are not covered transactions and,
therefore, are not affected if the person is excluded.
(c) Federal employment.
(d) A transaction that a Federal agency needs to respond to a
national or agency recognized emergency or disaster.
(e) A permit, license, certificate, or similar instrument issued as
a means to regulate public health, safety, or the environment, unless a
Federal agency specifically designates it to be a covered transaction.
(f) An incidental benefit that results from ordinary governmental
operations.
(g) Any other transaction if:
(1) The application of an exclusion to the transaction is
prohibited by law; or
(2) A Federal agency's regulation exempts it from coverage under
this part.
(h) Notwithstanding paragraph (a) of this section, covered
transactions must include non-procurement and procurement transactions
involving entities engaged in activity that contributed to or is a
significant factor in a country's non-compliance with its obligations
under arms control, nonproliferation or disarmament agreements, or
commitments with the United States. Federal agencies and primary tier
non-procurement recipients must not award, renew, or extend a non-
procurement transaction or procurement transaction, regardless of
amount or tier, with any entity listed in SAM.gov Exclusions on the
basis of involvement in activities that violate arms control,
nonproliferation or disarmament agreements, or commitments with the
United States (see section 1290 of the National Defense Authorization
Act for Fiscal Year 2017). The head of a Federal agency may grant an
exception to this requirement under 2 CFR 180.135 and with the
concurrence of the OMB Director.
Sec. 180.220 Are any procurement contracts included as covered
transactions?
(a) Covered transactions under this part:
(1) Do not include any procurement contracts awarded directly by a
Federal agency; but
(2) Do include some procurement contracts awarded under
nonprocurement covered transactions.
(b) Specifically, a contract for goods or services is a covered
transaction if any of the following applies:
(1) The contract is awarded by a participant in a nonprocurement
transaction covered under Sec. 180.210, and the contract amount is
expected to equal or exceed $25,000.
(2) The contract requires the consent of an official of a Federal
agency. In that case, the contract is always a covered transaction
regardless of the amount or who awarded it. For example, it could be a
subcontract awarded by a contractor at a tier below a nonprocurement
transaction, as shown in the Appendix to this part.
(3) The contract is for Federally-required audit services.
(c) A subcontract also is a covered transaction if:
(1) It is awarded by a participant in a procurement transaction
under a nonprocurement transaction of a Federal agency that extends the
coverage of paragraph (b)(1) of this section to additional tiers of
contracts (see the diagram in the Appendix to this part showing that
optional lower tier coverage); and
(2) The value of the subcontract is expected to equal or exceed
$25,000.
Sec. 180.225 How do I know if a transaction in which I may
participate is a covered transaction?
As a participant in a transaction, you will know that it is a
covered transaction because of the Federal agency regulations governing
the transaction. The appropriate Federal agency official or participant
at the next higher tier who enters into the transaction with you will
tell you that you must comply with applicable portions of this part.
[[Page 69413]]
Subpart C--Responsibilities of Participants Regarding Transactions
Doing Business With Other Persons
Sec. 180.300 What must I do before I enter into a covered
transaction with another person at the next lower tier?
When you enter into a covered transaction with another person at
the next lower tier, you must verify that the person with whom you
intend to do business is not excluded or disqualified. You do this by:
(a) Checking SAM.gov Exclusions; or
(b) Collecting a certification from that person; or
(c) Adding a clause or condition to the covered transaction with
that person.
Sec. 180.305 May I enter into a covered transaction with an excluded
or disqualified person?
(a) As a participant, you may not enter into a covered transaction
with an excluded person unless the Federal agency responsible for the
transaction grants an exception under Sec. 180.135.
(b) You may not enter into any transaction with a person who is
disqualified from that transaction unless you have obtained an
exception under the disqualifying statute, Executive Order, or
regulation.
Sec. 180.310 What must I do if a Federal agency excludes a person
with whom I am already doing business in a covered transaction?
(a) As a participant, you may continue covered transactions with an
excluded person if the transactions were in existence when the Federal
agency excluded the person. However, you are not required to continue
the transactions, and you may consider termination. You should decide
whether to terminate and the type of termination action, if any, only
after a thorough review to ensure that the action is proper and
appropriate.
(b) You may not renew or extend covered transactions (other than
no-cost time extensions) with any excluded person unless the Federal
agency responsible for the transaction grants an exception under Sec.
180.135.
Sec. 180.315 May I use the services of an excluded person as a
principal under a covered transaction?
(a) As a participant, you may continue to use the services of an
excluded person as a principal under a covered transaction if you were
using that person's services in the transaction before the person was
excluded. However, you are not required to continue using that person's
services as a principal. You should decide whether to discontinue that
person's services only after a thorough review to ensure that the
action is proper and appropriate.
(b) You may not begin to use the services of an excluded person as
a principal under a covered transaction unless the Federal agency
responsible for the transaction grants an exception under Sec.
180.135.
Sec. 180.320 Must I verify that principals of my covered transactions
are eligible to participate?
(a) Yes. As a participant, you are responsible for determining
whether your principals of your covered transactions are excluded or
disqualified from participating in the transaction.
(b) You may decide the method and frequency by which you do so. You
may, but are not required to check SAM.gov Exclusions.
Sec. 180.325 What happens if I do business with an excluded person
in a covered transaction?
As a participant, if you knowingly do business with an excluded
person, the Federal agency responsible for your transaction may
disallow costs, annul or terminate the transaction, issue a stop work
order, debar or suspend you, or take other remedies as appropriate.
Sec. 180.330 What requirements must I pass down to persons at lower
tiers with whom I intend to do business?
Before entering into a covered transaction with a participant at
the next lower tier, you must require that participant to:
(a) Comply with this subpart as a condition of participating in the
transaction. You may do so using any method(s) unless the regulation of
the Federal agency responsible for the transaction requires you to use
specific methods.
(b) Pass the requirement to comply with this subpart to each person
the participant enters into a covered transaction at the next lower
tier.
Disclosing Information--Primary Tier Participants
Sec. 180.335 What information must I provide before entering into a
covered transaction with a Federal agency?
Before you enter into a covered transaction at the primary tier,
you, as the participant, must notify the Federal agency office that is
entering into the transaction with you if you know that you or any of
the principals for that covered transaction:
(a) Are presently excluded or disqualified;
(b) Have been convicted within the preceding three years of any of
the offenses listed in Sec. 180.800(a) or had a civil judgment
rendered against you for one of those offenses within that time period;
(c) Are presently indicted for or otherwise criminally or civilly
charged by a governmental entity (Federal, State, or local) with the
commission of any of the offenses listed in Sec. 180.800(a); or
(d) Have had one or more public transactions (Federal, State, or
local) terminated within the preceding three years for cause or
default.
Sec. 180.340 If I disclose unfavorable information required under
Sec. 180.335, will I be prevented from participating in the
transaction?
As a primary tier participant, disclosing unfavorable information
about yourself or a principal under Sec. 180.335 will not necessarily
cause a Federal agency to deny your participation in the covered
transaction. The Federal agency will consider the information when
determining whether to enter into the covered transaction. The Federal
agency will also consider any additional information or explanation you
elect to submit with the disclosed information.
Sec. 180.345 What happens if I fail to disclose information required
under Sec. 180.335?
If a Federal agency later determines that you failed to disclose
information under Sec. 180.335 that you knew at the time you entered
into the covered transaction, the Federal agency may:
(a) Terminate the transaction for material failure to comply with
the terms and conditions of the transaction; or
(b) Pursue any other available remedies, including suspension and
debarment.
Sec. 180.350 What must I do if I learn of information required under
Sec. 180.335 after entering into a covered transaction with a Federal
agency?
At any time after you enter into a covered transaction, you must
give immediate written notice to the Federal agency office with which
you entered into the transaction if you learn either that:
(a) You failed to disclose information earlier, as required by
Sec. 180.335; or
(b) Due to changed circumstances, you or any of the principals for
the transaction now meet any of the criteria in Sec. 180.335.
[[Page 69414]]
Disclosing Information--Lower Tier Participants
Sec. 180.355 What information must I provide to a higher tier
participant before entering into a covered transaction with that
participant?
Before you enter into a covered transaction with a person at the
next higher tier, you, as a lower tier participant, must notify that
person if you know that you or any of the principals are presently
excluded or disqualified.
Sec. 180.360 What happens if I fail to disclose information required
under Sec. 180.355?
When a Federal agency later determines that you failed to tell the
person at the higher tier that you were excluded or disqualified at the
time you entered into the covered transaction with that person, the
agency may pursue any available remedies, including suspension and
debarment.
Sec. 180.365 What must I do if I learn of information required under
Sec. 180.355 after entering into a covered transaction with a higher
tier participant?
At any time after you enter into a lower tier covered transaction
with a person at a higher tier, you must provide immediate written
notice to that person if you learn either that:
(a) You failed to disclose information earlier, as required by
Sec. 180.355; or
(b) Due to changed circumstances, you or any of the principals for
the transaction now meet any of the criteria in Sec. 180.355.
Subpart D--Responsibilities of Federal Agency Officials Regarding
Transactions
Sec. 180.400 May I enter into a transaction with an excluded or
disqualified person?
(a) As a Federal agency official, you may not enter into a covered
transaction with an excluded person unless you obtain an exception
under Sec. 180.135.
(b) You may not enter into any transaction with a person
disqualified from that transaction unless you obtain a waiver or
exception under the statute, Executive Order, or regulation that is the
basis for the person's disqualification.
Sec. 180.405 May I enter into a covered transaction with a
participant if a principal of the transaction is excluded?
As a Federal agency official, you may not enter into a covered
transaction with a participant if you know that a principal of the
transaction is excluded unless you obtain an exception under Sec.
180.135.
Sec. 180.410 May I approve a participant's use of the services of an
excluded person?
After entering into a covered transaction with a participant, you,
as a Federal agency official, may not approve a participant's use of an
excluded person as a principal under that transaction unless you obtain
an exception under Sec. 180.135.
Sec. 180.415 What must I do if a Federal agency excludes the
participant or a principal after I enter into a covered transaction?
(a) As a Federal agency official, you may continue covered
transactions with an excluded person or under which an excluded person
is a principal if the transactions were in existence when the person
was excluded. However, you are not required to continue the
transactions, and you may consider termination. You should decide
whether to terminate and the type of termination action, if any, only
after a thorough review to ensure that the action is proper and
appropriate.
(b) You may not renew or extend covered transactions (other than
no-cost time extensions) with any excluded person or under which an
excluded person is a principal unless you obtain an exception under
Sec. 180.135.
Sec. 180.420 May I approve a transaction with an excluded or
disqualified person at a lower tier?
If a transaction at a lower tier is subject to your approval, you,
as a Federal agency official, may not approve:
(a) A covered transaction with a person who is currently excluded
unless you obtain an exception under Sec. 180.135; or
(b) A transaction with a person who is disqualified from that
transaction unless you obtain a waiver or exception under the statute,
Executive Order, or regulation that is the basis for the person's
disqualification.
Sec. 180.425 When do I check to see if a person is excluded or
disqualified?
As a Federal agency official, you must check to see if a person is
excluded or disqualified before you:
(a) Enter into a primary tier covered transaction;
(b) Approve a principal in a primary tier covered transaction;
(c) Approve a lower tier participant if your Federal agency's
approval of the lower tier participant is required; or
(d) Approve a principal in connection with a lower tier transaction
if your Federal agency's approval of the principal is required.
Sec. 180.430 How do I check to see if a person is excluded or
disqualified?
You check to see if a person is excluded or disqualified in two
ways:
(a) As a Federal agency official, you must check SAM.gov Exclusions
when you take any action listed in Sec. 180.425.
(b) You must review the information that a participant gives you,
as required by Sec. 180.335, about its status or the status of the
principals of a transaction.
Sec. 180.435 What must I require of a primary tier participant?
As a Federal agency official, you must require each participant in
a primary tier covered transaction to:
(a) Comply with subpart C as a condition of participation in the
transaction; and
(b) Communicate the requirement to comply with subpart C to persons
at the next lower tier with whom the primary tier participant enters
into covered transactions.
Sec. 180.440 What action may I take if a primary tier participant
knowingly does business with an excluded or disqualified person?
If a participant knowingly does business with an excluded or
disqualified person, you, as a Federal agency official, may refer the
matter for suspension and debarment consideration. You may also
disallow costs, annul or terminate the transaction, issue a stop work
order, or take any other appropriate remedy.
Sec. 180.445 What action may I take if a primary tier participant
fails to disclose the information required under Sec. 180.335?
As a Federal agency official, if you determine that a participant
failed to disclose information, as required by Sec. 180.335, at the
time it entered into a covered transaction with you, you may:
(a) Terminate the transaction for material failure to comply with
the terms and conditions of the transaction; or
(b) Pursue any other available remedies, including suspension and
debarment.
Sec. 180.450 What action may I take if a lower tier participant fails
to disclose the information required under Sec. 180.355 to the next
higher tier?
As a Federal agency official, if you determine that a lower tier
participant failed to disclose information, as required by Sec.
180.355, at the time it entered into a covered transaction with a
participant at the next higher tier, you may pursue any remedies
available to you, including the initiation of a suspension or debarment
action.
[[Page 69415]]
Subpart E--System for Award Management (SAM.gov) Exclusions
Sec. 180.500 What is the purpose of the System for Award Management
(SAM.gov) Exclusions?
The SAM.gov Exclusions is a widely available source of the most
current information about persons who are excluded or disqualified from
covered transactions.
Sec. 180.505 Who uses SAM.gov Exclusions?
(a) Federal agency officials use SAM.gov Exclusions to determine
whether to enter into a transaction with a person, as required under
Sec. 180.430.
(b) Participants also may, but are not required to, use SAM.gov
Exclusions to determine if:
(1) Principals of their transactions are excluded or disqualified,
as required under Sec. 180.320; or
(2) Persons with whom they are entering into covered transactions
at the next lower tier are excluded or disqualified.
(c) The SAM.gov Exclusions are available to the general public.
Sec. 180.510 Who maintains SAM.gov Exclusions?
GSA maintains SAM.gov Exclusions. When a Federal agency takes an
action to exclude a person under the nonprocurement or procurement
debarment and suspension system, the agency enters the information
about the excluded person into SAM.gov Exclusions.
Sec. 180.515 What specific information is in SAM.gov Exclusions?
(a) At a minimum, SAM.gov Exclusions indicate:
(1) The full name (where available) and address of each excluded
and disqualified person, in alphabetical order, with cross-references
if more than one name is involved in a single action;
(2) The type of action;
(3) The cause for the action;
(4) The scope of the action;
(5) Any termination date for the action;
(6) The Federal agency and name and telephone number of the agency
point of contact for the action; and
(7) The unique entity identifier approved by the GSA of the
excluded or disqualified person, if available.
(b)(1) The SAM.gov Exclusions includes a field for the Taxpayer
Identification Number (TIN), or the Social Security Number (SSN) for an
individual, of an excluded or disqualified person.
(2) Agencies disclose an individual's SSN to verify an individual's
identity only if permitted under the Privacy Act of 1974 and, if
appropriate, the Computer Matching and Privacy Protection Act of 1988,
as codified in 5 U.S.C. 552(a).
Sec. 180.520 Who places the information into SAM.gov Exclusions?
Federal agency officials who take actions to exclude persons under
this part or officials who are responsible for identifying disqualified
persons must enter the following information about those persons into
SAM.gov Exclusions:
(a) Information required by Sec. 180.515(a);
(b) The Taxpayer Identification Number (TIN) of the excluded or
disqualified person, including the Social Security Number (SSN) for an
individual, if the number is available and may be disclosed under the
law;
(c) Information about an excluded or disqualified person, within
three business days, after:
(1) Taking an exclusion action;
(2) Modifying or rescinding an exclusion action;
(3) Finding that a person is disqualified; or
(4) Finding that there has been a change in the status of a person
who is listed as disqualified.
Sec. 180.525 Whom do I ask if I have questions about a person in
SAM.gov Exclusions?
If you have questions about a listed person in SAM.gov Exclusions,
ask the point of contact for the Federal agency that placed the
person's name into SAM.gov Exclusions. You may find the Federal agency
point of contact from SAM.gov Exclusions.
Sec. 180.530 Where can I find SAM.gov Exclusions?
You may access SAM.gov Exclusions through the internet, currently
at https://www.sam.gov.
Subpart F--General Principles Relating to Suspension and Debarment
Actions
Sec. 180.600 How do suspension and debarment actions start?
When Federal agency officials receive information from any source
concerning a cause for suspension or debarment, they will promptly
report it, and the agency will investigate. The officials refer the
question of whether to suspend or debar you to their suspending or
debarring official for consideration, if appropriate.
Sec. 180.605 How does suspension differ from debarment?
Suspension differs from debarment in that:
------------------------------------------------------------------------
A suspending official . . . A debarring official . . .
------------------------------------------------------------------------
(a) Imposes suspension as a temporary Imposes debarment for a
status of ineligibility for procurement specified period as a final
and nonprocurement transactions, pending determination that a person
completion of an investigation or legal is not presently
or debarment proceeding. responsible.
(b) Must:
(1) Have adequate evidence that there may ............................
be a cause for debarment of a person; and
(2) Conclude that immediate action is Must conclude, based on a
necessary to protect the Federal interest. preponderance of the
evidence, that the person
has engaged in conduct that
warrants debarment.
(c) Usually imposes the suspension first, Imposes debarment after
and then promptly notifies the suspended giving the respondent
person, giving the person an opportunity notice of the action and an
to contest the suspension and have it opportunity to contest the
lifted. proposed debarment.
------------------------------------------------------------------------
Sec. 180.610 What procedures does a Federal agency use in suspension
and debarment actions?
In deciding whether to suspend or debar you, a Federal agency
handles the actions as informally as practicable, consistent with
principles of fundamental fairness.
(a) For suspension actions, a Federal agency uses the procedures in
this subpart and subpart G.
(b) For debarment actions, a Federal agency uses the procedures in
this subpart and subpart H.
[[Page 69416]]
Sec. 180.615 How does a Federal agency notify a person of a
suspension or debarment action?
(a) The suspending or debarring official sends a written notice to
the last known street address, facsimile number, or email address of:
(1) You or your identified counsel; or
(2) Your agent for service of process, or any of your partners,
officers, directors, owners, or joint venturers.
(b) The notice is effective if sent to any of these persons.
Sec. 180.620 Do Federal agencies coordinate suspension and debarment
actions?
Yes, when more than one Federal agency has an interest in a
suspension or debarment, the agencies may consider designating one
Federal agency as the lead agency for making the decision. Agencies are
encouraged to establish methods and procedures for coordinating their
suspension and debarment actions.
Sec. 180.625 What is the scope of a suspension or debarment?
If you are suspended or debarred, the suspension or debarment is
effective as follows:
(a) Your suspension or debarment constitutes suspension or
debarment of all of your divisions and other organizational elements
from all covered transactions unless the suspension or debarment
decision is limited:
(1) By its terms to one or more specifically identified
individuals, divisions, or other organizational elements; or
(2) To specific types of transactions.
(b) Any affiliate of a participant may be included in a suspension
or debarment action if the suspending or debarring official:
(1) Officially names the affiliate in the notice; and
(2) Gives the affiliate an opportunity to contest the action.
Sec. 180.630 May a Federal agency impute the conduct of one person to
another?
For purposes of actions taken under this part, a Federal agency may
impute conduct as follows:
(a) Conduct imputed from an individual to an organization. A
Federal agency may impute the fraudulent, criminal, or other improper
conduct of any officer, director, shareholder, partner, employee, or
other individual associated with an organization to that organization
when the improper conduct occurred in connection with the individual's
performance of duties for or on behalf of that organization, or with
the organization's knowledge, approval or acquiescence. The
organization's acceptance of the benefits derived from the conduct is
evidence of knowledge, approval, or acquiescence.
(b) Conduct imputed from an organization to an individual or
between individuals. A Federal agency may impute the fraudulent,
criminal, or other improper conduct of any organization to an
individual, or from one individual to another individual, if the
individual to whom the improper conduct is imputed either participated
in, had knowledge of, or reason to know of the improper conduct.
(c) Conduct imputed from one organization to another organization.
A Federal agency may impute the fraudulent, criminal, or other improper
conduct of one organization to another organization when the improper
conduct occurred in connection with a partnership, joint venture, joint
application, association, corporation, company, or similar arrangement
or with the organization's knowledge, approval, or acquiescence, or
when the organization to whom the improper conduct is imputed has the
power to direct, manage, control or influence the activities of the
organization responsible for the improper conduct. Acceptance of the
benefits derived from the conduct is evidence of knowledge, approval,
or acquiescence.
Sec. 180.635 May a Federal agency resolve an administrative action in
lieu of debarment or suspension?
Yes. A Federal agency may resolve an administrative action in lieu
of debarment or suspension by entering into an agreement at any time if
it is in the Federal Government's best interest.
Sec. 180.640 May an agreement to resolve an administrative action
include a voluntary exclusion?
Yes. If a Federal agency enters into an agreement to resolve an
administrative action with you in which you agree to be excluded, it is
called a voluntary exclusion and has a government-wide effect.
Sec. 180.645 Do other Federal agencies know if an agency agrees to a
voluntary exclusion?
(a) Yes. The Federal agency agreeing to the voluntary exclusion
enters information about it into SAM.gov Exclusions.
(b) Also, any agency or person may contact the Federal agency that
agreed to the voluntary exclusion to find out the details of the
voluntary exclusion.
Sec. 180.650 May an administrative agreement be the result of a
settlement?
Yes. A Federal agency may enter into an administrative agreement
with you as part of the settlement of a debarment or suspension action.
Sec. 180.655 How will other Federal awarding agencies know about an
administrative agreement that is the result of a settlement?
The suspending or debarring official who enters into an
administrative agreement with you must report information about the
agreement in SAM.gov within three business days after entering into the
agreement. The suspending and debarring official must use the
Contractor Performance Assessment Reporting System (CPARS) to enter or
amend information in SAM.gov. This information is required by section
872 of the Duncan Hunter National Defense Authorization Act for Fiscal
Year 2009 (41 U.S.C. 2313).
Sec. 180.660 Will administrative agreement information about me in
SAM.gov be corrected or updated?
Yes. The suspending or debarring official who entered information
into SAM.gov about an administrative agreement with you:
(a) Must correct the information within three business days if the
official subsequently learn that any information is erroneous.
(b) Must correct in SAM.gov, within three business days, the ending
date of the period during which the agreement is in effect if the
agreement is amended to extend that period.
(c) Must report any other modification to the administrative
agreement in SAM.gov within three business days.
(d) Is strongly encouraged to amend the information in SAM.gov in a
timely way to incorporate any update that the official obtains and that
could be helpful to Federal agencies who must use the system.
Subpart G--Suspension
Sec. 180.700 When may the suspending official issue a suspension?
Suspension is a serious action. Using the procedures of this
subpart and subpart F of this part, the suspending official may impose
suspension only when that official determines that:
(a) There exists an indictment for, or other adequate evidence to
suspect, an offense listed under Sec. 180.800(a), or
(b) There exists adequate evidence to suspect any other cause for
debarment listed under Sec. 180.800(b) through (d); and
(c) Immediate action is necessary to protect the public interest.
Sec. 180.705 What does the suspending official consider in issuing a
suspension?
(a) In determining the adequacy of the evidence to support the
suspension, the
[[Page 69417]]
suspending official considers how much information is available, how
credible it is given the circumstances, whether or not important
allegations are corroborated, and what inferences can reasonably be
drawn as a result.
(b) In making this determination, the suspending official may
examine:
(1) The basic documents, including grants, cooperative agreements,
loan authorizations, contracts, and other relevant documents;
(2) An indictment, criminal information, conviction, civil
judgment, or other official findings by Federal, State, or local bodies
that determine factual or legal matters constitutes adequate evidence
for purposes of suspension actions; and
(3) Other indicators of adequate evidence that may include, but are
not limited to, warrants and their accompanying affidavits.
(c) In deciding whether immediate action is needed to protect the
public interest, the suspending official has wide discretion. For
example, the suspending official may infer the necessity for immediate
action to protect the public interest either from the nature of the
circumstances giving rise to a cause for suspension or from potential
business relationships or involvement with a program of the Federal
Government.
Sec. 180.710 When does a suspension take effect?
A suspension is effective when the suspending official signs the
decision to suspend.
Sec. 180.715 What notice does the suspending official give me if I am
suspended?
After deciding to suspend you, the suspending official promptly
sends you a Notice of Suspension advising you:
(a) That you have been suspended;
(b) That your suspension is based on:
(1) An indictment;
(2) A criminal information;
(3) A conviction;
(4) A civil judgment;
(5) Other adequate evidence that you have committed irregularities
that seriously reflect on the propriety of further Federal Government
dealings with you; or
(6) Conduct of another person that has been imputed to you or your
affiliation with a suspended or debarred person;
(c) Of any other irregularities supporting your suspension in terms
sufficient to put you on notice without disclosing certain evidence in
the Federal Government's pending or contemplated legal proceedings;
(d) Of the cause(s) upon which the suspending official relied under
Sec. 180.700 for imposing suspension;
(e) That your suspension is for a temporary period pending the
completion of an investigation or resulting legal or debarment
proceedings;
(f) Of the applicable provisions of this subpart, subpart F, and
any other Federal agency procedures governing suspension decision-
making; and
(g) Of the government-wide effect of your suspension from
procurement and nonprocurement programs and activities.
Sec. 180.720 How may I contest a suspension?
As a respondent, if you wish to contest a suspension, you or your
representative must provide the suspending official with information in
opposition to the suspension. You may do this orally or in writing.
While oral statements may be a part of the official record, any
information provided orally that you consider important must also be
submitted in writing for the official record.
Sec. 180.725 How much time do I have to contest a suspension?
(a) As a respondent, you or your representative must either send or
make arrangements to appear and present the information and argument to
the suspending official within 30 days after you receive the Notice of
Suspension.
(b) The Federal agency taking the action considers the notice to be
received by you:
(1) When delivered, if the Federal agency mails the notice to the
last known street address, or five days after the agency sends it if
the letter is undeliverable;
(2) When sent, if the Federal agency sends the notice by facsimile
or five days after the agency sends it if the facsimile is
undeliverable; or
(3) When delivered, if the Federal agency sends the notice by email
or five days after the agency sends it if the email is undeliverable.
Sec. 180.730 What information must I provide to the suspending
official if I contest the suspension?
(a) In addition to any information and argument in opposition, as a
respondent, your submission to the suspending official must identify:
(1) Specific facts that contradict the statements contained in the
Notice of Suspension. A general denial is insufficient to raise a
genuine dispute over facts material to the suspension;
(2) All existing, proposed, or prior exclusions under regulations
implementing Executive Order 12549 and all similar actions taken by
Federal, State, or local agencies, including administrative agreements
that affect only those agencies;
(3) All criminal and civil proceedings not included in the Notice
of Suspension that grew out of facts relevant to the cause(s) stated in
the notice; and
(4) All of your affiliates.
(b) Your submission must also identify any of the paragraphs in
Sec. 180.730(a) that do not apply to you.
(c) If you fail to disclose this information or provide false
information, the Federal agency taking the action may seek further
criminal, civil, or administrative action against you, as appropriate.
Sec. 180.735 Under what conditions do I get an additional opportunity
to challenge the facts on which the suspension is based?
(a) As a respondent, you will not have an additional opportunity to
challenge the facts if the suspending official determines that:
(1) Your suspension is based upon an indictment, conviction, civil
judgment, or other findings by a Federal, State, or local body for
which an opportunity to contest the facts was provided;
(2) Your presentation in opposition contains only general denials
to the information contained in the Notice of Suspension;
(3) The issues raised in your presentation in opposition to the
suspension are not factual in nature, or are no material to the
suspending official's initial decision to suspend, or the official's
decision whether to continue the suspension; or
(4) On the basis of advice from the Department of Justice, an
office of the United States Attorney, a State attorney general's
office, or a State or local prosecutor's office, that substantial
interests of the government in pending or contemplated legal
proceedings based on the same facts as the suspension would be
prejudiced by conducting fact-finding.
(b) You will have an opportunity to challenge the facts if the
suspending official determines that:
(1) The conditions in paragraph (a) of this section do not exist;
and
(2) Your presentation in opposition raises a genuine dispute over
facts material to the suspension.
(c) If you have an opportunity to challenge disputed material facts
under this section, the suspending official or designee must conduct
additional proceedings to resolve those facts.
[[Page 69418]]
Sec. 180.740 Are suspension proceedings formal?
(a) Suspension proceedings are conducted in a fair and informal
manner. The suspending official may use flexible procedures to allow
you to present matters in opposition. In so doing, the suspending
official is not required to follow formal rules of evidence or
procedure in creating an official record upon which the official will
base a final suspension decision.
(b) As a respondent, you or your representative must submit any
documentary evidence you want the suspending official to consider.
Sec. 180.745 How is fact-finding conducted?
(a) If fact-finding is conducted:
(1) You may present witnesses and other evidence and confront any
witness presented; and
(2) The fact-finder must prepare written findings of fact for the
record.
(b) A transcribed record of fact-finding proceedings must be made,
unless you, as a respondent, and the Federal agency agree to waive it
in advance. If you want a copy of the transcribed record, you may
purchase it.
Sec. 180.750 What does the suspending official consider in deciding
whether to continue or terminate my suspension?
(a) The suspending official bases the decision on all information
contained in the official record. The record includes:
(1) All information in support of the suspending official's initial
decision to suspend you;
(2) Any further information and argument presented in support of,
or opposition to, the suspension; and
(3) Any transcribed record of fact-finding proceedings.
(b) The suspending official may refer disputed material facts to
another official for findings of fact. The suspending official may
reject any resulting findings, in whole or in part, only after
specifically determining them to be arbitrary, capricious, or clearly
erroneous.
Sec. 180.755 When will I know whether the suspension is continued or
terminated?
The suspending official must make a written decision whether to
continue, modify, or terminate your suspension within 45 days of
closing the official record. The official record closes upon the
suspending official's receipt of final submissions, information, and
findings of fact, if any. The suspending official may extend that
period for good cause.
Sec. 180.760 How long may my suspension last?
(a) If legal or debarment proceedings are initiated at the time of
or during your suspension, the suspension may continue until the
conclusion of those proceedings. However, a suspension may not exceed
12 months if proceedings are not initiated.
(b) The suspending official may extend the 12-month limit under
paragraph (a) of this section for an additional 6 months if an office
of a U.S. Assistant Attorney General, U.S. Attorney, or other Federal,
State, or local responsible prosecuting official requests an extension
in writing. In no event may a suspension exceed 18 months without
initiating proceedings under paragraph (a) of this section.
(c) The suspending official must notify the appropriate officials
under paragraph (b) of this section of an impending termination of a
suspension at least 30 days before the 12-month period expires to allow
the officials an opportunity to request an extension.
Subpart H--Debarment
Sec. 180.800 What are the causes for debarment?
A Federal agency may debar a person for:
(a) Conviction of or civil judgment for:
(1) Commission of fraud or a criminal offense in connection with
obtaining, attempting to obtain, or performing a public or private
agreement or transaction;
(2) Violation of Federal or State antitrust statutes, including
those proscribing price fixing between competitors, allocation of
customers between competitors, and bid rigging;
(3) Commission of embezzlement, theft, forgery, bribery,
falsification, or destruction of records, making false statements,
violating Federal criminal tax laws, receiving stolen property, making
false claims, or obstruction of justice; or
(4) Commission of any other offense indicating a lack of business
integrity or business honesty that seriously and directly affects your
present responsibility;
(b) Violation of the terms of a public agreement or transaction so
serious as to affect the integrity of a Federal agency program, such
as:
(1) A willful failure to perform in accordance with the terms of
one or more public agreements or transactions;
(2) A history of failure to perform or of unsatisfactory
performance of one or more public agreements or transactions; or
(3) A willful violation of a statutory or regulatory provision or
requirement applicable to a public agreement or transaction;
(c) Any of the following causes:
(1) A nonprocurement debarment by any Federal agency taken before
October 1, 1988, or a procurement debarment by any Federal agency taken
pursuant to 48 CFR part 9, subpart 9.4, before August 25, 1995;
(2) Knowingly doing business with an ineligible person, except as
permitted under Sec. 180.135;
(3) Failure to pay a single substantial debt, or a number of
outstanding debts (including disallowed costs and overpayments, but not
including sums owed the Federal Government under the Internal Revenue
Code) owed to any Federal agency or instrumentality, provided the debt
is uncontested by the debtor or, if contested, provided that the
debtor's legal and administrative remedies have been exhausted;
(4) Violation of a material provision of a voluntary exclusion
agreement entered into under Sec. 180.640 or of any other agreement
that resolves a debarment or suspension action; or
(5) Violation of the provisions of the Drug-Free Workplace Act of
1988 (41 U.S.C. 701); or
(d) Any other cause that is so serious or compelling in nature that
it affects your present responsibility.
Sec. 180.805 What notice does the debarring official give me if I am
proposed for debarment?
After consideration of the causes in Sec. 180.800, if the
debarring official proposes to debar you, the official sends you a
Notice of Proposed Debarment, pursuant to Sec. 180.615, advising you:
(a) That the debarring official is considering debarring you;
(b) The reasons for proposing to debar you in terms sufficient to
put you on notice of the conduct or transactions upon which the
proposed debarment is based;
(c) The cause(s) under Sec. 180.800 upon which the debarring
official relied for proposing your debarment;
(d) The applicable provisions of this subpart, subpart F of this
part, and any other Federal agency procedures governing debarment; and
(e) The government-wide effect of a debarment from procurement and
nonprocurement programs and activities.
Sec. 180.810 When does a debarment take effect?
Unlike a suspension, a debarment is not effective until the
debarring official issues a decision. The debarring official does not
issue a decision until the respondent has had an opportunity to contest
the proposed debarment.
[[Page 69419]]
Sec. 180.815 How may I contest a proposed debarment?
As a respondent, if you wish to contest a proposed debarment, you
or your representative must provide the debarring official with
information in opposition to the proposed debarment. You may do this
orally or in writing. While oral statements may be a part of the
official record, any information provided orally that you consider
important must also be submitted in writing for the official record.
Sec. 180.820 How much time do I have to contest a proposed
debarment?
(a) As a respondent, you or your representative must either send or
make arrangements to appear and present the information and argument to
the debarring official within 30 days after you receive the Notice of
Proposed Debarment.
(b) The Federal agency taking the action considers the Notice of
Proposed Debarment to be received by you:
(1) When delivered, if the Federal agency mails the notice to the
last known street address, or five days after the agency sends it if
the letter is undeliverable;
(2) When sent, if the Federal agency sends the notice by facsimile
or five days after the agency sends it if the facsimile is
undeliverable; or
(3) When delivered, if the Federal agency sends the notice by email
or five days after the agency sends it if the email is undeliverable.
Sec. 180.825 What information must I provide to the debarring
official if I contest the proposed debarment?
(a) In addition to any information and argument in opposition, as a
respondent, your submission to the debarring official must identify:
(1) Specific facts that contradict the statements contained in the
Notice of Proposed Debarment. Include any information about any of the
factors listed in Sec. 180.860. A general denial is insufficient to
raise a genuine dispute over facts material to the debarment;
(2) All existing, proposed, or prior exclusions under regulations
implementing Executive Order 12549 and all similar actions taken by
Federal, State, or local agencies, including administrative agreements
that affect only those agencies;
(3) All criminal and civil proceedings not included in the Notice
of Proposed Debarment that grew out of facts relevant to the cause(s)
stated in the notice; and
(4) All of your affiliates.
(b) If you fail to disclose this information or provide false
information, the Federal agency taking the action may seek further
criminal, civil, or administrative action against you, as appropriate.
Sec. 180.830 Under what conditions do I get an additional opportunity
to challenge the facts on which the proposed debarment is based?
(a) As a respondent, you will not have an additional opportunity to
challenge the facts if the debarring official determines that:
(1) Your debarment is based upon a conviction or civil judgment;
(2) Your presentation in opposition contains only general denials
to the information contained in the Notice of Proposed Debarment; or
(3) The issues raised in your presentation in opposition to the
proposed debarment are not factual in nature, or are not material to
the debarring official's decision whether to debar.
(b) You will have an additional opportunity to challenge the facts
if the debarring official determines that:
(1) The conditions in paragraph (a) of this section do not exist;
and
(2) Your presentation in opposition raises a genuine dispute over
facts material to the proposed debarment.
(c) If you have an opportunity to challenge disputed material facts
under this section, the debarring official or designee must conduct
additional proceedings to resolve those facts.
Sec. 180.835 Are debarment proceedings formal?
(a) Debarment proceedings are conducted in a fair and informal
manner. The debarring official may use flexible procedures to allow
you, as a respondent, to present matters in opposition. In so doing,
the debarring official is not required to follow formal rules of
evidence or procedure in creating an official record upon which the
official will base the decision on whether to debar.
(b) You or your representative must submit any documentary evidence
you want the debarring official to consider.
Sec. 180.840 How is fact-finding conducted?
(a) If fact-finding is conducted:
(1) You may present witnesses and other evidence and confront any
witness presented; and
(2) The fact-finder must prepare written findings of fact for the
record.
(b) A transcribed record of fact-finding proceedings must be made
unless you, as a respondent, and the Federal agency agree to waive it
in advance. If you want a copy of the transcribed record, you may
purchase it.
Sec. 180.845 What does the debarring official consider in deciding
whether to debar me?
(a) The debarring official may debar you for any of the causes in
Sec. 180.800. However, the official need not debar you even if a cause
for debarment exists. The official may consider the seriousness of your
acts or omissions and the mitigating or aggravating factors set forth
at Sec. 180.860.
(b) The debarring official bases the decision on all information
contained in the official record. The record includes:
(1) All information in support of the debarring official's proposed
debarment;
(2) Any further information and argument presented in support of,
or in opposition to, the proposed debarment; and
(3) Any transcribed record of fact-finding proceedings.
(c) The debarring official may refer disputed material facts to
another official for findings of fact. The debarring official may
reject any resultant findings, in whole or in part, only after
specifically determining them to be arbitrary, capricious, or clearly
erroneous.
Sec. 180.850 What is the standard of proof in a debarment action?
(a) In any debarment action, the Federal agency must establish the
cause for debarment by a preponderance of the evidence.
(b) If the proposed debarment is based upon a conviction or civil
judgment, the standard of proof is met.
Sec. 180.855 Who has the burden of proof in a debarment action?
(a) The Federal agency has the burden to prove that a cause for
debarment exists.
(b) Once a cause for debarment is established, you as a respondent
have the burden of demonstrating to the satisfaction of the debarring
official that you are presently responsible and that debarment is not
necessary.
Sec. 180.860 What factors may influence the debarring official's
decision?
This section lists the mitigating and aggravating factors that the
debarring official may consider in determining whether to debar you and
the length of your debarment period. The debarring official may
consider other factors if appropriate in light of the circumstances of
a particular case. The existence or nonexistence of any factor, such as
one of those set forth in this section, is not necessarily
determinative of your present responsibility. In making a debarment
decision, the debarring official may consider the following factors:
[[Page 69420]]
(a) The actual or potential harm or impact that results or may
result from the wrongdoing.
(b) The frequency of incidents or duration of the wrongdoing.
(c) Whether there is a pattern or prior history of wrongdoing. For
example, if you have been found by another Federal agency or a State
agency to have engaged in wrongdoing similar to that found in the
debarment action, the existence of this fact may be used by the
debarring official in determining that you have a pattern or prior
history of wrongdoing.
(d) Whether you are or have been excluded or disqualified by an
agency of the Federal Government or have not been allowed to
participate in State or local contracts or assistance agreements on a
basis of conduct similar to one or more of the causes for debarment
specified in this part.
(e) Whether you have entered into an administrative agreement with
a Federal agency or a State or local government that is not government-
wide but is based on conduct similar to one or more of the causes for
debarment specified in this part.
(f) Whether and to what extent you planned, initiated, or carried
out the wrongdoing.
(g) Whether you have accepted responsibility for the wrongdoing and
recognize the seriousness of the misconduct that led to the cause for
debarment.
(h) Whether you have paid or agreed to pay all criminal, civil, and
administrative liabilities for the improper activity, including any
investigative or administrative costs incurred by the government, and
have made or agreed to make full restitution.
(i) Whether you have cooperated fully with the government agencies
during the investigation and any court or administrative action. In
determining the extent of cooperation, the debarring official may
consider when the cooperation began and whether you disclosed all
pertinent information known to you.
(j) Whether the wrongdoing was pervasive within your organization.
(k) The kind of positions held by the individuals involved in the
wrongdoing.
(l) Whether your organization took appropriate corrective action or
implemented remedial or protective measures in the form of procedures,
policies, and programs to effectively address the activity cited as a
basis for the debarment.
(m) Whether your principals tolerated the offense.
(n) Whether you brought the activity cited as a basis for the
debarment to the attention of the appropriate government agency in a
timely manner.
(o) Whether you have fully investigated the circumstances
surrounding the cause for debarment and, if so, made the result of the
investigation available to the debarring official.
(p) Whether you had effective standards of conduct and internal
control systems in place at the time the questioned conduct occurred.
(q) Whether you have taken appropriate disciplinary action against
the individuals responsible for the activity which constitutes the
cause for debarment.
(r) Whether you have had adequate time to eliminate the
circumstances within your organization that led to the cause for the
debarment.
(s) Whether your business, technical, or professional license(s)
has been suspended, terminated, or revoked.
(t) Other factors that are appropriate to the circumstances of a
particular case.
Sec. 180.865 How long may my debarment last?
(a) If the debarring official decides to debar you, your period of
debarment will be based on the seriousness of the cause(s) upon which
your debarment is based. Generally, debarment should not exceed three
years. However, if circumstances warrant, the debarring official may
impose a longer period of debarment.
(b) In determining the period of debarment, the debarring official
may consider the factors in Sec. 180.860. If a suspension has preceded
your debarment, the debarring official must consider the time you were
suspended.
(c) If the debarment is for a violation of the provisions of the
Drug-Free Workplace Act of 1988, your period of debarment may not
exceed five years.
Sec. 180.870 When do I know if the debarring official debars me?
(a) The debarring official must make a written decision whether to
debar within 45 days of closing the official record. The official
record closes upon the debarring official's receipt of final
submissions, information, and findings of fact, if any. The debarring
official may extend that period for good cause.
(b) The debarring official sends you written notice, pursuant to
Sec. 180.615, that the official decided either:
(1) Not to debar you; or
(2) To debar you. In this event, the notice:
(i) Refers to the Notice of Proposed Debarment;
(ii) Specifies the reasons for your debarment;
(iii) States the period of your debarment, including the effective
dates; and
(iv) Advises you that your debarment is effective for covered
transactions and contracts that are subject to the Federal Acquisition
Regulations (48 CFR chapter 1) throughout the executive branch of the
Federal Government unless an agency head or an authorized designee
grants an exception.
Sec. 180.875 May I ask the debarring official to reconsider a
decision to debar me?
Yes. As a debarred person, you may ask the debarring official to
reconsider the debarment decision or to reduce the time period or scope
of the debarment. However, you must submit your request in writing and
support it with documentation.
Sec. 180.880 What factors may influence the debarring official
during reconsideration?
The debarring official may reduce or terminate your debarment based
on:
(a) Newly discovered material evidence;
(b) A reversal of the conviction or civil judgment upon which your
debarment was based;
(c) A bona fide change in ownership or management;
(d) Elimination of other causes for which the debarment was
imposed; or
(e) Other reasons the debarring official finds appropriate.
Sec. 180.885 May the debarring official extend a debarment?
(a) Yes. The debarring official may extend a debarment for an
additional period if that official determines that an extension is
necessary to protect the public interest.
(b) However, the debarring official may not extend a debarment
solely on the basis of the facts and circumstances upon which the
initial debarment action was based.
(c) If the debarring official decides that a debarment for an
additional period is necessary, the debarring official must follow the
applicable procedures in this subpart, and subpart F, to extend the
debarment.
Subpart I--Definitions
Sec. 180.900 Adequate evidence.
Adequate evidence means information sufficient to support the
reasonable belief that a particular act or omission has occurred.
Sec. 180.905 Affiliate.
Persons are affiliates of each other if, directly or indirectly,
either one controls or has the power to control the other or a third
person controls or has
[[Page 69421]]
the power to control both. The ways a Federal agency may determine
control include, but are not limited to:
(a) Interlocking management or ownership;
(b) Identity of interests among family members;
(c) Shared facilities and equipment;
(d) Common use of employees; or
(e) A business entity organized following the exclusion of a person
with the same or similar management, ownership, or principal employees
as the excluded person.
Sec. 180.910 Agent or representative.
Agent or representative means any person who acts on behalf of or
who is authorized to commit a participant in a covered transaction.
Sec. 180.915 Civil judgment.
Civil judgment means the disposition of a civil action by any court
of competent jurisdiction, whether by verdict, decision, settlement,
stipulation, or other disposition which creates a civil liability for
the complained of wrongful acts or a final determination of liability
under the Program Fraud Civil Remedies Act of 1986 (31 U.S.C. 3801-
3812).
Sec. 180.920 Conviction.
Conviction means:
(a) A judgment or any other determination of guilt of a criminal
offense by any court of competent jurisdiction, whether entered upon a
verdict or plea, including a plea of nolo contendere; or
(b) Any other resolution that is the functional equivalent of a
judgment, including probation before judgment and deferred prosecution.
A disposition without the participation of the court is the functional
equivalent of a judgment only if it includes an admission of guilt.
Sec. 180.925 Debarment.
Debarment means an action taken by a debarring official under
Subpart H to exclude a person from participating in covered
transactions and transactions covered under the Federal Acquisition
Regulations (48 CFR chapter 1). A person so excluded is debarred.
Sec. 180.930 Debarring official.
Debarring official means a Federal agency official who is
authorized to impose debarment. A debarring official is either:
(a) The agency head; or
(b) An official designated by the agency head.
Sec. 180.935 Disqualified.
Disqualified means that a person is prohibited from participating
in specified Federal procurement or nonprocurement transactions as
required under a statute, Executive order (other than Executive Orders
12549 and 12689), or other authority. Examples of disqualifications
include persons prohibited under--
(a) The Davis-Bacon Act (40 U.S.C. 3142);
(b) The equal employment opportunity acts and Executive orders; or
(c) The Clean Air Act (42 U.S.C. 7606), Clean Water Act (33 U.S.C.
1368), and Executive Order 11738 (38 FR 25161).
Sec. 180.940 Excluded or exclusion.
Excluded or exclusion means:
(a) That a person or commodity is prohibited from being a
participant in covered transactions, whether the person has been
suspended; debarred; proposed for debarment under 48 CFR part 9,
subpart 9.4; voluntarily excluded; or
(b) The act of excluding a person.
Sec. 180.945 System for Award Management (SAM.gov) Exclusions.
System for Award Management (SAM.gov) Exclusions means the list
maintained and disseminated by the General Services Administration
(GSA) containing the names and other information about ineligible
persons.
Sec. 180.950 Federal agency.
Federal agency means any United States executive department,
military department, defense agency, or any other executive branch
agency. For the purposes of this part, other agencies of the Federal
Government are not considered ``agencies'' unless they issue
regulations adopting the government-wide Debarment and Suspension
system under Executive Orders 12549 and 12689.
Sec. 180.955 Indictment.
Indictment means an indictment for a criminal offense. A
presentment, information, or other filing by a competent authority
charging a criminal offense will be given the same effect as an
indictment.
Sec. 180.960 Ineligible or ineligibility.
Ineligible or ineligibility means that a person or commodity is
prohibited from covered transactions because of an exclusion or
disqualification.
Sec. 180.965 Legal proceedings.
Legal proceeding means any criminal proceeding or any civil
judicial proceeding, including a proceeding under the Program Fraud
Civil Remedies Act of 1986 (31 U.S.C. 3801-3812), to which the Federal
Government or a State or local government or quasi-governmental
authority is a party. The term also includes appeals from those
proceedings.
Sec. 180.970 Nonprocurement transaction.
(a) Nonprocurement transaction means any transaction, regardless of
type (except procurement contracts), including, but not limited to, the
following:
(1) Grants;
(2) Cooperative agreements;
(3) Scholarships;
(4) Fellowships;
(5) Contracts of assistance;
(6) Loans;
(7) Loan guarantees;
(8) Subsidies;
(9) Insurances;
(10) Payments for specified uses; and
(11) Donation agreements.
(b) A nonprocurement transaction at any tier does not require the
transfer of Federal funds.
Sec. 180.975 Notice.
Notice means a written communication served in person, sent by
certified mail or its equivalent, or sent electronically by email or
facsimile. (See Sec. 180.615.)
Sec. 180.980 Participant.
Participant means any person who submits a proposal for or enters
into a covered transaction, including an agent or representative of a
participant.
Sec. 180.985 Person.
Person means any individual, corporation, partnership, association,
unit of government, or legal entity, regardless of how organized.
Sec. 180.990 Preponderance of the evidence.
Preponderance of the evidence means proof by information that,
compared with information opposing it, leads to the conclusion that the
fact at issue is more probably true than not.
Sec. 180.995 Principal.
Principal means:
(a) An officer, director, owner, partner, principal investigator,
or another person within a participant with management or supervisory
responsibilities related to a covered transaction; or
(b) A consultant or other person, whether or not employed by the
participant or paid with Federal funds, who:
(1) Is in a position to handle Federal funds;
(2) Is in a position to influence or control the use of those
funds; or,
(3) Occupies a technical or professional position capable of
[[Page 69422]]
substantially influencing the development or outcome of an activity
required to perform the covered transaction.
Sec. 180.1000 Respondent.
Respondent means a person against whom a Federal agency has
initiated a debarment or suspension action.
Sec. 180.1005 State.
(a) State means:
(1) Any of the states of the United States;
(2) The District of Columbia;
(3) The Commonwealth of Puerto Rico;
(4) Any territory or possession of the United States; or
(5) Any agency or instrumentality of a State.
(b) For purposes of this part, State does not include institutions
of higher education, hospitals, or units of local government.
Sec. 180.1010 Suspending official.
(a) Suspending official means a Federal agency official authorized
to impose suspension. The suspending official is either:
(1) The agency head; or
(2) An official designated by the agency head.
Sec. 180.1015 Suspension.
Suspension is an action taken by a suspending official under
subpart G of this part that immediately prohibits a person from
participating in covered transactions and transactions covered under
the Federal Acquisition Regulations (48 CFR chapter 1) for a temporary
period, pending completion of a Federal agency investigation and any
judicial or administrative proceedings that may ensue. A person so
excluded is suspended.
Sec. 180.1020 Voluntary exclusion or voluntarily excluded.
(a) Voluntary exclusion means a person's agreement to be excluded
under the terms of a settlement between the person and one or more
agencies. Voluntary exclusion must have a government-wide effect.
(b) Voluntarily excluded means the status of a person who has
agreed to a voluntary exclusion.
Appendix A to Part 180--Covered Transactions
BILLING CODE 3110-01-P
[[Page 69423]]
[GRAPHIC] [TIFF OMITTED] TP05OC23.078
BILLING CODE 3110-01-C
0
8. Revise part 182 to read as follows:
PART 182--GOVERNMENT-WIDE REQUIREMENTS FOR DRUG-FREE WORKPLACE
(FINANCIAL ASSISTANCE)
Sec.
182.5 What does this part do?
182.10 How is this part organized?
182.15 To whom does the guidance apply?
182.20 What must a Federal agency do to implement the guidance?
182.25 What must a Federal agency address in its implementation of
the guidance?
182.30 Where does a Federal agency implement the guidance?
182.40 How is the guidance maintained?
Subpart A--Purpose and Coverage
182.100 How is this part written?
182.105 Do terms in this part have special meanings?
182.110 What do subparts A through F of this part do?
182.115 Does this part apply to me?
182.120 Are any of my Federal assistance awards exempt from this
part?
182.125 Does this part affect the Federal contracts that I receive?
Subpart B--Requirements for Recipients Other Than Individuals
182.200 What must I do to comply with this part?
182.205 What must I include in my drug-free workplace statement?
182.210 To whom must I distribute my drug-free workplace statement?
182.215 What must I include in my drug-free awareness program?
[[Page 69424]]
182.220 By when must I publish my drug-free workplace statement and
establish my drug-free awareness program?
182.225 What actions must I take concerning employees who are
convicted of drug violations in the workplace?
182.230 How and when must I identify workplaces?
Subpart C--Requirements for Recipients Who Are Individuals
182.300 What must I do to comply with this part if I am an
individual recipient?
Subpart D--Responsibilities of Agency Awarding Officials
182.400 What are my responsibilities as an agency awarding official?
Subpart E--Violations of This Part and Consequences
182.500 How are violations of this part determined for recipients
other than individuals?
182.505 How are violations of this part determined for recipients
who are individuals?
182.510 What actions will the Federal Government take against a
recipient determined to have violated this part?
182.515 Are there any exceptions to those actions?
Subpart F--Definitions
182.605 Award.
182.610 Controlled substance.
182.615 Conviction.
182.620 Cooperative agreement.
182.625 Criminal drug statute.
182.630 Debarment.
182.635 Drug-free workplace.
182.640 Employee.
182.645 Federal agency or agency.
182.650 Grant.
182.655 Individual.
182.660 Recipient.
182.665 State.
182.670 Suspension.
Authority: 41 U.S.C. 8101-8106; 31 U.S.C. 503; 31 U.S.C. 6307.
Sec. 182.5 What does this part do?
This part provides guidance for Federal agencies on the portion of
the Drug-Free Workplace Act of 1988 (41 U.S.C. 8101-8106, as amended)
that applies to grants. It also applies the provisions of the Act to
cooperative agreements and other financial assistance awards, as a
matter of Federal Government policy.
Sec. 182.10 How is this part organized?
This part is organized into two segments.
(a) Sections 182.5 through 182.40 contain general policy direction
for Federal agencies' use of the uniform policies and procedures in
subparts A through F.
(b) Subparts A through F contain uniform government-wide policies
and procedures for Federal agency use to specify the:
(1) Types of awards that are covered by drug-free workplace
requirements;
(2) Drug-free workplace requirements with which a recipient must
comply;
(3) Actions required of a Federal agency awarding official; and
(4) Consequences of a violation of drug-free workplace
requirements.
Sec. 182.15 To whom does the guidance apply?
This part provides guidance to Federal agencies. Publication of
this guidance in the Code of Federal Regulations (CFR) does not change
its nature--it is guidance and not regulation. Federal agencies'
implementation of this guidance governs the rights and responsibilities
of other persons affected by the drug-free workplace requirements.
Sec. 182.20 What must a Federal agency do to implement the guidance?
To comply with the requirement in 41 U.S.C. 8106 for government-
wide regulations, each Federal agency that awards grants or cooperative
agreements or makes other financial assistance awards that are subject
to the drug-free workplace requirements in subparts A through F of the
guidance must issue a regulation consistent with those subparts.
Sec. 182.25 What must a Federal agency address in its implementation
of the guidance?
Each Federal agency's implementing regulation:
(a) Must establish drug-free workplace policies and procedures for
that Federal agency's Federal awards consistent with this guidance.
When adopted by a Federal agency, the provisions of the guidance have a
regulatory effect on that Federal agency's awards.
(b) Must address some matters for which the guidance in this part
gives the Federal agency discretion. Specifically, the regulation must:
(1) State whether the Federal agency:
(i) Has a central point to which a recipient may send the
notification of a conviction that is required under Sec. 182.225(a) or
Sec. 182.300(b); or
(ii) Requires the recipient to send the notification to the Federal
agency awarding official or their designee for each Federal award.
(2) Either:
(i) State that the Federal agency head is the official authorized
to determine under Sec. 182.500 or Sec. 182.505 that a recipient has
violated the drug-free workplace requirements; or
(ii) Provide the title of the official designated to make that
determination.
(c) May also, at the Federal agency's option, identify any specific
types of financial assistance awards, in addition to grants and
cooperative agreements, to which the Federal agency makes this guidance
applicable.
Sec. 182.30 Where does a Federal agency implement the guidance?
Each Federal agency that awards grants or cooperative agreements or
makes other financial assistance awards that are subject to the drug-
free workplace guidance in this part must issue a regulation
implementing the guidance within its chapter in subtitle B of this
title of the Code of Federal Regulations.
Sec. 182.40 How is the guidance maintained?
The OMB publishes proposed changes to the guidance in the Federal
Register for public comment, considers comments with the help of
appropriate interagency working groups, and then issues any changes to
the guidance in final form.
Subpart A--Purpose and Coverage
Sec. 182.100 How is this part written?
(a) This part uses a ``plain language'' format to make it easier
for the general public and business community to use and understand.
The section headings and text must be read together, as they are often
in the form of questions and answers.
(b) Pronouns used within this part, such as ``I'' and ``you,''
change from subpart to subpart depending on the audience being
addressed.
Sec. 182.105 Do terms in this part have special meanings?
This part uses terms that have special meanings. Those terms are
defined in subpart F.
Sec. 182.110 What do subparts A through F of this part do?
Subparts A through F specify standard policies and procedures to
carry out the Drug-Free Workplace Act of 1988 for financial assistance
awards.
Sec. 182.115 Does this part apply to me?
(a) Portions of this part apply to you if you are either:
(1) A recipient of a Federal assistance award (see definitions of
award and recipient in Sec. Sec. 182.605 and 182.660, respectively);
or
(2) A Federal agency awarding official.
(b) The following table shows the subparts that apply to you:
------------------------------------------------------------------------
If you are * * * See subparts * * *
------------------------------------------------------------------------
(1) a recipient who is not an A, B and E.
individual.
(2) a recipient who is an individual. A, C and E.
[[Page 69425]]
(3) a Federal agency awarding A, D and E.
official.
------------------------------------------------------------------------
Sec. 182.120 Are any of my Federal assistance awards exempt from this
part?
This part does not apply to any award to which the Federal agency
head, or their designee, determines that the application of this part
would be inconsistent with the international obligations of the United
States or the laws or regulations of a foreign government.
Sec. 182.125 Does this part affect the Federal contracts that I
receive?
This part will affect future contract awards indirectly if you are
debarred or suspended for a violation of the requirements of this part,
as described in Sec. 182.510(c). However, this part does not apply
directly to procurement contracts. The portion of the Drug-Free
Workplace Act of 1988 that applies to Federal procurement contracts is
carried out through the Federal Acquisition Regulation in Chapter 1 of
Title 48 of the Code of Federal Regulations (the drug-free workplace
coverage currently is in 48 CFR part 23, subpart 23.5).
Subpart B--Requirements for Recipients Other Than Individuals
Sec. 182.200 What must I do to comply with this part?
There are two general requirements if you are a recipient other
than an individual.
(a) First, you must make a good faith effort, on a continuing
basis, to maintain a drug-free workplace. You must agree to do so as a
condition for receiving any award covered by this part. The specific
measures that you must take in this regard are described in more detail
in subsequent sections of this subpart. Briefly, those measures are to:
(1) Publish a drug-free workplace statement and establish a drug-
free awareness program for your employees (see Sec. Sec. 182.205
through 182.220); and
(2) Take actions concerning employees convicted of violating drug
statutes in the workplace (see Sec. 182.225).
(b) Second, you must identify all known workplaces under your
Federal awards (see Sec. 182.230).
Sec. 182.205 What must I include in my drug-free workplace statement?
You must publish a statement that--
(a) Tells your employees that the unlawful manufacture,
distribution, dispensing, possession, or use of a controlled substance
is prohibited in your workplace;
(b) Specifies the actions that you will take against employees for
violating that prohibition; and
(c) Lets each employee know that, as a condition of employment
under any award, the employee:
(1) Will abide by the terms of the statement; and
(2) Must notify you in writing if the employee is convicted for a
violation of a criminal drug statute occurring in the workplace and
must do so no more than five calendar days after the conviction.
Sec. 182.210 To whom must I distribute my drug-free workplace
statement?
You must require that a copy of the statement described in Sec.
182.205 be given to each employee who will be engaged in the
performance of any Federal award.
Sec. 182.215 What must I include in my drug-free awareness program?
You must establish an ongoing drug-free awareness program to inform
employees about:
(a) The dangers of drug abuse in the workplace;
(b) Your policy of maintaining a drug-free workplace;
(c) Any available drug counseling, rehabilitation, and employee
assistance programs; and
(d) The penalties that you may impose upon them for drug abuse
violations occurring in the workplace.
Sec. 182.220 By when must I publish my drug-free workplace statement
and establish my drug-free awareness program?
If you are a new recipient that does not already have a policy
statement as described in Sec. 182.205 and an ongoing awareness
program as described in Sec. 182.215, you must publish the statement
and establish the program by the time given in the following table:
------------------------------------------------------------------------
If * * * Then you * * *
------------------------------------------------------------------------
(a) The performance period of the award Must have the policy statement
is less than 30 days. and program in place as soon
as possible, but before the
date on which performance is
expected to be completed.
(b) The performance period of the award Must have the policy statement
is 30 days or more. and program in place within 30
days after award.
(c) You believe there are extraordinary May ask the Federal agency
circumstances that will require more awarding official to give you
than 30 days for you to publish the more time to do so. The amount
policy statement and establish the of additional time, if any, to
awareness program. be given is at the discretion
of the Federal agency awarding
official.
------------------------------------------------------------------------
Sec. 182.225 What actions must I take concerning employees who are
convicted of drug violations in the workplace?
There are two actions you must take if an employee is convicted of
a drug violation in the workplace:
(a) First, you must notify Federal agencies if an employee who is
engaged in the performance of an award informs you about a conviction,
as required by Sec. 182.205(c)(2), or you otherwise learn of the
conviction. Your notification to the Federal agencies must:
(1) Be in writing;
(2) Include the employee's position title;
(3) Include the identification number(s) of each affected award;
(4) Be sent within ten calendar days after you learn of the
conviction; and
(5) Be sent to every Federal agency on whose award the convicted
employee was working. It must be sent to every Federal agency awarding
official or their designee, unless the Federal agency has specified a
central point for the receipt of the notices.
(b) Second, within 30 calendar days of learning about an employee's
conviction, you must either:
(1) Take appropriate personnel action against the employee, up to
and including termination, consistent with the requirements of the
Rehabilitation Act of 1973 (29 U.S.C. 794), as amended; or
(2) Require the employee to participate satisfactorily in a drug
abuse assistance or rehabilitation program approved for these purposes
by a Federal, State, or local health, law enforcement, or another
appropriate agency.
Sec. 182.230 How and when must I identify workplaces?
(a) You must identify all known workplaces under each Federal
agency award. A failure to do so is a violation of your drug-free
workplace
[[Page 69426]]
requirements. You may identify the workplaces:
(1) To the Federal agency awarding official that is making the
Federal award, either at the time of application or upon award; or
(2) In documents that you keep on file in your offices during the
performance of the Federal award, in which case you must make the
information available for inspection upon request by agency officials
or their designated representatives.
(b) Your workplace identification for a Federal award must include
the actual address of buildings (or parts of buildings) or other sites
where work under the award takes place. Categorical descriptions may be
used (for example, all vehicles of a mass transit authority or State
highway department while in operation, State employees in each local
unemployment office, performers in concert halls or radio studios).
(c) If you identified workplaces to the Federal agency awarding
official at the time of application or award, as described in paragraph
(a)(1) of this section, and any workplace that you identified changes
during the performance of the Federal award, you must inform the
Federal agency awarding official.
Subpart C--Requirements for Recipients Who Are Individuals
Sec. 182.300 What must I do to comply with this part if I am an
individual recipient?
As a condition of receiving a Federal award, if you are an
individual recipient, you must agree that:
(a) You will not engage in the unlawful manufacture, distribution,
dispensing, possession, or use of a controlled substance in conducting
any activity related to the Federal award; and
(b) If you are convicted of a criminal drug offense resulting from
a violation occurring during the conduct of any Federal award activity,
you will report the conviction:
(1) In writing.
(2) Within 10 calendar days of the conviction.
(3) To the Federal agency awarding official or their designee for
each Federal award that you currently have, unless the agency
designates a central point for the receipt of the notices, either in
the award document or its regulation implementing the guidance in this
part. When notice is made to a central point, it must include the
identification number(s) of each affected Federal award.
Subpart D--Responsibilities of Federal Agency Awarding Officials
Sec. 182.400 What are my responsibilities as a Federal agency
awarding official?
As a Federal agency awarding official, you must obtain each
recipient's agreement, as a condition of the award, to comply with the
requirements in:
(a) Subpart B, if the recipient is not an individual; or
(b) Subpart C, if the recipient is an individual.
Subpart E--Violations of This Part and Consequences
Sec. 182.500 How are violations of this part determined for
recipients other than individuals?
A recipient other than an individual is in violation of the
requirements of this part if the Federal agency head or their designee
determines, in writing, that:
(a) The recipient has violated the requirements of subpart B; or
(b) The number of convictions of the recipient's employees for
violating criminal drug statutes in the workplace is large enough to
indicate that the recipient has failed to make a good-faith effort to
provide a drug-free workplace.
Sec. 182.505 How are violations of this part determined for
recipients who are individuals?
A recipient who is an individual is in violation of the
requirements of this part if the Federal agency head or their designee
determines, in writing, that:
(a) The recipient has violated the requirements of subpart C; or
(b) The recipient is convicted of a criminal drug offense resulting
from a violation occurring during the conduct of any award activity.
Sec. 182.510 What actions will the Federal Government take against a
recipient determined to have violated this part?
If a recipient is determined to have violated this part, as
described in Sec. 182.500 or Sec. 182.505, the Federal agency may
take one or more of the following actions:
(a) Suspension of payments under the award;
(b) Suspension or termination of the award; and
(c) Suspension or debarment of the recipient under the Federal
agency's regulation implementing the OMB guidance on nonprocurement
debarment and suspension (2 CFR part 180) for a period not to exceed
five years.
Sec. 182.515 Are there any exceptions to those actions?
For a particular award, the Federal agency head may waive, in
writing, a suspension of payments under an award, suspension or
termination of an award, or suspension or debarment of a recipient if
the agency head determines that such a waiver would be in the public
interest. This exception authority cannot be delegated to any other
official.
Subpart F--Definitions
Sec. 182.605 Award.
Award means an award of financial assistance by a Federal agency
directly to a recipient.
(a) The term award includes:
(1) A Federal grant or cooperative agreement, in the form of money
or property in lieu of money.
(2) A block grant or a grant in an entitlement program, whether or
not the grant is exempted from coverage under the government-wide rule
that implements OMB Circular A-102 (for availability of OMB circulars,
see 5 CFR 1310.3) and specifies uniform administrative requirements.
(b) The term award does not include:
(1) Technical assistance that provides services instead of money.
(2) Loans.
(3) Loan guarantees.
(4) Interest subsidies.
(5) Insurance.
(6) Direct appropriations.
(7) Veterans' benefits to individuals (that is, any benefit to
veterans, their families, or survivors by virtue of the service of a
veteran in the Armed Forces of the United States).
Sec. 182.610 Controlled substance.
Controlled substance means a controlled substance in schedules I
through V of the Controlled Substances Act (21 U.S.C. 812), and as
further defined by regulation at 21 CFR 1308.11 through 1308.15.
Sec. 182.615 Conviction.
Conviction means a finding of guilt (including a plea of nolo
contendere) or imposition of sentence, or both, by any judicial body
charged with the responsibility to determine violations of the Federal
or State criminal drug statutes.
Sec. 182.620 Cooperative agreement.
Cooperative agreement means an award of financial assistance that,
consistent with 31 U.S.C. 6305, is used to enter into the same kind of
relationship as a grant (see definition of grant in Sec. 182.650),
except that substantial involvement is expected between the Federal
agency and the
[[Page 69427]]
recipient when carrying out the activity contemplated by the award. The
term does not include cooperative research and development agreements
as defined in 15 U.S.C. 3710a.
Sec. 182.625 Criminal drug statute.
Criminal drug statute means a Federal or non-Federal criminal
statute involving the manufacture, distribution, dispensing, use, or
possession of any controlled substance.
Sec. 182.630 Debarment.
Debarment means an action taken by a Federal agency to prohibit a
recipient from participating in Federal Government procurement
contracts and covered nonprocurement transactions. A recipient so
prohibited is debarred, in accordance with the Federal Acquisition
Regulation for procurement contracts (48 CFR part 9, subpart 9.4) and
Federal agency regulations implementing the OMB guidance on
nonprocurement debarment and suspension (2 CFR part 180, which
implements Executive Orders 12549 and 12689).
Sec. 182.635 Drug-free workplace.
Drug-free workplace means a site for the performance of work done
in connection with a specific award at which employees of the recipient
are prohibited from engaging in the unlawful manufacture, distribution,
dispensing, possession, or use of a controlled substance.
Sec. 182.640 Employee.
(a) Employee means the employee of a recipient directly engaged in
the performance of work under the award, including:
(1) All direct charge employees;
(2) All indirect charge employees, unless their impact or
involvement in the performance of work under the award is insignificant
to the performance o' the award; and
(3) Temporary personnel and consultants who are directly engaged in
the performance of work under the award and who are on the recipient's
payroll.
(b) This definition does not include workers not on the payroll of
the recipient (for example, volunteers, even if used to meet a cost
sharing requirement; consultants or independent contractors not on the
payroll; or employees of subrecipients or subcontractors in covered
workplaces).
Sec. 182.645 Federal agency or agency.
Federal agency or agency means any United States executive
department, military department, government corporation, government-
controlled corporation, any other establishment in the executive branch
(including the Executive Office of the President), or any independent
regulatory agency.
Sec. 182.650 Grant.
Grant means an award of financial assistance that, consistent with
31 U.S.C. 6304, is used to enter into a relationship:
(a) The principal purpose of which is to transfer a thing of value
to the recipient to carry out a public purpose of support or
stimulation authorized by a law of the United States rather than to
acquire property or services for the Federal Government's direct
benefit or use; and
(b) In which substantial involvement is not expected between the
Federal agency and the recipient when carrying out the activity
contemplated by the award.
Sec. 182.655 Individual.
Individual means a natural person.
Sec. 182.660 Recipient.
Recipient means any individual, corporation, partnership,
association, unit of government (except a Federal agency), or legal
entity, regardless of how it is organized, that receives an award
directly from a Federal agency.
Sec. 182.665 State.
State means any of the States of the United States, the District of
Columbia, the Commonwealth of Puerto Rico, or any territory or
possession of the United States.
Sec. 182.670 Suspension.
Suspension means an action taken by a Federal agency that
immediately prohibits a recipient from participating in Federal
Government procurement contracts and covered nonprocurement
transactions for a temporary period, pending completion of an
investigation and any judicial or administrative proceedings that may
ensue. A recipient so prohibited is suspended in accordance with the
Federal Acquisition Regulation for procurement contracts (48 CFR part
9, subpart 9.4) and Federal agency regulations implementing the OMB
guidance on nonprocurement debarment and suspension (2 CFR part 180,
which implements Executive Orders 12549 and 12689). Suspension of a
recipient is a distinct and separate action from suspension of an award
or suspension of payments under an award.
0
9. Revise part 183 to read as follows:
PART 183--NEVER CONTRACT WITH THE ENEMY
Sec.
183.5 Purpose of this part.
183.10 Applicability.
183.15 Responsibilities of Federal agencies.
183.20 Reporting responsibilities of Federal agencies.
183.25 Responsibilities of recipients.
183.30 Access to records.
183.35 Definitions.
Appendix A to Part 183
Award Terms for Never Contract With the Enemy
Authority: Pub. L. 113-291, as amended by Pub. L. 115-232, Pub.
L. 116-92, Pub. L. 116-283, Pub. L. 117-263; 31 U.S.C. 503; 31
U.S.C. 6307.
Sec. 183.5 Purpose of this part.
This part provides guidance to Federal agencies on the
implementation of the Never Contract with the Enemy requirements
applicable to certain grants and cooperative agreements, as specified
in subtitle E, title VIII of the National Defense Authorization Act
(NDAA) for Fiscal Year (FY) 2015 (Pub. L. 113-291), as amended by Sec.
820 of the National Defense Authorization Act for Fiscal Year 2023
(Pub. L. 117-263), hereafter cited as ``Never Contract with the
Enemy'').
Sec. 183.10 Applicability.
(a) This part applies only to grants and cooperative agreements
that are expected to exceed $50,000 and that are performed outside the
United States, including U.S. territories, and that are in support of a
contingency operation in which members of the Armed Forces are actively
engaged in hostilities. It does not apply to the authorized
intelligence or law enforcement activities of the Federal Government.
(b) All elements of this part are applicable until the date of
expiration as provided in law.
Sec. 183.15 Responsibilities of Federal agencies.
(a) Prior to making an award for a covered grant or cooperative
agreement (see also Sec. 183.35), the Federal agency must check the
current list of prohibited or restricted persons or entities in the
System for Award Management (SAM.gov) Exclusions.
(b) The Federal agency may include the award term provided in
appendix A in all covered grant and cooperative agreement awards in
accordance with Never Contract with the Enemy.
(c) A Federal agency may become aware of a person or entity that:
(1) Provides funds, including goods and services, received under a
covered grant or cooperative agreement of an executive agency directly
or indirectly to covered persons or entities; or
(2) Fails to exercise due diligence to ensure that no funds,
including goods
[[Page 69428]]
and services, received under an executive agency's covered grant or
cooperative agreement are provided directly or indirectly to covered
persons or entities.
(d) When a Federal agency becomes aware of such a person or entity,
it may do any of the following actions:
(1) Restrict the future award of all Federal contracts, grants, and
cooperative agreements to the person or entity based upon concerns that
Federal awards to the entity would provide grant funds directly or
indirectly to a covered person or entity.
(2) Terminate any grant, cooperative agreement, or contract to a
covered person or entity upon becoming aware that the recipient has
failed to exercise due diligence to ensure that no award funds are
provided directly or indirectly to a covered person or entity.
(3) Void in whole or in part any grant, cooperative agreement, or
contracts of the executive agency concerned upon a written
determination by the head of contracting activity or another
appropriate official that the grant or cooperative agreement provides
funds directly or indirectly to a covered person or entity.
(e) The Federal agency must notify recipients in writing regarding
its decision to restrict all future awards, terminate or void a grant
or cooperative agreement, or both. The agency must also notify the
recipient in writing about the recipient's right to request an
administrative review (using the agency's procedures) of the
restriction, termination, or void of the grant or cooperative agreement
within 30 days of receiving notification.
Sec. 183.20 Reporting responsibilities of Federal agencies.
(a) If a Federal agency restricts all future awards to a covered
person or entity, it must enter information on the ineligible person or
entity into SAM.gov Exclusions as a prohibited or restricted source
pursuant to Never Contract with the Enemy.
(b) When a Federal agency terminates or voids a grant or
cooperative agreement due to Never Contract with the Enemy, it must
report the action as a termination for material failure to comply in
SAM.gov. Federal agencies must use the Contractor Performance
Assessment Reporting System (CPARS) to enter or amend information in
SAM.gov.
(c) The Federal agency must document and report to the head of the
executive agency concerned (or the designee of such head) and the
commander of the covered combatant command concerned (or specific
deputies):
(1) Any action to restrict all future awards or to terminate or
void an award with a covered person or entity.
(2) Any decision not to restrict all future awards, terminate, or
void an award along with the agency's reasoning for not taking one of
these actions after the agency became aware that a person or entity is
a prohibited or restricted source.
(d) Each report referenced in paragraph (c)(1) of this section must
include the following:
(1) The executive agency taking such action.
(2) An explanation of the basis for the action taken.
(3) The value of the terminated or voided grant or cooperative
agreement.
(4) The value of all grants and cooperative agreements of the
executive agency with the person or entity concerned at the time the
grant or cooperative agreement was terminated or voided.
(e) Each report referenced in paragraph (c)(2) of this section must
include the following:
(1) The executive agency concerned.
(2) An explanation of the basis for not taking the action.
(f) For each instance in which an executive agency exercised the
additional authority to examine recipient and lower tier entity (for
example, subrecipient or contractor) records, the agency must report in
writing to the head of the executive agency concerned (or the designee
of such head) and the commander of the covered combatant command
concerned (or specific deputies) the following:
(1) An explanation of the basis for the action taken; and
(2) A summary of the results of any examination of records.
Sec. 183.25 Responsibilities of recipients.
(a) Recipients of covered grants or cooperative agreements must
fulfill the requirements outlined in the award term provided in
Appendix A to this part.
(b) Recipients must also flow down the provisions in award terms
covered in Appendix A to this part to all contracts and subawards under
the award.
Sec. 183.30 Access to records.
In addition to any other existing examination-of-records authority,
the Federal Government is authorized to examine any records of the
recipient and its subawards, to the extent necessary, to ensure that
funds, including supplies and services, received under a covered grant
or cooperative agreement (see Sec. 183.35) are not provided directly
or indirectly to a covered person or entity in accordance with Never
Contract with the Enemy. The Federal agency may only exercise this
authority upon a written determination by the Federal agency that
relies on a finding by the commander of a covered combatant command
that there is reason to believe that funds, including supplies and
services, received under the grant or cooperative agreement may have
been provided directly or indirectly to a covered person or entity.
Sec. 183.35 Definitions.
Terms used in this part are defined as follows:
Contingency operation, as defined in 10 U.S.C. 101(a)(13), means a
military operation that:
(1) Is designated by the Secretary of Defense as an operation in
which members of the armed forces are or may become involved in
military actions, operations, or hostilities against an enemy of the
United States or against an opposing military force; or
(2) Results in the call or order to, or retention on, active duty
of members of the uniformed services under 10 U.S.C. 688, 12301(a),
12302, 12304, 12304a, 12305, 12406 of 10 U.S.C. chapter 15, 14 U.S.C.
3713 or any other provision of law during a war or during a national
emergency declared by the President or Congress.
Covered combatant command means the following:
(1) The United States Africa Command.
(2) The United States Central Command.
(3) The United States European Command.
(4) The United States Pacific Command.
(5) The United States Southern Command.
(6) The United States Transportation Command.
Covered grant or cooperative agreement means a grant or cooperative
agreement, as defined in 2 CFR 200.1 with an estimated value in excess
of $50,000 that is performed outside the United States, including its
possessions and territories, in support of a contingency operation in
which members of the Armed Forces are actively engaged in hostilities.
Except for U.S. Department of Defense grants and cooperative agreements
that were awarded on or before December 19, 2017, that will be
performed in the United States Central Command, where the estimated
value is in excess of $100,000.
[[Page 69429]]
Covered person or entity means a person or entity that is actively
opposing United States or coalition forces involved in a contingency
operation in which members of the Armed Forces are actively engaged in
hostilities.
Appendix A to Part 183--Award Terms for Never Contract With the Enemy
Federal agencies may include the following award terms in all
awards for covered grants and cooperative agreements in accordance
with Never Contract with the Enemy:
I. Term 1--Prohibition on Providing Funds to the Enemy
(a) You must:
(1) Exercise due diligence to ensure that no funds, including
supplies and services, received under this grant or cooperative
agreement are provided directly or indirectly (including through
subawards or contracts) to a person or entity who is actively
opposing the United States or coalition forces involved in a
contingency operation in which members of the Armed Forces are
actively engaged in hostilities, which must be completed through 2
CFR 180.300 prior to issuing a subaward or contract and;
(2) Terminate or void in whole or in part any subaward or
contract with a person or entity listed in the System for Award
Management (SAM.gov) as a prohibited or restricted source pursuant
to subtitle E of Title VIII of the NDAA for FY 2015, unless the
Federal agency provides written approval to continue the subaward or
contract.
(b) You may include the substance of this clause, including
paragraph (a) of this clause, in subawards under this grant or
cooperative agreement that have an estimated value over $50,000 and
will be performed outside the United States, including its outlying
areas.
(c) The Federal agency has the authority to terminate or void
this grant or cooperative agreement, in whole or in part, if the
Federal agency becomes aware that you have failed to exercise due
diligence as required by paragraph (a) of this clause or if the
Federal agency becomes aware that any funds received under this
grant or cooperative agreement have been provided directly or
indirectly to a person or entity who is actively opposing coalition
forces involved in a contingency operation in which members of the
Armed Forces are actively engaged in hostilities.
(End of term)
II. Term 2--Additional Access to Recipient Records
(a) In addition to any other existing examination-of-records
authority, the Federal Government is authorized to examine any of
your records and the records of your subawards or contracts to the
extent necessary to ensure that funds, including supplies and
services, available under this grant or cooperative agreement are
not provided, directly or indirectly, to a person or entity that is
actively opposing the United States or coalition forces involved in
a contingency operation in which members of the Armed Forces are
actively engaged in hostilities, except for awards awarded by the
Department of Defense on or before Dec 19, 2017, that will be
performed in the United States Central Command (USCENTCOM) theater
of operations.
(b) The substance of this clause, including this paragraph (b),
must be included in subawards or contracts under this grant or
cooperative agreement that have an estimated value over $50,000 and
will be performed outside the United States, including its outlying
areas.
(End of term)
0
10. Revise the authority citation for part 200 to read as follows:
Authority: 31 U.S.C. 503; 31 U.S.C. 6101-6106; 31 U.S.C. 6307;
31 U.S.C. 7501-7507.
0
11. Amend part 200 by revising subparts A through F to read as follows:
PART 200--UNIFORM ADMINISTRATIVE REQUIREMENTS, COST PRINCIPLES, AND
AUDIT REQUIREMENTS FOR FEDERAL AWARDS
Subpart A--Acronyms and Definitions
Acronyms
Sec.
200.0 Acronyms.
200.1 Definitions.
Subpart B--General Provisions
200.100 Purpose.
200.101 Applicability.
200.102 Exceptions.
200.103 Authorities.
200.104 Supersession.
200.105 Effect on other issuances.
200.106 Agency implementation.
200.107 OMB responsibilities.
200.108 Inquiries.
200.109 Review date.
200.110 Effective date.
200.111 English language.
200.112 Conflict of interest.
200.113 Mandatory disclosures.
Subpart C--Pre-Federal Award Requirements and Contents of Federal
Awards
200.200 Purpose.
200.201 Use of grants, cooperative agreements, fixed amount awards,
and contracts.
200.202 Program planning and design.
200.203 Requirement to provide public notice of Federal financial
assistance programs.
200.204 Notices of funding opportunities.
200.205 Federal agency review of merit of proposals.
200.206 Federal agency review of risk posed by applicants.
200.207 Standard application requirements.
200.208 Specific conditions.
200.209 Certifications and representations.
200.210 Pre-award costs.
200.211 Information contained in a Federal award.
200.212 Public access to Federal award information.
200.213 Reporting a determination that an applicant is not qualified
for a Federal award.
200.214 Suspension and debarment.
200.215 Never contract with the enemy.
200.216 Prohibition on certain telecommunications and video
surveillance services or equipment.
200.217 Whistleblower Protections
Subpart D--Post Federal Award Requirements
200.300 Statutory and national policy requirements.
200.301 Performance measurement.
200.302 Financial management.
200.303 Internal controls.
200.304 Bonds.
200.305 Federal payment.
200.306 Cost sharing.
200.307 Program income.
200.308 Revision of budget and program plans.
200.309 Modifications to Period of Performance.
Property Standards
200.310 Insurance coverage.
200.311 Real property.
200.312 Federally-owned and exempt property.
200.313 Equipment.
200.314 Supplies.
200.315 Intangible property.
200.316 Property trust relationship.
Procurement Standards
200.317 Procurements by states and Indian Tribes.
200.318 General procurement standards.
200.319 Competition.
200.320 Procurement Methods.
200.321 Contracting with small businesses, minority businesses,
women's business enterprises, veteran-owned businesses, and labor
surplus area firms.
200.322 Domestic preferences for procurements.
200.323 Procurement of recovered materials.
200.324 Contract cost and price.
200.325 Federal awarding agency or pass-through entity review.
200.326 Bonding requirements.
200.327 Contract provisions.
Performance and Financial Monitoring and Reporting
200.328 Financial reporting.
200.329 Monitoring and reporting program performance.
200.330 Reporting on real property.
Subrecipient Monitoring and Management
200.331 Subrecipient and contractor determinations.
200.332 Requirements for pass-through entities.
200.333 Fixed amount subawards.
Record Retention and Access
200.334 Record retention requirements.
200.335 Requests for transfer of records.
200.336 Methods for collection, transmission, and storage of
information.
200.337 Access to records.
200.338 Restrictions on public access to records.
[[Page 69430]]
Remedies for Noncompliance
200.339 Remedies for noncompliance.
200.340 Termination.
200.341 Notification of termination requirement.
200.342 Opportunities to object, hearings, and appeals.
200.343 Effects of suspension and termination.
Closeout
200.344 Closeout.
Post-Closeout Adjustments and Continuing Responsibilities
200.345 Post-closeout adjustments and continuing responsibilities.
Collection of Amounts Due
200.346 Collection of amounts due.
Subpart E--Cost Principles
General Provisions
200.400 Policy guide.
200.401 Application.
Basic Considerations
200.402 Composition of costs.
200.403 Factors affecting allowability of costs.
200.404 Reasonable costs.
200.405 Allocable costs.
200.406 Applicable credits.
200.407 Prior written approval (prior approval).
200.408 Limitation on allowance of costs.
200.409 Special considerations.
200.410 Collection of unallowable costs.
200.411 Adjustment of previously negotiated indirect cost rates
containing unallowable costs.
Direct and Indirect Costs
200.412 Classification of costs.
200.413 Direct costs.
200.414 Indirect costs.
200.415 Required certifications.
Special Considerations for States, Local Governments and Indian Tribes
200.416 Cost allocation plans and indirect cost proposals.
200.417 Interagency service.
Special Considerations for Institutions of Higher Education
200.418 Costs incurred by states and local governments.
200.419 Cost accounting standards.
General Provisions for Selected Items of Cost
200.420 Considerations for selected items of cost.
200.421 Advertising and public relations.
200.422 Advisory councils.
200.423 Alcoholic beverages.
200.424 Alumni activities.
200.425 Audits conducted in accordance with the Single Audit Act.
200.426 Bad debts.
200.427 Bonding costs.
200.428 Collections of improper payments.
200.429 Commencement and convocation costs.
200.430 Compensation--personal services.
200.431 Compensation--fringe benefits.
200.432 Conferences.
200.433 Contingency provisions.
200.434 Contributions and donations.
200.435 Defense and prosecution of criminal and civil proceedings,
claims, appeals and patent infringements.
200.436 Depreciation.
200.437 Employee health and welfare costs.
200.438 Entertainment and prizes.
200.439 Equipment and other capital expenditures.
200.440 Exchange rates.
200.441 Fines, penalties, damages and other settlements.
200.442 Fund raising and investment management costs.
200.443 Gains and losses on the disposition of depreciable assets.
200.444 General costs of government.
200.445 Goods or services for personal use.
200.446 Idle facilities and idle capacity.
200.447 Insurance and indemnification.
200.448 Intellectual property.
200.449 Interest.
200.450 Lobbying.
200.451 Losses on other awards or contracts.
200.452 Maintenance and repair costs.
200.453 Materials and supplies costs, including costs of computing
devices.
200.454 Memberships, subscriptions, and professional activity costs.
200.455 Organization costs.
200.456 Participant support costs.
200.457 Plant and security costs.
200.458 Pre-award costs.
200.459 Professional service costs.
200.460 Proposal costs.
200.461 Publication and printing costs.
200.462 Rearrangement and reconversion costs.
200.463 Recruiting costs.
200.464 Relocation costs of employees.
200.465 Rental costs of real property and equipment.
200.466 Scholarships and student aid costs.
200.467 Selling and marketing costs.
200.468 Specialized service facilities.
200.469 Student activity costs.
200.470 Taxes (including Value Added Tax).
200.471 Telecommunication and video surveillance costs.
200.472 Termination and standard closeout costs.
200.473 Training and education costs.
200.474 Transportation costs.
200.475 Travel costs.
200.476 Trustees.
Subpart F--Audit Requirements
General
200.500 Purpose.
Audits
200.501 Audit requirements.
200.502 Basis for determining Federal awards expended.
200.503 Relation to other audit requirements.
200.504 Frequency of audits.
200.505 Remedies for noncompliance.
200.506 Audit costs.
200.507 Program-specific audits.
Auditees
200.508 Auditee responsibilities.
200.509 Auditor selection.
200.510 Financial statements.
200.511 Audit findings follow-up.
200.512 Report submission.
Federal Agencies
200.513 Responsibilities.
Auditors
200.514 Scope of audit.
200.515 Audit reporting.
200.516 Audit findings.
200.517 Audit documentation.
200.518 Major program determination.
200.519 Criteria for Federal program risk.
200.520 Criteria for a low-risk auditee.
Management Decisions
200.521 Management decisions.
Subpart A--Acronyms and Definitions
Acronyms
Sec. 200.0 Acronyms.
(a) CAS Cost Accounting Standards
(b) CFR Code of Federal Regulations
(c) F&A Facilities and Administration
(d) FAC Federal Audit Clearinghouse
(e) FAIN Federal Award Identification Number
(f) FAR Federal Acquisition Regulation
(g) FASB Financial Accounting Standards Board
(h) FFATA Federal Funding Accountability and Transparency Act of 2006
or Transparency Act--Public Law 109-282, as amended by section 6202(a)
of Public Law 110-252; section 3 of Public Law 113-101; section 2(a) of
Public Law 117-40 (See 31 U.S.C. 6101, statutory note)
(i) FOIA Freedom of Information Act
(j) FR Federal Register
(k) GAAP Generally Accepted Accounting Principles
(l) GAGAS Generally Accepted Government Auditing Standards
(m) GASB Government Accounting Standards Board
(n) GAO Government Accountability Office
(o) GSA General Services Administration
(p) IBS Institutional Base Salary
(q) IHE Institutions of Higher Education
(r) IRC Internal Revenue Code
(s) ISDEAA Indian Self-Determination and Education and Assistance Act
(t) MTC Modified Total Cost
(u) MTDC Modified Total Direct Cost
(v) NFE Non-Federal Entity
(w) NOFO Notice of Funding Opportunity
(x) OMB Office of Management and Budget
(y) PII Personally Identifiable Information
(z) PMS Payment Management System
(aa) SAM System for Award Management (SAM.gov)
[[Page 69431]]
(bb) UEI Unique Entity Identifier
(cc) U.S.C. United States Code
(dd) VAT Value Added Tax
Sec. 200.1 Definitions.
The following is a list of definitions of key terms frequently used
in 2 CFR part 200. Definitions found in Federal statutes or regulations
that apply to particular programs take precedence over the following
definitions. However, where the following definitions implement
specific statutory requirements that apply government-wide, such as the
Single Audit Act, the following definitions take precedence over
Federal regulations. For purposes of this part, the following
definitions apply--
Acquisition cost means the (total) cost of the asset including the
cost to ready the asset for its intended use. For example, acquisition
cost for equipment means the net invoice price of the equipment,
including the cost of any modifications, attachments, accessories, or
auxiliary apparatus necessary to make it usable for the purpose for
which it is acquired. Acquisition costs for software include those
development costs capitalized in accordance with generally accepted
accounting principles (GAAP). Ancillary charges such as taxes, duty,
protective in transit insurance, freight, and installation may be
included in or excluded from the acquisition cost in accordance with
the recipient's or subrecipient's regular accounting practices.
Advance payment means a payment that a Federal agency or pass-
through entity makes by any appropriate payment mechanism and payment
method before the recipient or subrecipient disburses the funds for
program purposes.
Allocation means the process of assigning a cost, or a group of
costs, to one or more cost objective(s), in reasonable proportion to
the benefit provided or other equitable relationship. The process may
entail assigning a cost(s) directly to a final cost objective or
through one or more intermediate cost objectives.
Assistance Listings refer to the publicly available listing of
Federal assistance programs managed and administered by the General
Services Administration (GSA) at SAM.gov.
Assistance Listing number means a unique number assigned to
identify an Assistance Listing.
Assistance Listing program title means the title that corresponds
to the Assistance Listing number.
Audit finding means deficiencies which the auditor is required to
report in the schedule of findings and questioned costs. (See Sec.
200.516(a))
Auditee means any non-Federal entity that must be audited under
this part. (See Sec. 200.501)
Auditor means an auditor who is a public accountant or a Federal,
State, local government, or Indian Tribe audit organization that meets
the general standards specified for external auditors in generally
accepted government auditing standards (GAGAS). The term auditor does
not include internal auditors of nonprofit organizations.
Budget means the financial plan for the Federal award that the
Federal agency or pass-through entity approves during the Federal award
process or in subsequent amendments to the Federal award. It may
include the Federal and non-Federal share or only the Federal share, as
determined by the Federal agency or pass-through entity.
Budget period means the time interval from the start date of a
funded portion of an award to the end date of that funded portion,
during which recipients and subrecipients are authorized to incur
financial obligations of the funds awarded, including any funds carried
forward or other revisions pursuant to Sec. 200.308.
Capital assets means:
(1) Tangible or intangible assets used in operations having a
useful life of more than one year which are capitalized in accordance
with GAAP. Capital assets include:
(i) Land, buildings (facilities), equipment, and intellectual
property (including software), whether acquired by purchase,
construction, manufacture, exchange, or through a lease accounted for
as financed purchase under Government Accounting Standards Board (GASB)
standards or a finance lease under Financial Accounting Standards Board
(FASB) standards; and
(ii) Additions, improvements, modifications, replacements,
rearrangements, reinstallations, renovations, or alterations to capital
assets that materially increase their value or useful life (not
ordinary repairs and maintenance).
(2) For purpose of this part, capital assets do not include
intangible right-to-use assets (per GASB) and right-to-use operating
lease assets (per FASB). For example, assets capitalized that recognize
a lessee's right to control the use of property or equipment for a
period of time under a lease contract. See Sec. 200.465.
Capital expenditures means expenditures to acquire capital assets
or expenditures to make additions, improvements, modifications,
replacements, rearrangements, reinstallations, renovations, or
alterations to capital assets that materially increase their value or
useful life.
Central service cost allocation plan means the documentation
identifying, accumulating, and allocating or developing billing rates
based on the allowable costs of services provided by a State, local
government, or Indian Tribe to its departments and agencies on a
centralized basis. The costs of these services may be allocated or
billed to users.
Claim means, depending on the context, either:
(1) A written demand or assertion by one of the parties to a
Federal award seeking as a matter of right:
(i) The payment of money;
(ii) The adjustment or interpretation of the terms and conditions
of the Federal award; or
(iii) Other relief arising under or relating to a Federal award.
(2) A request for payment not in dispute when submitted.
Class of Federal awards means a group of Federal awards either
awarded under a specific program or group of programs or to a specific
type of recipient or group of recipients to which specific provisions
or exceptions may apply.
Closeout means the process by which the Federal agency or pass-
through entity determines that all applicable administrative actions
and all required work of the Federal award have been completed and
takes actions as described in Sec. 200.344.
Cluster of programs means a grouping of closely related programs
that share common compliance requirements. The types of clusters of
programs are research and development (R&D), student financial aid
(SFA), and other clusters. ``Other clusters'' are defined by OMB in the
compliance supplement or designated by a State for Federal awards the
State provides to its subrecipients that meet the definition of a
cluster of programs. When designating ``other clusters,'' a State must
identify the Federal awards included in the cluster and advise the
subrecipients of compliance requirements applicable to the cluster,
consistent with Sec. 200.332. A cluster of programs must be considered
one program when determining major programs as described in Sec.
200.518, and with the exception of R&D as described in Sec.
200.501(d), whether a program-specific audit may be elected.
Cognizant agency for audit means the Federal agency designated to
carry out the responsibilities described in Sec. 200.513(a). The
cognizant agency for audit is not necessarily the same as the
[[Page 69432]]
cognizant agency for indirect costs. A list of cognizant agencies for
audit can be found on the Federal Audit Clearinghouse (FAC) website.
Cognizant agency for indirect costs means the Federal agency
responsible for reviewing, negotiating and approving cost allocation
plans or indirect cost proposals on behalf of all Federal agencies. The
cognizant agency for indirect cost is not necessarily the same as the
cognizant agency for audit. For assignments of cognizant agencies, see
the following:
(1) For Institutions of Higher Education (IHEs): Appendix III,
paragraph C.11.
(2) For nonprofit organizations: Appendix IV, paragraph C.2.a.
(3) For State and local governments: Appendix V, paragraph F.1.
(4) For Indian Tribes: Appendix VII, paragraph D.1.
Compliance supplement means an annually updated authoritative
source of information for auditors that identifies existing important
compliance requirements that the Federal Government expects to be
considered as part of an audit. Auditors use it to understand the
Federal program's objectives, procedures, and compliance requirements,
as well as audit objectives and suggested audit procedures for
determining compliance with the relevant Federal program.
Computing devices means machines that acquire, store, analyze,
process, and publish data and other information electronically,
including accessories (or ``peripherals'') for printing, transmitting
and receiving, or storing electronic information. See also the
definitions of supplies and information technology systems in this
section.
Contract means, for the purpose of Federal financial assistance, a
legal instrument by which a recipient or subrecipient purchases
property or services under a Federal award. For additional information
on subrecipient and contractor determinations, see Sec. 200.331. See
also the definition of subaward in this section.
Contractor means an entity that receives a contract.
Continuation funding means a discretionary decision by a Federal
agency to fund a second or subsequent budget period within the period
of performance.
Cooperative agreement means a legal instrument of financial
assistance between a Federal agency or pass-through entity and a
recipient or subrecipient that, consistent with 31 U.S.C. 6302-6305:
(1) Is used to enter into a relationship the principal purpose of
which is to transfer anything of value to carry out a public purpose
authorized by a law of the United States (see 31 U.S.C. 6101(3)); and
not to acquire property or services for the Federal Government or pass-
through entity's direct benefit or use;
(2) Is distinguished from a grant in that it provides for
substantial involvement of the Federal agency in carrying out the
activity contemplated by the Federal award.
(3) The term does not include:
(i) A cooperative research and development agreement as defined in
15 U.S.C. 3710a; or
(ii) An agreement that provides only:
(A) Direct United States Government cash assistance to an
individual;
(B) A subsidy;
(C) A loan;
(D) A loan guarantee; or
(E) Insurance.
Corrective action means action taken by the auditee that:
(1) Corrects identified deficiencies;
(2) Produces recommended improvements; or
(3) Demonstrates that audit findings are either invalid or do not
warrant auditee action.
Cost allocation plan means a central service or public assistance
cost allocation plan.
Cost objective means a program, function, activity, award,
organizational subdivision, contract, or work unit for which cost data
are desired and for which provision is made to accumulate and measure
the cost of processes, products, jobs, and capital projects. A cost
objective may be a major function of the recipient or subrecipient, a
particular service or project, a Federal award, or an indirect
(Facilities & Administrative (F&A)) cost activity, as described in
subpart E. See also the definitions of final cost objective and
intermediate cost objective in this section.
Cost sharing means the portion of project costs not paid by Federal
funds or contributions (unless authorized by Federal statute). This
term includes matching, which refers to required levels of cost share
that must be provided. See Sec. 200.306.
Disallowed cost means charges to a Federal award that the Federal
agency or pass-through entity determines to be unallowable.
Discretionary award means an award in which the Federal agency, in
keeping with specific statutory authority that enables the agency to
exercise judgment (``discretion''), selects the recipient or the amount
of Federal funding awarded through a competitive process or based on
merit of proposals. A discretionary award may be selected on a non-
competitive basis, as appropriate.
Equipment means tangible personal property (including information
technology systems) having a useful life of more than one year and a
per-unit acquisition cost that equals or exceeds the lesser of the
capitalization level established by the recipient or subrecipient for
financial statement purposes, or $10,000. See this section's
definitions of capital assets, computing devices, general purpose
equipment, information technology systems, special purpose equipment,
and supplies.
Expenditures means charges made by a recipient or subrecipient to a
Federal award.
(1) The charges may be reported on a cash or accrual basis as long
as the methodology is disclosed and consistently applied.
(2) For reports prepared on a cash basis, expenditures are the sum
of:
(i) Cash disbursements for direct charges for property and
services;
(ii) The amount of indirect expense charged;
(iii) The value of third-party in-kind contributions applied; and
(iv) The amount of cash advance payments and payments made to
subrecipients.
(3) For reports prepared on an accrual basis, expenditures are the
sum of:
(i) Cash disbursements for direct charges for property and
services;
(ii) The amount of indirect expense incurred;
(iii) The value of third-party in-kind contributions applied; and
(iv) The net increase or decrease in the amounts owed by the
recipient or subrecipient for:
(A) Goods and other property received;
(B) Services performed by employees, contractors, subrecipients,
and other payees; and
(C) Programs for which no current services or performance are
required, such as annuities, insurance claims, or other benefit
payments.
Federal agency has the meaning in paragraph (2) of this definition
unless the context clearly indicates that the more general meaning in
paragraph (1) of this definition is intended:
(1) An ``agency'' as defined at 5 U.S.C. 551(1) and further
clarified by 5 U.S.C. 552(f); or
(2) An ``agency'' as defined at 5 U.S.C. 551(1) and further
clarified by 5 U.S.C. 552(f) that provides a Federal award directly to
a recipient.
See also definitions of Federal award and recipient.
Federal Audit Clearinghouse (FAC) means the repository of record
[[Page 69433]]
designated by OMB where non-Federal entities must transmit the
information required by subpart F.
Federal award has the meaning, depending on the context, in either
paragraph (1) or (2) of this definition:
(1)(i) The Federal financial assistance that a recipient receives
directly from a Federal agency or indirectly from a pass-through
entity, as described in Sec. 200.101; or
(ii) The cost-reimbursement contract under the Federal Acquisition
Regulations that a non-Federal entity receives directly from a Federal
agency or indirectly from a pass-through entity, as described in Sec.
200.101.
(2) The instrument setting forth the terms and conditions. The
instrument is the grant agreement, cooperative agreement, other
agreement for assistance covered in paragraph (2) of the definition of
Federal financial assistance in this section, or the cost-reimbursement
contract awarded under the Federal Acquisition Regulations.
(3) Federal award does not include other contracts that a Federal
agency uses to buy goods or services from a contractor or a contract to
operate government-owned, contractor- operated (GOCO) facilities.
(4) See also definitions of Federal financial assistance, grant
agreement, and cooperative agreement.
Federal award date means the date when the authorized official of
the Federal agency signed (physically or digitally) the Federal award
or when an alternative binding agreement, consistent with the
requirements of 31 U.S.C. 1501, is reached with the recipient.
Federal financial assistance means:
(1) Assistance that recipients or subrecipients receive or
administer in the form of:
(i) Grants;
(ii) Cooperative agreements;
(iii) Non-cash contributions or donations of property (including
donated surplus property);
(iv) Direct appropriations;
(v) Food commodities; and
(vi) Other financial assistance (except assistance listed in
paragraph (2) of this definition).
(2) For Sec. 200.203 and subpart F of this part, Federal financial
assistance also includes assistance that recipients or subrecipients
receive or administer in the form of:
(i) Loans;
(ii) Loan Guarantees;
(iii) Interest subsidies; and
(iv) Insurance.
(3) For Sec. 200.216, Federal financial assistance includes
assistance that recipients or subrecipients receive or administer in
the form of:
(i) Grants;
(ii) Cooperative agreements;
(iii) Loans; and
(iv) Loan Guarantees.
(4) Federal financial assistance does not include amounts received
as reimbursement for services rendered to individuals as described in
Sec. 200.502(h) and (i).
Federal interest means, for purposes of Sec. 200.330 or when used
in connection with the acquisition or improvement of real property,
equipment, or supplies under a Federal award, the dollar amount that is
the product of the:
(1) The percentage of Federal participation in the total cost of
the real property, equipment, or supplies; and
(2) Current fair market value of the property, improvements, or
both, to the extent the costs of acquiring or improving the property
were included as project costs.
Federal program means:
(1) All Federal awards which are assigned a single Assistance
Listings Number.
(2) When no Assistance Listings Number is assigned, all Federal
awards from the same agency made for the same purpose must be combined
and considered one program.
(3) Notwithstanding paragraphs (1) and (2) of this definition, a
cluster of programs. The types of clusters of programs are:
(i) Research and development (R&D);
(ii) Student financial aid (SFA); and
(iii) ``Other clusters,'' as described in the definition of cluster
of programs in this section. Federal share means the portion of the
Federal award costs paid using Federal funds.
Final cost objective means a cost objective that has allocated to
it both direct and indirect costs and, in the recipient's or
subrecipient's accumulation system, is one of the final accumulation
points, such as a particular award, internal project, or other direct
activity of a recipient or subrecipient. See also the definitions of
cost objective and intermediate cost objective in this section.
Financial obligations means orders placed for property and
services, contracts and subawards made, and similar transactions that
require payment by a recipient or subrecipient under a Federal award
that result in expenditures by a recipient or subrecipient under a
Federal award.
Fixed amount award means a type of grant or cooperative agreement
pursuant to which the Federal agency or pass-through entity provides a
specific amount of funding without regard to actual costs incurred
under the Federal award. This type of Federal award reduces some of the
administrative burden and record-keeping requirements for both the
recipient or subrecipient and the Federal agency or pass-through
entity. Accountability is based primarily on performance and results.
See Sec. Sec. 200.102(c), 200.201(b), and 200.333.
For-profit organization generally means an organization or entity
organized for the purpose of earning a profit. The term includes but is
not limited to:
(1) An ``S corporation'' incorporated under Subchapter S of the
Internal Revenue Code;
(2) A corporation incorporated under another authority;
(3) A partnership;
(4) A limited liability company or partnership; and
(5) A sole proprietorship.
Foreign organization means an entity that is:
(1) A public or private organization located in a country other
than the United States and its territories that is subject to the laws
of the country in which it is located, irrespective of the citizenship
of project staff or place of performance;
(2) A private nongovernmental organization located in a country
other than the United States that solicits and receives cash
contributions from the general public;
(3) A charitable organization located in a country other than the
United States that is nonprofit and tax-exempt under the laws of the
country where it is registered and is not a university, college,
accredited degree-granting institution of education, private
foundation, hospital, an organization engaged exclusively in research
or scientific activities, church, synagogue, mosque or other similar
entities organized primarily for religious purposes; or
(4) An organization located in a country other than the United
States not recognized as a foreign public entity.
Foreign public entity means:
(1) A foreign government or foreign governmental entity;
(2) A public international organization, which is an organization
entitled to enjoy privileges, exemptions, and immunities as an
international organization under the International Organizations
Immunities Act (22 U.S.C. 288-288f);
(3) An entity owned (in whole or in part) or controlled by a
foreign government; or
(4) Any other entity consisting wholly or partially of one or more
foreign governments or foreign governmental entities.
[[Page 69434]]
General purpose equipment means equipment that is not limited to
research, medical, scientific, or other technical activities. Examples
include office equipment and furnishings, modular offices, telephone
networks, information technology equipment and systems, air
conditioning equipment, reproduction and printing equipment, and motor
vehicles. See also the definitions of equipment and special purpose
equipment in this section.
Generally accepted accounting principles (GAAP) has the meaning
specified in accounting standards issued by the Government Accounting
Standards Board (GASB) and the Financial Accounting Standards Board
(FASB).
Generally accepted government auditing standards (GAGAS), also
known as the Yellow Book, means generally accepted government auditing
standards issued by the Comptroller General of the United States, which
apply to financial audits.
Grant agreement or grant means a legal instrument of financial
assistance between a Federal agency or pass-through entity and a
recipient or subrecipient that, consistent with 31 U.S.C. 6302, 6304:
(1) Is used to enter into a relationship, the principal purpose of
which is to transfer anything of value to carry out a public purpose
authorized by a law of the United States (see 31 U.S.C. 6101(3)); and
not to acquire property or services for the Federal agency or pass-
through entity's direct benefit or use;
(2) Is distinguished from a cooperative agreement in that it does
not provide for substantial involvement of the Federal agency in
carrying out the activity contemplated by the Federal award.
(3) Does not include an agreement that provides only:
(i) Direct United States Government cash assistance to an
individual;
(ii) A subsidy;
(iii) A loan;
(vi) A loan guarantee; or
(v) Insurance.
Highest-level owner means the entity that owns or controls an
immediate owner of an applicant or that owns or controls one or more
entities that control an immediate owner of an applicant. No entity
owns or exercises control of the highest-level owner as defined in the
Federal Acquisition Regulations (FAR) (48 CFR 52.204-17).
Hospital means a facility licensed as a hospital under the law of
any State or a facility operated as a hospital by the United States, a
State, or a subdivision of a State.
Improper payment means a payment that should not have been made or
that was made in an incorrect amount under statutory, contractual,
administrative, or other legally applicable requirements. The term
improper payment includes: any payment to an ineligible recipient; any
payment for an ineligible good or service; any duplicate payment; any
payment for a good or service not received, except for those payments
where authorized by law; any payment that is not authorized by law; and
any payment that does not account for credit for applicable discounts.
See OMB Circular A-123 Appendix C, Requirements for Payment Integrity
Improvement for additional definitions and guidance on the requirements
for payment integrity.
Indian Tribe means any Indian Tribe, band, nation, or other
organized group or community, including any Alaska Native village or
regional or village corporation as defined in or established pursuant
to the Alaska Native Claims Settlement Act (43 U.S.C. Chapter 33),
which is recognized as eligible for the special programs and services
provided by the United States to Indians because of their status as
Indians. See 25 U.S.C. 5304(e). This includes any Indian Tribe
identified in the annually published Bureau of Indian Affairs list of
``Indian Entities Recognized and Eligible to Receive Services'' and
other entities that qualify as an Alaska Native village or regional
village corporation as defined in or established pursuant to the Alaska
Native Claims Settlement Act.
Indirect (facilities & administrative (F&A)) cost means those costs
incurred for a common or joint purpose benefitting more than one cost
objective and not readily assignable to the cost objectives
specifically benefitted, without effort disproportionate to the results
achieved. It may be necessary to establish multiple pools of indirect
costs to facilitate equitable distribution of indirect expenses to the
cost objectives served. Indirect cost pools must be distributed to
benefitted cost objectives on bases that will produce an equitable
result in consideration of relative benefits derived.
Indirect cost rate proposal means the documentation prepared by a
recipient to substantiate its request to establish an indirect cost
rate as described in appendices III through VII and Appendix IX to this
part.
Information technology systems means computing devices, ancillary
equipment, software, firmware, and similar procedures, services
(including support services), and related resources. See also the
definitions of computing devices and equipment in this section.
Institution of Higher Education (IHE) is defined at 20 U.S.C. 1001.
Intangible property means property having no physical existence,
such as trademarks, copyrights, data (including data licenses),
websites, IP licenses, trade secrets, patents, patent applications, and
property such as loans, notes and other debt instruments, lease
agreements, stocks and other instruments of property ownership of
either tangible or intangible property ownership, such as intellectual
property, software, or software subscriptions/licenses. Intermediate
cost objective means a cost objective that is used to accumulate
indirect costs or service center costs that are subsequently allocated
to one or more indirect cost pools or final cost objectives. See this
section's definitions of cost objective and final cost objective.
Internal control for recipients and subrecipients means:
(1) Processes designed and implemented by recipients and
subrecipients to provide reasonable assurance regarding the achievement
of objectives in the following categories:
(i) Effectiveness and efficiency of operations;
(ii) Reliability of reporting for internal and external use; and
(iii) Compliance with applicable laws and regulations.
Key Personnel means any individuals (including employees and
contractors) working under a Federal award that are designated in the
Federal award as being particularly integral or meaningful to the
program.
Loan means a Federal loan or loan guarantee received or
administered by a recipient, except as used in this section's
definition of program income.
(1) The term ``direct loan'' means a disbursement of funds by the
Federal Government to a non-Federal borrower under a contract that
requires the repayment of such funds with or without interest. The term
includes the purchase of, or participation in, a loan made by another
lender and financing arrangements that defer payment for more than 90
days, including the sale of a Federal Government asset on credit terms.
The term does not include the acquisition of a federally guaranteed
loan in satisfaction of default claims or the price support loans of
the Commodity Credit Corporation.
(2) The term ``direct loan obligation'' means a binding agreement
by a Federal agency to make a direct loan when specified conditions are
fulfilled by the borrower.
(3) The term ``loan guarantee'' means any Federal Government
guarantee, insurance, or other pledges for the payment of all or a part
of the principal or interest on any debt obligation of a
[[Page 69435]]
non-Federal borrower to a non-Federal lender but does not include the
insurance of deposits, shares, or other withdrawable accounts in
financial institutions.
(4) The term ``loan guarantee commitment'' means a binding
agreement by a Federal agency to make a loan guarantee when specified
conditions are fulfilled by the borrower, the lender, or any other
party to the guarantee agreement.
Local government means any unit of government within a State,
including a:
(1) County;
(2) Borough;
(3) Municipality;
(4) City;
(5) Town;
(6) Township;
(7) Parish;
(8) Local public authority, including any public housing agency
under the United States Housing Act of 1937;
(9) Special district;
(10) School district;
(11) Intrastate district;
(12) Council of governments, whether or not incorporated as a
nonprofit corporation under State law; and
(13) Any other agency or instrumentality of a multi-, regional, or
intra-State or local government.
Major program means a Federal program determined by the auditor to
be a major program in accordance with Sec. 200.518 or a program
identified as a major program by a Federal agency or pass-through
entity in accordance with Sec. 200.503(e).
Management decision means the Federal agency's or pass-through
entity's written determination, provided to the auditee, of the
adequacy of the auditee's proposed corrective actions to address the
findings based on its evaluation of the audit findings and proposed
corrective actions.
Micro-purchase means an individual procurement transaction for
supplies or services, the aggregate amount of which does not exceed the
micro-purchase threshold. Micro-purchases comprise a subset of a
recipient's or subrecipient's small purchases using informal
procurement methods as set forth in Sec. 200.320.
Micro-purchase threshold means the dollar amount at or below which
a recipient or subrecipient may purchase property, or services using
micro-purchase procedures (see Sec. 200.320). Generally, the micro-
purchase threshold for procurement activities administered under
Federal awards is not to exceed the amount set by the FAR at 48 CFR
part 2, subpart 2.1, unless a higher threshold is requested by the
recipient or subrecipient and approved by the cognizant agency for
indirect costs.
Modified Total Direct Cost (MTDC) means all direct salaries and
wages, applicable fringe benefits, materials and supplies, services,
travel, and up to the first $50,000 of each subaward (regardless of the
period of performance of the subawards under the award). MTDC excludes
equipment, capital expenditures, charges for patient care, rental
costs, tuition remission, scholarships and fellowships, participant
support costs, and the portion of each subaward in excess of $50,000.
Other items may only be excluded when necessary to avoid a serious
inequity in the distribution of indirect costs and with the approval of
the cognizant agency for indirect costs.
Non-discretionary award means an award made by the Federal agency
to specific recipients in accordance with statutory, eligibility, and
compliance requirements, such that in keeping with specific statutory
authority, the Federal agency has cannot exercise judgment
(``discretion''). A non-discretionary award amount could be
specifically determined or by formula.
Non-Federal entity (NFE) means a State, local government, Indian
Tribe, Institution of Higher Education (IHE), or nonprofit organization
that carries out a Federal award as a recipient or subrecipient.
Nonprofit organization means any organization that:
(1) Is operated primarily for scientific, educational, service,
charitable, or similar purposes in the public interest;
(2) Is not organized primarily for profit;
(3) Uses net proceeds to maintain, improve, or expand the
organization's operations; and
(4) Is not an IHE.
Notice of funding opportunity means a formal announcement of the
availability of Federal funding through a financial assistance program
from a Federal agency. The notice of funding opportunity provides
information on the award, such as who is eligible to apply, the
evaluation criteria for selecting a recipient or subrecipient, the
required components of an application, and how to submit the
application. The notice of funding opportunity is any paper or
electronic issuance that an agency uses to announce a funding
opportunity, whether it is called a ``program announcement,'' ``notice
of funding availability,'' ``broad agency announcement,'' ``research
announcement,'' ``solicitation,'' or some other term.
Office of Management and Budget (OMB) means the Executive Office of
the President, Office of Management and Budget.
Oversight agency for audit means the Federal agency that provides
the predominant amount of funding directly (direct funding) (as listed
on the schedule of expenditures of Federal awards, see Sec.
200.510(b)) to a recipient or subrecipient unless OMB designates a
specific cognizant agency for audit. When the direct funding represents
less than 25 percent of the total Federal expenditures (as direct and
sub-awards) by the recipient or subrecipient, then the Federal agency
with the predominant amount of total funding is the designated
oversight agency for audit. When there is no direct funding, the
Federal agency that is the predominant source of pass-through funding
must assume the oversight responsibilities. The duties of the oversight
agency for audit and the process for any reassignments are described in
Sec. 200.513(b).
Participant generally means an individual who is not a recipient or
subrecipient staff member or consultant, or an individual who is
developing or leading the implementation of the Federal award; but
rather attending, benefitting from, or is otherwise playing a role in
the overall program activities. Examples include, community members
participating in a community outreach program, members of the public
whose perspectives or input are sought as part of a program, exchange
students, or conference attendees.
Participant support costs means direct costs that support
participants and their involvement in a Federal award, such as
stipends, subsistence allowances, travel allowances, registration fees,
dependent care, and per diem paid directly to or on behalf of
participants.
Pass-through entity means a recipient or subrecipient that provides
a subaward to a subrecipient (including lower tier subrecipients) to
carry out part of a Federal program.
Performance goal means a measurable target level of performance
expressed as a tangible, measurable objective, against which actual
achievement can be compared, including a goal expressed as a
quantitative standard, value, or rate. In some instances (for example,
discretionary research awards), this may be limited to the requirement
to submit technical performance reports (to be evaluated in accordance
with agency policy).
Period of performance means the time during which the recipient and
subrecipient must perform and complete the work authorized under the
Federal award. It is the time interval between the start and end date
of a Federal award, which may include one or more funded portions or
budget
[[Page 69436]]
periods. The period of performance does not commit the Federal agency
to fund the award beyond the currently approved budget period.
Personal property means property other than real property. It may
be tangible or intangible.
Personally Identifiable Information (PII) means information that
can be used to distinguish or trace an individual's identity, either
alone or when combined with other personal or identifying information
that is linked or linkable to a specific individual. Some PII is
available in public sources such as telephone books, websites, and
university listings. This type of information is considered Public PII.
Public PII includes, for example, first and last name, address, work
telephone number, email address, home telephone number, and general
educational credentials. The definition of PII is not attached to any
single category of information or technology. Instead, it requires a
case-by-case assessment of the specific risk that an individual can be
identified. Non-PII can become PII whenever additional information is
made publicly available, in any medium and from any source, that could
be used to identify an individual when combined with other available
information.
Prior approval means the written approval by an authorized official
of a Federal agency or pass-through entity of certain costs or
programmatic decisions.
Program income means gross income earned by the recipient or
subrecipient that is directly generated by a supported activity or
earned as a result of the Federal award during the period of
performance except as provided in Sec. 200.307(c). Program income
includes but is not limited to income from fees for services performed,
the use or rental of real or personal property acquired under Federal
awards, the sale of commodities or items fabricated under a Federal
award, license fees, and royalties on patents and copyrights, and
principal and interest on loans made with Federal award funds. Interest
earned on advances of Federal funds is not program income. Except as
otherwise provided in Federal statutes, regulations, or the terms and
conditions of the Federal award, program income does not include
rebates, credits, discounts, and interest earned on any of them. See
Sec. 200.407. See also 35 U.S.C. 200-212 ``Disposition of Rights in
Educational Awards,'' which applies to inventions made under Federal
awards.
Project cost means total allowable costs incurred under a Federal
award and all cost sharing, including third-party contributions.
Property means real property or personal property. See this
section's definitions of real property and personal property.
Protected Personally Identifiable Information (Protected PII) means
an individual's first name or first initial and last name in
combination with any one or more type of information, including, but
not limited to, social security number, passport number, credit card
numbers, clearances, bank numbers, biometrics, date and place of birth,
mother's maiden name, criminal, medical and financial records,
educational transcripts. This definition does not include PII that must
be disclosed by law. See this section's definition of Personally
Identifiable Information (PII).
Questioned cost has the meaning given in paragraphs (1) through
(3).
(1) Questioned cost means an amount, expended or received from a
Federal award, that in the auditor's judgment:
(i) Is noncompliant or suspected noncompliant with Federal
statutes, regulations, or the terms and conditions of the Federal
award;
(ii) At the time of the audit, lacked adequate documentation to
support compliance; or
(iii) Appeared unreasonable and did not reflect the actions a
prudent person would take in the circumstances.
(2) The questioned cost amount under (1)(ii) is calculated as if
the portion of a transaction that lacked adequate documentation were
confirmed noncompliant.
(3) There is no questioned cost solely because of:
(i) Deficiencies in internal control; or
(ii) Noncompliance with reporting requirements if this
noncompliance does not affect the amount expended or received from the
Federal award.
(4) Known questioned cost means a questioned cost specifically
identified by the auditor. Known questioned costs are a subset of
likely questioned costs.
(5) Likely questioned cost means the auditor's best estimate of
total questioned costs, not just the known questioned costs. Likely
questioned costs are developed by extrapolating from audit evidence
obtained, for example, by projecting known questioned costs identified
in an audit sample to the entire population from which the sample was
drawn. In evaluating the effect of questioned costs on the opinion on
compliance, the auditor considers the likely questioned costs, not just
the known questioned costs.
Real property means land, including land improvements, structures,
appurtenances thereto, and legal interests in land such as a fee title,
licenses, rights of way, easements, but excludes moveable machinery and
equipment.
Recipient means an entity that receives a Federal award directly
from a Federal agency to carry out an activity under a Federal program.
The term recipient does not include subrecipients or individuals that
are participants and beneficiaries of the award.
Renewal award means an award made after the expiration of a Federal
award for which the start date is contiguous with, or closely follows,
the end of the expiring Federal award. The start date of a renewal
award begins a new and distinct period of performance.
Research and Development (R&D) means all basic and applied research
activities and all development activities performed by a recipient or
subrecipient. The term research also includes activities involving the
training of individuals in research techniques where such activities
use the same facilities as other research and development activities
and where such activities are not included in the instruction function.
``Research'' is the systematic study directed toward fuller scientific
knowledge or understanding of the subject studied. ``Development'' is
the systematic use of knowledge and understanding gained from research
to produce useful materials, devices, systems, or methods, including
designing and developing prototypes and processes.
Simplified acquisition threshold means the dollar amount below
which a recipient or subrecipient may purchase property or services
using small purchase methods (see Sec. 200.320). Recipients and
subrecipients adopt small purchase procedures to expedite the purchase
of items at or below the simplified acquisition threshold. The
simplified acquisition threshold set in the FAR at 48 CFR part 2,
subpart 2.1 is used in this part as the simplified acquisition
threshold for secondary procurement activities administered under
Federal awards. The recipient or subrecipient is responsible for
determining an appropriate simplified acquisition threshold, which is
less than or equal to the dollar value established in the FAR, based on
internal controls, an evaluation of risk, and its documented
procurement procedures. Recipients and subrecipients should also
determine if local government purchasing laws apply. This threshold
must never exceed the dollar value established in the FAR.
Special purpose equipment means equipment that is used only for
research, medical, scientific, or other
[[Page 69437]]
technical activities. Examples of special purpose equipment include
microscopes, x-ray machines, surgical instruments, spectrometers, and
associated software. See also the definitions of equipment and general
purpose equipment in this section.
State means any State of the United States, the District of
Columbia, the Commonwealth of Puerto Rico, U.S. Virgin Islands, Guam,
American Samoa, the Commonwealth of the Northern Mariana Islands, and
any agency or instrumentality thereof exclusive of local governments.
Student Financial Aid (SFA) means Federal awards under those
programs of general student assistance, such as those authorized by
Title IV of the Higher Education Act of 1965, as amended (20 U.S.C.
1070-1099d), which the U.S. Department of Education administers, and
similar programs provided by other Federal agencies. It does not
include Federal awards under programs that provide fellowships or
similar Federal awards to students on a competitive basis or for
specified studies or research.
Subaward means an award provided by a pass-through entity to a
subrecipient for the subrecipient to contribute to the goals and
objectives of the project by carrying out part of a Federal award
received by the pass-through entity. It does not include payments to a
contractor or to an individual that is a Federal program beneficiary. A
subaward may be provided through any legal agreement, including an
agreement the pass-through entity considers a contract.
Subrecipient means an entity that receives a subaward from a pass-
through entity to carry out part of a Federal award. It does not
include an individual that is a Federal program beneficiary or
participant. A subrecipient may also be a recipient of other Federal
awards directly from a Federal agency.
Subsidiary means an entity in which more than 50 percent of the
entity is owned or controlled directly by a parent corporation or
through another subsidiary of a parent corporation.
Supply means all tangible personal property other than those
described in the equipment definition. A computing device is a supply
if the acquisition cost is below the lesser of the capitalization level
established by the recipient or subrecipient for financial statement
purposes or $10,000, regardless of the length of its useful life. See
this section's definitions of computing devices and equipment.
Telecommunications cost means the cost of using communication
technologies such as mobile phones, landlines, and the internet.
Termination means the action a Federal agency or pass-through
entity takes to discontinue a Federal award, in whole or in part at any
time before the planned end date of the period of performance.
Termination does not include discontinuing a Federal award (for
example, not issuing continuation funding which is at the discretion of
a Federal agency), or a lack of available funds.
Third-party in-kind contributions means the value of non-cash
contributions (meaning, property or services) that:
(1) Benefit a federally-assisted project or program Federal award;
and
(2) Are contributed by non-Federal third parties, without charge,
to a recipient or subrecipient under a Federal award.
Unliquidated financial obligation means financial obligations
incurred by the recipient or subrecipient but not paid (liquidated) for
financial reports prepared on a cash basis. For reports prepared on an
accrual basis, these are financial obligations incurred by the
recipient or subrecipient but not recorded.
Unobligated balance means the amount of funds under a Federal award
that the recipient or subrecipient has not obligated. The amount is
computed by subtracting the cumulative amount of the recipient's or
subrecipient's unliquidated financial obligations and expenditures
under the Federal award from the cumulative amount of funds the Federal
agency or pass-through entity authorized the recipient or subrecipient
to obligate.
Voluntary committed cost sharing means cost sharing specifically
pledged voluntarily in the proposal's budget on the part of the
recipient or subrecipient, which becomes a binding requirement of the
Federal award. See Sec. 200.306.
Subpart B--General Provisions
Sec. 200.100 Purpose.
(a) Purpose. (1) This part establishes uniform administrative
requirements, cost principles, and audit requirements for Federal
awards. Federal agencies must not impose additional requirements except
as allowed in Sec. Sec. 200.102, 200.211, or unless specifically
required by Federal statute, regulation, or Executive order.
(2) This part provides Federal agencies with the policy for
collecting and submitting information on all Federal financial
assistance programs to the Office of Management and Budget (OMB) and
communicating this information to the public. It also establishes
Federal policies related to the delivery of this information to the
public, including through the use of electronic media. It also sets
forth how the General Services Administration (GSA), OMB, and Federal
agencies implement the Federal Program Information Act (31 U.S.C. 6101-
6106).
(b) Administrative requirements. Subparts B through D set forth the
uniform administrative requirements for Federal financial assistance.
This includes establishing requirements for Federal agencies management
of Federal financial assistance programs before a Federal award is
made, and requirements that Federal agencies may impose on recipients
and subrecipients throughout the lifecycle of a Federal award.
(c) Cost principles. Subpart E establishes principles for
determining allowable costs incurred by recipients and subrecipients
under Federal awards. These principles are for the purpose of cost
determination. They do not address the circumstances nor dictate the
extent of Federal Government funding of a particular program or
project.
(d) Single Audit Requirements and Audit Follow-up. Subpart F is
issued pursuant to the Single Audit Act Amendments of 1996 (31 U.S.C.
7501-7507). Subpart F sets forth the standards for achieving
consistency and uniformity among Federal agencies for the audit of non-
Federal entities administering Federal awards. Subpart F also provides
the policies and procedures for Federal agencies or pass-through
entities when using the results of these audits.
Sec. 200.101 Applicability.
(a) General applicability to Federal agencies. (1) Subparts A
through F apply to Federal agencies that make Federal awards to non-
Federal entities.
(2) Federal agencies may apply subparts A through E to Federal
agencies, for-profit organizations, foreign public entities, or foreign
organizations as permitted in agency regulations or program statutes,
except when a Federal agency determines that the application of these
subparts would be inconsistent with the international responsibilities
of the United States or the laws of a foreign government. If a Federal
agency does not apply subpart E to for-profit organizations, the cost
principles of the Federal Acquisition Regulations (FAR) will apply.
Subpart F only applies to non-Federal entities as defined in the Single
Audit Act Amendments of 1996 (31 U.S.C. 7501-7507). Federal agencies
should apply the requirements to all recipients in a consistent and
equitable manner to the
[[Page 69438]]
extent permitted within applicable statutes, regulations, and policies.
(b) Applicability to different types of Federal awards. (1)
Throughout subparts A through F, the word ``must'' indicates a
requirement. The word ``should'' or ``may'' indicates a recommended
approach and permits discretion.
(2) Paragraphs (b)(3) through (6) of this section describe what
portions of this part apply to specific types of Federal financial
assistance. The terms and conditions of Federal awards and the
requirements of this part flow down to subrecipients unless indicated
otherwise in Federal statute, regulation, or the terms and conditions
of the Federal award. Pass-through entities must comply with the
requirements described in Sec. Sec. 200.331 through 200.333, and any
other sections directed toward pass-through entities.
(3) Subparts A and B apply to all Federal financial assistance with
the following exceptions:
(i) Sections 200.111, 200.112, and 200.113 do not apply to
agreements for loans, loan guarantees, interest subsidies, insurance,
and procurement contracts under the FAR and subcontracts under those
contracts.
(4) Subparts C and D apply only to grants and cooperative
agreements with the following exceptions:
(i) Section 200.203 also applies to agreements for loans, loan
guarantees, interest subsidies, and insurance;
(ii) Section 200.216 also applies to loans and loan guarantees; and
(iii) Sections 200.303 and 200.331 through 200.333 also apply to
all types of Federal financial assistance.
(5) Subpart E applies to grants, cooperative agreements, and
certain procurement contracts under the FAR but does not apply to the
following:
(i) Grants and Cooperative Agreements providing food commodities;
(ii) Fixed Amount Awards;
(iii) Agreements for loans, loan guarantees, interest subsidies,
and insurance;
(iv) Procurement contracts under the FAR that are not negotiated;
and
(v) Federal awards to hospitals (See Appendix IX--Hospital Cost
Principles)
(6) Subpart F only applies to the following:
(i) Grants and cooperative agreements (including fixed amount
awards);
(ii) Contracts and subcontracts awarded under the FAR (except for
fixed price contracts and subcontracts);
(iii) Agreements for loans, loan guarantees, interest subsidies,
and insurance; and
(iv) Any other form of Federal financial assistance as defined by
the Single Audit Act Amendment of 1996.
(c) Federal award of a cost-reimbursement contract under the
Federal Acquisition Regulations (FAR) to a non-Federal entity. When a
non-Federal entity is awarded a cost-reimbursement contract under the
FAR, only subpart D, Sec. Sec. 200.331 through 200.333, and subparts E
and F are incorporated by reference into the contract. The requirements
of subparts D, E, and F are supplementary to the FAR and the contract.
In cases of conflict, the FAR and the terms and conditions of the
contract awarded under the FAR shall prevail over the incorporated
requirements from this part. When the Cost Accounting Standards (CAS)
are applicable to the contract, they also take precedence over the
incorporated requirements from this part. In addition, costs that are
identified as unallowable under 41 U.S.C. 4304(a) and as stated in the
FAR (48 CFR part 31, subpart 31.2, and 48 CFR 31.603) are always
unallowable. For requirements other than those covered in subpart D,
Sec. Sec. 200.331 through 200.333, and subparts E and F, the terms of
the contract and the FAR apply.
(d) Governing provisions. With the exception of subpart F, which is
required by the Single Audit Act, Federal statutes or regulations
govern in any circumstances where they conflict with the provisions of
this part. For agreements with Indian Tribes, this includes the
provisions of the Indian Self-Determination and Education and
Assistance Act (ISDEAA), as amended (see 25 U.S.C. 5301-5423.
(e) Program applicability. Except for Sec. Sec. 200.203, 200.216,
and 200.331 through 200.333, the requirements in subparts C, D, and E
do not apply to the following programs:
(1) The block grant awards authorized by the Omnibus Budget
Reconciliation Act of 1981 (including Community Services), except to
the extent that subpart E apply to subrecipients of Community Services
Block Grant funds pursuant to 42 U.S.C. 9916(a)(1)(B);
(2) Federal awards to local education agencies under 20 U.S.C.
7702-7703b, (portions of the Impact Aid program);
(3) Payments under the Department of Veterans Affairs' State Home
Per Diem Program (38 U.S.C. 1741); and
(4) Federal awards authorized under the Child Care and Development
Block Grant Act of 1990, as amended:
(i) Child Care and Development Block Grant (42 U.S.C. 9858).
(ii) Child Care Mandatory and Matching Funds of the Child Care and
Development Fund (42 U.S.C. 9858).
(f) Additional program applicability. Except for Sec. Sec. 200.203
and 200.216, the guidance in subpart C does not apply to the following
programs:
(1) Entitlement Federal awards to carry out the following programs
of the Social Security Act:
(i) Temporary Assistance for Needy Families (Title IV-A of the
Social Security Act, 42 U.S.C. 601-619);
(ii) Child Support Enforcement and Establishment of Paternity
(Title IV-D of the Social Security Act, 42 U.S.C. 651-669b);
(iii) Federal Payments for Foster Care, Prevention, and Permanency
(Title IV-E of the Act, 42 U.S.C. 670-679c);
(iv) Aid to the Aged, Blind, and Disabled (Titles I, X, XIV, and
XVI-AABD of the Act, as amended);
(v) Medical Assistance (Medicaid) (Title XIX of the Act, 42 U.S.C.
1396-1396w-5) not including the State Medicaid Fraud Control program
authorized by Section 1903(a)(6)(B) of the Social Security Act (42
U.S.C. 1396b(a)(6)(B)); and
(vi) Children's Health Insurance Program (Title XXI of the Act, 42
U.S.C. 1397aa-1397mm).
(2) A Federal award for an experimental, pilot, or demonstration
project that is also supported by a Federal award listed in paragraph
(f)(1) of this section.
(3) Federal awards under subsection 412(e) of the Immigration and
Nationality Act and subsection 501(a) of the Refugee Education
Assistance Act of 1980 (Pub. L. 96-422, 94 Stat. 1809), for cash
assistance, medical assistance, and supplemental security income
benefits to refugees and entrants and the administrative costs of
providing the assistance and benefits (8 U.S.C. 1522(e)).
(4) Entitlement awards under the following programs of The National
School Lunch Act:
(i) National School Lunch Program (Section 4 of the Act, 42 U.S.C.
1753);
(ii) Commodity Assistance (Section 6 of the Act, 42 U.S.C. 1755);
(iii) Special Meal Assistance (Section 11 of the Act, 42 U.S.C.
1759a);
(iv) Summer Food Service Program for Children (Section 13 of the
Act, 42 U.S.C. 1761); and
(v) Child and Adult Care Food Program (Section 17 of the Act, 42
U.S.C. 1766).
(5) Entitlement awards under the following programs of The Child
Nutrition Act of 1966:
(i) Special Milk Program (Section 3 of the Act, 42 U.S.C. 1772);
[[Page 69439]]
(ii) School Breakfast Program (Section 4 of the Act, 42 U.S.C.
1773); and
(iii) State Administrative Expenses (Section 7 of the Act, 42
U.S.C. 1776).
(6) Entitlement awards for State Administrative Expenses under The
Food and Nutrition Act of 2008 (Section 16 of the Act, 7 U.S.C. 2025).
(7) Non-discretionary Federal awards under the following non-
entitlement programs:
(i) Special Supplemental Nutrition Program for Women, Infants and
Children (Section 17 of the Child Nutrition Act of 1966) 42 U.S.C.
1786;
(ii) The Emergency Food Assistance Programs (Emergency Food
Assistance Act of 1983) 7 U.S.C. 7501 note; and
(iii) Commodity Supplemental Food Program (Section 5 of the
Agriculture and Consumer Protection Act of 1973) 7 U.S.C. 612c note.
Sec. 200.102 Exceptions.
(a) OMB exceptions. Except for subpart F, OMB may allow either
exceptions to or deviations from requirements of this part for classes
of Federal awards, or of recipients, subrecipients, or both, when not
prohibited by statute. For example, OMB may allow exceptions or
deviations in support of innovative program designs or emergency
situations. Deviation means applying more or less restrictive
requirements to a class of Federal awards, recipients, or
subrecipients.
(b) Statutory exceptions. When required by Federal statute, a
Federal agency does not need OMB approval to allow exceptions to or
deviations from requirements of this part (except for subpart F) for a
class of Federal awards or recipients, subrecipients, or both.
(c) Agency exceptions. Federal agencies may allow exceptions to
requirements of this part for individual Federal awards, or recipients,
or subrecipients on a case-by-case basis when the exceptions are not
prohibited by statute and OMB approval is not expressly required by
this part. Only the cognizant agency for indirect costs may authorize
exceptions related to cost allocation plans or indirect cost rate
proposals. A Federal agency may also apply less restrictive
requirements when issuing fixed amount awards (see Sec. 200.1), except
for those requirements imposed by statute or in subpart F.
Sec. 200.103 Authorities.
This part is issued under the following authorities.
(a) Subparts B through D are authorized under 31 U.S.C. 503 (the
Chief Financial Officers Act, Functions of the Deputy Director for
Management); the Federal Program Information Act (Pub. L. 95-220 and
Pub. L. 98-169, as amended, codified at 31 U.S.C. 6101-6106); the
Federal Grant and Cooperative Agreement Act of 1977 (Pub. L. 95-224, as
amended, codified at 31 U.S.C. 6301-6309); 41 U.S.C. 1101-1131 (the
Office of Federal Procurement Policy Act); Reorganization Plan No. 2 of
1970 and Executive Order 11541 (``Prescribing the Duties of the Office
of Management and Budget and the Domestic Policy Council in the
Executive Office of the President''); and the Single Audit Act
Amendments of 1996 (31 U.S.C. 7501-7507).
(b) Subpart E is authorized under the Budget and Accounting Act of
1921, as amended; the Budget and Accounting Procedures Act of 1950, as
amended (31 U.S.C. 1101-1126); the Chief Financial Officers Act of 1990
(31 U.S.C. 503-504); Reorganization Plan No. 2 of 1970; and Executive
Order 11541, ``Prescribing the Duties of the Office of Management and
Budget and the Domestic Policy Council in the Executive Office of the
President.'' OMB also relies on authority under 31 U.S.C. 503 and 31
U.S.C. 6307.
(c) Subpart F is authorized under the Single Audit Act Amendments
of 1996, (31 U.S.C. 7501-7507). OMB also relies on authority under 31
U.S.C. 503 and 31 U.S.C. 6307.
Sec. 200.104 Supersession.
This part supersedes previous OMB guidance issued under Title 2,
subtitle A, chapter I of the Code of Federal Regulations related to
uniform administrative requirements, cost principles, and audit
requirements for Federal awards.
Sec. 200.105 Effect on other issuances.
(a) Superseding inconsistent requirements. For Federal awards made
subject to this part by a Federal agency, this part takes precedence
over any administrative requirements, program manuals, handbooks, and
other non-regulatory materials that are inconsistent with the
requirements of those subparts upon implementation of this part by the
Federal agency, except to the extent that they are required by statute
or authorized in accordance with Sec. 200.102.
(b) Imposition of requirements on recipients. Agencies may only
impose legally binding requirements on recipients and subrecipients
through:
(1) Notice and public comment procedures through an approved agency
process, including as authorized by this part, other statutes, or
regulations; or
(2) Incorporating requirements into the terms and conditions of a
Federal award as permitted by Federal statute, regulation, or this
part.
Sec. 200.106 Agency implementation.
The specific requirements and responsibilities of Federal agencies,
non-Federal entities, recipients, and subrecipients are set forth in
this part. Federal agencies making Federal awards to non-Federal
entities must implement the language in subparts C through F of this
part in codified regulations unless different provisions are required
by Federal statute or are approved by OMB.
Sec. 200.107 OMB responsibilities.
OMB will review Federal agency regulations and implementation of
this part. OMB will provide interpretations of policy requirements and
assistance to ensure effective, efficient, and consistent
implementation. Any exceptions will be subject to approval by OMB and
only with adequate justification from the Federal agency.
Sec. 200.108 Inquiries.
Inquiries from Federal agencies concerning this part may be
directed to OMB. Inquiries from recipients or subrecipients should be
addressed to the Federal agency, the cognizant agency for indirect
costs, the cognizant agency for audit, or the pass-through entity as
appropriate.
Sec. 200.109 Review date.
OMB will review this part periodically.
Sec. 200.110 Effective date.
(a) The standards set forth in this part affecting the
administration of Federal awards by Federal agencies become effective
once implemented by Federal agencies or when any future amendment to
this part becomes final.
(b) Existing negotiated indirect cost rates will remain in place
until they expire. The effective date of changes to indirect cost rates
must be based upon the date a newly re-negotiated rate goes into effect
for the recipient's or subrecipient's fiscal year. Therefore, for
indirect cost rates and cost allocation plans, the revisions to this
part (as of the publication date for revisions to this guidance) become
effective in generating proposals and negotiating a new rate (when the
rate is re-negotiated).
Sec. 200.111 English language.
(a) All Federal financial assistance announcements, applications,
and Federal award information should be in the English language and
must be in terms of U.S. dollars. However, Federal agencies,
recipients, and subrecipients may issue or translate a Federal award
[[Page 69440]]
or other documents into another language. A Federal agency may
translate formal or informal announcements of the availability of
Federal funding through a financial assistance program, such as a
notice of funding opportunity, when translations may serve to increase
the pool of applicants or the participation of a specific community
(for example, programs administered in foreign countries where the
primary language is not English). There must be official controlling
English versions of announcements and award documents.
(b) Applications, reports, and official correspondence may be
submitted in languages other than English if specified in the notice of
funding opportunity or the terms and conditions of the Federal award.
(c) In the event of inconsistency between English and another
language, the English language meaning will control. When a significant
portion of the recipient's or subrecipient's employees administering a
Federal award are not fluent in English, the Federal award should be
provided in English and the language(s) with which employees are more
familiar.
Sec. 200.112 Conflict of interest.
Federal agencies must establish conflict of interest policies for
Federal awards. A recipient or subrecipient must disclose in writing
any potential conflict of interest to the Federal agency or pass-
through entity in accordance with the established Federal agency
policies.
Sec. 200.113 Mandatory disclosures.
An applicant, recipient, or subrecipient of a Federal award must
promptly disclose whenever they have credible evidence of a violation
of Federal criminal law potentially affecting the Federal award (for
example, fraud, embezzlement, bribery, gratuity violations, identity
theft, or sexual assault and exploitation) or a violation of the civil
False Claims Act. (See also 2 CFR 175.105 regarding the obligation to
report credible information related to conduct prohibited by the
Trafficking Victims Protection Act, 22 U.S.C. 7104c). The disclosure
must be made in writing to the Federal agency, pass-through entity (if
applicable), and the agency's Office of Inspector General. Recipients
and subrecipients are required to report matters related to recipient
integrity and performance in accordance with Appendix XII of this part.
Failure to make required disclosures can result in any of the remedies
described in Sec. 200.339. (See also 2 CFR part 180, 31 U.S.C. 3321,
and 41 U.S.C. 2313.)
Subpart C--Pre-Federal Award Requirements and Contents of Federal
Awards
Sec. 200.200 Purpose.
Sections 200.201 through 200.216 prescribe instructions and other
pre-award matters to be used by Federal agencies in the program
planning, announcement, application, and award processes.
Sec. 200.201 Use of grants, cooperative agreements, fixed amount
awards, and contracts.
(a) Federal awards. The Federal agency or pass-through entity must
decide on the appropriate type of agreement for a Federal award (for
example, a grant, cooperative agreement, subaward, or contract) in
accordance with this guidance. See the Federal Grant and Cooperative
Agreement Act (31 U.S.C. 6301-6309).
(b) Fixed amount awards. The Federal agency or pass-through entity
(see Sec. 200.333) may use fixed amount awards (see Fixed amount
awards in Sec. 200.1) for which the following conditions apply:
(1) The Federal award amount is negotiated using the cost
principles (or other pricing information) as a guide. The Federal
agency or pass-through entity may use fixed amount awards if the
project scope has measurable goals and objectives and if adequate cost,
historical, or unit pricing data is available to establish a fixed
budget based on a reasonable estimate of actual costs. Accountability
must be based on performance and results, which can be communicated in
performance reports or through routine monitoring. Except in the case
of termination before the completion of the Federal award, there is no
review of the actual costs incurred by the recipient or subrecipient
under the Federal award. Therefore, no financial reporting is required.
This does not absolve the awardee from the record retention
requirements contained in sections 200.334 through 200.338. Payments
must be based on meeting specific requirements of the Federal award.
Some of the ways in which the Federal award may be paid include, but
are not limited to:
(i) In several partial payments. The amount of each payment as well
as the ``milestone'' or event triggering the payment, should be agreed
to in advance and included in the Federal award;
(ii) On a unit price basis. The defined unit(s) or price(s) should
be agreed to in advance and included in the Federal award; or
(iii) In one payment at the completion of the Federal award.
(2) A fixed amount award may not be used in programs that require
mandatory cost sharing.
(3) A fixed amount award may generate and use program income in
accordance with the terms and conditions of the Federal award; however,
the requirements of Sec. 200.307 do not apply.
(4) At the end of a fixed amount award, the recipient or
subrecipient must certify in writing to the Federal agency or pass-
through entity that the project was completed as agreed to in the
Federal award and that all expenditures were incurred in accordance
with Sec. 200.403. When the required activities were not carried out,
including fixed amount awards paid on a unit price basis under
200.201(b)(1)(ii), the amount of the Federal award must be reduced by
the amount that reflects the activities that were not completed in
accordance with the Federal award. When the required activities were
completed in accordance with the terms and conditions of the Federal
award, the recipient or subrecipient is entitled to any unexpended
funds.
(5) Periodic reports may be established for fixed amount awards.
(6) Prior approval requirements that apply to fixed amount awards
are Sec. 200.308 (paragraphs 1 through 3, 6, and 10) and Sec.
200.333.
Sec. 200.202 Program planning and design.
(a) The Federal agency must design a program and create an
Assistance Listing before announcing the Notice of Funding Opportunity.
A program must be designed:
(1) With clear goals and objectives that provide meaningful results
consistent with the Federal authorizing legislation of the program;
(2) To measure performance based on the goals and objectives
developed during program planning and design. Performance measures may
differ depending on the type of program. See Sec. 200.301 for more
information on performance measurement;
(3) To align with the strategic goals and objectives within the
Federal agency's performance plan and should support the Federal
agency's performance measurement, management, customer service
initiatives, and reporting as required by Part 6 of OMB Circular A-11
(Preparation, Submission, and Execution of the Budget);
(4) To align with the Program Management Improvement Accountability
Act (Pub. L. 114-264) as
[[Page 69441]]
well as the Foundations for Evidence-Based Policymaking Act (Pub. L.
115-435), as applicable; and
(5) To encourage the recipient to engage members of the community
that will benefit from or be impacted by a program during the design
phase, when practicable.
(b) Federal agencies should develop programs in consultation with
communities benefiting from or impacted by the program. In addition,
Federal agencies should consider available data and evaluation results
from past programs and make every effort to extend eligibility
requirements to all potential applicants. Federal agencies are
encouraged to coordinate with other agencies during program planning
and design, particularly when the goals and objectives of a program or
project align with those of other agencies.
Sec. 200.203 Requirement to provide public notice of Federal
financial assistance programs.
(a) The Federal agency must maintain an accurate list of Federal
programs in the Assistance Listings maintained by the General Services
Administration (GSA) at SAM.gov.
(1) The Assistance Listings is the comprehensive government-wide
source of Federal financial assistance program information produced by
the executive branch of the Federal Government.
(2) The information that the Federal agency must submit to GSA for
approval by OMB is listed in paragraph (b). GSA must prescribe the
format for the submission in coordination with OMB.
(3) The Federal agency must assign the appropriate Assistance
Listing before making the Federal award unless exigent circumstances
require otherwise (for example, timing requirements imposed by a
Federal statute).
(b) To the extent practicable, the Federal agency must create,
update, and manage Assistance Listing entries based on the authorizing
statute for the program and comply with additional guidance provided by
GSA (in consultation with OMB) to ensure consistent and accurate
information is available to prospective applicants. Assistance Listings
should be communicated to the public in plain language. Accordingly,
Federal agencies must submit the following information to GSA when
creating an Assistance Listing:
(1) Program Description, Purpose, Goals, and Measurement. A brief
summary of the statutory or regulatory requirements of the program and
its intended outcome. Where appropriate, the program description,
purpose, goals, and performance measurement should align with the
strategic goals and objectives within the Federal agency's performance
plan and should support the Federal agency's performance measurement,
management, customer service initiatives, and reporting as required by
Part 6 of OMB Circular A-11;
(2) Identification. Identification of whether the program will
issue Federal awards on a discretionary or non-discretionary basis;
(3) Projected total amount of funds available for the program.
Estimates based on previous year funding are acceptable if current
appropriations are not available at the time of the submission;
(4) Anticipated source of available funds. The statutory authority
for funding the program and the agency, sub-agency, or specific program
unit that will issue the Federal awards (to the extent possible) and
associated funding identifier (for example, Treasury Account
Symbol(s));
(5) General eligibility requirements. The statutory, regulatory, or
other eligibility factors or considerations that determine the
applicant's qualification for Federal awards under the program (for
example, type of recipient); and
(6) Applicability of Single Audit Requirements. Applicability of
Single Audit Requirements as required by subpart F.
Sec. 200.204 Notices of funding opportunities.
The Federal agency must announce specific funding opportunities for
Federal financial assistance that will be openly competed. The term
openly competed means opportunities that are not directed to one or
more specifically identified applicants. To the extent possible, the
Federal agency should communicate opportunities to the public in plain
language to ensure the announcement is accessible to diverse
communities of eligible applicants, including underserved communities.
The Federal agency should also make efforts to limit the length and
complexity of the announcement and only include the information that is
necessary for the effective communication of the program objectives.
Federal agencies may offer pre-application technical assistance or
provide clarifying information for funding opportunities. However,
Federal agencies must ensure these resources are made accessible and
widely available to all potential applicants; for example, by posting
answers to questions and requests on Grants.gov. The Federal agency
should make every effort to identify in the NOFO all eligible
applicants (for example, different types of nonprofit organizations
such as labor unions). The following information must be provided in a
public notice:
(a) Summary information in notices of funding opportunities. The
Federal agency must display the following information on Grants.gov, in
a location preceding the full text of the announcement:
(1) Federal Agency Name;
(2) Funding Opportunity Title;
(3) Announcement Type (whether the funding opportunity is the
initial announcement or a modification of a previously announced
opportunity);
(4) Funding Opportunity Number (required, if the Federal agency has
assigned a number to the funding opportunity announcement);
(5) Assistance Listing Number(s);
(6) Funding Details. To the extent appropriate, the total amount of
funding that the Federal agency expects to award, the anticipated
number of awards, and the expected dollar values of individual awards,
which may be a range or average;
(7) Key Dates. Key dates include due dates for submitting
applications or Executive Order 12372 submissions, as well as for any
letters of intent or preapplications. For any announcement issued
before a program's application materials are available, key dates also
include the date on which those materials will be released; and any
other additional information, as deemed applicable by the Federal
agency. If possible, the Federal agency should provide an anticipated
award date. If the NOFO states that applications will be evaluated on a
``rolling'' basis (that is, at different points during a specified
period of time), the Federal agency should provide an estimate of the
time needed to process an application and notify the applicant of the
Federal agency's decision;
(8) Executive Summary. A brief description that is written in plain
language and summarizes the goals and objectives of the program, the
target audience, and eligible applicants. The text of the executive
summary should not exceed 500 words; and
(9) Agency contact information.
(b) Availability period. The Federal agency should make all funding
opportunities available for application for at least 60 calendar days.
However, the Federal agency may extend the availability period of an
opportunity as needed. For example, extending the period may be
necessary to provide technical assistance to an applicant pool that was
not anticipated when the
[[Page 69442]]
announcement was made or has less experience with applying for Federal
financial assistance. The Federal agency may also determine that an
availability period of less than 60 days is sufficient for a particular
funding opportunity. However, no funding opportunity should be
available for less than 30 calendar days unless the Federal agency
determines that exigent circumstances justify this.
(c) Full text of funding opportunities. (1) The Federal agency must
include the information in Appendix I for every funding opportunity.
(2) Federal agencies should ensure that funding opportunities are
written using plain language. To the extent possible Federal agencies
must streamline opportunities to make them accessible, particularly for
funding opportunities that are new, targeted to underserved
communities, or intended to reach inexperienced applicants.
(3) To reduce application burden, Federal agencies should consider
whether programmatic or administrative requirements specific to the
agency, program, or funding opportunity must be met at the time of
application or as a requirement of receiving a Federal award.
Sec. 200.205 Federal agency merit review of proposals.
Unless prohibited by Federal statute, the Federal agency must
design and execute a merit review process of applications for
discretionary Federal awards. The objective of a merit review process
is to select recipients most likely to be successful in delivering
results based on the program objectives as outlined in section Sec.
200.202. A merit review is an objective process of evaluating Federal
award applications in accordance with the written standards of the
Federal agency. If utilizing external peer reviewers, these standards
should identify the number of people the agency requires to participate
in the merit review process and provide opportunities for a diverse
group of participants, including those representing underserved
communities. This process must be described or incorporated by
reference in the applicable funding opportunity. See Appendix I to this
part. See also Sec. 200.204. The Federal agency must also periodically
review its merit review process.
Sec. 200.206 Federal agency review of risk posed by applicants.
(a) Review of OMB-designated repositories of government-wide data.
(1) Prior to making a Federal award, the Federal agency is required to
review eligibility information for applicants and financial integrity
information for applicants available in OMB-designated databases per
the Payment Integrity Information Act of 2019 (Pub. L. 116-117), the
``Do Not Pay Initiative'' (31 U.S.C. 3354), and 41 U.S.C. 2313.
(2) The Federal agency is required to review the responsibility and
qualification records available in the non-public segment of the System
for Award Management (SAM.gov) prior to making a Federal award where
the Federal share is expected to exceed the simplified acquisition
threshold. See 41 U.S.C. 2313. The Federal agency must consider all of
the information available in SAM.gov with regard to the applicant and
any immediate highest-level owner, predecessor (meaning, an
organization that is replaced by a successor), or subsidiary,
identified for that applicant in SAM.gov. See Public Law 112-239,
National Defense Authorization Act for Fiscal Year 2013. The
information in the system for a prior recipient of a Federal award must
demonstrate a satisfactory record of administering programs or
activities under Federal financial assistance or procurement awards,
and integrity and business ethics. The Federal agency may make a
Federal award to a recipient that does not fully meet these standards
if it is determined that the information is not relevant to the Federal
award under consideration or there are specific conditions that can
appropriately mitigate the risk associated with the recipient in
accordance with Sec. 200.208.
(b) Risk Assessment. (1) The Federal agency must establish and
maintain policies and procedures for conducting a risk assessment to
evaluate the risks posed by applicants before issuing Federal awards.
This assessment helps identify risks that may affect the advancement
toward or the achievement of a project's goals and objectives. Risk
assessments assist Federal managers in determining appropriate
resources and time to devote to project oversight and monitor recipient
progress. This assessment may incorporate elements such as the quality
of the application, award amount, risk associated with the program,
cybersecurity risks, and impacts on local jobs and the community. If
the Federal agency determines that the Federal award will be made,
specific conditions that address the assessed risk may be implemented
in the Federal award. The risk criteria to be evaluated must be
described in the announcement of the funding opportunity described in
Sec. 200.204.
(2) In evaluating risks posed by applicants, the Federal agency
should consider the following items:
(i) Financial stability. The applicant's record of effectively
managing financial risks, assets, and resources;
(ii) Management systems and standards. Quality of management
systems and ability to meet the management standards prescribed in this
part;
(iii) History of performance. The applicant's record of managing
previous and current Federal awards, including compliance with
reporting requirements and conformance to the terms and conditions of
Federal awards, if applicable;
(iv) Audit reports and findings. Reports and findings from audits
performed under subpart F or the reports and findings of any other
available audits, if applicable; and
(v) Ability to effectively implement requirements. The applicant's
ability to effectively implement statutory, regulatory, or other
requirements imposed on recipients of Federal awards.
(c) Adjustments to the Risk Assessment. The Federal agency may
modify the risk assessment at any time during the period of
performance, which may justify changes to the terms and conditions of
the Federal award. See Sec. 200.208.
(d) Suspension and debarment compliance. (1) The Federal agency
must comply with the government-wide suspension and debarment guidance
in 2 CFR part 180 and individual Federal agency suspension and
debarment requirements in title 2 of the Code of Federal Regulations.
Federal agencies must also require recipients to comply with these
requirements. These requirements restrict making Federal awards,
subawards, and contracts with certain parties that are debarred,
suspended, or otherwise excluded from receiving Federal awards
participating in Federal awards.
Sec. 200.207 Standard application requirements.
(a) Paperwork clearances. The Federal agency may only use
application information collections approved by OMB under the Paperwork
Reduction Act of 1995 and OMB's implementing regulations in 5 CFR part
1320 and in alignment with OMB-approved, government-wide data elements
available from the OMB-designated standards lead. OMB will authorize
additional information collections only on a limited basis and
consistent with these requirements.
[[Page 69443]]
(b) Information collection. The Federal agency may inform
applicants that they do not need to provide certain information already
being collected through other means.
Sec. 200.208 Specific conditions.
(a) Federal agencies are responsible for ensuring that specific
Federal award conditions and performance expectations are consistent
with the program design (See Sec. 200.202 and Sec. 200.301)
(b) The Federal agency or pass-through entity may adjust specific
conditions in the Federal award based on an analysis of the following
factors:
(1) Review of OMB-designated repositories of government-wide data
(for example, SAM.gov) or review of its risk assessment (See Sec.
200.206);
(2) The recipient's or subrecipient's history of compliance with
the terms and conditions of Federal awards;
(3) The recipient's or subrecipient's ability to meet expected
performance goals as described in Sec. 200.211; or
(4) A determination that a recipient or subrecipient has adequate
financial resources to perform the Federal award.
(c) Specific conditions may include the following:
(1) Requiring payments as reimbursements rather than advance
payments;
(2) Withholding authority to proceed to the next phase until
receipt of evidence of acceptable performance;
(3) Requiring additional or more detailed financial reports;
(4) Requiring additional project monitoring;
(5) Requiring the recipient or subrecipient to obtain technical or
management assistance; or
(6) Establishing additional prior approvals.
(d) Prior to imposing specific conditions, the Federal agency or
pass-through entity must notify the recipient or subrecipient as to:
(1) The nature of the specific condition(s);
(2) The reason why the specific condition(s) is being imposed;
(3) The nature of the action needed to remove the specific
condition(s);
(4) The time allowed for completing the actions; and
(5) The method for requesting the Federal agency or pass-through
entity to reconsider imposing a specific condition.
(e) Any specific conditions must be promptly removed once the
conditions that prompted them have been satisfied.
Sec. 200.209 Certifications and representations.
Unless prohibited by the U.S. Constitution, Federal statutes, or
regulations, each Federal agency or pass-through entity is authorized
to require a recipient or subrecipient to submit certifications and
representations annually in SAM.gov. Submission may be required more
frequently if a recipient or subrecipient fails to meet a requirement
of a Federal award. When a recipient or subrecipient is provided an
exception to the requirements of 2 CFR 25.110, the recipient or
subrecipient must submit the appropriate assurance form (for example,
SF-424B).
Sec. 200.210 Pre-award costs.
For requirements on costs incurred by the applicant prior to the
start date of the period of performance of the Federal award, see Sec.
200.458.
Sec. 200.211 Information contained in a Federal award.
The Federal award must include the following information:
(a) Federal award performance goals. Where applicable, performance
goals, indicators, targets, and baseline data must be included in the
Federal award. The Federal agency must also specify in the terms and
conditions of the Federal award how performance will be assessed,
including the timing and scope of expected performance. See Sec. Sec.
200.202 and 200.301 for more information on Federal award performance
goals.
(b) General Federal award information. The Federal agency must
include the following information in each Federal award:
(1) Recipient Name (which must match the name associated with its
unique entity identifier as defined at 2 CFR 25.400);
(2) Recipient's Unique Entity Identifier;
(3) Unique Federal Award Identification Number (FAIN);
(4) Federal Award Date (see Federal award date in Sec. 200.1);
(5) Period of Performance Start and End Date;
(6) Budget Period Start and End Date;
(7) Amount of Federal Funds Obligated by this Action;
(8) Total Amount of Federal Funds Obligated;
(9) Total Approved Cost Sharing, where applicable;
(10) Total Amount of the Federal Award including, approved Cost
Sharing;
(11) Budget Approved by the Federal Agency;
(12) Federal Award Description (to comply with statutory
requirements (for example, FFATA));
(13) Name of the Federal agency (including contact information for
the awarding official),
(14) Assistance Listings Number and Title;
(15) Identification of whether the Award is R&D; and
(15) Indirect Cost Rate for the Federal award (including if the de
minimis rate is charged per Sec. 200.414).
(c) General terms and conditions. (1) Federal agencies must
incorporate the following general terms and conditions either in the
Federal award or by reference, as applicable:
(i) Administrative requirements. Administrative requirements
implemented by the Federal agency as specified in this part.
(ii) National policy requirements. These include statutory,
executive order, other Presidential directive, or regulatory
requirements that apply by specific reference and are not program-
specific. See Sec. 200.300 Statutory and national policy requirements.
(iii) Recipient integrity and performance matters. When the total
Federal share of the Federal award may include more than $500,000 over
the period of performance, the Federal agency must include the terms
and conditions available in Appendix XII. See also Sec. 200.113.
(iv) Future budget periods. When it is anticipated that the period
of performance will include multiple budget periods, the Federal agency
must indicate that subsequent budget periods are subject to the
availability of funds, program authority, satisfactory performance, and
compliance with the terms and conditions of the Federal award.
(v) Termination provisions. Federal agencies must inform recipients
of the termination provisions in Sec. 200.340, including the
applicable termination provisions in the Federal agency's regulations
or terms and conditions of the Federal award.
(2) The Federal award must incorporate, by reference, all general
terms and conditions of the Federal award, which must be maintained on
the Federal agency's website.
(3) The Federal agency must provide a copy of the full text of the
general terms and conditions if a recipient requests it.
(4) The Federal agency must maintain an archive of previous
versions of the general terms and conditions, with effective dates, for
use by a recipient, auditors, or others. The archive should be located
on the Federal agency's
[[Page 69444]]
website in the same place where current terms and conditions are
available.
(d) Federal award specific terms and conditions. The Federal agency
must include in each Federal award any specific terms and conditions
that are in addition to the general terms and conditions. See also
Sec. 200.208. Whenever practicable, these specific terms and
conditions should also be available on the Federal agency's website and
in notices of funding opportunities (as outlined in Sec. 200.204).
(e) Federal agency requirements. Any other information required by
the Federal agency.
Sec. 200.212 Public access to Federal award information.
(a) Except as noted in paragraph (c) of this section, the Federal
agency must publish the required Federal award information on
USAspending.gov in accordance with the guidance provided by OMB and the
U.S. Department of the Treasury's DATA Act Information Model Schema
(DAIMS).
(b) All responsibility and qualification records posted in SAM.gov
will be publicly available after a waiting period of 14 calendar days,
except for:
(1) Past performance reviews required by Federal Government
contractors (See Federal Acquisition Regulation (FAR) 48 CFR part 42,
subpart 42.15);
(2) Information that was entered prior to April 15, 2011; or
(3) Information that is withdrawn during the 14-calendar day
waiting period by a Federal agency.
(c) Nothing in this section may be construed as requiring the
publication of information otherwise exempt under the Freedom of
Information Act (5 U.S.C 552), or controlled unclassified information
pursuant to Executive Order 13556.
Sec. 200.213 Reporting a determination that an applicant is not
qualified for a Federal award.
(a) The Federal agency must report in SAM.gov if it does not make a
Federal award to an applicant because it determines that the applicant
does not meet the minimum qualification standards as described in Sec.
200.206(a)(2). The Federal agency must report that determination only
if all of the following apply:
(1) The only basis for the determination is the applicant's prior
record of performance on administering Federal awards or its record of
integrity and business ethics, as described in Sec. 200.206(a)(2)
(meaning, the applicant was determined to be qualified based on all
factors other than those two standards); and
(2) The total Federal share of the Federal award was expected to
exceed the simplified acquisition threshold over the period of
performance.
(b) The Federal agency is not required to report a determination
that an applicant is not qualified for a Federal award if they issue
the Federal award in accordance with the requirements of Sec. 200.208.
(c) If the Federal agency reports a determination that an applicant
is not qualified for a Federal award, the Federal agency also must
notify the applicant that:
(1) The determination was made and reported in SAM.gov and provides
an explanation of the determination;
(2) The information will be kept in the system for a period of five
years from the date of the determination and then archived (See section
872 of Pub. L. 110-417, as amended, codified at 41 U.S.C. 2313);
(3) Each Federal agency that considers making a Federal award to
the applicant during that five-year period will consider that
information in determining the applicant's qualification to receive a
Federal award when the total Federal share of a Federal award is
expected to exceed the simplified acquisition threshold over the period
of performance;
(4) The applicant may review the responsibility/qualification
records accessible in SAM.gov and comment on any information the system
contains about the applicant; and
(5) Federal agencies must consider the applicant's comments in
determining whether the applicant is qualified for a future Federal
award.
(d) If the Federal agency enters information into SAM.gov about a
determination that an applicant is not qualified for a Federal award
and subsequently:
(1) Learns that any of that information is erroneous, the Federal
agency must correct the information in the system within three business
days; and
(2) Obtains an update to that information that could be helpful to
other Federal agencies, the Federal agency should amend the information
in the system within 30 days.
(e) Federal agencies must not post any information that will be
made publicly available in the non-public segment of the
responsibility/qualification records that is covered by a disclosure
exemption under the Freedom of Information Act. If a recipient asserts
within seven calendar days to a Federal agency that some or all of the
publicly available information is covered by a disclosure exemption
under the Freedom of Information Act, the Federal agency that posted
the information must remove the posting within seven calendar days of
receiving the assertion. Prior to reposting the releasable information,
the Federal agency must resolve the issue in accordance with the
agency's Freedom of Information Act procedures.
Sec. 200.214 Suspension and debarment.
Recipients and subrecipients are subject to the non-procurement
debarment and suspension regulations implementing Executive Orders
12549 and 12689, as well as 2 CFR part 180. The regulations in 2 CFR
part 180 restrict making Federal awards, subawards, and contracts with
certain parties that are debarred, suspended, or otherwise excluded
from receiving or participating in Federal awards.
Sec. 200.215 Never contract with the enemy.
Federal agencies, recipients, and subrecipients are subject to the
guidance implementing Never Contract with the Enemy in 2 CFR part 183.
The guidance in 2 CFR part 183 affects covered contracts, grants, and
cooperative agreements that are expected to exceed $50,000 during the
period of performance, are performed outside the United States and its
territories, and are in support of a contingency operation in which
members of the Armed Forces are actively engaged in hostilities.
Sec. 200.216 Prohibition on certain telecommunications and video
surveillance services or equipment.
(a) Recipients and subrecipients are prohibited from obligating or
expending Federal funds to:
(1) Procure or obtain;
(2) Extend or renew a contract to procure or obtain; or
(3) Enter into a contract (or extend or renew a contract) to
procure or obtain equipment, services, or systems that uses covered
telecommunications equipment or services as a substantial or essential
component of any system, or as critical technology as part of any
system. As described in section 889 of Public Law 115-232, covered
telecommunications equipment is telecommunications equipment produced
by Huawei Technologies Company or ZTE Corporation (or any subsidiary or
affiliate of such entities).
(i) For the purpose of public safety, security of government
facilities, physical security surveillance of critical infrastructure,
and other national security purposes, video surveillance and
telecommunications equipment produced by Hytera Communications
Corporation, Hangzhou Hikvision Digital Technology Company, or Dahua
[[Page 69445]]
Technology Company (or any subsidiary or affiliate of such entities).
(ii) Telecommunications or video surveillance services provided by
such entities or using such equipment.
(iii) Telecommunications or video surveillance equipment or
services produced or provided by an entity that the Secretary of
Defense, in consultation with the Director of the National Intelligence
or the Director of the Federal Bureau of Investigation, reasonably
believes to be an entity owned or controlled by, or otherwise connected
to, the government of a covered foreign country.
(b) In implementing the prohibition under section 889 of Public Law
115-232, heads of executive agencies administering loan, grant, or
subsidy programs shall prioritize available funding and technical
support to assist affected businesses, institutions and organizations
as is reasonably necessary for those affected entities to transition
from covered communications equipment and services, to procure
replacement equipment and services, and to ensure that communications
service to users and customers is sustained.
(c) A recipient or subrecipient may use covered telecommunications
equipment or services for their own purposes (not program activities)
provided they are not procured with Federal funds.
(d) The prohibition on covered telecommunications equipment or
services applies to funds generated as program income, indirect cost
recoveries, or to satisfy cost share requirements.
(e) The recipient or subrecipient is not required to certify that
funds were not expended on covered telecommunications equipment or
services beyond the certification provided upon signing the award.
(f) For additional information, see section 889 of Public Law 115-
232 and Sec. 200.471.
Sec. 200.217 Whistleblower protections.
An employee of a recipient or subrecipient may not be discharged,
demoted, or otherwise discriminated against as a reprisal for
disclosing to a person or body described in paragraph (a)(2) of 41
U.S.C. 4712 information that the employee reasonably believes is
evidence of gross mismanagement of a Federal contract or grant, a gross
waste of Federal funds, an abuse of authority relating to a Federal
contract or grant, a substantial and specific danger to public health
or safety, or a violation of law, rule, or regulation related to a
Federal contract (including the competition for or negotiation of a
contract) or grant. See statutory requirements for whistleblower
protections at 10 U.S.C. 4701, 41 U.S.C. 4712, 41 U.S.C. 4304, and 10
U.S.C. 4310.
Subpart D--Post Federal Award Requirements
Sec. 200.300 Statutory and national policy requirements.
(a) The Federal agency or pass-through entity must manage and
administer the Federal award in a manner so as to ensure that Federal
funding is expended and associated programs are implemented in full
accordance with the U.S. Constitution, applicable Federal statutes
(including statutes that prohibit discrimination) and regulations, and
the requirements of this part. The Federal agency or pass-through
entity must communicate to a recipient or subrecipient all relevant
requirements, including those contained in general appropriations
provisions, and incorporate them directly or by reference in the terms
and conditions of the Federal award.
(b) In administering Federal awards that are subject to Federal
statutes prohibiting discrimination based on sex, the Federal agency or
pass-through entity must ensure that the award is administered in a way
that does not unlawfully discriminate based on sexual orientation or
gender identity, consistent with the Supreme Court's reasoning in
Bostock v. Clayton County, 140 S. Ct. 1731 (2020).
(c) In administering awards in accordance with the U.S.
Constitution, the Federal agency must take account of the heightened
constitutional scrutiny that may apply under the Constitution's Equal
Protection clause for government action that provides differential
treatment based on sexual orientation or gender identity.
Sec. 200.301 Performance measurement.
(a) The Federal agency must measure the recipient's performance to
show achievement of program goals and objectives, share lessons
learned, improve program outcomes, and foster the adoption of promising
practices. The Federal agency should establish program goals and
objectives during program planning and design (see Sec. 200.202). The
Federal agency should clearly communicate the specific program goals
and objectives in the Federal award, including how the Federal agency
will measure the achievement of the goals and objectives, the expected
timeline, and information on how the recipient must report the
achievement of program goals and objectives. The Federal agency should
also clearly communicate in the Federal award any expected outcomes,
indicators, targets, baseline data, or data collections that the
recipient is responsible for measuring and reporting. The Federal
agency must ensure all requirements for measuring performance align
with the Federal agency's strategic goals, strategic objectives, or
performance goals relevant to a program (see OMB Circular A-11,
Preparation, Submission, and Execution of the Budget Part 6).
(b) When establishing performance reporting frequency and content,
the Federal agency should consider what information will be necessary
to measure the recipient's progress, to identify promising practices of
recipients, and build the evidence upon which the Federal agency makes
program and performance decisions. The Federal agency should not
require additional information that is not necessary for measuring
program performance. See Sec. 200.329 for more information on
reporting program performance.
(c) The Federal agency should also specify in the Federal award any
requirements of the recipients' participation in federally-funded
evaluations.
Sec. 200.302 Financial management.
(a) Each State must expend and account for the Federal award in
accordance with State laws and procedures for expending and accounting
for the State's funds. All recipient and subrecipient financial
management systems, including records documenting compliance with
Federal statutes, regulations, and the terms and conditions of the
Federal award, must be sufficient to permit the preparation of reports
required by the terms and conditions; and tracking expenditures to
establish that funds have been used in accordance with Federal
statutes, regulations, and the terms and conditions of the Federal
award. See Sec. 200.450
(b) The recipient's or subrecipient's financial management system
must provide for the following (see Sec. Sec. 200.334, 200.335,
200.336, and 200.337):
(1) Identification of all Federal awards by the Assistance Listings
title and number, Federal award identification number, Federal award
year, and name of the Federal agency or pass-through entity.
(2) Accurate, current, and complete disclosure of the financial
results of each Federal award or program in accordance with the
reporting
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requirements in Sec. Sec. 200.328 and 200.329. When a Federal agency
or pass-through entity requires reporting on an accrual basis from a
recipient or subrecipient that maintains its records other than on an
accrual basis, the recipient or subrecipient must not be required to
establish an accrual accounting system. This recipient or subrecipient
may develop accrual data for its reports based on an analysis of the
documentation on hand.
(3) Maintaining records that sufficiently identify the source and
expenditure of Federal funds for Federal awards. These records must
contain information necessary to identify Federal awards,
authorizations, financial obligations, unobligated balances, assets,
expenditures, income, and interest and be supported by source
documentation.
(4) Effective control over and accountability for all funds,
property, and assets. The recipient or subrecipient must safeguard all
assets and ensure they are used solely for authorized purposes. See
Sec. 200.303.
(5) Comparison of expenditures with budget amounts for each Federal
award.
(6) Written procedures to implement the requirements of Sec.
200.305.
(7) Written procedures for determining the allowability of costs in
accordance with subpart E and the terms and conditions of the Federal
award.
Sec. 200.303 Internal controls.
The recipient or subrecipient must:
(a) Establish, document, and maintain effective internal control
over the Federal award that provides reasonable assurance that the
recipient or subrecipient is managing the Federal award in compliance
with Federal statutes, regulations, and the terms and conditions of the
Federal award. These internal controls should comply with the guidance
in ``Standards for Internal Control in the Federal Government'' issued
by the Comptroller General of the United States or the ``Internal
Control-Integrated Framework'' issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO).
(b) Comply with the U.S. Constitution, Federal statutes,
regulations, and the terms and conditions of the Federal award.
(c) Evaluate and monitor the recipient's or subrecipient's
compliance with statutes, regulations, and the terms and conditions of
Federal awards.
(d) Take prompt action when instances of noncompliance are
identified.
(e) Take cybersecurity and other measures as appropriate to
safeguard information including protected personally identifiable
information (PII). This also includes information the Federal agency or
pass-through entity designates as sensitive or other information the
recipient or subrecipient considers sensitive and is consistent with
applicable Federal, State, local, and tribal laws regarding privacy and
responsibility over confidentiality.
Sec. 200.304 Bonds.
(a) Where the Federal Government guarantees or insures the
repayment of money borrowed by the recipient, the Federal agency 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.
(b) The Federal agency may require adequate fidelity bond coverage
where the recipient entity lacks coverage to protect the interest of
the Federal Government.
(c) Where bonds, insurance, or both are required in the situations
described above, the bonds and insurance must be obtained from
companies holding certificates of authority issued by the U.S.
Department of Treasury (see 31 CFR part 223).
Sec. 200.305 Federal payment.
(a) Payments for States. Payments for states are governed by
Treasury-State Cash Management Improvement Act (CMIA) agreements and
default procedures codified at 31 CFR part 205 and Treasury Financial
Manual (TFM) 4A-2000, ``Overall Disbursing Rules for All Federal
Agencies.''
(b) Payments for recipients and subrecipients other than States.
The payment methods must minimize the time elapsing between the
transfer and disbursement of funds regardless of whether the payment is
made by electronic funds transfer or by other means. See Sec.
200.302(b)(6). Except as noted in this part, the Federal agency must
require recipients to use only OMB-approved, government-wide
information collections to request payment.
(1) The recipient or subrecipient must be paid in advance, provided
it maintains or demonstrates the willingness to maintain written
procedures. Such procedures must minimize the time elapsing between the
transfer and disbursement of funds. The procedures must also establish
a financial management system that meets the standards for fund control
and accountability as established in this part. Advance payments to a
recipient or subrecipient must be limited to the minimum amounts needed
and be timed with actual, immediate cash requirements in carrying out
the purpose of the approved program or project. The timing and amount
of advance payments must be as close as is administratively feasible to
the actual disbursements for direct program or project costs and the
proportionate share of any allowable indirect costs. The recipient or
subrecipient must make timely payments to contractors in accordance
with the contract provisions.
(2) Whenever possible, advance payment requests by the recipient or
subrecipient must be consolidated to cover anticipated cash needs for
all Federal awards received by the recipient from the Federal agency or
pass-through entity.
(i) Advance payment mechanisms must comply with 31 CFR part 208 and
include, but are not limited to, Treasury checks and electronic funds
transfers.
(ii) Recipients and subrecipients must be authorized to submit
payment requests as often as necessary when electronic fund transfers
are used or at least monthly when electronic transfers are not used.
See Electronic Fund Transfer Act (15 U.S.C. 1693-1693r).
(3) Reimbursement is preferred when the requirements in paragraph
(b) cannot be met, when the Federal agency or pass-through entity sets
a specific condition per Sec. 200.208, when requested by the recipient
or subrecipient, when a Federal award is for construction, or when a
significant portion of the construction project is accomplished through
private market financing or Federal loans and the Federal award
constitutes a minor portion of the project. When the reimbursement
method is used, the Federal agency or pass-through entity must make
payment within 30 calendar days after receipt of the payment request
unless the Federal agency or pass-through entity reasonably believes
the request to be improper.
(4) If the recipient or subrecipient cannot meet the criteria for
advance payments and the Federal agency or pass-through entity has
determined that reimbursement is not feasible because the recipient or
subrecipient lacks sufficient working capital, the Federal agency or
pass-through entity may provide cash on a working capital advance
basis. Under this procedure, the Federal agency or pass-through entity
must advance cash payments to the recipient or subrecipient to cover
its estimated disbursement needs for an initial period generally
aligned to the recipient's or subrecipient's disbursing cycle. After
that, the Federal agency or
[[Page 69447]]
pass-through entity must reimburse the recipient or subrecipient for
its actual cash disbursements. Use of the working capital advance
payment method requires that the pass-through entity provide timely
advance payments to any subrecipients to meet the subrecipient's actual
cash disbursements. The pass-through entity must not use the working
capital advance method of payment if the reason for using this method
is the unwillingness or inability of the pass-through entity to provide
timely advance payments to the subrecipient to meet the subrecipient's
actual cash disbursements.
(5) If available, the recipient or subrecipient must disburse funds
available from program income (including repayments to a revolving
fund), rebates, refunds, contract settlements, audit recoveries, and
interest earned on Federal funds before requesting additional cash
payments.
(6) Payments for allowable costs must not be withheld at any time
during the period of performance unless required by Federal statute,
regulations, or in one of the following instances:
(i) The recipient or subrecipient has failed to comply with the
terms and conditions of the Federal award; or
(ii) The recipient or subrecipient is delinquent in a debt to the
United States as defined in OMB Circular A-129, ``Policies for Federal
Credit Programs and Non-Tax Receivables.'' Under such conditions, the
Federal agency or pass-through entity may, upon reasonable notice,
inform the recipient that payments must not be made for financial
obligations incurred after a specified date until the conditions are
corrected or the debt is repaid to the Federal Government.
(7) A payment withheld for failure to comply with the terms and
conditions of the Federal award must be released to the recipient or
subrecipient upon subsequent compliance. When a Federal award is
suspended, payment adjustments must be made in accordance with Sec.
200.343.
(8) A payment must not be made to a recipient or subrecipient for
amounts that the recipient or subrecipient withholds from contractors
to assure satisfactory completion of work. Payment must be made when
the recipient or subrecipient disburses the withheld funds to the
contractors or to escrow accounts established to ensure satisfactory
completion of work.
(9) The Federal agency or pass-through entity must not require
separate depository accounts for funds provided to the recipient or
subrecipient or establish any eligibility requirements for
depositories. However, the recipient or subrecipient must be able to
account for all Federal funds received, obligated, and expended.
(10) Advance payments of Federal funds must be deposited and
maintained in insured accounts whenever possible.
(11) The recipient or subrecipient must maintain advance payments
of Federal funds in interest-bearing accounts unless one of the
following applies:
(i) The recipient or subrecipient receives less than $250,000 in
Federal funding per year;
(ii) The best available interest-bearing account would not
reasonably be expected to earn interest in excess of $500 per year on
Federal cash balances;
(iii) The depository would require an average or minimum balance so
high that it would not be feasible with the expected Federal and non-
Federal cash resources;
(iv) A foreign government or banking system prohibits or precludes
interest-bearing accounts; or
(v) An interest-bearing account is not readily accessible (for
example, due to public or political unrest in a foreign country).
(12) The recipient or subrecipient may retain up to $500 per year
of interest earned on Federal funds to use for administrative expenses
of the recipient or subrecipient. Any additional interest earned on
Federal funds must be returned annually to the Department of Health and
Human Services Payment Management System (PMS) through either the
Automated Clearing House (ACH) network or a Fedwire Funds Service
payment. All interest in excess of $500 per year must be returned to
PMS regardless of whether the recipient or subrecipient was paid
through PMS. Instructions for returning interest can be found at
https://pms.psc.gov/grant-recipients/returning-funds-interest.html.
(13) All other Federal funds must be returned to the payment system
of the Federal agency. Returns should follow the instructions provided
by the Federal agency. All returns to PMS should follow the
instructions provided at https://pms.psc.gov/grant-recipients/returning-funds-interest.html.
Sec. 200.306 Cost sharing.
(a) Cost sharing may not be used as a factor during the merit
review of applications or proposals unless allowed by the Federal
agency's regulations, and the information is included in the notice of
funding opportunity. Voluntarily committed cost sharing is not expected
under Federal research grants. See Sec. Sec. 200.414, 200.204, and
Appendix I.
(b) The Federal agency or pass-through entity must accept any cost
sharing or in-kind contributions as part of the recipient's or
subrecipient's contributions to a program when they:
(1) Are verifiable in the recipient's or subrecipient's records;
(2) Are not included as contributions for any other Federal award;
(3) Are necessary and reasonable for achieving the objectives of
the Federal award;
(4) Are allowable under subpart E;
(5) Are not paid by the Federal Government under another Federal
award, except where the program's Federal authorizing statute
specifically provides that Federal funds made available for the program
can be applied to cost sharing requirements of other Federal programs;
(6) Are provided for in the approved budget when required by the
Federal agency; and
(7) Conform to other applicable provisions of this part.
(c) Unrecovered indirect costs, including indirect costs on cost
sharing, may be included as part of cost sharing with the prior
approval of the Federal agency or pass-through entity. Unrecovered
indirect cost means the difference between the amount charged to the
Federal award and the amount which could have been charged to the
Federal award under the recipient's or subrecipient's approved indirect
cost rate.
(d) Values for recipient or subrecipient contributions of services
and property must be established in accordance with the cost principles
in subpart E. When a Federal agency or pass-through entity authorizes
the recipient or subrecipient to donate buildings or land for
construction/facilities acquisition projects or long-term use, the
value of the donated property for cost sharing must be the lesser of
paragraph (d)(1) or (2) below.
(1) The value of the remaining life of the property recorded in the
recipient's or subrecipient's accounting records at the time of
donation.
(2) The current fair market value. However, when there is
sufficient justification, the Federal agency or pass-through may
approve using the current fair market value of the donated property,
even if it exceeds the value described in paragraph (d)(1) at the time
of donation.
(e) Volunteer services furnished by third-party professional and
technical personnel, consultants, and other labor may be counted as
cost sharing if the service is necessary for the program. Rates for
third-party volunteer services must be consistent with those paid for
[[Page 69448]]
similar work by the recipient or subrecipient. When the required skills
are not found in the recipient's or subrecipient's workforce, rates
must be consistent with those paid for similar work in the labor market
where the recipient or subrecipient competes for the services involved.
In either case, fringe benefits that are allowable, allocable, and
reasonable may be included in the valuation.
(f) When a third-party organization furnishes the services of an
employee, these services must be valued at the employee's regular rate
of pay plus an amount of fringe benefits that are allowable, allocable,
and reasonable. These services may also include indirect costs at
either the third-party organization's federally-negotiated indirect
cost rate or a rate in accordance with Sec. 200.414(d). These services
are allowable if they employ the same skill(s) for which the employee
is normally paid. Where donated services are treated as indirect costs,
indirect cost rates will separate the value of the donated services so
that reimbursement for the donated services will not be made.
(g) Donated property from third parties may include items such as
equipment, office supplies, laboratory supplies, or workshop and
classroom supplies. The assessed value of donated property included as
cost sharing must not exceed the property's fair market value at the
time of the donation.
(h) The method used for determining the value of donated equipment,
buildings, and land for which title passes to the recipient or
subrecipient may differ according to the following:
(1) If the purpose of the Federal award is to assist the recipient
or subrecipient in acquiring equipment, buildings, or land, the
aggregate value of the donated property may be claimed as cost sharing.
(2) If the purpose of the Federal award is to support activities
that require the use of equipment, buildings, or land, only
depreciation charges for equipment and buildings may be made. However,
the fair market value of equipment or other capital assets and fair
rental charges for land may be allowed if provided in the terms and
conditions of the Federal award. See Sec. 200.420.
(i) The value of donated property must be determined in accordance
with the accounting policies of the recipient or subrecipient with the
following qualifications:
(1) The value of donated land and buildings must not exceed its
fair market value at the time of donation to the recipient or
subrecipient as established by an independent appraiser (for example,
certified real property appraiser or General Services Administration
representative) and certified by a responsible official of the
recipient or subrecipient as required by the Uniform Relocation
Assistance and Real Property Acquisition Policies Act of 1970, as
amended, (42 U.S.C. 4601-4655) except as provided in the implementing
regulations at 49 CFR part 24, ``Uniform Relocation Assistance And Real
Property Acquisition For Federal And Federally-Assisted Programs.''
(2) The value of donated equipment must not exceed the fair market
value at the time of donation.
(3) The value of donated space must not exceed the fair rental
value of comparable space as established by an independent appraisal of
comparable space and facilities in a privately-owned building in the
same locality.
(4) The value of loaned equipment must not exceed its fair rental
value.
(j) The fair market value of third-party in-kind contributions must
be documented and, to the extent feasible, supported by the same
methods used internally by the recipient or subrecipient.
(k) For institutions of higher education (IHE), voluntary
uncommitted cost sharing should be treated differently from mandatory
or voluntary committed cost sharing and should not be included in the
organized research base for computing the indirect cost rate or
reflected in any allocation of indirect costs. Voluntary uncommitted
cost sharing effort, is faculty-donated additional time above that
agreed to as part of the award. See OMB memorandum M-01-06, dated
January 5, 2001, Clarification of OMB A-21 Treatment of Voluntary
Uncommitted Cost Sharing and Tuition Remission Costs.
Sec. 200.307 Program income.
(a) General. The recipient or subrecipient is encouraged to earn
income to defray program costs when appropriate. Program income must be
used for the original purpose of the Federal award. Program income
earned during the period of performance may only be used for costs
incurred during the period of performance or allowable closeout costs.
Program income must be expended prior to requesting additional Federal
funds. Program income exceeding amounts specified in the Federal award
may be added to or deducted from the total allowable costs in
accordance with the terms and conditions of the Federal award.
(b) Use of program income. There are three methods of applying
program income: deduction; addition; and cost-sharing. The Federal
agency should specify how program income will be used in the terms and
conditions of the Federal award. The deduction method will be used if
the Federal agency does not specify a method for applying program
income. However, the addition method will be used when no method is
specified for awards made to institutions of higher education (IHE) and
nonprofit research institutions. In specifying alternatives to the
deduction and addition methods, the Federal agency may distinguish
between income earned by the recipient and income earned by
subrecipients as well as between the sources, kinds, or amounts of
income.
(1) Deduction. Program income is deducted from the total allowable
costs, reducing the overall total amount of the Federal award.
(2) Addition. Program income is added to the total allowable costs,
increasing the overall total amount of the Federal award. If no program
income method is specified in the Federal award, prior approval is
required to use the addition method.
(3) Cost sharing. Program income is used to meet the Federal
award's cost sharing requirement. If no program income method is
specified in the Federal award, prior approval is required to use the
cost sharing method.
(c) Income after the period of performance. There are no
requirements governing the disposition of program income earned after
the end of the period of performance of the Federal award unless
stipulated in the Federal agency regulations or the terms and
conditions of the Federal award. The Federal agency may negotiate
agreements with recipients regarding appropriate uses of income earned
after the end of the period of performance as part of the closeout
process. See Sec. 200.344.
(d) Cost of generating program income. If authorized by Federal
regulations or the Federal award, costs incidental to generating
program income may be deducted from gross income to determine program
income, provided these costs have not been charged to the Federal
award.
(e) Not considered program income. The following are not considered
program income unless specified in Federal statutes, regulations, or
the terms and conditions of the Federal award:
(1) Governmental revenues. Taxes, special assessments, levies,
fines, and similar revenues the recipient or subrecipient raised.
[[Page 69449]]
(2) Property. Proceeds from the sale of real property, equipment,
or supplies. The proceeds must be handled in accordance with the
requirements of the Property Standards of Sec. Sec. 200.311, 200.313,
200.314, or as explicitly identified in Federal statutes, regulations,
or the terms and conditions of the Federal award.
(3) License fees and royalties. License fees and royalties for
copyrighted material, patents, patent applications, trademarks, and
inventions made under the Federal award subject to 37 CFR part 401.
Sec. 200.308 Revision of budget and program plans.
(a) Approved budget in general. The approved budget for the Federal
award summarizes the financial aspects of the project or program as
approved during the Federal award process. It may include the Federal
share, non-Federal share, or both depending upon Federal agency
requirements.
(b) Deviations from approved budget. The recipient or subrecipient
must report deviations from the approved budget, project or program
scope, or objective(s) in accordance with Sec. 200.329. The recipient
or subrecipient must request prior approvals from the Federal agency or
pass-through entity for budget and program plan revisions in accordance
with this section.
(c) Requesting approval for budget revisions. When requesting
approval for budget revisions, the recipient or subrecipient must use
the same format for budget information that was used in their
application. However, the Federal agency or pass-through entity may
inform the recipient or subrecipient that a letter of request is
sufficient.
(d) Federal agency or pass-through entity review. The Federal
agency or pass-through entity must review the request for budget or
program plan revision and notify the recipient or subrecipient whether
the revisions have been approved within 30 days of receipt of the
request. The Federal agency or pass-through entity must inform the
recipient or subrecipient in writing when a decision can be expected if
more than 30 days is required for a review.
(e) Limitation on other prior approval requirements. Unless
specified in this guidance, the Federal agency may not impose other
prior approval requirements for specific items not approved by OMB. See
also Sec. Sec. 200.102 and 200.407.
(f) Revisions Requiring Prior Approval. A recipient or subrecipient
must request prior written approval from the Federal agency or pass-
through entity for the following reasons:
(1) Change in the scope or the objective of the project or program
(even if there is no associated budget revision requiring prior written
approval).
(2) Change in key personnel specified in the recipient's or
subrecipient's application and included in the Federal award.
(3) The disengagement from a project for more than three months, or
a 25 percent reduction in time and effort devoted to the Federal award
over the course of the period of performance, by the approved project
director or principal investigator.
(4) Incurring costs that require prior approval in accordance with
subpart E. The Federal agency may waive prior approval of these costs
when the costs requiring prior approval are included in the recipient's
or subrecipient's application, and also included in the Federal award.
(5) The transfer of funds budgeted for participant support costs to
other budget categories.
(6) Subaward activities not proposed in the application and
approved in the Federal award. A change in subrecipient only requires
prior approval if the Federal agency or pass-through entity includes
the requirement in the terms and conditions of the Federal award. In
general, a Federal agency or pass-through entity should not require
prior approval of a change to the subrecipient unless the inclusion was
a determining factor in the merit review or eligibility process. This
requirement does not apply to acquiring equipment, supplies, or general
support services.
(7) Changes in the total approved cost-sharing amount.
(8) Requesting additional Federal funds to complete the project. If
approved, the Federal agency must ensure that adequate funds are
available to avoid a violation of the Antideficiency Act.
(9) Transferring funds between the construction and nonconstruction
work under a Federal award.
(10) A no-cost extension (meaning, an extension of time that
requires no additional Federal funds) of the period of performance,
other than any one-time extension authorized by the Federal agency in
accordance with paragraph (g)(2). All requests for no-cost extensions
should be submitted at least 10 calendar days before the conclusion of
the period of performance. The Federal agency may approve multiple no-
cost extensions under a Federal award if not prohibited by Federal
statute or regulation.
(g) Waiver of certain prior approvals. Except for the requirements
listed in paragraphs (f)(1) through (10), the Federal agency is
authorized to waive other prior written approvals contained in subparts
D and E. Such waivers may include authorizing recipients to do one or
more of the following:
(1) Pre-award costs. Incur project costs 90 calendar days before
the Federal award date. Expenses incurred more than 90 calendar days
before the Federal award date requires prior approval of the Federal
agency. All costs incurred before the Federal award date are at the
recipient's own risk (for example, the Federal agency is not required
to reimburse such costs if the recipient does not receive the Federal
award or if the Federal award is less than anticipated and inadequate
to cover such costs). Pre-award costs must be charged to the initial
budget period of the Federal award unless otherwise specified by the
Federal agency. See also Sec. 200.458.
(2) One-time extensions. Initiate a one-time extension of the
period of performance by up to 12 months unless one or more of the
conditions outlined in paragraphs (g)(2)(i) through (iii) of this
section apply. Prior approval is not required if a recipient is
authorized in the terms and conditions of the Federal award to initiate
a one-time extension. However, the recipient must notify the Federal
agency in writing with the supporting justification and a revised
period of performance at least 10 calendar days before the conclusion
of the period of performance. A one-time extension may not be exercised
for the sole purpose of using unobligated balances. This paragraph does
not preclude the Federal agency from approving further no-cost
extensions to the Federal award. One-time extensions require prior
approval from the Federal agency when:
(i) The terms and conditions of the Federal award prohibit the
extension.
(ii) The extension requires additional Federal funds.
(iii) The extension involves any change in the approved scope of
the project.
(3) Unobligated Balances. Carry forward unobligated balances to
subsequent budget periods.
(h) Prior approvals for research awards. The prior approval
requirements described in paragraph (g) are automatically waived for
Federal awards that support research unless stipulated in the Federal
agency's regulations or terms and conditions of the Federal award.
However, one-time extensions require the Federal agency's prior
approval when one of the conditions in paragraph (g)(2) of this section
applies.
[[Page 69450]]
(i) Awards above the Simplified Acquisition Threshold. The Federal
agency cannot permit a transfer that would cause any Federal
appropriation to be used for purposes other than those consistent with
the appropriation. The Federal agency may restrict the transfer of
funds among direct cost categories (for example, personnel, travel, and
supplies) or programs, functions, and activities when:
(1) The Federal share of the Federal award exceeds the simplified
acquisition threshold; and
(2) The cumulative amount of a transfer exceeds 10 percent of the
total budget, including cost share, as last approved by the Federal
agency.
Sec. 200.309 Modifications to Period of Performance.
When the Federal agency or pass-through entity extends the Federal
award, the period of performance will be amended to end at the
completion of the extension. When the Federal agency decides not to
continue a Federal award with multiple budget periods, the period of
performance will be amended to end at the completion of the authorized
budget period. If termination occurs, the period of performance will be
amended to end upon the effective date of termination. A renewal award
means an award made after the expiration of a Federal award for which
the start date is contiguous with, or closely follows, the end of the
expiring Federal award. The start date of a renewal award begins a new
and distinct period of performance.
Property Standards
Sec. 200.310 Insurance coverage.
The recipient or subrecipient must, at a minimum, provide the
equivalent insurance coverage for real property and equipment acquired
or improved with Federal funds as provided to property and equipment
owned by the recipient or subrecipient. Insurance is not required for
Federally-owned property unless required by the terms and conditions of
the Federal award.
Sec. 200.311 Real property.
(a) Title. Subject to the requirements and conditions set forth in
this section, title to real property acquired or improved under the
Federal award will vest upon acquisition in the recipient or
subrecipient.
(b) Use. Except as otherwise provided by Federal statutes or the
Federal agency, real property must be used for the originally-
authorized purpose as long as it is needed for that purpose. While the
property is being used for the originally-authorized purpose, the
recipient or subrecipient must not dispose of or encumber its title or
other interests except as provided by the Federal agency. An
encumbrance is a claim or liability that is attached to the property or
some other right held by a party that is not the owner. An encumbrance
may lessen the value of the property and restrict its free use until
the encumbrance is lifted.
(c) Appraisals. Appraisals of real property must be as conducted by
an independent appraiser (for example, certified real property
appraiser or General Services Administration representative) and
certified by a responsible official of the recipient or subrecipient as
required by the Uniform Relocation Assistance and Real Property
Acquisition Policies Act of 1970, as amended, (42 U.S.C. 4601-4655)
except as provided in the implementing regulations at 49 CFR part 24,
``Uniform Relocation Assistance And Real Property Acquisition For
Federal And Federally-Assisted Programs.''
(d) Disposition. When real property is no longer needed for the
originally-authorized purpose, the recipient or subrecipient must
obtain disposition instructions from the Federal agency or pass-through
entity. The instructions must specify one of the following disposition
methods:
(1) Retain title after compensating the Federal agency. When the
recipient or subrecipient retains title to the property, it must pay
the Federal agency an amount calculated by multiplying the percentage
of the Federal agency's contribution towards the original purchase (and
costs of any improvements) by the current fair market value of the
property. However, in situations where the recipient or subrecipient is
disposing of real property acquired or improved with the Federal award
and acquiring replacement real property under the same Federal award,
the net proceeds from the disposition may be used as an offset to the
cost of the replacement property.
(2) Sell the property and compensate the Federal agency. When a
recipient or subrecipient sells the property, it must pay the Federal
agency an amount calculated by multiplying the percentage of the
Federal agency's contribution towards the original purchase (and cost
of any improvements) by the proceeds of the sale after deducting any
actual and reasonable expenses paid to sell or fix up the property for
sale. When the Federal award has not been closed out, the net proceeds
from the sale may be offset against the original cost of the property.
When directed to sell the property, the recipient or subrecipient must
sell the property utilizing procedures that provide for competition to
the extent practicable and that results in the highest possible return.
(3) Transfer title to the Federal agency or a third party
designated/approved by the Federal agency. When a recipient or
subrecipient transfers title to the property to a Federal agency or
third party designated or approved by the Federal agency, the recipient
or subrecipient is entitled to be paid an amount calculated by
multiplying the percentage of the recipient's or subrecipient's
contribution towards the original purchase of the real property (and
cost of any improvements) by the current fair market value of the
property.
Sec. 200.312 Federally owned and exempt property.
(a) Title to Federally-owned property remains vested in the Federal
Government. The recipient or subrecipient must submit an inventory
listing of Federally owned property in its custody to the Federal
agency or pass-through entity on an annual basis. The recipient or
subrecipient must request disposition instructions from the Federal
agency or pass-through entity upon completion of the Federal award or
when the property is no longer needed.
(b) If the Federal agency has no further need for the property, it
must declare the property excess and report it for disposal to the
appropriate Federal disposal authority unless the Federal agency has
statutory authority to dispose of the property by alternative methods
(for example, the authority provided by the Federal Technology Transfer
Act (15 U.S.C. 3710(i)). The Federal agency or pass-through entity must
issue appropriate instructions to the recipient or subrecipient.
(c) Exempt property means property acquired under the Federal award
where the Federal agency has chosen to vest title to the property to
the recipient or subrecipient without further responsibility to the
Federal Government. The Federal agency may only exercise this option
when permitted by Federal statute and set forth in the terms and
conditions of the Federal award. Absent statutory authority and
specific terms and conditions of the Federal award, the title to exempt
property acquired under the Federal award remains with the Federal
Government.
Sec. 200.313 Equipment.
See also Sec. 200.439.
[[Page 69451]]
(a) Title. Title to equipment acquired under the Federal award will
vest upon acquisition in the recipient or subrecipient subject to the
conditions of this section. This title must be a conditional title
unless a Federal statute specifically authorizes the Federal agency to
vest title in the recipient or subrecipient without further
responsibility to the Federal Government (and the Federal agency elects
to do so). A conditional title means a clear title is withheld by the
Federal agency until conditions and requirements specified in the terms
and conditions of a Federal award have been fulfilled. Title for
equipment vested in a recipient or subrecipient is subject to the
following conditions:
(1) Use the equipment for the authorized purposes of the project
during the period of performance or until the property is no longer
needed for the purposes of the project.
(2) While the equipment is being used for the originally-authorized
purpose, the recipient or subrecipient must not dispose of or encumber
its title or other interests without the approval of the Federal agency
or pass-through entity. An encumbrance is a claim or liability that is
attached to the property or some other right held by a party that is
not the owner. An encumbrance may lessen the value of the property and
restrict its free use until the encumbrance is lifted.
(3) Use and dispose of the property in accordance with paragraphs
(b), (c), and (e) of this section.
(b) General. A State must use, manage and dispose of equipment
acquired under a Federal award in accordance with State laws and
procedures. Indian Tribes must use, manage, and dispose of equipment
acquired under a Federal award in accordance with tribal laws and
procedures. If such laws and procedures do not exist, Indian Tribes
must follow the guidance in this section. Other recipients and
subrecipients must follow paragraphs (c) through (e) of this section.
(c) Use. (1) The recipient or subrecipient must use equipment for
the project or program for which it was acquired and for as long as
needed, whether or not the project or program continues to be supported
by the Federal award. The recipient or subrecipient must not encumber
the equipment without prior approval of the Federal agency or pass-
through entity. The Federal agency may require the submission of the
applicable common forms for reporting on equipment. When no longer
needed for the original project or program, the equipment may be used
in other activities in the following order of priority:
(i) Activities under other Federal awards from the Federal agency
that funded the original project; then
(ii) Activities under Federal awards from other Federal agencies.
These activities include consolidated equipment for information
technology systems.
(2) During the time that equipment is used on the project or
program for which it was acquired, the recipient or subrecipient must
also make the equipment available for use on other programs or projects
supported by the Federal Government, provided that such use will not
interfere with the purpose for which it was originally acquired. First
preference for other use of the equipment must be given to other
programs or projects supported by the Federal agency that financed the
equipment. Second preference must be given to programs or projects
under Federal awards from other Federal agencies. Use for non-
federally-funded projects is also permissible, provided such use will
not interfere with the purpose for which it was originally acquired.
The recipient or subrecipient should consider charging user fees as
appropriate.
(3) Notwithstanding the encouragement in Sec. 200.307 to earn
program income, the recipient or subrecipient must not use equipment
acquired with the Federal award to provide services for a fee that is
less than a private company would charge for similar services. This
restriction is effective as long as the Federal Government retains an
interest in the equipment or as authorized by Federal statute.
(4) When acquiring replacement equipment, the recipient or
subrecipient may either trade-in or sell the equipment and use the
proceeds to offset the cost of the replacement equipment.
(d) Management requirements. Regardless of whether equipment is
acquired in part or its entirety under the Federal award, the recipient
or subrecipient must manage equipment (including replacing equipment)
utilizing procedures that meet the following requirements:
(1) Property records must include a description of the property, a
serial number or another identification number, the source of funding
for the property (including the FAIN), the title holder, the
acquisition date, the cost of the property, the percentage of the
Federal agency contribution towards the original purchase, the
location, use and condition of the property, and any disposition data
including the date of disposal and sale price of the property. The
recipient is responsible for maintaining and updating property records
when there is a change in the status of the property.
(2) A physical inventory of the property must be conducted, and the
results must be reconciled with the property records at least once
every two years.
(3) A control system must be in place to ensure safeguards for
preventing property loss, damage, or theft. Any loss, damage, or theft
of equipment must be investigated and reported to the Federal agency or
pass-through entity.
(4) Regular maintenance procedures must be in place to ensure the
property is in proper working condition.
(5) If the recipient or subrecipient is authorized or required to
sell the property, proper sales procedures must be in place to ensure
the highest possible return.
(e) Disposition. When equipment acquired under a Federal award is
no longer needed for the original project, program, or for other
activities currently or previously supported by a Federal agency, the
recipient or subrecipient must request disposition instructions from
the Federal agency or pass-through entity if required by the terms and
conditions of the Federal award. Disposition of the equipment will be
made as follows, in accordance with Federal agency or pass-through
entity disposition instructions:
(1) Equipment with a current fair market value of $10,000 or less
(per unit) may be retained, sold, or otherwise disposed of with no
further responsibility to the Federal agency or pass-through entity.
(2) Except as provided in Sec. 200.312(b), or if the Federal
agency or pass-through entity fails to provide requested disposition
instructions within 120 days, items of equipment with a current fair
market value in excess of $10,000 (per-unit) may be retained or sold by
the recipient or subrecipient. However, the Federal agency is entitled
to an amount calculated by multiplying the percentage of the Federal
agency's contribution towards the original purchase by the current
market value or proceeds from the sale. If the equipment is sold, the
Federal agency or pass-through entity may permit the recipient or
subrecipient to retain $1,000 or 10 percent (whichever is less) from
the Federal share of the proceeds to cover expenses associated with the
selling and handling of the equipment.
(3) The recipient or subrecipient may transfer title to the
property to the Federal Government or to an eligible third party
provided that the recipient or subrecipient must be entitled to
[[Page 69452]]
compensation for its attributable percentage of the current fair market
value of the property.
(4) In cases where a recipient or subrecipient fails to take
appropriate disposition actions, the Federal agency or pass-through
entity may direct the recipient or subrecipient to take disposition
actions.
(f) Equipment retention. When included in the terms and conditions
of the Federal award, the Federal agency may permit the recipient to
retain equipment with no further obligation to the Federal Government
unless prohibited by Federal statute or regulation.
Sec. 200.314 Supplies.
See also Sec. 200.453.
(a) Title to supplies acquired under the Federal award will vest
upon acquisition in the recipient or subrecipient. When there is a
residual inventory of unused supplies exceeding $10,000 in aggregate
value at the end of the period of performance, and the supplies are not
needed for any other Federal award, the recipient or subrecipient may
retain or sell the unused supplies. Unused supplies means supplies that
are in new condition, not having been used or opened before. The
aggregate value of unused supplies consists of all supply types, not
just like-item supplies. The Federal agency or pass-through entity is
entitled to compensation in an amount calculated by multiplying the
percentage of the Federal agency's or pass-through-through entity's
contribution towards the cost of the original purchase(s) by the
current market value or proceeds from the sale. If the supplies are
sold, the Federal agency or pass-through entity may permit the
recipient or subrecipient to retain $500 or 10 percent (whichever is
less) from the Federal share of the proceeds to cover expenses
associated with the selling and handling of the supplies.
(b) Unless expressly authorized by Federal statute, the recipient
or subrecipient must not use supplies acquired with the Federal award
to provide services for a fee that is less than a private company would
charge for similar services. This restriction is effective as long as
the Federal Government retains an interest in the supplies or as
authorized by Federal statute.
Sec. 200.315 Intangible property.
(a) Title to intangible property acquired under a Federal award
vest upon acquisition in the recipient or subrecipient. The recipient
or subrecipient must use that intangible property for the originally-
authorized purpose and must not encumber the property without the
approval of the Federal agency or pass-through entity. An encumbrance
is a claim or liability that is attached to the property or some other
right held by a party that is not the owner. An encumbrance may lessen
the value of the property and restrict its free use until the
encumbrance is lifted. When no longer needed for the originally-
authorized purpose, disposition of the intangible property must occur
in accordance with the provisions in Sec. 200.313(e).
(b) To the extent permitted by law, the recipient or subrecipient
is not prohibited from asserting any copyright it may own in any work
resulting from or acquired under the Federal award. To the extent
permitted by law, the Federal agency reserves a royalty-free,
nonexclusive, and irrevocable right to reproduce, publish, or otherwise
use the work for Federal purposes and to authorize others to do so.
This includes the right to require recipients and subrecipients to make
such works available through agency-designated public access
repositories.
(c) The recipient or subrecipient is subject to applicable
regulations governing patents and inventions, including government-wide
regulations in 37 CFR 401.
(d) The Federal Government has the right to:
(1) Obtain, reproduce, publish, or otherwise use the data produced
under a Federal award; and
(2) Authorize others to receive, reproduce, publish, or otherwise
use the data for Federal purposes.
(e)(1) The recipient or subrecipient must provide research data
relating to published research findings produced under the Federal
award and that were used by the Federal Government in developing an
agency action that has the force and effect of law if requested by the
Federal agency in response to a Freedom of Information Act (FOIA)
request. When the Federal agency obtains the research data solely in
response to a FOIA request, the Federal agency may charge the requester
a fee for the cost of obtaining the research data. This fee should
reflect the costs incurred by the Federal agency and the recipient or
subrecipient. This fee is in addition to any fees the Federal agency
may assess under the FOIA (5 U.S.C. 552(a)(4)(A)).
(2) Published research findings mean:
(i) Research findings published in a peer-reviewed scientific or
technical journal; or
(ii) Research findings publicly cited by a Federal agency in
developing an agency action that has the force and effect of law.
(3) Research data means the recorded factual material commonly
accepted in the scientific community as necessary to validate research
findings. Research data does not include any of the following:
(i) Preliminary analyses, drafts of scientific papers, plans for
future research, peer reviews, or communications with colleagues. This
``recorded'' material excludes physical objects (for example,
laboratory samples).
(ii) Trade secrets, commercial information, materials necessary to
be held confidential by a researcher until they are published, or
similar information which is protected under law; and
(iii) Personnel, medical, and other personally identifiable
information that, if disclosed, would constitute an invasion of
personal privacy. Information that could identify a particular person
in a research study is not considered research data.
Sec. 200.316 Property trust relationship.
Real property, equipment, and intangible property acquired or
improved with the Federal award must be held in trust by the recipient
or subrecipient as trustee for the beneficiaries of the project or
program under which the property was acquired or improved. The Federal
agency or pass-through entity may require the recipient or subrecipient
to record liens or other appropriate notices of record to indicate that
personal or real property has been acquired or improved with a Federal
award and that use and disposition conditions apply to the property.
Procurement Standards
Sec. 200.317 Procurements by States and Indian Tribes.
When conducting procurement transactions under a Federal award, a
State or Indian Tribe must follow the same policies and procedures it
uses for procurements with non-Federal funds. If such policies and
procedures do not exist, States and Indian Tribes must follow the
procurement standards in Sec. Sec. 200.318 through 200.327. In
addition to its own policies and procedures, a State or Indian Tribe
must also comply with the following procurement standards: Sec. Sec.
200.321, 200.322, 200.323, and 200.327. All other recipients and
subrecipients, including subrecipients of a State, must follow the
procurement
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standards in Sec. Sec. 200.318 through 200.327.
Sec. 200.318 General procurement standards.
(a) Documented procurement procedures. The recipient or
subrecipient must maintain and use documented procedures for
procurement transactions under a Federal award or subaward, including
for acquisition of property or services. These documented procurement
procedures must be consistent with State, local, and tribal laws and
regulations and the standards identified in Sec. Sec. 200.317 through
200.327.
(b) Oversight of contractors. Recipients and subrecipients must
maintain oversight to ensure that contractors perform in accordance
with the terms, conditions, and specifications of their contracts or
purchase orders.
(c) Conflicts of interest. (1) The recipient or subrecipient must
maintain written standards of conduct covering conflicts of interest
and governing the actions of its employees engaged in the selection,
award, and administration of contracts. No employee, officer, agent, or
board member with a real or apparent conflict of interest may
participate in the selection, award, or administration of a contract
supported by the Federal award. A conflict of interest includes when
the employee, officer, or agent, any member of their immediate family,
their partner, or an organization that employs or is about to employ
any of the parties indicated herein, has a financial or other interest
in or a tangible personal benefit from an entity considered for a
contract. An employee, officer, and agent of the recipient or
subrecipient may neither solicit nor accept gratuities, favors, or
anything of monetary value from contractors. However, the recipient or
subrecipient may set standards for situations where the financial
interest is not substantial or a gift is an unsolicited item of nominal
value. The recipient's or subrecipient's standards of conduct must also
provide for disciplinary actions to be applied for violations by its
employees, officers, agents, or board members.
(2) If the recipient or subrecipient has a parent, affiliate, or
subsidiary organization that is not a State or Indian Tribe, the
recipient or subrecipient must also maintain written standards of
conduct covering organizational conflicts of interest. Organizational
conflicts of interest mean that because of relationships with a parent
company, affiliate, or subsidiary organization, the recipient or
subrecipient is unable or appears to be unable to be impartial in
conducting a procurement action involving a related organization.
(d) Avoidance of unnecessary or duplicative items. The recipient's
or subrecipient's procedures must avoid the acquisition of unnecessary
or duplicative items. Consideration should be given to consolidating or
breaking out procurements to obtain a more economical purchase. When
appropriate, an analysis should be made between leasing and purchasing
property or equipment to determine the most economical approach.
(e) Procurement arrangements using strategic sourcing. When
appropriate for the procurement or use of common or shared goods and
services, recipients and subrecipients are encouraged to enter into
State and local intergovernmental agreements or inter-entity agreements
for procurement transactions. These or similar procurement arrangements
using strategic sourcing may foster greater economy and efficiency.
Documented procurement actions of this type (using strategic sourcing,
shared services, and other similar procurement arrangements) will meet
the competition requirements of this part.
(f) Use of excess and surplus Federal property. The recipient or
subrecipient is encouraged to use excess and surplus Federal property
instead of purchasing new equipment and property when it is feasible
and reduces project costs.
(g) Use of value engineering clauses. When practical, the recipient
or subrecipient is encouraged to use value engineering clauses in
contracts for construction projects of sufficient size to offer
reasonable opportunities for cost reductions. Value engineering means
analyzing each contract item or task to ensure its essential function
is provided at the overall lowest cost.
(h) Responsible contractors. The recipient or subrecipient must
award contracts only to responsible contractors that possess the
ability to perform successfully under the terms and conditions of a
proposed contract. The recipient or subrecipient must consider
contractor integrity, public policy compliance, proper classification
of employees (see the Fair Labor Standards Act, 29 U.S.C. 201, chapter
8), past performance record, and financial and technical resources when
conducting a procurement transaction. See also Sec. 200.214.
(i) Procurement records. The recipient or subrecipient must
maintain records sufficient to detail the history of each procurement
transaction. These records must include the rationale for the
procurement method, contract type selection, contractor selection or
rejection, and the basis for the contract price.
(j) Time-and-materials type contracts. (1) The recipient or
subrecipient may use a time-and-materials type contract only after a
determination that no other contract is suitable and if the contract
includes a ceiling price that the contractor exceeds at its own risk.
Time-and-materials type contract means a contract whose cost to a
recipient or subrecipient is the sum of:
(i) The actual cost of materials; and
(ii) Direct labor hours charged at fixed hourly rates that reflect
wages, general and administrative expenses, and profit.
(2) Because this formula generates an open-ended contract price, a
time-and-materials contract provides no positive profit incentive to
the contractor for cost control or labor efficiency. Therefore, each
contract must set a ceiling price that the contractor exceeds at its
own risk. Further, the recipient or subrecipient awarding such a
contract must assert a high degree of oversight to obtain reasonable
assurance that the contractor is using efficient methods and effective
cost controls.
(k) Settlement of contractual and administrative issues. The
recipient or subrecipient is responsible for the settlement of all
contractual and administrative issues arising out of its procurement
transactions. These issues include but are not limited to, source
evaluation, protests, disputes, and claims. In resolving these issues,
the Federal agency may not substitute its judgment for that of the
recipient or subrecipient unless the matter is primarily a Federal
concern. Proper oversight does not relieve the recipient or
subrecipient of any of its contractual responsibilities. Violations of
law must be referred to the Federal, State, or local authority with
proper jurisdiction.
(l) Examples of labor and employment practices. The procurement
standards in this subpart do not prohibit recipients or subrecipients
from using Project Labor Agreements (PLAs) or similar forms of pre-hire
collective bargaining agreements; requiring construction contractors to
use hiring preferences or goals for people residing in high-poverty
areas, disadvantaged communities as defined by the Justice40 Initiative
OMB Memorandum M-21-28, or high-unemployment census tracts within a
region no smaller than the county where a federally funded construction
project is located, consistent with the policies and procedures of the
recipient or subrecipient, provided that a recipient or subrecipient
may not prohibit interstate hiring; requiring a contractor to use
hiring preferences or goals for individuals with barriers to employment
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(as defined in section 3 of the Workforce Innovation and Opportunity
Act (29 U.S.C. 3102(24)), including women and people from underserved
communities as defined by Executive Order 13985; using agreements
intended to ensure uninterrupted delivery of services; using agreements
intended to ensure community benefits; or offering employees of a
predecessor contractor rights of first refusal under a new contract.
Federal agencies may allow recipients and subrecipients to use such
practices if consistent with the U.S. Constitution, applicable Federal
statutes and regulations, the objectives and purposes of the applicable
Federal financial assistance program, and other requirements of this
part.
Sec. 200.319 Competition.
(a) All procurement transactions under the Federal award must be
conducted in a manner that provides full and open competition and is
consistent with the standards of this section and Sec. 200.320.
(b) To ensure objective contractor performance and eliminate unfair
competitive advantage, contractors that assist recipients and
subrecipients with developing or drafting specifications, requirements,
statements of work, or invitations for bids must be excluded from
competing on those procurements.
(c) Examples of requirements that may restrict competition include,
but are not limited to:
(1) Placing unreasonable requirements on firms for them to qualify
to do business;
(2) Requiring unnecessary experience and excessive bonding;
(3) Noncompetitive pricing practices between firms or between
affiliated companies;
(4) Noncompetitive contracts to consultants that are on retainer
contracts;
(5) Organizational conflicts of interest;
(6) Specifying only a ``brand name'' product instead of allowing
``an equal'' product to be offered and describing the performance or
other relevant requirements of the procurement; and
(7) Any arbitrary action in the procurement process.
(d) The recipient or subrecipient must have written procedures for
procurement transactions. These procedures must ensure that all
solicitations:
(1) Are made in accordance with Sec. 200.319(b);
(2) Incorporate a clear and accurate description of the technical
requirements for the property, equipment, or service being procured.
The description may include a statement of the qualitative nature of
the property, equipment, or service to be procured. When necessary, the
description must provide minimum essential characteristics and
standards to which the property, equipment, or service must conform.
Detailed product specifications should be avoided if at all possible.
When it is impractical or uneconomical to clearly and accurately
describe the technical requirements, a ``brand name or equivalent''
description of features may be used to provide procurement
requirements. The specific features of the named brand must be clearly
stated; and
(3) Identify any additional requirements which the offerors must
fulfill and all other factors that will be used in evaluating bids or
proposals.
(e) The recipient or subrecipient must ensure that all prequalified
lists of persons, firms, or products used in procurement transactions
are current and include enough qualified sources to ensure maximum open
competition. When establishing or amending prequalified lists, the
recipient or subrecipient must consider objective factors that evaluate
price and cost to maximize competition. The recipient or subrecipient
must not preclude potential bidders from qualifying during the
solicitation period.
(f) To the extent consistent with established practices and legal
requirements applicable to the recipient or subrecipient, this subpart
does not prohibit recipients or subrecipients from developing written
procedures for procurement transactions that incorporate a scoring
mechanism that rewards bidders that commit to specific numbers and
types of U.S. jobs, minimum compensation, benefits, on-the-job-training
for employees making work or products providing services on a contract,
and other worker protections. This subpart also does not prohibit
recipients and subrecipients from making inquiries of bidders about
these subjects and assessing the responses. Any scoring mechanism must
be consistent with the U.S. Constitution, applicable Federal statutes
and regulations, and the terms and conditions of the Federal award.
(g) Noncompetitive procurements can only be awarded in accordance
with Sec. 200.320(c).
Sec. 200.320 Procurement Methods.
There are three types of procurement methods described in this
section: informal procurement methods (for micro-purchases and
simplified acquisitions); formal procurement methods (through sealed
bids or proposals); and noncompetitive procurement methods. For any of
these methods, the recipient or subrecipient must maintain and use
documented procurement procedures, consistent with the standards of
this section and Sec. Sec. 200.317, 200.318, and 200.319.
(a) Informal procurement methods for small purchases. These
procurement methods expedite the completion of transactions, minimize
administrative burdens, and reduce costs. Informal procurement methods
may be used when the value of the procurement transaction under the
Federal award does not exceed the simplified acquisition threshold as
defined in Sec. 200.1. Recipients and subrecipients may also establish
a lower threshold. Informal procurement methods include:
(1) Micro-purchases--(i) Distribution. The aggregate amount of the
procurement transaction does not exceed the micro-purchase threshold
defined in Sec. 200.1. To the extent practicable, the recipient or
subrecipient should distribute micro-purchases equitably among
qualified suppliers.
(ii) Micro-purchase awards. Micro-purchases may be awarded without
soliciting competitive price or rate quotations if the recipient or
subrecipient considers the price reasonable based on research,
experience, purchase history, or other information. Purchase cards may
be used as a method of payment for micro-purchases.
(iii) Micro-purchase thresholds. The recipient or subrecipient is
responsible for determining and documenting an appropriate micro-
purchase threshold based on internal controls, an evaluation of risk,
and its documented procurement procedures. The micro-purchase threshold
used by the recipient or subrecipient must be authorized or not
prohibited under State, local, or tribal laws or regulations. The
recipient or subrecipient may establish a threshold higher than the
Federal threshold established in the Federal Acquisition Regulations
(FAR) in accordance with paragraphs (a)(1)(iv) and (v) of this section.
(iv) Recipient or subrecipient increase to the micro-purchase
threshold up to $50,000. The recipient or subrecipient may establish a
threshold higher than the micro-purchase threshold identified in the
FAR in accordance with the requirements of this section. The recipient
or subrecipient may self-certify a threshold up to $50,000 on an annual
basis and must maintain documentation to be made available to the
Federal agency or pass-through entity and auditors in accordance with
Sec. 200.334. The self-certification must include a justification,
clear
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identification of the threshold, and supporting documentation of any of
the following:
(A) A qualification as a low-risk auditee, in accordance with the
criteria in Sec. 200.520 for the most recent audit;
(B) An annual internal institutional risk assessment to identify,
mitigate, and manage financial risks; or,
(C) For public institutions, a higher threshold is consistent with
State law.
(v) Recipient or subrecipient increase to the micro-purchase
threshold over $50,000. Micro-purchase thresholds higher than $50,000
must be approved by the cognizant agency for indirect costs. The
recipient or subrecipient must submit a request that includes the
requirements in paragraph (a)(1)(iv) of this section. The increased
threshold is valid until any factor that was relied on in the
establishment and rationale of the threshold changes.
(2) Simplified acquisitions--(i) Simplified acquisition procedures.
The aggregate dollar amount of the procurement transaction is higher
than the micro-purchase threshold but does not exceed the simplified
acquisition threshold. If simplified acquisition procedures are used,
price or rate quotations must be obtained from an adequate number of
qualified sources as determined appropriate by the recipient or
subrecipient.
(ii) Simplified acquisition thresholds. The recipient or
subrecipient is responsible for determining an appropriate simplified
acquisition threshold based on internal controls, an evaluation of
risk, and its documented procurement procedures, which may be lower
than, but not exceed, the threshold established in the FAR.
(b) Formal procurement methods. Formal procurement methods are
required when the value of the procurement transaction under a Federal
award exceeds the simplified acquisition threshold of the recipient or
subrecipient. Formal procurement methods are competitive and require
public notice. The following formal methods of procurement are used for
procurement transactions above the simplified acquisition threshold
determined by the recipient or subrecipient in accordance with
paragraph (a)(2)(ii) of this section:
(1) Sealed bids. This is a procurement method in which bids are
publicly solicited through an invitation and a firm fixed-price
contract (lump sum or unit price) is awarded to the responsible bidder
whose bid conforms with all the material terms and conditions of the
invitation and is the lowest in price. The sealed bids procurement
method is preferred for procuring construction services.
(i) For sealed bidding to be feasible, the following conditions
should be present:
(A) A complete, adequate, and realistic specification or purchase
description is available;
(B) Two or more responsible bidders have been identified as willing
and able to compete effectively for the business; and
(C) The procurement lends itself to a firm-fixed-price contract,
and the selection of the successful bidder can be made principally
based on price.
(ii) If sealed bids are used, the following requirements apply:
(A) Bids must be solicited from an adequate number of qualified
sources, providing them with sufficient response time prior to the date
set for opening the bids. For local governments, the invitation for
bids must be publicly advertised.
(B) The invitation for bids must define the items or services with
specific information, including any required specifications, for the
bidder to properly respond;
(C) All bids will be opened at the time and place prescribed in the
invitation for bids. For local governments, the bids must be opened
publicly.
(D) A firm-fixed-price contract is awarded in writing to the lowest
responsive bid and responsible bidder. When specified in the invitation
for bids, factors such as discounts, transportation cost, and life-
cycle costs must be considered in determining which bid is the lowest.
Payment discounts must only be used to determine the low bid when the
recipient or subrecipient determines they are a valid factor based on
prior experience.
(E) The recipient or subrecipient must document and provide a
justification for all bids it rejects.
(2) Proposals. This is a procurement method used when conditions
are not appropriate for using sealed bids. This procurement method may
result in either a fixed-price or cost-reimbursement contract. They are
awarded in accordance with the following requirements:
(i) Requests for proposals require public notice, and all
evaluation factors and their relative importance must be identified.
Proposals must be solicited from multiple qualified entities. To the
maximum extent practicable, any proposals submitted in response to the
public notice must be considered.
(ii) The recipient or subrecipient must have written procedures for
conducting technical evaluations and making selections.
(iii) Contracts must be awarded to the responsible offeror whose
proposal is most advantageous to the recipient or subrecipient
considering price and other factors; and
(iv) The recipient or subrecipient may use competitive proposal
procedures for qualifications-based procurement of architectural/
engineering (A/E) professional services whereby the offeror's
qualifications are evaluated, and the most qualified offeror is
selected, subject to negotiation of fair and reasonable compensation.
The method, where the price is not used as a selection factor, can only
be used to procure architectural/engineering (A/E) professional
services. The method may not be used to purchase other services
provided by A/E firms that are a potential source to perform the
proposed effort.
(c) Noncompetitive procurement. There are specific circumstances in
which the recipient or subrecipient may use a noncompetitive
procurement method. The noncompetitive procurement method may only be
used if one of the following circumstances apply:
(1) The aggregate amount of the procurement transaction does not
exceed the micro-purchase threshold (see paragraph (a)(1) of this
section);
(2) The procurement transaction can only be fulfilled by a single
source;
(3) The public exigency or emergency for the requirement will not
permit a delay resulting from providing public notice of a competitive
solicitation;
(4) The recipient or subrecipient requests in writing to use a
noncompetitive procurement method, and the Federal agency or pass-
through entity provides written approval; or
(5) After soliciting several sources, competition is determined
inadequate.
Sec. 200.321 Contracting with small businesses, minority businesses,
women's business enterprises, veteran-owned businesses, and labor
surplus area firms.
(a) When possible, the recipient or subrecipient should ensure that
small businesses, minority businesses, women's business enterprises,
veteran-owned businesses, and labor surplus area firms (See U.S.
Department of Labor's list) are considered as set forth below.
(b) Such consideration means:
(1) These business types are included on solicitation lists;
(2) These business types are solicited whenever they are deemed
eligible as potential sources;
(3) Dividing procurement transactions into separate procurements to
permit
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maximum participation by these business types;
(4) Establishing delivery schedules (for example, the percentage of
an order to be delivered by a given date of each month) that encourage
participation by these business types;
(5) Utilizing organizations such as the Small Business
Administration and the Minority Business Development Agency of the
Department of Commerce; and
(6) Requiring a contractor under a Federal award to apply this
section to subcontracts.
Sec. 200.322 Domestic preferences for procurements.
(a) The recipient or subrecipient should, to the greatest extent
practicable and consistent with law, provide a preference for the
purchase, acquisition, or use of goods, products, or materials produced
in the United States (including but not limited to iron, aluminum,
steel, cement, and other manufactured products). The requirements of
this section must be included in all subawards, contracts, and purchase
orders under Federal awards.
(b) For purposes of this section:
(1) ``Produced in the United States'' means, for iron and steel
products, that all manufacturing processes, from the initial melting
stage through the application of coatings, occurred in the United
States.
(2) ``Manufactured products'' means items and construction
materials composed in whole or in part of non-ferrous metals such as
aluminum; plastics and polymer-based products such as polyvinyl
chloride pipe; aggregates such as concrete; glass, including optical
fiber; and lumber.
(c) Federal agencies providing Federal financial assistance for
infrastructure projects must implement the Buy America preferences set
forth in 2 CFR part 184.
Sec. 200.323 Procurement of recovered materials.
(a) A recipient or subrecipient that is a State agency or agency of
a political subdivision of a State and its contractors must comply with
section 6002 of the Solid Waste Disposal Act, as amended by the
Resource Conservation and Recovery Act of 1976 as amended, 42 U.S.C.
6962. The requirements of Section 6002 include procuring only items
designated in the guidelines of the Environmental Protection Agency
(EPA) at 40 CFR part 247 that contain the highest percentage of
recovered materials practicable, consistent with maintaining a
satisfactory level of competition, where the purchase price of the item
exceeds $10,000 or the value of the quantity acquired during the
preceding fiscal year exceeded $10,000; procuring solid waste
management services in a manner that maximizes energy and resource
recovery; and establishing an affirmative procurement program for
procurement of recovered materials identified in the EPA guidelines.
(b) The recipient or subrecipient should, to the greatest extent
practicable and consistent with law, purchase, acquire, or use products
and services that can be reused, refurbished, or recycled; contain
recycled content, are biobased, or are energy and water efficient; and
are sustainable. This may include purchasing compostable items and
other products and services that reduce the use of single-use plastic
products. See Executive Order 14057, section 101, Policy.
Sec. 200.324 Contract cost and price.
(a) The recipient or subrecipient must perform a cost-benefit or
price analysis for every procurement transaction, including contract
modifications, in excess of the Simplified Acquisition Threshold. The
method and degree of analysis conducted depend on the facts surrounding
the particular procurement transaction. For example, the recipient or
subrecipient should consider potential workforce impacts in their
analysis if the procurement transaction will displace public sector
employees. However, as a starting point, the recipient or subrecipient
must develop their own estimates before receiving bids or proposals.
(b) Costs or prices based on estimated costs for contracts under
the Federal award are allowable only to the extent that the costs
incurred or cost estimates included in negotiated prices would be
allowable for the recipient or subrecipient under subpart E of this
part. The recipient or subrecipient may reference its own cost
principles as long as they comply with subpart E of this part.
(c) The recipient or subrecipient may not use the ``cost plus a
percentage of cost'' and ``percentage of construction costs'' methods
of contracting.
Sec. 200.325 Federal agency or pass-through entity review.
(a) The Federal agency or pass-through entity may review the
technical specifications of proposed procurements under the Federal
award if the Federal agency or pass-through entity believes the review
is needed to ensure that the item or service specified is the one being
proposed for acquisition. The recipient or subrecipient must submit the
technical specifications of proposed procurements when requested by the
Federal agency or pass-through entity. This review should take place
prior to the time the specifications are incorporated into a
solicitation document. When the recipient or subrecipient desires to
accomplish the review after a solicitation has been developed, the
Federal agency or pass-through entity may still review the
specifications. In those cases, the review should be limited to the
technical aspects of the proposed purchase.
(b) When requested, the recipient or subrecipient must provide
procurement documents (such as requests for proposals, invitations for
bids, or independent cost estimates) to the Federal agency or pass-
through entity for pre-procurement review. The Federal agency or pass-
through entity may conduct a pre-procurement review when:
(1) The recipient's or subrecipient's procurement procedures or
operation fails to comply with the procurement standards in this part;
(2) The procurement is expected to exceed the Simplified
Acquisition Threshold and is to be awarded without competition, or only
one bid is expected to be received in response to a solicitation;
(3) The procurement is expected to exceed the Simplified
Acquisition Threshold and specifies a ``brand name'' product;
(4) The procurement is expected to exceed the Simplified
Acquisition Threshold, and a sealed bid procurement is to be awarded to
an entity other than the apparent low bidder; or
(5) A proposed contract modification changes the scope of a
contract or increases the contract amount by more than the Simplified
Acquisition Threshold.
(c) The recipient or subrecipient is exempt from the pre-
procurement review in paragraph (b) of this section if the Federal
agency or pass-through entity determines that its procurement systems
comply with the standards of this part.
(1) The recipient or subrecipient may request that the Federal
agency or pass-through entity review its procurement system to
determine whether it meets these standards for its system to be
certified. Generally, these reviews must occur where there is
continuous high-dollar funding and third-party contracts are awarded
regularly.
(2) The recipient or subrecipient may self-certify its procurement
system. However, self-certification does not limit the Federal agency's
or pass-
[[Page 69457]]
through-through entity's right to review the system. Under a self-
certification procedure, the Federal agency or pass-through entity may
rely on written assurances from the recipient or subrecipient that it
is complying with the standards of this part. The recipient or
subrecipient must cite specific policies, procedures, regulations, or
standards as complying with these requirements and have its system
available for review.
Sec. 200.326 Bonding requirements.
The Federal agency or pass-through entity may accept the
recipient's or subrecipient's bonding policy and requirements for
construction or facility improvement contracts or subcontracts
exceeding the Simplified Acquisition Threshold. Before doing so, the
Federal agency or pass-through entity must determine that the Federal
interest is adequately protected. If such a determination has not been
made, the minimum requirements must be as follows:
(a) A bid guarantee from each bidder equivalent to five percent of
the bid price. The bid guarantee must consist of a firm commitment such
as a bid bond, certified check, or other negotiable instrument
accompanying a bid as assurance that the bidder will, upon acceptance
of the bid, execute any required contractual obligations within the
specified timeframe.
(b) A performance bond on the contractor's part for 100 percent of
the contract price. A performance bond is a bond executed in connection
with a contract to secure the fulfillment of all the contractor's
requirements under a contract.
(c) A payment bond on the contractor's part for 100 percent of the
contract price. A payment bond is a bond executed in connection with a
contract to assure payment as required by the law of all persons
supplying labor and material in the execution of the work provided for
under a contract.
Sec. 200.327 Contract provisions.
The recipient's or subrecipient's contracts must contain the
applicable provisions described in Appendix II of this part.
Performance and Financial Monitoring and Reporting
Sec. 200.328 Financial reporting.
(a) The Federal agency must only require OMB-approved government-
wide data elements on recipient financial reports. At the time of
publication, this consists of the Federal Financial Report (SF-425);
however, this also applies to any future OMB-approved government-wide
data elements available from the OMB-designated standards lead.
(b) The Federal agency or pass-through entity must collect
financial reports no less than annually. The Federal agency or pass-
through entity may not collect financial reports more frequently than
quarterly unless a specific condition has been implemented in
accordance with Sec. 200.208. To the extent practicable, the Federal
agency or pass-through entity should collect financial reports in
coordination with performance reports.
(c) The recipient or subrecipient must submit financial reports as
required by the Federal award. Reports submitted annually by the
recipient or subrecipient must be due no later than 90 calendar days
after the reporting period. Reports submitted quarterly or semiannually
must be due no later than 30 calendar days after the reporting period.
(d) The final financial report submitted by the recipient must be
due no later than 120 calendar days after the conclusion of the period
of performance. A subrecipient must submit a final financial report to
a pass-through entity no later than 90 calendar days after the
conclusion of the period of performance. See also Sec. 200.344. The
Federal agency or pass-through entity may extend the due date for any
financial report with justification from the recipient or subrecipient.
Sec. 200.329 Monitoring and reporting program performance.
(a) Monitoring by the recipient. The recipient or subrecipient is
responsible for the oversight of the Federal award. The recipient or
subrecipient must monitor its activities under Federal awards to ensure
they are compliant with all requirements and meeting performance
expectations. Monitoring by the recipient or subrecipient must cover
each program, function, or activity. See also Sec. 200.332.
(b) Reporting program performance. The Federal agency must use OMB-
approved common information collections, as applicable, when requesting
performance reporting information. The Federal agency must only require
OMB-approved government-wide data elements in collection of performance
information including Research Performance Progress Reports if
applicable. The Federal agency or pass-through entity may not collect
performance reports more frequently than quarterly unless a specific
condition has been implemented in accordance with Sec. 200.208. To the
extent practicable, the Federal agency or pass-through entity should
collect performance reports in coordination with financial reports.
When reporting program performance, the recipient or subrecipient must
relate financial data and project or program accomplishments to the
performance goals and objectives of the Federal award. Also, the
recipient or subrecipient must provide cost information to demonstrate
cost-effective practices (for example, through unit cost data) when
required by the terms and conditions of the Federal award. In some
instances (for example, discretionary research awards), this may be
limited to the requirement to submit technical performance reports.
Reporting requirements must clearly indicate a standard against which
the recipient's or subrecipient's performance can be measured. As noted
in OMB Circular A-11, Part 6, Section 280, measures of customer
experience are of co-equal importance as traditional measures of
financial and operational performance. Reporting requirements should
not solicit information from the recipient or subrecipient that is not
necessary for the effective monitoring of the Federal award. Federal
agencies should consult monitoring framework documents such as the
agency's Evaluation Plan to make that determination.
(c) Submitting performance reports. (1) The recipient or
subrecipient must submit performance reports as required by the Federal
award. Intervals must be no less frequent than annually nor more
frequent than quarterly except if specific conditions are applied (See
Sec. 200.208). Reports submitted annually by the recipient or
subrecipient must be due no later than 90 calendar days after the
reporting period. Reports submitted quarterly or semiannually must be
due no later than 30 calendar days after the reporting period.
Alternatively, the Federal agency or pass-through entity may require
annual reports before the anniversary dates of multiple-year Federal
awards. The final performance report submitted by the recipient must be
due no later than 120 calendar days after the period of performance. A
subrecipient must submit a final performance report to a pass-through
entity no later than 90 calendar days after the conclusion of the
period of performance. See also Sec. 200.344. The Federal agency or
pass-through entity may extend the due date for any performance report
with justification from the recipient or subrecipient.
(2) As applicable, performance reports should contain information
on the following:
[[Page 69458]]
(i) A comparison of accomplishments to the objectives of the
Federal award established for the reporting period (for example,
comparing costs to units of accomplishment). Where performance trend
data and analysis would be informative to the Federal agency program,
the Federal agency should include this as a performance reporting
requirement.
(ii) Explanations on why established goals or objectives were not
met; and
(iii) Additional information, analysis, and explanation of cost
overruns or higher-than-expected unit costs.
(d) Construction performance reports. Federal agencies or pass-
through-through entities rely on on-site technical inspections and
certified percentage of completion data to monitor progress under
Federal awards for construction. Therefore, the Federal agency or pass-
through entity may require additional performance reports when
necessary to ensure the goals and objectives of Federal awards are met.
(e) Significant developments. The recipient or subrecipient must
inform the Federal agency or pass-through entity of any significant
developments between performance reporting due dates that could impact
the Federal award. Significant developments include events that enable
meeting milestones and objectives sooner or at less cost than
anticipated or that produce different beneficial results than
originally planned. Significant developments also include problems,
delays, or adverse conditions which will impact the recipient's or
subrecipient's ability to meet milestones or the objectives of the
Federal award. When significant developments occur that negatively
impact the Federal Award, the recipient or subrecipient must include
information on their plan for corrective action and any assistance
needed to resolve the situation.
(f) Site visits. The Federal agency or pass-through entity may
conduct in-person or virtual site visits as warranted.
(g) Performance report requirement waiver. The Federal agency may
waive any performance report that is not necessary to ensure the goals
and objectives of the Federal award are being achieved.
Sec. 200.330 Reporting on real property.
The Federal agency or pass-through entity must require the
recipient or subrecipient to submit at least annual reports on the
status of real property in which the Federal Government retains an
interest. In instances where the Federal Government's interest in the
real property extends for 15 years or more, the Federal agency or pass-
through entity may require the recipient or subrecipient to report at
various multi-year frequencies. Reports submitted at multi-year
frequencies may not exceed a five-year reporting period. The Federal
agency must only require OMB-approved government-wide data elements on
recipient real property reports.
Subrecipient Monitoring and Management
Sec. 200.331 Subrecipient and contractor determinations.
An entity may concurrently receive Federal awards as a recipient, a
subrecipient, and a contractor. The recipient or subrecipient is
responsible for making case-by-case determinations to determine whether
the entity receiving Federal funds is a subrecipient or a contractor.
The Federal agency may require the recipient or subrecipient to comply
with additional guidance to inform these determinations. The Federal
agency does not have a direct legal relationship with subrecipients or
contractors of any tier. All of the characteristics listed below may
not be present in all cases, and some characteristics from both
categories may be present at the same time. Therefore, the recipient or
subrecipient is responsible for determining the nature of an agreement.
The substance of the relationship is more important than the form of
the agreement.
(a) Subrecipients. A subaward is for the purpose of carrying out a
portion of the Federal award and creates a Federal financial assistance
relationship with a subrecipient. See the definition of Subaward in
Sec. 200.1. Characteristics that support the classification of the
entity as a subrecipient include, but are not limited to, when the
entity:
(1) Determines who is eligible to receive what Federal assistance;
(2) Has its performance measured in relation to whether the
objectives of a Federal program were met;
(3) Has responsibility for programmatic decision-making;
(4) Is responsible for adherence to applicable Federal program
requirements specified in the Federal award; and
(5) Implements a program for a public purpose specified in
authorizing statute, as opposed to providing goods or services for the
benefit of the pass-through entity.
(b) Contractors. A contract is for the purpose of obtaining goods
and services for the recipient's or subrecipient's use and creates a
procurement relationship with a contractor. See the definition of
contract in Sec. 200.1. Characteristics that support a procurement
relationship between the recipient or subrecipient and a contractor
include, but are not limited to, when the contractor:
(1) Provides the goods and services within normal business
operations;
(2) Provides similar goods or services to many different
purchasers;
(3) Normally operates in a competitive environment;
(4) Provides goods or services that are ancillary to the
implementation of a Federal program; and
(5) Is not subject to compliance requirements of a Federal program
as a result of the agreement. However, similar requirements may apply
for other reasons.
Sec. 200.332 Requirements for pass-through entities.
A pass-through entity must:
(a) Confirm in SAM.gov that a potential subrecipient is not
suspended, debarred, or otherwise excluded from receiving Federal
funds.
(b) Ensure that every subaward is clearly identified to the
subrecipient as a subaward and includes the information provided below.
A pass-through entity must provide the best available information when
some of the information below is unavailable. A pass-through entity
must amend a subaward if additional information becomes available or
data elements change. Required information includes:
(1) Federal award identification.
(i) Subrecipient's name (must match the name associated with its
unique entity identifier);
(ii) Subrecipient's unique entity identifier;
(iii) Federal Award Identification Number (FAIN);
(iv) Federal Award Date;
(v) Subaward Period of Performance Start and End Date;
(vi) Subaward Budget Period Start and End Date;
(vii) Amount of Federal Funds Obligated in the subaward;
(viii) Total Amount of Federal Funds Obligated to the subrecipient
by the pass-through entity, including the current financial obligation;
(ix) Total Amount of the Federal Award committed to the
subrecipient by the pass-through entity;
(x) Federal award project description, as required by the Federal
Funding Accountability and Transparency Act (FFATA);
(xi) Name of the Federal agency, pass-through entity, and contact
information for awarding official of the pass-through entity;
(xii) Assistance Listings title and number; the pass-through entity
must
[[Page 69459]]
identify the dollar amount made available under each Federal award and
the Assistance Listings Number at the time of disbursement;
(xiii) Identification of whether the Federal award is for research
and development; and
(xiv) Indirect cost rate for the Federal award (including if the de
minimis rate is used in accordance with Sec. 200.414).
(2) All requirements of the subaward, including requirements
imposed by Federal statutes, regulations, and the terms and conditions
of the Federal award;
(3) Any additional requirements that the pass-through entity
imposes on the subrecipient for the pass-through entity to meet its
responsibilities under the Federal award. This includes information and
certifications (see Sec. 200.415) required for submitting financial
and performance reports that the pass-through entity must provide to
the Federal agency;
(4) Indirect Cost Rate;
(i) An approved indirect cost rate negotiated between the
subrecipient and the Federal Government. If no approved rate exists, a
pass-through entity must determine the appropriate rate in
collaboration with the subrecipient. The indirect cost rate may be
either:
(A) An indirect cost rate negotiated between the pass-through
entity and the subrecipient. These rates may be based on a prior
negotiated rate between a different pass-through entity and the
subrecipient. In these instances, the pass-through entity is not
required to collect information justifying the rate but may elect to do
so; or
(B) The de minimis indirect cost rate.
(ii) The pass-through entity must not require the use of the de
minimis indirect cost rate if the subrecipient has an approved indirect
cost rate negotiated with the Federal Government. Subrecipients may
elect to use the cost allocation method to account for indirect costs
in accordance with Sec. 200.405(d).
(5) A requirement that the subrecipient permit the pass-through
entity and auditors to access the subrecipient's records and financial
statements for the pass-through entity to fulfill its monitoring
requirements; and
(6) Appropriate terms and conditions concerning the closeout of the
subaward.
(c) Prior to issuing a subaward, evaluate each subrecipient's risk
of noncompliance with a subaward to determine the appropriate
subrecipient monitoring described in paragraph (e) of this section.
When evaluating a subrecipient's risk, a pass-through entity should
consider the following:
(1) The subrecipient's prior experience with the same or similar
subawards;
(2) The results of previous audits. This includes considering
whether or not the subrecipient receives a Single Audit in accordance
with subpart F and the extent to which the same or similar subawards
have been audited as a major program;
(3) Whether the subrecipient has new personnel or new or
substantially changed systems, policies, or procedures; and
(4) Any Federal agency monitoring results (for example, if the
subrecipient also receives Federal awards directly from the Federal
agency).
(d) If appropriate, consider implementing specific conditions in a
subaward described in Sec. 200.208 and notify the Federal agency of
the specific conditions.
(e) Monitor the activities of a subrecipient to ensure that a
subaward complies with Federal statutes, regulations, and the terms and
conditions of the subaward. The pass-through entity is responsible for
monitoring the overall performance of a subrecipient to ensure that the
goals and objectives of the subaward are achieved. In monitoring a
subrecipient, a pass-through entity must:
(1) Review financial and performance reports.
(2) Ensure that the subrecipient takes corrective action on all
significant developments that negatively affect the subaward.
Significant developments include Single Audit findings related to the
subaward, other audit findings, site visits, and written notifications
from a subrecipient of adverse conditions which will impact their
ability to meet the milestones or the objectives of a subaward. When
significant developments negatively impact the subaward, a subrecipient
must provide the pass-through entity with information on their plan for
corrective action and any assistance needed to resolve the situation.
(3) Issue a management decision for audit findings pertaining only
to the Federal award provided to the subrecipient from the pass-through
entity as required by Sec. 200.521.
(4) Resolve audit findings specifically related to the subaward.
However, the pass-through entity is not responsible for resolving
cross-cutting findings that apply to the subaward and other Federal
awards or subawards. If a subrecipient has a current Single Audit
report and has not been excluded from receiving Federal funding
(meaning, has not been debarred or suspended), the pass-through entity
may rely on the subrecipient's cognizant audit agency or cognizant
oversight agency to perform audit follow-up and make management
decisions related to cross-cutting findings in accordance with section
Sec. 200.513(a)(4)(viii). Such reliance does not eliminate the
responsibility of the pass-through entity to issue subawards that
conform to agency and award-specific requirements, to manage risk
through ongoing subaward monitoring, and to monitor the status of the
findings that are specifically related to the subaward.
(f) Depending upon the pass-through entity's assessment of the risk
posed by the subrecipient (as described in paragraph (c) of this
section), the following monitoring tools may be useful for the pass-
through entity to ensure proper accountability and compliance with
program requirements and achievement of performance goals:
(1) Providing subrecipients with training and technical assistance
on program-related matters;
(2) Performing site visits to review the subrecipient's program
operations; and
(3) Arranging for agreed-upon-procedures engagements as described
in Sec. 200.425.
(g) Verify that a subrecipient is audited as required by subpart F
of this part.
(h) Consider whether the results of a subrecipient's audit, on-site
reviews, or other monitoring necessitate adjustments to the pass-
through entity's records.
(i) Consider taking enforcement action against noncompliant
subrecipients as described in Sec. 200.339 and in program regulations.
Sec. 200.333 Fixed amount subawards.
With prior written approval from the Federal agency, the recipient
may provide subawards based on fixed amounts. Fixed amount subawards
must meet the requirements of Sec. 200.201.
Record Retention and Access
Sec. 200.334 Record retention requirements.
The recipient or subrecipient must retain all Federal award records
for three years from the date of submission of the final financial
report. For awards that are renewed quarterly or annually, the
recipient or subrecipient must retain records for three years from the
date of submission of the quarterly or annual financial report,
respectively. Records to be retained include but are not limited to,
financial records, supporting documentation, and statistical records.
Federal agencies or pass-through-through entities may not impose any
other record retention requirements except for the following:
[[Page 69460]]
(a) The records must be retained until all litigation, claims, or
audit findings involving the records have been resolved and final
action taken if any litigation, claim, or audit is started before the
expiration of the three-year period.
(b) When the recipient or subrecipient is notified in writing by
the Federal agency or pass-through entity, cognizant agency for audit,
oversight agency for audit, or cognizant agency for indirect costs to
extend the retention period.
(c) The records for property and equipment acquired with the
support of Federal funds must be retained for three years after final
disposition.
(d) The three-year retention requirement does not apply to the
recipient or subrecipient when records are transferred to or maintained
by the Federal agency.
(e) The records for program income earned after the period of
performance must be retained for three years from the end of the
recipient's or subrecipient's fiscal year in which the program income
is earned. This only applies if the Federal agency or pass-through
entity requires the recipient or subrecipient to report on program
income earned after the period of performance in the terms and
conditions of the Federal award.
(f) The records for indirect cost rate computations or proposals,
cost allocation plans, and any similar accounting computations of the
rate at which a particular group of costs is chargeable (such as
computer usage chargeback rates or composite fringe benefit rates) must
be retained according to the applicable option below:
(1) If submitted for negotiation. When a proposal, plan, or other
computation must be submitted to the Federal Government to form the
basis for negotiation of an indirect cost rate (or other standard
rates), then the three-year retention period for its supporting records
starts from the date of submission.
(2) If not submitted for negotiation. When a proposal, plan, or
other computation is not required to be submitted to the Federal
Government to form the basis for negotiation of an indirect cost rate
(or other standard rates), then the three-year retention period for its
supporting records starts from the end of the fiscal year (or another
accounting period) covered by the proposal, plan, or other computation.
Sec. 200.335 Requests for transfer of records.
The Federal agency must request the transfer of records to its
custody from the recipient or subrecipient when it determines that the
records possess long-term retention value. However, the Federal agency
may arrange for the recipient or subrecipient to retain the records
that have long-term retention value so long as they are continuously
available to the Federal Government.
Sec. 200.336 Methods for collection, transmission, and storage of
information.
When practicable, the Federal agency or pass-through entity and the
recipient or subrecipient must collect, transmit, and store Federal
award information in an open file, non-licensed, and machine-readable
formats. A machine-readable format is a format in a standard computer
language (not English text) that can be read automatically by a
computer system. Upon request, the Federal agency or pass-through
entity must always provide or accept paper versions of Federal award
information to and from the recipient or subrecipient. The Federal
agency or pass-through entity must not require additional copies of
Federal award information submitted in paper versions. The recipient or
subrecipient does not need to create and retain paper copies when
original records are electronic and cannot be altered. In addition, the
recipient or subrecipient may substitute electronic versions of
original paper records through duplication or other forms of electronic
conversion, provided that the procedures are subject to periodic
quality control reviews. Quality control reviews must ensure that
electronic conversion procedures provide safeguards against the
alteration of records and assurance that records remain in a format
that is readable by a computer system.
Sec. 200.337 Access to records.
(a) Records of recipients and subrecipients. The Federal agency or
pass-through entity, Inspectors General, the Comptroller General of the
United States, or any of their authorized representatives must have the
right of access to any records of the recipient or subrecipient
pertinent to the Federal award to perform audits, execute site visits,
or for any other official use. This right also includes timely and
reasonable access to the recipient's or subrecipient's personnel for
the purpose of interview and discussion related to such documents or
the Federal award in general.
(b) Extraordinary and rare circumstances. The recipient or
subrecipient and Federal agency or pass-through entity must take
measures to protect the name of victims of a crime when access to the
victim's name is necessary. Only under extraordinary and rare
circumstances would such access include a review of the true name of
victims of a crime. Routine monitoring cannot be considered
extraordinary and rare circumstances that would necessitate access to
this information. Any such access, other than under a court order or
subpoena pursuant to a bona fide confidential investigation, must be
approved by the head or delegate of the Federal agency.
(c) Expiration of right of access. The Federal agency's or pass-
through-through entity's rights of access are not limited to the
required retention period of this part but last as long as the records
are retained. Federal agencies or pass-through-through entities must
not impose any other access requirements upon recipients and
subrecipients.
Sec. 200.338 Restrictions on public access to records.
Federal agencies or pass-through-through entities may not place
restrictions on the recipient or subrecipient that limit public access
to the records of the recipient or subrecipient pertinent to a Federal
award, except for protected personally identifiable information (PII)
or other sensitive information when the Federal agency can demonstrate
that such records will be kept confidential and would have been
exempted from disclosure pursuant to the Freedom of Information Act (5
U.S.C. 552) or controlled unclassified information pursuant to
Executive Order 13556 if the records had belonged to the Federal
agency. The Freedom of Information Act (5 U.S.C. 552) (FOIA) does not
apply to records that remain under the recipient's or subrecipient's
control except as required by Sec. 200.315. Unless required by
Federal, State, local, and tribal law, recipients and subrecipients are
not required to permit public access to their records. The recipient's
or subrecipient's records provided to a Federal agency generally will
be subject to FOIA and applicable exemptions.
Remedies for Noncompliance
Sec. 200.339 Remedies for noncompliance.
The Federal agency or pass-through entity may implement specific
conditions if the recipient or subrecipient fails to comply with the
U.S. Constitution, Federal statutes, regulations, or terms and
conditions of the Federal award. See Sec. 200.208 for additional
information on specific conditions. When the Federal agency or pass-
through entity determines that noncompliance cannot be remedied by
imposing specific conditions, the Federal agency or pass-through entity
[[Page 69461]]
may take one or more of the following actions:
(a) Temporarily withhold payments until the recipient or
subrecipient takes corrective action.
(b) Disallow costs for all or part of the activity associated with
the noncompliance of the recipient or subrecipient.
(c) Suspend or terminate the Federal award in part or in its
entirety.
(d) Initiate suspension or debarment proceedings as authorized in 2
CFR part 180 and the Federal agency's regulations. Pass-through
entities must recommend suspension or debarment proceedings for a
subrecipient or subcontractor be initiated by the Federal agency.
(e) Withhold further Federal funds (new awards or continuation
funding) for the project or program.
(f) Pursue other legally available remedies.
Sec. 200.340 Termination.
(a) The Federal award may be terminated in part or its entirety as
follows:
(1) By the Federal agency or pass-through entity if the recipient
or subrecipient fails to comply with the terms and conditions of the
Federal award;
(2) By the Federal agency or pass-through entity with the consent
of the recipient or subrecipient, in which case the two parties must
agree upon the termination conditions. These conditions include the
effective date and, in the case of partial termination, the portion to
be terminated;
(3) By the recipient or subrecipient upon sending the Federal
agency or pass-through entity a written notification of the reasons for
such termination, the effective date, and, in the case of partial
termination, the portion to be terminated. However, if the Federal
agency or pass-through entity determines that the remaining portion of
the Federal award will not accomplish the purposes for which the
Federal award was made, the Federal agency or pass-through entity may
terminate the Federal award in its entirety; or
(4) By the Federal agency or pass-through entity pursuant to the
terms and conditions of the Federal award.
(b) The Federal agency or pass-through entity must clearly and
unambiguously specify all termination provisions in the terms and
conditions of the Federal award.
(c) When the Federal agency terminates the Federal award prior to
the end of the period of performance due to the recipient's material
failure to comply with the terms and conditions of the Federal award,
the Federal agency must report the termination in SAM.gov. A Federal
agency must use the Contractor Performance Assessment Reporting System
(CPARS) to enter information in SAM.gov.
(1) The information required under paragraph (c) of this section is
not to be reported in SAM.gov until the recipient has either:
(i) Exhausted its opportunities to object or challenge the decision
(see Sec. 200.342); or
(ii) Has not, within 30 calendar days after being notified of the
termination, informed the Federal agency that it intends to appeal the
decision to terminate.
(2) If a Federal agency, after entering information about a
termination in SAM.gov, subsequently:
(i) Learns that any of that information is erroneous, the Federal
agency must correct the information in the system within three business
days;
(ii) Obtains an update to that information that could be helpful to
other Federal agencies. The Federal agency is strongly encouraged to
amend the information in the system to incorporate the update in a
timely way.
(3) The Federal agency must not post any information that will be
made publicly available in the non-public segment of SAM.gov that is
covered by a disclosure exemption under the Freedom of Information Act
(FOIA). When the recipient asserts within seven calendar days to the
Federal agency which posted the information that a disclosure exemption
under FOIA covers some of the information made publicly available, the
Federal agency that posted the information must remove the posting
within seven calendar days of receiving the assertion. Before reposting
the releasable information, the Federal agency must resolve the issue
in accordance with the agency's FOIA procedures.
(d) When the Federal award is terminated in part or its entirety,
the Federal agency or pass-through entity and recipient or subrecipient
remain responsible for compliance with the requirements in Sec. Sec.
200.344 and 200.345.
(e) A Federal agency determination to not award continuation
funding does not constitute a termination. For example, if an award no
longer effectuates the program goals or agency priorities or continued
Federal funding is not available.
Sec. 200.341 Notification of termination requirement.
(a) The Federal agency or pass-through entity must provide written
notice of termination to the recipient or subrecipient. The written
notice of termination should include the reasons for termination, the
effective date, and the portion of the Federal award to be terminated,
if applicable.
(b) If the Federal award is terminated for the recipient's material
failure to comply with a Federal award, the notification must state the
following:
(1) The termination decision will be reported in SAM.gov;
(2) The information will be available in SAM.gov for five years
(and then archived) from the date of the termination;
(3) A Federal agency that considers making a Federal award to the
recipient during that five-year period that is expected to exceed the
simplified acquisition threshold over the period of performance must
consider the information regarding the recipient's material failure to
comply in judging whether the entity is qualified to receive the
Federal award.
(4) The recipient may comment on any information in SAM.gov about
the recipient for future consideration by Federal agencies. The
recipient may submit comments in SAM.gov.
(5) Federal agencies should consider the recipient's comments when
determining whether the recipient is qualified for a Federal award.
(c) Upon termination of the Federal award, the Federal agency must
provide the information to USAspending.gov as required by the Federal
Funding Accountability and Transparency Act (FFATA). In addition, the
Federal agency must update or notify any other relevant government-wide
systems or entities of any indications of poor performance as required
by 41 U.S.C. 2313 and 31 U.S.C. 3321.
Sec. 200.342 Opportunities to object, hearings, and appeals.
The Federal agency or pass-through entity must maintain written
procedures for processing objections, hearings, and appeals. Upon
initiating a remedy for noncompliance (for example, disallowed costs, a
corrective action plan, or termination), the Federal agency or pass-
through entity must provide the recipient or subrecipient with an
opportunity to object and provide information challenging the action.
The Federal agency or pass-through entity must comply with any
requirements for hearings, appeals, or other administrative proceedings
to which the recipient or subrecipient is entitled under any statute or
regulation applicable to the action involved.
[[Page 69462]]
Sec. 200.343 Effects of suspension and termination.
Costs to the recipient or subrecipient resulting from financial
obligations incurred by the recipient or subrecipient during a
suspension or after the termination of a Federal award are not
allowable unless the Federal agency or pass-through entity expressly
authorizes them in the notice of suspension or termination or
subsequently. However, costs during suspension or after termination are
allowable if:
(a) The costs result from financial obligations which were properly
incurred by the recipient or subrecipient before the effective date of
suspension or termination, are not in anticipation of it; and
(b) The costs would be allowable if the Federal award was not
suspended or expired normally at the end of the period of performance
in which the termination takes effect.
Closeout
Sec. 200.344 Closeout.
(a) The Federal agency or pass-through entity must close out the
Federal award when it determines that all administrative actions and
required work of the Federal award have been completed. When the
recipient or subrecipient fails to complete the necessary
administrative actions or the required work for an award, the Federal
agency or pass-through entity must proceed with closeout based on the
information available. This section specifies the administrative
actions required at the end of the period of performance.
(b) A recipient must submit all reports (financial, performance,
and other reports required by the Federal award) no later than 120
calendar days after the conclusion of the period of performance. A
subrecipient must submit all reports (financial, performance, and other
reports required by a subaward) to the pass-through entity no later
than 90 calendar days after the conclusion of the period of performance
of the subaward (or an earlier date as agreed upon by the pass-through
entity and subrecipient). When justified, the Federal agency or pass-
through entity may approve extensions for the recipient or
subrecipient. When the recipient does not have a final indirect cost
rate covering the period of performance, a final financial report must
still be submitted to fulfill the requirements of this section. The
recipient must submit a revised final financial report when all
applicable indirect cost rates have been finalized.
(c) The recipient must liquidate all financial obligations incurred
under the Federal award no later than 120 calendar days after the
conclusion of the period of performance. A subrecipient must liquidate
all financial obligations incurred under a subaward no later than 90
calendar days after the conclusion of the period of performance of the
subaward (or an earlier date as agreed upon by the pass-through entity
and subrecipient). When justified, the Federal agency or pass-through
entity may approve extensions for the recipient or subrecipient.
(d) The Federal agency or pass-through entity must not delay
payments to the recipient or subrecipient for costs meeting the
requirements of subpart E of this part.
(e) The recipient or subrecipient must immediately refund any
unobligated funds that the Federal agency or pass-through entity paid
and that are not authorized to be retained. See OMB Circular A-129 and
Sec. 200.346.
(f) The Federal agency or pass-through entity must make all
necessary adjustments to the Federal share of costs after closeout
reports are received. For example, the disallowance of any costs or the
deobligation of an unliquidated balance.
(g) The recipient or subrecipient must account for any property
acquired with Federal funds or received from the Federal Government in
accordance with Sec. Sec. 200.310 through 200.316 and 200.330.
(h) The Federal agency must make every effort to complete all
closeout actions no later than one year after the end of the period of
performance. If the indirect cost rate has not been finalized and would
delay closeout, the Federal agency is authorized to mutually agree with
the recipient to close an award using the current or most recently
negotiated rate. However, the recipient is not required to agree to a
final rate for a Federal award for the purpose of prompt closeout.
(i) If the recipient does not comply with the requirements of this
section, including submitting all final reports, the Federal agency
must report the recipient's material failure to comply with the terms
and conditions of the Federal award in SAM.gov. A Federal agency must
use the Contractor Performance Assessment Reporting System (CPARS) to
enter or amend information in SAM.gov. Federal agencies may also pursue
other enforcement actions as appropriate. See Sec. 200.339.
Post-Closeout Adjustments and Continuing Responsibilities
Sec. 200.345 Post-closeout adjustments and continuing
responsibilities.
(a) The closeout of the Federal award does not affect any of the
following:
(1) The right of the Federal agency or pass-through entity to
disallow costs and recover funds on the basis of a later audit or
review. However, the Federal agency or pass-through entity must make
determinations to disallow costs and notify the recipient or
subrecipient within the record retention period.
(2) The recipient's or subrecipient's requirement to return funds
or right to receive any remaining and available funds as a result of
refunds, corrections, final indirect cost rate adjustments (unless the
Federal award in closed in accordance with Sec. 200.344(h)), or other
transactions.
(3) The ability of the Federal agency or pass-through entity to
make financial adjustments to a previously closed Federal award, such
as resolving indirect cost payments and making final payments.
(4) Audit requirements in subpart F of this part.
(5) Property management and disposition requirements in Sec. Sec.
200.310 through 200.316.
(6) Records retention as required in Sec. Sec. 200.334 through
200.337.
(b) After the closeout of the Federal award, a relationship created
under the Federal award may be modified or ended in whole or in part.
This may only be done with the consent of the awarding Federal agency
or pass-through entity and the recipient or subrecipient, provided the
responsibilities of the recipient or subrecipient referred to in
paragraph (a) of this section, including those for property management
as applicable, are considered and provisions made for continuing
responsibilities of the recipient or subrecipient, as appropriate.
Collection of Amounts Due
Sec. 200.346 Collection of amounts due.
Any Federal funds paid to the recipient or subrecipient in excess
of the amount that the recipient or subrecipient is determined to be
entitled to under the Federal award constitutes a debt to the Federal
Government. The Federal agency must collect all debts arising out of
its Federal awards in accordance with the Standards for the
Administrative Collection of Claims (31 CFR 901).
[[Page 69463]]
Subpart E--Cost Principles
General Provisions
Sec. 200.400 Policy guide.
The application of these cost principles is based on the
fundamental premises that:
(a) The recipient or subrecipient is responsible for the efficient
and effective administration of the Federal award through sound
management practices.
(b) The recipient or subrecipient is responsible for administering
Federal funds in a manner consistent with Federal statutes,
regulations, and the terms and conditions of the Federal award.
(c) The recipient or subrecipient, in recognition of its unique
combination of staff, facilities, and experience, is responsible for
employing organization and management techniques necessary to ensure
the proper and efficient administration of the Federal award.
(d) The accounting practices of the recipient or subrecipient must
be consistent with these cost principles and support the accumulation
of costs as required by these cost principles, including maintaining
adequate documentation to support costs charged to the Federal award.
(e) The cognizant agency for indirect costs should ensure that the
recipient or subrecipient consistently applies these cost principles
when reviewing, negotiating, and approving cost allocation plans or
indirect cost proposals. Where wide variations exist in the treatment
of a given cost item by the recipient or subrecipient, the
reasonableness and equity of such treatments should be fully
considered. See the definition of indirect costs in Sec. 200.1.
(f) For recipients and subrecipients that educate and engage
students in research, the dual role of students as both trainees and
employees (including pre- and post-doctoral staff) contributing to the
completion of Federal awards for research must be recognized in the
application of these principles.
(g) The recipient or subrecipient may not earn or keep any profit
resulting from Federal financial assistance unless explicitly
authorized by the terms and conditions of the Federal award. See also
Sec. 200.307.
Sec. 200.401 Application.
(a) General. The recipient or subrecipient must apply these
principles in determining allowable costs under Federal awards. The
recipient or subrecipient must also use these principles as a guide in
pricing fixed-price contracts and subcontracts when costs are used in
determining the appropriate price. These cost principles do not apply
to:
(1) Arrangements under which Federal financing is in the form of
loans, scholarships, fellowships, traineeships, or other fixed amounts
based on items such as education allowance or published tuition rates
and fees.
(2) Capitation awards to Institutions of Higher Education (IHEs)
based on case counts or the number of beneficiaries.
(3) Fixed amount awards. See 200.201.
(4) Federal awards to hospitals (see Appendix IX of this part).
(5) Grants and cooperative agreements for food commodities.
(6) Other awards under which the recipient or subrecipient is not
required to account for actual costs incurred.
(b) Federal contract. A Federal contract awarded to a recipient is
subject to the Cost Accounting Standards (CAS). It must incorporate the
applicable CAS requirements per 48 CFR Chapter 99 and 48 CFR part 30
(FAR Part 30). With respect to the allocation of costs, the Cost
Accounting Standards at 48 CFR parts 9904 or 9905 take precedence over
the cost principles in subpart E. When a contract with a recipient is
subject to full CAS coverage, the allowability of certain costs under
the cost principles will be affected by the allocation provisions of
the Cost Accounting Standards (for example, CAS 414--48 CFR 9904.414--
Cost of Money as an Element of the Cost of Facilities Capital, and CAS
417--48 CFR 9904.417--Cost of Money as an Element of the Cost of
Capital Assets Under Construction, apply instead of the allowability
provisions of Sec. 200.449). For example, the allowability of costs in
CAS-covered costs is determined first by the allocation provisions of
the Cost Accounting Standards rather than the allowability provisions
in Sec. 200.449 (unless the CAS does not address the specific costs).
In complying with those requirements, the recipient's application of
cost accounting practices for estimating, accumulating, and reporting
costs for Federal awards and CAS-covered contracts must be consistent
with the cost accounting practices for the CAS-covered contracts. The
recipient must maintain only one set of accounting records supporting
the allocation of costs if the recipient administers both Federal
awards and CAS-covered contracts.
(c) Exemptions. Some nonprofit organizations, because of their size
and nature of operations, can be considered to be similar to for-profit
organizations in terms of the applicability of cost principles. These
nonprofit organizations must operate under Federal cost principles that
apply to for-profit organizations located at 48 CFR 31.2. Appendix VIII
contains a list of these nonprofit organizations. Other organizations
may be added to this list if approved by the cognizant agency for
indirect costs.
Basic Considerations
Sec. 200.402 Composition of costs.
The total cost of a Federal award is the sum of the allowable
direct and allocable indirect costs minus any applicable credits.
Sec. 200.403 Factors affecting allowability of costs.
Except where otherwise authorized by statute, costs must meet the
following criteria to be allowable under Federal awards:
(a) Be necessary and reasonable for the performance of the Federal
award and be allocable thereto under these principles.
(b) Conform to any limitations or exclusions set forth in these
principles or in the Federal award as to types or amount of cost items.
(c) Be consistent with policies and procedures that apply uniformly
to both federally-financed and other activities of the recipient or
subrecipient.
(d) Be accorded consistent treatment. For example, a cost may not
be assigned to a Federal award as a direct cost if any other cost
incurred for the same purpose in like circumstances has been allocated
to the Federal award as an indirect cost.
(e) Be determined in accordance with generally accepted accounting
principles (GAAP), except, for State and local governments and Indian
Tribes only, as otherwise provided for in this part.
(f) Not be included as a cost or used to meet cost sharing
requirements of any other federally-financed program in either the
current or a prior period. See Sec. 200.306(b).
(g) Be adequately documented. See Sec. Sec. 200.300 through
200.309.
(h) Administrative closeout costs may be incurred until the due
date of the final report(s). If incurred, these costs must be
liquidated prior to the due date of the final report(s) and charged to
the final budget period of the award unless otherwise specified by the
Federal agency. All other costs must be incurred during the approved
budget period. At its discretion, the Federal agency is authorized to
waive prior written approvals to carry forward unobligated balances to
subsequent budget periods. See Sec. 200.308(g)(3).
[[Page 69464]]
Sec. 200.404 Reasonable costs.
A cost is reasonable if it does not exceed an amount that a prudent
person would incur under the circumstances prevailing when the decision
was made to incur the cost. In determining the reasonableness of a
given cost, consideration must be given to the following:
(a) Whether the cost is generally recognized as ordinary and
necessary for the recipient's or subrecipient's operation or the proper
and efficient performance of the Federal award;
(b) The restraints or requirements imposed by such factors as sound
business practices; arm's-length bargaining; Federal, State, local,
tribal, and other laws and regulations; and terms and conditions of the
Federal award.
(c) Market prices for comparable costs for the geographic area; and
(d) Whether the individuals concerned acted with prudence in the
circumstances considering their responsibilities to the recipient or
subrecipient, its employees, its students or membership (if
applicable), the public at large, and the Federal Government.
(e) The degree to which the cost represents a deviation from the
recipient's or subrecipient's established written policies and
procedures for incurring costs.
Sec. 200.405 Allocable costs.
(a) Allocable costs in general. A cost is allocable to a Federal
award if the cost is assignable to that Federal award in accordance
with the relative benefits received. This standard is met if the cost
satisfies any of the following criteria:
(1) Is incurred specifically for the Federal award;
(2) Benefits both the Federal award and other work of the recipient
or subrecipient and can be distributed in proportions that may be
approximated using reasonable methods; or
(3) Is necessary to the overall operation of the recipient or
subrecipient and is assignable in part to the Federal award in
accordance with these cost principles.
(b) Allocation of indirect costs. All activities which benefit from
the recipient's or subrecipient's indirect cost, including unallowable
activities and donated services by the recipient or subrecipient or
third parties, will receive an appropriate allocation of indirect
costs.
(c) Limitation on charging certain allocable costs to other Federal
awards. A cost allocable to a particular Federal award may not be
charged to other Federal awards (for example, to overcome fund
deficiencies or to avoid restrictions imposed by Federal statutes,
regulations, or the terms and conditions of the Federal awards).
However, this prohibition would not preclude the recipient or
subrecipient from shifting costs that are allowable under two or more
Federal awards in accordance with existing Federal statutes,
regulations, or the terms and conditions of the Federal awards.
(d) Direct cost allocation principles. If a cost benefits two or
more projects or activities in proportions that can be determined
without undue effort or cost, the cost must be allocated to the
projects based on the proportional benefit. However, when those
proportions cannot be determined because of the interrelationship of
the work involved, then, notwithstanding paragraph (c), the costs may
be allocated or transferred to benefitted projects on any reasonable
documented basis. Where the purchase of equipment or other capital
asset is specifically authorized under a Federal award, the costs are
assignable to the Federal award regardless of the use that may be made
of the equipment or other capital asset involved, when no longer needed
for the purpose for which it was originally required. See also
Sec. Sec. 200.310 through 200.316 and 200.439.
(e) Costs of contracts subject to CAS. Costs of contracts subject
to CAS must be allocated according to the Cost Accounting Standards,
which take precedence over the allocation provisions in this part.
Sec. 200.406 Applicable credits.
(a) Applicable credits refer to transactions that offset or reduce
direct or indirect costs allocable to a Federal award. Examples of such
transactions are purchase discounts, rebates or allowances, recoveries
or indemnities on losses, insurance refunds or rebates, adjustments of
overpayments, or erroneous charges. To the extent that such credits
accruing to or received by the recipient or subrecipient relate to
allowable costs, they must be credited to the Federal award either as a
cost reduction or cash refund, as appropriate.
(b) In some instances, the amounts received from the Federal
Government to finance activities or service operations of the recipient
or subrecipient should be treated as applicable credits. Specifically,
the concept of netting such credit items (including any amounts used to
meet cost sharing requirements) must be recognized in determining the
rates or amounts to be charged to the Federal award. See Sec. Sec.
200.436 and 200.468 for potential application areas.
Sec. 200.407 Prior written approval (prior approval).
The reasonableness and allocability of certain costs under Federal
awards may be difficult to determine. To avoid subsequent disallowance
or dispute based on unreasonableness or nonallocability, the recipient
may seek the prior written approval of the Federal agency (or, for
indirect costs, the cognizant agency for indirect costs) before
incurring the cost. The absence of prior written approval on any
element of cost will not, in itself, affect the reasonableness or
allocability of that cost unless prior approval is specifically
required for allowability as described under certain circumstances in
the following sections:
(a) Section 200.306 Cost sharing;
(b) Section 200.307 Program income;
(c) Section 200.308 Revision of budget and program plans;
(d) Section 200.333 Fixed amount subawards;
(e) Section 200.430 Compensation--personal services, paragraph (h);
(f) Section 200.431 Compensation--fringe benefits;
(g) Section 200.439 Equipment and other capital expenditures;
(h) Section 200.441 Fines, penalties, damages and other
settlements;
(i) Section 200.442 Fund raising and investment management costs;
(j) Section 200.445 Goods or services for personal use;
(k) Section 200.447 Insurance and indemnification;
(l) Section 200.455 Organization costs;
(m) Section 200.458 Pre-award costs;
(n) Section 200.462 Rearrangement and reconversion costs;
(o) Section 200.475 Travel costs.
Sec. 200.408 Limitation on allowance of costs.
Statutory requirements may limit the allowability of costs. Any
costs that exceed the maximum amount allowed by statute may not be
charged to the Federal award. Only the amount allowable by statute may
be charged to the Federal award.
Sec. 200.409 Special considerations.
Other sections in this part describe special considerations and
requirements applicable to states, local governments, Indian Tribes,
and IHEs. In addition, certain provisions among the items of cost in
this subpart are only applicable to certain types of recipients and
subrecipients, as specified in the following sections:
[[Page 69465]]
(a) Direct and Indirect Costs (Sec. Sec. 200.412-200.415);
(b) Special Considerations for States, Local Governments and Indian
Tribes (Sec. Sec. 200.416 and 200.417); and
(c) Special Considerations for Institutions of Higher Education
(Sec. Sec. 200.418 and 200.419).
Sec. 200.410 Collection of unallowable costs.
Payments made for costs determined to be unallowable by either the
awarding Federal agency, cognizant agency for indirect costs, or pass-
through entity must be refunded with interest to the Federal
Government. Unless directed by Federal statute or regulation,
repayments must be made in accordance with the instructions provided by
the Federal agency or pass-through entity that made the allowability
determination. See Sec. Sec. 200.300 through 200.309, and Sec.
200.346.
Sec. 200.411 Adjustment of previously negotiated indirect cost rates
containing unallowable costs.
(a) Federal negotiated indirect cost rates based on a proposal
later found to have included costs that:
(1) Are unallowable as specified by Federal statutes, regulations
or the terms and conditions of a Federal award; or
(2) Are unallowable because they are not allocable to the Federal
award(s), must be adjusted, or a refund must be made in accordance with
the requirements of this section. These adjustments or refunds are
intended to correct the proposals used to establish the rates and do
not constitute a reopening of the rate negotiation. The adjustments or
refunds must be made regardless of the type of rate negotiated
(predetermined, final, fixed, or provisional).
(b) For rates covering a future fiscal year of the recipient or
subrecipient, the unallowable costs must be removed from the indirect
cost pools and the rates must be adjusted.
(c) For rates covering a past period, the Federal share of the
unallowable costs must be computed for each year involved, and a cash
refund (including interest) must be made to the Federal Government in
accordance with the directions provided by the cognizant agency for
indirect costs. When cash refunds are made for past periods covered by
provisional or fixed rates, appropriate adjustments must be made when
the rates are finalized to avoid duplicate recovery of the unallowable
costs.
(d) For rates covering the current period, either a rate adjustment
or a refund, as described in paragraphs (b) and (c) of this section,
must be required by the cognizant agency for indirect costs. The choice
of method must be at the discretion of the cognizant agency for
indirect costs, based on its judgment as to which method would be most
practical.
(e) The amount or proportion of unallowable costs included in each
year's rate will be assumed to be the same as the amount or proportion
of unallowable costs included in the base year proposal used to
establish the rate.
Direct and Indirect Costs
Sec. 200.412 Classification of costs.
There is no universal rule for classifying certain costs as direct
or indirect costs. A cost may be direct for some specific service or
function but indirect for the Federal award or other final cost
objective. Therefore, each cost incurred for the same purpose in like
circumstances must be treated consistently either as a direct or an
indirect cost to avoid possible double-charging of Federal awards.
Guidelines for determining direct and indirect costs charged to Federal
awards are provided in this subpart.
Sec. 200.413 Direct costs.
(a) General. Direct costs are those costs that can be identified
specifically with a particular final cost objective, such as a Federal
award, or other internally or externally funded activity, or that can
be directly assigned to such activities relatively easily with a high
degree of accuracy. Costs incurred for the same purpose in like
circumstances must be treated consistently as direct or indirect costs.
See Sec. 200.405.
(b) Application to Federal awards. The association of costs with a
Federal award (rather than the nature of the procurement transaction)
determines whether costs are direct or indirect. Costs charged directly
to a Federal award are typically incurred specifically for that Federal
award (including, for example, supplies needed to achieve the award's
objectives and the proportion of staff salary expended in relation to
that specific award). However, costs that otherwise would be treated as
indirect costs may also be considered direct costs if they are directly
related to a specific award (including, for example, extraordinary
utility consumption, the cost of materials supplied from stock or
services rendered by specialized facilities, cybersecurity, integrated
data systems, asset management systems, performance management costs,
program evaluation costs, or other institutional service operations).
(c) Administrative and clerical staff salaries. Administrative and
clerical staff salaries should normally be treated as indirect costs.
Direct charging of these costs may be appropriate only if they meet all
of the following conditions:
(1) The administrative or clerical services are integral to a
Federal award;
(2) Individuals involved can be specifically identified with a
Federal award; and
(3) The costs are not also recovered as indirect costs.
(d) Minor items. A minor direct cost may be treated as an indirect
cost when it is practical to do so and provided that it is treated
consistently for all Federal and non-Federal purposes.
(e) Treatment of unallowable costs in determining indirect cost
rates. Unallowable costs for Federal awards must be treated as direct
costs when determining indirect cost rates. Additionally, unallowable
costs must be allocated their equitable share of the recipient's or
subrecipient's indirect costs if they represent activities which:
(1) Include the salaries of personnel;
(2) Occupy space; and
(3) Benefit from the recipient's or subrecipient's indirect costs.
(f) Treatment of certain costs for nonprofit organizations. For
nonprofit organizations, the costs of activities performed by the
nonprofit organization primarily as a service to members, clients, or
the general public when significant and necessary to the organization's
mission must be treated as direct costs whether or not allowable, and
be allocated an equitable share of indirect costs. Some examples of
these types of activities include:
(1) Maintenance of membership rolls, subscriptions, publications,
and related functions. See Sec. 200.454.
(2) Providing services and information to members, the government,
or the public. See Sec. Sec. 200.454 and 200.450.
(3) Promotion, lobbying, and other forms of public relations. See
Sec. Sec. 200.421 and 200.450.
(4) Conferences (except in support of the general administration of
the recipient or subrecipient). See also Sec. 200.432.
(5) Maintenance, protection, and investment of special funds not
used in the recipient's or subrecipient's operation. See also Sec.
200.442.
(6) Group benefits on behalf of members or clients, including life
and hospital insurance, annuity or retirement plans, and financial aid.
See also Sec. 200.431.
Sec. 200.414 Indirect costs.
(a) Facilities and administration classification. For major
Institutions of Higher Education (IHE) and major
[[Page 69466]]
nonprofit organizations, indirect costs must be classified within two
broad categories: ``Facilities'' and ``Administration.'' ``Facilities''
is defined as depreciation on buildings, equipment and capital
improvements, interest on debt associated with certain buildings,
equipment and capital improvements, and operations and maintenance
expenses. ``Administration'' is defined as general administration and
general expenses such as the director's office, accounting, personnel,
and all other types of expenditures not listed specifically under one
of the subcategories of ``Facilities'' (including cross allocations
from other pools, where applicable). For nonprofit organizations,
library expenses are included in the ``Administration'' category; for
IHEs, they are included in the ``Facilities'' category. Major IHEs are
defined as those required to use the Standard Format for Submission as
noted in Appendix III. Major nonprofit organizations are those which
receive more than $10 million in direct Federal funding.
(b) Diversity of nonprofit organizations. It is not always possible
to specify the types of costs that may be classified as indirect costs
for nonprofit organizations due to the diversity of their accounting
practices. Identification with a Federal award rather than the nature
of the procurement transaction involved is the determining factor in
distinguishing direct from indirect costs of Federal awards. However,
typical examples of indirect cost for many nonprofit organizations may
include depreciation on buildings and equipment, the costs of operating
and maintaining facilities, and general administration and general
expenses, such as the salaries and expenses of executive officers,
personnel administration, and accounting.
(c) Federal Agency Acceptance of Negotiated Indirect Cost Rates.
(See Sec. 200.306.)
(1) Negotiated indirect cost rates must be accepted by all Federal
agencies. A Federal agency may only use a rate different from the
negotiated rate for either a class of Federal awards or a single
Federal award when required by Federal statute, regulation, or when
approved by the awarding Federal agency based on documented
justification described in paragraph (c)(3) of this section.
(2) The Federal agency must notify OMB of any approved deviations.
The recipient or subrecipient may notify OMB of any disputes with
Federal agencies regarding the application of a federally negotiated
indirect cost rate.
(3) The Federal agency must implement, and make publicly available,
the policies, procedures and general decision-making criteria that
their programs will follow to seek and justify deviations from
negotiated rates.
(4) The Federal agency must include the policies relating to
indirect cost rate reimbursement or cost share as approved under
paragraph (e) in the notice of funding opportunity. As appropriate, the
Federal agency should incorporate discussion of these policies into its
outreach activities with applicants before posting a notice of funding
opportunity. See Sec. 200.204.
(d) Pass-through entities. Pass-through entities are subject to the
requirements in Sec. 200.332(b)(4) and must accept all federally
negotiated indirect costs rates for subrecipients.
(e) Appendices. Requirements for development and submission of
indirect cost rate proposals and cost allocation plans are contained in
the following Appendices:
(1) Appendix III to Part 200--Indirect (F&A) Costs Identification
and Assignment, and Rate Determination for Institutions of Higher
Education (IHEs);
(2) Appendix IV to Part 200--Indirect (F&A) Costs Identification
and Assignment, and Rate Determination for Nonprofit Organizations;
(3) Appendix V to Part 200--State/Local Government-wide Central
Service Cost Allocation Plans;
(4) Appendix VI to Part 200--Public Assistance Cost Allocation
Plans;
(5) Appendix VII to Part 200--States and Local Government and
Indian Tribe Indirect Cost Proposals; and
(6) Appendix IX to Part 200--Hospital Cost Principles.
(f) De minimis rate. Recipients and subrecipients that do not have
a current Federal negotiated indirect cost rate (including provisional
rate) may elect to charge a de minimis rate of up to 15 percent of
modified total direct costs (MTDC). The recipient or subrecipient is
authorized to determine the appropriate rate up to this limit. Federal
agencies may not require recipients and subrecipients to use a de
minimis rate lower than this standard unless required by Federal
statute. The de minimis rate must not be applied to cost reimbursement
contracts issued directly by the Federal Government in accordance with
the FAR. Recipients and subrecipients are not required to use the de
minimis rate and may submit an indirect cost proposal in accordance
with the appropriate Appendix referenced in paragraph (e) of this
section. When applying the de minimis rate, costs must be consistently
charged as either direct or indirect costs and may not be double
charged or inconsistently charged as both. The de minimis rate does not
require documentation to justify its use and may be used indefinitely.
Once elected, the recipient or subrecipient must use the de minimis
rate for all Federal awards until the recipient or subrecipient chooses
to receive a negotiated rate. A governmental department or agency that
receives more than $35 million in direct Federal funding during its
fiscal year may not elect to use the de minimis rate (see Appendix VII,
paragraph D.1.b.).
(g) One-time extension of indirect rates. A recipient or
subrecipient with a current Federal negotiated indirect cost rate may
apply for a one-time extension of that agreement for up to four years.
This extension will be subject to review and approval by the cognizant
agency for indirect costs. If granted, the recipient or subrecipient
may only request a rate review when the extension period ends. The
recipient or subrecipient must re-apply to negotiate a new rate when
the extension ends. When a new rate is negotiated, the recipient or
subrecipient may again apply for a one-time extension of the new rate
in accordance with this paragraph.
Sec. 200.415 Required certifications.
(a) Financial reports and payment requests under Federal awards
must include a certification, signed by an official who is authorized
to legally bind the recipient or subrecipient, which reads as follows:
``By signing this report, I certify to the best of my knowledge and
belief that the report is true, complete, and accurate, and the
expenditures, disbursements and cash receipts are for the purposes and
objectives set forth in the terms and conditions of the Federal award.
I am aware that any false, fictitious, or fraudulent information, or
the omission of any material fact, may subject me to criminal, civil or
administrative penalties for fraud, false statements, false claims or
otherwise. (U.S. Code Title 18, Section 1001 and Title 31, Sections
3729-3730 and 3801-3812).''
(b) Subrecipients under the Federal award must certify to the pass-
through entity whenever applying for funds, requesting payment, and
submitting reports: ``I certify to the best of my knowledge and belief
that the information provided herein is true, complete, and accurate. I
am aware that the provision of false, fictitious, or fraudulent
information, or the omission of any material fact, may subject me to
criminal, civil, or administrative consequences including, but not
limited
[[Page 69467]]
to violations of U.S. Code Title 18, Sections 2, 1001, 1343 and Title
31, Sections 3729-3730 and 3801-3812.'' Each such certification must be
maintained pursuant to the requirements of Sec. 200.334. This
paragraph applies to all tiers of subrecipients.
(c) Certification of cost allocation plan or indirect cost rate
proposal. Each cost allocation plan or indirect cost rate proposal must
comply with the following:
(1) A proposal to establish a cost allocation plan or an indirect
cost rate, whether submitted to a Federal cognizant agency for indirect
costs or maintained on file by the recipient, must be certified by the
recipient using the Certificate of Cost Allocation Plan or Certificate
of Indirect Costs as set forth in appendices III through VII, and IX of
this part. The certificate must be signed on behalf of the recipient by
an individual at a level no lower than the vice president or chief
financial officer of the recipient that submits the proposal.
(2) The Federal Government may either disallow all indirect costs
or unilaterally establish an indirect cost rate when the recipient
fails to submit a certified proposal for establishing a rate. This rate
should be based upon audited historical data or other data furnished to
the cognizant agency for indirect costs and for which it can be
demonstrated that all unallowable costs have been excluded. The rate
established must ensure that potentially unallowable costs are not
reimbursed. Alternatively, the recipient may use the de minimis
indirect cost rate. See Sec. 200.414(f).
(d) Nonprofit organizations must certify that they did not meet the
definition of a major nonprofit organization as defined in Sec.
200.414(a), if applicable.
(e) The recipient must certify that the requirements and standards
for lobbying (see Sec. 200.450) have been met when submitting its
annual indirect cost rate proposal.
Special Considerations for States, Local Governments and Indian Tribes
Sec. 200.416 Cost allocation plans and indirect cost proposals.
(a) Awards to states, local governments, and Indian Tribes are
often implemented at the level of department within the State, local
government, or Indian Tribe. A central service cost allocation plan is
established to allow such department to claim a portion of centralized
service costs that are incurred in proportion to the award's
activities. Examples of centralized service costs may include motor
pools, computer centers, purchasing, and accounting. Since Federal
awards are performed within the individual operating agencies, there
needs to be a process whereby these central service costs can be
identified and assigned to benefitted activities on a reasonable and
consistent basis. The central service cost allocation plan establishes
this process.
(b) Individual departments typically charge Federal awards for
indirect costs through an indirect cost rate. A separate indirect cost
rate proposal for each operating department is usually necessary to
claim indirect costs under Federal awards. Indirect costs include:
(1) The indirect costs originating in each operating department of
the State, local government, or Indian Tribe carrying out Federal
awards; and
(2) The costs of central governmental services distributed through
the central service cost allocation plan and not otherwise treated as
direct costs.
(c) The requirements for developing and submitting cost allocation
plans (for central service costs and public assistance programs) and
indirect cost rate proposals are contained in Appendices V, VI, and VII
of this part.
Sec. 200.417 Interagency service.
An operating department may provide services to another operating
department of the same State, local government, or Indian Tribe. In
these instances, the cost of services provided may include allowable
direct costs of the service plus a pro-rated share of indirect costs. A
standard indirect cost rate equal to 10 percent of the direct salaries
and wages for providing the service (excluding overtime, shift
premiums, and fringe benefits) may be used instead of determining the
actual indirect costs of the service. These services do not include
centralized services that are included in central service cost
allocation plans described in Appendix V of this part.
Special Considerations for Institutions of Higher Education
Sec. 200.418 Costs incurred by states and local governments.
Costs incurred or paid by a State or local government on behalf of
and in direct benefit to its IHEs are allowable. These costs include
but are not limited to fringe benefit programs such as pension costs
and Federal Insurance Contributions Act (FICA) costs. These costs are
allowable regardless of whether or not they are recorded in the
accounting records of the institutions, subject to the following
conditions:
(a) The costs meet the requirements of Sec. 200.402--200.411;
(b) The costs are properly supported by approved cost allocation
plans in accordance with the applicable cost accounting principles of
this part; and
(c) The costs are not otherwise borne directly or indirectly by the
Federal Government.
Sec. 200.419 Cost accounting standards.
An IHE that receive an aggregate total $50 million or more in
Federal awards and instruments subject to this subpart (as specified in
Sec. 200.101) in its most recently completed fiscal year must comply
with the Cost Accounting Standards Board's cost accounting standards
located at 48 CFR 9905.501, 9905.502, 9905.505, and 9905.506. CAS-
covered contracts and subcontracts awarded to the IHEs are subject to
the broader range of CAS requirements at 48 CFR 9900 through 9999 and
48 CFR part 30 (FAR Part 30).
General Provisions for Selected Items of Cost
Sec. 200.420 Considerations for selected items of cost.
(a) This section provides principles to be applied in establishing
the allowability of certain items involved in determining cost, in
addition to other requirements of this subpart. These principles apply
whether or not a particular cost item is properly treated as a direct
or indirect cost.
(b) The following sections are not intended to be a comprehensive
list of potential items of cost encountered under Federal awards.
Failure to mention a particular item of cost, including as an example
in certain sections, is not intended to imply that it is either
allowable or unallowable. When determining the allowability for an item
of cost, each case should be based on the treatment provided for
similar or related items of cost and based on the principles described
in Sec. Sec. 200.402 through 200.411. In case of a discrepancy between
the provisions of a specific Federal award and the provisions below,
the Federal award governs. Criteria outlined in Sec. 200.403 must be
applied in determining allowability.
Sec. 200.421 Advertising and public relations.
(a) The term advertising costs means the costs of advertising media
and corollary administrative costs. Advertising media includes, but is
not limited to, magazines, newspapers, radio and television, direct
mail, exhibits, and electronic or computer transmittals.
[[Page 69468]]
(b) The only allowable advertising costs are those which are solely
for:
(1) The recruitment of personnel required by the recipient or
subrecipient for the performance of a Federal award (See also Sec.
200.463);
(2) The procurement of goods and services for the performance of a
Federal award;
(3) The disposal of scrap or surplus materials acquired in the
performance of a Federal award except when the recipient or
subrecipient is reimbursed for disposal costs at a predetermined
amount; or
(4) Program outreach and other specific purposes necessary to meet
the Federal award requirements.
(c) The term ``public relations'' includes community relations and
means those activities dedicated to maintaining the recipient's or
subrecipient's image or maintaining or promoting understanding and
favorable relations with the community or public at large or any
segment of the public.
(d) The only allowable public relations costs are:
(1) Costs specifically required by the Federal award;
(2) Costs of communicating with the public and press about specific
activities or accomplishments which result from the performance of the
Federal award (these costs are considered necessary as part of the
outreach effort for the Federal award); or
(3) Costs of conducting general liaison with news media and
government public relations officers, to the extent that such
activities are limited to communication and liaison necessary to keep
the public informed on matters of public concern, such as notices of
funding opportunities or financial matters.
(e) Unallowable advertising and public relations costs include the
following:
(1) All advertising and public relations costs other than as
specified in paragraphs (b) and (d) of this section;
(2) Costs of meetings, conventions, conferences, or other events
related to other activities of the entity (see also Sec. 200.432),
including:
(i) Costs of displays, demonstrations, and exhibits;
(ii) Costs of meeting rooms, hospitality suites, and other special
facilities used in conjunction with shows and other special events; and
(iii) Salaries and wages of employees engaged in setting up and
displaying exhibits, making demonstrations, and providing briefings;
(3) Costs of promotional items and memorabilia;
(4) Costs of advertising and public relations designed solely to
promote the recipient or subrecipient.
Sec. 200.422 Advisory councils.
An advisory council or committee is a body that provides advice to
the management of such entities as corporations, organizations, or
foundations. Costs incurred by advisory councils or committees are
unallowable unless authorized by statute, the Federal agency, or as an
indirect cost where allocable to Federal awards. See Sec. 200.444,
which applies to States, local governments, and Indian Tribes.
Sec. 200.423 Alcoholic beverages.
The cost of alcoholic beverages is unallowable.
Sec. 200.424 Alumni activities.
Costs incurred by IHEs for, or in support of, alumni activities are
unallowable.
Sec. 200.425 Audits conducted in accordance with the Single Audit
Act.
(a) A reasonably proportionate share of the costs of audits
required by and performed in accordance with the Single Audit Act
Amendments of 1996 (31 U.S.C. 7501-7507), and the requirements of this
part are allowable. However, the following audit costs are unallowable:
(1) Any costs for audits that are not required by and performed in
accordance with the Single Audit Act, and the requirements of this
part; and
(2) Any costs of auditing a recipient or subrecipient exempt from
having an audit conducted under the Single Audit Act and the
requirements of this part.
(b) The costs of a financial statement audit of a recipient or
subrecipient that does not currently have a Federal award may be
included in the indirect cost pool for a cost allocation plan or
indirect cost proposal.
(c) Pass-through entities may charge Federal awards for the cost of
agreed-upon procedures engagements to monitor subrecipients (in
accordance with Sec. Sec. 200.331-333) exempt from having an audit
conducted under the Single Audit Act and the requirements of this part.
This cost is allowable only if the agreed-upon procedures engagements
are:
(1) Conducted in accordance with GAGAS or applicable international
attestation standards, as appropriate;
(2) Paid for and arranged by the pass-through entity; and
(3) Limited in scope to one or more of the following compliance
requirements: activities allowed or unallowed; allowable costs/cost
principles; eligibility; and reporting.
Sec. 200.426 Bad debts.
Bad debts (debts determined to be uncollectable), including losses
(whether actual or estimated) arising from uncollectable accounts and
other claims, are unallowable. Related collection costs, and related
legal costs, arising from such debts are also unallowable. See Sec.
200.428.
Sec. 200.427 Bonding costs.
(a) Bonding costs arise when the Federal agency requires assurance
against financial loss to itself or others because of an act or default
of the recipient. They also arise when the recipient requires similar
assurance, including bonds as bid, performance, payment, advance
payment, infringement, and fidelity bonds for employees and officials.
(b) Bonding costs required under the Federal award's terms and
conditions are allowable.
(c) Bonding costs required by the recipient in the general conduct
of its operations are allowable as an indirect cost to the extent that
such bonding is in accordance with sound business practice and the
rates and premiums are reasonable under the circumstances.
Sec. 200.428 Collections of improper payments.
The costs incurred by a recipient or subrecipient to recover
improper payments, including improper overpayments, are allowable as
either direct or indirect costs, as appropriate. The recipient or
subrecipient may use the amounts collected in accordance with cash
management standards described in Sec. 200.305.
Sec. 200.429 Commencement and convocation costs.
For IHEs, costs incurred for commencements and convocations are
unallowable, except as activity costs provided for in Appendix III,
(B)(9) Student Administration and Services.
Sec. 200.430 Compensation--personal services.
(a) General. Compensation for personal services includes all
remuneration, paid currently or accrued, for services of employees
rendered during the period of performance under the Federal award,
including but not necessarily limited to wages and salaries.
Compensation for personal services may also include fringe benefits
addressed in Sec. 200.431. Costs of compensation are allowable to the
extent that they satisfy the specific requirements of this part and
that the total compensation for individual employees:
[[Page 69469]]
(1) Is reasonable for the services rendered and conforms to the
established written policy of the recipient or subrecipient
consistently applied to both Federal and non-Federal activities;
(2) Follows an appointment made in accordance with the recipient's
or subrecipient's laws, rules, or written policies and meets the
requirements of Federal statute, where applicable; and
(3) Is determined and supported as provided in paragraph (g) of
this section, when applicable.
(b) Reasonableness. Compensation for employees engaged in work on
Federal awards will be reasonable to the extent that it is consistent
with that paid for similar work in other activities of the recipient or
subrecipient. In cases where the kinds of employees required for
Federal awards are not found in the different activities of the
recipient or subrecipient, compensation will be considered reasonable
to the extent that it is comparable to that paid for similar work in
the labor market in which the recipient or subrecipient competes for
the kind of employees involved.
(c) Professional activities outside the recipient or subrecipient.
Unless the Federal agency expressly authorizes an arrangement, a
recipient or subrecipient must follow its written policies and
procedures concerning the permissible extent of professional services
that can be provided outside the recipient or subrecipient for non-
organizational compensation. Where the recipient or subrecipient does
not have written policies or procedures, or they do not adequately
define the permissible extent of consulting or other non-organizational
activities undertaken for extra outside pay, the Federal Government may
require the recipient or subrecipient to allocate the effort of
professional staff working on Federal awards between:
(1) Recipient or subrecipient activities, and
(2) Non-organizational professional activities. Appropriate
arrangements governing compensation must be negotiated on a case-by-
case basis if the Federal agency considers the extent of non-
organizational professional effort excessive or inconsistent with the
conflicts-of-interest terms and conditions of the Federal award.
(d) Unallowable costs. (1) Costs unallowable under other sections
of these principles must not be allowable under this section solely
because they constitute personnel compensation.
(2) The allowable compensation for certain employees is subject to
a ceiling in accordance with Federal statute. See 10 U.S.C.
2324(e)(1)(P), 41 U.S.C. 1127, and 41 U.S.C. 4304(a)(16) for the
ceiling amount, covered compensation subject to the ceiling, covered
employees, and other relevant provisions for cost-reimbursement
contracts. For different types of Federal awards, other statutory
ceilings may apply.
(e) Special considerations. Special considerations in determining
the allowability of compensation will be given to any change in a
recipient's or subrecipient's compensation policy resulting in a
substantial increase in its employees' level of compensation
(particularly when the change was concurrent with an increase in the
ratio of Federal awards to other activities) or any change in the
treatment of allowability of specific types of compensation due to
changes in Federal policy.
(f) Incentive compensation. Incentive compensation to employees
based on cost reduction, efficient performance, suggestion awards, or
safety awards is allowable to the extent that the overall compensation
is determined to be reasonable and such costs are paid or accrued
according to an agreement entered into in good faith between the
recipient or subrecipient and the employees before the services were
rendered, or according to an established plan followed by the recipient
or subrecipient so consistently as to imply, in effect, an agreement to
make such payment.
(g) Standards for Documentation of Personnel Expenses. (1) Charges
to Federal awards for salaries and wages must be based on records that
accurately reflect the work performed. These records must:
(i) Be supported by a system of internal control that provides
reasonable assurance that the charges are accurate, allowable, and
properly allocated;
(ii) Be incorporated into the official records of the recipient or
subrecipient;
(iii) Reasonably reflect the total activity for which the employee
is compensated by the recipient or subrecipient, not exceeding 100
percent of compensated activities (for IHEs, this is the IBS);
(iv) Encompass federally-assisted and all other activities
compensated by the recipient or subrecipient on an integrated basis but
may include the use of subsidiary records as defined in the recipient's
or subrecipient's written policy;
(v) Comply with the established accounting policies and procedures
of the recipient or subrecipient (See paragraph (i)(1)(ii) of this
section for treatment of incidental work for IHEs.); and
(vi) Support the distribution of the employee's salary or wages
among specific activities or cost objectives if the employee works on
more than one Federal award; a Federal award and non-Federal award; an
indirect cost activity and a direct cost activity; two or more indirect
activities allocated using different allocation bases; or an
unallowable activity and a direct or indirect cost activity.
(vii) Budget estimates (meaning, estimates determined before the
services are performed) alone do not qualify as support for charges to
Federal awards, but may be used for interim accounting purposes,
provided that:
(A) The system for establishing the estimates produces reasonable
approximations of the activity performed;
(B) Significant changes in the related work activity (as defined by
the recipient's or subrecipient's written policies) are promptly
identified and entered into the records. Short-term (such as one or two
months) fluctuation between workload categories do not need to be
considered as long as the distribution of salaries and wages is
reasonable over the longer term; and
(C) The recipient's or subrecipient's system of internal controls
includes processes to perform periodic after-the-fact reviews of
interim charges made to a Federal award based on budget estimates. All
necessary adjustments must be made so that the final amount charged to
the Federal award is accurate, allowable, and properly allocated based
on actual work performed.
(viii) Because practices vary as to the activity constituting a
full workload (for example, IBS for IHEs), records may reflect
categories of activities expressed as a percentage distribution of
total activities.
(ix) It is recognized that teaching, research, service, and
administration are often inextricably intermingled in an academic
setting. Therefore, a precise assessment of factors contributing to
costs is not required when IHEs record salaries and wages are charged
to Federal awards.
(2) For records that meet the standards required in paragraph
(g)(1) of this section, the recipient or subrecipient is not required
to provide additional support or documentation for the work performed
other than that referenced in paragraph (g)(3) of this section.
(3) In accordance with Department of Labor regulations implementing
the Fair Labor Standards Act (FLSA) (29 CFR part 516), charges for the
salaries and wages of nonexempt employees, in
[[Page 69470]]
addition to the supporting documentation described in this section,
must also be supported by records indicating the total number of hours
worked each day.
(4) Salaries and wages of employees used in meeting cost sharing
requirements on Federal awards must be supported in the same manner as
salaries and wages claimed for reimbursement from Federal awards.
(5) States, local governments, and Indian Tribes may use substitute
processes or systems for allocating salaries and wages to Federal
awards either in place of or in addition to the records described in
paragraph (g)(1) of this section if approved by the cognizant agency
for indirect cost. Such systems may include, but are not limited to,
random moment sampling, ``rolling'' time studies, case counts, or other
quantifiable measures of work performed.
(i) Substitute systems that use sampling methods (primarily for
Temporary Assistance for Needy Families (TANF), the Supplemental
Nutrition Assistance Program (SNAP), Medicaid, and other public
assistance programs) must meet acceptable statistical sampling
standards, including:
(A) The sampling universe must include all of the employees whose
salaries and wages are to be allocated based on sample results except
as provided in paragraph (g)(5)(iii);
(B) The sample must cover the entire period involved; and
(C) The results must be statistically valid and applied to the
period being sampled.
(ii) Allocating charges for the sampled employees' supervisors and
clerical and support staff, based on the results of the sampled
employees, will be acceptable.
(iii) Less than full compliance with the statistical sampling
standards noted in paragraph (5)(i) may be accepted by the cognizant
agency for indirect costs if it concludes that the amounts allocated to
Federal awards will be minimal or if it concludes that the system
proposed by the recipient or subrecipient will result in lower costs to
Federal awards than a system which complies with the standards.
(6) Cognizant agencies for indirect costs are encouraged to approve
alternative proposals based on outcomes and milestones for program
performance when these are clearly documented. These plans are
acceptable as an alternative to requirements in paragraph (g)(1) of
this section when approved by the cognizant agency for indirect costs.
(7) For Federal awards of similar purpose activity or instances of
approved blended funding, a recipient or subrecipient may submit
performance plans that incorporate funds from multiple Federal awards
and account for their combined use based on performance-oriented
metrics, provided the plans are approved in advance by all involved
Federal agencies. In these instances, the recipient or subrecipient
must submit a request for waiver of the requirements based on
documentation that describes the method of charging costs, relates the
charging of costs to the specific activity that is applicable to all
fund sources, and is based on quantifiable measures of the activity in
relation to time charged.
(8) For a recipient or subrecipient whose records do not meet the
standards described in this section, the Federal Government may require
personnel activity reports, including prescribed certifications, or
equivalent documentation supporting the records as required in this
section.
(h) Nonprofit organizations. This paragraph provides guidance
specific to only nonprofit organizations. For compensation to members
of nonprofit organizations, trustees, directors, associates, officers,
or the immediate families thereof, a determination must be made that
the compensation is reasonable for the actual personal services
rendered rather than a distribution of earnings above actual costs.
Compensation may include director's and executive committee member's
fees, incentive awards, off-site or incentive pay, location allowances,
hardship pay, and cost-of-living differentials.
(i) Institutions of Higher Education (IHEs). This paragraph
provides guidance specific to only IHEs.
(1) Determining allowable personnel costs. Certain conditions
require special consideration and possible limitations in determining
allowable personnel compensation costs under Federal awards. Among such
conditions are the following:
(i) Allowable activities. Charges to Federal awards may include
reasonable amounts for activities contributing and directly related to
work under an agreement, such as delivering special lectures about
specific aspects of the ongoing activity, writing reports and articles,
developing and maintaining protocols (human, animals, etcetera),
managing substances/chemicals, managing and securing project-specific
data, coordinating research subjects, participating in appropriate
seminars, consulting with colleagues and graduate students, and
attending meetings and conferences.
(ii) Incidental activities. Incidental activities for which
supplemental compensation is allowable under the written institutional
policy (at a rate not to exceed institutional base salary) do not need
to be included in the records described in paragraph (g) to charge
payments of incidental activities directly, such activities must either
be expressly authorized in the Federal award budget or receive prior
written approval by the Federal agency.
(2) Salary basis. Charges for work performed on Federal awards by
faculty members during the academic year are allowable at the
institutional base salary (IBS) rate. Except as noted in paragraph
(i)(1)(ii), in no event will charges to Federal awards, irrespective of
the basis of computation, exceed the proportionate share of the IBS for
that period. This principle applies to all members of the faculty at an
institution. IBS is the annual compensation paid by an IHE for an
individual's appointment, whether that individual's time is spent on
research, instruction, administration, or other activities. IBS
excludes any income an individual earns outside of duties performed for
the IHE. Unless there is prior approval by the Federal agency, charges
of a faculty member's salary to a Federal award may not exceed the
proportionate share of the IBS for the period during which the faculty
member worked on the Federal award.
(3) Intra-Institution of Higher Education (IHE) consulting. Intra-
IHE consulting by faculty should be undertaken as an IHE responsibility
requiring no compensation in addition to IBS. However, in unusual cases
where consultation is across departmental lines or involves a separate
or remote operation, and the work performed by the faculty members is
in addition to their regular responsibilities, any charges for such
work representing additional compensation above IBS are allowable
provided that such consulting arrangements are expressly authorized in
the Federal award or approved in writing by the Federal agency.
(4) Extra service pay. Extra service pay typically represents
overload compensation, subject to institutional compensation policies
for services above and beyond IBS. Where extra service pay results from
Intra-IHE consulting, it is subject to the same requirements of
paragraph (b) of this section. It is allowable if all of the following
conditions are met:
(i) The IHE establishes consistent written policies which apply
uniformly to all faculty members, not just those working on Federal
awards.
[[Page 69471]]
(ii) The IHE establishes a consistent written definition of work
covered by IBS, which is specific enough to determine conclusively when
work beyond that level has occurred. This definition may be described
in appointment letters or other documentation.
(iii) The supplementation amount paid is commensurate with the IBS
pay rate and additional work performed. See paragraph (i)(2) of this
section.
(iv) The salaries, as supplemented, fall within the salary
structure and pay ranges established by and documented in writing or
otherwise applicable to the IHE.
(v) The total salaries charged to Federal awards, including extra
service payments, are subject to the standards of documentation as
described in paragraph (g).
(5) Periods outside the academic year. (i) Except as specified for
teaching activity in paragraph (i)(5)(ii) of this section, charges for
work performed by faculty members on Federal awards during periods not
included in the base salary period must be at a rate not more than the
IBS.
(ii) Charges for teaching activities performed by faculty members
on Federal awards during periods not included in IBS period must be
based on the written policy of the IHE governing compensation to
faculty members for teaching assignments during such periods.
(6) Part-time faculty. Charges for work performed on Federal awards
by faculty members having only part-time appointments must be
determined at a rate not more than that regularly paid for part-time
assignments.
(7) Sabbatical leave costs. Rules for sabbatical leave are as
follows:
(i) Costs of leaves of absence by employees for performance of
graduate work or sabbatical study, travel, or research are allowable,
provided the IHE has a uniform written policy on sabbatical leave for
persons engaged in instruction and persons engaged in research. These
costs must be allocated equitably among all related activities of the
IHE.
(ii) Where sabbatical leave is included in fringe benefits as a
direct charge, the aggregate amount of assessments applicable to all
work of the institution during the base period must be reasonable in
relation to the IHE's experience under its sabbatical leave policy.
(8) Salary rates for non-faculty members. Non-faculty full-time
professional personnel may also earn ``extra service pay'' in
accordance with the recipient's written policy and paragraph (i)(1)(i).
Sec. 200.431 Compensation--fringe benefits.
(a) General. Fringe benefits are allowances and services employers
provide to their employees as compensation in addition to regular
salaries and wages. Fringe benefits include, but are not limited to,
the costs of leave (vacation, family, sick, or military), employee
insurance, pensions, and unemployment benefits. Except as provided
elsewhere in these principles, the costs of fringe benefits are
allowable provided that the benefits are reasonable and are required by
law, an organization-employee agreement, or an established policy of
the recipient or subrecipient.
(b) Leave. The cost of fringe benefits in the form of regular
compensation paid to employees during periods of authorized absences
from the job, such as for annual leave, family-related leave, sick
leave, holidays, court leave, military leave, administrative leave, and
other similar benefits, are allowable if all of the following criteria
are met:
(1) They are provided under established written leave policies;
(2) The costs are equitably allocated to all related activities,
including Federal awards; and,
(3) The accounting basis (cash or accrual) selected for costing
each type of leave is consistently followed by the recipient or
subrecipient or a specified grouping of employees.
(i) When a recipient or subrecipient uses the cash basis of
accounting, the cost of leave is recognized in the period that the
leave is taken and paid for. Payments for unused leave when an employee
retires or terminates employment are allowable in the year of payment
and must be allocated as a general administrative expense to all
activities. These costs may be included in fringe benefit rates with
the approval of the cognizant agency for indirect costs.
(ii) The accrual basis may be only used for those types of leave
for which a liability as defined by GAAP exists when the leave is
earned. When a recipient or subrecipient uses the accrual basis of
accounting, allowable leave costs are the lesser of the amount accrued
or funded.
(c) Fringe benefits. The cost of fringe benefits in the form of
employer contributions or expenses for social security; employee life,
health, unemployment, and worker's compensation insurance (except as
indicated in Sec. 200.447); pension plan costs; and other similar
benefits are allowable, provided such benefits are permitted under
established written policies. The recipient or subrecipient must
allocate fringe benefits to Federal awards and all other activities in
a manner consistent with the pattern of benefits attributable to the
individuals or group(s) of employees whose salaries and wages are
chargeable to such Federal awards and other activities, and charged as
direct or indirect costs following the recipient's or subrecipient's
accounting practices.
(d) Cost objectives. The recipient or subrecipient may assign
fringe benefits to cost objectives by identifying specific benefits to
specific individual employees or by allocating them based on entity-
wide salaries and wages of the employees receiving the benefits. When
the allocation method is used, separate allocations must be made to
selective groupings of employees unless the recipient or subrecipient
demonstrates that costs in relationship to salaries and wages do not
differ significantly for different groups of employees.
(e) Insurance. See also Sec. 200.447(d)(1) and (2).
(1) Provisions for a reserve under a self-insurance program for
unemployment compensation or workers' compensation are allowable to the
extent that the provisions represent reasonable estimates of the
liabilities for such compensation and the types of coverage, the extent
of coverage, and rates and premiums would have been allowable had
insurance been purchased to cover the risks. However, provisions for
self-insured liabilities which do not become payable for more than one
year after the provision is made must not exceed the present value of
the liability.
(2) Insurance costs on the lives of trustees, officers, or other
employees holding positions of similar responsibility are allowable
only to the extent that the insurance represents additional
compensation. The cost of such insurance is unallowable when the
recipient or subrecipient is named as beneficiary.
(3) Actual claims paid to or on behalf of employees or former
employees for workers' compensation, unemployment compensation,
severance pay, and similar employee benefits (for example, post-
retirement health benefits) are allowable in the year of payment
provided that the recipient or subrecipient follows a consistent
costing policy.
(f) Automobiles. That portion of automobile costs furnished by the
recipient or subrecipient that relates to personal use by employees
(including transportation to and from work) is unallowable as a fringe
benefit or
[[Page 69472]]
indirect costs regardless of whether the cost is reported as taxable
income to the employees.
(g) Pension plan costs. Pension plan costs incurred in accordance
with the established written policies of the recipient or subrecipient
are allowable, provided that:
(1) Such policies meet the test of reasonableness.
(2) The methods of cost allocation are not discriminatory.
(3) The cost assigned to each fiscal year should be determined in
accordance with GAAP, except for State and local governments.
(4) The costs assigned to a given fiscal year are funded for all
plan participants within six months after the end of that year.
However, increases to normal and past service pension costs caused by a
delay in funding the actuarial liability beyond 30 calendar days after
each quarter of the year to which such costs are assignable are
unallowable. The recipient or subrecipient may follow the ``Cost
Accounting Standard for Composition and Measurement of Pension Costs''
(48 CFR 9904.412).
(5) Premiums for pension plan termination insurance that are paid
according to the Employee Retirement Income Security Act (ERISA) of
1974 (29 U.S.C. 1301-1461) are allowable. Late payment charges on such
premiums are unallowable. Excise taxes on accumulated funding
deficiencies and other penalties imposed under ERISA are unallowable.
(6) Pension plan costs may be computed using a pay-as-you-go method
or an actuarial cost method recognized by GAAP and following the
recipient's or subrecipient's established written policies.
(i) For pension plans financed on a pay-as-you-go method, allowable
costs will be limited to those representing actual payments to retirees
or their beneficiaries.
(ii) Pension costs calculated using an actuarial cost method
recognized by GAAP are allowable for a given fiscal year if they are
funded for that year within six months after the end of that year.
Costs funded after six months (or a later period agreed to by the
cognizant agency for indirect costs) are allowable in the year funded.
The cognizant agency for indirect costs may agree to an extension if an
appropriate adjustment is made to compensate for the timing of the
charges to the Federal Government and related Federal reimbursement and
the recipient's or subrecipient's contribution to the pension fund.
Adjustments may be made by cash refund or other equitable procedures to
compensate the Federal Government for the time value of Federal
reimbursements in excess of contributions to the pension fund.
(iii) Amounts funded by the recipient or subrecipient in excess of
the costs calculated using an actuarial cost-based method recognized by
GAAP for a fiscal year may be used as the recipient's or subrecipient's
contribution in future periods.
(iv) When a recipient or subrecipient establishes or converts to an
acceptable actuarial cost method, as defined by GAAP, and funds pension
costs in accordance with this method, the unfunded liability at the
time of conversion is allowable if amortized over a period of years in
accordance with GAAP.
(v) Payments for unfunded pension costs must be charged in
accordance with the allocation principles of this subpart.
Specifically, the recipient or subrecipient may not charge unfunded
pension costs directly to a Federal award if those unfunded pension
costs are related to compensation not allocable to that award. In all
cases, the payments for unfunded pension costs may not exceed the
contribution rate of the employee's current pension costs. Payments for
unfunded pension costs may only be charged to a Federal award with the
prior approval of the awarding Federal agency or cognizant agency for
indirect costs if included as part of an approved negotiated indirect
cost rate agreement. The recipient or subrecipient must notify the
awarding Federal agency or cognizant agency for indirect costs, as
applicable, if unfunded pension costs are re-amortized.
(vi) The recipient or subrecipient must provide the Federal
Government an equitable share of any previously allowed pension costs
(including subsequent earnings) that the recipient or subrecipient
receives through a refund, withdrawal, or other credit.
(h) Post-retirement health. A post-retirement health plan (PRHP)
refers to the costs of health insurance or health services not included
in a pension plan covered by paragraph (g) for retirees and their
spouses, dependents, and survivors. PRHP costs may be computed using a
pay-as-you-go method or an actuarial cost method recognized by GAAP and
following the recipient's or subrecipient's established written
policies.
(1) For PRHP financed on a pay-as-you-go method, allowable costs
will be limited to those representing actual payments to retirees or
their beneficiaries.
(2) PRHP costs calculated using an actuarial cost method recognized
by GAAP are allowable for a given fiscal year if they are funded for
that year within six months after the end of that year. Costs funded
after six months (or a later period agreed to by the cognizant agency
for indirect costs) are allowable in the year funded. The cognizant
agency for indirect costs may agree to an extension if an appropriate
adjustment is made to compensate for the timing of the charges to the
Federal Government and related Federal reimbursement and the
recipient's or subrecipient's contributions to the PRHP fund.
Adjustments may be made by cash refund, reduction in the current year's
PRHP costs, or other equitable procedures to compensate the Federal
Government for the time value of Federal reimbursements in excess of
contributions to the PRHP fund.
(3) Amounts funded by the recipient or subrecipient in excess of
the costs calculated using an actuarial cost-based method recognized by
GAAP for a fiscal year may be used as the recipient's or subrecipient's
contribution in future periods.
(4) If a recipient or subrecipient establishes or converts to an
actuarial cost method and funds PRHP costs in accordance with this
method, the initial unfunded liability attributable to prior years is
allowable if amortized over a period of years in accordance with GAAP,
or, if no such GAAP period exists, over a period negotiated with the
cognizant agency for indirect costs.
(5) Payments for unfunded PRHP costs must be charged in accordance
with the allocation principles of this subpart. Specifically, the
recipient or subrecipient may not charge unfunded PRHP costs directly
to a Federal award if those unfunded PRHP costs are related to
compensation not allocable to that award. In all cases, the payments
for unfunded PHRP costs may not exceed the contribution rate of the
employee's current health benefit costs. Payments for unfunded PRHP
costs may only be charged to a Federal award with the prior approval of
the awarding Federal agency or cognizant agency for indirect costs if
included as part of an approved negotiated indirect cost rate
agreement. The recipient or subrecipient must notify the awarding
Federal agency or cognizant agency for indirect costs, as applicable,
if unfunded PHRP costs are re-amortized.
(6) To be allowable in the current year, the PRHP costs must be
paid either to:
(i) An insurer or other benefit provider as current year costs or
premiums; or
(ii) An insurer or trustee that will maintain a trust fund or
reserve for the sole purpose of providing post-
[[Page 69473]]
retirement benefits to retirees and other beneficiaries.
(7) The recipient or subrecipient must provide the Federal
Government an equitable share of any previously allowed post-retirement
benefit costs (including subsequent earnings) that the recipient or
subrecipient receives through a refund, withdrawal, or other credit.
(i) Severance pay. (1) Severance pay, also commonly referred to as
dismissal wages, is a payment in addition to regular salaries and
wages, by recipients and subrecipients to workers whose employment is
being terminated. Severance pay is allowable only to the extent that,
in each case, it is required by:
(i) Law;
(ii) Employer-employee agreement;
(iii) Established policy that constitutes, in effect, an implied
agreement on the recipient's or subrecipient's part; or
(iv) Circumstances of the particular employment.
(2) Costs of severance payments are divided into two categories as
follows:
(i) Actual severance payments for normal turnover must be allocated
to all activities; or, where the recipient or subrecipient provides for
a reserve for normal severances, such method is acceptable if the
charge to current operations is reasonable in light of payments made
for normal severances over a representative past period, and if amounts
charged are allocated to all activities of the recipient or
subrecipient.
(ii) Measuring the costs of abnormal or mass severance pay by means
of an accrual method will not achieve equity for both parties.
Therefore, accruals are not allowable. However, the Federal Government
recognizes its responsibility to contribute its fair share toward a
specific payment. Prior approval by the Federal agency or cognizant
agency for indirect cost, as appropriate, is required.
(3) Costs incurred in severance pay packages that are in excess of
the standard severance pay provided by the recipient or subrecipient to
an employee upon termination of employment and that are paid to the
employee contingent upon a change in management control over, or
ownership of, the recipient's or subrecipient's assets, are
unallowable.
(4) Severance payments to foreign nationals employed by the
recipient or subrecipient outside the United States, to the extent that
the amount exceeds the customary or prevailing practices for the
recipient or subrecipient in the United States, are unallowable unless
they are required by applicable foreign law or necessary for the
performance of Federal programs and approved by the Federal agency.
(5) Severance payments to foreign nationals employed by the
recipient or subrecipient outside the United States due to the
termination of the foreign national as a result of the closing of, or
curtailment of activities by, the recipient or subrecipient in that
country, are unallowable unless they are required by applicable foreign
law or necessary for the performance of Federal programs and approved
by the Federal agency.
(j) For IHEs only. (1) Fringe benefits in the form of undergraduate
and graduate tuition or tuition remission for individual employees are
allowable, provided such benefits are granted in accordance with
established written policies of the IHE and are distributed to all IHE
activities on an equitable basis. Tuition benefits for family members
other than the employee are unallowable.
(2) Fringe benefits in the form of undergraduate and graduate
tuition or tuition remission for individual employees not employed by
the IHE are limited to the tax-free amount allowed by the Internal
Revenue Code as amended (26 U.S.C. 127).
(3) IHEs may offer employees tuition waivers or reductions,
provided that the benefit does not discriminate in favor of highly
compensated employees. Employees can exercise these benefits at other
institutions according to institutional policy. See Sec. 200.466, for
treatment of tuition remission provided to students.
(k) Fringe benefit programs and other benefit costs. For IHEs whose
costs are paid by a State or local government, fringe benefit programs
(such as pension costs and FICA) and any other benefits costs incurred
specifically on behalf of, and in direct benefit to, the IHE, are
allowable. These costs do not need to be recorded in the accounting
records of the IHE but are subject to the following:
(1) The costs meet the requirements of Basic Considerations in
Sec. Sec. 200.402 through 200.411;
(2) The costs are properly supported by approved cost allocation
plans in accordance with applicable Federal cost accounting principles;
and
(3) The costs are not otherwise borne directly or indirectly by the
Federal Government.
Sec. 200.432 Conferences.
A conference means an event whose primary purpose is to disseminate
technical information beyond the recipient or subrecipient and is
necessary and reasonable for successful performance under the Federal
award. Allowable conference costs paid by the recipient or subrecipient
as a sponsor or host of the conference may include rental of
facilities, speakers' fees, costs of meals and refreshments, local
transportation, and other incidental items to such conferences unless
further restricted by the terms and conditions of the Federal award.
The costs of identifying and providing locally available dependent-care
resources for participants are allowable as needed. Conference hosts/
sponsors must exercise discretion and judgment in ensuring that
conference costs are appropriate, necessary, and managed to minimize
costs to the Federal award. The Federal agency may authorize exceptions
for programs including Indian Tribes, children, and the elderly. See
also Sec. Sec. 200.438, 200.456, and 200.475.
Sec. 200.433 Contingency provisions.
(a) Contingency provisions are part of a budget estimate of future
costs (typically of large construction projects, IT systems, or other
items approved by the Federal agency) which are associated with
possible events or conditions arising from causes for which the precise
outcome is indeterminable at the time of estimate and that are likely
to result, in the aggregate, in additional costs for the approved
activity or project. Contingency costs for major project scope changes,
unforeseen risks, or extraordinary events are not allowable.
(b) It is permissible for contingency costs other than those
excluded in paragraph (a) of this section to be explicitly included in
budget estimates to the extent necessary to improve their precision.
Contingency costs must be estimated using broadly-accepted cost
estimating methodologies, specified in the budget documentation of the
Federal award, and accepted by the Federal agency. As such, contingency
amounts are to be included in the Federal award. In order for actual
costs incurred to be allowable, they must comply with the cost
principles and other requirements of this part (see Sec. Sec. 200.300
and 200.403), be necessary and reasonable for proper and efficient
accomplishment of project or program objectives, and be verifiable from
the recipient's or subrecipient's records.
(c) Payments to a recipient's or subrecipient's ``contingency
reserve'' or any similar payment made for events the occurrence of
which cannot be foretold with certainty as to the time or intensity, or
with an assurance of their happening, are unallowable, except as noted
in Sec. Sec. 200.431 and 200.447.
[[Page 69474]]
Sec. 200.434 Contributions and donations.
(a) Costs of contributions and donations, including cash, property,
and services, from the recipient or subrecipient to other entities are
unallowable.
(b) The value of services and property donated (including in-kind)
to the recipient or subrecipient may not be charged to the Federal
award either as a direct or indirect cost. The value of donated
services and property may be used to meet cost sharing requirements
(see Sec. 200.306). Depreciation on donated assets is permitted so
long as the donated property is not counted towards meeting cost
sharing requirements (see Sec. 200.436).
(c) Services donated or volunteered to the recipient or
subrecipient may be provided by professional and technical personnel,
consultants, and other skilled and unskilled labor. The value of these
services may not be charged to the Federal award as a direct or
indirect cost. However, the value of donated services may be used to
meet cost sharing requirements in accordance with the provisions of
Sec. 200.306.
(d) To the extent feasible, services donated to the recipient or
subrecipient will be supported by the same methods used to support the
allocability of regular personnel services.
(e) The following provisions apply to nonprofit organizations. The
value of services donated to a nonprofit organization and used in the
performance of a direct cost activity must be considered in the
determination of the recipient's or subrecipient's indirect cost
rate(s) and, accordingly, must be allocated a proportionate share of
applicable indirect costs when the following circumstances exist:
(1) The aggregate value of the services is material;
(2) The services are supported by a significant amount of the
indirect costs incurred by the recipient or subrecipient;
(i) In those instances where there is no basis for determining the
fair market value of the services rendered, the recipient or
subrecipient and the cognizant agency for indirect costs must negotiate
an appropriate allocation of indirect cost to the services.
(ii) Where donated services directly benefit a project supported by
the Federal award, the indirect costs allocated to the services will be
considered as a part of the project's total costs. Such indirect costs
may be reimbursed under the Federal award or used to meet cost sharing
requirements.
(f) Fair market value of donated services must be computed as
described in Sec. 200.306.
(g) Personal Property and Use of Space.
(1) Donated personal property and use of space may be furnished to
a recipient or subrecipient. The value of the personal property and
space may not be charged to the Federal award either as a direct or
indirect cost.
(2) The value of the donations may be used to meet cost sharing
requirements described in Sec. 200.300. The recipient or subrecipient
must value the donations in accordance with Sec. 200.300. Where the
recipient or subrecipient treats donations as indirect costs, indirect
cost rates must separate the value of the donations so that
reimbursement is not made.
Sec. 200.435 Defense and prosecution of criminal and civil
proceedings, claims, appeals and patent infringements.
(a) Definitions for this section--(1) Conviction means a judgment
or conviction of a criminal offense by any court of competent
jurisdiction, whether entered upon verdict or a plea, including a
conviction due to a plea of nolo contendere.
(2) Costs include the services of in-house or private counsel,
accountants, consultants, or others engaged to assist the recipient or
subrecipient before, during, and after the commencement of a judicial
or administrative proceeding that bears a direct relationship to the
proceeding.
(3) Fraud means:
(i) Acts of fraud or corruption or attempts to defraud the Federal
Government or to corrupt its agents,
(ii) Acts that constitute a cause for debarment or suspension (as
specified in agency regulations), and
(iii) Acts that violate the False Claims Act (31 U.S.C. 3729-3732)
or the Anti-kickback Act (42 U.S.C. 1320a-7b(b)).
(4) Penalty does not include restitution, reimbursement, or
compensatory damages.
(5) Proceeding includes an investigation.
(b) Costs. (1) Except as otherwise described herein, costs incurred
in connection with any criminal, civil, or administrative proceeding
(including the filing of a false certification) commenced by the
Federal Government, a State, local government, or foreign government,
or joined by the Federal Government (including a proceeding under the
False Claims Act), against the recipient or subrecipient, (or commenced
by third parties or a current or former employee of the recipient or
subrecipient who submits a whistleblower complaint of reprisal in
accordance with 10 U.S.C. 4701 or 41 U.S.C. 4712), are not allowable if
the proceeding:
(i) Relates to a violation of, or failure to comply with, a
Federal, State, local or foreign statute, regulation, or the terms and
conditions of the Federal award by the recipient or subrecipient
(including its agents and employees); and
(ii) Results in any of the following dispositions:
(A) In a criminal proceeding, a conviction.
(B) In a civil or administrative proceeding involving an allegation
of fraud or similar misconduct, a determination of recipient or
subrecipient liability.
(C) In the case of any civil or administrative proceeding, the
disallowance of costs, the imposition of a monetary penalty, or an
order issued by the Federal agency head or delegate to the recipient or
subrecipient to take corrective action under 10 U.S.C. 4701 or 41
U.S.C. 4712.
(D) A final decision by an appropriate Federal official to debar or
suspend the recipient or subrecipient, to rescind or void a Federal
award, or to terminate a Federal award because of a violation or
failure to comply with a statute, regulation, or the terms and
conditions of the Federal award.
(E) A disposition by consent or compromise if the action could have
resulted in any of the dispositions described in paragraphs
(b)(1)(ii)(A) through (D) of this section.
(2) If more than one proceeding involves the same alleged
misconduct, the costs of all such proceedings are unallowable if any
results in one of the dispositions shown in paragraph (b) of this
section.
(c) Allowability of costs for proceeding commenced by Federal
Government. If a proceeding referred to in paragraph (b) of this
section is commenced by the Federal Government and is resolved by
consent or compromise pursuant to an agreement by the recipient or
subrecipient and the Federal Government, then the costs incurred may be
allowed to the extent expressly authorized in the agreement.
(d) Allowability of costs for proceeding commenced by State, local,
or foreign government. If a proceeding referred to in paragraph (b) of
this section is commenced by a State, local or foreign government, then
the costs incurred may be allowed if the authorized Federal official
determines that the costs were incurred as a result of:
(1) A specific term or condition of the Federal award, or
(2) Specific written direction of an authorized official of the
Federal agency.
[[Page 69475]]
(e) Allowability of costs in general. Costs incurred in connection
with proceedings described in paragraph (b), and that are not
unallowable, may be allowable to the extent that:
(1) The costs are reasonable and necessary for the administration
of the Federal award and activities required to deal with the
proceeding and the underlying cause of action;
(2) Payment of the reasonable, necessary, allocable and otherwise
allowable costs incurred is not prohibited by any other provision(s) of
the Federal award;
(3) The costs are not recovered from the Federal Government or a
third party, either directly as a result of the proceeding or
otherwise; and,
(4) An authorized Federal official must determine the percentage of
costs allowed considering the complexity of litigation, generally
accepted principles governing the award of legal fees in civil actions
involving the United States, and other factors that may be appropriate.
This percentage must not exceed 80 percent unless the agreement under
paragraph (c) has explicitly considered this limitation and permitted a
higher percentage. In that case, the total amount of costs incurred may
be allowable.
(f) Major Fraud Act. Costs incurred by the recipient or
subrecipient in connection with the defense of suits brought by its
employees or ex-employees under section 2 of the Major Fraud Act of
1988 (18 U.S.C. 1031), including the cost of all relief necessary to
make the employee whole, where the recipient or subrecipient was found
liable or settled, are unallowable.
(g) Un-allowability of costs for prosecuting claims against Federal
Government. Costs for prosecuting claims against the Federal
Government, including appeals of final Federal agency decisions, are
unallowable.
(h) Costs of legal, accounting, consultant services. Costs of
legal, accounting, consultant services, and related costs incurred in
connection with patent infringement litigation, are unallowable unless
otherwise provided for in the Federal award.
(i) Potentially unallowable costs. Costs that may be unallowable
under this section, including directly associated costs, must be
segregated and accounted for separately. During the pendency of any
proceeding covered by paragraphs (b) and (f) of this section, the
Federal Government must generally withhold payment of such costs.
However, if in its best interests, the Federal Government may provide
for conditional payment upon a provision of adequate security, or other
adequate assurance, and agreement to repay all unallowable costs, plus
interest, if the costs are subsequently determined to be unallowable.
Sec. 200.436 Depreciation.
(a) Depreciation is the method for allocating the cost of fixed
assets to periods benefitting from asset use. The recipient or
subrecipient may be compensated for the use of its buildings, capital
improvements, equipment, and software projects capitalized in
accordance with GAAP provided that they are needed and used in the
recipient's or subrecipient's activities and correctly allocated to
Federal awards. The compensation must be made by computing the proper
depreciation.
(b) The allocation for depreciation must be made in accordance with
Appendices III through IX of this part.
(c) Depreciation is computed applying the following rules. The
computation of depreciation must be based on the acquisition cost of
the assets involved. For an asset donated to the recipient or
subrecipient by a third party, its fair market value at the time of the
donation must be considered as the acquisition cost. Such assets may be
depreciated or claimed as cost sharing but not both. When computing
depreciation charges, the acquisition cost will exclude:
(1) The cost of land;
(2) Any portion of the cost of buildings and equipment borne by or
donated by the Federal Government, irrespective of where the title was
originally vested or is presently located;
(3) Any portion of the cost of buildings and equipment contributed
by or for the recipient or subrecipient that is already claimed as cost
sharing or where law or agreement prohibits recovery; and
(4) Any asset acquired solely for the performance of a non-Federal
award.
(d) When computing depreciation charges, the following must be
observed:
(1) The period of useful service or useful life established in each
case for usable capital assets must take into consideration such
factors as the type of construction, nature of the equipment,
technological developments in the particular area, historical data, and
the renewal and replacement policies followed for the individual items
or classes of assets involved.
(2) The depreciation method used to charge the cost of an asset (or
group of assets) to accounting periods must reflect the pattern of
consumption of the asset during its useful life. In the absence of
clear evidence indicating that the expected consumption of the asset
will be significantly greater in the early portions than in the later
portions of its useful life, the straight-line method must be presumed
to be the appropriate method. Depreciation methods once used may not be
changed unless approved in advance by the cognizant agency for indirect
costs. The depreciation methods used to calculate the depreciation
amounts for indirect cost rate purposes must be the same methods used
by the recipient or subrecipient for its financial statements.
(3) The entire building, including the shell and all components,
may be treated as a single asset and depreciated over a single useful
life. A building may also be divided into multiple components. Each
component may be depreciated over its estimated useful life in this
case. The building components must be grouped into three general
components: building shell (including construction and design costs),
building services systems (for example, elevators, HVAC, and plumbing
system), and fixed equipment (for example, sterilizers, casework, fume
hoods, cold rooms, and glassware/washers). A cognizant agency for
indirect costs may authorize a recipient or subrecipient to use more
than these three groupings in exceptional cases. When a recipient or
subrecipient elects to depreciate its buildings by their components,
the same depreciation method must be used for indirect and financial
statements purposes, as described in paragraphs (d)(1) and (2).
(4) No depreciation may be allowed on assets that have outlived
their depreciable lives.
(5) Where the depreciation method is introduced to replace the use
allowance method, depreciation must be computed as if the asset had
been depreciated over its entire life meaning, from the date the asset
was acquired and ready for use to the date of disposal or withdrawal
from service). The total amount of use allowance and depreciation for
an asset (including imputed depreciation applicable to periods before
the conversion from the use allowance method and depreciation after the
conversion) may not exceed the total acquisition cost of the asset.
(e) Adequate property records must support depreciation charges,
and physical inventories must be taken at least once every two years to
ensure that the assets exist and are usable, used, and needed. The
recipient or subrecipient may use statistical sampling techniques when
taking these inventories. In addition, the recipient or subrecipient
must maintain adequate depreciation records showing the amount of
depreciation.
[[Page 69476]]
Sec. 200.437 Employee health and welfare costs.
(a) Costs incurred in accordance with the recipient's or
subrecipient's established written policies for improving working
conditions, employer-employee relations, employee health, and employee
performance are allowable.
(b) These costs must be equitably apportioned to all activities of
the recipient or subrecipient. Income generated from these activities
must be credited to the cost thereof unless such income has been
irrevocably sent to employee welfare organizations.
(c) Losses resulting from operating food services are allowable
only if the recipient's or subrecipient's objective is to operate food
services on a break-even basis. Losses sustained because of operating
objectives other than the above are allowable only when:
(1) The recipient or subrecipient can demonstrate unusual
circumstances; and
(2) Approved by the cognizant agency for indirect costs.
Sec. 200.438 Entertainment and prizes.
(a) Entertainment costs. Costs of entertainment, including
amusement, diversion, and social activities and any associated costs
(such as gifts), are unallowable unless they have a specific and direct
programmatic purpose and are included in a Federal award.
(b) Prizes. Costs of prizes or challenges are allowable if they
have a specific and direct programmatic purpose and are included in the
Federal award. Federal agencies should refer to OMB guidance in M-10-11
``Guidance on the Use of Challenges and Prizes to Promote Open
Government,'' issued March 8, 2010, or its successor.
Sec. 200.439 Equipment and other capital expenditures.
(a) See Sec. 200.1 for the definitions of capital expenditures,
equipment, special purpose equipment, general purpose equipment,
acquisition cost, and capital assets.
(b) The following rules of allowability must apply to equipment and
other capital expenditures:
(1) Capital expenditures for general-purpose equipment, buildings,
and land are unallowable as direct charges, except with the prior
written approval of the Federal agency or pass-through entity.
(2) Capital expenditures for special purpose equipment are
allowable as direct costs, provided that items with a unit cost of
$10,000 or more have the prior written approval of the Federal agency
or pass-through entity.
(3) Capital expenditures for improvements to land, buildings, or
equipment that materially increase their value or useful life are
unallowable as a direct cost except with the prior written approval of
the Federal agency or pass-through entity. See Sec. 200.436 on the
allowability of depreciation on buildings, capital improvements, and
equipment. See Sec. 200.465 on the allowability of real property and
equipment rental costs.
(4) When approved as a direct charge in accordance with paragraphs
(b)(1) through (3), capital expenditures must be charged in the period
in which the expenditure is incurred or as otherwise determined
appropriate and negotiated with the Federal agency.
(5) The recipient or subrecipient may claim the unamortized portion
of any equipment written off as a result of a change in capitalization
levels by continuing to claim the otherwise allowable depreciation on
the equipment or by amortizing the amount to be written off over a
period of years negotiated with the cognizant agency for indirect cost.
(6) Cost of equipment disposal. If the Federal agency instructs the
recipient or subrecipient to otherwise dispose of or transfer the
equipment, the costs of disposal or transfer are allowable.
(7) Equipment and other capital expenditures are unallowable as
indirect costs. See Sec. 200.436.
Sec. 200.440 Exchange rates.
Cost increases for fluctuations in the exchange rate are allowable
costs subject to funding availability. The recipient or subrecipient
must conduct reviews of fluctuations in the exchange rate to determine
if there is the need for additional Federal funding before the end date
of the Federal award. Subsequent adjustments for currency increases may
be allowed only when the recipient or subrecipient provides the Federal
agency or pass-through entity with adequate source documentation from a
commonly used source in effect when the cost was incurred and to the
extent that sufficient Federal funds are available.
Sec. 200.441 Fines, penalties, damages and other settlements.
Costs resulting from recipient or subrecipient violations of,
alleged violations of, or failure to comply with, Federal, State,
local, tribal, or foreign laws and regulations are unallowable, except
when incurred as a result of compliance with specific provisions of the
Federal award, or with the prior written approval of the Federal
agency. See Sec. 200.435.
Sec. 200.442 Fundraising and investment management costs.
(a) Costs of organized fundraising, including financial campaigns,
endowment drives, solicitation of gifts and bequests, and similar
expenses incurred to raise capital or obtain contributions, are
unallowable. Fundraising costs for meeting the Federal program
objectives are allowable with the prior written approval of the Federal
agency.
(b) Costs of investment counsel and staff and similar expenses
incurred to enhance income from investments are unallowable except when
associated with investments covering pension, self-insurance, or other
funds, which include Federal participation allowed by this part.
(c) Costs related to the physical custody and control of monies and
securities are allowable.
(d) Both allowable and unallowable fundraising and investment
activities must be allocated as an appropriate share of indirect costs
in accordance with Sec. 200.413.
Sec. 200.443 Gains and losses on the disposition of depreciable
assets.
(a) The recipient or subrecipient must include gains and losses on
the sale, retirement, or other disposition of depreciable property in
the year they occur as credits or charges to the asset cost grouping(s)
of the property. The amount of the gain or loss is the difference
between the amount realized on the property and the undepreciated basis
of the property.
(b) Gains and losses from the disposition of depreciable property
must not be recognized as a separate credit or charge under the
following conditions:
(1) The gain or loss is processed through a depreciation account
and is reflected in the depreciation allowable under Sec. Sec. 200.436
and 200.439.
(2) The property is given in exchange as part of the purchase price
of a similar item, and the gain or loss is taken into account in
determining the depreciation cost basis of the new item.
(3) A loss results from failing to maintain proper insurance,
except as provided in Sec. 200.447.
(4) Compensation for the use of the property was provided through
use allowances instead of depreciation.
(5) Gains and losses arising from extraordinary or bulk sales,
retirements, or other dispositions must be considered on an individual
basis.
(c) Gains or losses of any nature arising from the sale or exchange
of property other than the property covered in paragraph (a) of this
section
[[Page 69477]]
must be excluded in computing Federal award costs.
(d) When assets acquired with Federal funds, in part or wholly, are
disposed of, the distribution of the proceeds must be made in
accordance with Sec. Sec. 200.310 through 200.316.
Sec. 200.444 General costs of government.
(a) For states, local governments, and Indian Tribes, the general
costs of government are unallowable except as provided in Sec.
200.475. Unallowable costs include:
(1) Salaries and expenses of the Office of the Governor of a State
or the chief executive of a local government or the chief executive of
an Indian Tribe;
(2) Salaries and other expenses of a State legislature, tribal
council, or similar local governmental body, such as a county
supervisor, city council, or school board, whether incurred for
purposes of legislation or executive direction;
(3) Costs of the judicial branch of a government;
(4) Costs of prosecutorial activities unless treated as a direct
cost to a specific program if authorized by statute or regulation.
However, this does not preclude the allowability of other legal
activities of the Attorney General as described in Sec. 200.435; and
(5) Costs of other general types of government services normally
provided to the general public, such as fire and police, unless
provided as a direct cost under a program statute or regulation.
(b) Indian Tribes and Councils of Governments (COGs) (see
definition for Local government in Sec. 200.1) may include up to 50
percent of salaries and expenses directly attributable to managing and
operating Federal programs by the chief executive and their staff in
the indirect cost calculation without documentation.
Sec. 200.445 Goods or services for personal use.
(a) Costs of goods or services for the personal use of the
recipient's or subrecipient's employees are unallowable regardless of
whether the cost is reported as taxable income to the employees.
(b) Housing costs (for example, depreciation, maintenance,
utilities, furnishings, rent), housing allowances, and personal living
expenses are only allowable as direct costs regardless of whether
reported as taxable income to the employees. In addition, these costs
must be approved in advance by a Federal agency to be allowable.
Sec. 200.446 Idle facilities and idle capacity.
(a) Definitions for the purpose of this section:
(1) Facilities means land and buildings or any portion thereof,
equipment individually or collectively, or any other tangible capital
asset, wherever located, and whether owned or leased by the recipient
or subrecipient.
(2) Idle facilities mean completely unused facilities that exceed
the recipient's or subrecipient's current needs.
(3) Idle capacity means the unused capacity of partially used
facilities. It is the difference between:
(i) That which a facility could achieve under 100 percent operating
time on a one-shift basis less operating interruptions resulting from
time lost for repairs, setups, unsatisfactory materials, and other
normal delays and;
(ii) The extent to which the facility was actually used to meet
demands during the accounting period. A multi-shift basis should be
used if it can be shown that this amount of usage would normally be
expected for the type of facility involved.
(4) Cost of idle facilities or idle capacity means maintenance,
repair, housing, rent, and other related costs (for example, insurance,
interest, and depreciation). These costs could include the costs of
idle public safety emergency facilities, telecommunications, or
information technology system capacity that is built to withstand major
fluctuations in load (for example, consolidated data centers).
(b) The costs of idle facilities are unallowable except to the
extent that:
(1) They are necessary to meet workload requirements which may
fluctuate, and are allocated appropriately to all benefiting programs;
or
(2) Although not necessary to meet fluctuations in workload, they
were necessary when acquired and are now idle because of changes in
program requirements, efforts to achieve more economical operations,
reorganization, termination, or other causes which could not have been
reasonably foreseen. Under this exception, costs of idle facilities are
allowable for a reasonable period, ordinarily not to exceed one year,
depending on the initiative taken to use, lease, or dispose of such
facilities.
(c) The costs of idle capacity are normal costs of doing business
and are a factor in the normal fluctuations of usage or indirect cost
rates from period to period. These costs are allowable, provided that
the capacity is reasonably anticipated to be necessary to carry out the
purpose of the Federal award or was originally reasonable and is not
subject to reduction or elimination by use on other Federal awards,
subletting, renting, or sale, in accordance with sound business,
economic, or security practices. Widespread idle capacity throughout an
entire facility or among a group of assets having substantially the
same function may be considered idle facilities.
Sec. 200.447 Insurance and indemnification.
(a) Costs of insurance required or approved and maintained by the
terms and conditions of the Federal award are allowable.
(b) Costs of other insurance in connection with the general conduct
of activities are allowable subject to the following limitations:
(1) The types, extent, and cost of coverage are in accordance with
the recipient's or subrecipient's established written policy and sound
business practices.
(2) Costs of insurance or contributions to any reserve covering the
risk of loss of, or damage to, Federal Government property are
unallowable except to the extent that the Federal agency has approved
the costs.
(3) Costs allowed for business interruption or other similar
insurance must exclude coverage of management fees.
(4) Insurance costs on the lives of trustees, officers, or other
employees holding positions of similar responsibilities are allowable
only when the insurance represents additional compensation (see Sec.
200.431). This insurance is unallowable when the recipient or
subrecipient is identified as the beneficiary.
(5) Insurance costs to correct defects in the recipient's or
subrecipient's materials or workmanship are unallowable.
(6) Medical liability (malpractice) insurance. Medical liability
insurance is an allowable cost of a Federal research program only when
the program involves human subjects or training of participants in
research techniques. Medical liability insurance costs must be treated
as a direct cost and assigned to individual projects based on how the
insurer allocates the risk to the population covered by the insurance.
(c) Actual losses which could have been covered by permissible
insurance (through a self-insurance program or otherwise) are
unallowable unless expressly authorized in the Federal award. However,
costs incurred because of losses not covered under nominal deductible
insurance coverage provided in keeping with sound management practice,
and minor losses not covered by insurance, such as spoilage, breakage,
and disappearance of small
[[Page 69478]]
hand tools, which occur in the ordinary course of operations, are
allowable.
(d) Contributions to a reserve for a self-insurance program,
including workers' compensation, unemployment compensation, and
severance pay, are allowable subject to the following requirements:
(1) The type, extent, and cost of coverage and the rates and
premiums would have been allowed had the insurance (including
reinsurance) been purchased to cover the risks. However, a provision
for known or reasonably estimated self-insured liabilities, which do
not become payable for more than one year after the provision is made,
must not exceed the discounted present value of the liability. The rate
used for discounting the liability must be determined by considering
factors such as the recipient's or subrecipient's settlement rate for
those liabilities and its investment rate of return.
(2) Earnings or investment income on reserves must be credited to
those reserves.
(3)(i) Contributions to reserves must be based on sound actuarial
principles using historical experience and reasonable assumptions.
Reserve levels must be analyzed and updated at least biennially for
each major risk being insured and take into account any reinsurance,
coinsurance, and other relevant factors or information. Reserve levels
related to employee-related coverages must normally be limited to the
value of claims:
(A) Submitted and adjudicated but not paid;
(B) Submitted but not adjudicated; and
(C) Incurred but not submitted.
(ii) Reserve levels exceeding the above-mentioned value must be
identified and justified in the cost allocation plan or indirect cost
rate proposal.
(4) Accounting records, actuarial studies, and cost allocations (or
billings) must recognize any significant differences due to the types
of insured risk and losses generated by the various insured activities
or agencies of the recipient or subrecipient. If individual departments
or agencies of the recipient or subrecipient experience significantly
different levels of claims for a particular risk, those differences
must be recognized by using separate allocations or other techniques
resulting in an equitable allocation.
(5) Whenever funds are transferred from a self-insurance reserve to
other accounts (for example, general fund or unrestricted account),
refunds must be made to the Federal Government for its share of funds
transferred, including earned or imputed interest from the date of
transfer and debt interest, if applicable, chargeable in accordance
with the claims collection regulations of the cognizant agency for
indirect cost.
(e) Insurance refunds must be credited against insurance costs in
the year the refund is received.
(f) Indemnification includes securing the recipient or subrecipient
against liabilities to third persons and other losses not compensated
by insurance or otherwise. The Federal Government is obligated to
indemnify the recipient or subrecipient only to the extent expressly
provided for in the Federal award, except as provided in paragraph (c).
Sec. 200.448 Intellectual property.
(a) Patent and copyright costs. (1) The following costs related to
securing patents and copyrights are allowable:
(i) Costs of preparing disclosures, reports, and other documents
required by the Federal award and of searching the art to the extent
necessary to make such disclosures;
(ii) Costs of preparing documents and any other patent costs in
connection with the filing and prosecution of a United States patent
application where the Federal Government requires that a title or a
royalty-free license be conveyed to the Federal Government; and
(iii) General counseling services relating to patent and copyright
matters, such as advice on patent and copyright laws, regulations,
clauses, and employee intellectual property agreements (See Sec.
200.459).
(2) The following costs related to securing patents and copyrights
are unallowable:
(i) Costs of preparing disclosures, reports, and other documents
and of searching the art to make disclosures not required by the
Federal award;
(ii) Costs in connection with filing and prosecuting any foreign
patent application, or any United States patent application, where the
Federal award does not require conveying title or a royalty-free
license to the Federal Government.
(b) Royalties and other costs for the use of patents and
copyrights. (1) Royalties on a patent or copyright or amortization of
the cost of acquiring by purchase a copyright, patent, or rights
thereto, necessary for the proper performance of the Federal award are
allowable unless:
(i) The Federal Government already has a license or the right to
free use of the patent or copyright.
(ii) The patent or copyright has been adjudicated to be invalid or
administratively determined to be invalid.
(iii) The patent or copyright is considered to be unenforceable.
(iv) The patent or copyright is expired.
(2) Special care should be exercised in determining reasonableness
when the royalties may have been obtained as a result of less-than-
arm's-length bargaining, such as:
(i) Royalties paid to persons, including corporations, affiliated
with the recipient or subrecipient.
(ii) Royalties paid to unaffiliated parties, including
corporations, under an agreement entered into in contemplation that a
Federal award would be made.
(iii) Royalties paid under an agreement entered into after a
Federal award is made to a recipient or subrecipient.
(3) In any case involving a patent or copyright formerly owned by
the recipient or subrecipient, the amount of royalty allowed must not
exceed the cost which would have been allowed had the recipient or
subrecipient retained the title.
Sec. 200.449 Interest.
(a) General. Costs incurred for interest on borrowed capital,
temporary use of endowment funds, or the use of the recipient's or
subrecipient's own funds are unallowable. Financing costs (including
interest) to acquire, construct, or replace capital assets are
allowable, subject to the requirements of this section.
(b) Capital assets. (1) Capital assets is defined in Sec. 200.1.
An asset cost includes (as applicable) acquisition costs, construction
costs, and other costs capitalized in accordance with GAAP.
(2) For recipient or subrecipient fiscal years beginning on or
after January 1, 2016, intangible assets include patents and computer
software. For software development projects, only interest attributable
to the portion of the project costs capitalized in accordance with GAAP
is allowable.
(c) Conditions for all recipients and subrecipients. (1) The
recipient or subrecipient uses the capital assets in support of Federal
awards;
(2) The allowable asset costs to acquire facilities and equipment
are limited to a fair market value available to the recipient or
subrecipient from an unrelated (arm's length) third party.
(3) The recipient or subrecipient obtains the financing via an
arm's-length transaction (meaning, a transaction with an unrelated
third party); or claims reimbursement of actual interest cost at a rate
available via such a transaction.
[[Page 69479]]
(4) The recipient or subrecipient limits claims for Federal
reimbursement of interest costs to the least expensive alternative. For
example, a lease contract that transfers ownership by the end of the
contract may be determined less costly than purchasing through other
types of debt financing, in which case reimbursement must be limited to
the amount of interest determined if leasing had been used.
(5) The recipient or subrecipient expenses or capitalizes allowable
interest cost in accordance with GAAP.
(6) Earnings generated by the investment of borrowed funds pending
their disbursement for the asset costs are used to offset the current
period's allowable interest cost, whether that cost is expensed or
capitalized. Earnings subject to being reported to the Federal Internal
Revenue Service under arbitrage requirements are excludable.
(7) The following conditions must apply to debt arrangements over
$1 million to purchase or construct facilities unless the recipient or
subrecipient makes an initial equity contribution to the purchase of 25
percent or more. For this purpose, ``initial equity contribution''
means the amount or value of contributions made by the recipient or
subrecipient for the acquisition of facilities prior to occupancy.
(i) The recipient or subrecipient must reduce claims for
reimbursement of interest cost by an amount equal to imputed interest
earnings on excess cash flow attributable to the portion of the
facility used for Federal awards.
(ii) The recipient or subrecipient must impute interest on excess
cash flow as follows:
(A) Annually, the recipient or subrecipient must prepare a
cumulative (from the project's inception) report of monthly cash
inflows and outflows, regardless of the funding source. For this
purpose, inflows consist of Federal reimbursement for depreciation,
amortization of capitalized construction interest, and annual interest
cost. Outflows consist of initial equity contributions, debt principal
payments (less the pro-rata share attributable to the cost of land),
and interest payments.
(B) To compute monthly cash inflows and outflows, the recipient or
subrecipient must divide the above-mentioned annual amounts by the
months in the year (usually 12) that the building is in service.
(C) For any month in which cumulative cash inflows exceed
cumulative outflows, interest must be calculated on the excess inflows
for that month and be treated as a reduction to allowable interest
cost. The interest rate to be used must be the three-month Treasury
bill closing rate as of the last business day of that month.
(8) Interest attributable to a fully depreciated asset is
unallowable.
(d) Additional conditions for states, local governments and Indian
Tribes. For interest costs to be allowable for states, local
governments, and Indian Tribes, the recipient or subrecipient must have
incurred the interest costs for buildings after October 1, 1980, or
after September 1, 1995, for land and equipment.
(1) The requirement to offset the interest earned on borrowed funds
against allowable interest cost (paragraph (c)(5) of this section) also
applies to earnings on debt service reserve funds.
(2) The recipient or subrecipient must negotiate the amount of
allowable interest cost related to the acquisition of facilities with
asset costs of $1 million or more, as described in paragraph (c)(7) of
this section. For this purpose, a recipient or subrecipient must
consider only cash inflows and outflows attributable to that portion of
the real property used for Federal awards.
(e) Additional conditions for IHEs. For interest costs to be
allowable, the IHE must have incurred the interest costs after July 1,
1982, in connection with acquisitions of capital assets that occurred
after that date.
(f) Additional condition for nonprofit organizations. For interest
costs to be allowable, the nonprofit organization must have incurred
the interest costs after September 29, 1995, in connection with
acquisitions of capital assets that occurred after that date.
(g) The interest allowability provisions of this section do not
apply to a nonprofit organization subject to ``full coverage'' under
the Cost Accounting Standards (CAS), as defined at 48 CFR 9903.201-
2(a). The nonprofit organization's Federal awards are instead subject
to CAS 414 (48 CFR 9904.414), ``Cost of Money as an Element of the Cost
of Facilities Capital,'' and CAS 417 (48 CFR 9904.417), ``Cost of Money
as an Element of the Cost of Capital Assets Under Construction.''
Sec. 200.450 Lobbying.
(a) Lobbying costs associated with obtaining Federal assistance
awards. The costs of certain influencing activities associated with
obtaining grants, cooperative agreements, contracts, or loans are
unallowable. Lobbying with respect to certain grants, cooperative
agreements, contracts, and loans is governed by relevant statutes,
including the provisions of 31 U.S.C. 1352, as well as the common rule,
``New Restrictions on Lobbying,'' published on February 26, 1990,
including definitions, and the Office of Management and Budget
``Government-wide Guidance for New Restrictions on Lobbying'' and
notices published on December 20, 1989, June 15, 1990, January 15,
1992, and January 19, 1996.
(b) Executive lobbying costs. Costs incurred in attempting to
improperly influence, either directly or indirectly, an employee or
officer of the executive branch of the Federal Government to give
consideration or to act regarding a Federal award or a regulatory
matter are unallowable. Improper influence means any influence that
induces or tends to induce a Federal employee or officer to give
consideration or to act regarding a Federal award or regulatory matter
on any basis other than the merit.
(c) Restrictions on nonprofit organizations and IHEs. In addition,
the following restrictions apply to nonprofit organizations and IHEs:
(1) Costs associated with the following activities are unallowable:
(i) Attempts to influence the outcomes of any Federal, State, or
local election, referendum, initiative, or similar procedure through
in-kind or cash contributions, endorsements, publicity, or similar
activity;
(ii) Establishing, administering, contributing to, or paying the
expenses of a political party, campaign, political action committee, or
other organization established to influence the outcomes of elections
in the United States;
(iii) Any attempt to influence:
(A) The introduction of Federal or State legislation;
(B) The enactment or modification of any pending Federal or State
legislation through communication with any member or employee of the
Congress or State legislature (including efforts to influence State or
local officials to engage in similar lobbying activity);
(C) The enactment or modification of any pending Federal or State
legislation by preparing, distributing, or using publicity or
propaganda or by urging members of the general public, or any segment
thereof, to contribute to or participate in any mass demonstration,
march, rally, fundraising drive, lobbying campaign or letter writing or
telephone campaign; or
(D) Any government official or employee in connection with a
decision to sign or veto enrolled legislation;
(iv) Legislative liaison activities, including attendance at
legislative sessions or committee hearings, gathering information
regarding legislation, and analyzing the effect of legislation, when
such activities are
[[Page 69480]]
carried on in support of or in knowing preparation for an effort to
engage in unallowable lobbying.
(2) The following activities are excepted from the coverage of
paragraph (c)(1) of this section:
(i) Technical and factual presentations on topics directly related
to the performance of a grant, contract, or other agreement (through
hearing testimony, statements, or letters to the Congress or a State
legislature, or subdivision, member, or cognizant staff member
thereof), in response to a documented request (including a
Congressional Record notice requesting testimony or statements for the
record at a regularly scheduled hearing) made by the recipient's or
subrecipient's member of congress, legislative body, subdivision, or a
cognizant staff member thereof, provided such information is readily
obtainable and can be readily put in deliverable form, and further
provided that costs under this section for travel, lodging or meals are
unallowable unless incurred to offer testimony at a regularly scheduled
Congressional hearing pursuant to a written request for such
presentation made by the Chairman or Ranking Minority Member of the
Committee or Subcommittee conducting such hearings;
(ii) Any lobbying made unallowable by paragraph (c)(1)(iii) of this
section to influence State legislation to directly reduce the cost, or
to avoid material impairment of the recipient's or subrecipient's
authority to perform the grant, contract, or other agreement; or
(iii) Any activity specifically authorized by statute to be
undertaken with funds from the Federal award.
(iv) Any activity excepted from the definitions of ``lobbying'' or
``influencing legislation'' by the Internal Revenue Code provisions
that require nonprofit organizations to limit their participation in
direct and ``grass roots'' lobbying activities to retain their
charitable deduction status and avoid punitive excise taxes, 26 U.S.C.
(I.R.C.) 501(c)(3), 501(h), 4911(a), including:
(A) Nonpartisan analysis, study, or research reports;
(B) Examinations and discussions of broad social, economic, and
similar problems; and
(C) Information provided upon request by a legislator for technical
advice and assistance, as defined by I.R.C. 4911(d)(2) and 26 CFR
56.4911-2(c)(1) through (c)(3).
(v) When a recipient or subrecipient seeks reimbursement for
indirect costs, total lobbying costs must be identified separately in
the indirect cost rate proposal and thereafter be treated as other
unallowable activity costs in accordance with Sec. 200.413.
(vi) The recipient or subrecipient must submit a certification that
the requirements and standards of this section have been complied with
as part of its annual indirect cost rate proposal. (See Sec. 200.415.)
(vii)(A) Time logs, calendars, or similar records are not required
to be created for purposes of complying with the record-keeping
requirements in Sec. 200.302 with respect to lobbying costs during a
particular calendar month when:
(1) The employee engages in lobbying (as defined in paragraphs
(c)(1) and (c)(2) of this section) for 25 percent or less of the
employee's compensated hours of employment during that calendar month;
and
(2) Within the preceding five-year period, the recipient or
subrecipient has not materially misstated allowable or unallowable
costs of any nature, including legislative lobbying costs.
(B) When conditions in paragraph (c)(2)(vii)(A)(1) and (2) of this
section are met, recipients and subrecipients are not required to
establish records to support the allowability of claimed costs in
addition to records already required or maintained. Also, when
conditions in paragraphs (c)(2)(vii)(A)(1) and (2) of this section are
met, the absence of time logs, calendars, or similar records will not
serve as a basis for disallowing costs by contesting estimates of
lobbying time spent by employees during a calendar month.
(viii) In consultation with OMB, the Federal agency must establish
procedures for resolving, in advance, any significant questions or
disagreements concerning the interpretation or application of this
section. Any such advance resolutions must be binding in any subsequent
settlements, audits, or investigations with respect to that grant or
contract for purposes of interpretation of this part, provided,
however, that this must not be construed to prevent a contractor or
recipient or subrecipient from contesting the lawfulness of such a
determination.
Sec. 200.451 Losses on other awards or contracts.
Any excess costs over income under any other award or contract of
any nature is unallowable. This includes, but is not limited to, the
recipient's or subrecipient's contributed portion by reason of cost
sharing agreements or any under-recoveries through negotiation of flat
amounts for indirect costs. Also, any excess of costs over authorized
funding levels transferred from any award or contract to another is
unallowable. All losses are not allowable indirect costs and must be
included in the appropriate indirect cost rate base for allocating
indirect costs.
Sec. 200.452 Maintenance and repair costs.
Costs incurred for utilities, insurance, security, necessary
maintenance, janitorial services, repair, or upkeep of buildings and
equipment (including Federal property unless otherwise provided for)
which neither add to the permanent value of the property nor
appreciably prolong its intended life, but keep it in an efficient
operating condition, are allowable. Costs incurred for improvements
that add to the permanent value of the buildings and equipment or
appreciably prolong their intended life must be treated as capital
expenditures (see Sec. 200.439). These costs are only allowable to the
extent not paid through rental or other agreements.
Sec. 200.453 Materials and supplies costs, including costs of
computing devices.
(a) Costs incurred for materials, supplies, and fabricated parts
necessary for the performance of a Federal award are allowable.
(b) Purchased materials and supplies must be charged at their
actual prices, net of applicable credits. Withdrawals from general
stores or stockrooms must be charged at their actual net cost under any
recognized method of pricing inventory withdrawals, consistently
applied. Incoming transportation charges are an allowable part of
materials and supplies costs.
(c) Materials and supplies used for the performance of a Federal
award may be charged as direct costs. Charging computing devices as
direct costs is allowable for devices that are essential and allocable,
but not solely dedicated, to the performance of a Federal award.
(d) Where Federally-donated or furnished materials are used in
performing the Federal award, the materials will be used without
charge.
Sec. 200.454 Memberships, subscriptions, and professional activity
costs.
(a) Costs of the recipient's or subrecipient's membership in
business, technical, and professional organizations are allowable.
(b) Costs of the recipient's or subrecipient's subscriptions to
business, professional, and technical periodicals are allowable.
(c) Costs of membership in any civic or community organization are
allowable.
(d) Costs of membership in any country club or social or dining
club or organization are unallowable.
[[Page 69481]]
(e) Costs of membership in organizations whose primary purpose is
lobbying are unallowable. See Sec. 200.450.
Sec. 200.455 Organization costs.
(a) Costs such as incorporation fees, brokers' fees, fees to
promoters, organizers or management consultants, attorneys,
accountants, or investment counselors, whether or not employees of the
recipient or subrecipient in connection with the establishment or
reorganization of an organization, are unallowable except with prior
approval of the Federal agency.
(b) The costs of any activities undertaken to persuade employees of
the recipient or subrecipient, or any other entity, to exercise or not
to exercise, or concerning the manner of exercising, the right to
organize and bargain collectively through representatives of the
employees' own choosing, are unallowable.
(c) The costs related to data and evaluation are allowable and
include (but are not limited to) the expenditures needed to gather,
store, track, manage, analyze, disaggregate, secure, share, publish, or
otherwise use data to administer or improve the program, such as data
systems, personnel, data dashboards, cyber security, and related items.
Data costs may also include direct or indirect costs associated with
building integrated data systems--data systems that link individual-
level data from multiple State and local government agencies for
purposes of management, research, and evaluation.
Sec. 200.456 Participant support costs.
Participant support costs are allowable (see Sec. 200.1). The
classification of items as participant support costs must be documented
in the recipient's or subrecipient's written policies and procedures
and treated consistently across all Federal awards.
Sec. 200.457 Plant and security costs.
Necessary and reasonable expenses incurred for the protection and
security of facilities, personnel, and work products are allowable.
Such costs include, but are not limited to, wages and uniforms of
personnel engaged in security activities; equipment; barriers;
protective (non-military) gear, devices, and equipment; contractual
security services; and consultants. Capital expenditures for plant
security purposes are subject to Sec. 200.439.
Sec. 200.458 Pre-award costs.
Pre-award costs are those incurred before the start date of the
Federal award or subaward directly pursuant to the negotiation and in
anticipation of the Federal award where such costs are necessary for
efficient and timely performance of the scope of work. These costs are
allowable only to the extent that they would have been allowed if
incurred after the start date of the Federal award and only with the
prior written approval of the Federal agency. If approved, these costs
must be charged to the initial budget period of the Federal award
unless otherwise specified by the Federal agency or pass-through
entity.
Sec. 200.459 Professional service costs.
(a) Costs of professional and consultant services rendered by
persons who are members of a particular profession or possess a special
skill and who are not officers or employees of the recipient or
subrecipient are allowable, subject to paragraphs (b) and (c) of this
section when reasonable in relation to the services rendered and when
not contingent upon recovery of the costs from the Federal Government.
In addition, legal and related services are limited under Sec.
200.435.
(b) In determining the allowability of costs in a particular case,
no single factor or any combination of factors is necessarily
determinative. However, the following factors are relevant:
(1) The nature and scope of the service rendered in relation to the
service required.
(2) The necessity of contracting for the service, considering the
recipient's or subrecipient's capability in the particular area.
(3) The past pattern of such costs, particularly in the years prior
to receiving a Federal award(s).
(4) The impact of Federal awards on the recipient's or
subrecipient's business (meaning, what new problems have arisen).
(5) Whether the proportion of Federal work to the recipient's or
subrecipient's total business influences the recipient or subrecipient
in favor of incurring the cost, particularly where the services
rendered are not of a continuing nature and have little relationship to
work under Federal awards.
(6) Whether the service can be performed more economically by
direct employment rather than contracting.
(7) The qualifications of the individual or entity providing the
service and the customary fees charged, especially on non-federally
funded activities.
(8) Adequacy of the contractual agreement for the service (for
example, description of the service, estimate of the time required,
rate of compensation, and termination provisions).
(c) To be allowable, retainer fees must be supported by evidence of
bona fide services available or rendered in addition to the factors in
paragraph (b) of this section.
Sec. 200.460 Proposal costs.
Proposal costs are the costs of preparing bids, proposals, or
applications on potential Federal and non-Federal awards or projects,
including developing data necessary to support the recipient's or
subrecipient's bids or proposals. Proposal costs of the current
accounting period of both successful and unsuccessful bids and
proposals normally should be treated as indirect costs and allocated to
all current activities of the recipient or subrecipient. No proposal
costs of past accounting periods may be allocated to the current
period.
Sec. 200.461 Publication and printing costs.
(a) Publication costs for electronic and print media, including
distribution, promotion, and general handling, are allowable. These
costs should be allocated as indirect costs to all benefiting
activities of the recipient or subrecipient if they are not
identifiable with a particular cost objective.
(b) Page charges, article processing charges, or similar open
access fees for professional journal publications and other peer-
reviewed publications developed under a Federal award are allowable
where:
(1) The publications report work supported by the Federal
Government; and
(2) The charges are levied impartially on all items published by
the journal, whether or not under a Federal award.
(3) The recipient or subrecipient may charge the Federal award
during closeout for the costs of publication or sharing of research
results if the costs were not incurred during the period of performance
of the Federal award. If incurred, these costs must be charged to the
final budget period of the award unless otherwise specified by the
Federal agency.
Sec. 200.462 Rearrangement and reconversion costs.
(a) Costs incurred for ordinary and normal rearrangement and
alteration of facilities are allowable as indirect costs. Special
arrangements and alterations are allowable as a direct cost if the
costs are incurred specifically for a Federal award and with the prior
approval of the Federal agency or pass-through entity.
(b) Costs incurred in restoring or rehabilitating the recipient's
or subrecipient's facilities to approximately the same condition
[[Page 69482]]
existing immediately before the commencement of a Federal award(s),
less costs related to normal wear and tear, are allowable.
Sec. 200.463 Recruiting costs.
(a) Subject to paragraphs (b) and (c) of this section, and provided
that the size of the staff recruited and maintained is in keeping with
workload requirements, costs of ``help wanted'' advertising, operating
costs of an employment office necessary to secure and maintain adequate
staff, costs of operating an aptitude and educational testing program,
travel costs of employees while engaged in recruiting personnel, travel
costs of applicants for interviews for prospective employment, and
relocation costs incurred incident to recruitment of new employees, are
allowable to the extent that such costs are incurred pursuant to the
recipient's or subrecipient's standard recruitment program. When the
recipient or subrecipient uses employment agencies, costs not in excess
of standard commercial rates for such services are allowable.
(b) Special emoluments, fringe benefits, and salary allowances
incurred to attract professional personnel that do not meet the test of
reasonableness or do not conform with the established practices of the
recipient or subrecipient, are unallowable.
(c) If relocation costs incurred incident to recruitment of a new
employee have been funded in whole or in part by a Federal award, and
the newly hired employee resigns for reasons within the employee's
control within 12 months after hire, the recipient or subrecipient must
refund or credit the Federal Government for its share of the cost. See
Sec. 200.464.
(d) Short-term visa costs (as opposed to longer-term immigration
visas) are generally allowable expenses that may be proposed as a
direct cost. Since short-term visas are issued for a specific period
and purpose and can be clearly identified as directly connected to work
performed on a Federal award. For these costs to be directly charged to
a Federal award, they must:
(1) Be critical and necessary for the conduct of the project;
(2) Be allowable under the applicable cost principles;
(3) Be consistent with the recipient's or subrecipient's cost
accounting practices and established written policy; and
(4) Meet the definition of ``direct cost'' as described in the
applicable cost principles.
Sec. 200.464 Relocation costs of employees.
(a) Relocation costs are costs incident to the permanent change of
duty assignment (for an indefinite period or a stated period of not
less than 12 months) of an existing employee or upon recruitment of a
new employee. Relocation costs are allowable, subject to the
limitations described in paragraphs (b), (c), and (d) of this section,
provided that:
(1) The move is for the benefit of the employer.
(2) Reimbursement to the employee is in accordance with an
established written policy consistently followed by the employer.
(3) The reimbursement does not exceed the employee's actual (or
reasonably estimated) expenses.
(b) Allowable relocation costs for current employees are limited to
the following:
(1) The costs of transportation of the employee, members of their
immediate family and their household, and personal effects to the new
location.
(2) The costs of finding a new home, such as advance trips by
employees and spouses to locate living quarters and temporary lodging
during the transition period, up to a maximum period of 30 calendar
days.
(3) Closing costs, such as brokerage, legal, and appraisal fees,
incidental to the disposition of the employee's former home. These
costs, together with those described in paragraph (b)(4) of this
section, are limited to eight percent of the sales price of the
employee's former home.
(4) The continuing costs of ownership (for up to six months) of the
vacant former home after the settlement or lease date of the employee's
new permanent home, such as maintenance of buildings and grounds
(exclusive of fixing-up expenses), utilities, taxes, and property
insurance.
(5) Other necessary and reasonable expenses normally incident to
relocation, such canceling an unexpired lease, transportation of
personal property, and purchasing insurance against loss of or damages
to personal property. The cost of canceling an unexpired lease is
limited to three times the monthly rental.
(c) Allowable relocation costs for new employees are limited to
those described in paragraphs (b)(1) and (2) of this section. If
relocation costs incurred incident to the recruitment of a new employee
have been funded in whole or in part by a Federal award, and the newly
hired employee resigns for reasons within the employee's control within
12 months after hire, the recipient or subrecipient must refund or
credit the Federal Government for its share of the cost. If a new
employee is relocating to an overseas location and dependents are not
permitted for any reason, and the costs do not include transporting
household goods, the costs must be considered travel costs in
accordance with Sec. 200.474, not relocation costs under Sec.
200.464).
(d) The following costs related to relocation are unallowable:
(1) Fees and other costs associated with acquiring a new home.
(2) A loss on the sale of a former home.
(3) Continuing mortgage principal and interest payments on a home
being sold.
(4) Income taxes paid by an employee related to reimbursed
relocation costs.
Sec. 200.465 Rental costs of real property and equipment.
(a) Subject to the limitations described in paragraphs (b) through
(d) of this section, rental costs are allowable to the extent that the
rates are reasonable in light of such factors as costs of comparable
rental properties; market conditions in the area; alternatives
available; and the type, life expectancy, condition, and value of the
property leased. Rental arrangements should be reviewed periodically to
determine if circumstances have changed and if other options are
available.
(b) Rental costs under ``sale and lease back'' arrangements are
allowable only up to the amount allowed if the recipient or
subrecipient had continued to own the property. This amount would
include expenses such as depreciation, maintenance, taxes, and
insurance.
(c) Rental costs under ``less-than-arm's-length'' leases are
allowable only up to the amount described in paragraph (b) of this
section. For this purpose, a less-than-arm's-length lease is one under
which one party to the lease agreement can control or substantially
influence the actions of the other. Such leases include, but are not
limited to, those between:
(1) Divisions of the recipient or subrecipient;
(2) The recipient or subrecipient under common control through
common officers, directors, or members; and
(3) The recipient or subrecipient and a director, trustee, officer,
or key employee of the recipient or subrecipient or an immediate family
member, either directly or through corporations, trusts, or similar
arrangements in which they hold a controlling interest. For example,
the recipient or subrecipient may establish
[[Page 69483]]
a separate corporation to own property and lease it back to the
recipient or subrecipient.
(4) Family members include one party with any of the following
relationships to another party:
(i) Spouse and parents thereof;
(ii) Children and spouses thereof;
(iii) Parents and spouses thereof;
(iv) Siblings and spouses thereof;
(v) Grandparents and grandchildren and spouses thereof;
(vi) Domestic partner and parents thereof, including domestic
partners of any individual in 2 through 5 of this definition; and
(vii) Any individual related by blood or affinity whose close
association with the employee is the equivalent of a family
relationship.
(d) Rental costs under leases which are required to be accounted
for as a financed purchase under GASB standards or a finance lease
under GAAP are allowable only up to the amount (described in paragraph
(b) of this section) allowed if the recipient or subrecipient had
purchased the property on the date the lease agreement was executed.
Interest costs related to these leases are allowable if they meet the
criteria in Sec. 200.449. Unallowable costs include costs that would
not have been incurred if the recipient or subrecipient had purchased
the property, such as amounts paid for profit, management fees, and
taxes.
(e) Rental or lease payments are allowable under lease contracts
where the recipient or subrecipient is required to recognize an
intangible right-to-use lease asset under GASB standards or right-of-
use operating lease workspace asset under GAAP for purposes of
financial reporting in accordance with GAAP.
(f) The rental of any property owned by any individuals or entities
affiliated with the recipient or subrecipient, including commercial or
residential real estate, for purposes such as the home office is
unallowable.
Sec. 200.466 Scholarships and student aid costs.
(a) Costs of scholarships, fellowships, and student aid programs at
IHEs are allowable only when the purpose of the Federal award is to
provide training to participants, and the Federal agency approves the
cost. However, tuition remission and other forms of compensation paid
as, or instead of, wages to students performing necessary work are
allowable provided that:
(1) The individual is conducting activities necessary to the
Federal award;
(2) Tuition remission and other support are provided in accordance
with the established written policy of the IHE and consistently
provided in a like manner to students in return for similar activities
conducted under Federal awards as well as other activities; and
(3) The student is enrolled in an advanced degree program at the
IHE or an affiliated institution during the academic period and the
student's activities under the Federal award are related to their
degree program;
(4) The tuition or other payments are reasonable compensation for
the work performed and are conditioned explicitly upon the performance
of necessary work; and
(5) The IHE compensates students under Federal awards as well as
other activities in similar manners.
(b) Charges for tuition remission and other forms of compensation
paid to students as, or instead of, salaries and wages are subject to
the reporting requirements in Sec. 200.430. The charges must be
treated as a direct or indirect cost in accordance with the actual work
performed. Tuition remission may be charged on an average rate basis.
See Sec. 200.431.
Sec. 200.467 Selling and marketing costs.
Costs of selling and marketing any products or services of the
recipient or subrecipient are unallowable unless they are allowed under
Sec. 200.421 and are necessary to meet the requirements of the Federal
award.
Sec. 200.468 Specialized service facilities.
(a) The costs of services provided by highly complex or specialized
facilities operated by the recipient or subrecipient are allowable
provided the charges for the services meet the conditions of either
paragraph (b) or (c) of this section and take into account any items of
income or Federal financing that qualify as applicable credits under
Sec. 200.406. These costs include charges for facilities such as
computing facilities, wind tunnels, and reactors.
(b) The costs of such services, when material, must be charged
directly to the applicable Federal awards based on actual usage of the
services on the basis of a schedule of rates or established methodology
that:
(1) Does not discriminate between activities under Federal awards
and other activities of the recipient or subrecipient, including usage
by the recipient or subrecipient for internal purposes; and
(2) Is designed to recover only the aggregate costs of the
services. Each service's costs must normally consist of its direct
costs and an allocable share of all indirect costs. Rates must be
adjusted at least biennially and must consider any over or under-
applied costs of the previous period(s).
(c) Where the costs incurred for a service are not material, they
may be allocated as indirect costs.
(d) Under extraordinary circumstances, the cognizant agency for
indirect costs and the recipient or subrecipient may negotiate and
establish an alternative costing arrangement if it is in the Federal
Government's best interest.
Sec. 200.469 Student activity costs.
Costs incurred for intramural activities, student publications,
student clubs, and other student activities are unallowable unless
expressly authorized in the Federal award.
Sec. 200.470 Taxes (including Value Added Tax).
(a) For States, local governments, and Indian Tribes. (1) Taxes
that a governmental unit is legally required to pay are allowable,
except for self-assessed taxes that disproportionately affect Federal
programs or changes in tax policies that disproportionately affect
Federal programs.
(2) Gasoline taxes, motor vehicle fees, and other taxes that are,
in effect, user fees for benefits provided to the Federal Government
are allowable.
(3) This provision does not restrict the authority of the Federal
agency to identify taxes where Federal participation is inappropriate.
The cognizant agency for indirect costs may accept a reasonable
approximation in circumstances where determining the amount of
unallowable taxes would require an excessive amount of effort.
(b) For nonprofit organizations and IHEs. (1) Taxes that the
recipient or subrecipient is required to pay and which are paid or
accrued in accordance with GAAP are generally allowable. These costs
include payments made to local governments instead of taxes and that
are commensurate with the local government services received. The
following taxes are unallowable:
(i) Taxes for which exemptions are available to the recipient or
subrecipient directly or which are available to the recipient or
subrecipient based on an exemption afforded the Federal Government and,
in the latter case, when the Federal agency makes available the
necessary exemption certificates;
(ii) Special assessments on land which represent capital
improvements; and
(iii) Federal income taxes.
(2) Any refund of taxes and interest thereon, which were allowed as
Federal
[[Page 69484]]
award costs, must be credited to the Federal Government as a cost
reduction or cash refund, as appropriate. However, any interest paid or
credited to a recipient or subrecipient incident to a refund of tax,
interest, and penalty will be paid or credited to the Federal
Government only to the extent that such interest accrued over the
period during which the Federal Government has reimbursed the recipient
or subrecipient for the taxes, interest, and penalties.
(c) Value Added Tax (VAT). Foreign taxes charged for procurement
transactions that a recipient or subrecipient is legally required to
pay in a country is allowable. Foreign tax refunds or applicable
credits under Federal awards refer to receipts or reduction of
expenditures, which operate to offset or reduce expense items that are
allocable to Federal awards as direct or indirect costs. To the extent
that such credits accrued or received by the recipient or subrecipient
relate to allowable cost, these costs must be credited to the Federal
agency as a cost reduction or cash refunds, as appropriate. In cases
where the costs are credited back to the Federal award, the recipient
or subrecipient may reduce the Federal share of costs by the amount of
the foreign tax reimbursement, or where Federal award has not expired,
the Federal agency may allow the recipient or subrecipient to use the
foreign government tax refund for approved activities under the Federal
award.
Sec. 200.471 Telecommunication and video surveillance costs.
(a) Costs incurred for telecommunications and video surveillance
services or equipment such as phones, internet, video surveillance, and
cloud servers are allowable except for the following circumstances:
(b) Obligating or expending covered telecommunications and video
surveillance services or equipment or services as described in Sec.
200.216 to:
(1) Procure or obtain, extend or renew a contract to procure or
obtain;
(2) Enter into a contract (or extend or renew a contract) to
procure; or
(3) Obtain the equipment, services, or systems.
Sec. 200.472 Termination and standard closeout costs.
(a) Termination Costs. Termination of a Federal award generally
gives rise to the incurrence of costs or the need for special treatment
of costs, which would not have arisen had the Federal award not been
terminated. Cost principles covering these items are set forth in this
section. They must be used in conjunction with the other termination
requirements of this part.
(1) The cost of items reasonably usable on the recipient's or
subrecipient's other work is unallowable unless the recipient or
subrecipient submits evidence that it would not retain such items
without sustaining a loss. In deciding whether such items are
reasonably usable on other work of the recipient or subrecipient, the
Federal agency or pass-through entity should consider the recipient's
or subrecipient's plans and orders for current and scheduled activity.
Contemporaneous purchases of common items by the recipient or
subrecipient must be considered evidence that the items are reasonably
usable on the recipient's or subrecipient's other work. Any acceptance
of common items as allocable to the terminated portion of the Federal
award must be limited to the extent that the quantities of such items
on hand, in transit, and on order do not exceed the reasonable
quantitative requirements of other work.
(2) If the recipient or subrecipient cannot discontinue certain
costs immediately after the effective termination date, despite making
all reasonable efforts, then the costs are generally allowable within
the limitations of this part. Any costs continuing after termination
due to the negligent or willful failure of the recipient or
subrecipient to immediately discontinue the costs are unallowable.
(3) Loss of useful value of special tooling, machinery, and
equipment is generally allowable if:
(i) Such special tooling, special machinery, or equipment is not
reasonably capable of use in the other work of the recipient or
subrecipient;
(ii) The interest of the Federal Government is protected by
transfer of title or by other means deemed appropriate by the Federal
agency (see Sec. 200.313 (d)); and
(iii) The loss of useful value for one terminated Federal award is
limited to the portion of the acquisition cost which bears the same
ratio to the total acquisition cost as the terminated portion of the
Federal award bears to the entire terminated Federal award and other
Federal awards for which the special tooling, machinery, or equipment
was acquired.
(4) Rental costs under unexpired leases are generally allowable
where clearly shown to have been reasonably necessary for the
performance of the terminated Federal award less the residual value of
such leases, if:
(i) The amount of claimed rental costs does not exceed the
reasonable use value of the property leased for the period of the
Federal award and a further period as may be reasonable; and
(ii) The recipient or subrecipient makes all reasonable efforts to
terminate, assign, settle, or otherwise reduce the cost of the lease.
The cost of alterations of the leased property provided they were
necessary for the performance of the Federal award, and the cost of
reasonable restoration required by the lease may be included.
(5) The following settlement expenses are generally allowable.
(i) Accounting, legal, clerical, and similar costs that are
reasonably necessary for:
(A) The preparation and presentation to the Federal agency or pass-
through entity of settlement claims and supporting data with respect to
the terminated portion of the Federal award, unless the termination is
for cause (see Sec. Sec. 200.339-200.343); and
(B) The termination and settlement of subawards.
(ii) Reasonable costs for the storage, transportation, protection,
and disposition of property provided by the Federal Government or
acquired or produced for the Federal award.
(6) Claims under subawards, including the allocable portion of
claims common to the Federal award and other work of the recipient or
subrecipient, are generally allowable. An appropriate share of the
recipient's or subrecipient's indirect costs may be allocated to the
amount of settlements with contractors and subrecipients, provided that
the amount allocated is consistent with the requirements of Sec.
200.414. These allocated indirect costs must exclude the same and
similar costs claimed directly or indirectly as settlement expenses.
(b) Closeout Costs. Administrative costs associated with the
closeout activities of a Federal award are allowable. The recipient or
subrecipient may charge the Federal award during the closeout for the
necessary administrative costs of that Federal award (for example,
salaries of personnel preparing final reports, publication and printing
costs, and the costs associated with the disposition of equipment and
property). These costs may be incurred until the due date of the final
report(s). If incurred, these costs must be liquidated prior to the due
date of the final report(s) and charged to the final budget period of
the award unless otherwise specified by the Federal agency.
[[Page 69485]]
Sec. 200.473 Training and education costs.
The cost of training and education provided for employee
development is allowable.
Sec. 200.474 Transportation costs.
Costs incurred for freight, express, cartage, postage, and other
transportation services relating to goods purchased, in process, or
delivered, are allowable. When the costs can be readily identified with
the items involved, they may be charged directly as transportation
costs or added to the cost of such items. When identification with the
materials received cannot be readily identified, the inbound
transportation cost may be charged to the appropriate indirect cost
accounts if the recipient or subrecipient follows a consistent,
equitable procedure in this respect. If reimbursable under the terms
and conditions of the Federal award, outbound freight should be treated
as a direct cost.
Sec. 200.475 Travel costs.
(a) General. Travel costs include the transportation, lodging,
subsistence, and related items incurred by employees who are in travel
status on official business of the recipient or subrecipient. These
costs may be charged on an actual cost basis, a per diem or mileage
basis, or on a combination of the two, provided the method used is
applied to an entire trip and not to selected days of the trip. The
method used must be consistent with those normally allowed in like
circumstances in the recipient's or subrecipient's other activities and
in accordance with the recipient's or subrecipient's established
written policies. Notwithstanding the provisions of Sec. 200.444,
travel costs of officials covered by that section are allowable with
the prior written approval of the Federal agency or pass-through entity
when they are specifically related to the Federal award.
(b) Lodging and subsistence. Costs incurred by employees and
officers for travel, including costs of lodging, other subsistence, and
incidental expenses, must be considered reasonable and otherwise
allowable only to the extent such costs do not exceed charges normally
allowed by the recipient or subrecipient in its regular operations as
the result of the recipient's or subrecipient's established written
policy. In addition, if these costs are charged directly to the Federal
award documentation must justify that:
(1) Participation of the individual is necessary for the Federal
award; and
(2) The costs are reasonable and consistent with the recipient's or
subrecipient's established written policy.
(c) Dependent costs. (1) Temporary dependent care costs (dependent
is defined in 26 U.S.C. 152) above and beyond regular dependent care
that directly results from travel to conferences is allowable provided
that:
(i) The costs are a direct result of the individual's travel for
the Federal award;
(ii) The costs are consistent with the recipient's or
subrecipient's established written policy for all travel; and
(iii) Are only temporary during the travel period.
(2) Travel costs for dependents are unallowable, except for travel
of six months or more with prior approval of the Federal agency. See
Sec. 200.432.
(d) Establishing rates and amounts. In the absence of an
established written policy regarding travel costs, the rates and
amounts established under 5 U.S.C. 5701-11 (``Travel and Subsistence
Expenses; Mileage Allowances''), by the Administrator of General
Services, or by the President (or their designee) pursuant to any
provisions of such subchapter must apply to travel under Federal awards
(48 CFR 31.205-46(a)).
(e) Commercial air travel. (1) Airfare costs in excess of the basic
least expensive unrestricted accommodations class offered by commercial
airlines are unallowable except when such accommodations would:
(i) Require circuitous routing;
(ii) Require travel during unreasonable hours;
(iii) Excessively prolong travel;
(iv) Result in additional costs that would offset the
transportation savings; or
(v) Offer accommodations not reasonably adequate for the traveler's
medical needs. The recipient or subrecipient must justify and document
these conditions on a case-by-case basis for the use of first-class or
business-class airfare to be allowable in such cases.
(2) Unless a pattern of avoidance is detected, the Federal
Government will generally not question a recipient's or subrecipient's
determinations that customary standard airfare or other discount
airfare is unavailable for specific trips if the recipient or
subrecipient can demonstrate that such airfare was not available in the
specific case.
(f) Air travel by other than commercial carrier. Travel costs by
recipient or subrecipient-owned, -leased, or -chartered aircraft
include the cost of the lease, charter, operation (including personnel
costs), maintenance, depreciation, insurance, and other related costs.
The portion of these costs that exceed the cost of airfare, as provided
for in paragraph (d), is unallowable.
Sec. 200.476 Trustees.
Travel and subsistence costs of trustees (or directors) at IHEs and
nonprofit organizations are allowable. See Sec. 200.475.
Subpart F--Audit Requirements
General
Sec. 200.500 Purpose.
This part sets forth standards for obtaining consistency and
uniformity among Federal agencies for the audit of non-Federal entities
expending Federal awards.
Audits
Sec. 200.501 Audit requirements.
(a) Audit required. A non-Federal entity that expends $1,000,000 or
more during the non-Federal entity's fiscal year in Federal awards must
have a single or program-specific audit conducted for that year in
accordance with the provisions of this part.
(b) Single audit. A non-Federal entity that expends $1,000,000 in
Federal awards during its fiscal year must have a single audit
conducted in accordance with Sec. 200.514 except when it elects to
have a program-specific audit conducted in accordance with paragraph
(c) or (d) of this section.
(c) Program-specific audit election (in general). A non-Federal
entity may elect to have a program-specific audit conducted in
accordance with Sec. 200.507 if the following conditions are met:
(1) The non-Federal entity expends Federal awards under only one
Federal program (excluding research and development); and
(2) The Federal program's statutes or regulations, or terms and
conditions of the Federal award, do not require a financial statement
audit of the non-Federal entity.
(d) Program-specific audit election for research and development. A
non-Federal entity may elect to have a program-specific audit for
research and development conducted in accordance with Sec. 200.507,
but only if all of the following conditions are met:
(1) The non-Federal entity expends Federal awards only from the
same Federal agency, or the same Federal agency and the same pass-
through entity; and
(2) The Federal agency, or pass-through entity in the case of a
subrecipient, approves a program-specific audit in advance.
[[Page 69486]]
(e) Exemption when Federal awards expended are less than
$1,000,000. A non-Federal entity that expends less than $1,000,000 in
Federal awards during its fiscal year is exempt from Federal audit
requirements for that year, except as noted in Sec. 200.503. However,
in all instances, the records of the non-Federal entity must be
available for review or audit by appropriate officials of the Federal
agency, pass-through entity, and the Government Accountability Office
(GAO).
(f) Federally Funded Research and Development Centers (FFRDC).
Management of an auditee that owns or operates a FFRDC may elect to
treat the FFRDC as a separate entity for purposes of this part.
(g) Subrecipients and contractors. An auditee may simultaneously be
a recipient, a subrecipient, and a contractor. Federal awards expended
as a recipient or a subrecipient are subject to audit under this part.
Payments received for goods or services provided as a contractor under
a Federal award (see Sec. 200.331) are not subject to audit under this
part.
(h) Compliance responsibility for contractors. In most cases, the
auditee's compliance responsibility for contractors is to ensure that
the procurement, receipt, and payment for goods and services comply
with Federal statutes, regulations, and the terms and conditions of a
Federal award. Federal award compliance requirements normally do not
flow down to contractors. However, the auditee is responsible for
ensuring compliance for procurement transactions that require a
contractor to be responsible for program compliance and the
contractor's records must be reviewed to determine program compliance.
Also, when these procurement transactions relate to a major program,
the scope of the audit must include a determination that these
transactions comply with Federal statutes, regulations, and the terms
and conditions of a Federal award.
(i) For-profit subrecipient. This part does not apply to for-profit
organizations. As necessary, the pass-through entity is responsible for
establishing requirements to ensure compliance by for-profit
subrecipients. The subaward with a for-profit subrecipient must
describe applicable compliance requirements and the for-profit
subrecipient's compliance responsibility. Methods to ensure compliance
for Federal awards made to for-profit subrecipients may include pre-
award audits, monitoring throughout the performance of the subaward,
and post-award audits (see Sec. 200.332).
Sec. 200.502 Basis for determining Federal awards expended.
(a) Determining Federal awards expended. The determination of when
a Federal award is expended must be based on when the activity related
to the Federal award occurs. Generally, the activity related to the
Federal award pertains to events that require the non-Federal entity to
comply with Federal statutes, regulations, and the terms and conditions
of Federal awards, such as:
(1) Expenditure/expense transactions associated with grants,
cooperative agreements, cost-reimbursement contracts under the FAR,
compacts with Indian Tribes, and direct appropriations;
(2) The disbursement of funds to subrecipients;
(3) The use of loan proceeds under loan and loan guarantee
programs;
(4) The receipt of property (including surplus property);
(5) The receipt or use of program income;
(6) The distribution or use of food commodities;
(7) The disbursement of amounts entitling the non-Federal entity to
an interest subsidy; and
(8) The period when insurance is in force.
(b) Loan and loan guarantees (loans). Loan and loan guarantees
retain their Federal character through the end of the Federal award
period of performance unless otherwise specified in statute or Federal
agency regulations. The Federal Government is at risk for loans until
the debt is repaid. Therefore, the following guidelines must be used to
calculate the value of Federal awards expended under loan programs
(except as noted in paragraphs (c) and (d)):
(1) The value of new loans made or received during the audit
period; plus
(2) The balance of loans from previous years at the beginning of
the audit period for which the Federal Government imposes continuing
compliance requirements; plus
(3) Any interest subsidy, cash, or administrative cost allowance
received.
(c) Loan and loan guarantees (loans) at Institutions of Higher
Education (IHE). When loans are made to students of an IHE, but the IHE
itself does not have continuing compliance requirements for the loans,
then only the value of loans made during the audit period are
considered Federal awards expended in that audit period. The balance of
loans for previous audit periods is not included as Federal awards
expended because the lender accounts for the prior balances.
(d) Prior loan and loan guarantees (loans). Loans, the proceeds of
which were received and expended in prior years, are not considered
Federal awards expended under this part when Federal statutes,
regulations, and the terms and conditions of Federal awards pertaining
to such loans impose no continuing compliance requirements other than
to repay the loans.
(e) Endowment funds. The cumulative balance of Federal awards for
endowment funds that are federally restricted is considered Federal
awards expended in each audit period in which the funds are still
restricted.
(f) Free rent. Free rent received by itself is not considered a
Federal award expended under this part. However, free rent received as
part of a Federal award to carry out a Federal program must be included
in determining Federal awards expended and is subject to audit under
this part.
(g) Valuing non-cash assistance. Federal non-cash assistance (such
as free rent, food commodities, donated property, or donated surplus
property that is received as part of a Federal award to carry out a
Federal program) must be valued at fair market value at the time of
receipt or the assessed value provided by the Federal agency and must
be included in determining Federal awards expended under this part
(h) Medicare. Medicare payments to a non-Federal entity for
providing patient care services to Medicare-eligible individuals are
not considered Federal awards expended under this part.
(i) Medicaid. Medicaid payments to a subrecipient for providing
patient care services to Medicaid-eligible individuals are not
considered Federal awards expended under this part unless a State
requires the funds to be treated as Federal awards expended because
reimbursement is on a cost-reimbursement basis.
(j) Certain loans provided by the National Credit Union
Administration. For purposes of this part, loans from the National
Credit Union Share Insurance Fund and the Central Liquidity Facility
funded by contributions from insured non-Federal entities are not
considered Federal awards expended.
Sec. 200.503 Relation to other audit requirements.
(a) Other financial audits. An audit conducted in accordance with
this part must be in lieu of any financial audit of Federal awards
which a non-Federal entity is required to undergo under any other
Federal statute or regulation. To the extent that such an audit
provides a Federal agency with the information it requires to carry out
its responsibilities under Federal statute or regulation, a
[[Page 69487]]
Federal agency must rely upon and use that information.
(b) Conducting additional audits. Notwithstanding paragraph (a) of
this section, a Federal agency, Inspectors General, or GAO may conduct
or arrange additional audits to carry out its responsibilities under
Federal statute or regulation. The provisions of this part do not
authorize any non-Federal entity to constrain, in any manner, such
Federal agency from carrying out or arranging for such additional
audits, except that the Federal agency must plan such audits not to be
duplicative of other audits of Federal awards. Prior to commencing such
an audit, the Federal agency or pass-through entity must review the FAC
for recent audits submitted by the non-Federal entity, and to the
extent such audits meet a Federal agency or pass-through entity's
needs, the Federal agency or pass-through entity must rely upon and use
such audits. Any additional audits must be planned and performed in
such a way as to build upon work performed, including the audit
documentation, sampling, and testing already performed by other
auditors.
(c) Authority to conduct additional audits. The provisions of this
part do not limit the authority of Federal agencies to conduct, or
arrange for the conduct of, audits and evaluations of Federal awards,
nor limit the authority of any Federal agency Inspector General or
other Federal officials. For example, requirements that may be
applicable under the FAR or CAS and the terms and conditions of a cost-
reimbursement contract may include additional applicable audits to be
conducted or arranged for by Federal agencies.
(d) Federal agency to pay for additional audits. A Federal agency
that conducts or arranges for additional audits must, consistent with
other applicable Federal statutes and regulations, arrange for funding
the full cost of such additional audits.
(e) Request for a program to be audited as a major program. A
Federal agency may request that an auditee have a particular Federal
program audited as a major program in lieu of the Federal agency
conducting or arranging for the additional audits. Such requests should
be made at least 180 calendar days prior to the end of the fiscal year
to be audited to allow for planning. After consultation with its
auditor, the auditee should promptly respond to such a request by
informing the Federal agency whether the program would otherwise be
audited as a major program using the risk-based audit approach
described in Sec. 200.518 and, if not, the estimated incremental cost.
The Federal agency must then promptly confirm to the auditee whether it
wants the program audited as a major program. If the program is to be
audited as a major program based upon this Federal agency request, and
the Federal agency agrees to pay the full incremental costs, then the
auditee must have the program audited as a major program. With approval
of the Federal agency, a pass-through entity may use the provisions of
this paragraph for a subrecipient.
Sec. 200.504 Frequency of audits.
Audits required by this part must be performed annually except as
provided in paragraphs (a) and (b) of this section:
(a) A State, local government, or Indian Tribe that is required by
constitution or statute, in effect on January 1, 1987, to undergo its
audits less frequently than annually, is permitted to undergo biennial
(every other year) audits pursuant to this part. This requirement must
still be in effect for the biennial period.
(b) Any nonprofit organization that had biennial audits for all
biennial periods ending between July 1, 1992, and January 1, 1995, is
permitted to undergo biennial audits pursuant to this part. Biennial
audits must cover both fiscal years within the biennial period.
Sec. 200.505 Remedies for noncompliance.
In cases of continued inability or unwillingness to have an audit
conducted in accordance with this part, Federal agencies or pass-
through-through entities must take appropriate action as provided in
Sec. 200.339.
Sec. 200.506 Audit costs.
See Sec. 200.425.
Sec. 200.507 Program-specific audits.
(a) Program-specific audit guide available. In some cases, a
program-specific audit guide will be available to provide specific
guidance to the auditor concerning internal controls, compliance
requirements, suggested audit procedures, and audit reporting
requirements. A listing of current program-specific audit guides can be
found in the compliance supplement (Appendix VI, Program-Specific Audit
Guides). When a current program-specific audit guide is available, the
auditor must follow Generally Accepted Government Auditing Standards
(GAGAS) and the guide when performing a program-specific audit.
(b) Program-specific audit guide not available. (1) When a current
program-specific audit guide is not available, the auditee and auditor
must basically have the same responsibilities for the Federal program
as they would have for an audit of a major program in a single audit.
(2) The auditee must prepare the financial statement(s) for the
Federal program that includes a schedule of expenditures of Federal
awards for the program and notes that describe the significant
accounting policies used in preparing the schedule, a summary schedule
of prior audit findings consistent with the requirements of Sec.
200.511(b), and a corrective action plan consistent with the
requirements of Sec. 200.511(c).
(3) The auditor must:
(i) Perform an audit of the financial statement(s) for the Federal
program in accordance with GAGAS;
(ii) Obtain an understanding of internal controls and perform tests
of internal controls over the Federal program consistent with the
requirements for a major program in accordance withSec. 200.514(c);
(iii) Determine whether the auditee has complied with Federal
statutes, regulations, and the terms and conditions of Federal awards
that could have a direct and material effect on the Federal program
consistent with the requirements for a major program under Sec.
200.514(d);
(iv) Follow up on prior audit findings and perform procedures to
assess the reasonableness of the summary schedule of prior audit
findings prepared by the auditee in accordance with the requirements of
Sec. 200.511 When the auditor concludes that the summary schedule of
prior audit findings materially misrepresents the status of any prior
audit finding, the auditor must report this condition as a current-year
audit finding.; and
(v) Report any audit findings consistent with the requirements of
Sec. 200.516.
(4) The auditor's report(s) may be in the form of either combined
or separate reports. It may be organized differently from the manner
presented in this section. The auditor's report(s) must state that the
audit was conducted in accordance with this part and include the
following:
(i) An opinion (or disclaimer of opinion) as to whether the
financial statement(s) of the Federal program is presented fairly in
all material respects in accordance with the stated accounting
policies;
(ii) A report on internal control related to the Federal program,
which must describe the scope of testing of internal control and the
results of the tests;
(iii) A report on compliance that includes an opinion (or
disclaimer of opinion) as to whether the auditee complied with laws,
regulations, and the terms and conditions of Federal
[[Page 69488]]
awards which could have a direct and material effect on the Federal
program; and
(iv) A schedule of findings and questioned costs for the Federal
program that includes a summary of the auditor's results relative to
the Federal program in a format consistent with Sec. 200.515(d)(1) and
findings and questioned costs consistent with the requirements of Sec.
200.515(d)(3).
(c) Report submission for program-specific audits. (1) Audit
period. The audit must be completed and submitted in accordance with
paragraph (c)(2) or (c)(3) of this section. Unless a different period
is specified in the program-specific audit guide, the audit must be
submitted within 30 calendar days after receiving the auditor's
report(s) or nine months after the end of the audit period (whichever
is earlier). The reporting package is due the next business day when
the due date falls on a Saturday, Sunday, or Federal holiday. Unless
restricted by Federal law or regulation, the auditee must make copies
of the report(s) available for public inspection. Auditees and auditors
must ensure that their respective parts of the reporting package do not
include protected personally identifiable information.
(2) Program-specific audit guide available. When a program-specific
audit guide is available, the auditee must electronically submit the
data collection form prepared in accordance with Sec. 200.512(b), as
applicable to the program-specific audit, to the Federal Audit
Clearinghouse (FAC). The submission must also include the reporting
required by the program-specific audit guide.
(3) Program-specific audit guide not available. When a program-
specific audit guide is not available, the auditee must electronically
submit the data collection form prepared in accordance with Sec.
200.512(b) to the FAC. The submission must consist of the financial
statement(s) of the Federal program, a summary schedule of prior audit
findings, a corrective action plan as described in paragraph (b)(2),
and the auditor's report(s) described in paragraph (b)(4).
(d) Other sections of this part may apply. Program-specific audits
are subject to:
(1) 200.500 Purpose through 200.503 Relation to other audit
requirements, paragraph (d);
(2) 200.504 Frequency of audits through 200.506 Audit costs;
(3) 200.508 Auditee responsibilities through 200.509 Auditor
selection;
(4) 200.511 Audit findings follow-up;
(5) 200.512 Report submission, paragraphs (e) through (h);
(6) 200.513 Responsibilities;
(7) 200.516 Audit findings through 200.517 Audit documentation;
(8) 200.521 Management decision; and
(9) Other referenced provisions of this part unless contrary to the
provisions of this section, a program-specific audit guide, or program
statutes and regulations.
Auditees
Sec. 200.508 Auditee responsibilities.
The auditee must:
(a) Arrange for the audit required by this part in accordance with
Sec. 200.509, and ensure it is properly performed and submitted in
accordance with Sec. 200.512.
(b) Prepare financial statements, including the schedule of
expenditures of Federal awards in accordance with Sec. 200.510.
(c) Promptly follow up and take corrective action on audit
findings. This includes preparing a summary schedule of prior audit
findings and a corrective action plan in accordance with Sec.
200.511(b) and (c), respectively.
(d) Provide the auditor access to personnel, accounts, books,
records, supporting documentation, and any other information needed for
the auditor to perform the audit required by this part.
Sec. 200.509 Auditor selection.
(a) Auditor procurement. When procuring audit services, the auditee
must follow the procurement standards in Sec. Sec. 200.317 through
200.327 of subpart D or the FAR (48 CFR part 42), as applicable. When
requesting proposals for audit services, the objectives and scope of
the audit must be made clear, and the non-Federal entity must request a
copy of the audit organization's peer review report, which the auditor
must provide under GAGAS. Factors to be considered in evaluating each
proposal for audit services include the responsiveness to the request
for proposal, relevant experience, availability of staff with
professional qualifications and technical abilities, the results of
peer and external quality control reviews, and price. Whenever
possible, the auditee must make efforts to contract with businesses as
stated in Sec. 200.321 or the FAR (48 CFR part 42), as applicable.
(b) Restriction on auditor preparing indirect cost proposals. An
auditor who prepares the indirect cost proposal or cost allocation plan
may not be selected to perform the audit required by this part when the
indirect costs recovered by the auditee during the prior year exceed $1
million. This restriction applies to the base year used to prepare the
indirect cost proposal or cost allocation plan and any subsequent years
in which the resulting indirect cost agreement or cost allocation plan
is used to recover costs.
(c) Use of Federal auditors. Federal auditors may perform all or
part of the work required under this part if they fully comply with the
requirements of this part.
Sec. 200.510 Financial statements.
(a) Financial statements. The auditee must prepare financial
statements that reflect its financial position, results of operations
or changes in net assets, and, where appropriate, cash flows for the
fiscal year audited. The financial statements must be for the same
organizational unit and fiscal year chosen to meet this part's
requirements. However, organization-wide financial statements of the
non-Federal entity may also include departments, agencies, and other
organizational units that have separate audits in accordance with Sec.
200.514(a) and prepare separate financial statements.
(b) Schedule of expenditures of Federal awards. The auditee must
also prepare a schedule of expenditures of Federal awards for the
period covered by the auditee's financial statements. The schedule must
include the total Federal awards expended as determined in accordance
with Sec. 200.502. The auditee may choose to provide information
requested by Federal agencies or pass-through-through entities to make
the schedule easier to use. For example, when a Federal program has
multiple Federal award years, the auditee may separately list the
amount of Federal awards expended for each year of a Federal award. The
schedule must:
(1) List individual Federal programs by Federal agency using the
applicable Assistance Listing number(s). For a cluster of programs, the
non-Federal entity must provide the cluster name, a list of individual
Federal programs within the cluster, and provide the Federal agency
name and the applicable Assistance Listing number(s). For research and
development, total Federal awards expended must be shown either by
individual Federal award or by Federal agency and major subdivision
within the Federal agency. For example, the National Institutes of
Health is a major subdivision within the Department of Health and Human
Services.
(2) For audits covering multiple recipients (such as departments,
agencies, IHEs, and other organizational
[[Page 69489]]
units), identify the recipient of the Federal award.
(3) For Federal awards received as a subrecipient, the name of the
pass-through entity and identifying number assigned by the pass-through
entity must be included.
(4) Provide total Federal awards expended for each individual
Federal program and the Assistance Listings number or other identifying
number when the Assistance Listings information is unavailable. For a
cluster of programs, the auditee must also provide the total for the
cluster.
(5) Include the total amount provided to subrecipients from each
Federal program.
(6) For loan or loan guarantee programs described in Sec.
200.502(b), identify in the notes to the schedule the balances
outstanding at the end of the audit period. This requirement is in
addition to including the total Federal awards expended for loan or
loan guarantee programs in the schedule.
(7) Include notes describing the significant accounting policies
used in preparing the schedule and whether the auditee elected to use
the 15 percent de minimis indirect cost rate (see Sec. 200.414).
Sec. 200.511 Audit findings follow-up.
(a) General. The auditee is responsible for follow-up and
corrective action on all audit findings. As part of this
responsibility, the auditee must prepare a summary schedule of prior
audit findings. The auditee must also prepare a corrective action plan
for current year audit findings. The summary schedule of prior audit
findings and the corrective action plan must include the reference
numbers the auditor assigns to audit findings under Sec. 200.516(c).
Since the summary schedule may include audit findings from multiple
years, it must include the fiscal year in which the finding initially
occurred. The corrective action plan and summary schedule of prior
audit findings must include findings relating to the financial
statements, which must be reported in accordance with GAGAS.
(b) Summary schedule of prior audit findings. The summary schedule
of prior audit findings must report the status of all audit findings
included in the prior audit's schedule of findings and questioned
costs. The summary schedule must also include audit findings reported
in the prior audit's summary schedule of prior audit findings except
audit findings listed as corrected in accordance with paragraph (b)(1)
of this section or no longer valid or not warranting further action in
accordance with paragraph (b)(3) of this section.
(1) When audit findings were fully corrected, the summary schedule
need only list the audit findings and state that corrective action was
taken.
(2) When audit findings were not corrected or only partially
corrected, the summary schedule must describe the reasons for the
finding's recurrence, planned corrective action, and any partial
corrective action taken. When the corrective action taken significantly
differs from the corrective action previously reported in a corrective
action plan or the Federal agency's or pass-through-through entity's
management decision, the summary schedule must provide an explanation.
(3) When the auditee believes the audit findings are no longer
valid or do not warrant further action, the reasons for this position
must be described in the summary schedule. A valid reason for
considering an audit finding as not warranting further action is that
all of the following have occurred:
(i) Two years have passed since the audit report in which the
finding occurred was submitted to the FAC;
(ii) The Federal agency or pass-through entity is not currently
following up with the auditee on the audit finding; and
(iii) A management decision was not issued.
(c) Corrective action plan. At the completion of the audit, the
auditee must prepare a corrective action plan to address each audit
finding included in the auditor's report for the current year. The
corrective action plan must be a document separate from the auditor's
findings described in Sec. 200.516. The corrective action plan must
also provide the name(s) of the contact person(s) responsible for the
corrective action, the corrective action to be taken, and the
anticipated completion date. When the auditee does not agree with the
audit findings or believes corrective action is not required, the
corrective action plan must include a detailed explanation of the
reasons.
Sec. 200.512 Report submission.
(a) General. (1) The audit must be completed and include the data
collection form described in paragraph (b) of this section and the
reporting package described in paragraph (c) of this section. The audit
must be submitted within 30 calendar days after receiving the auditor's
report(s) or nine months after the end of the audit period (whichever
is earlier). If the due date falls on a Saturday, Sunday, or Federal
holiday, the reporting package is due the next business day.
(2) The auditee must make copies available for public inspection
unless restricted by Federal statute or regulation. Auditees and
auditors must ensure that their respective parts of the reporting
package do not include protected personally identifiable information.
(b) Data collection. The FAC is the repository of record for
subpart F reporting packages and the data collection form. All Federal
agencies, pass-through entities and others interested in a reporting
package and data collection form must obtain it by accessing the FAC.
(1) The auditee must submit the required data collection form (SF-
SAC) described in Appendix X of this part. This form provides
information about the auditee, its Federal programs, the results of the
audit, and whether the audit was completed in accordance with this
part. The form must include all information required by this part that
is necessary for Federal agencies to use the audit to ensure the
integrity of Federal programs. The form includes data elements and a
format that OMB must approve, is available from the FAC, and include
collections of information from the reporting package described in
paragraph (c).
(2) A senior-level representative of the auditee (for example, a
State controller, director of finance, chief executive officer, or
chief financial officer) must sign a statement to be included as part
of the data collection form stating that the auditee complied with the
requirements of this part, including that:
(i) The data collection form was prepared in accordance with this
part (and the instructions accompanying the form);
(ii) The reporting package does not include protected personally
identifiable information;
(iii) The information included in its entirety is accurate and
complete; and
(iv) The FAC is authorized to make the reporting package and the
form publicly available on a website.
(3) An auditee that is an Indian Tribe or a tribal organization (as
defined in the Indian Self-Determination, Education and Assistance Act
(ISDEAA), 25 U.S.C. 450b(l)) may opt not to authorize the FAC to make
the reporting package publicly available on a website. To opt-out, an
Indian Tribe or tribal organization must exclude the authorization
described in paragraph (b)(2)(iv) of this section. In these instances,
the Indian Tribe is responsible for submitting the reporting package
directly to any pass-through entities through which it has received a
Federal award and to pass-through
[[Page 69490]]
entities for which the summary schedule of prior audit findings
reported the status of any findings related to those Federal awards
that the pass-through entity provided. Unless restricted by Federal
statute or regulation, if the auditee opts not to authorize
publication, the Indian Tribe must make copies of the reporting package
available for public inspection.
(4) The auditor must complete the applicable data elements of the
data collection form using the information included in the reporting
package described in paragraph (c) of this section. The auditor must
sign a statement to be included as part of the data collection form
stating:
(i) The source of information included in the data collection form;
(ii) The auditor's responsibility for the information;
(iii) The data collection form is not a substitute for the
reporting package described in paragraph (c); and
(iv) The content of the form is limited to the collection of
information prescribed by OMB.
(c) Reporting package. The reporting package must include the
following:
(1) Financial statements and schedule of expenditures of Federal
awards discussed in Sec. 200.510(a) and (b), respectively;
(2) Summary schedule of prior audit findings discussed in Sec.
200.511(b);
(3) Auditor's report(s) discussed in Sec. 200.515; and
(4) Corrective action plan discussed in Sec. 200.511(c).
(d) Submission to FAC. The auditee must electronically submit the
data collection form described in paragraph (b) of this section and the
reporting package described in paragraph (c) of this section to the
FAC.
(e) Requests for management letters issued by the auditor. Auditees
must submit a copy of any management letters issued by the auditor when
requested by a Federal agency or pass-through entity.
(f) Report retention requirements. Auditees must keep a copy of the
data collection form described in paragraph (b) of this section and a
copy of the reporting package described in paragraph (c) on file for
three years from the date of submission to the FAC. Copies of audit
records must be maintained in accordance with Sec. 200.336.
(g) FAC responsibilities. The FAC must make available the reporting
packages received in accordance with paragraph (c) of this section and
Sec. 200.507(c) to the public, except for Indian Tribes exercising the
option in paragraph (b)(3) of this section, and maintain a database of
completed audits, provide appropriate information to Federal agencies,
and follow up with known auditees that the FAC knows have not submitted
the required data collection forms and reporting packages.
(h) Electronic filing. Nothing in this part must preclude
electronic submissions to the FAC in such a manner as may be approved
by OMB.
Federal Agencies
Sec. 200.513 Responsibilities.
(a) Cognizant agency for audit responsibilities. (1) A non-Federal
entity expending more than $50 million a year in Federal awards must
have a cognizant agency for audit. The cognizant agency for audit must
be the Federal agency that provides the largest amount of direct
funding to a non-Federal entity (as listed on the Schedule of
expenditures of Federal awards, see Sec. 200.510(b)) to a non-Federal
entity unless OMB designates a specific cognizant agency for audit.
When the direct funding represents less than 25 percent of the total
expenditures (as direct and subawards) by the non-Federal entity, then
the Federal agency with the predominant amount of total funding is the
designated cognizant agency for audit.
(2) To provide for continuity of cognizance, the determination of
the predominant amount of direct funding must be based upon direct
Federal awards expended in the non-Federal entity's fiscal years ending
in 2019 and every fifth year after that.
(3) Notwithstanding how audit cognizance is determined, a Federal
agency may reassign cognizance to another Federal agency that provides
substantial funding to an auditee if it agrees to be the cognizant
agency for audit. Within 30 calendar days after any reassignment, both
the old and the new cognizant agency for audit must notify the change
to the FAC, the auditee, and, if known, the auditor.
(4) The cognizant agency for audit must:
(i) Provide technical audit advice and assistance to auditees and
auditors.
(ii) Obtain or conduct quality control reviews on selected audits
made by non-Federal auditors and provide the results to other
interested organizations.
(iii) Cooperate and support the Federal agency designated by OMB to
lead a government-wide analysis to assess the quality of single audits.
The government-wide analysis may rely on the current and ongoing
quality control review work performed by Federal agencies, State
auditors, and professional audit associations. This government-wide
audit analysis must be performed at an interval determined by OMB, and
the results must be posted publicly. In providing support to the
government-wide analysis, a Federal agency must provide the following:
(A) An assessment of the extent to which single audits conform to
the requirements, standards, and procedures of this part; and
(B) Recommendations to address audit quality issues, including
recommendations for any changes to this part's requirements, standards,
and procedures.
(iv) Promptly inform the appropriate Federal law enforcement
officials and impacted Federal agencies of any direct reporting by the
auditee or its auditor required by GAGAS, Federal statute, or
regulation.
(v) Advise the community of independent auditors of any noteworthy
or important factual trends related to the quality of audits stemming
from quality control reviews. Significant problems or quality issues
consistently identified through quality control reviews of audit
reports must be referred to appropriate State licensing agencies and
professional bodies.
(vi) Advise the auditor, Federal awarding agencies, and, where
appropriate, the auditee of any deficiencies found in the audits when
the deficiencies require corrective action by the auditor. When advised
of deficiencies, the auditee must work with the auditor to take
corrective action. If corrective action is not taken, the cognizant
agency for audit must notify the auditor, the auditee, and applicable
Federal awarding agencies and pass-through entities of the facts and
make recommendations for follow-up action. Major inadequacies or
repetitive substandard performance by auditors must be referred to
appropriate State licensing agencies and professional bodies for
disciplinary action.
(vii) Coordinate, to the extent practical, audits or reviews made
by or for Federal agencies that are in addition to the audits made
pursuant to this part, so that the additional audits or reviews build
upon, rather than duplicate, audits performed in accordance with this
part.
(viii) Coordinate a management decision for cross-cutting audit
findings that affect the Federal programs of more than one agency when
requested by any Federal awarding agency whose awards are included in
the audit finding of the auditee. Cross-cutting audit finding means an
audit finding where the same underlying condition or issue affects all
Federal awards (including Federal
[[Page 69491]]
awards of more than one Federal agency or pass-through entity).
(ix) Coordinate the audit work and reporting responsibilities among
auditors to achieve the most cost-effective audit.
(x) Provide advice to auditees as to how to handle changes in
fiscal year.
(b) Oversight agency for audit responsibilities. An auditee who
does not have a designated cognizant agency for audit will be under the
general oversight of the Federal agency determined in accordance with
Sec. 200.1 oversight agency for audit. A Federal agency with oversight
for an auditee may reassign oversight to another Federal agency that
agrees to be the oversight agency for audit. Within 30 calendar days
after any reassignment, both the old and the new oversight agency for
audit must provide notice of the change to the FAC, the auditee, and,
if known, the auditor. The oversight agency for audit:
(1) Must provide technical advice and assistance to auditees and
auditors.
(2) May assume all or some of the responsibilities normally
performed by a cognizant agency for audit.
(c) Awarding Federal agency responsibilities. In addition to all
other requirements of this part, the awarding Federal agency must:
(1) Ensure that audits are completed, and reports are received in a
timely manner in accordance with the requirements of this part.
(2) Provide technical advice and assistance to auditees and
auditors.
(3) Follow-up on audit findings to ensure that non-Federal entities
take appropriate and timely corrective action. Follow-up includes:
(i) Issuing a management decision in accordance with Sec. 200.521;
(ii) Monitoring the non-Federal entity's progress implementing a
corrective action;
(iii) Using a cooperative audit resolution approach to improve
Federal program outcomes through better audit resolution, follow-up,
and corrective action, which means the use of audit follow-up
techniques promoting prompt corrective action by improving
communication, fostering collaboration, promoting trust, and developing
an understanding between the Federal agency and the non-Federal entity.
This approach is based upon:
(A) A strong commitment by Federal agency and non-Federal entity
leadership to Federal program integrity;
(B) Federal agencies strengthening partnerships and working
cooperatively with non-Federal entities and their auditors; non-Federal
entities and their auditors working cooperatively with Federal
agencies;
(C) A focus on current conditions and corrective action going
forward;
(D) Federal agencies offering appropriate relief for past
noncompliance when audits show prompt corrective action has occurred;
and
(E) Federal agency leadership sending a clear message that
continued failure to correct conditions identified by audits likely to
cause improper payments, fraud, waste, or abuse is unacceptable and
will result in sanctions.
(iv) Tracking the effectiveness of the Federal agency's follow-up
processes, the effectiveness of single audits in improving non-Federal
entity accountability, and the use of single audits in making Federal
award decisions. The Federal agency should develop a baseline, metrics,
and targets to track, over time, the effectiveness of the Federal
agency's process to follow up on audit findings.
(4) Provide OMB with annual updates to the compliance supplement.
These updates include working with OMB to ensure that the compliance
supplement focuses the auditor on testing the compliance requirements
most likely to cause improper payments, fraud, waste, abuse, or
generate audit findings for which the Federal agency with take action
in accordance with Sec. 200.505. Federal agencies are encouraged to
engage with external audit stakeholders and the Federal agency's Office
of Inspector General's National Single Audit Coordinator (NSAC) prior
to submitting compliance supplement drafts to OMB.
(5) Provide OMB with the name of a single audit accountable
official from among the senior policy officials of the Federal agency.
The accountable official must be:
(i) Responsible for ensuring that the Federal agency fulfills the
requirements of this section and effectively uses the single audit
process to reduce improper payments and improve Federal program
outcomes.
(ii) Accountable for improving the effectiveness of the Federal
agency's single audit processes in accordance with paragraph
(c)(3)(iv).
(iii) Responsible for designating the Federal agency's key
management single audit liaison.
(6) Provide OMB with the name of a key management single audit
liaison. The liaison must:
(i) Serve as the Federal agency's point of contact for the single
audit process within and outside the Federal Government.
(ii) Promote interagency coordination, consistency, and information
sharing. This includes coordinating audit follow-up, identifying high-
risk non-Federal entities, providing input on single audit and follow-
up policy, enhancing the utility of the FAC, and identifying ways to
use single audit results to improve Federal award accountability and
best practices.
(iii) Oversee training for the Federal agency's program management
personnel related to the single audit process.
(iv) Promote the Federal agency's use of a cooperative audit
resolution approach as described in paragraph (c)(3)(iii) of this
section.
(v) Coordinate the Federal agency's audit follow-up processes and
ensure non-Federal entities implement corrective actions for audit
findings.
(vi) Manage the Federal agency's audit follow-up processes for the
cognizant agency for an audit if there are cross-cutting audit
findings. Cross-cutting audit findings means an audit finding where the
same underlying condition or issue affects all Federal awards
(including Federal awards of more than one Federal agency or pass-
through entity).
(vii) Ensure the Federal agency provides OMB with annual updates to
the compliance supplement consistent with the compliance supplement
preparation guide.
(viii) Support the mission of the Federal agency's single audit
accountable official and coordinate with the Federal agency's Office of
Inspector General's National Single Audit Coordinator (NSAC).
Auditors
Sec. 200.514 Scope of audit.
(a) General. The audit must be conducted in accordance with GAGAS.
The audit must also cover the entire operations of the auditee, or, at
the option of the auditee, such audit must include a series of audits
that cover departments, agencies, and other organizational units that
expended or otherwise administered Federal awards during the audit
period. In these instances, the audit must include the financial
statements and schedule of expenditures of Federal awards for each such
department, agency, and other organizational unit, which must be
considered to be a non-Federal entity. The financial statements and
schedule of expenditures of Federal awards must be for the same audit
period.
(b) Financial statements. The auditor must determine whether the
auditee's financial statements are presented fairly
[[Page 69492]]
in all material respects in accordance with generally accepted
accounting principles. The auditor must also determine whether the
schedule of expenditures of Federal awards is stated fairly in all
material respects in relation to the auditee's financial statements as
a whole.
(c) Internal control. (1) The compliance supplement provides
guidance on internal controls over Federal programs based upon the
guidance in Standards for Internal Control in the Federal Government
issued by the Comptroller General of the United States and the Internal
Control-Integrated Framework, issued by the Committee of Sponsoring
Organizations of the Treadway Commission (COSO).
(2) In addition to the requirements of GAGAS, the auditor must
perform procedures to obtain an understanding of internal control over
Federal programs sufficient to plan the audit to support a low assessed
level of control risk of noncompliance for major programs.
(3) Except as provided in paragraph (c)(4) of this section, the
auditor must:
(i) Plan the testing of internal control over compliance for major
programs to support a low assessed level of control risk for assertions
relevant to the compliance requirements for each major program; and
(ii) Perform testing of internal control as planned in paragraph
(c)(3)(i) of this section.
(4) When internal control over some or all of the compliance
requirements for a major program are likely to be ineffective in
preventing or detecting noncompliance, the planning and performing of
testing described in paragraph (c)(3) of this section are not required
for those compliance requirements. However, the auditor must report a
significant deficiency or material weakness in accordance with Sec.
200.516, assess the related control risk at the maximum, and consider
whether additional compliance tests are required because of ineffective
internal control.
(d) Compliance. (1) In addition to the requirements of GAGAS, the
auditor must determine whether the auditee has complied with Federal
statutes, regulations, and the terms and conditions of Federal awards
that may have a direct and material effect on each of its major
programs.
(2) The principal compliance requirements applicable to most
Federal programs and the compliance requirements of the largest Federal
programs are included in the compliance supplement.
(3) For the compliance requirements related to Federal programs
contained in the compliance supplement, an audit of these compliance
requirements will meet the requirements of this part. Where there have
been changes to the compliance requirements, and the changes are not
reflected in the compliance supplement, the auditor must determine the
current compliance requirements and modify the audit procedures
accordingly. For those Federal programs not covered in the compliance
supplement, the auditor must follow the compliance supplement's
guidance for programs not included.
(4) The compliance testing must include tests of transactions and
other auditing procedures necessary to provide the auditor with
sufficient audit evidence to support an opinion on compliance.
(e) Audit follow-up. The auditor must follow up on prior audit
findings regardless of whether a prior audit finding is related to a
major program in the current year. Audit follow-up includes performing
procedures to assess the reasonableness of the summary schedule of
prior audit findings prepared by the auditee in accordance with the
requirements of Sec. 200.511. When the auditor concludes that the
summary schedule of prior audit findings materially misrepresents the
status of any prior audit finding, the auditor must report this
condition as a current-year audit finding.
(f) Data collection form. As required in Sec. 200.512(b)(4), the
auditor must complete and sign specified sections of the data
collection form.
Sec. 200.515 Audit reporting.
The auditor's report(s) may be in the form of either combined or
separate reports. It may be organized differently from the manner
presented in this section. The auditor's report(s) must state that the
audit was conducted in accordance with this part and include the
following:
(a) An opinion (or disclaimer of opinion) from the auditor
determining whether the financial statement(s) of the auditee is
presented fairly in all material respects in accordance with generally
accepted accounting principles (or a special purpose framework such as
cash, modified cash, or regulatory as required by State law). The
auditor must also decide whether the schedule of expenditures of
Federal awards is stated fairly in all material respects in relation to
the auditee's financial statements as a whole.
(b) A report on internal control over financial reporting and
compliance with provisions of laws, regulations, contracts, and award
agreements, noncompliance with which could have a material effect on
the financial statements. This report must describe the scope of
internal control and compliance testing and the results of the tests.
Where applicable, the report must refer to the separate schedule of
findings and questioned costs described in paragraph (d) of this
section.
(c) A report on compliance for each major program and a report on
internal control over compliance. This report must describe the scope
of testing of internal control over compliance and include an opinion
(or disclaimer of opinion) as to whether the auditee complied with
Federal statutes, regulations, and the terms and conditions of Federal
awards that could have a direct and material effect on each major
program and refer to the separate schedule of findings and questioned
costs described in paragraph (d) of this section.
(d) A schedule of findings and questioned costs which must include
the following three components:
(1) A summary of the auditor's results, which must include:
(i) The type of report the auditor issued (unmodified opinion,
qualified opinion, adverse opinion, or disclaimer of opinion) on
whether the audited financial statements were prepared in accordance
with GAAP;
(ii) A statement about whether significant deficiencies or material
weaknesses in internal control were disclosed by the audit of the
financial statements, if applicable;
(iii) A statement as to whether the audit disclosed any
noncompliance that is material to the financial statements of the
auditee;
(iv) A statement about whether significant deficiencies or material
weaknesses in internal control over major programs were disclosed by
the audit, if applicable;
(v) The type of report the auditor issued (unmodified opinion,
qualified opinion, adverse opinion, or disclaimer of opinion) on
compliance for major programs;
(vi) A statement as to whether the audit disclosed any audit
findings that the auditor is required to report under Sec. 200.516(a);
(vii) An identification of major programs by listing each
individual major program; however, in the case of a cluster of
programs, only the cluster name as shown on the schedule of
expenditures of Federal Awards is required for a cluster of programs;
(viii) The dollar threshold used to distinguish between Type A and
Type B programs, as described in Sec. 200.518(b)(1) or (3) when a
[[Page 69493]]
recalculation of the Type A threshold is required for large loan or
loan guarantees; and
(ix) A statement as to whether the auditee qualified as a low-risk
auditee underSec. 200.520.
(2) Findings relating to the financial statements required to be
reported in accordance with GAGAS.
(3) Findings and questioned costs for Federal awards which must
include audit findings as defined in Sec. 200.516(a) and be reported
in the following manner:
(i) Audit findings (for example, internal control findings,
compliance findings, questioned costs, or fraud) that relate to the
same issue must be presented as a single audit finding. Where
practical, audit findings should be organized by Federal agency or
pass-through entity.
(ii) Audit findings that relate to both the financial statements
(paragraph (d)(2) of this section) and Federal awards (this paragraph
(d)(3)) must be reported in both sections of the schedule. However, the
reporting in one section of the schedule may be in summary form and
reference a detailed reporting in the other section.
(e) Nothing in this part precludes combining the reporting required
by this section with the reporting required by Sec. 200.512(b) when
allowed by GAGAS and Appendix X of this part.
Sec. 200.516 Audit findings.
(a) Audit findings reported. The auditor must report the following
as an audit finding in the schedule of findings and questioned costs:
(1) Significant deficiencies and material weaknesses in internal
control over major programs. The auditor's determination of whether a
deficiency in internal control is a significant deficiency or a
material weakness for the purpose of reporting an audit finding is in
relation to a type of compliance requirement for a major program
identified in the compliance supplement.
(2) Material noncompliance with the provisions of Federal statutes,
regulations, or the terms and conditions of Federal awards related to a
major program. The auditor's determination of whether noncompliance
with the provisions of Federal statutes, regulations, or the terms and
conditions of Federal awards is material for the purpose of reporting
an audit finding is in relation to a type of compliance requirement for
a major program identified in the compliance supplement.
(3) Known questioned costs when either known or likely questioned
costs are greater than $25,000 for a type of compliance requirement for
a major program. When reporting questioned costs, the auditor must
include information to provide proper perspective for evaluating the
prevalence and consequences of the questioned costs.
(4) Known questioned costs greater than $25,000 for a Federal
program that is not audited as a major program. Except for audit
follow-up, the auditor is not required to perform audit procedures for
such a Federal program; therefore, the auditor will normally not find
questioned costs for a program that is not audited as a major program.
However, if the auditor does become aware of questioned costs for a
Federal program that is not audited as a major program (for example, as
part of audit follow-up or other audit procedures) and the known
questioned costs are greater than $25,000, the auditor must report this
as an audit finding.
(5) The circumstances concerning why the auditor's report on
compliance for each major program is other than an unmodified opinion.
This must be included unless the circumstances are otherwise reported
as audit findings in the schedule of findings and questioned costs.
(6) Known or likely fraud affecting a Federal award, unless the
fraud is otherwise reported as an audit finding in the schedule of
findings and questioned costs. This paragraph does not require the
auditor to publicly report information that could compromise
investigative or legal proceedings or to make an additional reporting
when the auditor confirms that the fraud was reported outside the
auditor's reports under the direct reporting requirements of GAGAS.
(7) Instances where the results of audit follow-up procedures
disclosed that the summary schedule of prior audit findings prepared by
the auditee in accordance with Sec. 200.511(b) materially
misrepresents the status of any prior audit finding.
(b) Audit finding detail and clarity. Audit findings must be
presented with sufficient detail and clarity for both the auditee to
prepare a corrective action plan and take corrective action and for
Federal agencies or pass-through-through entities to arrive at a
management decision. As applicable, the following information must be
included in audit findings:
(1) The Federal program and specific Federal award identification,
including the Assistance Listings title and number, Federal award
identification number and year, the name of the Federal agency, and
name of the applicable pass-through entity. When information, such as
the Assistance Listings title and number or Federal award
identification number, is unavailable, the auditor must provide the
best information available to describe the Federal award.
(2) The criteria or specific requirement for the audit finding (for
example, the specific Federal statute, regulation, or term and
condition of the Federal award). The criteria or specific requirement
provides a context for evaluating evidence and understanding findings.
As a result, the criteria should generally identify the required or
desired state or expectation with respect to the program or operation.
(3) The condition found, including facts that support the
deficiency identified in the audit finding.
(4) A statement of cause that identifies the reason or explanation
for the condition or the factors responsible for the difference between
the situation that exists (condition) and the required or desired state
(criteria), which may also serve as a basis for recommendations for
corrective action.
(5) The possible asserted effect to provide sufficient information
to the auditee and Federal agency or pass-through entity to permit them
to determine the cause and effect to facilitate prompt and proper
corrective action. A statement of the effect or potential effect should
provide a clear, logical link to establish the impact or potential
impact of the difference between the condition and the criteria.
(6) The identification of known questioned costs, by applicable
Assistance Listing number(s) and Federal award identification
number(s), and how these questioned costs were computed.
(7) When there are known questioned costs but the dollar amount is
undetermined or not reported, a description of why the dollar amount
was undetermined or otherwise could not be reported.
(8) Information to provide proper perspective for evaluating the
prevalence and consequences of the audit finding. For example, whether
the audit finding represents an isolated instance or a systemic
problem. Where appropriate, instances identified must be related to the
universe and the number of cases examined and be quantified in terms of
dollar value. In addition, the audit should indicate whether the
sampling was a statistically valid sample.
(9) The identification of whether the audit finding is a repeat of
a finding in the immediately prior audit. The audit must identify the
applicable prior year
[[Page 69494]]
audit finding numbers in these instances.
(10) Recommendations to prevent future occurrences of the
deficiency identified in the audit finding.
(11) Views of the responsible officials of the auditee.
(c) Reference numbers. Each audit finding in the schedule of
findings and questioned costs must include a reference number in the
format meeting the requirements of the data collection form submission
(see Sec. 200.512(b)).
Sec. 200.517 Audit documentation.
(a) Retention of audit documentation. The auditor must retain audit
documentation and reports for a minimum of three years after the date
of issuance of the auditor's report(s) to the auditee. The cognizant
agency for audit, oversight agency for audit, cognizant agency for
indirect costs, or pass-through entity may extend the retention period
by providing written notification to the auditor. When the auditor is
aware that the Federal agency, pass-through entity, or auditee is
contesting an audit finding, the auditor must contact the parties
contesting the audit finding for guidance prior to the destruction of
the audit documentation and reports.
(b) Access to audit documentation. Audit documentation must be made
available upon request to the cognizant or oversight agency for audit
or its designee, cognizant agency for indirect cost, a Federal agency,
or GAO at the completion of the audit, as part of a quality review, to
resolve audit findings, or to carry out oversight responsibilities
consistent with the purposes of this part. Access to audit
documentation includes the right of Federal agencies to obtain copies
of audit documentation as is reasonable and necessary.
Sec. 200.518 Major program determination.
(a) General. The auditor must use a risk-based approach to
determine which Federal programs are major programs. This risk-based
approach must consider current and prior audit experience, oversight by
Federal agencies and pass-through entities, and the inherent risk of
the Federal program. The process described in paragraphs (b) through
(h) of this section must be followed.
(b) Step one. (1) The auditor must identify and label the larger
Federal programs as Type A programs. Type A programs are defined as
Federal programs with Federal awards expended during the audit period
exceeding the levels outlined in the table 1:
Table to Paragraph (b)(1)
------------------------------------------------------------------------
Total Federal awards expended Type A threshold
------------------------------------------------------------------------
Equal to or exceed $1,000,000 but less $750,000.
than or equal to $25 million.
Exceed $25 million but less than or equal Total Federal awards
to $100 million. expended times .03.
Exceed $100 million but less than or equal $3 million.
to $1 billion.
Exceed $1 billion but less than or equal Total Federal awards
to $10 billion. expended times .003.
Exceed $10 billion but less than or equal $30 million.
to $20 billion.
Exceed $20 billion........................ Total Federal awards
expended times .0015.
------------------------------------------------------------------------
(2) Federal programs not labeled Type A under paragraph (b)(1) of
this section must be labeled Type B programs.
(3) Including large loans and loan guarantees (loans) must not
result in the exclusion of other programs as Type A programs. A Federal
program providing loans is considered a large loan program when it
exceeds four times the largest non-loan program. For these large loan
programs, the auditor must consider the Federal program as a Type A
program and exclude its values in determining other Type A programs.
This recalculation of the Type A program is performed after removing
the total of all large loan programs. For this paragraph, a program is
only considered a Federal program providing loans if the value of
Federal awards expended for loans within the program comprises 50
percent or more of the total Federal awards expended for the program. A
cluster of programs is treated as one program, and the value of Federal
awards expended under a loan program is determined as described in
Sec. 200.502.
(4) For biennial audits (see Sec. 200.504), the determination of
Type A and Type B programs must be based on the Federal awards expended
during the two-year audit period.
(c) Step two. (1) The auditor must identify Type A programs that
are low-risk. In making this determination, the auditor must consider
whether the requirements in Sec. 200.519(c), the results of audit
follow-up, or any changes in personnel or systems affecting the program
indicate significantly increased risk and therefore preclude the
program from being low-risk. For a Type A program to be considered low-
risk, it must have been audited as a major program in at least one of
the two most recent audit periods (in the most recent audit period in
the case of a biennial audit), and, in the most recent audit period,
the program must not have had:
(i) Internal control deficiencies that were identified as material
weaknesses in the auditor's report on internal control for major
programs as required under Sec. 200.515(c);
(ii) A modified opinion on the program in the auditor's report on
major programs as required under Sec. 200.515(c); or
(iii) Known or likely questioned costs that exceed five percent of
the total Federal awards expended for the program.
(2) Notwithstanding paragraph (c)(1) of this section, OMB may
approve a Federal agency request that a Type A program not be
considered low-risk for a specific recipient. For example, it may be
necessary for a large Type A program to be audited as a major program
each year for a particular recipient for the Federal agency to comply
with 31 U.S.C. 3515. The Federal agency must notify the auditee and, if
known, the auditor of OMB's approval at least 180 calendar days prior
to the end of the fiscal year to be audited.
(d) Step three. (1) The auditor must identify high-risk Type B
programs using professional judgment and the criteria in Sec. 200.519.
However, the auditor is not required to identify more high-risk Type B
programs than at least one-fourth of the number of low-risk Type A
programs identified as low-risk under step two. Except for known
material weakness in internal control or compliance problems as
discussed in Sec. 200.519(b)(1), (2), and (c)(1), a single criterion
in risk would rarely cause a Type B program to be considered high-risk.
When identifying which Type B programs to assess for risk, the auditor
is encouraged to use an approach that provides an opportunity for
different high-risk Type B programs to be audited as major programs
over a period of time.
(2) The auditor is not expected to perform risk assessments on
relatively small Federal programs. Therefore, the auditor is only
required to perform risk assessments on Type B programs that
[[Page 69495]]
exceed 25 percent (0.25) of the Type A threshold determined in step
one.
(e) Step four. At a minimum, the auditor must audit all of the
following as major programs:
(1) All Type A programs not identified as low-risk under step two.
(2) All Type B programs identified as high-risk under step three.
(3) Additional programs as necessary to comply with the percentage
of coverage rule described in paragraph (f). This rule may require the
auditor to audit more programs as major programs than the number of
Type A programs.
(f) Percentage of coverage rule. When the auditee meets the
criteria in Sec. 200.520, the auditor only needs to audit the major
programs identified in paragraphs (e)(1) and (2) of this section and
such additional Federal programs with Federal awards expended that, in
the aggregate, all major programs encompass at least 20 percent (0.20)
of total Federal awards expended. Otherwise, the auditor must audit the
major programs identified in paragraphs (e)(1) and (2) of this section
and such additional Federal programs with Federal awards expended that,
in the aggregate, all major programs encompass at least 40 percent
(0.40) of total Federal awards expended.
(g) Documentation of risk. The auditor must include in the audit
documentation the risk analysis used for determining major programs.
(h) Auditor's judgment. The auditor's judgment in applying the
risk-based approach to determine major programs must be presumed
correct when the determination was performed and documented in
accordance with this part. Challenges by a Federal agency or pass-
through entity must only be for clearly improper use of the
requirements in this part. However, a Federal agency or pass-through
entity may provide auditors guidance about the risk of a particular
Federal program. The auditor must consider this guidance in determining
major programs in audits not yet completed.
Sec. 200.519 Criteria for Federal program risk.
(a) General. The auditor's determination should be based on an
overall evaluation of the risk of noncompliance occurring that could be
material to the Federal program. The auditor must consider criteria,
such as those described in paragraphs (b), (c), and (d) of this
section, to identify risk in Federal programs. Also, as part of the
risk analysis, the auditor may wish to discuss a particular Federal
program with auditee management and the Federal agency or pass-through
entity.
(b) Current and prior audit experience. (1) Weaknesses in internal
control over Federal programs would indicate higher risk. Therefore,
consideration should be given to the control environment over Federal
programs. This includes considering factors such as the expectation of
management's adherence to Federal statutes, regulations, and the terms
and conditions of Federal awards, and the competence and experience of
personnel who administer the Federal programs.
(i) A Federal program administered under multiple internal control
structures may have higher risk. When assessing risk in a large single
audit, the auditor must consider whether weaknesses are isolated in a
single operating unit (for example, one college campus) or pervasive
throughout the entity.
(ii) A weak system for monitoring subrecipients would indicate
higher risk when significant parts of a Federal program are passed to
subrecipients through subawards.
(2) Prior audit findings would indicate higher risk, especially
when the situations identified in the audit findings could
significantly impact a Federal program or have not been corrected.
(3) Federal programs not recently audited as major programs may be
of higher risk than those recently audited as major programs without
audit findings.
(c) Oversight exercised by Federal agencies and pass-through
entities. (1) The oversight exercised by Federal agencies or pass-
through-through entities may be used to assess risk. For example,
recent monitoring or other reviews performed by an oversight entity
that disclosed no significant problems would indicate lower risk,
whereas monitoring that disclosed significant problems would indicate
higher risk.
(2) With the concurrence of OMB, a Federal agency may identify
Federal programs that are higher risk. OMB will identify these Federal
programs in the compliance supplement.
(d) Inherent risk of the Federal program. (1) The nature of a
Federal program may indicate risk. Consideration should be given to the
complexity of the program and the extent to which the Federal program
contracts for goods and services. For example, Federal programs that
disburse funds through third-party contracts or have eligibility
criteria may be higher risk. Federal programs primarily involving staff
payroll costs may be at high risk for noncompliance with the
requirements of Sec. 200.430 but otherwise be at low risk.
(2) The phase of a Federal program in its lifecycle at the Federal
agency may indicate risk. For example, a new Federal program with new
or interim regulations may have higher risk than an established program
with time-tested regulations. Also, significant changes in Federal
programs, statutes, regulations, or the terms and conditions of Federal
awards may increase risk.
(3) The phase of a Federal program in its lifecycle at the auditee
may indicate risk. For example, during the first and last years that an
auditee participates in a Federal program, the risk may be higher due
to the start-up or closeout of program activities and staff.
(4) Type B programs with larger Federal awards expended would be of
higher risk than programs with substantially smaller Federal awards
expended.
Sec. 200.520 Criteria for a low-risk auditee.
An auditee that meets all of the following conditions for each of
the preceding two audit periods must qualify as a low-risk auditee and
be eligible for reduced audit coverage in accordance with Sec.
200.518.
(a) Single audits were performed on an annual basis in accordance
with the provisions of this subpart, including submitting the data
collection form and the reporting package to the FAC within the
timeframe specified in Sec. 200.512. A non-Federal entity that has
biennial audits does not qualify as a low-risk auditee.
(b) The auditor issued unmodified opinions on both the schedule of
expenditures of Federal awards and whether the financial statements
were prepared in accordance with GAAP (or a basis of accounting
required by State law).
(c) No internal control deficiencies were identified as material
weaknesses under the requirements of GAGAS.
(d) The auditor did not report a substantial doubt about the
auditee's ability to continue as a going concern.
(e) None of the Federal programs had audit findings from any of the
following in either of the preceding two audit periods in which they
were classified as Type A programs:
(1) Internal control deficiencies that were identified as material
weaknesses in the auditor's report on internal control for major
programs as required under Sec. 200.515(c);
(2) A modified opinion on a major program in the auditor's report
on major programs as required under Sec. 200.515(c); or
[[Page 69496]]
(3) Known or likely questioned costs that exceeded five percent
(.05) of the total Federal awards expended for a Type A program during
the audit period.
Management Decisions
Sec. 200.521 Management decisions.
(a) General. The management decision must clearly state whether or
not the audit finding is sustained, the reasons for the decision, and
the expected auditee action to repay disallowed costs, make financial
adjustments or take other action. If the auditee has not completed
corrective action, a timetable for follow-up should be given. Prior to
issuing the management decision, the Federal agency or pass-through
entity may request additional information or documentation from the
auditee, including a request for auditor assurance related to the
documentation, as a way of mitigating disallowed costs. The management
decision should describe any appeal process available to the auditee.
While not required, the Federal agency or pass-through entity may also
issue a management decision on findings relating to the financial
statements, which are required to be reported in accordance with GAGAS.
(b) Federal agency. The cognizant agency for audit is responsible
for coordinating a management decision for audit findings that affect
the programs of more than one Federal agency (see Sec.
200.513(a)(4)(vii)). The awarding Federal agency is responsible for
issuing a management decision for audit findings that affect the
Federal awards it makes to a non-Federal entity (see Sec.
200.513(c)(3)(i)).
(c) Pass-through entity. The pass-through entity is responsible for
issuing a management decision for audit findings that affect subawards
it issues to subrecipients under a Federal award (see Sec.
200.332(d)).
(d) Time requirements. The Federal agency or pass-through entity
responsible for issuing a management decision must do so within six
months of the FAC's acceptance of the audit report. The auditee must
initiate and proceed with corrective action as rapidly as possible and
corrective action should begin no later than upon receipt of the audit
report.
(e) Reference numbers. Management decisions must include the
reference numbers the auditor assigned to each audit finding in
accordance with Sec. 200.516(c).
0
12. Revise appendix I to part 200 to read as follows:
Appendix I to Part 200--Full Text of Notice of Funding Opportunity
(a) General Requirements.
(1) In developing a notice of funding opportunity (NOFO),
Federal agencies must:
(i) Be concise and use plain language per the guidance at
PlainLanguage.gov wherever possible.
(ii) For electronic NOFOs and other information about them,
comply with Section 508 of the Rehabilitation Act of 1973 (29 U.S.C.
794d).
(2) Federal agencies may:
(i) Link to standard content to include required information
rather than including the full language in the NOFO. The NOFO should
make clear if linked information is critical--for example, standard
terms and conditions, administrative and national policy
requirements, and standard templates.
(ii) Include links to relevant regulations and other sources.
(iii) Use cross-references between the sections, including
hyperlinks in electronic versions.
(3) Required Consistency. Potential applicants must be able to
find similar information across all Federal NOFOs. To that end,
Federal agencies must include the same or similar section headings
and a table of contents with at least these sections:
(i) Basic Information
(ii) Eligibility
(iii) Program Description
(iv) Application Contents and Format
(v) Submission Requirements and Deadlines
(vi) Application Review Information
(vii) Award Notices
(viii) Post-Award Requirements and Administration
(b) Required Sections and Information.
As required below, the Federal agency must include the following
sections and information in the text of a NOFO and a table of
contents.
(1) Basic Information.
This section provides sufficient information to help an
applicant make an informed decision about whether to submit a
proposal.
(i) This section must include the following:
(A) Federal Agency Name.
(B) Funding Opportunity Title.
(C) Announcement Type (whether the funding opportunity is the
initial announcement or a modification of a previously announced
opportunity).
(D) Funding Opportunity Number (required, if the Federal agency
has assigned a number to the funding opportunity announcement).
(E) Assistance Listing Number(s).
(F) Funding Details. The total amount of funding that the
Federal agency expects to award, the anticipated number of awards,
and the expected dollar values of individual awards, which may be a
range.
(G) Key Dates. Key dates include due dates for submitting
applications or Executive Order 12372 submissions, as well as for
any letters of intent or preapplications. For any announcement
issued before a program's application materials are available, key
dates also include the date on which those materials will be
released; and any other additional information, as deemed applicable
by the Federal agency. If possible, the Federal agency should
provide an anticipated award date. If the NOFO is evaluated on a
``rolling'' basis, the Federal agency should provide an estimate of
the time needed to process an application and notify the applicant
of the Federal agency's decision.
(H) Executive Summary. A brief description that is written in
plain language and summarizes the goals and objectives of the
program, the target audience, and eligible recipients. The text of
the executive summary should not exceed 500 words.
(I) Agency contact information.
(ii) This section could include the following:
(A) The amount of funding per Federal award, on average,
experienced in previous years.
(B) Whether this is a new program or a one-time initiative.
(2) Eligibility.
This section addresses the factors that determine applicant or
application eligibility.
(i) Eligible Applicants. This subsection must identify the
following:
(A) A complete and specific list of entity types eligible to
apply.
(B) Any additional restrictions on eligibility beyond the type
of entity.
(C) Eligibility factors for the principal investigator or
project director, if any.
(D) Criteria that would make any particular projects ineligible.
(E) A reference to any funding restriction elsewhere in the NOFO
that could affect an applicant's or project's eligibility.
(F) A reference or link to any other factors that would
disqualify an applicant or application, such as the responsiveness
criteria in 6a.
(G) Any limit on the number of applications an applicant may
submit under the announcement. Make clear whether the limitation is
on the submitting organization, individual investigator or program
director, or both.
(ii) Cost Sharing. This subsection must state:
(A) Whether there is required cost sharing. This statement must
be clear that not committing to the required cost sharing will make
the application ineligible. If cost sharing is not required, the
announcement must say so.
(B) An explanation of the calculation for the required cost
sharing. Required cost sharing may be a certain percentage or amount
or in the form of contributions of specified items or activities
(for example, provision of equipment).
(C) Any restrictions on the types of cost, such as in-kind
contributions, acceptable as cost sharing.
(D) Any requirement to commit to cost sharing. This section
should refer to the appropriate portions of section D stating any
pre-award requirements for the submission of letters or other
documentation to verify commitments to meet cost-sharing
requirements if a Federal award is made.
(3) Program Description.
This section contains the full program description of the
funding opportunity.
(i) This section must include the following:
[[Page 69497]]
(A) The general purpose of the funding and what it is expected
to achieve for the public good.
(B) The Federal agency's funding priorities or focus areas, if
any.
(C) Program goals and objectives.
(D) A description of how the award will contribute to achieving
the program's goals and objectives.
(E) The expected performance goals, indicators, targets,
baseline data, data collection, and other outcomes the Federal
agency expects recipients to achieve.
(F) For cooperative agreements, the ``substantial involvement''
that the Federal agency expects to have or should reference where
the potential applicant can find that information.
(G) Information on program specific unallowable costs so that
the applicant can develop an application and budget consistent with
program requirements and any limits on indirect costs.
(H) Any eligibility criteria for beneficiaries or program
participants other than Federal award recipients.
(I) Citations for authorizing statutes and regulations for the
funding opportunity.
(ii) This section could also include the following:
(A) Any program history, such as whether it is a new program or
a new or changed area of program emphasis.
(B) Examples of successful projects funded in the past.
(C) Other information the Federal agency finds necessary.
(4) Application Contents and Format.
This subsection must identify the required content of an
application and the forms or formats an applicant must use. If any
requirements are stated elsewhere, this section should refer to
where those requirements may be found. This section also should
include required forms or formats as part of the announcement or
state where the applicant may obtain them.
(i) This subsection must specifically address content and form
or format requirements for:
(A) Pre-applications, letters of intent, or white papers are
required or encouraged if they apply.
(B) The application as a whole.
(C) Component pieces of the application.
(D) Information that successful applicants must submit after
notification of intent to make a Federal award but prior to a
Federal award. For example, this could include evidence of
compliance with requirements relating to human subjects or
information needed to comply with the National Environmental Policy
Act (NEPA) (42 U.S.C. 4321 et seq.).
(ii) Within each of the categories above, this subsection must
include, where relevant:
(A) Limitations on page numbers.
(B) Formatting requirements, including font and font size,
margins, paper size, and color limitations.
(C) Any requirements for file naming, file size limitations, or
file format such as PDF.
(D) The number of copies required if paper submissions are
allowed.
(E) The sequence required for application sections or
components.
(F) Signature requirements, including those for electronic
submissions.
(G) Any requirements for third-party information such as
references, letters of support, or letters of commitment to the
project or to contribute to cost sharing.
(H) A reference to any requirements in Section 6 to provide
documentation to support an eligibility determination, such as proof
of 501(c)(3) status or an authorizing tribal resolution.
(I) Instructions needed to develop the narrative portions of the
application. Include any requirements for its order, format, or
required headings.
(J) If applicable, the need to identify proprietary information.
Include how to do so and how the Federal agency will handle it.
(5) Submission Requirements and Deadlines.
(i) Address to Request Application Package. This subsection must
include the following:
(A) How to get application forms, kits, or other materials
needed to apply. If the announcement contains everything needed,
this section needs only say so. If not, the guidance must include:
(1) An internet address where the materials can be accessed.
(2) An email address.
(3) A U.S. Postal Service mailing address.
(4) Telephone number.
(5) Telephone Device for the Deaf (TDD), Text Telephone (TTY)
number, or other appropriate telecommunication relay service.
(ii) Unique entity identifier and System for Award Management
(SAM.gov). This subsection must state the requirements for unique
entity identifiers and registration in SAM.gov. It must include the
following:
(A) Each applicant must:
(1) Be registered in SAM.gov before submitting its application;
(2) Provide a valid unique entity identifier in its application;
and
(3) Continue to maintain an active registration in SAM.gov with
current information at all times during which it has an active
Federal award or an application or plan under consideration by a
Federal agency.
(B) If individuals are eligible to apply, they are exempt from
this requirement under 2 CFR 25.110(b).
(C) If the Federal agency exempts any applicants from this
requirement under 2 CFR 25.110(c) or (d), a statement to that
effect.
(iii) Submission Instructions. This subsection addresses how the
applicant will submit the application. It must include the
following:
(A) Actions needed prior to applying:
(1) Instructions on any registrations required to access
electronic submission systems or links to them. Where possible,
provide the expected time frames needed to complete the registration
process.
(B) The methods for submitting the application:
(1) Whether the applicant must submit in electronic or paper
form or whether the applicant has an option. Applicants should not
be required to submit in more than one format.
(2) Instructions on how to submit electronically or links to
them. Must include the URL to the electronic submission system and
information on or links to information about the system or software
requirements needed by the system.
(3) If the Federal agency allows paper submissions, the process
used to approve this option if it is not automatically allowed.
(4) If the Federal agency allows paper submissions, the method
for submitting the application. This information must include a
postal address and ``care of'' information needed to route the
application to the appropriate person, office, or email address, if
the Federal agency allows such submissions.
(C) If applicable, this subsection also must say how applicants
must submit pre-applications, letters of intent, third-party
information, or other information required before the award. It must
include the following:
(1) Instructions on how to submit electronically or links to
them.
(2) Whether the applicant must submit in electronic or paper
form or whether the applicant has an option.
(3) If the Federal agency allows paper submissions, the method
for submitting the required information. This information must
include a postal address and ``care of'' information needed to route
the application to the appropriate person, office, or email address.
(D) This subsection must also include what to do in the event of
system problems and a point of contact who will be available if the
applicant experiences technical difficulties.
(iv) Submission Dates and Times. This subsection must include
due dates and times for all submissions. If they are different for
electronic and paper submissions, be clear about the differences.
This includes the following:
(A) Full applications.
(B) Any preliminary submissions, such as letters of intent,
white papers, or pre-applications.
(C) Any other submissions required before Federal award separate
from the full application.
(D) If the funding opportunity is a general announcement that is
open for a period of time with no specific due dates for
applications, this section should say so.
(v) Intergovernmental Review. This section must include the
following:
(A) Whether or not the funding opportunity is subject to
Executive Order 12372, ``Intergovernmental Review of Federal
Programs''.
(B) If it is applicable, include the following:
(1) A short description of this requirement.
(2) Where applicants can find their State's Single Point of
Contact, learn whether their State has an intergovernmental review
process, and if so, get information on their State's process. The
list of SPOCs is on the Office of Management and Budget's website.
(6) Application Review Information.
(i) Responsiveness Review. This section includes information on
the criteria that make an application or project ineligible. These
are sometimes referred to as
[[Page 69498]]
``responsiveness'' criteria, ``go-no-go'' criteria, or ``threshold''
criteria. Federal agencies may change the title of this section as
appropriate. This section must include the following:
(A) A brief understanding of the Federal agency responsiveness
review process.
(B) A list and enough detail to understand the criteria or
disqualifying factors to be reviewed.
(C) A reference to the regulation or requirement that describes
the restriction, if applicable. For example, if entities that have
been found to be in violation of a particular Federal statute are
ineligible, say so.
(ii) Review Criteria. This section must address the review
criteria that the Federal agency will use to evaluate applications
for merit. This information includes the merit and other review
criteria evaluators will use to judge applications, including any
statutory, regulatory, or other preferences that will be applied in
the review process. These criteria are distinct from eligibility
criteria that are addressed before an application is accepted for
review and any program policy or other factors that are applied
during the selection process, after the review process is completed.
The intent is to make the application process transparent so
applicants can make informed decisions when preparing their
applications to maximize the fairness of the process.
(A) This section must include the following:
(1) A clear description of each criterion and sub-criterion
used.
(2) If criteria vary in importance, the relative percentages,
weights, or other means used to distinguish between them.
(3) For statutory, regulatory, or other preferences, an
explanation of those preferences with an explicit indication of
their effect, for example, if they result in additional points being
assigned.
(4) How an applicant's proposed cost sharing will be considered
in the review process if it is not an eligibility criterion in
Section 2b. For example, to assign a certain number of additional
points to applicants who offer cost sharing or to break ties among
applications with equivalent scores after evaluation against all
other factors. If cost sharing will not be considered in the
evaluation, the announcement should say so. Do not include
statements that cost sharing is encouraged without providing clarity
about what that means.
(5) The relevant information if the Federal agency permits
applicants to nominate reviewers of their applications or suggest
those, they feel may be inappropriate due to a conflict of interest.
(B) This section could include the following:
(1) The types of people responsible for evaluation against the
merit criteria. For example, peers external to the Federal agency or
Federal agency personnel.
(2) The number of people on an evaluation panel and how it
operates, how reviewers are selected, reviewer qualifications, and
how conflicts of interest are avoided.
(iii) Review and Selection Process.
This section may vary in the level of detail provided.
(A) It must include the following:
(1) Any program policy, factors, or elements that the selecting
official may use in selecting applications for the award. For
example, geographical dispersion, program balance, or diversity.
(2) A brief description of the merit review process, including
how the Federal agency uses merit review outcomes in final decision-
making. For example, whether they are advisory only.
(B) It could also include the following:
(1) Who makes the final selections for awards.
(2) Any multi-phase review methods. For example, an external
panel that advises on, makes, or approves final recommendations to
the deciding official.
(iv) Risk Review.
(A) This section must include the following:
(1) A brief description of the factors used for the Federal
agency's risk review as required by Sec. 200.206.
(2) If the Federal agency expects that any award under the NOFO
will be more than the simplified acquisition threshold during its
period of performance, include the following information:
(i) That before making a Federal award with a total amount of
Federal share greater than the simplified acquisition threshold, the
Federal agency must review and consider any information about the
applicant that is in the responsibility/qualification records
available in SAM.gov (see 41 U.S.C. 2313).
(ii) That an applicant can review and comment on any information
in the responsibility/qualification records available in SAM.gov.
(iii) That before making decisions in the risk review required
by Sec. 200.206 the Federal agency will consider any comments by
the applicant, along with information available in the
responsibility/qualification records in SAM.gov.
(7) Award Notices.
This section must address what a successful applicant can expect
to receive following selection.
(i) It must include the following:
(A) If the Federal agency's practice is to provide a separate
notice stating that an application has been selected before it makes
the Federal award, indicate that the letter is not an authorization
to begin performance and that the Federal award is the authorizing
document.
(B) If pre-award costs are allowed, beginning performance is at
the applicant's own risk.
(C) This section should indicate that the notice of Federal
award signed by the grants officer, or equivalent, is the official
document that obligates funds, and whether it is provided through
postal mail or by electronic means and to whom.
(D) The timing, form, and content of notifications to
unsuccessful applicants. See also Sec. 200.211.
(8) Post-Award Requirements and Administration.
(i) Administrative and National Policy Requirements. Providing
information on administrative and policy requirements lets a
potential applicant identify any requirements with which it would
have difficulty complying. This section must include the following:
(A) A statement related to the ``general'' terms and conditions
of the award, including requirements that the Federal agency
normally includes.
(B) Any relevant special terms and conditions.
(C) Any special requirements that could apply to specific awards
after the review of applications and other information based on the
particular circumstances of the effort to be supported. For example,
if human subjects were to be involved or if some situations may
justify special terms on intellectual property, data sharing, or
security requirements.
(D) As in other sections, the announcement need not include all
terms and conditions of the award but may refer to documents with
details on terms and conditions.
(ii) Reporting.
This section includes information needed to understand the post-
award reporting requirements. Highlight any special reporting
requirements for Federal awards under this funding opportunity that
differ from what the Federal agency's Federal awards usually
require. For example, differences in report type, frequency, form,
format, or circumstances for use. This section must include the
following:
(A) The type of reporting required, such as financial or
performance.
(B) The reporting frequency.
(C) The means of submission, such as paper or electronic.
(D) References to all relevant requirements, such as those at 2
CFR 180.335 and 180.350.
(E) If the Federal share of any Federal award may include more
than $500,000 over the period of performance, this section must
inform potential applicants about the post-award reporting
requirements reflected in appendix XII to this part.
(9) Other Information--Optional.
This section may include any additional information to help
potential applicants. For example, the section could include the
following:
(i) Related programs or other upcoming or ongoing Federal agency
funding opportunities for similar activities.
(ii) Current internet addresses for Federal agency websites that
may be useful to an applicant in understanding the program.
(iii) Routine notices to applicants. For example, the Federal
Government is not obligated to make any Federal award as a result of
the announcement, or only grants officers can bind the Federal
Government to the expenditure of funds.
0
13. Amend appendix III to part 200 by revising the heading of section
A.1. and paragraph C.2 to read as follows:
Appendix III to Part 200--Indirect (F&A) Costs Identification and
Assignment, and Rate Determination for Institutions of Higher Education
(IHEs)
* * * * *
A. General
* * * * *
[[Page 69499]]
1. Major Functions/Activities of an IHE
* * * * *
C. Determination and Application of Indirect (F&A) Cost Rate or
Rates
* * * * *
2. The Distribution Basis
Indirect (F&A) costs must be distributed to applicable Federal
awards and other benefitting activities within each major function
(see section A.1) on the basis of modified total direct costs
(MTDC), consisting of all salaries and wages, fringe benefits,
materials and supplies, services, travel, and up to the first
$50,000 of each subaward (regardless of the period covered by the
subaward). MTDC is defined in Sec. 200.1. For this purpose, an
indirect (F&A) cost rate should be determined for each of the
separate indirect (F&A) cost pools developed pursuant to subsection
1. The rate in each case should be stated as the percentage which
the amount of the particular indirect (F&A) cost pool is of the
modified total direct costs identified with such pool.
0
14. Amend appendix IV to part 200 by revising paragraphs B.2.c. and
B.4.a.iii to read as follows:
Appendix IV to Part 200--Indirect (F&A) Costs Identification and
Assignment, and Rate Determination for Nonprofit Organizations
* * * * *
B. Allocation of Indirect Costs and Determination of Indirect Cost
Rates
* * * * *
2. * * *
c. The distribution base may be total direct costs (excluding
capital expenditures and other distorting items, such as subawards
for $50,000 or more), direct salaries and wages, or other base which
results in an equitable distribution. The distribution base must
exclude participant support costs as defined in Sec. 200.1.
* * * * *
4. * * *
a. * * *
(iii) other direct functions (including projects performed under
Federal awards). Joint costs, such as depreciation, rental costs,
operation and maintenance of facilities, telephone expenses,
information technology and the like are prorated individually as
direct costs to each category and to each Federal award or other
activity using a base most appropriate to the particular cost being
prorated.
0
15. Amend appendix VII to part 200 by
0
a. Revising paragraphs C.2.c.(1), C.3.e.(1), and D.1.b.;
0
b. Redesignating paragraphs D.1.c. and D.1.d. as D.1.d. and D.1.e; and
0
c. Adding a new paragraph D.1.c.
The revisions and addition read as follows:
C. Allocation of Indirect Costs and Determination of Indirect Cost
Rates
* * * * *
2. * * *
c. * * *
(1) total direct costs (excluding capital expenditures and other
distorting items, such as pass-through funds, subcontracts in excess
of $50,000, and participant support costs),
* * * * *
3. * * *
e. * * *
(1) total direct costs (excluding capital expenditures and other
distorting items such as pass-through funds, subawards in excess of
$50,000, and participant support costs),
* * * * *
D. Submission and Documentation of Proposals
* * * * *
1. * * *
b. A governmental department or agency (such as a state or local
Department of Health, Department of Transportation, or Department of
Housing) that receives more than $35 million in direct Federal
funding during its fiscal year must submit its indirect cost rate
proposal to its cognizant agency for indirect costs.
c. If a governmental department or agency (such as a state or
local Department of Health, Department of Transportation, or
Department of Housing) receives $35 million or less in direct
Federal funding during its fiscal year, it must develop an indirect
cost proposal in accordance with the requirements of this part and
maintain the proposal and related supporting documentation for
audit. This established rate must be accepted by any Federal agency
to which the governmental department or agency applies for funding.
Federal agencies must not compel the governmental department or
agency to accept the de minimis rate or some other rate established
by the Federal agency. These governmental departments or agencies
are not required to submit their proposals unless they are
specifically requested to do so by the cognizant agency for indirect
costs. Where a non-Federal entity only receives funds as a
subrecipient, the pass-through entity will be responsible for
negotiating and/or monitoring the subrecipient's indirect costs.
* * * * *
0
16. Revise appendix X to part 200 to read as follows:
Appendix X to Part 200--Data Collection Form (Form SF-SAC)
The Data Collection Form SF-SAC is available as a webform on the
Federal Audit Clearinghouse (FAC). Form and submission instructions
can be found at https://www.fac.gov/.
0
25. Revise appendix XII to part 200 to read as follows:
Appendix XII to Part 200--Award Term and Condition for Recipient
Integrity and Performance Matters
I. Reporting of Matters Related to Recipient Integrity and Performance
(a) General Reporting Requirement.
(1) If the total value of your active grants, cooperative
agreements, and procurement contracts from all Federal agencies
exceeds $10,000,000 for any period of time during the period of
performance of this Federal award, then you as the recipient must
ensure the information available in the responsibility/qualification
records through the System for Award Management (SAM.gov), about
civil, criminal, or administrative proceedings described in
paragraph (b) of this award term is current and complete. This is a
statutory requirement under section 872 of Public Law 110-417, as
amended (41 U.S.C. 2313). As required by section 3010 of Public Law
111-212, all information posted in responsibility/qualification
records in SAM.gov on or after April 15, 2011 (except past
performance reviews required for Federal procurement contracts) will
be publicly available.
(b) Proceedings About Which You Must Report.
(1) You must submit the required information about each
proceeding that--
(i) Is in connection with the award or performance of a grant,
cooperative agreement, or procurement contract from the Federal
Government;
(ii) Reached its final disposition during the most recent five-
year period; and
(iii) Is one of the following--
(A) A criminal proceeding that resulted in a conviction;
(B) A civil proceeding that resulted in a finding of fault and
liability and payment of a monetary fine, penalty, reimbursement,
restitution, or damages of $5,000 or more;
(C) An administrative proceeding that resulted in a finding of
fault and liability and your payment of either a monetary fine or
penalty of $5,000 or more or reimbursement, restitution, or damages
in excess of $100,000; or
(D) Any other criminal, civil, or administrative proceeding if--
(1) It could have led to an outcome described in paragraph
(b)(1)(iii)(A) through (C);
(2) It had a different disposition arrived at by consent or
compromise with an acknowledgment of fault on your part; and
(3) The requirement in this award term to disclose information
about the proceeding does not conflict with applicable laws and
regulations.
(c) Reporting Procedures.
Enter the required information in SAM.gov for each proceeding
described in paragraph (b) of this award term. You do not need to
submit the information a second time under grants and cooperative
agreements that you received if you already provided the information
in SAM.gov because you were required to do so under Federal
procurement contracts that you were awarded.
(d) Reporting Frequency.
During any period of time when you are subject to the
requirement in paragraph (a) of this award term, you must report
proceedings information in SAM.gov for the most recent five-year
period, either to report new information about a proceeding that you
have not reported previously or affirm that there is no new
information to report. If you have Federal contract, grant, and
cooperative agreement awards with a cumulative total value greater
than $10,000,000, you must disclose semiannually any information
about the criminal, civil, and administrative proceedings.
[[Page 69500]]
(e) Definitions.
For purposes of this award term--
Administrative proceeding means a non-judicial process that is
adjudicatory in nature to make a determination of fault or liability
(for example, Securities and Exchange Commission Administrative
proceedings, Civilian Board of Contract Appeals proceedings, and
Armed Services Board of Contract Appeals proceedings). This includes
proceedings at the Federal and State level but only in connection
with the performance of a Federal contract or grant. It does not
include audits, site visits, corrective plans, or inspection of
deliverables.
Conviction means a judgment or conviction of a criminal offense
by any court of competent jurisdiction, whether entered upon a
verdict or a plea, and includes a conviction entered upon a plea of
nolo contendere.
Total value of currently active grants, cooperative agreements,
and procurement contracts includes the value of the Federal share
already received plus any anticipated Federal share under those
awards (such as continuation funding).
II. [Reserved]
Deidre A. Harrison,
Deputy Controller, performing the delegated duties of the Controller
Office of Federal Financial Management.
[FR Doc. 2023-21078 Filed 9-28-23; 4:15 pm]
BILLING CODE 3110-01-P